The Mutual Way To Put Britain Back On Its Feet
Phillip Blond's latest article from the Daily Mail
By any account the UK economy is in a dire position. According to a McKinsey report in January total British debt (that's corporate, personal and public debt) was 469pc of GDP.
Our situation is second only to that of Japan, whose economy has atrophied for nearly 20 years.
Heavily indebted, we must do what any household or business would do: cut costs and increase income. For a country this means getting more out of what we spend on public services and growing our private sector.
However, this is easier said than done. Private business is still struggling to access the investment capital that has been monopolised and centralised in the City of London and our public sector is demoralised and dysfunctional.
Our economy, fixated on the dominance of a now failed economic model, has failed to develop any coherent alternative for widening investment, innovation and entrepreneurship.
We are a nation that wishes to start and run businesses, but we lack the capacity, investment capital and regional infrastructure to help businesses grow and prosper.
Unable to make the most of our people and denied access to finance and long-term funding, both the public and the private sector need a new model to drive intensive long-term investment in research and development, business capacity and skill appreciation.
That new model could and should include an updated version of an old one: co-ops. A new, modernised mutualism is one of the ways we can escape the present economic crisis.
Right now we still operate under a shareholder value regime, where companies have increasingly focused on short-term gain using debt leverage to increase stock value.
A new mutualism, where every employee owns something, offers stakeholding instead of shareholding as a method to raise performance, productivity and investment. And this is no fantasy. Employee-owned firms have outperformed the FTSE-All Share Index over the last 18 years by an average of 10pc.
When shares are distributed to all employees we see a minimum 5pc productivity gain and often more, according to research.
Many of the most innovative and successful companies from Google to Gortex extend some form of mutualism to their staff. Some, including John Lewis, make it their entire business model.
One of the most exciting developments in this election is the adoption of a co-op model for the public services. This is where innovation and ownership could truly deliver more for less.
Between 1997 and 2007 public sector productivity declined by 3.4pc, whereas in the private sector it rose by 27.9pc. The gap between the two figures represents some £58bn.
These new co- ops, which the Conservative Party is promising to offer across the public sector, would allow employee buy-outs and the removal of countless layers of bureaucracy and waste.
And let's not forget some of the worst ongoing disputes in British industry are where each side perceives that their interests are opposed.
Mutualism offers a way to create a new common interest. Overcoming union hostility and years of distrust, it allows the company to modernise working practices in exchange for equity stakes that really could raise company productivity and profitability.
British Airways and the Post Office spring to mind as two great brands threatened by industrial disputes and confronted by the need to invest and update. Only a new mutualism could really save them from further disruption and damage.
Moreover a new, mutualised Post Office could be the way that we spread and popularise a more effective and engaged mass investment and capital supply strategy. It could host stock markets for regional businesses and encourage people to direct some of their savings into new local firms that they know and understand.
This would be a win-win situation, providing small firms with capital and engaged investors and developing a new popular investment activity. Creating a new mass mutualism is surely part of the answer to Britain's economic woes.
This article first appeared in the Daily Mail on the 3rd of May 2010.
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ResPublica are delighted to announce our fringe programme for Conservative Party Conference this year, which will take place at the ICC in Birmingham from Sunday 3rd October – Wednesday 6th October.
All ResPublica events will take place in the ResPublica Marquee, an exclusive space just outside the Centenary square entrance of the ICC (secure zone). Unless otherwise stated our events are open to all conference delegates and do not require advance registration. Refreshments will be served at all events.
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The latest edition of the British Politics Review features an article by Senior Researcher Adam Schoenborn arguing that the Coalition Government must devolve to deliver:
"Political decentralisation alone will not give people transformative power to shape their lives and communities, economic decentralisation will be every bit as important to this goal. Despite inhibiting the growth of income inequality, New Labour allowed meaningful asset-ownership to become the preserve of the rich…"
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Jonathan Rosenberg founder of the country’s single largest mutual housing association Walterton & Elgin Community Homes discusses the Big Society, John Lewis-style collectives and the work of ResPublica Director Phillip Blond on the Open Democracy blog:
"...Prepare for a potentially painful dose of post-election political correction. The divide is transformed, and it’s not about party anymore. Mass mutualism is the new dogma: so proclaimed Cameron’s philosopher king, Phillip Blond, in, of all places, the Daily Mail. We are all ‘social capitalists’ now: such was the implication of the newly ennobled Big Society adviser Lord Nat Wei’s maiden speech...."
To read the full blog click here. -
ResPublica Director Phillip Blond discussed immigration and British values on Newsnight, Monday 28th June 2010. To watch please click here.
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Comments (5)
Please God the incoming Conservative is not so naive as this.
(I am offered preview and save - no post)
I think this is 'bang on the money'. We need people to feel engaged in the companies that they work for - most people are fed up of making money for someone else and of the adversarial relationship between workers and bosses. John Lewis shows how people are prepared to take responsible decisions when they can see the direct benefit (or penalty) of the decisions they take and where everyone benefits, not just the few.
I agree with much of what I have just read by Philip Blond. As a retired Methodist minister now living in Cheltenham but with live roots in Rochdale I would like to see more mutuality in all walks of life. The National Debt is a pressing issue. I am not an economist or politician,but I see little progress ahead if existing gulfs - between individuals and groups - cannot be bridged. The present House of Commons resembles a slanging match between several groups all driven by self-interest.
We launch a mutual model in Wigan this September. It's simply a network that puts together vendor organisations (shops, buses, football clubs, councils) with people (shoppers, passengers, fans, citizens) and uses smart technology to bundle them all onto one card. This card is a called the Wigan+ card and the vehicle that protects the customers information is a Community Interest Company.
Wigan+ is a club with partners and members. Promotions and messages are personally customised for each member and deals find them rather than the need to go searching. Members are encouraged to volunteer more info about themselves - the more they give the more they get. This information is valuable (just ask Tesco) and we will make the most of it on behalf of our members. The info is locked as an asset and owned by the people of the town - it cannot be sold.
The rewards given will help people understand they have responsibilities as well as rights. It coaches them to be socially responsible. it also prevents irresponsible businesses from giving irresponsible rewards. I'm hoping that we can get some timebanking to form part of our system, and create a credit union so that local people can support local businesses and not get ripped off by the big banks.
We also think it will help politicians deliver the decentralised changes they seek in terms of how frontline services are delivered.
It's just like the co-operative used to be. Profits from the CIC are distributed according to the will of the people and not the will of those currently in power.
Giving people real choice might transform their lives. The poorest and most vulnerable in society deserve such choices. they shouldn't be forced to fund the vast army of administrators that box-tick our lives and consume huge amount of tax-payers money meanwhile. Working together is the new black.
@mikeriddell62
Here in Australia some of us are cheering Phillip on for all we're worth. Both in Britain and over here, we need to move on from a society of 'agents', where everyone is pretending to act in the best interests of someone else, to a society of mutual stakeholders. Producers, workers, financers, shareholders, consumers: the ideal is that all of us are all of these, as Mondragon in Spain has shown to be not only possible but also profitable. Go Red Tory!
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