People have been sleepwalked into having their pensions put into play on the City Casino: Can some pensions instead finance democratic enterprises?

“participation will save the world”  :  Paul Seeger

An if so story.

Eleven million people are being enrolled into NEST pension schemes. These will largely be based on investment into the financial markets, shares and other speculative instruments, in other words the City.  The City has many casino like characteristics, it is rigged to favour the operators and very big players.  The traders will skim off small takes from the myriad trades often integral to city operations , now even algorithms trading in nano seconds. Much of this activity is money trading money and its derivatives which spin in a realm of countless trades  detached from the real economy; unless a profit can be gained.  There are also  finance and  pension managers taking their cuts with poorly revealed running fees.  Pension funds , though significant players on the financial and stock markets,  hold a minority stake, and personal share holders with an even smaller stake.(see Andy Cumbers on blog roll)   It is an imperfect and  opaque market especially for the smaller stake holders and is dominated by oligarchical rentier interests such as corporate holdings, hedge funds and sovereignty funds.  There is no democratic accountability to the pensioner, what ever residual power there is, will be in the hands of the pension fund managers. But the government has built incentives to draw people in.; in effect a subsidy for the City .  The worker can opt out just as trade unionists can opt out of paying a tiny political levy, about 9% do. The political  implications of incorporating those with modest means is considerable and often not in the overall social  or  individual interest . This is part of the political engineering stated off with the fire selling of council housing, which aimed to integrate  many people as petty property owners,  subordinated, as mortgage payers,  and then turned into petty rentiers and small punters on the corporate and financial market.  The Casino will draw any and all players into to market to keep its roulette wheel spinning and milk for profit.

Barbera Castle spent her last years warning of the dangers of basing the main body of pensions on the unstable  financial and stock markets. As in the casino, punters sometimes win, but the casino wins in the end, so drawing and tempting  people,  into this  subtly politically biased financial field is questionable.   The speculative stock and financial markets have an insatiable appetite to attract money into play including sometimes  from dubious sources.   It will be the City, the financial, commodity and stock markets, who will tend to   drive   the suppression of the workers wages or  redundancies.  To this can be added  the careless depletion of ecology and environment in the restless quest for profit.  Capital in our neo-con liberal times is underwritten by privileging of property rights, a principle underlying capitalism.  Capital as a factor of production will tend to exploit  other factors of production, be it labour  and land, ( the environment).  It seeks to enclose what is common and capture and retain benefits while when ever possible dumping problems on us all,  loading problems on the public realm. Examples are bank bail outs, clean ups after an environmental disaster or welfare for those ruined by unemployment when corporations close down industries and relocate in low wage areas. Capitalism, especially where  dominated by speculation and rents, the form prevailing in the UK and USA, will seek to privatize the common weal in all its forms, state, municipal, or associative enterprises (de-mutualization).  Putting investments and pensions into this nexus of economic relationships helps the perpetuation of these processes. An alternative will need pioneers investments while it is developed into viability.

There is an absence  of  viable  alternatives for investments/pensions that also work  for the common benefit.  This would need new forms of mutuals  that act as such. The present orthodoxy is to assume that it is in the interest of the small investor to parody what richer investors do. The so-called ethical investments in PLCS on the stock exchange is an  minimal “ethical” strategy,  screening out the worst at best. Investments in the stock exchange are open so screening is partial at best.   A  small investor in the financial markets is vulnerable to distress selling  in a downturn, where as wealthy investor is able to be able to ride out fluctuations and may even benefit in  with the ability of buying into a depressed market and bottom feed.  Can there be other options for investments or pensions which at least can be partly invested to underwrite a democratic economy?

An article by Joe Guinan and Thomas Hanna points to alternative possibilities of what can be done with pension funds, See link on the blog roll attached to this blog see left of screen  Democratizing Capital.  Joe Guinan has also written articles on pension Socialism. See article part 1, and 2.  But before a significant and vital economy based on economic democracy some features that now exist weakly in the UK have to be developed and brought into stronger mutually supporting association.  This will mean clear boundary conditions that upholds competent administration conducive to social and ecological ends, setting a code of practice which is compatible with  delivering the goods and viable within the prevailing current economic conditions.  These characteristics are vital if  democratic enterprises are to become significant,  and begin to break down the near  economic monoculture  dominated by corporate financial capitalism.  In so doing new  socially inclusive solutions can be created, making new commons.

