When more competition means less for everyone: the case of the original ‘robber barons’

Castle Katz, The Rhine Photo from: Wikipedia, Creative Commons

Castle Katz, The Rhine
Photo from: Wikipedia, Creative Commons

If you picture the Rhine, the great European river that flows from the Alps to the North Sea, you might picture a river with regular, beautiful castles …. and you would be right.

During the Middle Ages, the Rhine was a great European trading route, protected by the Holy Roman Emperor. Merchant ships, plying their trade, paid a toll and their passage was assured, their way safe.

But after the Empire started to weaken, over the thirteenth century, this changed. German barons – the original robber barons – built castles along the Rhine, and started to levy their own, illegal tolls – sometimes stretching iron chains across the river from the castle bank.

The castles represented a business, selling rights of passage. Whereas at Mainz, the Rhine is half a kilometre wide, from Bingen onwards, it curves narrowly, making tolls relatively easy.

Today, those ruined castles are perfect for tourism, but strung along the river, close enough often to walk easily from one to the other, they served to kill trade. Not only did the barons levy tolls, but they would steal ships and one, the Baron of Reitberg, in 1254, kidnapped the Queen of Holland from her ship.

The kidnapping led to the formation of the Rheinischer Bund, the Rhine League – a co-operative venture with cities, princes and knights as members. They freed the Queen, deposed four of the robber barons and closed ten or more toll castles.

But knights were costly and neighbouring towns failed to chip in. As Michael Heller, author of The Gridlock Economy, a compelling view of ownership over time, reports “when the league collapsed, the robber barons proliferated anew, and rive traffic shrunk. More than five hundred years passed with gridlock on the Rhine.”

It was only after Waterloo in 1815, that the great European powers finally collaborated to remove the offending toll collectors – just decades indeed before railways emerged as an alternative for traders. The Rhine had long been the greatest trade course in Western Europe, but its contribution to the common good had been shackled and hampered by the lack of consistent co-operation.

Fast forward two centuries, and alongside the anniversary reminders of Waterloo, recent economic debate in the UK on productivity and the long-run impact of austerity reflects some of the fate of the Rhine, with the risk that in the move to a new settlement after the emergency actions in the follow up to the Credit Crunch, private competition will win out over common good – a win/lose or if we are unlucky in terms of global competitiveness, a lose/lose economic fate.

The search is on therefore for a new approach for economic success, that balances co-operation and competition.

I have been writing on this, linked to the new book I have co-authored and edited, Co-operative Advantage, in a series of blog posts for sister sites, including the New Statesman (including the text above), New Economics Foundation, Huffington Post, NESTA and the Young Foundation. My thanks to them for hosting the debate.

Too much competition or too little co-operation? We call them global business leaders now, but will the new robber barons among them please stand up?

Spanish lessons – how Spain came to lead the world on the social economy

I had the chance to visit Spain recently, to take part in an event with Spanish worker co-operatives under the auspices of the national network and Co-operatives Europe. The Spanish co-operative sector has always been vibrant and colourful, but the way in which it has stepped up in the aftermath of economic crisis and the credit crunch is instructive and inspiring.

The roots of co-operatives in Spain are as diverse as the country and its regions. One of the most celebrated of founding parents, though not the only one, is the visionary priest and thinker Jose Maria Arizmendiarrieta. His reflections are well worth reading and nicely set out on a website to mark the anniversary of his birth. An example of the ambition of his reflections, which kickstarted the Mondragon Co-operative Corporation is: 

“The idea is to institutionalize honesty. Better yet, the idea is to institutionalize human greatness.”

In 2011, the co-operative sector joined forces with a wider range of social organisations to back a new law, Law 5/2011 of 29th March on the Social Economy. This law defined the sector and gave visibility to its actions in the context of economic stress. Included were co-ops alongside mutual insurance societies, employee share owned companies, fishermen’s guilds, disability associations and foundations. The key principles across all were:

  • Priority of people and social objectives over financial capital
  • Internal and social solidarity
  • Independence from public authorities.

The organisation CEPES is the voice for the social economy at a national level, giving the social economy a far higher profile in government economic and business decision making. It is what in the UK we have been tiptoeing towards, in the form of our successful Social Economy Alliance.

The true power of the social economy combined is economic as much as it is policy and political. The Spanish social economy covers 44,563 businesses with a turnover of 151 million euros, employing (directly and indirectly) 2,215,000 people and linking up 16,528,000 people as members. 

The moral? 

For me, the Spanish movement teaches us that there is always one more way you can co-operate, one more step you can take, one more way in which you can be great.

Austerity Britain risks becoming a dirtier Britain: what we can do

hearts clean upOver the last few weeks, co-operatives across the country came together to clean up local streets, parks and waterways as part of this year’s Co-operatives Fortnight.

