Consumers or Citizens? Cliff Mills 3 rd November 2009 St Michaels Macclesfield In the series: How then shall we live?

Consumers or Citizens?

Cliff Mills

3rd November 2009St Michael’s Macclesfield

In the series: How then shall we live?

Your top three issues?

• Global poverty

• Climate change

• Peak oil

• Economic crisis

• Energy security

• Environmental

destruction

Likely to be …

• Huge issues• Affecting lots of people• Caused by many factors• Influenced by big

organisations

“I am too small and insignificant”

“There is nothing I can do about it”

“How we shape the world we live in”

• We are not too small

• We can do something

• We have to

– Governments probably can’t solve biggest issues

– Other large institutions can’t or won’t

• We are the only ones who can

This talk

• Today’s world

– Why things are the way that they are

– How we fit in, the part we play

– What drives it

• A different sort of world

– Whether things could be different

– A different place and role for individuals

• What can we do to help get there?

Today’s world

• Dominated by institutions

– Governmental

– Trading

– Religious

– Educational

– Voluntary/NGO

• We are small in this

context

Shocking news: institutions don’t exist

• We pretend that they do; they are convenient

• Can outlive individuals

• Can operate on a bigger scale

• Can own things, employ people

• Can enshrine principles, or an ethos

A major component of the world we live in

Today’s most significant institutions

• Businesses: trading

organisations

– Manufacturers

– Service-providers

– Brokers and traders

• Important for us:

– Goods and services

– Jobs

– Backbone of economy

How most businesses work

• Today’s dominant “business model”

– Companies

– Owned by investors

– Trade in order to make a return or “profit”

• Hugely successful

– Invention of Victorian age

– The engine of growth for modern economies

– Responsible for creating today’s world

“Investor ownership”

• A success story – but not entirely

• Disadvantages of investor ownership

– Investors are the only owners

– Other interest groups excluded (employees,

customers, local community)

– It benefits investors (private benefit)

– It does not trade for the public good

• Our role: consumers, creating demand, fuelling growth

(“disempowered”)

Investor ownership

• A problem with the business model, not specific

corporations

• Caveat: there are bad examples of all types

• The main problems

– The model is driven by the pursuit of growth and

private gain

– Not based on delivering public good

– It does not promote equality

Today’s world and society

• Dominated by investor

ownership

• Pursuit of private gain –

socially acceptable

• UK economy built on it

• Commercial law built on it

• The pursuit of private

gain “institutionalised”

“Growth is a substitute for equality of income. So long as there is growth, there is hope, and that makes large income differentials tolerable.”

(Henry Wallich, former governor of US Federal Reserve, professor of economics at Yale)

“So long as there is growth …”

• But the planet has limited resources …

• … what worked in the nineteenth century may not work today …

• … and there is a financial crisis …

Financial crisis

“Crises and ordeals do not create the problems for us: they simply reveal the problem that we already own.”

Father Richard Rohr

“It is obvious that the old order and the ideas that underpinned it are broken …”

Will Hutton, the Guardian, November 2008

“The old order is broken …”

• Many jobs lost, homes

repossessed

• But has anything actually

changed?

• The Stock Market is

buoyant

• Bankers’ bonuses are

back …

• But the old order is broken

“…the ideas that underpinned it …”

• The underpinning idea: investor ownership

• Many people know that it is unfair, or not working in their

sector

• The planet cannot sustain the unbridled pursuit of growth

and private gain

• It is economically, socially and politically unsustainable

But what is the alternative?

The British Mentality

• Public or private

• State-owned or privately-

owned

• Nationalisation – 1940s to

1970s

• Privatisation – 1980s to

today (continuing)

The fore-runner to state-ownership

• There was an alternative way of doing business

• It was based on self-help, rather than the pursuit of gain

• It had its origins in the late 18th/early 19th century

• We know it as traditional mutuality

Traditional mutuality

• Co-operative, friendly and

building societies

• Formed by people in

communities

• Pooled their collective

needs to create a

sustainable business

• Self-help, fighting against

adversity

The basis of mutuality

• No investor shareholders – customers were the owners

(members)

• Democratic participation

– One member one vote

– Those in charge were elected

– Accountable to the members

• Societies traded for a community (social) purpose

How were they funded?

