This year’s Democratic Business Summit comes to Cardiff’s Principality Stadium on 3 December, uniting policy makers, businesses, federations, academics, and funders to develop solutions to “our broken economy”.
Organiser Stir to Action is also launching its Centre for Democratic Business – a specialist home for its work on transforming business ownership in the UK and beyond.
The centre will look at a number of key issues, such as how democratic ownership can create its own policy domain; the threat of demutualisation; sources of capital; the role of unions; and the sort of investment and infrastructure needed for a new generation of democratic business support.
“Over the last couple of years, we found ourselves focusing on the role of business ownership in the economy,” said Stir to Action director Jonny Gordon-Farleigh. “We decided to create a more specialist home for our work … we thought it would be a good way of working more effectively with partners and with the new government, to have a centre that very explicitly foregrounds democratically owned businesses.”
Last November saw the inaugural Democratic Business Summit in Manchester, which aimed “to convene a range of business federations that are pro-democratic ownership but may not work together as well as they could,” says Gordon-Farleigh, “plus the kind of charitable foundations taking a bigger interest in the systemic long-term understandings of how businesses and the economy can work better.
“Having a more specialist home for this activity allows us to keep working more broadly around the new economy, and really refine and expand our work in this area.”
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Projects include a three-part course called the Co-op Option, designed to increase the knowledge of democratic ownership models among local government policymakers and business advisors who want to support the sector, but lack understanding of it. Stir to Action has delivered this in West Yorkshire through the UK Shared Prosperity Fund’s Business for Good programme, and in Scotland through Co-op Development Scotland, training more than 20 councils which are developing community wealth building.
“That’s another part of our work,” says Gordon-Farleigh, “getting more local government, early stage businesses and business advisors to visit democratic businesses, so they can see how these organisations work inside.”
Stir to Action also stewards Democratic Ownership Matters, an international network set up by Power to Change, which has an international board and primarily uses a digital platform to encourage shared learning across areas such as the green transition, transforming city economies, and employee-ownership conversions in different countries.
The second Democratic Business Summit comes six months into the new Labour government, which he sees as “an opportunity to reconvene organisations to look at how we can work with the government, articulate interventions and get the relationship right”.
Labour has pledged to ‘double the size of the co-op and mutual economy’, but at the moment “there’s a grey area in terms of what that means and how we can do it,” says Gordon-Farleigh. “So, we’re publishing some pieces in advance of the summit that will focus around business development approaches that support the creation of new micro businesses.”
Inspiration comes from the USA – for instance, Obran a Baltimore-based co-op holding company which acquires private businesses and converts them to worker co-ops. Obran functions as a “democratic conglomerate”, says Gordon-Farleigh, and Stir to Action is looking at how to build resilience through democratic corporate groups that share back office, entrepreneurial experience and capital.
Another mechanism under consideration is the co-operative franchise model, taking inspiration from New York cleaners’ co-op Up and Go which developed a digital app to sell its services. The model has now been franchised as Brightly “and “works on a cost of only 5% of monthly revenue … that’s compared to franchises sometimes costing up to 60% in the private sector.”
This kind of franchising and replication could enable more ordinary workers to set up businesses, taking advantage of the back office functions, governance system and retail platform, without having to duplicate the set-up.
Startups will still be part of co-op sector growth, adds Gordon-Farleigh, “but conversions, acquisitions and using franchising models to enable people who would not be starting co-operatives to do so could be a great part of how we advance as a sector, to scale it and to make it a bigger part of our national economy”.
The Democratic Business Summit will be a strategic event, he says, looking at issues such as governance, legislation and capital, and is aimed at more experienced players in a bid to create stronger relationships between democratic businesses and the organisations trying to promote them.
City regions have become a fertile area for democratic business development, he adds, through mechanisms like ownership hubs. And while there is still a need for more private lending to the sector, it is also important to show individuals how they can put the collective power of their wages, savings and assets into democratic businesses – for instance through community shares.
“Adjacent to all this, you’ve got credit unions and building societies, and again, they’re all made up of the collective capital of individual borrowers, lenders and savers,” says Gordon-Farleigh.
”We really need to activate that kind of story about wealth and finance in this country. These democratic business movements are based on patient, flexible wealth, which is given by individuals to support those businesses and organisations. That’s a big part of the story going ahead, creating more independence and autonomy.”
He believes philanthropic foundations and democratic funds also have a role to play but acknowledges there is a lack of certainty around the availability of public money to support the delivery of big policy promises. And it’s also important “to enable those who are most disadvantaged within the economy to use democratic models of ownership, across housing, business, and other sectors”. He highlights the low number of black-led community shares initiatives and black investors – something the London-based e Ubele Initiative is looking to change.
The rise of the social enterprise model since 2000 has “decoupled business ownership from business behaviour and economic and social outcomes,” Gordon-Farleigh argues. “It essentially said any business can produce social outcomes – it doesn’t matter how it’s structured or who owns it. That made a big impression on policy.
“Of course, private businesses can be positive actors in some ways, but a big part of our work is promoting why democratic membership within business delivers the rights, the agencies, and the outcomes that follow from having a stake, as a decision maker and in terms of the way that business relates to local community, to wages and to everything that happens in that business.
“We’ve had two decades of social enterprise being the big story, and community wealth building has been an important contribution to that. But I think we are poised for change. And if federations like Co-operatives UK, the Employee Ownership Association and Workers.coop, and support bodies like Power to Change work together, as a broader business movement we can lobby for real change, bring more resources in and bring democratic business to the fore.”