Themed the ‘Big Co-op Clean’, Co-operatives Fortnight is a national campaign, and clean-ups were organised from Ipswich to Inverness, with co-operative retailers, pubs and housing providers all taking part.

With our members, Co-operatives UK organises Co-operatives Fortnight each year, focusing this year on demonstrating how co-operatives make a difference locally.

Our Big Co-op Clean came on the back of new survey results we commissioned, showing that one in three people (31%) report that litter on the streets has increased, compared to this time last year.

Summer is when litter is most visible and the trends are on the increase, with a 20% hike in fast food waste compared to last year. The state of our streets reflect the state of society – if we don’t co-operate by not littering or value the work of street cleaners who clear up litter, ‘austerity Britain’ risks becoming ‘dirty Britain’.

The need to value the work of our cleaners is echoed by my colleagues at Unison, where senior national officer Mike Short says:

This figure shows that the government must start reinvesting in local services such as street cleaning and public toilets. Since 2010 local authorities have had £11.5bn wiped from their budgets and half a million local government jobs have gone, so it’s no wonder that dirty streets are becoming a problem.

We need collective action, both by the state and at a community and workplace level. Co-operatives are organisations owned and run together by us all, so it’s no surprise perhaps that co-ops are part of the story in working in their local areas to tidy up nearby streets and areas.

We’re still getting information in on the impact of the Big Co-op Clean, but what’s coming through is strong local action from co-operatives right across the country:

–       In Chelmsford, the local co-operative society organised a clean-up of Central Park, with 50 volunteers collecting over 100 bags of rubbish.

–       In Hebden Bridge a local co-op pub cleaned up the woods, finishing with a well-deserved co-operative pint.

–       In Manchester, a local worker owned retailer organised a clean-up of the local cycleway, providing helpers with soup along the way.

–       In Scotland, the local co-operative organised for members to tidy and paint the playground in Coupar Angus, which was representing Scotland in the Britain in Bloom competition.

The Big Co-op Clean has not just been part of a fabulous fortnight, but helped to show how co-ops make a difference in their local communities, day-in, day-out.

The future of business advice may just be peer to peer…the story of our pilot

Nowhere is the power of business to achieve change more emblematic or more hopeful than the sunrise of the community energy sector across the UK. It has been an extraordinary journey to see new technologies for a clean future matched by new techniques for community organising, offering a very human scale domestic success story.

Ever since the first renewable energy co-operative, Baywind, started, the sector has been an exemplar for bootstrap learning and peer support. The backing of Esmee Fairbairn and the partnership we have had with Locality and the UK Government for our Community Shares Unit, focusing on local equity raising, has allowed us to experiment in how to build on this, with a practical project backing the energy and potential of peer support.

Every success story has many people that can claim to have had a share. But the practitioners are the ones that know how narrow the difference is between success and failure, and own the insights and experience that make the difference. So much advice and guidance in social enterprise and wider business settings tends to be provided by intermediaries without that hands-on experience – they can add value, but what practitioners can add is often invaluable. Or tends to offer pages on a website, when what is needed, at the early stage, is conversations with people.

Community energy comes in many different legal and organisational forms, but there is a natural co-operation across them all.  Community energy pioneers and practitioners are often the most generous of people with their time and expertise. But again, it is all too common for this to be taken for granted. They are typically running enterprises that need their focus. Again, across the wider social enterprise and business sector, there is often an assumption that such people will volunteer to be mentors, to ‘give back’ when they have already given so much.

What is unusual about this project is that we have tried a methodology for business development that, as an alternative to the costs of traditional sources of business support, creates a modest but enabling reward structure for practitioners to be able to support those who are following them.

The idea for the work came from conversations with our members, in work completed by Becky and Jenny Willis who have made a huge contribution to our work at Co-operatives UK over time, to support the fledgling community energy sector.

Of course, some of the barriers that practitioners have faced are better simply removed, rather than advised on. Community energy is influenced by a complex policy and regulatory environment and there are lessons, and recommendations, for national policy that we draw from our work in this project that are set out in our Policy Report. 

The challenge of creating a sustainable economy is sometimes characterised as about learning to adapt to the future we face. The challenge of scaling community energy, across all the relevant renewable technologies, is also about learning. How do we accelerate learning, in order to accelerate practice? One answer which can now be added into the mix is energy mentoring.

We would be keen and interested to share our learning, which we set out at summary level in a second Impact Report, and to engage with partners and in new partnerships to make the most of co-operation and learning for community energy and indeed for wider social and economic innovation

The challenge of creating a sustainable economy is sometimes characterised as about learning to adapt to the future we face. The challenge of scaling community energy, across all the relevant renewable technologies, is also about learning. How do we accelerate learning, in order to accelerate practice? One answer which can now be added into the mix is peer to peer mentoring.

