Artificial intelligence in a co-operative association

(Co-written with Paul Murphy, IT Programme Leader at Co-operatives UK)

All intelligent people can be stupid at times – it just depends on the context. The same is true for technology, which is why the search for artificial general intelligence – a system perhaps that can be stupid less often when the context changes – is the focus of so much interest at present.

Like many other organisations, we have been looking at where we can use automation. The shift in functions from holiday booking to sales and accounts to cloud based systems represents an extraordinary shift in organisational life. As a co-operative association, we have embraced the possibilities of digital learning, with a national platform to support new co-operatives, the Hive, with digital resources, diagnostic tools and advice communities, funded by the Co-operative Bank. All this is in line with our mission to promote, develop and unite co-operative enterprise.

Machine learning is another area of promise. As characterised by Martin Ford, author of the Rise of the Robots, this is where “a computer churns through data and, in effect, writes its own program based on the statistical relationships it discovers.”

The organisation, founded in 1869, has always collected data from its members, in order to publish statistics on the sector, for benchmarking and to allow our members to tell their shared story as a different kind of business. What intrigued us was whether we could use artificial intelligence to learn from the data that we have.

In particular, when things fail in a co-operative, it is bad news all round, because so many people are both co-owners and have an emotional stake in the enterprise. Could we use the data that we have to spot the early warning signs in a way that supports early action?

We drew on recent work using two core techniques:

  • Neurocomputing is inspired by the working and structure of the animal brain and has prompted the development of neural networks that allow machines to learn in a somewhat similar way.
  • Evolutionary computation is another bio-inspired technology whereby algorithms are iteratively adapted through processes based on natural selection and evolution.

Neurocomputing has had success in developing AI products that are now widely in use. In computer vision, neural networks can perform highly accurate image recognition and are being used in robotics, online mapping, and autonomous vehicles. Experimental applications include their use in medical diagnoses, where researchers believe they can be used to analyse radiographs, CT and MRI scans with much greater accuracy than traditional techniques, and drug companies are experimenting with neural networks to process 3D images of molecules with the aim of identifying new drugs.

Natural language processing is another area of use of neural networks. ‘Chatbots’ are aimed at automating customer service interactions, and products such as Google Now, Amazon Alexa and Apple Siri, which are built into common consumer electronics, such as smart phones and smart speakers, are using neural networks to provide a voice user interface and language translation.  Voice recognition has been common since the mid 1990’s but the addition of neural networks has allowed a radical improvement in the accuracy and usability of the technology.

In economics, over the past 20 years or so this new field of study has offered a powerful critique of neoclassical economics and its various assumptions.  Leading thinkers like Brian Arthur, Paul Ormerod, Eric Beinhocker and Doyne Farma have all pointed to radically new ways of framing how economies work. As Manfred Max-Neef described it years ago, we might dub this ‘Real-Life Economics’.

Our pilot study was to create and train a population of neural networks. Using the familiar evolutionary principles of reproduction, mutation and selection, the population was evolved through several generations to produce a network that performed significantly better than any member of the original population.

For those interested in the comparison with biological systems, the chart below, drawn by Karlijn Willems, compares the two:

Biological Neuron

So we trained the network using a selection of historical time-series economic data on the UK co-operative sector. We then tested the results with the purpose of predicting those organisations that were at high risk of financial difficulty or failure.

Using the historic data, we could see that the accuracy of prediction increased from 35.60% – being stupid most of the time – to 51.45% – being intelligent more often than not.

The predictions we generated can be used to guide our contact and offers of support for members. Often in a co-operative, preventative work can make a difference. If there is not enough income, there is not enough income, but if the underlying reason is one that can be addressed, such as the quality of governance or the capital structure, then the advice we offer can make a real difference.

We have made big strides in the use of open data for the co-operative sector and as a recent UK Government review on AI puts it “more open data in more sectors is more data to use with AI to address challenges in those sectors, increasing the scope for innovation.”

The downside was the astonishing drain on computing power that was required to run the analysis. We had to use a very high specification cloud computing instance to run this and even that took over two weeks.

