Cooperatives and Social Enterprise in Europe

In March, I was at a European meeting between cooperative representatives (www.cecop.coop), european social enterprise representatives and officials of the European Commission. Our task was to find common understandings. Not easy!

In the rest of Europe, it is commonly accepted that social enterprises are democratically governed. In many countries they have to be cooperatives eg Italy which invented the 'Social Cooperative' to provide local community social services under contract to state funders.

But the UK is very different. Our social enterprises tend to be chief executive led and not democratic. In the UK we therefore see rapid growth and very large social enterprises which are 'corporate' rather than 'community' focussed.

This was my contribution:-

Bob Cannell, Cooperatives UK (UK):
There is a need to understand our (Cooperatives and Social Enterprises) differences and to harmonise our understanding.
It is possible to harmonise some of the principles. We are not going to get one working definition.

In the UK, the “chief executive social entrepreneur” is the norm.

What does “social” refer to? To governance? To goals and outputs? There is a very different understanding of this word.

If governance has to be social, then the cooperative is the model.

If the goals and outputs are to be social, we are talking about a very different type of enterprise. It gets confusing if you interpret “social” as referring to the goals.

The response to the economic crisis should be local. But corporate social enterprises have no local links. There are two possible responses:

1/ Local community response: responding to local needs (employment, etc.)
2/ Corporate response: incentives by the state for corporate social entrepreneurs to take over public services (for example, the reform of the NHS in the UK ).

Contract negotiations are incredibly complicated; there are economies of scale in contracting hence the big fish get bigger and the small ones get squeezed out. Consequently, local links get broken in the process.

We must emphasise democracy and participation. In the UK, we did have a wall between social enterprise and the cooperative, but both movements are now talking. We should prioritise the definition of general criteria: in this perspective, a loose definition is needed, not a tight one. We should make sure that large corporate do not dominate community-based response.

The cooperative movement and social enterprise, franchising models, cooperating with each other, is a challenge for us. Private investor corporations will be moving in, it is so easy for the State to contract with those people to provide services, but that is not what we cooperatives and social enterprises want at all.

Can Cooperatives Control Capitalism?

see http://www.social-europe.eu/2010/04/taming-the-tiger-the-challenge-for-european-social-democracy/.

A recent article by me in Social Europe Journal.

My argument is that capital has become so liquid it is threatening the 50 year old EU model. A model which balances the demands of capital (business investors), organised labour (the trade unions) and the state together to create social democracy. But the banks have become 'vampire squids' to use a current buzz phrase, sniffing out stored capital in businesses, latching on and using private equity funds to suck it out to use as betting chips in the global casino of capital speculation.

To prevent capital (investment for business as well as stored financial reserves and the capital infrastructure underpinning our societies) disappearing and dumping us in the capital famine that typifies the Rust Belt inner cities of the American mid west, we need to find business models which lock down capital and put it under democratic control.

The ideal model, which works well in a competitive capitalist market, is the cooperative model.

Community of Interest or The Common Bond

Labout arguing for citizen control and Tories for employee ownership in the 'new mutuals'.

As Carole leslie from Baxi says "The debate shouldn’t be about theory, it should be about practice. What works for one organisation might have to be adapted, developed or completely reinvented for another." http://blog.baxipartnership.co.uk/2010/04/01/mutual-ownership-lets-find-the-best-way/

And the best way to determine what will work is Stakeholder Analysis. Which group has the strongest Community of Interest ( or Common Bond to use a credit union term). That group has the strongest drive to make the organisation work. If more than one, a multistakeholder model might be best, like GLL, but weighted as in GLL to the stronger interest group, in their case the workers.

On Radio 4 yesterday Will Davies from Demos confirmed that Labour do not support employee ownership and cited the Foundation hospital trusts as an example of Labour's preferred model of citizen control.

The rushed introduction of the foundation trust model is a classic case of not identifying the communities of interest before imposing a model. Hospital trusts are stuffed with special interest activists banging their specific drums. Democracy is a sideshow to central government control via the executive managers.

This is precisely NOT what we want in New Mutualism. It seems Labour is still prejudiced against employee control even where it might be more effective.

This prejudice runs deep and long since the 1919 Fabian takeover and banishment of syndicalism and guild socialism from the Labour Party.

But the Tories can only see share based employee ownership. A 21st century version of Thatchers popular capitalism but using Employee Shareownership schemes. This is not cooperation as we worker coop enthusiasts see it. We want to break free from the corrupting influence of individual share ownership for the benefits of collective ownership of capital. We see ourselves as the stewards of capital created in the past, which we can use to generate a present income, but must hand on to the cooperators of tomorrow, hopefully enhanced.

There is a danger that worker cooperatives will fall between these two theoretical shibboleths, executive driven neo-consumer cooperatives a la Labour and the joint stock holding 'little masters' of Tory dreams.