“Commons” an ancient concept and practice can be understood in various ways, as universal rights, or  also can refer to “commonwealth” , that is assets, financial or land and property held in common.  It also implies a more equitable distribution of wealth through the community.  In a modern context this requires a democratic process of governance, setting the norms and needs a culture of engaged membership / citizenship as active  stewardship.  Commons need to be valued and cared for.  These as tangible, can range from being common public spaces, allotments, roads and parks,  often be held  by municipalities or by mutual association. Public utilities and serves such as the NHS are also a type of Commons, and can also be  in democratic trust. Mutual, cooperative and community companies, as autonomous enterprises, have at least some common element to them be they worker, housing, land trust, consumer coop or community company. How can commons in democratic form be regenerated and made to work for us?

Can  investments or pensions as mutual funds  underwrite an emergent economic democracy both in a mutual public sector and as autonomous cooperative and mutual enterprises. 

Mutuals and cooperatives have  at least a nominal democratic base to their governance, all to often moribund.  There needs to be an awakening of their democratic quality by engaging members, possibly through modern forms of communication.  This can  potential be a means of democratizing the economy both in the public and private sector.  Democratic finance enterprises will usually take a mutual form such as IPSs( Industrial and Provident Societies), credit unions , building societies or eventually perhaps a  mutual bank. These forms are relatively simple and can be made democratic and transparent.  New forms of  basic banking and investment vehicles can emerge dedicated to serve the community, as the citizen, regional businesses and cooperatives rooted in community. Cooperatives and mutuals can be a variety of types, worker, tenant, consumer, community, community energy, and land trusts.  For this to happen the democratization and socialization of capital through mutual association of savings is a necessary stage. Grant derived revolting funds can also be added.  Financial cooperatives  act as secondary cooperatives linking primary cooperatives in a common interest relationship.  These  create relationships of mutual support but  require  some commitment for investments from primary cooperatives or their members.  A supporting public can added to this with some provisos.   Strategic and systemic mutual aid among enterprises breaks down any tendency for organizational egotism.    Mutual funds can  be of a type that make loans, or as venture capital.   If there are developments of a range of mutual funds  this might eventually allow  the underwriting of replacements to PFIs (Private Finance Incentives)  with Democratic Public Mutual Trusts.(DPMT) . The public can then have a stake-holding with elected representation and some what is paid out from the public purse goes back to the citizen.

PFIs compromise good governance and violates the principal of separation of powers,  bring commercial interests into the delivery of social goods.  This stimulates corporate interest to aggressively lobby at the international level and then at the national, pressing the legislative and executive,  compromising even more the weak democracy we have.  This is turning us into debt serfs of corporate and financial interests as  rent seekers, domestic and foreign. A partnership of stakeholders as workers and the public  is  more appropriate  for the delivery of social goods and basic utilities.  At least some the funding of public services is taken off the governments books but remains in a mutual relationship with the public,  bringing a symmetry of benefits in all stakeholder groups share benefits equitably though democratic processes.  In economic terms, no factor of production, labour, capital or land (ownership) is privileged  but act in mutual relationship.   How can investment funds under democratic governance create other outcomes more conducive to more equitable outcomes?

Self sufficiency and autonomy

Grant derived revolving funds can also be a boost but grant dependence can be detrimental and distort the drive to viable and robust enterprises.   They can undermine democracy and become bureaucratic.  The grant dispensing agencies will often reward the wrong projects and favour solutions that do not challenge the prevailing orthodoxy.  The pay master will guide the agenda.  The projects with several investor stakeholders, be they citizen, worker,  client or patient  will tend to point to what people value.  Sometimes they might be mistaken but without any risk no new solutions can be developed.   People will tend to be more careful of enterprises they investment in with cash or effort.    Grant funded projects are a necessity when markets fail or in areas of vital services.  Public sector mutuals will be usually dependent on the public purse as the only customer.   Autonomous mutuals or cooperative enterprise will need to survive in the open market  so will need to break even and make modest surpluses.  Benefits or dividends will need distributing  fairly to the stakeholders, be they worker, customer and investor on a ” symmetry of benefits” or “triple bottom line”  basis. A pool of mutual funds as democratic finance is only a component towards building an economic democracy,  an other important factors are the people who want and are able to pioneer viable democratic enterprises.