When the computing finishes though, we then face the human challenge. How do we talk to our members about a prediction that they will fail as a business within one to two years?

You might think these things should not be a surprise. Tacit knowledge should always add weight and insight that formal systems won’t capture – which is why some of the interesting work on complexity systems at the London School of Economics by Professor Eve Mitleton-Kelly brings in stakeholders and focuses on an enabling environment to resolve specific challenges. This is the more participative and applied end of a field often accused of producing ‘black box’ solutions. This is where you are told the answer but have no idea why it is the answer (the Watson super-computing system developed by IBM takes this challenge on – how to reconcile complexity and transparency). An unhappy outcome for an individual co-op would be that a prediction of failure that is stupid (wrong) triggers a closure as a result.

Thirty years ago, John Butler, a legendary ex-colleague from Co-operatives UK (then the Co-operative Union) went to Clydebank to visit the local, fiercely independent consumer co-operative. Armed with statistics, John argued that the co-op was sure to fail and would need to transfer its engagements to another larger co-op in order to survive. He was sent away with a flea in his ear, the co-op turned itself around without outside help and for thirty years, Clydebank Co-operative has refused to rejoin Co-operatives UK. It was a lesson.

When you think you are genuinely being intelligent… now that‘s when stupidity is most likely to catch you unawares.







Who are the top membership networks in the UK?

We have updated our stats on the leading membership networks in the UK. Political parties are making a comeback – who would have predicted that? Trade unions down a little further. 

What stands out are the cooperative and mutual sectors, particularly when you consider that so many sports clubs are probably run on a de facto mutual basis, with one member, one vote.
Here are the top seven membership networks in the UK, which I shared this morning at a conference of mutual insurers. I have blogged on this before when we first compiled a list, arguing that the UK is a nation of members

There is no definitive compendium on this, so if you have any additions that we missed, let us know! 

Nicely, the Co-op Group now publishes an online ticker, open data, of its own membership total: 4.6 million and rising.

On the shoulders of co-operative women – the story of Ada Salter

The co-operative sector stands on the shoulders not of giants but of working people who together achieved giant-sized success. Co-operation is something not just of its day but that cascades down the generations.

One of the co-operative women I have met, or rather whose statue I have visited, is Ada Salter.

The first female Mayor in London, Ada Salter was a Quaker, a pacifist and a socialist. With her husband, Alfred, a pioneering doctor, she transformed residents’ lives and hopes in and around the South London quarter of Bermondsey, focusing on improving the social and environmental conditions in which people lived. Health outcomes improved, but before they did, her own daughter was one to have died, age ten, of Scarlet Fever. By the 1930s, 7,000 trees in the area had been planted thanks to her work.

In 1913, thanks to the Ada Salters, the Labour Co-operative Bakery was created. This started with a staff of 9 baking 5,000 loaves a week. By 1924, there were 100 staff baking 94,000 loaves a week – of good daily bread, and in the co-operative tradition, unadulterated. They paid above the union rate, with hours and conditions among the best of any.  

Beauty and peace was at the heart of her vision, as they can be ours today.

It is time to turn Brexit into a triumph of democracy

Over one year on and with the exception of a now accepted transition period, there couldn’t really be less clarity in the public mind on what Brexit means. So do we leave it to the negotiators and the um, experts?

It is not just whether and how we exit the EU, but what comes next? If we want to be sovereign, and succeed, how do we want to use that freedom?

Somehow, democracy has to get a grip.

Alongside what happens in Parliament, to my mind, there are three vital ingredients for a truly democratic Brexit.

