11 September 2009

Extraction of Value(s)

Two reports are published today that are implicitly linked, and yet I wonder how many media commentators will make that link explicit? The first is the lengthy and damning report into the buyout of MG Rover by the team led by John Towers. Known as the Phoenix Four, since the final collapse of the car company in 2005, their reputation has turned back into ashes.

Yet what we witnessed during the five years of scavenging, while the suited vultures stripped the value out of Rover was no different in type from what happens every day in capitalist business: the extraction of the value of workers' expertise, skills and commitment by a small number of people who have the control of capital. That's why the system is called capitalism rather than labourism.

Ok, in this case the scale of the rip-off draws public attention, and the fact that Rover was an inconic national company that had also received public support added to our interest, but the model is the same in every shareholder-owned business in the world.

Which brings me to the second report, published today by Demos, and called Reinventing the Firm, it presents a strong case for the movement of a much larger proportion of what is currently the private sector into some form of worker ownership. There are several strong arguments presented, an interesting one being the nature of current ownership. Since shares are now so commonly held by institutions (70% as compared with only 25% in 1963) power over companies is now distant, consolidated and purely profits-driven. Why should a pension-fund manager whose bonus and continued employing relies on delivering a fixed percentage return show any regard to the human or environmental consequences of his investment decisions?

The report also makes clear the significance of the broadly defined mutual sector of the economy, which has annual revenue of £84bn. and £476bn. in assets. This is a whole alternative economy and one which has performed better financially during the economic crisis, and routinely performs better in ethical terms. Demos cites an index of productivity performance since 1992 which shows that mutual companies have out-performed the FTSE by an average of 10 per cent over that period.

Worker ownership is not a panacea - we all know examples of people who merely exchange hiearchical exploitation for self-exploitation when they set up a social enterprise or co-operative - but it is certainly a model for reorganising corporate life that has demonstrable advantages over the limited liability corporate model. It is time that co-operatives ceased to be Britain's best-kept secret and moved into the mainstream of our economy.


  1. What ever happened to the 'Co-Ownership' movement? John Stuart Mill, was a passionate advocate for co-ownership, arguing that the benefits included "the healing of the standing feud between capital and labour; the transformation of human life, from a conflict of classes struggling for opposite interests, to a friendly rivalry in the pursuit of a common good."

  2. Hi Molly!
    we work to help set up and support co-operatives in Somerset and we'd love to have a link to this blog from our website:
    Somerset Co-operative Services