Liberal Vision

All about Co-ops…

Here are a selection of posts from about the blogosphere on the Tories new Mutualist plans:

Positive:

Co-op Capitalism:

“Co-op’s are neither socialist or capitalist necessarily. Most hedge funds are co-ops, owned by the partners with the profits shared by the workers. Many law firms are co-ops, luxury apartment blocks are run by self-selecting co-ops, huge agri-businesses are run by co-ops of rich farmers, mutual funds are a form of co-op, the list is endless. Lefties might want co-operatives to be non-profit, organic wool knitters but the most successful ones are not. They do this because they are smart and don’t want a third party to profit at their expense. Co-ops have nothing to do with top-down state socialism as designed by Fabians.”

Co-operative Ownership – the Liberal Way:

“I have written before that co-ops and similar ventures are part of the rich tapestry of a market economy. After all, before the days of statutory regulation, the Stock Exchange was a mutual – you can’t get closer to the market economy than that. Co-ops and mutuals certainly have their limitations – access to capital and corporate governance being the two main ones. People complain about profit-making banks being owned by shareholders but mutuals can be captured by management and pay poor interest rates to savers and co-ops can be captured by a senior management clique without any possibility of facilitating change. There is a big literature on all this and I hope that Osborne’s team has read it. Neverthelessm, mutuals and co-ops definitely have their place. Three cheers for George Osborne’s attempts to create co-ops in the public sector then? Not yet.”

Co-op Dissonance:

“The Conservative Party recently re-asserted its commitment to allow co-operatives and other non-profit bodies to run public services on a contractual basis. It is an idea very similar to the adopted Swedish model of paying for schools, although there are a number of clarifications that need to be made. Whilst the ‘Free School’ model allocates funds according to the number of pupils being educated (i.e. according to outcome), the worker-co-operative proposals have hinged on the use of contracts. This means that while the penalty for a failing school will be the loss of pupils and a corresponding loss of revenues, ultimately resulting in the closure of a pupil-less school, the penalty for a failed contract is still unclear. The ‘Free School’ model means competition is automatic as pupils and parents are instantly able to choose and change the school they would like to attend, but a truly competitive environment based on contracts will be much harder to achieve with co-operatives, as each contract could essentially be a short-term monopoly on government-funded services for its duration.”

Negative:

The John Lewis State:

“If a John Lewis style primary school were a floperoo, would all the teacher-shareholders be sacked, or only the head? A resolution procedure for failing co-ops that didn’t harm pupils – or patients of community nursing teams – would plainly be essential. And what about the power structure within each co-op. Would all co-op members have identical shares and equal votes on strategy and management? Some headteachers, for example, would find such democracy profoundly uncomfortable. Or would there be a boss or senior management team, who would have both management control and the potential to pocket the bulk of any financial gains? The background to all of this – of course – is that revenues for public services will be under pressure for many years, as a result of the shocking state of the public finances. For the looming general election, there are few more important debates than how public services can deliver more out of less.”

Will Tory Co-ops take off?:

“The public finances are dire. The co-op business plan will have to assume the state will be paying less and less for their services over time. Yet somehow they’ll have to work out how to make a surplus to make the venture attractive. This could make sense with a high degree of flexibility over staff pay and terms and conditions. But in the case of nurses and teachers, contract terms would be transferred from the public sector, which gives the workers protection. So the flexibility will come in paying more, or paying any new staff less. Over time this will make a big difference and could be the basis for a decent business model. But big barriers remain, not least the generous public sector pension terms. Will the potential surpluses really be enough to convince public sector workers to become entrepreneurs?”

WTF???!!!:

Vote Blue Get Red?!:

“After they are ostensibly mutualised, social enterprises will be subjected to competitive tendering, internal markets and divisive incentive structures. The economies of scale and low cost finance available to large public sector organisations will also be lost. As an added bonus to the right, a serious wedge will be driven into national pay bargaining and public sector trade unionism further weakened.

In other words, forget all Cameron’s talk about ‘Conservative means to progressive ends’. The big idea here is to open up Jobcentres, schools and NHS trust to marketisation. Those guys remain as high on Hayek as they ever were.”

As if…