  1. The first is that we need a much better objective sense – and public literacy – of the facts, of what the issues and trade-offs are. This is not to curtail knock-about campaigning and tribal communications – this is a wedge issue after all and that is what wedges do, they divide. But we can’t only have that post-fact tribal rhetoric – that is demagoguery and not democracy.
  2. The second is that we need genuine deliberation – that characteristic of all great democracies that in exchanging views and sharing information, we change our views and come together around different options. John Dewey would describe democracy as starting in conversation. Well, we need an adult, respectful and informed conversation around Brexit.
  3. The third is that we need a decision-making process which can draw on these first two to make decisions with full democratic legitimacy on behalf of the people of the nations and regions of the UK. That may simply be the working through of our current representative system, or supplemented in ways that support that – whether through effective parliamentary scrutiny, new referenda or greater dialogue across political representatives at a devolved level.
But we need the first two in order to make a success of the third. If we leave it to MPs, what mandate really do they have? If we run a second referendum, is that because those who propose it simply see it as a backdoor to reverse the first one?
Luckily, we now have a start on the first two: information and deliberation.

The Citizens’ Assembly on Brexit is taking place this month, with the second of two sessions coming up in Manchester next weekend.

A deliberative forum like this is a well established participatory tool. It brings people together who are broadly selected to be representative of the electorate of the United Kingdom. The Citizens’ Assembly on Brexit allows members to engage in detailed, reflective and informed discussions about what the UK’s post-Brexit relations with the European Union should be.

By the end,  the goal is to agree on recommendations for what should happen next. 

The project is led by the Constitution Unit at UCL, supported by a range of partners including Involve, the democracy charity I am proud to be Chair of. It is also supported in principle by UK politicians across the Brexit spectrum. 

At the first session, all 51 assembly members turned up and stayed engaged throughout the full weekend. It makes me hopeful for Brexit and democracy that they also enjoyed it! Average scores out of six across the Assembly Members were:
  • The event overall: 5.2
  • The lead facilitators: 5.8
  • The table facilitators: 5.5

A balanced range of expert speakers gave an information input to the event: Angus Armstrong, David Paton, Thomas Sampson, and Shanker Singham spoke on trade policy. Catherine Barnard, David Coleman, and Jonathan Portes spoke on immigration. Anand Menon served as roving expert. Alan Renwick – Director of the Citizens’ Assembly on Brexit, and the Deputy Director of the Constitution Unit – gave his thoughts in a blog on the first stage of the event.

The briefing papers for the Citizens Assembly are the most comprehensive and unbiased source of information on the options for trade and immigration after leaving the EU that I know of.

This is the first step of the three above, and is essential for a working democracy, even more so in an age of fake news. One participatory pioneer, Perry Walker (a distringuished colleague from days at the New Economics Foundation), created a ‘democracy in a box’ game some time back, called Democs. He explained to me the vital need to separate out facts from opinions:

“The first part of the kit was ‘facts’ – what an academic would call a factoid – something that is generally accepted and ideally, in this case, would be signed off by Full Fact or a similar authority.

The second was explicitly opinionated. For example, one was by Jeremy Clarkson, in a Democs kit on Climate Change, saying that it didn’t really matter if we lost Holland to rising sea levels – there were other places to go on holiday. In a kit on the Scottish Referendum, we had two sets of opinion Cards, one pro and one anti-Independence, to make sure that each had the same exposure.”

To my mind, we would benefit from establishing a core set of facts around Brexit and its implications and options. These would be signed off by a relevant authority (perhaps the UCL Constitution Unit, perhaps the Office of National Statistics) and circulated widely in a concise, social marketing-led form through libraries, GP clinics, government offices and civil society. A programme like this would be part of building a wider public Brexit literacy helping in turn to ensure that whatever future we face going forward is one which people can feel responsibility for, rather than surprised by or embittered about.

The Assembly meets again this weekend to make decisions such as the best options around trade and immigration arrangements post Brexit.

This is hopeful stuff. So far, national politics and the media are not helping to shape dialogue or debate. Rather than widen the base of facts on which we can deliberate between trade-offs, as democracy aims to do, we are ruled by every variety of shallow promise in terms of having our cake and eating it.

It is time to turn Brexit into a triumph of democracy.



The livelihoods of one in ten people in work around the world are sustained by co-operatives

The scale and reach of the global co-operative sector is charted in a remarkable new report from the team at CICOPA, part of the International Co-operative Alliance. It is the second global assessment of co-operatives and employment, led by Hyung-sik Eum with input from Bruno Roelants, and can be situated as part of a wider emerging focus on improving co-operative data worldwide.

