Global challenges and how co-operatives can help

Global challenges and how co-operatives can help

In this article, Cooperative Business NZ CEO Craig Presland sets out the case for more co-operatives throughout the world, including across the UK, to counter unsustainable, inequitable and undemocratic economic models.

In many western countries, including the UK, young people are, for the first time, set to earn less during their lifetime than their parents.

In addition, the basic building blocks of life – from housing to education to transport – are becoming more expensive and yet increasingly inadequate for many, driving de-stabilising levels of indebtedness.

Many countries, and communities of people within them, are being left behind as institutions offering support and collective agency have been lost, and democratic power within respective economies has weakened.

This short video best describes the significantly reduced control – and democratic power – that Britons now have in terms of business ownership and how forming more co-operatives will help regain that control and power.

 

While NZ’s economy has flourished over the past 10 years since the GFC, we are no different in terms of the growing gap between rich and poor, the unaffordability of suitable housing for many, unhealthy levels of indebtedness and foreign ownership of assets.

Overarching this globally, we are operating beyond the planet’s ecological limits and more and more into a deepening environmental crisis. Unsustainable, inequitable and undemocratic – the economic model in many countries appears to be broken.

In the UK, more than half of company equity is now overseas-owned, with only just over 12% owned by individuals. Investor-owned organisations have gained control which are often driven in their quest to drive investor returns over the short term. Many would call this financial greed.

The grand promise from the Thatcher era of a share-owning democracy, and with it broad-based economic power, seems to have crumbled.

Powerful, distant (overseas) shareholders are now presiding over a time when unprecedented levels of wealth created have flowed in their direction. Meanwhile, local employees, local suppliers and local customers have experienced a declining share. Take NZ’s leading four banks for example, all now Australian-owned and returning over $NZ5.0 billion between them annually. How much of this mammoth return is invested back into NZ I wonder?

Ownership matters

Ownership shapes purpose. Creating an economy that addresses the real-world challenges that we face, such as an ageing society or climate change, and produces goods and services designed to meet these challenges, is immeasurably more difficult to achieve if control lies in the hands of powerful shareholding conglomerates whose natural habitat is capital markets and prime objective is to maximize investor returns.

The new economy mission becomes more achievable if the power to determine the direction and strategy of business is in the hands of those with a genuine interest in addressing today’s challenges on a sustainable basis and who live within the communities directly affected.

The co-operative advantage

 

Co‑operatives are at their heart free, open and democratic enterprises, member-owned as opposed to investor-owned, members either being the users of the organization (suppliers of products or services, otherwise customers) or, alternatively, the employees of the organization.

 

Profits are retained by Members and, therefore, are kept locally. Co‑ops are often established to achieve a specific social and/or environmental goal by pooling the resources of a group of people who are motivated towards serving their members and giving back generously to local communities.

Co-operatives also have an eye for future generations which drives their quest for true sustainability and endurance.

From their origins as a form of mutual self-help enterprises in response to the hardships and exploitation of the Industrial Revolution, co‑operatives have applied democratic and collaborative processes to economic organisation. Their ownership structure aims to ensure people – whether staff, suppliers (producers) or consumers – have a genuine, democratic stake in their enterprise and share in the wealth that they create.

By putting genuine control in the hands of workers, suppliers or consumers, and not the providers of capital (investors), along with ensuring equality among members in terms of economic decision-making, co‑operatives embody a different vision of how power should be organised and used in economic activity.

From their emergence in Rochdale, England in 1844, co‑operatives have been based on shared values, driving co‑operation to meet common needs. These values remain central to co‑operatives today: self-help, self-responsibility, democracy, equality, equity and solidarity.

 

The seven foundational principles of the co‑operative movement provide guidelines for practical action to realise these values: (1) voluntary, open ownership; (2) democratic owner control; (3) owner economic participation; (4) autonomy and independence; (5) education, training and information; (6) co-operation among co‑operatives; and (7) concern for the community.

Conclusions

While NZ operates one of the most co-operative economies in the world with almost one-fifth of our GDP generated by co-ops, mutuals and societies (this figure is under 1.5% in the UK), and almost one in three Kiwis being a member of a co-op, mutual or society (one in six globally), we can be doing better – for example how we bank.

The Co-operative Bank, SBS Bank and Co-op Money NZ (made up of 10 credit unions that have formed together since 2014), are all 100% locally owned with profits returned to members each year.

Organisations, including those with investments in foreign lands, need to place true sustainability (economic, environmental and social) at the forefront of their strategies, policies and decision-making. There must be less emphasis on maximizing short term financial returns (often driven by greed), and more on fair and equitable returns over the longer term with an eye towards investing significantly in local communities, future generations and our ecological environment.

Here the UN’s 17 Sustainable Development Goals, each to be met by 2030, provide us with an excellent blueprint.

We need more co-operatives in the world, including in the UK, whereby financial benefits are provided solely to members on the basis of the amount of product supplied, or amount of business transacted, in a given 12-month period. In doing so there will be fair and sustainable returns, distributed equitably, and retained locally by members who are in control of their own destiny ie. democratic owner control (Rochdale principle No. 2).

Craig Presland

CEO – Cooperative Business NZ

26th Sept 2018