Towards a Mutual Economy?

By Adam Peggs

Last summer Labour presented its most stridently left-wing manifesto for a generation, based around a genuinely popular policy platform. The document presented a coherent alternative to both Tory austerity and the Thatcherite model which has predominated in Britain since 1979. These achievements cannot be understated – they offer the prospect of affordable homes for all, affordable public utilities, a serious reduction in in-work poverty and a wider redistribution of wealth.

Yet the party also admittedly had little to say around ownership and control of the workplace outside of the major utilities. What it did say on co-operatives, the most obvious alternative to either public ownership or absentee private ownership, was unequivocally positive. Labour promised ‘a proper legal definition for co-operative ownership’. The party also promised that its proposed National Investment Bank would provide the necessary financial support to the co-operative sector. It also pledged to double the size of the UK’s co-operative sector – a welcome target that is both specific and manageable.

Despite their evident merits, this set of policies did relatively little to promote a genuine economic transformation. Under the proposals and targets set out in the manifesto, the UK’s co-operative sector would remain significantly smaller than in many Western European countries where the social market and social democratic models have more influence.

Labour and its activists need to dare to be bolder – we’re not here just to manage inequality and exploitation but to challenge the very structures that bring them about. That means developing goals that are more far reaching than the manifesto pledges, and the co-operative sector is among the most crucial areas for this. Given that we’re starting from such a small co-operative sector, our longer term plans should involve a commitment to an expansion of the sector by six, eight or ten times.

Developments since last summer make it essential to note John McDonnell’s proposed worker ownership funds, a policy announced in the run-up to conference, which is a keystone for a newer, more radical set of policies on worker ownership.  The ownership funds idea is one of the most transformative policies announced by the party for decades – and has already proved popular among the wider public. But the policy would also leave workers as a minority stakeholder at work. For this reason the left ought to think for the longer term about what is needed to significantly expand worker ownership of industry. A distinctive set of ideas around expanding the UK’s co-operative sector would be an obvious route.

The co-operative movement is in Labour’s blood and has proved itself a viable, decentralised form of social ownership which leaves workers happier, better off and with more control over their own lives. Co-operatives and the co-operative movement have once again returned to left-wing thought as a significant plank of what a better society could look like. In short co-operatives must be taken seriously because they disrupt the maldistribution of wealth and power and present a democratic alternative.

Building on the 2017 manifesto and complementing the planned investment funds will involve a series of policies capable of delivering the colossal enlargement of the co-operative sector that we on the left should be considering.

Something roughly along the lines of a Ministry for Mutuality – an idea initially put forward by Jeremy Gilbert – could serve as a more robust version of the Co-operative Development Agency proposed by the New Economics Foundation. While Whitehall reorganisations are no socialist demand, in this case a department dedicated solely toward promoting more equitable, decentralised models of ownership could prove be a vital part of a democratic socialist strategy.

Another set of opportunities lies in adopting an aspect of the Preston Model, but on the national level. Preston Council has served as a bulwark of municipal socialism in recent years, and its approach to outsourcing offers a lesson on how the state could promote co-operative development. Where outsourcing has taken place in Preston, co-operative enterprises have been prioritised, providing links between local government and worker-owned firms. This is a dilemma for the left, with the prospect of strengthening worker-run firms on one hand and the need to reverse the diminished accountability caused by Tory outsourcing on the other. A simple way out of this might be for the Labour Party, from the national leadership to CLPs, to promote a combination of reversing outsourcing and promoting links between co-ops and the public sector.

Giving grants directly to workers could also prove essential to economic transformation, allowing workers to buy out bigger stakes than as laid out in McDonnell’s ownership fund policy. The ownership funds are already among the most important policies announced by Labour in the last few decades, offering workers the chance to have a meaningful stake in the society we live in. But the proposed 10% stake is relatively small, leaving worker’s voices often drowned out by absentee shareholders. One way to bolster these proposals would be for the state to introduce grants for workers demanding a bigger stake than the 10% that has been set out. Such a policy could see the state acting to give workers a chance to achieve democratic worker ownership and place real power directly in the hands of ordinary people.

Labour should consider aiming to make mutually-owned enterprises a major source of job creation in the private sector, tying Labour’s proposed industrial strategy to structural reform of the UK economy. An industrial strategy could be geared toward serious development of the co-operative sector, and of other forms of worker-owned firms. This would not just draw a stronger line between the Labour Party and Theresa May’s feeble, half-baked industrial strategy, it would tie the notion of an industrial strategy to our project to build a fair society free from exploitation. Even if this were to be a longer-term objective, it would indicate to the whole country that the Labour Party is dedicated to fundamental change.

Doubling the size of the co-op sector would be a progressive feat and would no doubt transform lives, but we need to be far more ambitious than this. A dedicated government department, a strengthened form of Labour’s right-to-own firms policy and a twinning of Labour’s industrial strategy with a strategy for co-operative expansion could be vital next steps in developing a longer-term alternative. After decades of timidity, the left must ensure that it thinks seriously about delivering lasting change. We should aim to, eventually, radically outstrip the number of worker-owned firms seen in countries like France and New Zealand, building up a whole sector of the economy which is democratic, socially owned and independent from the state.