Time to Look Again at the Co-operative Option

 

A piece I wrote for Chartist 

It is admittedly from a low base but it is a fact that since the great crash of 2008 the co-operative economy in the UK has grown by 19.6% to £35.6 billion, the number of individual co-operative enterprises has grown by 23% and the number of members in co-ops has reached 13.5 million (4.5 million more than all the individual shareholders).

Internationally too the sector is in rude healthy with over a billion people members of co-ops employing over 100 million people more than all the transnational businesses added together and the world’s top 300 co-ops have a US$2trillion turnover.

So why is the sector still so invisible here in the UK?  I believe this is for two reasons, people felt following the demutualisations of the eighties that it was a historical thing (interestingly none of the demutualised building societies have survived as stand alone mortgage banks) and secondly because in the public mind the sector is almost exclusively identified with co-op shops which where disappearing and only now are clawing their way back through mergers and acquisitions.

It may seem odd but in the first half of the nineteenth century as Britain was undergoing the industrial revolution it was unclear which model of business governance would dominate this new economy. People are familiar with Robert Owen who was a huge influence on the early co-operative movement but more important, in developing co-operative theory was Irishman William Thompson (1775-1833).

Thompson coined the word competitive to describe the system we now have. His An Inquiry into the Principles of the Distribution of Wealth Most Conducive to Human Happiness; applied to the Newly Proposed System of Voluntary Equality of Wealth, (1824) was an important contribution to the political-economy of co-operation. Thompson debated with J.S.Mill in the 1820’s as Mill too became convinced that the co-operative was the ideal business form. In his Principles of Political Economy (1852) he wrote,

“The form of association…which if mankind continues to improve, must be expected, in the end to predominate is not that which can exist between a capitalist as chief and work-people without a voice in the management, but the association of the labourers themselves on terms of equality, collectively owning the capital with which they carry on their operations and working under managers elected and removable by themselves.” 

Up to the end of the century it looked a no-brainer that co-operation would win out over wasteful capitalism. In 1899 Alfred Marshall, the founder of the Cambridge school of neoclassical economics, wrote in his essay on Co-operation, that in a co-operative, “the worker does not produce for others but for himself, which unleashes an enormous capacity for diligent, high quality work that capitalism suppresses. There is one ruined product in the history of the world, so much greater than all the others that it can truly be called the ‘wasted product’ – the best working capacities of the labouring classes.”

So how come for a hundred year’s co-operation vanished from economic text-books and as a consequence from our economic life? Pami Kalmi of the Helinski School of Economics has documented this disappearance.

He has shown that before World War I co-operation had a fair shake there was extensive discussion of co-ops, with theoretical insights and a careful examination of existing co-operative forms.   He pins the change on two things a move from an institutional approach ie from actually existing firms and co-ops to the more theoretical idealised neo-classical model, and to the increased role of the state which meant that all the social problems fell to the government with economists offering top-down solutions based on idealised abstract market solutions.

The current problems we face is that markets are an over simplified abstract idea which in the real world only work for short periods as a means of allocating resources. We only have to look at the multiple crises in banking, housing, energy, jobs, health and social care, transport and even in food supply, all due in their own way to market failure of the current capitalist model.

Yet the solutions to these crises offered by both government and opposition are almost invariably more top down, more market, and more competition!  It seems that those bought up and educated in the current period believe that the thing they want, “the market” offering consumer choice and a rational distribution of resources can only achieved in a capitalistic system.  But the market economy arose centuries before capitalism and the idea that capitalism and the market are synonymous is completely unfounded.

It is this inability to even imagine a co-operative alternative amongst economists, policy makers and politicians that is both holding back the development of the co-operative economy but more importantly doing immense damage to our national economy.

After all has any model been taken more in vain in the last couple of years than the “John Lewis Model”? This has become one of those Humpty Dumpty phrases from Lewis Carroll’s Through the Looking Glass, “When I use a word it means just what I choose it to mean.” Talking about “mutuals” without any understanding of them is spreading distrust.

No wonder trade unionists see the “mutualisation” of public services as mere privatisation. Some of this failure to connect is the fault of us in the co-operative sector who seem to relish making co-op structures as complex as possible (although when you look at them in details share holder businesses too can be pretty complex).

In a neo-liberal binary world of public or private the very idea of a private business that is owned and controlled democratically by its members and that enters the market for social ends just does not fit into this world view. No wonder they have been successfully eradicated from economic textbooks.   

