The Co-operative Group and the commons

The Co-operative Group is already a force for good in the UK and it could become the basis for a much more equitable and dynamic economy. But a combination of mismanagement and scandal has raised pressing questions about its structure. Dan Hind sets out some proposals for reform.

Dan Hind
3 December 2013

If there is a surplus of good, it resides in the people. - Niccolò Machiavelli

The 7.9 million members of the Co-operative Group collectively own it. It is a shared resource run, in theory if not always in practice, for the benefit of these many member-owners. In other words, we can usefully think of it as a particular kind of common pool resource (CPR), much like a forest or fishery.

A substantial body of empirical research describes how natural CPRs can resist both internal and external threats and remain viable over the long-term. Elinor Ostrom, the Nobel Prize-winning anthropologist, offers a summary of what’s needed in her book, Governing the Commons. Ostrom shows that CPRs are more likely to prosper when a defined group, with clear rights and responsibilities, takes responsibility for them. Furthermore, those who collectively own a resource need to have effective means to shape the rules that affect them. If they appoint agents to manage a shared resource, they need to ensure that these agents are accountable to them. And the owners-in-common need to maintain their autonomy with relation to external authorities. The state, for example, must be prevented from imposing ‘solutions’ from above.

We can immediately see that the Co-operative Group’s arrangements fall some way short of the ideal Ostrom describes. Most members don’t know where the boundaries of the Group lie, or what their rights and responsibilities are. They don’t understand what they own. Not surprisingly, they play little or no part in shaping the rules that affect them or in holding their agents accountable. Only 222,221 members voted in elections to the governing board of the Group – a turnout of less than 3%.

The owners of immediately tangible resources like forests and fisheries do not usually need an elaborate communications system in order to know whether they are flourishing or not. If too many trees are being felled or too many fish are being caught, those who share ownership will soon notice. By comparison the Co-op Group is massively more complex and inaccessible to its members’ unmediated experience. The group comprises a huge number of abstract entities (firms) and relations (contracts). It also owns farms, shops, housing, and much else besides. It operates on a national level and it has a political as well as economic and social character. There are also strong incentives for people who understand this complex entity to keep their knowledge to themselves.

Institutions are only as accountable to those who nominally own them if they have the necessary information to maintain effective oversight and control. Machiavelli once wrote that ‘it is necessary for anyone who anyone who organizes a republic and establishes laws in it must take for granted that all men are evil and will always act according to the wickedness of their nature whenever they have the opportunity’. A co-operative is no different from a republic in this respect. In order to save the Group members will have to take on a range of new powers and responsibilities, backed by the necessary resources.

It is the absence of vibrant and plural communications within the Co-operative Group  that is perhaps the most pressing problem its members face. The member-owners have no independent means to monitor those who manage it on their behalf, and no independent means to determine how best to safeguard and enhance their interests in the future. The vast majority have been deprived of reliable and relevant information and are now shocked to learn that the Group’s bank has come close to collapse. Members still have few means to understand the crisis the Group faces. Many probably think, like Ian Hislop, that the Reverend Flowers is responsible for breaking the Co-operative Bank. This is a caricature of what happened. But without reliable information, vague impressions given the appearance of substance by tabloid revelations provide most of us with what passes for an explanation.

The Group has run into trouble because of a breakdown of democratic oversight and control. Yet this breakdown is becoming a pretext for further weakening the democratic powers of the membership. According to the Guardian, an internal review by Sir Christopher Kelly is expected recommend that scrapping of all democratically elected positions in the group. This is to be resisted at all costs. Instead it is vital that the Group begins to restore the links between formal ownership, effective oversight and ultimate control. More democracy and different kinds of democratic power are needed.

At the moment members have no means to communicate with one another. The Group could remedy this directly by using some of its marketing budgets to support the creation of a network of local print, online and broadcast media. The retail arm of the Group spends considerable sums on colour printed offers that are distributed to households around stores. These advertising offers could be folded into newspapers printed by the Group. These newspapers would carry stories and features created by local media groups. If necessary more money could be diverted from the current media spend – or from the Co-operative Party - to support co-operative media. The newspapers would be free to customers and would also be available commercially, wherever possible. In other words the Co-op Group would act as an anchor-advertiser for news co-ops that would be owned separately by Co-op members in particular localities.

