ourEconomy: Opinion

Labour should focus on building a new co-operative economy from the ground up

Forget Tony Blair – if Labour want to regain the trust of the working class the party should look to Tom Mann.

Iwan Doherty
Iwan Doherty
23 December 2019
image: Daniel Leal-Olivas/PA Wire/PA Images

Labour’s electoral defeat has set off a new race for leader, and a fervent debate about how the party should regain electoral success. But if the next leader wants to build long standing success for the Labour movement, they should look beyond Parliament.

Forget Tony Blair: if Labour want to build long-term success for socialism while regaining the trust of the working class the party should look to Tom Mann ­­– a trade unionist from the party’s birth who believed that unions and co-operatives, not parliamentary seats, were the path to a socialist economy. Going forward, the party should seek to nurture a movement based around its unions, a new co-operative economy, and fighting hyper-individualism with community action. Not only will this do more to advance our economy towards socialism than any social democrat could achieve in five years, it could also re-instil the love of the labour movement and socialism among the working class.

The UK’s trade union movement has been in terminal decline since the 1980s, and our co-operative economy – businesses owned and managed by workers and customers – lags behind other developed nations. These are factors that should greatly concern the labour movement, and yet they don’t. Corbyn may have moved the party to the left, but the project remained obsessed with statecraft.

Labour party members often point to the higher levels of public spending in other successful nations, but what they often miss is how unionised their workforces are and the extent to which co-operatives play an important role in their economy.

The Labour movement used to be based around unions that provided higher wages, and coops that provided cheaper goods and services. These tangible economic benefits attracted low-income people to join. But the modern labour movement is based around the state its potential to do good – a view that is not often shared across the country. Equally, beyond nationalising key industries, this approach does not bring us much closer to a worker owned economy. But a more local approach can.

Labour’s new strategy should therefore be based around promoting the co-operative economy and the most effective method for this is spreading municipal socialism, as we’ve seen happen in Preston, via community wealth building. Other regions are now copying the ‘Preston Model’, with the most exciting new project being led by Jamie Driscoll, Mayor of the North East.

The model works by identifying ‘anchor institutions’ – large institutions like schools and hospitals which lots of money flow through – and getting these institutions to change their suppliers to local co-operatives and other local small businesses. This creates a new economy that keeps money local and in the hands of the people who will spend it locally too.

Preston’s experiment has been an outstanding success. The struggling northern town turned “most improved city in the UK” has shown dramatic growth since the model has been enacted. It is estimated that the Preston model has added £200 million to the city’s economy while significantly reducing unemployment. It has provided an effective antidote to the suffering of austerity and a route towards a new socialist path, based around co-operatives.

Evidence shows that co-operatives are more efficient than corporations, and could hold the key to solving the country’s productivity problem. Think tanks believe co-operatively owned stores can help save our dying highstreets due to their resilience. Community businesses have a survival rate of 94% or more. Co-operative ownership may also be the key to saving the local pubs, with evidence showing that this model of ownership keeps three times more money circling locally. Co-ops could also help revitalise de-industrialised communities and restore community ownership and control to areas that have felt the brunt of neoliberalism.

It is no coincidence that the Emilia Romagna of Italy, where co-operative enterprises generate close to 40% of GDP, has the lowest socio-economic inequality of any region in Europe. Other regions such as the Basque country, New Zealand and Sweden all have large co-operative sectors. The co-op is fast proving itself as the superior form of enterprise.

Co-operatives also remain highly resistant to economic downturns, provide greater distributive justice for their employees, and avoid less tax. Importantly for socialists, they move us towards an economy run by workers, for workers. The path to socialism is to build one co-operative after another.

Among those who have entered Labour’s leadership race so far, Lisa Nandy or Rebecca Long Bailey are the candidates most likely to foster these ideas. The former was involved in the setup of the Preston Model and is a fierce defender of more municipal power for towns. Long Bailey is also a strong supporter of community wealth building and her economic positions on alternative models of ownership are well documented.

Labour need a modification in strategy, not only to build a stronger electoral power base but also to be more effective in delivering economic change. Building new socialist economies at the municipal level should be a key priority of the Labour Party post-Corbyn.

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