Pt 1- Why Co-operatives?

In our current economic system businesses are owned by private individuals who have bought or inherited shares that grant them voting rights, to elect a board of directors who control the company, any profits made.

However, there is an alternative to the conventional business that exists and thrives, even in our current economy, that puts ordinary people in charge, co-operatives.

Co-operatives are companies owned by their members, these could be workers or consumers or a mix of the 2, run on a 1 member one vote basis. These members elect the board who decide how the company is run whilst members keep the profits, or reinvest them in the company.

An economy where more businesses were owned co-operatively would broaden power and create a fairer market outcome while giving workers and consumers more control.

In Britain, 57 percent of people believe they have no influence over the economy with 58 per cent thinking big businesses are out of control. People feel powerless in their workplaces and this manifests into lack of power in their communities.

Giving people a vote in how their workplace is run or how major stores they consume from are run would drastically shift power in the economy. Lots of the energy of the current labour movement is focussed on more tax and spend or nationalisation but more effort should be applied to helping create more democratic enterprises.

Co-operatives can help solve other problems such as poverty and inequality. Capital resources are the main contributor to inequality as shown below, as labour share of income has decreased in most developed nations post-1980, despite rising productivity.

Co-operatives help narrow income inequality as well with large co-operatives such as Mondragon having fixed pay ratios between the lowest and highest-paid employees. At Mondragon it is 1:9, a ratio decided democratically by all workers, in comparison in the average FTSE company it is 1:312.

I will go more into the economic advantages of co-operatives over conventional businesses in Part 2.

Co-operatives also have a wide backing from the public with 62% of people seeing co-operative businesses as fair while only 11% say the same about Private Limited Companies.

The rebuild after Covid is a prime time to move towards more widespread co-operatives, as seen in European regions such as the Basque country and Emilia Romagna, that would create a resilient, more equitable new normal.

In an economy moving towards perilous times our ownership structures may decide whether we suffer from rising inequality or a future of shared plenty.

You may have noticed the Title includes Pt 1- I want this to be the start of a series of many articles focussing solely on co-operatives, how we can create more and the issues they can help solve.

If you want to support my writing please join my OC- My plan is to make the production co-operative in nature with subscribers determining new topics for me to write about.

You can find other writing about co-operatives, including some of mine, on Mutual Interest Media- which is itself a co-op