The launch of the International Year of Co-operatives is an opportunity to take stock. New York was the obvious place for the launch, given that the Year has been declared by the United Nations – and its headquarters are in the ‘big apple’.
However, it would be understandable if many co-operators felt there could be more suitable places for the launch – Manchester, for example. This concern would seem to be supported by looking at the latest figures produced by the International Co-operative and Mutual Insurance Federation. No US mutual insurers make it into ICMIF’s top 20 – nor do any from the UK.
Instead, ICMIF’s largest member is Japan’s Zenkyoren, which is far larger than any other mutual insurer both in terms of its life and non-life business. However, the absence of US and UK mutual insurers from the list is not a complete story – sadly not all mutual insurers are members of ICMIF. The UK’s largest mutual insurer is Royal London – which is in the process of enlargement, through the takeover of Royal Liver. It would be in the top 20 were it an ICMIF member.
Similarly, New York Life would make it into the list were it a member, given that it manages over $283bn in assets. Northwestern Mutual is even larger, with $1.2trn of life cover under protection. Both mutuals would make it into the Fortune 500 list if they demutualised. Sadly, many other US financial mutuals have demutualised in recent years – though it should be recognised that historically some US insurers have gone the other way, initially incorporating as joint stock businesses, but then converting to mutuals because of the better economics achieved through mutualisation.
The point is that dismissing the United States as simply the home of shareholder capitalism is misleading. As the current Occupy Wall Street campaign demonstrates, there is an admirable tradition in the US of radicalism and co-operation.
As this column has reflected previously, much of rural America receives electricity only because of energy supply co-ops that operate on much lower margins than joint stock companies would contemplate. (It is worth noting that the International Co-operative Alliance is next month seeking to create a new energy sector co-operative group, reflecting the significant growth of energy co-ops around the world. A meeting in Cancun in Mexico this month is intended to kick this off.)
I spent some of my summer this year in New York and I was struck by the destination board of one of the bus services that passed me, on its way to the ‘Co-op City’. This is situated in New York’s Bronx district and is one of the largest housing developments in the world. It would be wrong to hold this up as a beacon of socialist living: the vast settlement comprises large numbers of owner-occupied apartments and its history involves loan defaults and fraud.
But it does illustrate the reality that co-operatives are a form of organisation that is widely recognised in the United States. Similarly, many small housing developments operate through joint ownership of common living spaces and are termed ‘co-ops’. Again in New York’s Bronx, the largest food distribution centre in the world is Hunts Point – a co-operative in the sense that it is jointly owned by the companies that operate from there.
According to the US’s New Economics Institute (not to be confused with the UK’s New Economics Foundation, my favourite think-tank), we are about to see a big increase in the use of co-operative structures in America. This follows the meltdown of Anglo-Saxon capitalism that led Pauline Green of the ICA to say the other day rather grandly – but probably with complete justification – “The investor-led model has failed.”
The NEI suggests that America is now in the midst of what it terms “evolutionary reconstruction”. As evidence for this it points to the growth in popular movements against the excesses and destructive impact of investment banking seen at Occupy Wall Street. This is, judging by British television, supported by people across traditional social divides, with many angry white collar pensioners showing their support for the movement. There is also a parallel in the strength of feeling evident in Athens and Rome against austerity programmes.
But this movement is not only characterised by the negative, but also by the positive, suggests NEI. It illustrates its argument by reference to many new workers’ co-operatives being established across the US, with other businesses involving worker engagement through ESOPs – Employee Stock Ownership Plans (termed Employee Share Ownership Plans in the UK).
According to Gar Alperovitz of the NEI: “At the heart of the spectrum of emerging institutional change is the traditional radical principal that ownership of capital should be subject to democratic control.”
It may be far-fetched to expect a revolution for social change to emerge from the United States, but these are very interesting times. As I write, it appears that the eurozone – and possibly the European Union itself – will be saved because of the backing of the bail-out fund by the vast sovereign reserves of China. Those reserves, we should remember, have been created off the back of state capitalism and state manipulated currency exchange rates. The previously dominant capitalist structures are indeed under threat.
The balance of wealth and the world’s balance of power is currently shifting. Much of Europe can expect to lose its traditional position of financial privilege. Perhaps the same will happen, more slowly, in the United States. As citizens lose those privileges, not to mention a substantial part of the value of their pensions (along with being forced to retire later), they are getting angry.
This may not be a time of revolution, but in global terms it is a time of profound reorientation. The last period in which there was a strong parallel of large scale international trade that then went into a period of protectionism – as could happen in the coming years – caused such strong trade competition between countries and their governments that it led to the First and then the Second World War. An alternative parallel is the 1920s and 30s, which is no more comforting.
As we witness the risks of the break-up of the European Union we should bear in mind those grim historical warnings. It is probably too much to hope that a resurgence in co-operative enterprise will deflate those nationalist sentiments that are now growing. But the traditional virtues of co-operation and solidarity are needed today and they stand a better chance than for many years of earning a hearing.
But let us consider the lessons of history as we celebrate the International Year of Co-operatives.