Friday, 23 March 2018

Some Reasons why the 1970s Wave of UK Worker Coops Faded Away and Why there is an Upsurge in the 2010s

Cooperative Development Support

In the late 1990s ICOM (the former worker cooperative federation) did a cluster analysis of location of worker coops and CDAs (cooperative development agencies) in the UK.  It was very clear that existing worker coops clustered around long standing CDAs. There were few where there had not been a CDA. With some odd exceptions eg Suma Wholefoods, the largest 70s worker coop, in Leeds and Halifax.  

It was also apparent that the loss of worker coops seemed to be higher where CDAs had disappeared previously due to loss of funding by local authorities as they lost funding from the Conservative governments of the 80s and early 90s.

Social Enterprise UK Style

But when the Blair Labour government won a landslide victory in 1997, they emphasised social enterprise. Cooperatives were deemed to be 'innefective and obsolete' by the promoters of social enterprise. They successfully lobbied the Blair administration to put all their considerable 'third sector' support into promoting social enterprise. Which meant that there was almost no cooperative development support or awareness raising on the ground. No one with any authority wanted to hear about cooperatives.

Social enterprise thought leaders of the 90s discounted democracy as part of the governance of their type of social enterprise, creating a gulf between cooperatives and UK social enterprise (unlike on the continent where social enterprise and cooperatives intertwine).  This was the case until fairly recently. 

Change in Attitude

Conservative politicians disliked social enterprise 'Blairstyle', they referred it as 'jobs for the children of labour politicians'. After 2010 and the election of a Conservative led government it was again possible to start talking about cooperatives in the UK without getting the cold shoulder from government (local and national). Cooperatives fit the politics of all major parties (for different reasons) even if they don't really understand them.

Cooperative Enterprise Hub

The coalition government didn't fund cooperative development though. That was left to the retail society coops, first United NorWest's regional C Change program (2010ish) and then the Cooperative Group's national Cooperative Enterprise Hub from 2011 until their major crisis in 2013.

All of which meant there were few worker coops forming in the 90s (with amazing exceptions e.g. Unicorn Grocery) to replace those fading away after their first twenty years of life. Most small businesses have a fairly short life and few survive their founder. Coops as Virginie Perotin of Leeds University, shows in her research, do survive longer and more often but only statistically. Most still die fairly young (like other small businesses) - especially where they don't have someone to turn to for help when they have a crisis and/or have failed to do succession planning (the majority).

Upturn: Worker Cooperation Becomes Popular Again

The upturn in worker coops currently could be linked to the Hub program directly and indirectly. Hundreds of coops were set up and revitalised by the Hub.  My coop development network, CBC, alone had nearly 300 Hub clients (of all types of coops, worker coops tended to be in the minority). I personally 'saved' quite a few worker coops thanks to Hub funding where they were in a people fix and needed a third party to come in and help unblock the emotional logjams. Such jams kill coops and their businesses and worker coops are especially vulnerable to them,  having no boss to cut through the tangle.

The (no longer a cooperative) Coop Bank continues to fund The Hive a smaller support program than the Hub managed by Cooperatives UK. Coop development practitioners report a lot of demand for assistance by groups of, often young, people trying to set up collectively organised businesses, in order to make a living, the way 1970s youth responded to their economic recession.

Tech Coops; the New Wholefoods

I think the tech coops expansion is an example of a business idea whose time is now.   In the 70s it was a popular campaign for real food that created a demand and allowed young people to make a living from wholefoods - minimally processed foods. Today software development is the equivalent. 
And it's the same junk food/real food choice.  Software developers have a terrible reputation, do the project, take the money and run, even though it doesn't work.   The market is not only huge and expanding faster than supply can keep up, but the opportunity for more people friendly suppliers is also huge.  Learning to code is easy for those who have an aptitude for it and software development is a team activity. Individual workers must cooperate with their colleagues to get the whole development job right.  Outlandish, the leading UK tech coop,  famously converted from a privately owned partnership into a worker coop to increase their team working potential. 

The new Suma

Outlandish are undoubtedly the 'Suma' of this new network. But, significantly, they have cooperated with other coops from the start. They actively help other people form tech coops to take on some of the work that Outlandish lacks capacity for/no longer wants to do. They do the more complicated stuff now and pass on the simpler jobs to newer coops to gain experience. eg Outlandish are said to be opening a university coop where students will hone their skills before taking on better paid and more difficult work either in this coop or setting up their own. 

CoTech; the Network of Tech Coops

A self supporting ecosystem of tech coops is developing.  Just as once there was a self-supporting ecosystem of wholefood coops from importers and manufacturers to distributors to retailers and caterers.  It isn't a coincidence that one of the principal advisers to this new, 30 coop strong,  CoTech network is Principle 6. sadly the sixth principle faded and was lost from the wholefood coops movement early on and was replaced by competition.  Worker coops sank or swam by themselves, and most sank.

Cooperation between Cooperatives, the solution.

CECOP/CICOPA (the European ad Global worker coops federations) have always stressed the need for cooperation between coops and building horizontal networks for successful worker coop development. The evidence is compelling. Wherever worker coops cooperate in horizontal networks, Italy, Spain, Argentina, Japan, France, they prosper and (mostly) survive the ups and downs of national politics and economics. 
The loss of so many UK worker coops since 1980 (3000 and down to 400 today) is significantly due to their inability to use Principle 6 for mutual support. Why that was the case is the stuff of another essay.

