Cooperatives – for Wales and direct action
There is hardly a family in Wales that has not already been hit hard by the loss of work as a direct consequence of the global credit crunch. The Welsh economy is now beginning to experience the sting in the tail of the success of overseas inward direct investment attracted to Wales by Government support over the last 25 years. Now the international economy is in a crisis much of that investment is being considered marginal by the multi-national corporate owners and is being withdrawn or run down.
In addition to inward investment the UK Government and since 1997, the Welsh Assembly Government, has also supported the economic development policy of new start ups through financial support, enterprise policies and innovation from higher education. But even in this area, the role of external ownership and control has taken its toll, with many new start ups being purchased by multi-national corporations as soon as they show promise and profit. Rachel’s Yogurt and Tynant Water are well known examples being respectively owned by North American and Italian companies. With international research indicating that 1/3 of small and medium sized enterprises will change hands over the next 10 years and will require succession strategies the issue of who owns and controls should be taken seriously.
Ownership and control are the missing ingredients in the Assembly Governments economic development policy. Cooperatives and mutuals in their various forms owned and controlled from below by their members provide a way forward that addresses ownership and control issues to provide a more sustainable from of governance than simple share ownership. Successful mutual building societies such as the Nationwide and Principality; the turn around in the fortunes of the Cooperative Group; and Welsh successes such as Tower Colliery, credit unions and to some extent Welsh Water are an indication of what this different form of ownership can achieve. Cooperatives should be moved up
Over the last 10 years colleagues at the Wales Institute for Research into Cooperatives (WIRC) at UWIC have undertaken international research into cooperatives and their economic and social potential. We have developed some key ideas about how and why cooperatives could provide a firm foundation for the Welsh economy of the future. First, there needs to be a rebalance of policy away from inward investment toward indigenous capital growth and the mobilization of small savings for local investment. Second, sustaining this capital within the territory it has been created through ‘capital anchoring’. This goes a considerable way to preventing a sell off by spreading the cooperative ownership through many members who, in the case of worker cooperatives, are also the employees. Thus there is a smaller financial attraction per member in a sell off and possible loss of employment act as incentives to maintain ownership and control. Cooperative ownership can also be backed up by legal means and within the articles and memorandum of governance.
Third, following the example of Quebec, a Welsh ‘solidarity’ investment fund needs to be established that is itself a cooperative, owned by the investors with a single vote, who will only be able to save up to a maximum. Investment will be ethically made in Wales to cooperatives and organisations that have good records in areas such as climate change, fair trade, health and safety and trade union recognition. Such a fund will help start ups and employee buyouts and help cooperatives smooth and cope with changes in economic activity between sectors.
Taking these principles forward we have explored the possibilities of cooperatives in a number of areas based upon research into existing cooperatives or organisations that come close to the model.
Tower Colliery: although now closed as a deep mine the workers cooperatives was a tremendous success for 13 years sustaining a highly technical modern coal mine with a very active democratic governance structure. Tower consistently made a surplus whilst maintaining employment, having an excellent safety record and 100% trade union membership. The cooperative still continues to operate in the coal mining industry and is central to a heads of the valleys development project. It has been an inspiration to workers around the world.
Cultural industries: in research produced for
Knowledge cooperatives: original this was based upon our work in the declining Welsh engineering industry where we suggested that ailing firms could work together as ‘consortia cooperatives’ to sell their skills to a wider market. More recently, following work on the relationship between higher education and the economy, we have proposed that knowledge cooperatives could form a method of bringing together academics and producers as equal owners to develop and market a stream of innovations in specific sectors. The cooperative form ensuring that the benefits are anchored within Wales.
Cooperative history in the UK is one that is rooted in forms of direct action and self activity with workers coming together to find collective solutions to the problems that face them. Direct action is alive and well in the green movement through organisations such as the Transitional Towns, which is aimed at finding local solutions to the event of oil supplies being exhausted without waiting for state action. The movement has only been in existence for just over two years but has inspired action throughout the UK as well in countries such as New Zealand.
In the same way it should be possible for us to start a new tradition of cooperative direct action. For example, it is possible to link the issues of climate change, price and employment together in local cooperative action. Consumer cooperatives could be formed locally to collective organise the purchase of energy supplies. The Phone Co-op established in the UK recently does this in relation to phone and broadband providing a service that is reliable, price competitive and returns a profit share to members. Local energy cooperatives could similar reduce price but also specifically target renewable energy supplies using revenue and savings to invest in local renewable energy production. Car cooperatives have started in the UK and provide a form of reducing the ownership and use of individual transport. Similar arrangements have and can be made for fresh food etc.
The point about bringing these cooperative initiatives together locally is that they not only provide a method of tackling climate change and prices of basic energy through a method of collective direct action but also the new cooperatives will provide a source of permanent employment.
Although states have to play a key role in the current crisis, cooperatives provide a way of enabling those affected by the crisis to take direct action now to address the personal impacts, whilst making links to other members of their local communities who are also interested in issues of climate change and energy prices.
Ownership and control should become a key issue for the long term social and economic development in Wales. Cooperatives provide a method of putting this into practice. There is plenty that the Assembly Government could lead on and also help to facilitate local direct action. Even in the absence of any government policy lead, cooperatives provide a way for people at the local level to take action which could have immediate impact and also create a more sustainable Welsh economy.