Cooperatives and Politics – A New Zealand Perspective

In a curious parallel to New Zealand’s political landscape, the British Conservative party won power from the British Labour party in 2010 after spending three terms in opposition.

Their flagship policy for this election was “The Big Society”, which is relevant because it has a lot to say about cooperatives.

One of the fundamental tenets of The Big Society is that increases in British government spending, particularly under previous Labour governments, eroded national productivity and made Britain unnecessarily vulnerable to the global financial crisis.

This was evidenced by relatively low economic growth over the period, a widening deficit, and a number of other fiscal evils.

So what does this have to do with cooperatives?

THE BIG SOCIETY

The Conservatives’ remedy for Big Government is The Big Society. This means stronger British institutions independent of the state but contributing nonetheless to the interests of both the state and the individual.

Such institutions are deemed important both as the objects of loyalty and the relationships which define the social fabric, as well as repositories of human wisdom and knowledge.

Together with competition and entrepreneurship, they are proposed as the basis for future British economic success.

The point is that the British Conservative party has identified cooperatives as matching this requirement perfectly. This is problematic for the Conservatives. The British cooperative movement is heavily influenced by its historical association with the political Left.

British ‘friendly societies’ based on the principle of mutuality, and committed to self-help in the welfare of working people, are particularly significant.

Consequently a Conservative Cooperative Movement has been set up in an attempt to bridge that political divide.

In contrast to Britain, the New Zealand cooperative movement in did not arise from any sort of class struggle. Instead, it emerged on a number of fronts as a thoroughly rational response to various unique challenges.

For primary industry, these were mainly to do with geography, particularly isolation, exposure to export market volatility and the absence of readily available capital.

For the retailing sector, it was about owner-operators achieving scale for procurement and branding.

SUCCESSFUL ENTERPRISE

New Zealand cooperatives thus tend to exhibit all the characteristics of entrepreneurship and fierce competitiveness that one would expect of any successful enterprise.

The fundamental difference from investor-owned businesses is that the rewards of this success flow back to the members who transact with the cooperative, rather than some independent group of financiers and investor shareholders.

New Zealand’s three Foodstuffs cooperatives provide a stark contrast with the traditional British retail consumer-owned or worker-owned cooperative comprised largely of working class members and serving a local community.

Foodstuffs is our third largest business, and a cooperative of grocers rather than its customers. It held 57% market share in 2010, and had opened significantly more stores than its main investor-owned competitor Progressive over the previous decade.

Essentially, it comprises entrepreneurial business owners, who are unlikely to have a strong affiliation with the political Left.

The secretary of the National Distribution Union once claimed that Foodstuffs was “one of the most anti-union companies in New Zealand” and is more like “a libertarian think-tank that happens to run supermarkets”.

In fairness, Foodstuffs has a social responsibility programme and many of the stores’ owner-operators contribute greatly to their local communities through sponsorship and other support.

However, it might be fair to say that New Zealand cooperatives do tend to comprise liberal capitalists rather than socialists.

DIFFERENT BEAST

Thus while New Zealand’s notion of cooperatives very neatly fits the British Conservatives’ description of the institutions that they so desire, they are quite a different animal from British cooperatives, both in membership and political affiliation.

This raises an interesting challenge for the British Conservatives who are faced with a dilemma while trying to simultaneously woo a potentially hostile movement and at the same time reduce the scale of government spending.

It also raises interesting questions about the political alignment of cooperatives in New Zealand, particularly if we accept the assertion they are largely comprised of liberal capitalists.

Various investors and financiers have a significant interest in opening up New Zealand’s largest cooperative companies to external investment.

While these would-be investors themselves have a natural alignment with liberal, capitalist policies, their self-interest in seeking new investment opportunities makes them natural opponents to the cooperative model.

Thus the irony that they look for the support of liberal, capitalist political allies to undermine what are essentially liberal, capitalist organisations.

MISLEADING STATEMENTS

Neither Fonterra nor Foodstuffs (nor any other cooperative) appears in the published list of New Zealand Business Roundtable members – although Progressive Enterprises is represented.

This bastion of liberal (and libertarian) capitalists has been quite outspoken in its criticism of cooperatives, including opposing the formation of the Fonterra cooperative and subsequently endorsing moves to allow external investment in Fonterra.

It has also been a source of misleading statements associating cooperatives with socialism, which is quite mischievous in light of the preceding discussion.

It is therefore highly significant that the New Zealand Business Roundtable and the New Zealand Institute have announced they will merge forming a new, independent public policy think tank.

Both Fonterra and Foodstuffs are members of The New Zealand Institute, which itself is characterised by a focus on innovation and internationalisation and is largely silent on the question of cooperatives.

All New Zealand cooperatives should be interested in what stance the newly merged think tank has on these issues.

A proper, shared understanding of what the New Zealand cooperative movement really means would be the best outcome.●

— From the February 2012 Cooperatives News