Let me be clear. I do not propose that the Co-op waste money on bureaucratic puff rags. Each local media group would devise a constitution such that those who rely on it enjoy considerable power to direct content and hold editors accountable. The groups would use a mixture of election and selection by lot to appoint editors and other key staff. There would be real commercial pressures on these groups. If they were able to appeal to audiences there is no reason why they shouldn’t grow their revenues.

The retail arm might be present on the governing boards, but it would not dominate them. Instead, all members of the Co-op Group would have some share of voice in debates about editorial direction. They could club together to highlight issues that concerned them, build coalitions and run public campaigns. Local and national politics would be enlivened by a culture of critical engagement. People who are normally talked about could speak for themselves. These would be media in which the voices of the working majority predominated, for no other reason than that their operations would reflect the interests of their audiences. Participation would be uneven, of course. Some will busy themselves in all manner of activism. Other will just be glad to have a feisty and engaged local newspaper again. But all members would have the opportunity to engage with their media as owners – a privilege currently enjoyed by a handful of aptly named barons and moguls.

Printed newspapers and websites would carry local civic and human-interest news, information about the Group, and articles from a national network of contributors organized along co-operative lines. The media groups would commission investigations into the conduct of the Co-operative Group and into other matters of public interest. Co-operative radio could provide opportunities for public opinion to clarify itself in analysis and argument. These publications would provide a venue in which proposed reforms of the Group could be thoroughly debated.

These will be well funded news organizations with the power to challenge wrong-doing and praise virtue, wherever they find them. They will be attuned to the needs of specific media markets, and local in the true sense. That is, they will be close to the people who rely on them, and able to set their experiences in a context that is variously hyperlocal, regional, national and global.

Privately owned local newspapers are closing and shedding reporters in an effort to shore up unreal profit margins against a background of digital disruption. Dave Boyle, perhaps the co-operative movement’s most imaginative and persuasive democratic reformer, argues that co-operative news organizations would help restore plural coverage in local media markets.

I propose using a fraction of Group marketing and advertising budgets to provide seed funding for such co-operative media groups. These would not only reinvigorate local reporting but also ensure that Co-op members understand the organization they collectively own. They would thus enable members to shape the Group’s future and ensure that mistakes are discovered and remedied quickly. Surveillance by active and independent editors backed by engaged and attentive audiences is not pleasant. Managers that can avoid it will do so. But such surveillance is necessary if the Group is to prosper.

As I say, at the start money spent on printing and distributing full colour marketing material could be used to produce black and white newspapers. Over time money spent advertising in third party media could be diverted to support co-operative media groups. At the moment ‘the Co-operative Group family of businesses advertise in a wide range of national print, broadcast and online publications’. A spokesman for the Group says that it ‘must avoid letting the editorial policy or editorial decisions of individual newspapers determine commercial relationships’. But it is hard to make even a strictly commercial case for giving so much of its marketing budget to media that do not embody co-operative principles. The Group is more likely to flourish economically if it supports media that take co-operation seriously, and that improve the performance of the group by strengthening democratic governance over it. And many members will be heartily sick of the sexism, racism and class hatred found in much of the mainstream. They will welcome, and want to support, an alternative.

Besides, the co-operative movement needs independent and plural media if it is to modernise and remain commercially viable. A retailer owned by informed and communicative customers has enormous structural advantages over its capitalist competitors. Jaron Lanier has described Walmart’s rise as an early example of a company using information technology to leverage its knowledge of suppliers and customers into a commanding position in the marketplace. Imagine what an organization owned – really owned because thoroughly understood – by its customers could achieve. By pooling information about their preferences in networks they collectively own, members could begin to fight back against the enclosure of subjectivity being established by monsters like Amazon, Facebook, Apple and the rest. A customer base of 7.9 million could use its power to treat suppliers and employees with respect, support an expansion of the co-operative and employee-owned sector, and deploy its economic power to create new public good. If the digital future is to be tolerable for human beings it will be because co-operative principles of common ownership and democratic control have prevailed. There is a great deal at stake.