How can a new generation of democratic enterprises be incubated and brought to viability? Building a Mondragon Effect

The Mondragon corporation, a federation of co-operatives, is a federation of primary co-operatives linked together through secondary cooperatives and overseen by an elected council which sets norms and helps coordinate the federative relationship.  At the core of the federation is the Bank Caja Laboral,  the Mondragon University and the social council.  The University has courses on cooperative administration, researches new products and services. The Caja Laboral helps underwrite – enterprises “spun out” from within  the federative relationship.  The development of new cooperatives comes out of a relationship of mutual finance,  cooperative education and research.  The corporation also holds rights to patents. This complex is to a considerable degree  self financing. There is a commitment by each cooperative to contribute to the upkeep of this mutually supporting relationship. Each member is required to build up an investment stake in the Corporation which is withdrawn on  retirement.  Mondragon applies a wage solidarity policy and the maximum salary differential is 9:1. Mondragon Corporation is not without its problems however it seems an evolved model which has grown within the particularity of Basque regionalism and its  social catholic church.  The Corporation is not a perfection but has developed  practices that perhaps can at least in part be copied in other circumstances.  This seems to be happening in the USA with the tie up with the Mondragon Coops and the United Steel Workers Union who have jointly brought out the Union Cooperative model.  In Cleveland Ohio the Democracy Collaborative is helping develop the Evergreen Coops, also inspired by Mondragon.  They have so far launched three coops built up around anchor institutions such as hospitals and universities. Other enterprises are in formation.

In the UK this model of cooperative formation seems to be largely absent, though the Midlands Cooperative Society seem to have been able from their own resources to spin out Cooperative Energy which is shaping up well.  There seems to be in a loose way some ingredients  that can potentially be brought together to work as an incubator platform underwritten by mutual socialized mutual investments. This process might be rationalized and is probably partly in place.  A dedicated  bank would be a great help.

Creating Democratic Finance for a social and productive purpose

The aim of socializing finance has had a set back with the Cooperative Bank falling into the control of the vulture funds. The Cooperative Bank  was a creature of the large consumer corporate cooperatives and the Cooperative Party which it  served more or less as an ordinary bank with some ethical screening of its investments, their democratic quality was poor and inadequate with a failure of proper surveillance and transparency.   It remains to be seen if anything cooperative can be recovered from the ship wreck.  In the long run the Cooperative Bank will need  recovering or instead  there needs to be a construction of  a new Cooperative Bank.  Save our Bank launched by the Ethical Consumer are working on this and it is hoped that a there will be a constructive outcome.   Other options need looking at and developed. The Unity Trust Bank may be another possibility it seems to be a bank for unions, charities and credit unions.  The Cooperative Bank is putting its 27% share in the Unity Trust Bank up for sale.   An other possibility  are the credit unions with the recent change of law, which gives limited of scope for the credit unions extend beyond personal accounts  Some of the larger Credit Unions are  now able in a limited way to provide associative  and corporate accounts.    In the long  run  this may allow them to support  small business and cooperative enterprise as  local quasi banks.  This will depend on credit unions critical massing into financial free-standing viability, which then may allow adjustments in the regulations  to give more scope  to act as such.   There has been a shake out of credit unions with some of the less viable needing to be closed and while others have consolidated through amalgamation but  some are well on the way to full viability. The Glasgow Credit Union holds £120m and has enough sufficiency to begin act as a  local quasi bank.   Credit Unions could then begin to act as local financial hubs. This will need a cultural change together with more regulatory freedom.

Mutual investment funds as IPSs  (Industrial and provident Societies ) could also be set up alongside credit unions ,  allowing more scope for investments and a source loans to  local s to cooperatives and also small business.  IPSs can also crafted to act as secondary social investment societies  having share holdings in primary IPSc  community enterprises and the emerging community energy schemes are an examples.  There will be three advantages,    1. investments could be made by subscription perhaps as a mini pension on the level of  union subs, under normal circumstances locked in until retirement or  due notice of withdrawal.  2.  Investments can be put into several projects, spreading risk  3. Pools of available funds can be built up to be  invested when the right projects made a  withdrawable share  bid.  One last instrument of social investments are the community development finance initiatives (CDFI)  , some of these might be compatible with democratic practice , such as Cooperative and Community Finance (see link in blog roll).     Recently  IPS share based enterprises has  been given a  boost,  with the  level allowed  in the value an individual can invest  as withdrawable  shares raised from £20000 to £100000.   Such developments may begin to allow the formation of a  “dedicated financial field for economic democracy”.   What there is fragmented, ambiguous and inadequate and needs bringing to work together with clear principles and objectives.   Any significant advancement towards a more democratic economy will only be possible with stronger links of mutual support among financial mutuals which stimulates popular support.