The fact that in some circumstances co-operatives can be more efficient, innovative or indeed more profitable than shareholder businesses is impossible for them to imagine.

If we look at the best examples of co-operatives around the world in energy, in social care, in food supply in housing and even in financial services many of the solutions to our current predicament are staring us in the face if we could only see them.

This is why Ed Mayo secretary General of Co-operatives UK has called for a National Co-operation Policy. Put simply to promote co-operation and co-operative solutions within and between enterprises and enterprises and individuals when it adds value. There are good examples of this approach from countries as diverse as Denmark, Germany, Italy and France.

Some of this ignorance about co-operative forms is the fault of the movement itself and this is also why the theme this year for Co-operative Fortnight, the movements’ outward facing celebration of all things co-operative is the “co-operative option.” We have set ourselves the challenge of persuading accountants and lawyers’ business advisers and bank managers anyone who advises start up businesses that there is always the co-operative option.

We have a lot to do but as John Stuart Mill argued “we may through the co-operative principle, see our way to a change in society which would combine the freedom and independence of the individual, with the moral, intellectual and economic advantages of aggregate production.”

Raising a Glass to Co-op Wine

If I had a favourite type of co-op near the top of the list would be those called caves cooperatives in France, cantina sociale in Italy and winzergenossenschaft in Germany. I am sure those of you who like me enjoy a drop and want to be ideologically sound in our choices have already worked this one out  - they are winemaking co-operative’s.

These splendid organisations allow small scale growers to pool resources and benefit from economies of scale. Small scale growers often lack the resources to build wineries, to invest in technology or marketing but get enough of them together and they can compete with the big boys. Every wine growing region in the world has some co-operative presence and some are dominated by co-operatives.

The worlds largest wine producing region is the Spanish region of La Mancha it was in the 1940’s that the growers here started joining together to get better prices for their grapes. Today almost 400,000 hectares of grapes are grown in the region 70% of which supply 130 co-ops.  Some people think that co-operatives only produce tank wine for blending or for distillation but here Cooperativa Virgen de Las Vinas, the largest cooperative in Europe with 2,445 members, recently won the Bacchus de Oro Prize for its 2004 Tomillar Reserva proving that even large co-ops can produce world class wine.

Over half of all French wine is produced by co-operatives and this too is not all Vin de Pays. There is an interesting struggle going on in the Champagne region between the large Champagne Houses and the co-operatives. The so called grand marques depend on the co-operatives for their grapes and although they dominate global sales they only control about 10% of the regions vineyards. Big brands like Moët & Chandon, Dom Pérignon, Veuve Clicquot and Krug could not sustain their sales without the input of co-operative producers.

There has however in a gradual shift in the proportion of the wine being sold directly into the market by the co-operatives bypassing the grand marques. What is more the bigger co-ops have been leaders in innovation developing interesting new products it is clear therefore that the co-operatives own brands will have a bigger share of the market in the years to come.

If you are a Bollinger Boshevik you may have seen the largest co-op own brand champagnes examples include Pannier, Raoul Collet and Veuve Devaux and they are often cheaper and just as good if not better than the more well known brands hardly surprising when they are made with the very same grapes.

One of my other personal favourites when it comes to the world of co-operative winemaking is La Riojana Co-operative in Argentina.  Its roots too go right back to the 1940’s, when Italian immigrants, most of whom were active wine growers back home, decided to build a small bodega and to buy grapes to make wine. Shortly afterwards they began planting vineyards in La Rioja province, in northwest Argentina.

Today several hundred families are involved in producing grapes for La Riojana co-operative and have helped to make it not only one of the largest and most successful co-operatives in Argentina but with annual production of around 4 million cases of wine, the world’s largest producer of certified Fairtrade-organic wine.

With over 500 members, mostly small-scale producers, many the children of the founder members continue the family tradition of producing grapes for the co-operative.
Their flagship wine is a delicious fair-trade organic Gran Reserva Malbec sold around the UK under the own brand of the co-operative group and is available from their stores. Having wet your appetite for co-op wines where can I get them from I hear you say. Well this month I received a truly co-operative offer from Britain’s very best wine club.
The Wine Society the world’s only co-operative wine merchant owned by and only trading with its members has a splendid offer called good co-operation, which is a free bottle with every order of a case from anyone of seventeen co-operatives around the world. For value for money as a co-operative wine merchant the Wine Society is outstanding with its paramount task the pleasure of the members. Not only do they supply the world’s best wine it is remarkably competitively priced.
This selection of co-op reds from Spain, France and Italy and whites from South Africa, France, Italy, Portugal and Germany also includes a co-operative non-vintage champagne, Le Brun de Neuville. To purchase these splendid wines you have to be a member but I have to say this is one of the best co-ops we have ever joined.
Never has co-op principle six, co-operation among co-operatives, been more pleasurable.
For more information go to: www.thewinesociety.com
   

Grow Your Own Vegetables Shop!