Over time I am sure some members will want to revise the Group’s overall structure. At the moment it gives substantial resources to the Co-operative Party, and hence to the Labour Party. The 2012 annual report notes that the Group gave £563,000 to the Co-operative Party, £242,000 to Co-operative Party Councils, £50,000 to the Shadow Chancellor’s office, and another £50,050 on various bits and pieces. The Group also paid for a number of MPs to go on ‘study tours about the global co-operative sector’. In total the Group’s political activities cost somewhat more than £900,000 a year, or about eleven pence per member.

Until now there has been little debate about the merits of these arrangements. Dave Boyle has pointed out that ‘the overwhelming majority’ are ‘blissfully unaware that the Co-operative Party even exists, or that it – and thus the Labour Party – are funded via profits from their purchases in the shops’. They will have been even more surprised to learn that the Group has been funding Ed Balls’ office. In 2006 Balls told an audience of bankers that the UK government had a ‘specific and clear interest’ in safeguarding ‘the light touch and proportionate regulatory regime that has made London a magnet for international business’. His approach to finance sector regulation has not worked out well for most co-operative members.

Boyle proposes that Group hand control over political expenditure to the members themselves. Democratic control would certainly give the Co-operative movement an opportunity to form new coalitions and alliances. For example, the campaign against corporate tax avoidance has made impressive gains in recent years. Given the natural affinity between campaigns to keep the economy onshore and the co-operative movement, members might well want to give groups like UK Uncut money that would otherwise go to pay for ‘study tours about the global co-operative sector’. At any event, by ending the formal link with Labour the members would be in a stronger position to support MPs who promote the co-operative agenda and make life more difficult for those, from all parties, who sell themselves to corporate power.

Boyle made his proposal to democratise the Party in an article in the Guardian that will have been read by only a tiny handful of co-operative members. After a dismissive response from Gareth Thomas, a Labour MP who is also the Co-operative Party chair, the Group sailed on regardless. Boyle had no means to reach the many millions of members he wanted to persuade. The Group as a property held in common has been hidden away from its nominal owners by their agents.

Perhaps the electoral pact with Labour makes sense. Perhaps it doesn’t. Perhaps the constitution of the group needs to change. Perhaps the way customer-members interact with the Group can be revised to take advantage of modern technology. But all this is up to the members to decide, step by step, in the light of an accessible body of inquiry and debate. However you see mutualism developing, the first stage is the creation of an information system for the Group that is accountable to members and capable of defying everyone else. Only in this way will the members be able to ensure that their agents serve their interests.

Independent media will create spaces where awkward questions will be asked, about the past conduct of the Group, about the link with Labour, about local politics, and so on. But the alternative is worse. If the Group does not make its members active partners in setting policy and regulating conduct, those outside the Group, in government and the media, will take the lead in determining what happens to the Group.

Remember Ostrom’s warning. If collectively owned properties are to survive then their owners must be free to make their own rules. Whether well-meaning or not, the imposition of change from outside would spell disaster. Ursula Lidbetter, the current chair of the Group has called for a ‘root and branch’ review. The danger is that the branches will continue to sway together in the winds of the current fashion for expert administration. But there is an opportunity to reconnect the roots and the branches, in the first instance through accountable and dynamic media.

By the time Sir Christopher Kelly publishes his findings in May of next year the Group could be in a position to present his report to the nearly eight million people who own the Group through media that they also own. They can then use these media as venues to discuss what to do next. If the member-owners understand what is at stake, and what is possible, they will act together to safeguard the Group. If they remain in the dark the danger will only grow.

To paraphrase that famous writer of nuisance letters, Machiavelli, if there is any surplus of good it resides in member-owners of the Co-operartive Group. It is time for those who currently run the Group to give those member-owners the powers and resources they need to understand the Group’s current position, and plot its future course. If that means the wider co-operative movement becomes a major player in the media industry along the way, then so be it.

Had enough of ‘alternative facts’? openDemocracy is different Join the conversation: get our weekly email


We encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.
Audio available Bookmark Check Language Close Comments Download Facebook Link Email Newsletter Newsletter Play Print Share Twitter Youtube Search Instagram WhatsApp yourData