Could the future for business advice be a co-operative one, based on a far greater degree of peer to peer mentoring?

We have put together Our Impact Report on what we have learned through the project. We would be keen and interested to share ideas on the approach and to engage with partners and in new partnerships to make the most of peer to peer models of advice, both for community energy and indeed for wider social and economic innovation.

Innovation as social change – new book out

CoverThere is a longstanding tradition of alternative economic strategies in the UK.

Many have been at the macro policy level. I have written a few myself in my former time as Director of the New Economics Foundation. They are important as beacons, lighthouses for a different set of policy prescriptions.

But the most important perhaps have been those that have emerged out of practice, and inspired practice in its turn, because they have the chance to be embedded and owned by social movements… the Lucas Aerospace Plan led by Mike Cooley, which inspired a generation of work around technology exchange; the work of the Greater London Enterprise Board (GLEB), with its long term venture funding; or the Highlands and Islands Enterprise Board, backing community economic development.

Co-operative Advantage is a book in this space and tradition. New out, it is based on research I have led over three years with co-operative business experts, advised by Professor Michael Best, University of Massachusetts Lowell, an internationally recognised authority on sector development. Michael was part of the GLEB story, along with Robin Murray, who has been an inspiration for the work and contributes one of the closing chapters.

The research for the book analyses growth sectors around which the co-operative model has an edge and a fit that offers a competitive advantage – identifying fifty potential innovations that dovetail with emerging trends in technology and markets. The total economic value of the sectors that we look at add up to 61% of overall GDP and account for 64% of total employment in the UK.

The authors of the fifteen sectors are co-operative entrepreneurs or business analysts with expertise in the area, and each has been the result of extensive engagement with coops and mutuals in each sector, representing a bootstrapping of knowledge.

The model of sector development is one that has a long history in economic policy making. A sector strategy in conventional economic development is a term that describes a process for stimulating the absolute growth of an industrial sector or sub sector. his would require a blend of demand and supply side measures, such as: sheltered or supported markets; active marketing; dedicated finance; infrastructure; workforce development; business networks; research and development, including links to academic institutions etc. Often these would stem from public policy decisions and be supported by the state. A sector strategy, though, is also about enabling existing enterprises to understand the trends that are shaping the markets that they operate in.

The starting point is the political economy of innovation. Innovation is estimated to account for 70% of long-term economic growth. But whose innovation and in whose interests? Innovation is endlessly talked, always assumed to require venture capital to drive it, corporate patents to protect it, but the political economy of innovation is less often subject to scrutiny.

I see innovation as social change. Yes, there are drivers for innovation that we look at in each sector, in technology, culture, demographics and environment, but we are looking for the innovations that can be accelerated for social and ecological gain. We need placards, yes, but we also need a social economy.

The co-operative economy – in communities and now on open data 

Co-operatives Fortnight is underway. This is the annual sector campaign to promote awareness of co-operative enterprise. It closes on July 4th, which is the United Nations International Co-operatives Day.

Today, I am up early as we are releasing The Co-operative Economy 2015, our annual sector data.

Overall, there are now 6,796 individual co-operatives across the UK covering every industry, from retail giants and agricultural heavyweights through to community owned pubs, football clubs and credit unions. 

The fastest growth areas are agriculture, energy and social care, where co-operative innovations offer a powerful economic advantage. 

The sector as whole turned over £37 billion last year, a growth of 15 percent since 2010. The figure is a 2.8 percent decline on last year’s £38 billion, a dip accounted for by the shifts in trading and business lines at The Co-operative Group, after its rescue phase last year. The data is drawn from published accounts, so exactly covers that period.

The underlying sector performance is a strong one, with, as ever, some heartwarming stories of new co-operatives emerging at the grass-roots level.

We are publishing the report and summary on a refreshed Co-ops UK website and releasing the figures together with a beta explorer tool on an ‘open data’ basis, which allows anyone to look through the numbers and draw their own analysis from it. You are welcome to have a go, and we welcome your feedback.

An old idea now on its way back…an economy for the common good

The best ideas are sometimes the oldest ones. They just take their time to mature. The concept of the common good, or the common weal in traditional parlance, is as old as the hills, as British as driving rain. And in economics, it is making a come back.

Today an extraordinary best-seller across continental Europe is published in English by Zed Books. ‘Change Everything: creating an economy for the common good’ written by Christian Felber has helped to encourage a rapidly spreading and international grass-roots movement, organized around the idea of returning business and economic life to the measuring stick of common good. 

I have posted a longer blog this week on the patient emergence of ideas around an economy for the common good on the site of COVI, dubbed the first visual think tank.