 

There you are watching TV, tucking in to your beef lasagne and you find that it may have won the four-thirty at Haydock Park. Food quality was a major issue back in the nineteenth century and a key factor in the growth of the co-operative retail movement. Who would have thought that over a hundred and fifty years later food adulteration would raise its head again?

The horse meat scandal has exposed all sorts of shady dealing. It is shocking to discover that shops selling foodstuffs did not know (or appear to care) what it was and perhaps even worse consumers did not know or care what they where eating.

The worst feature of this crisis is not the duplicity of food producers and retailers who are after all only in it for the money. The surprise is the constant shock at the idea that profit seeking enterprises are only in it for profit!

When I was small my mum taught me not to put anything in my mouth if I did not know where it had come from. Yet millions everyday eat food that is processed to such an extent you need a forensic laboratory to know what it is. As someone who likes his grub I find this deeply sad.

Good food is one of life’s great pleasures and yet a swathe of our population has been enslaved by relentless marketing and advertising and by a growing addiction to salt, sugar and fat, to believe that this stuff is edible.   Sadly this is something of a class issue. Growing health and obesity issues do disproportionately affect the less affluent that have been conned into believing they can only afford cheap processed crap. It is ironic that in Britain the rich make a fortune selling this stuff to the poor whilst they eat like Mediterranean peasants.

It now seems amazing that early council houses where built with large gardens so that people could offset the rent by growing their own vegetables. We are a nation that has become alienated from the environment and have lost all sense of where our food comes from with many seasonal foods available all year around - all that varies is their number of air miles.

Thankfully there is growing resistance to this environmentally damaging food economy. Some of it is being lead by a growing network of new co-operative stores selling organic and ethically sourced foodstuffs. A classic example since its opening in 1996 is the wonderful Unicorn grocery in Chorlton, South Manchester. 

This multi award winning - Observer Food Monthly’s Best Independent Shop, Radio 4 Food Programs Best Independent Retailer - store’s basic offer is affordable, wholesome food with a focus on organic, fair-trade and local sourcing. As a workers co-op, owned and managed by the people who work in it they have created a place they would want to shop in themselves.

Their focus is on basic ingredients for tasty, interesting and affordable cooking with around seventy lines of organic fruit and veg at prices that compare well to the supermarket chains.

Unicorn also owns 21 acres of prime growing land, just 14 miles from the shop, tenanted by a co-op of organic growers, improving and securing the regional veg supply for the future. Packed on site they have a wide variety of staple cooking ingredients such as pulses, grains, nuts, dried fruits and spices, provide the basis for really good value meals.

Put this together with organic beer and wine, daily fresh organic bread and an ever-expanding deli counter and you have a winning combination. They also have a growing selection of environmentally friendly baby products, cosmetics and household goods made from natural ingredients.

Unicorn also caters to people seeking dairy free, gluten free and sugar free products. The shop is full of information about trade and food issues, and aims to help customers make informed shopping choices.

So does it work financially? Well it has grown from a turnover of £3,500 to £3.5 million, from 4 members to 50. The worker/members donate a steady 5% of wage costs to local and international projects relating to its Principles of Purpose and also contribute to a tree planting scheme with a carbon tax in an attempt to offset some of the environmental impact of running the business.

There may not be room for a Unicorn on every high street but surely there is a need for one in every small town and every suburb?  Unicorn encourages others to have ago themselves with a self-help guide to opening your own new co-op store on their website at: www.unicorn-grocery.co.uk. If your town needs better food and a healthier diet why not have a go and Grow a Grocery?

Hugo Chavez- 21st Century Socialism and Co-operatives

So farewell Commandante Chavez!  I was very sad to hear of the death of Hugo Chavez, taken from us whilst there was still so much work to be done cementing the Bolivarian Revolution. A great leader winning the hearts of the people and expanding the realm of the possible in Latin America. He had huge charisma and a ready wit which he often used to wind up the “the Empire”!

