Alternative Models of Ownership

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* Report: Alternative Models of Ownership. REPORT TO THE SHADOW CHANCELLOR OF THE EXCHEQUER AND SHADOW SECRETARY OF STATE FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY. By Cheryl Barrott, Matthew Brown, Andrew Cumbers et al. Labour, 2017


Executive Summary

" The economic system in Britain, in its current guise, has a number of fundamental structural flaws that undermine economic strength and societal well-being. The predominance of private property ownership has led to a lack of long-term investment and declining rates of productivity, undermined democracy, left regions of the country economically forgotten, and contributed to increasing levels inequality and financial insecurity. Alternative forms of ownership can fundamentally address these problems.

 These issues are all the more pronounced given the increasing levels of automation in our economy. Automation has an emancipatory potential for the country’s population, but the liberating possibilities of automation can only be realised – and the threats of increased unemployment and domination of capital over labour only countered – through new models of collective ownership that ensure that the prospective benefits of automation are widely shared and democratically governed.

 Cooperative ownership has the ability to increase employment stability and increase productivity levels, as well as making firms more democratic. To support the expansion of cooperatives in the UK it is necessary to improve their access to finance, and examples from Italy and Spain point in the direction necessary to achieve this. Cooperatives can further be supported by national legislation and a re-worked government procurement policy.

 Municipal and locally-led ownership can improve service provision and guarantee that economic prosperity is not concentrated in certain regions of the country. A variety of policies, including place-based budgets, increased powers being handed to local authorities, and the relocation of various major institutions outside of London can foster this type of ownership.

 National ownership of certain industries promotes long-term planning of the economy, helps to provide modernising infrastructure, quality health and social care, and to combat climate change. Examples around the world point to the positive contribution of national ownership, but in the UK national state ownership has historically tended to be too centralised, with power in the hands of a private and corporate elite. To improve national ownership in the UK requires taking measures to increase the democratic accountability of state ownership.

 To turn the proposals of this report into practical and popular policy will necessitate, amongst other things: the examination of sectors of the economy which may require national government intervention; the drawing up of a list of policies to develop and to have an open consultation with stakeholders on the biggest proposals; the establishment of a network of activists/experts to discuss governance issues in collectively/publicly owned organisations; and the preparation of a policy document for publication ahead of the September Party conference."



Michal Rozworski:

"If more economic democracy is the end, Labour’s plans focus on three means of reaching it.

First, there are co-ops, membership organizations where ownership and decision-making are shared by the members. There are many types of co-ops, from consumer co-ops where members do nothing more than elect boards of governors every few years to fully worker-run co-ops where shop floor decisions are subject to democratic deliberation. At their best, co-ops ensure new technology is implemented quickly but work is redistributed so that jobs are not lost.

Unsurprisingly, the Labour document focuses on worker co-ops. It relies on three main examples — plywood processing in the US Northwest, the region of Emilia-Romagna in Italy, and the Mondragon network from Spain — to make the case that worker co-ops can be as efficient (if not more efficient) than their privately owned counterparts. This argument is key to presenting co-ops as a cure to the diagnosis of low productivity.

Next there is “municipal and locally-led” ownership. This broad category includes everything from community shops to farmers’ markets and development trusts to social enterprises. Many of these are halfway houses between capitalist enterprise and direct economic democracy. The important fact is that they are responsive to their communities, are limited, partially or totally, in using profits for anything other than reinvestment in the community, and have broader social or environmental goals.

Because of their generally small size and precarity as outcrops of democracy in rough capitalist seas, both co-ops and locally led institutions require other “anchor institutions” to sustain or protect them. For instance, co-ops have a harder time accessing finance because lenders cannot gain rights of control if things go wrong. Local social enterprises, on the other hand, often find it difficult to get off the ground without procurement contracts from local authorities for what they produce.

The third category of economic democracy, national ownership, is usually on a vastly different scale. Where co-ops or social enterprises are most often quite small, state-owned enterprises are usually found among the “commanding heights” of the economy.

Even conventional economics grudgingly admits that there may be “natural” monopolies, sectors where fixed capital costs are so high that any number of firms greater than one is too costly. The post service is one example: a network of post offices that serves the entire population is a very costly thing to create. Not only does it not make sense to have two; anyone trying to create a second one will most likely fail, consumed by the high start-up costs (unless, of course, the government goes out of its way to hamstring or dismantle these monopolies).

“Alternative Model of Ownership” argues for state ownership where natural monopolies exist, in sectors where only the government can carry out the long-term and risky investment that scares off private investors, and where high-quality services are needed. This third category is — rightly! — kept quite broad. Economic democracy is not a narrow niche.

While state-owned enterprises give the government direct control over such things as pricing and production, there are no guarantees that they will be significantly more democratic, neither for their workers nor the citizens who use their goods or services. Labour’s report holds out the promise for a different kind of state, one that recognizes public ownership is a means for more democracy, not an end in itself.

In a more democratic state, workers might elect front-line managers within a national railway company whose board included representatives from unions, passenger rights groups, and local government. Community councils of patients could help chart the strategy of a public hospital — an idea the NHS briefly flirted with in the 1970s. Economic democracy is far more than public ownership." (