Cooperative Developments

You may not have noticed, but 2012 has been the International Year of Co-operatives. The Scottish parliament held a back-slapping session at the start of the year in which MSP’s of all parties made speeches in support of cooperatives and expressing delight at the 4% GDP (employing 25000 people) for which the sector accounts in the Scottish economy.

Even Tories found themselves able to highlight the role cooperatives play though they did focus on farmers machinery coops rather than the worker controlled variety.
Only Patrick Harvie of the Scottish Greens pointed out that such celebratory language was unsuitable until much more of our economy was based around home-grown co-operative ventures.

Much pleasure and delight was expressed, particularly by SNP MSP’s, at the recent discovery that the first cooperative was set up, not in Rochdale as formerly believed, but in Fenwick, Ayrshire in 1761. There the local weavers’ society began by buying and sharing materials and looms, but in 1769 branched out into food and “victuals”, first buying a sack of oatmeal wholesale to sell in smaller quantities at cut price. Savings were divided among the members.

In the early 1800s, the villagers took further steps towards local, popular democracy by establishing what became known as the “Fenwick parliament”: open meetings to debate local affairs held at the water pump, strategically located at a crossroads.

The co-operative sector in Scotland today is dominated by businesses within the Co-operative Group operating as member co-ops. This means that all members have a vote at AGMs and thus a say in the running of the business. Lets look then at Scotmid, an independent Scottish cooperative business which incorporates Semichem and The Fragrance House.

The Scottish Midland Cooperative Society was established in 1859 and currently has around 4200 employees. Although a wholly independent business, most of their purchasing is made via the Cooperative Retail Trading Group, who have shared values and principles and are at the forefront of ethical and fairtrade purchasing. Around 75% of Coop fairtrade goods are sourced from smallholder cooperatives in the developing world.

However, although Scotmid claim 48000 members, only a tiny percentage actually participate in General Meetings. Only 100 members attended the 2011 West of Scotland meeting and 60 the East of Scotland Regional meeting. Directors are eligible for bonuses and the company operates a traditional hierarchical business structure with vast differences in renumeration. They also have a large property portfolio including flats which are “very much concentrated within Edinburgh where there is a thriving private sector rental market”. (1)

Although a co-op in name, and somewhat less directly affected by the financial crisis than shareholder-owned companies, Scotmid do not really present an alternative business model which puts workers at the heart of the business.

Not all co-ops are the same however, and a good example of a workers co-operative (2) is the ‘Scottish Wholefood Collective Warehouse’  Limited, trading as Green City, which was set up in 1978 with four founder members. The work force has now expanded to twenty five members and turnover to £2.25 million.

As a workers co-operative, decision making is by consensus. There is a management team consisting of elected members from each department. It meets on a regular basis to ensure the smooth running and development of the Co-operative.

When needed, there is also a General Meeting where all the members are present. This deals with issues concerning the Co-operative as a whole and also gives everyone the opportunity to express their views on issues that interest them. Each full member is entitled to call a General Meeting when they feel there is a need. Such meetings discuss employing new people, acceptance of probationary members to full membership and policy decisions about finance and resources.

All members are paid the same hourly rate; most work part-time but for at least two days per week; hours are very flexible to accommodate childcare needs etc.; profits are shared on a pro-rata basis amongst co-op members.

Collectivist and non-hierarchical values seem to permeate the wholefood sector with Suma Wholefoods in Leeds, which employs more than 100 people, also operating “a thoroughly democratic system of management that isn’t bound by the conventional notions of hierarchy.”

But it is not just in the wholefood sector that workers cooperatives can be successful. The biggest cooperative business in the world is the Mondragon Cooperative Corporation http://www.mondragon-corporation.com/ENG.aspx which is the top Basque business group and is based on manufacturing. It has an annual congress with 650 delegates representing all the member coops. It has recently entered into an agreement with the United steelworkers of America with a view to setting up Trade Union Coops; an innovative initiative which may alter Trade Union reservations about cooperative business models.

Not everything is rosy in relation to Mondragon however, and concerns have been expressed about its increased global role and increasing salary differentials from 1 in 3 originally to up to 1 in 8 today.

A further form of cooperative is the community coop, which often seeks to provide services or infrastructure that conventional businesses find unprofitable eg Angus Broadband Cooperative Ltd which, working closely with the local authority, seeks to provide fast broadband services in the highland parts of Angus.

Energy purchasing cooperatives are also beginning to appear, and an energy buying coop for London was a cornerstone of Ken Livingstone’s campaign for Mayor earlier this year. The possibilities of similar schemes which could involve selling via feed-in tariffs as well as purchasing of energy from the grid must be considerable and could allow the less well off in our society to benefit from alternative, sustainable energy and making a contribution to fighting climate change and fuel poverty at one and the same time.

The cooperative sector is then well placed to make a major contribution to a sustainable economic future. Although the Scottish Government are encouraging coops through Cooperative Development Scotland  http://www.scottish-enterprise.com/resources/reports/cds-annual-review-2012.aspx , it must be ensured that new coops are based on genuine participative democracy and operate non-hierarchical structures. This will take time and training as concensual decision-making is a skill of which most of us have little experience.

  This was approved by the International Co-operative Alliance General Assembly in September 2005. Below is the section on the basic characteristics of workers’ co-operatives:

 1. They have the objective of creating and maintaining sustainable jobs and generating wealth, to improve the quality of life of the worker-members, dignify human work, allow workers’ democratic self-management and promote community and local development.

2. The free and voluntary membership of their members, in order to contribute with their personal work and economic resources, is conditioned by the existence of workplaces.

3. As a general rule, work shall be carried out by the members. This implies that the majority of the workers in a given worker cooperative enterprise are members and vice versa.

4. The worker-members’ relation with their cooperative shall be considered as different to that of conventional wage-based labour and to that of autonomous individual work.

5. Their internal regulation is formally defined by regimes that are democratically agreed upon and accepted by the worker-members.

6. They shall be autonomous and independent, before the State and third parties, in their labour relations and management, and in the usage and management of the means of production.