The world loves credit unions

The global credit union movement has welcomed eight million new members in 2011, according to the World Council of Credit Unions.

The 2011 Statistical Report, based on reports from 100 countries, shows the world’s credit union membership at 196 million,

At the launch of the new estimates, in Gdansk, Poland, Lech Wałęsa, former head of Poland’s Solidarity party and the Nobel Peace Prize winner, called on the co-operative and credit union movement to start its own “revolution” through economic action at the grassroots.

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Nice trust, if you can get it

If you have ever worked somewhere where there is low trust, you will know the difference that a co-operative environment can make.

Some fascinating new research out from the University of Rome this month explores whether co-operative enterprises create social trust.

Their headline conclusion is that if you work in a co-operative, you are 37% more likely to experience social trust than if you work for a conventional firm – and 48% more likely than if you work in the public sector.

They conclude that this “suggests that the development of cooperative enterprises – and, more generally, of less hierarchical models of governance and of not purely profit maximizing forms of enterprises – may play a crucial role in the diffusion of trust and in the accumulation of social capital. This may contribute to increased resilience of the economic system, especially in times of crisis.”

Snuggle for survival

Honey bees, vampire bats and meerkats are on display in this sideshow in this month’s Scientific American on the role of co-operation in evolution.

Drawing on his recent book and academic research, Martin Nowak (Professor of Biology and Mathematics) outlines five drivers for co-operation which explain its central role in human behaviour over time. In my words (with the proper, technical terms in brackets), these are:

1. I scratch your back because you scratch mine (direct reciprocity)
2. People around me can get into scratching (spatial selection)
3. We scratch in our family (kin selection)
4. I scratch your back because someone else will scratch mine (indirect reciprocity)
5. I scratch because it is good that I do (group selection)

A range of beautiful images on co-operation and co-operative enterprise around the world is also now touring Britain in the form of a fabulous street gallery developed by the Co-operative Group. Launched in Brighton around Co-operatives Fortnight, this will form part of the global co-operative festival, Co-operatives United, running from October 29th to November 2nd 2012 out of Manchester.

In a nice phrase, this is all what Nowak terms ‘the snuggle for survival’.

Markets or mutuals?

Should public services be delivered by co-operatives and mutuals? For some, the answer is ‘never’ on the grounds that this is dismantling the state. For others, the answer is ‘sometimes’ on the grounds that if you are going to move something away from state control, you are better off with a model of social ownership and co-operative values than the pursuit of private interest.

I certainly tend to the ‘sometimes’ camp. The public realm is worth defending, but that is not the preserve of the state. The everyday democracy of co-operatives has a role to play in widening the constituency of concern for collective action and social justice. And one of the things that the state has never done well, except for the upper echelons, is to empower the people who are paid to work for it.

The recent report of the Mutuals Taskforce, which I contributed to and which has now closed, has a series of practical recommendations which could start to make more of a reality of mutual options. This is set out in its report ‘Public Service Mutuals – the Next Steps’.

A lot rides on the model of commissioning and a recent Policy Network paper authored by Robin Murray, associate of Co-operatives UK, is helpful in arguing that we need new models of commissioning that do not assume that all public services should be commodities to be bought in the market (with the role of commissioning being to create the very market it assumes is necessary).

The current model of commissioning has two stages. First the terms of the contract and the process of its letting follow the established procedures of public service. Second, the contractor is held to account in the terms of the contract. It sounds simple, but the downside in practice of this tradition of ‘rule based public administration’ is not just its rigidity and barriers to entry, but also that the successful contractor ends up with the information with which to game the system.

Instead of a single, vertical line of accountability, Robin suggests that co-operatives can add “multiple lines of direct accountability to those directly involved in the use and production of the service. The public partner as a primary source of funds is part of this granular system, in part through engagement in the governance of the co-op (and where appropriate in its operational support), in part through the principles of regular information flow and independent assessment. It is a primary feature of co-operative partnerships that they operate on the principle of open books and mutual learning, both of them central not just to accountability but to social innovation in such collaborative services.”

So far, co-operative school trusts and academies are the outstanding success story, with five times as many conversions as wider mutual spin-outs. The Schools Co-operative Society is now a focused and practical force for what is an inspiring movement – as this fabulous video from the Co-operative College shows.

There is also growing union recognition that here is a model that is neatly compatible with the interests of staff. Elsewhere, the union view on employee ownership in public services has been curiously muted, as if neither government nor labour movement wanted to recognise how central they ought to be.

Ironically, co-operative schools have yet really to be embraced by Central Government as part of its Mutuals Programme and more effort has gone into quasi-mutuals that stretch to minority employee ownership and external investors.

The truth is that those who want to see public service mutuals in practice are typically those who do not want to see services turned over to shareholders and private markets. There is a world of difference between being a stepping stone to privatisation and being an alternative to it.

One billion smiles

Saturday is the international day of co-operatives, neatly closing our 2012 Co-operatives Fortnight.

The UN Secretary General, Ban Ki-Moon, has issued this effusive official communique in celebration of co-operative business around the world, with their our one billion members.

Within this, he says “cooperatives empower their members and strengthen communities. They promote food security and enhance opportunities for small agricultural producers. They are better tuned to local needs and better positioned to serve as engines of local growth. By pooling resources, they improve access to information, finance and technology. And their underlying values of self-help, equality and solidarity offer a compass in challenging economic times.”

So smile, along with one billion other people, this weekend.

Sharing success

Nick Clegg has just launched our new data on the growth of employee-owned co-operative business, as part of the Employee Ownership Summit.

Drawing on its annual digest of data, Co-operatives UK’s figures show that the UK employee-owned sector has grown at a rate of 1.1%, compared to 0.7% for the economy at large. As such, the growth rate for employee owned firms is over 50% higher than the economy at large.

The substance of the Summit has been a landmark report by Graeme Nuttall, called Sharing Success. This is full of in-depth analysis and recommendations and it feels like employee ownership has finally arrived as a mainstream business model.

Positive Linking

In a complex world, it pays to co-operate. A new book by best-selling UK economist Paul Ormerod published in Co-operatives Fortnight looks at the power of ‘positive linking’ and the role of networks in economic life.

Once one of the UK’s leading economic forecasters, Paul is celebrated for declaring the ‘death of economics’ and the failure of forecasting, long before our present troubles. Rather like a one man UK Sante Fe Institute, he has gone on since to explore new, more open models based on complexity theory and new methodologies for analysis based on more maths rather than less.

Paul grew up in Rochdale and is for example a lifelong supporter of the Rochdale Hornets, now a fan-owned co-operative. Being a fan, or Chair as he was for a while, is never easy and he turned his analytical mind to their success, compiling a statistical account of their track record – noting drily that “they have not won anything since 1922”.

On co-operation, Paul describes to me the lessons of his new book for the co-operative sector:

“Because the shareholder-based company is the dominant form of organisation in the Western world, people often draw the conclusion that it must in some way be superior, be fitter for survival, than other corporate structures such as co-operatives. But the new, biologically-inspired thinking about economic and social processes tells us that this is not necessarily true at all.

“Different, more socially aware forms such as co-ops, have the potential to perform just as well. Whether we adopt these structures more widely is a question of values rather than economics. The key to this, and to a great deal of social and economics policy in the 2st century, is understanding how values either spread or are contained across real-life social networks.

“The current dominance of the shareholder corporation owes a lot to chance and historical contingency. Alternative forms of corporate governance now have a great opportunity to spread and replace the current ‘brand leader’.”

Positive Linking: how networks can revolutionise the world is available from Thursday July 5th for order online from News from Nowhere and of course other, well known / not so co-operative online sellers.