Thursday, 4 January 2018

The False Choice Between Ownership and Membership. True Coops Need Both.

Ownership/Membership? Which is the Most Important in Coops?
A weird shift to emphasise member ownership and governance, and a downplaying of the importance of cooperative membership, seems to be abroad at present.  Especially amongst some US proponents of worker coops and platform coops. History tells us this is a dangerous trend that often results in the loss of cooperative capital.

Jam Today
 The highly successful Scottish Agricultural Organisation Society is a classic example of how prioritising cooperation can cooperativise even the most fiercely independent people, Scottish farmers. If it works there, it works anywhere. But as SAOS say, you have to hold the principles and the long term determination to stick with them when the dominant ideology rubbishes and ridicules those principles and encourages private, individualistic ownership.  Which in agricultural coops as anywhere, more often than not,  results in demutualisation, a curse for most farmers coops and most 'consortium' coops of small business people (eg InterFlora). When a sufficiently large cohort reach retirement age, they want the money for themselves regardless of the loss of collective benefit that ensues. 

Eternal Paradox
The struggle is always between individual benefit now and deferred collective benefit. The eternal unresolved and unresolvable human dilemma. We just have to hold the paradox unresolved and keep the balance actively and dynamically. Opting for one or the other destroys the whole. The paradox is the organisation!

More Jam Today
If the emphasis is on ownership alone, there is no loyalty and therefore no long term sustainability.  In the UK in the 19th century, producer coops (early versions of worker coops) either failed commercially or were privatised, hundreds of them, leaving a mere handful to stagger into the 20th century. The members had no collective loyalty when an investor came along offering money for their shares, picking them off one by one.

The 19th century worker investor built and owned cotton mills of Oldham, Lancashire, (which weren't cooperative societies but used the little known One Shareholder One Vote variant of a company. Still exists I'm told but no one uses it.) with individual worker ownership of shares (and fierce fighting over dividends), were lost in wholesale mass panic recession sell outs to private investors, and the entire worker owned sector disappeared in a very short time.

The same with the spun out local council bus companies of the 1980s, when Thatcher forced British councils to sell their buses and many Labour authorities sold them at big discounts to union sponsored Employee Owned companies.  In every single case staff sold their shares to investors.  The same happened in every formerly state owned business in the former USSR, countless thousands of them, where ownership shares were given to the workers. They all sold, from the Baltic to the Balkans.

None of these emphasised membership or democratic participation and often, bizarrely, barred worker owners from the board (19th century producer cooperative societies) for reasons long forgotten. But they did emphasise  and celebrate 'employee ownership' at congresses etc.

EBTs, a Sort of Solution
The buses and Baltic examples prompted Job Ownership Ltd., which became the Employee Ownership Association, to invent the Employee Benefit Trust owned company. This trust structure (copied I think from John Lewis Partnership) is controlled by external trustees and prevents the employee 'owners' selling their 'birthright' for a 'mess of pottage'. But it institutes a paternalistic culture in which the 'owners' can't be trusted and have to have the 'great and the good' trustees controlling them.

Quite at odds with cooperative self help principles and more akin to charity culture (the rich doing things to the poor). The EOA and employee ownership sector talk about employee 'voice', rather than membership rights and responsibilities as we do in worker coops.  Studies have shown this type of EO does result in significant business improvements (compared to investor ownership) but the improvements stall a few years after the Employee Buy Out. 

Cooperative Collectives
Our concept of a worker owned and controlled cooperative is quite different. And more in keeping with 21st century platform and network cooperatives.  In most of our British worker coops, we talk about worker members, not employees (which suggests a subservient role). Our members are at the same time - workers, employees (legally), managers, directors (often) and owners (much as the members of an internet based platform coop must be). 

People are Adults; Trust Them
A common criticism is 'How do you juggle all those hats? Surely its simpler to just do one or two of those roles?' but that idea comes from the dominant systems ideology which says that workers in businesses should be treated as  chidren or dehumanised resources to slot into a pre-conceived (by the 'adult' executives) structure in simple, narrow and controllable job descriptions.  But in society outside of work, humans do juggle multiple roles quite well, eg in families, friendship groups, clubs etc. Humans, in general, and worker coop members know when to prioritise particular roles, and can do that much better if there is collective training, agreement and alignment on a membership agreement or member job description. It is not a coincidence that the 'stand out' high performing worker cooperatives invest time and money in membership discussion and development.

Deferred Gratification; How To Encourage It
The important point is that engaging with your work in this complex, multi-factorial (but natural) way creates emotional engagement and loyalty to the group (by the expenditure of a lot of emotional labour) and thereby encourages participants to go for the deferred collective benefit option rather than the selfish individualistic 'jam today' option.

It's a lot cheaper than expensive employee engagement programs too, and can yield astonishing productivity and wealth creation, enabling 'that's impossible' salaries and benefits. Performance which does not fade over time.

So 'ownership' may be an easy option but it has potentially self-defeating ramifications.

I'll finish with two examples that top the argument. Both emphasised ownership and deliberately underplayed a sense of membership, except perhaps, in the second in a perverted way, a club of pirates.    United Airlines, went from majority ESOP to alienated staff striking against their own management and bankruptcy in 5 years.  And Enron, which was a 70% employee owned business but zero employee control.