Growing democratic enterprises for  and with the public

A “financial investment field of economic democray” can be applied in three basic areas :  1.. as autonomous enterprises operating in the market, 2. as subsidized social enterprises  3.   in the public sector.  For simplicity these three categories can be reduced to two 1, the autonomous enterprises and 2. social and or public. enterprises. The term social and public enterprise seems to being claimed by a  spectrum of political opinion.  Publicly funded democratic enterprises may  fulfill needs which the market is unable met.   These types of enterprises can cut across a left right political divide as  solutions that work, allowing  ideological considerations to be given  secondary consideration.   A proviso will be needed for agreed principles and practice which allow  a range of interpretations .    This may  be happening , for it is the solutions that count. A government website invites public workers to turn their departments into worker directed mutual enterprises and may open up opportunities for innovation and wider participation.

Unions are sometime worried that mutuals will become trojan horse to privatization and if so used would undermine trust.  A more constructive option is the opportunity to revitalise and reconstruct the public sector and work in democratic governance representing all stakeholders. We are usually high bound by the concepts and forms of enterprises we have, but there is always scope for creating new forms, developed with inputs by workers , unions might be vehicles for such  options.  For example Democratic Mutual Trusts (DMTs)  might be a partnership with the state or local government as democratic multistakeholder partnerships,  the state, workers  and community.   NHS trusts already have a  weak mutual element  on multi-stakeholder representation.  These would be strengthened and become more embedded in the community   by multi- stakeholder investments.    The public, both as community and worker often feel little sense of ownership of the public sector.   In the long-term PFIs can be replaced by DPMTs.   (See “Out with PFIs; in with Democratic Public Mutual Trusts”  item on this blog Feb 23, 2013, scroll on right hand side)   Instead of paying dividends and rents to the capitalist corporations, often from abroad, charges will be fed to the stakeholder’s investment accounts.  The government  can make this more secure by giving some degree of guarantee.

Worker coop start ups and conversions : In the market

Dedicated pensions and investments in democratic enterprises could also help boost the density of  cooperatives and mutuals  business  in the market.  The boundary between what is public, municipal and market will not always be clearcut as cooperatives are sometimes  helped with support from government or municipality as  in the Emilia Romagna region of Italy. With the Mondragon cooperative the incubatory environment has been  self-generated and grew from relationship formed by strong Basque community identity and a local catholic  church dedicated to  social issues such as education and   creating  jobs in an  economically depressed area.  In both cases there are links with educational and research institutions such as  local collages and universities . A higher density of cooperatives  in  federative structures or a strong network   allow cooperatives to be “spun out” from within the complex. Enterprise planning, product or services development then can be matched up with  dedicated  capital.  A symmetry of benefits relationship  needs  secondary mutuals,  these  can tie all the elements, the community, as citizens, workers, consumers , social housing tenants and so on, with the primary cooperative enterprises that deliver the particular   goods and services.  The “factors of production”  land (environment) , labour, and capital are put into a symbiotic relationship, with none over dominant. Dividends or benefits can be devided  in an appropriate way to each stakeholder group.

New cooperatives as start-ups need a group of people willing to work together with skills and  plans to implement the enterprise.  An important component will be finance. If new cooperatives are developed within an  associational relationship,  the most promising enterprise plans  can be recommended to be financed, from investments administered within the federative relationship.  The basis of such a relationship potently exists in modest form in the UK, such as Cooperative and Community Finance.  This needs scaling up with a commitment from the community of co-operators and their sympathisers within communities to actively save and or place some fraction of their pension funds.  New independent cooperatives   in the UK,  usually to come  about through people getting together to launch their enterprises, these come in various cooperative forms. These will often and seek advice from a cooperative agency ( See Cooperative UK link on blog roll right of screen).   Cooperative projects can be funded through IPSs share bids. Other often small enterprises seem to be funded through ordinary loans from banks or loans from friends and family. The large consumer cooperatives seem to sometimes have  their own resources to spin out innovative enterprises such as the Energy Cooperative.  Such developments from within consumer cooperatives  might be an opportunity to widen sources of investments and is an opportunity to  develop  democratic multi stakeholder relationships with investors, some as pension holders,  workers and citizens of the surrounding community.  For this not to decay into coterie capture,  a vitalized membership culture of engagement needs to be maintained, within a corporate light structure, which is transparent and answerable to membership direction, while at the same time supporting  a culture of enterprise and competent administration.

