ECONOMICS - by News WeeklyNews Weekly
Can co-operatives civilise capitalism?
, December 4, 1999
Can a revival of mutual funds and cooperatives help recapture the social cohesion and security that has been eroded under the grinding force of globalisation?
That was the the question addressed at a seminar recently organised by Mutuality Australia Inc.
The seminar brought together representatives from across the political spectrum, from churches, co-operatives and mutual organisations.
Race Matthews, former MP and secretary of the Australian Fabian Society, spoke on the demise of mutual organisations in Australia and the challenge of reinvigorating credit unions and other mutual organisations.
His recent book, Jobs of Our Own: Building a Stakeholder Society, is an historical account of the impact of the distributist movement from G. K. Chesterton and Hillaire Belloc, to the brilliant success of the Mondragon co-operative movement in the Basque region of northern Spain. He said:
'Mutualist bodies such as insurance societies, credit unions, friendly societies, building societies and co-operatives reflect the principle that our key needs can often be satisfied more effectively by acting together than alone. Mutuals are usually formed so members can obtain goods and services which would otherwise be unavailable or higher priced
'While Australia has had financial co-operatives for more than a century, credit unions in their modern form date from the 1950s. Australians who married in those years could obtain 30-year home loans at rates of about 3 per cent.
'Families in outer suburban Catholic parishes got together after mass, pooled their savings and queued for loans at affordable rates. In time, their neighbours of other faiths or none at all joined in, giving rise to community credit unions and, a little later, industrial credit unions.
'The benefits of credit unions are so obvious that they now number some three million members, with assets totalling more than $18 billion. Every member is an equal co-owner of the business, with an equal say in its affairs and equal access to its services.'
Race Matthews noted the cross-generational importance of credit unions and mutal funds.
'Each generation of members of a mutual adds to its store of savings in the expectation that they will be passed on for the benefit of generations still to come. Mutualist bodies are in this sense trustees for the intentions of the dead and the inheritance of the unborn. It was not by accident that the names of some early mutuals included the word 'perpetual'.
'What cannot be hammered home too strongly or too frequently emphasised is the simple and powerful truth that demutualisations are all too often a massive contravention of the public interest, driven by anti-mutualist vilification and the naked greed of their directors, managers and staff for lavish allocations of stock options and grotesquely inflated remuneration packages.'
It was pointed out at the seminar that if the National Roads and Motorists Association (NRMA) succeeds in demutualising next year, the total value of demutualisations in Australia over the past decade will amount to $35 billion.
The next targets for demutualisation are the credit unions.
There was a general recognition of the need to re-educate even those who are members of mutual funds and co-operatives as to the principles and advantages of co-operative saving, and to revitalise the co-operative movement, as has happened in many other countries.
For example, a major United States co-operative - Co-operative Services Inc. of Oak Park In Michigan - was formed in the 1930s in response to an urgent local need for affordable, hygienic household milk delivery services.
When the commercial dairies moved in with comparable services at a comparable price, the co-operative repositioned itself, so that the community capital it had accumulated was used for affordable eye tests and spectacles.
Following the arrival of the optometrical services corporations, the co-operative retasked its capital again, to meet the need for affordable accommodation and support services for older people. It now operates large apartment complexes - self-governing co-operatives within the over-arching structure of the parent body in several States.
In the USA, co-operatives are taken seriously. Universities have chairs in co-operative enterprise.
A new generation of co-operatives have been developed in the US, Holland, Scandinavia, and Britain.
In Australia, Charles Sturt University and the University of Technology, Sydney, with encouragement from the NSW Government, have developed the Australian Centre for Co-operative Research and Development.
It is a small step in a country where the important role co-operatives have played has been largely forgotten.