The headline is that the livelihoods of just under one in ten people in employment (9.46%) around the world are sustained by cooperatives.

In total, this is 279.4 million people in employment across the 156 countries for which data has been collected. The majority of these are what CICOPA classifies as producer members. These are people working as typically small-scale producers, for example in food and farming, clustered into co-operatives. 

The largest numbers are in Asia, with over 31 million producer members in India alone (served by many of the 610,000 co-operatives in the country). Alongside these are people directly employed by a co-operative or by enterprises grouped co-operatively. In the European Union, for example, over 1.5 million people work in worker co-operatives – worldwide, this is 11 million people.

As part of this work, CICOPA has updated the global statistics on the overall co-operative sector, last tracked by the United Nations statistical agency. Overall, there are an estimated 2.94 million co-operatives around the world (2,937,323). The number of memberships is 1.2 billion (1,217,457,660), providing positive substantiation for the previous estimates by the United Nations of around one billion members of co-operatives worldwide (recognising that a minority of memberships may be of people who are members of more than one co-operative).

Alongside this data, the team offers an analysis of changing trends in work and points to the role of co-operatives in advancing the ambitious UN Sustainable Development Goals around employment and decent work. Alongside continuing levels of unemployment, inequality and gender inequality worldwide, there are trends towards self employment and a reversal of employment patterns, back towards informal labour markets. The UK is one case study, drawing on our own Co-operatives UK report, Not Alone, on freelancer co-operatives.

The International Labour Organisation is running a debate on the future of work, with key themes feeding into its own 100 year centenary events in 2019. 

If it is about what works, then co-operatives should be on the agenda. 

What happens when you google ‘Google Monopoly’?

A warm welcome to the Open Markets Institute – the new home for the anti-monopoly team led by Barry Lynn at the New America Foundation.

It is quite a story.

The Open Markets team was forced out of the New America Foundation think tank on August 31. The story began nine weeks earlier, when they put out a statement welcoming a European antitrust action against Google for its abuse of monopoly power. 

Google complained to New America’s leadership. Two days later, the team was given notice.

The only good news was the media response. The coverage of Google flexing its muscles and their dismissal shone a light on the threats that monopoly power poses. 

Kenneth Vogel’s initial article ran on the front page of the August 31 New York Times. Thoughtful articles and editorials have been published since in 300 mainstream media outlets, including the Economist, the Washington Post, the Financial Times and the Wall Street Journal. 

The best tradition of open markets thinking, from Karl Popper onwards, has always favoured the equitable distribution of power. There is no such thing as an open market where monopolies set the terms of trade. 

So what happens when we all google ‘Google Monopoly’? 

The think tanks that retail ideas in today’s world may be subject to corporate pressure, but ideas themselves are free. They are free to resist.

Solidarity in the winds

We launched an appeal at the start of this week across the UK co-operative sector, in support of countries in the Caribbean and South Asia hit by storms and floods. I tell the story of the appeal in a blog here on Huffington Post.

It was an appeal prompted by one coastal co-operative, Southern Co-op, out of concern for others on coasts on distant shores.

Now the appeal has been taken worldwide by the International Co-operative Alliance. One of the first to respond, outside of the UK and USA (where there has been an ongoing appeal through credit unions after storms in Texas and Florida) is the Philippines. 

Sylvia Paraguya of the National Confederation of Cooperatives said “We received support during the Haiyan time and we cannot forget that. In our own ways, we would also like to express our solidarity.”

In 2013, Typhoon Haiyan devastated the Philippines, with the loss of over six thousand lives. The co-operative sector, with over seven and a half million members, was hit hard at the time, but with support and resilience, played a vital role in the subsequent recovery, in line with their core purpose – to meet the needs of their members.

Steve Murrells is Chief Executive of the UK Co-op Group, which made a substantial gift of £50,000 to kickstart the worldwide appeal. 

As he commented to me yesterday, it all feels like a movement again.