There are two other avenues for investment that could be promising.  There is a  possibly cloning or franchising succesful models. The Suma whole food cooperative has become an impressive success. As an egalitarian common ownership cooperative it might have a restricted application but  some will  be attracted to the model, and give  an incentive to those  so committed. So can the model be replicated as  autonomous branchs?  Another avenue are the conversions of ordinary Companies into cooperative or co-ownership models.  The Co ownership associations such as Employee Ownership Association seem to have been dawn into  Cooperative UK and some co-ownership seems fall into the cooperative category.

In the 1970s there was some divergence between the common ownership worker cooperatives and the co-ownership companies.  There has been an overlap between these two categories. At the time ICOM ( Industrial Common Ownership Movement )  represented the common ownership Cooperatives these included the new generation of  worker coops that emerged after the 1976 Common ownership Bill and older paternalistic  enterprises such as the Scott-Bader Commonwealth,which is owned by a trust on behalf of the workers.  Separate and independent of these are he John Lewis group, this  also emerged as paternalistic conversion of an ongoing business  into  a  mutual trust their employees workers are refered as partners . It a succesful business but from anecdotal evidence rather paternalistic.  Differential of pay has widened over time from 25;1 to 75:1.  The cleaning staff are not included and went on strike.

The common ownership cooperatives seem to have stabilized as a minute sector, apparently some 500,  in the main small worker coops  employing about 3000 workers.  With the exception of Radical Routes with its particular agenda, they have not developed their own secondary cooperative mechanisms. Nor  has a policy worker investments into their own  complex of cooperatives, at primary or secondary level been adopted.  This would which allow spinning out new cooperatives from within, so a passive attitude has prevailed waiting for a paternalistic mechanism to provide finance or this is done in isolation by particular cooperatives looking for finance independently and in the main as isolates not withstanding superficial commitment to mutual support and association.  An active attitude   of democratic enterprise development  is more likely if a financial stake on the primary and secondary level  is a requirement.   This binds the complex of relationships made by mutual and cooperative enterprises in association, a willingness to invest by all stakeholders will boost this tendency. This creates a relationship of active mutual interest that needs care and development if not to become inert. A culture of membership engagement is more  likely by members having an investment stake, and all being well should prompt the effective use  of capital resources, people, finance and land. There are in place the likes of Cooperative and Community Capital and Rootstock have some weak characteristics of the type of relationships being argued for but investments made into these cooperative funds remind one to the sale of indulgencies;  and are mainly made by outsiders with a bit of spare cash, who are prepared to accepting low returns, so that others can live the pure ecological life on their behalf.  Of course each and every one of these enterprises is an achievement and it is perhaps cheap shots to pock fun writing on a lap top, but a question is, can there be a next step so the democratic forms of enterprise can become more universal?

An other current is co-ownership, some is compatible with worker cooperatives and some convergence may be taking place as the employee ownership people seem to have come in under the Cooperative UK umbrella.  Co-ownership  (employee ownership) was introduced by Robert Oakeshott into the UK. He was an admirer  of the Mondragon Cooperatives but the characteristics of the Mondragon cooperative do not seem to have been incorporated into the employee ownership scene.  ( From limited knowledge!)  Employee ownership seems to range from ESOPs,  ( employee shares schemes), to enterprises owned by mutual trusts with some employee stake holding , with a majority holding held in trust. The Scott Bader chemical company is such a commonwealth.  These are compatible with worker cooperatives and are staff directed enterprises, where with formal management, answerable to the members workers and where the majority of workers are members or have the right to membership, after not too long period of probationary  employment.  Scott Bader used to have a wage solidarity policy with differentials of  a maxim of  5:1.  This characteristic is important as great pay differentials reflect power relationships. The employee ownership enterprises never went onto develop a federative relationship around secondary mutual enterprises, which include financial enterprises. This model is ideal for worker buy outs, or successions were a business owner wants to pass on the enterprise to the staff . A democratic financial field based on mutual funds or quasi-banks ( and eventually dedicated mutual trust bank) can also serve small and medium-sized business rooted in their region.  These can be a source for  to cooperative convention  in due course especially if in relationship with democratic financial enterprises.

