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November 15, 2007



Chris, two points:

1. Partnerships aren't co-ops and they aren't worker-owned. Have you ever worked for one? A partnership is about the most rigid hierarchy you can get, with a massive gulf between the partners and the employees and much less chance of promotion to the partnership for a non-partner. If your model of a worker-owned firm is something like Clifford Chance then it's very, very not like John Lewis.

2. I am not at all sure that "Market Based Management" in the sense you've linked to means what you're implying it does. It's the personal philosophy of Charles Koch, an extremely right-wing American who owns a big company. It's basically one part kaizen to one part "act like you own the business" to one part bullshit bingo.


I can see that schools and hospitals aren't "public services" in the way that the M25 is. In what way are they "public services" that Tesco and Sainsbury aren't? Or are you using "public services" just to mean "government-owned business where the government controls client access"?


D2 - Yes, the larger partnerships are hierarchical. But this is in large part a result of their earlier success as smaller, more egalitarian firms. As these expand, they often have to employ people with less/no ownership rights, as this is cheaper and less risky than giving them full partnership. And the prospect of getting partnership is often a fantastic way of motivating staff - resulting in an efficiency less available to firms with external shareholders.

Mark Wadsworth

It is a bit of an empty debate.

If co-op's were so great, why aren't there more of them? Why did all the building societies merge and demutualise? Look at the history of ASDA and all these other big companies that may have been farmers' co-op's in the dim and distant past.

In any event, lawyers choose partnerships (rather than limited company) a) because it is much more flexible and b) because it is usually much better for tax. They are not co-op's by any stretch of the imagination, they are 'owner-managed'.

james c

John Lewis is a historical accident, which was the result of the wishes of its founder. It persists as a partnership, because the top management gain more through it being a partnership, and keeping their jobs, than if it were sold.

Roger Thornhill

IIRC the Building Societies demutualised by offers of shares to the members - i.e. liquidating an asset they did not know they "had". I do recall the banking regulations changing around that time, Banks getting interested in mass selling of mortgages and BSocs getting interested in becoming banks.

I still have my 100 shares in Abbey/Santander from the float. I liked Abbey because it was a mutual. I now use Nationwide, which still is. I would use the Co-Op bank if they did not give money to that bunch of crooks in the Labour Party.

The Tory plan is peculiar, as voluntary collectives should form by themselves. Are the Tories proposing some fundamental change in business or tax legislation to change the balance?


[But this is in large part a result of their earlier success as smaller, more egalitarian firms. As these expand, they often have to employ people with less/no ownership rights, as this is cheaper and less risky than giving them full partnership]

but "expand" in this context means "take on a third person". They move to a hierarchy at a very, very early stage.

Jim Donovan

While not a fan of socialist capitalism, I have to acknowledge the success of the co-op model for New Zealand dairy farmers. These guys are not renowned for their socialist principles - it's all about self-interest (a la law, accounting, engineering, IT partnerships, etc). But they've done well from the capitalist/co-op model

As you imply, co-ops work until they need big bucks, so you'll be interested in their move towards stock-markets and mainstream capitalism.


Laurent GUERBY

Jim, French Credit Agricole is also a coop (legally, not really in spirit :) with some capital on the stock market.

Chris, an easy reply to Sinclair "To own the company they work for exposes them to greater risk and is not in their interests." is that in (most/all at least in France?) coop owning one share is the same as owning millions of shares so worker don't have to put all their wealth in the coop shares, they just need to put a bit and they can invest the rest of their savings outside their employer owned coop.

Kevin Carson

Mark Wadsworth,

You might as well ask why if capitalist enterprises are so great, why were there so few of them in the old USSR.

Maybe the fact that there are so few co-ops, despite their being more efficient, has something to do with the fact that this is not a free market.

State capitalism starts with certain structural assumptions that rule out residual claimancy by workers, despite the fact that it is the most efficient form of organization. For one thing, it is built on a foundation of massive expropriation of the working classes, including the enclosure of the open-field system in the late middle ages, the nullification of copyhold tenure in the 17th century, and the Enclosures of commons in the 18th. The result was an economy in which most property was concentrated in a few hands, and the majority of people were driven into the wage labor market against their will. That meant that the industrial economy developed under conditions of concentrated capital ownership and the absentee ownership of enterprises, which made hierarchy necessary to elicit effort from workers who had no rational interest in maximizing effort or productivity.

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