A tradition of difference
It is 10 years since financier Andrew Regan tried to hijack the UK’s co-operative movement and turn it into cash. ‘In effect he found it totally impossible to work out how we were organised, and couldn’t bribe the people he was looking for because he couldn’t find them.’
So says Iain Macdonald, at that time membership officer for the Co-operative Union, after 17 years as a Strathclyde councillor. In November 2002, he landed the plum job in Geneva of secretary to the International Co-operative Alliance, and last month he joined the board of the Scottish Enterprise-backed Co-operative Development Scotland.
From councillor in Dumbarton, Macdonald’s constituency is now a membership of 220 organisations in 90 countries representing no less than 800 million people around the globe.
Macdonald was a civil servant in exile in London when in 1979 he saw an advert in the left-wing Tribune newspaper for a job as education officer with the Co-operative Union in Scotland. So began 23 years steeped in the movement’s UK heritage and history, which along with his Scottish political nous helped land the globetrotting brief which most memorably took him to the presidential palace in Paraguay (‘we now have a member of the Paraguayan co-operative movement on our board in Geneva’).
But he says: ‘When I go to these countries they are fascinated that we come from the UK and particularly Scotland. In Japan especially, they know more about our co-operative movement than we do, and have a huge respect for it. The Robert Owen Society is one of the biggest voluntary organisations in Japan, and they make regular pilgrimages to New Lanark.
‘In Scotland, not enough people know about their own heritage, about what we set up and how effective it has been on a world scale.’
But he says Regan’s audacious attack in the UK a decade ago stirred a sleeping giant.
‘Andrew Regan did the co-operative movement in the UK a favour,’ he says. ‘What it did was wake up the whole democratic base to be a successful co-operative you have to be successful in the marketplace but you can’t forget why you are different. The democratic social foundations of the movement are equally important, and that combination is increasingly a strong one and responds to people’s concerns about globalisation.’
We are an enormous player within the world, both socially and economically Worldwide, the movement is an invisible colossus. ‘We are an enormous player within the world economy, both socially and economically,’ Macdonald says. ‘We want to see the co-operative enterprise model play an even bigger part.’
The ‘Global 300’ list of co-operatives, published by the ICA under Macdonald’s guidance, shows the awakened and integrated Co-operative Group is the eighth largest co-op in the world with a turnover of £8bn. Its latest intended merger partner, United Co-operatives, appears in the lower reaches of the list, along with wide-awake financial mutuals Nationwide and insurer Royal London, which has just approached the smaller Royal Liver about a merger.
Another role model is employee-owned John Lewis, says Macdonald. But he says: ‘I am constantly very frustrated, not just here but in every country I visit, with some exceptions, that the co-operative movement within that country is a very large player but doesn’t receive the recognition you might assume it would.’ He cites a ‘less aggressive approach to business’, but points to the market success of the business model across the globe.
The top 10 co-operatives include giant food and farming consortia in Japan and Korea, huge insurers in Japan, France and the US (Nationwide), the world’s second biggest bank (Credit Agricole), retailers in Germany and Switzerland (Migros) and a materials group (the pioneering Mondragon co-operative) in Spain.
He observes: ‘Switzerland is the great epicentre of capitalism, yet it is a huge co-operative country – Migros is the biggest consumer co-op in the world but the movement is big in housing and agriculture too – it has a much higher proportion of co-operative enterprise than in the UK.’
Macdonald says: ‘Our problem is that politicians, like many people, always associate the Co-op with the wee shop round the corner. My job is to show the sheer scale and significance of the movement in the world, and its vision.’
He also quotes last year’s report by the Treasury Committee which found that the wave of demutualisation of building societies and insurers in the UK had not necessarily benefited their customers. ‘The broad outcome was that consumers were worse off,’ Macdonald says. ‘We have now set up a rapid response unit’ to demutualisation and we are asking my former mentor Sir Graham Melmoth to head it up.’ (Melmoth led the Co-operative Wholesale Society from 1996 into the merger that created Co-operative Group in 2000, retiring in 2002.)
‘We are looking particularly at New Zealand, where Fontera is the biggest dairy agricultural organisation in the world with 15% of the country’s GDP (gross domestic product) we decided for once to go on the attack rather than try to defend it. There are examples where we have saved some, and these are now beginning to build up, and we are coupling that with people’s concerns about the unfettered free market.’
But how can a fettered business compete on level terms? ‘Our set of values and principles give us certain conditions under which we run our businesses – they are not a constraint in my view. They do mean we can’t cut the same corners and seek the favours from certain areas that others get. That is why we are doing this exercise.’
The growing ‘social enterprise’ movement, which counts co-operatives among its members, is not however fully embraced by Macdonald or by Co-operative Development Scotland.
He says: ‘I think it dilutes the perception of what the co-operative is. It adds to this view that we are really do-gooding’ organisations and we are not for profit – we used to talk about surplus, but co-operatives are about making money.’
Macdonald says the model is critical to the emerging economies of Africa, where ICA is trying to have an influence. ‘We are supporting the development of co-operative enterprises as businesses as a way out of African poverty, rather than the hand-out approach which has failed miserably. It is not easy, and some co-operatives have come and gone as a result of government interference – it is all about self-help and self-responsibility, coupled with democratic control.’
Surprisingly, some 13% of electricity in the US is produced by co-operative enterprises. ‘A lot of the return goes back into the local community to help wind farm generation but it also goes abroad – they are doing a lot of work in Bangladesh too. There is a natural link between being a co-operative and making that commitment outside your own sphere.’