Other Coop types

Housing coops and land trusts are potentially a sound sector for democratic multi-stakeholder investment. Municipalities have their budgets tightly controlled by central government and local government in Britain is feeble and well on the way to becoming small committees that dispense contracts to the private sector and fire sell municipal assets to those  wealthy enough to afford to buy.  Half of the sold off council housing stock is now in the hands of buy to let landlords who are subsidized by the housing benefit system. Housing has become very expensive,  both to those that need affordable rented housing or houses  suitable for first time buyers. Land trusts and housing coops have the potential to help solve these problems, on a multi stakeholder basis which rewards each stakeholder, tenant, worker and investor on symmetry of benefits basis.  The housing benefits system can be made to work towards building up socialized housing stock.  There already are incentives for investments for  a social purpose, and housing can be included if it is not already.   There is scope for partnerships  or cooperation with municipalities and as housing needs some at least tacit approval from local authorities,  a desirable if not necessary relationship. Housing associations do not always seem to be run as anything mutual or democratic and seem often to be paternalistic..  Elected tenant  representation once muted is absent in most if not all cases. Rumours have even been heard that some are talking of turning themselves into PLCs, this if it were to happen would no doubt be of great benefit for their managers and the ultimate privatization!  Instead the tenants might be best having proper democratic representation on the governing bodies while affordable social housing is rebuilt at scale.

An economic sector based on democratic governance will usually mean a form of mutual and cooperative enterprise. There  are a range of enterprises, from those that have government as its sole customer, these an extension of the public sector. But  here is no reason why public/mutual hybrids cannot formed as enterprises, not just driven by top down by government appointees, but   include worker and community inputs.  The Replacement of PFIs with Democratic Public Mutual Trusts are obvious candidates. This will mean that instead of the public being “in hoc” to private sector renters  ,  dividends would come back to the multi-stakeholders, worker and community investors themselves.  On the community level there is  scope to develop democratic enterprises also  energy and community owned  commercial property or land in partnership with municipalities.  The assets generated by house building and  rents will usually to be a sound investment  and with government as a back up, will be as sound as any economic endeavour can be. The last category, are free-standing  democratic enterprises in the market and they can be a variety of kinds.  To recap there are a range of potential areas of investment for economic democracy.   The saving of workers and people in their community can be a way of creating  jobs owned by the employees and their community.  Can  this ever be a viable option?

In the UK the mutual, cooperative and co-ownership covers a dispersed range of forms.  The large consumer corporate coops are what  remains of the line of succession coming down from the Rochdale pioneers, but it is questionable if they retain much of the ethos, though there will be a minority who do.  There were hundreds of  consumer cooperative societies, most have amalgamated and there are now thirty or so independent consumer societies. Many have become  bureaucratic, with low membership engagement, captured by a coterie.   This is if anything worst with some of the large building societies, these are nominally democratic enterprises still holding billions in there near 0 interest% deposit accounts. Should these be included as democratic enterprises?  Then there are the credit unions that have emerged from another current of cooperative activity. These with a few exceptions in the Uk have yet to mature into viable mature enterprises  and are governed in a paternalistic way as source of sub prime loans, something for the poor. New less restrictive legislation gives more scope for credit unions to have a chance of becoming viable and more widely useful. The rest of the cooperative and mutual forms will cover, housing, energy, community interest companies, B Corporations, and then the worker cooperative, common ownership and co-ownership cooperatives.   All these differing forms come loosely under the umbrella of Cooperative UK which is the nearest we have in the UK to a social council setting normative standards. Membership in worker cooperatives tends to be much more active than consumer cooperatives where membership is usually passive and even more so with big financial mutuals.  This is a perfect situation for functionary and coterie take over.  These enterprises are of different sorts. The links between them remain too weak to become a coherent sector  of enterprise which are functionally  democratic.

