A Tool in the Wrong Hands

I’ve written about the concept of the New Mutualism. This idea was proposed by the Cooperative Party UK in the 1970’s as an alternative to nationalizing industries or privatizing essential services. After Thatcher, it popped up again. There is an excellent collection of articles edited by Johnston Birchall called The New Mutualism in Public Policy.

The book examines how mutualization of water departments and commuter rail would restore basic services while keeping efficiencies and affordability for taxpayers. I written that such a system could be used in Madison to assist the Bus system. It envisions a mutual organization (or a co-operative) consisting of the stakeholders: the workers, the consumers, and the government. Each stakeholder group would have specific needs and desires and have an equal voice at the table.

Unfortunately, in this country, the wrong message is being touted. The term “managed competition” has been used to create the idea that municipalities can drastically reduce expenses and maintain services by turning the job over to worker cooperatives created from the former city workers. This is simply privatization with a slightly friendly face to it. In Memphis, (thanks to Bernard for the link) the idea is to put the work for solid-waste collection out to bid, but help the unionized workers create a company that they own in order to bid on it. It sounds like a neat idea, but it is really a trick.

This would force the workers to slash their pay and benefits in order to compete with the private sector. Recently, a unionized nursing home in Wisconsin found that the county could no longer afford to run it after a tax levy failed. The workers began considering a worker cooperative model but quickly discovered that workers in the world outside of taxpayer supported labor unions has not fared very well. They saw a situation in which switching to a worker co-operative would require paycuts of up to 50% , a severe reduction of benefits, and a dramatic reduction of patient services in what had been a top-rated government run nursing home. Trying to keep the union strong and fighting a private company would likely lead to similar results, but at least they would have a chance and not have to engage in self-exploitation.

These attempts to use the worker coop model as a tool to destroy worker’s rights and benefits is not just wrong-headed but diabolical. Until there is a legitimate mutalization model in the US, the unionized workers should fight for the status quo with everything that they have. The “managed competition” model is just another word for “outsourcing” and one that lures workers into their own destruction.

There is a better way to do it, however. In fact, Birchall’s book talks about solid-waste. A stronger model that would still provide benefits to taxpayers and cash strapped municipalities would be to create a multi-stakeholder co-operative. The City would provide a long-term lease (say $1/100 years) to the co-op. The board would consist of one-third workers, one-third consumers, and one-third municipalities. Membership would involve a purchase of a share for consumers (so those that wish to have a say may) and workers. This would allow the coop a means of raising capital other than through the tax base. Consumer membership might even be further divided into individual household and corporate consumers.

This would create a level of accountability on the sanitation workers and bring consumers into the loop on the real costs of sanitation. Workers would need to justify their pay and benefits, but consumers would have to justify their needs as well. The municipal presence would create a third-party to help provide the “big picture” and keep the co-op locked into the city and regional plan. This would create a very different dynamic that simply outsourcing. It would require that people take on the responsibility of self-governance and, pardon the pun, get serious about dealing with their crap as a community. In the long run, it would likely create a more efficient agency, reduce costs, and create higher levels of satisfaction among both workers and consumers. It wouldn’t be as easy as simply outsourcing and it wouldn’t provide a profit bonanza to private companies, but it could become a real model for creating a very democratic society that goes beyond simply voting for the Mayor or alders.

About John McNamara

John spent 26 years with Union Cab of Madison Cooperative and currently helps develop co-ops in the Pacific Northwest. He holds a Ph.D. in Business Administration and Masters in Management: Co-operatives and Credit Unions from Saint Mary's University.
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