If it's such a good idea, Jeremy, set one up...

The leader of the Labour Party has been talking about business (while smiling benignly at his youth wing who want to nationalise Greggs). He tweeted this:

Imagine an Uber run co-operatively by their drivers, collectively controlling their futures, with profits shared or re-invested.

Splendid. There are some great worker-owned businesses - John Lewis, Arup and so forth - although none of them started that way. But the implication of Corbyn's comments sound a little more sinister - even a hint of some form of nationalisation for dear old Uber.

But seriously, if it's such a good idea to have a ride share co-op, Jeremy, why not set one up? No-one's stopping you (except maybe the Mayor of London and his Black Cab mates).

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Too few people using The People's Supermarket it seems!

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There was a flurry of right-on, luvvie commentary about the People's Supermarket a while back:

Arthur Potts Dawson, the mastermind behind The People's Supermarket, is certainly full of what one might loosely define as organic missionary zeal. A tall, youthful and reasonably optimistic chap who set up the London eco-restaurant Acorn House, (and is vaguely related to Mick Jagger, inter alia), Potts Dawson hopes that once his baby takes off, the likes of Tesco and Asda will be as a bad dream. We will all put in our community service and revel in 1970s-style food bills, while the big boys founder.

This is because in return for washing walls at TPS, you will be eligible for a 10 per cent shopping discount, and the ability to buy about 20 special "People's" foodstuffs at artificially low prices. Ordinary shoppers will be able to use the store, but not access the cheaper prices. Only we cleaners qualify for that. 

Eighteen months later it doesn't seem to be working out for them:

Due to financial difficulties, The People's Supermarket has struggled to keep up with the payment of business rates to Camden Council. The People's Supermarket is a Co-operative and Community Benefit Society and operates for the benefit of its members and the community, not in pursuit of profit. For that reason, we ask that Camden Council continue to support us by allowing for the renegotiation of rate payments. In the absence of such support, The People's Supermarket will become insolvent by March 1st.

So when we're getting all excited about different business models, frothing about mutuals, co-ops, co-production and other such wonders, let's not forget the basic truth about the market! If you don't have enough custom, you don't make enough income and you can't pay your bills. With the result that the cap is waved under the council's nose saying "help us out - we're really good even though we're losing money!"

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A thought on the state and ownership....

It’s time to come over all philosophical again – driven, on this occasion, to explain the issues around the interchangeable use of the word “public”, “state” and “government”. And to explore why, when something is “publicly-owned” it doesn’t mean ‘owned by the public’ but rather ‘owned by the state’.

Firstly, however, we need to recall that the idea of ‘government’ – being the administration of the state’s interests – goes back a long way and that, for most of that time the state’s interests have been the interests of a narrow elite rather than the entire people. Indeed, some would argue that this still applies, that ‘government’, ‘elite’ and ‘state’ are de facto interchangeable terms.

The earliest governments serve what Finer (after Weber) described as the ‘oikos economy’ – drawing on the Greek idea of the household:

• It is not just any household: it is ‘the authoritarian household – of a prince, manorial lord, or patrician’.
• Its dominant motive is not capitalist acquisition but the lord’s organized want-satisfaction, satisfied in kind. And this remains so if, in order to secure otherwise available goods, it has market-oriented enterprises attached to it
• In its pure state, however, it is completely autarkic.

The purpose of business, of trade and commerce is not – in the manner of Adam Smith – to allow the satisfaction of individual self-interest but rather to satisfy the interests of the ‘household’ (as manifest in the interests of the household’s governors or rulers). Under such a system the individual has rights only in so far as these are granted to him – and these rights can be removed arbitrarily should the governors deem that to be in their interests.

Thus – from its earliest days – government was illiberal. Freedom was constrained by the needs of the oikos as defined by its government. The typical Sumerian, Egyptian or even Athenian was not ‘free’ but was indentured to the polity – to the state’s ‘household’. And the purpose of the state in most places today remains the same – it is uninterested in market-oriented enterprise except that such enterprise is an effect means of securing revenues allowing the state to fulfil its desires.

Which brings us to the matter of ownership and the discussion as to whether the term ‘state-owned’ equates to us (which I take to mean ‘the people collectively’) owning. Back in Sumer or Memphis we knew where we were – everything belonged to the ‘god-emperor’. We didn’t own anything except in the de minimus manner of owning a pot or a spoon.

Today it is more difficult – we do own things but only as individuals. The law and custom does not recognise collective ownership unless that ownership is defined – the Co-op is ‘mutually-owned’ in that there is a long list of members who ‘own’ the organisation. However, those individuals cannot dispose of their ownership – a Co-op membership has no market value since I cannot sell you that membership. It is not ownership but a narrowly-defined right to a ‘say’.

State-ownership – when defined in these terms – is even more nebulous. The Co-op’s members can, in theory elect to dispose of all or part of the business. In the case of state-ownership this is not the case. We – the property’s collective owners – have no power to dispose of the property through collective action. No mechanism exists for decisions about the property to be made by ‘us’, the property’s collective ‘owners’. If the mutual ownership in the case of the Co-op is diluted, in the case of ‘state-ownership’ is almost homeopathic in its dilution.