His attitude to the United States hardened, and who could blame him, after the attempted coup of 2002 which had US fingerprints all over it. The good news is that it will be extremely difficult to undo the opening up of citizen power in Venezuela. Having flexed their muscles it is hard to imagine any circumstances in which the people would wish to give it up.

As a co-operator one of the most exciting aspects of the revolution was his commitment to co-operatives. The growth in the number of co-operatives was astonishing in 1998; there were fewer than 800 legally registered co-ops in Venezuela with about 20,000 members. By the middle of 2006 the National Superintendence of Cooperatives (SUNACOOP) had registered over 100,000 coops with over 1.5 million members.

Since then they have continued to grow and some now estimate that there are 200,000 co-ops employing 20% of Venezuelans. There have been heated debates in the co-op movement about top-down versus bottom-up co-ops, if they are truly voluntary and even if some conventional businesses are calling themselves co-ops just to gain tax advantages.

The government have been active promoting the creation of new co-ops by providing cheap credit, preferential purchasing arrangements particularly on government contracts, and technical support. At this rate of growth it is unsurprising that in the academic and technical literature there are reports that a large number of Venezuelan co-operative members have serious weaknesses in administrative and technical skills, as well as in motivation.

It is also true that producer co-operatives are also having great difficulty in competing with their capitalist counterparts to purchase inputs and to find customers. There is a fear that their dependency on state institutions for access to capital and contracts is threatening their sustainability.

It is clear that post Chavez a new wave of co-operative development is needed to consolidate the gains of the revolution. The lack of integration amongst co-operatives needs to be addressed. The key is co-operative principle 6, co-operation amongst co-operatives. This requires an active national co-operative centre to provide advice and support for co-operative enterprise and the creation of secondary co-operatives or what are called federals linking together smaller co-ops to gain the market advantages of larger businesses especially when it comes to trading, either buying crucial inputs or selling their wares to the public.  

I am sure Venezuelan co-operatives can overcome these challenges by coordinating their activities among themselves and by exploiting the special relationships they have with their neighbouring communities.

A good dose of democratic planning and co-ordination could also serve to consolidate their organizational and ethical principles, and to transform them into true socialist enterprises that effectively and efficiently satisfy social needs.

There is no area of the Venezuelan economy in which this is more important than food production and distribution. The government broke the private sector stranglehold on food distribution with Mercal created in 2003 which markets food at low prices to some 15,000 stores about (10per cent of the total) supported by the Venezuelan Agricultural Organisation (of 2004) which owns a series of processing subsidiaries which supply Mercal. In 2010, after months of negotiations the Government purchased the supermarket chain, “Supermercados Exito”, the French group, “Casino”, and the Colombian “Almacenes Exito” then in November, they also bought the CATIVEN Supermarket Chain (also owned by the Casino Group).

With these acquisitions, they became the owner of 35 stores - renamed Abastos Bicentenarios and six stores of Gran Bicentenario (formerly Hipermercado Exito), eight distribution centres and a fleet of trucks. This new business controlled by the Socialist Market Corporation (COMERSO) gives the State a presence in the retail sector but certainly not a dominant one. Makro for example have 35 Hypermarkets compared with Bicentarios six.

These could form the backbone of a consumer co-operative retail sector that could seriously challenge the private sector. What is more our friends at Mondragon know how to co-operatise a retailer having done so with the Eroski chain across Spain.

Challenging the crony capitalist oligarchy in Venezuela is a huge challenge and Hugo Chavez deserves great credit for the progress that has been made but to consolidate these gains with out the huge charisma of an individual we need the collective engagement of a people and co-operative structures can make that possible.

.

Bad Poetry Day

I read the christmas annual from the Black Country Bugle and thought the poetry in here is poor I should have ago. So I did here is my first attempt:

Wolverhampton – All Change

Nick Matthews

(With apologies to John Betjeman)

Past new student flats, so spick and span,

Against an unencumbered sky,

The Old Great Western Railway ran

When someone different was I.

Springfield bitter now does not flow

From Butlers Brewery tap

Drinkers looking to get the glow,

Use elsewhere ale to fill the gap.

St Georges where the Matin’s bell,

No longer rings. Drowned out by

Supermarket tills. A shopping hell?

Or heaven with plenty for you to buy.

Mander tower marks the spot

Where inks and paint did flow

Today in the mall get your caffeine shot

To recover from another retail blow.

Then the Molineux, the pleasure ground,

You stood behind the goal up at the back

Feeling the crowds sway and sound

Come on you Wolves the old gold and black.

