People’s Businesses, People’s Banks
Much of this won’t be possible without access to credit, with dificulty in accessing finance widely accepted as the single biggest hurdle for cooperatives and worker-owned businesses.
These firms tend to sufer from limited access to long-term finance in capitalist economies, with conventional institutions sceptical of lending to businesses over which they have no control. This lack of support leads to under-investment and a tendency to buckle during moments of financial stress, making cooperative businesses susceptible to acquisition by larger non-worker-owned ones who can access credit more easily. This explains why, despite their ‘static’ productivity advantages over conventional organisations, over longer periods worker-owned businesses are structurally handicapped – which explains why they presently comprise such a small part of the economy.
Any of the larger national banks – who hold around 80 per cent of deposits in the UK – would prefer to lend £10 million to a single large business than £50,000 to two hundred smaller ones. So if we want to move away from economies based on oligopoly and capital flight, creating a network of local banks and credit unions will be of paramount importance.
Here too a greater focus on the public sector provides part of the solution, with the large pension funds of these same anchor institutions ofering more than suficient capital to start. While Britain’s unions rightly resist austerity at the national level, they have around £200 billion of their members’ money invested in pensions. By putting this in local development banks, they could not only create more jobs but also ensure better returns for their members. Of course, profit wouldn’t be the bottom line, but as John Clancy has written, their returns from investments in overseas equities often prove distinctly underwhelming, which means funds are actively looking for more sustainable and, if necessary, local investments.
Fundamental Principles
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