So you can see why I find the idea that something – land, buildings, forest – belongs to ‘us’ when it is state-owned difficult to accept. Yes, we have a degree of say over the government through electing representatives. But I’m not sure that this gives ‘us’ control – a prerequisite of property rights. Control of the property rests either with those employed to manage – the foresters, land agents or caretakers – or with those we elect as our representatives.  In truth this gets to the heart of differences between believers in individual liberty and Fabian social democrats.

The social democrat ideal is encapsulated in Mussolini’s statement:

“Everything within the state, nothing without the state”

There is nothing – no activity we undertake that should fall outside the remit of government action. It that respect, the state and ‘the people’ are inseparable so that which is owned by the state is de jure owned by the people. Even if those people have no say over the use or disposal of that which they ‘own’!

For the believer in liberty, the state is bounded. Limited in its ownership and scope to those things we have asked of it. Once that function is no longer required, the state’s ownership ceases. The only things ‘within the state’ are things we have placed in its orbit – all else is without the state, which is to say free. Moreover, the idea that ‘state-ownership’ and ‘public-ownership’ are in any way comparable is a fiction sustained only by those whose interests are served by Mussolini’s viewpoint.

The state may no longer be the King but that marginal release from oppression did not transform the state into the people. The state remains an instrument of control rather than liberty, of suppression rather than release and of elite rather than of the people. And state-ownership for the sake of state-ownership serves all of us badly.

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Some thoughts on the Co-operative Party and their misplaced ideas

Given that Labour are saying “co-operative party principles” will be included in the Labour Manifesto for the coming election I thought it might be worthwhile looking at those principles and at their practical implications. And I do so from the perspective of someone who favours mutual organisations, community ownership and new models of service delivery – something I share, it seems, with David Cameron.

The Co-operative Party has helpfully published their guide – “A Co-operative Party Agenda for a Fourth Term” (so no question as to who they’ll be backing despite the enthusiasm from all three main parties for mutualism). I thought I’d pull out some of their suggestions and give a considered view set against our mixed experience of co-ops.

Promoting co-operative and mutual enterprise. The underlying argument here – although it isn’t quite put that way –is that co-op and mutual models of business are superior to “capitalist” models of business. These models are dubbed “social” – presumably implying that the joint stock company is anti-social. There is no attempt made beyond glib statements about service and lies about profits (co-ops and mutuals are profit-making organisations) to explain the basis for this distinction. In my view Government should not involve itself in how private citizens and private organisations choose to organise themselves yet it is clear that the Co-op Party wished to force unspecified co-operative “values” on private firms and to “reconnect them with stakeholders and society”. Nowhere in all this is there a word about the consumer, the customer – the most important stakeholder in any business.

Employee-ownership. John Lewis has a lot to answer for! This for-profit, quite pricey general store and supermarket chain is held up as a paragon of socialist virtue. We’re told that this shows just how effective employee-ownership can be. Truth be told though – for the amount of real control employees have over the management of John Lewis – the “employee-ownership” model is just a glorified bonus scheme. Don’t get me wrong – if firms wish to organise this way they can – and it clearly works for some organisations. But there is no evidence of more social or economic benefit compared, let’s say, to being owned by faceless Swiss gnomes or big-hatted Texan billionaires.

Remutualisation. Ah, here’s the cheap shot! Those wicked Tories allowed all those nice cuddly building societies to get turned into banks – and look what happened! We must turn Northern Rock back into a mutual organisation pour encourager les autres! Excuse me but do you remember what those mutual organisations were like? Do you recall how unaccountable, producer-led, unresponsive and lazy they were? Mutual organisation works pretty well at the level of the working mans club (or Conservative Club for that matter, most of which are mutuals) but scale it up to a multi-billion financial organisation and you can forget real accountability. These organisations become run purely for the interests of the management not the member or the customer. And certainly not for any wider “stakeholders”. A quick look at the US savings and loan scandals shows just how vulnerable mutuals are to managerial abuse.

Land reform. Now we get the real lefty stuff. Introducing a land value tax to replace council tax and business rates. Apparently the reason for the strange behaviour of the UK’s property market is because the existing property taxes create a system that favours the developer over the user. Leaving aside the scale of destruction in our property sector during this recession, this argument not only shows profound ignorance of how land is valued but ignores the primary reasons for our distorted property market. And those reasons? Our planning system and our preference for freehold models of residential ownership. If the Co-op Party wanted a really radical approach that would allow for more affordable housing in places where people want to live, then they would be proposing the privatisation of property rights through the repeal of the Town & Country Planning Acts and associated guidance and secondary legislation.

Trade Justice. As we might expect from the UK’s biggest recipient of Common Agricultural Policy cash, the Co-op is firmly in the protectionist camp. OK, they call it trade justice but what they mean is that we carry on the protectionist agriculture policies that puff up the Co-op's profits while assuaging our guilt at the damage this does to poor African farmers by promoting so-call “fair trade”.

There is some good stuff in the Co-op ‘manifesto’ too – mutualising the health service would take us back closer to the private (mostly charitable) delivery that existed prior to Labour nationalisation of health and there are some interesting ideas about increasing participation. However, the Co-op's connection to the Labour Party holds it back – they seem obliged to continue to nod in the direction of groupthink and to promote the failed initiatives of socialism.

It seems to me that trying to make party political capital out of the idea of mutuality and co-operation is misplaced. And it also seems to me that, for all the talk of engagement and participation, the one thing not proposed here is the real transferring of power from centralised, monolithic and failing government to ordinary people. Now that would be radical!

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