Democratic enterprise are not the  dominant  form of enterprise and are at a high density in rather special areas such as Emilia-Romagna and the Basque country both with strong regional identity and autonomy.  In both cases there were also special social and political conditions that helped, in Emilia-Romagna a left administration and in Mondragon in the Basque country strong  regional identity and a church under the influence of social Catholicism. Even in these areas they are not the dominant form of enterprise. These area have more work stability and even wealth distribution . Cooperatives are not perfections they reflect what people do with them, but will be conducive to social ends if the culture and practice is so orientated and alive.  Sometimes cooperatives have no commitment to a social purpose and act  just  the in self-interest of membership and even  exploit non-member workers.  In England regional identity is weak with no political structure, furthermore local government has been undermined.  Healthy local democracy will enhance the chances of making democratic enterprise viable.  Weak  local government can be partly be mitigated and supplemented  by finding novel income streams from  community enterprises,  in partnership with the various stakeholders.  Devolution is giving freedom for  Wales and Scotland  to set a new agenda more favourable to economic democracy.  The desire to break away from a City dominated  UK is a motive  for Scots to seek independence as evidenced by Jimmy Reid Foundation and the Common-weal Project.

If not now perhaps after the next economic crisis!?

A move towards economic democracy will require a significant raising of awareness that there are other possibilities.  These need to be worked out, planed and tested so that there are realistic expectations which  enough people are prepared to support and work for.  The understanding of cooperatives and mutuals beyond the superficial is confined to a fairly small circle of people,  those in the main said to be leaders , consultants and  best  practitioners.  Those that seek to define what is mutual and cooperative are usually academics and unwittingly a social exclusion is generated, in the 19C these organisations were usually formed by and belong to working class people. The demise of the Cooperative Bank seems to have stimulated an  interesting debate among the connoisseurs but is anyone beyond listening or interested?   Relating to a more extensive public is not an easy task , but necessary if a culture of engaged membership is to emerge, for apathy is death to democracy and meaningful cooperation..  Education has always been fundamental for both  democracy and cooperation.  Efforts need to be made in this respect, the internet and the use of  you-tube might  be a good tool to start with and can be   added to the useful published material that Cooperative UK and Radical Routes have made available. In the end there is no substitute for direct relationships, mediating through the internet is a help but not sufficient, the internet can help inform and bring people together but it also can lead to solipsistic isolation.  Cooperation implies relating to others and is a challenge that people need to learn and want to do.

In the USA Gar Alperovitz and others are working to raise awareness and talk of evolutionary reconstruction, a process of  trial and error, step by step development and democratization of wealth,  work and community, this includes social investment to underwrite  democratic enterprises.    His,  is a systemic awareness in two senses, firstly, how the concentration of wealth in the hands of the few  dis-empowers and  impoverishes the majority. Secondly that there is a need  for a systemic sense and strategy to  rebuild from bottom up a democratic and equitable economy which then can be the basis for a supporting politics.  His reference is USA, but much of what he says will be relevent to the UK.  This maybe a best hope, as formal politics is now  dominated by corporate and financial capital, while counter forces such as  unions are  weakened and maybe being further undermined.  Communities as citizens and workers  can potently by building their own  democratic enterprises gain empowerment.    The unions can  be partners and strengthen such  developments.   The strategic use of our savings/pensions used with care has the potential to help  rebuild a multi-stakeholder public service and also a new generation of  cooperative enterprises in the market. This will be made easier with the democratization of finance through the use of new mutuals designed for this purpose. Capital as a factor of production should not be privileged but work for the common interest of all stakeholders,  human and beyond. Establishing viable democratic, people made, enterprises will gradually build up capacity to absorb funding  and asset transfers from government sources .   The  principles, social purpose, and good practice that  mark out boundary conditions  of what is economic democracy will need clarification.  People need  awakening to the possibility of an emergent economic  democracy, what it means, and its potential benefits. Work needs doing, including the  design and planning of useful and attractive enterprises.

Currently in the UK and USA, after the economic shock starting in mid 2007,  financial and corporate capitalism has  been revived with massive support of the state. Reforms have been minor.  There is now an economic recover in the UK but many fear it is superficial and unbalanced, too much dependent on debt,  inflating a housing bubble,  while there sill remains , debts, low investment,  poor  productivity and stagnating wages . The  benfits will be limited to the better off.  The economy could fall back after a short recovery.  Gar Alperovitz talks of an era of punctuated stagnation caused by the disparity of wealth and power, undermining stability needed for a full economic recovery. If this trend becomes the norm,  the prolonged stress could prompt people to look for new solutions. Moves towards economic democracy at scale might then begin to make sense.  The democratization of finance including pensions has the potential  make this come alive. People will have a say in and ownership of the new generation of solutions.   We have to take risks  and  make  an effort to create new inclusive solutions, for a democratic economy to happen. The learning process will always be going.



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