14 March 2007

Reasons to be Co-operative

Along with the other supermarkets John Lewis announced its record profits earlier this month, up from £250m. to £300m. But there is one big difference. Because of JL’s mutual ownership structure the profit will either be reinvested in the firm or paid out to employees in bonuses. Employees are actually known as ‘partners’ in the company and they will be paid an average of £2,000 on top of their salaries. As part of the group, Waitrose employees will benefit from this pay-out: a supermarket assistant earning £12.5K will get an extra £2,000.

John Lewis has a considerably smaller turnover than Tesco, and lower profits to match. But more important is the fact that Tesco’s profits will be paid to shareholders rather than employees, which helps explain why Tesco’s shares have increased in value by 25% over the past year. The basic justice of the situation at John Lewis compared to Tesco is so apparent that it barely seems stating: it is the employees who generate the surplus and so it is rightfully theirs.

In my world it seems obvious that, if employees know they will benefit from the success of the business they work for, they are likely to work harder. In the world of capitalist economics, though, co-operation is supposed to operate as a disincentive. It is cut-throat competition that yields efficiency. But if this were the case we would expect to see businesses like Waitrose failing, whereas in fact they are going from strength to strength.

A recent opinion poll asking about ethical brands reported in the FT shows that British consumeres do make the link between co-operatives and ethical consumption: 'UK shoppers emerged as the most aware, most critical and most likely to see national brands such as Co-op, the financial and retail group, or Innocent, the smoothie drinks brand, as standard-bearers.' Of the top 15 brands four are co-operatives.

As individuals playing our part in the economy we may be fortunate enough to work for a co-operative, or to be able to influence the movement of our place of work into co-operative ownership, or to start a co-operative business. If these options are not available we can at least choose to shop at a co-operative supermarket—Waitrose or the Co-operative—and use mutual banks and building societies—the largest being the Nationwide.This is much more than a token gesture. If we want to live by Gandhi’s maxim that we should ‘be the change we want to see in the world’, then if you want to see a just and co-operative world it is just common sense.

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