• Members deposited their money there– No “high street”

financial services– Cash was insecure at

home– Enabled people to

save– Limited interest paid

on capital if sufficient trading surplus

How did they trade?

• Just like a normal business

• They had to be profitable to survive

• The difference: trading surplus was – Used for reserves– Funded activities– Paid back to members

in proportion to their trade (the “divi”)

Why were they successful?

• People were loyal

– To preserve local goods and services (self-help)

– To look after their savings

• It was an efficient business model

• Driven by self-help, meeting needs, not the pursuit of

private gain

Self-help worked as a basis for business

The high point – mid 20th Century

• Thousands of building

societies

• Friendly societies had

about 14 million members

• Co-operative retail

societies accounted for

more than 30% of UK

retail trade

• Impact on society?

Why the subsequent decline?

– Creation of the Welfare State: many societies swept

away

– Central taxation replacing self-help

– Rise of big PLCs and banks

– Decline in quality of mutual management

– Demutualisation of building societies

– Growing belief in “the market”

– Cultural change: the rise of consumerism

Triumph of consumerism

• Self-help became irrelevant: – we had become consumers, rather than citizens

• The culture changed, society changed

• The end of self-help and mutuality?

Nearly … but not quite• 1990 – 2000: Mutuality

struggling for survival• Currently a revival• Mutuality sounds like a

good idea• Less problems than

banks in credit crunch• Values and principles

now a selling point• Return of self-help and

mutuality?

A return of self-help and mutuality?

• Many people have forgotten, or never knew

• Business people have very little idea

– only understand one business model

– the market: people are consumers

• Nothing else would work

In the end, its up to us

Citizens

Driven by self-interest

Investor ownership

Profit maximisingbusinesses

Driven bymutual interest

Consumers

Self-helpbusinesses

Community/mutualownership

Less fairsociety

More fairsociety

OR

Why we are powerful• Our power as individuals is through how we behave as

customers, workers and savers

The patterns of our economic behaviour determine the society we live in

• Are we willing to use our economic power – not to get the cheapest deal, the highest pay or best

return– but to create a different world?

Using our economic power

• Many already do through

the job they choose

• How many do so when

buying food, insurance,

energy, a holiday?

• How many do so when

saving, and financial

planning?

• What could be achieved

by self-help today?

What can be achieved today?

What is possible today?

Is it possible to move from a greed-based economy to a needs-based economy?

Could large businesses today be based on delivering the public good, rather than private gain?

• No, if we wait for some institution to change things• Yes, if we change the way we think and behave• Yes, if there is a popular movement for change• Is it likely?

The views of (some) economists

• Ostrom: challenges conventional view that only state or private ownership works

• Lunn: people’s behaviour does not fit orthodox economic theory

• De Soto: how to use the savings of the poor – the “Mystery of Capital”

It depends on us

• Are people sufficiently concerned?

• Will we – make do with less– accept inconvenience– pay for change– have less so others

can have more?• Or is some environmental

disaster needed?

We should remember

• Self-help emerged from adversity, not prosperity• Started by ordinary (poor) people, not governments• It played a big part in creating the fabric (now crumbling)

of civic society and local communities• It was the fore-runner to the welfare state, and the

concept of public service• It needs to play a big part – especially with energy needs

If we want a different world, we need to behave differently

As citizens, not consumers

Things to do

• Learn and find out more

– Books, articles

– Websites

• Change your behaviour

– As customers

– As savers

– As workers

• Tell others, campaign,

influence people

What do you think?

Questions and discussion