The work benches are all empty now

At Chubbs great red brick pile

Ask and they will tell you how

They kept us locked and safe in style.

The only thing that does not change

St Peter’s proud upon the hill

The tiles spick and flowers arranged

A place loved and tended still.

Wolverhampton all change!

Comes the cry from an unencumbered sky,

Over old Great Western rails I did range,

Now homeward bound am I.

If you are familiar with John  Betjeman you will recognize his poem a Distant View of a Provincial Town which I think is based on a trip to Swindon! Anyway its not brill but the Bugle liked it!

Time to End Fairtrade Fortnight

Every year I wish that fair trade fortnight could be the last because we have made all trade fair! Capitalism is very good at through the abstraction of the market at hiding the unequal human relationships that mark out the interchange of goods and services between us.

So fair trade is a small step in making those relationships real. This year we have been asked by the Fair Trade foundation to “go further for fair trade”. And there is one co-operative that seems to be doing just that.

For the last thirty years Paul Birch has been better known as a record producer and MD of a record label. In that time he has released over a thousand albums by artists as diverse as Stone Roses to UFO, the Scorpions to Sister Sledge. He struck the fair-trade bug when he started developing a line in merchandising for many of the bands he promoted.

Paul says that it took a while to tick all the ethical boxes finding your way through the process of getting the T-shirts with fair trade and organic accreditation was a steep learning curve. Having built up a supply chain and created relationships with the producers it seemed like a good idea to put together all the marketing skills they had developed in thirty years in the music business into selling fair trade products.

In thinking about this the idea of a co-operative structure linking producers and consumers became the obvious vehicle. Today  Revolver Co-operative Limited is the trading co-operative company behind the Revolver World brand. Organised as an Industrial and Provident society it is a bona fide co-operative, formed with the help of The Co-operative Group (through the Co-operative Hub) and Co-operatives UK.
What is unusual about it however is that they incorporate the whole supply chain in the ownership of the business. As a multistakeholder community co-operative membership open to all, producer co-operatives in the developing world, retailers such as the Co-op’s in which it sells the products and the final customers.
What’s more 25% of the profit is invested back into the producers' communities. It prefers to trade with co-operatives because it says this strengthens the relationships between consumers and producers. In a very short time as well as a great range of fair trade organic apparel it now has a great range of coffees.
I have to make an admission at this point. Despite the fact that I come from a family of tea bellies.  I hate tea. I just can’t drink it. I am a total coffee head. And one of the most depressing features of modern life is the fact despite the fact that coffee and coffee shops have become ubiquitous most of what they sell is not very good!
So I drink most of my coffee at home and I like to try out coffees from around the world and have become a bit of a coffee snob. So to discover Revolvers coffee range was a delight. Their African coffee is grown by the co-operatives Kagera Coffee Union in Tanzania and Gumutindo Coffee Co-Operative in Uganda. This superb blend combines Tanzanian Peaberry, grown on the upper slopes of Mount Kilimanjaro, and Ugandan High-grown Northern Bugisu, grown under shade not far from the Ugandan/Kenyan border.
Their Columbian coffee is a single-estate blend grown by the Riseralda Co-Operative established in 1959 of Fairtrade certified Arabica beans and the their Costa Rica coffee comes from members of the CoopeDota coffee growers co-operative who produce a terrific AA Grade Tarrazú arabica coffee.

The most recent venture however is probably of most interest to Morning Star readers. Paul says, “Cuban coffee is one of the most underrated coffees we've come across recently. Not only is it delicious, its quality rivals that of the established 'standard' coffees like Colombia. Not a word of a lie, when we received our first cupping samples in the office it's all we drank for two weeks straight!”

There is no doubt that their latest product is a bit special: exclusively imported Cuba Altura coffee sourced from one of the oldest grower co-operatives in Cuba.

Paul adds that, “at the moment given the somewhat 'unique' commercial situation in Cuba its not possible to get Fairtrade accreditation but nonetheless we're delighted to have this co-operatively produced arabica in both whole bean and roast & ground. Try it may well become one of your favourites - it makes great espressos.”

 Given that fairness is the whole basis of the Cuban economy you can do your bit and get great coffee and support the Cuban revolution by breaking the embargo everyday!

Currently a 227 gram pack is selling for just £3.75 and a pack of six for £22.50 or a kilo of beans for just £15.99. If you don’t have a co-op shop near you to obtain Revolver World coffee head to the website at www.revolverworld.com