The Co-operative Alternative in Europe

The Case of Housing

Gregory Andrusz

• Publisher: Taylor & Francis
• Year: 2019
• Print ISBN: 9781138341333
• eBook ISBN: 9780429802287
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

First published in 1999, this book attempts to understand housing co-operatives in terms of their development over time and their relationships to other types of housing tenure. The book considers them within the framework of the broader co-operative movement and its role in society's overall system of production and exchange. There is an examination of the role of a form of ownership which is neither "private", nor "state" in six countries, and in some cases the fortunes of housing co-operatives seem closely to correlate with periods of political liberalization and crises, heralding a shift in ideological orientation.

Part I
From Corporatist State
To Co-Operative
Commonwealth?

Introduction to Part I

The end of the Second World War marked more than the defeat of fascism. It also marked the rejection of the conventional economic wisdom that had dominated the inter-war period, where ‘normalcy’ meant a return to the Gold Standard and a belief in the efficacy of free markets and in the dictum ‘laissez-faire should be the general practice: every departure from it, unless required by some great good, is a certain evil’.¹ The Allies who had defeated fascism in war were intent on ensuring that national and international measures should be taken to ensure that as far as possible the economic causes of that war should not be allowed to recur. The outcome was state intervention and the formation of the corporatist state.

Keynes and Marx walked in step for the first thirty years after the war. Then, in the mid-1970s the West broke step and rejected Keynes. A little over a decade later, Marx suffered the same fate. Normalcy once more became economic regulation not by governments but by markets. The issue now is the search for a new collectivist approach to social organisation.

Note

1 J. S. Mill, Principles of Political Economy, (1848), Longman, London, 1909, p. 950.

1 Conflicts in Political Economy and Social Theory

So when I consider... the state of all flourishing commonwealths today... I can see nothing but a conspiracy of the rich who are aiming at their own advantage under the name of the commonwealth. They invent and devise all ways and means, by which they may keep without fear of losing all that they have amassed by evil practices, and next to that may purchase as cheaply as possible and misuse the labour and toil of the poor.

Thomas More, Utopia

In September 1990, after a year of truly cataclysmic changes in the political geography of the world which accompanied the collapse of the ‘actually existing socialism’¹ in East and Central Europe and the Soviet Union, a military crisis in the Middle East involved the United States and the USSR in a joint, agreed policy towards a belligerent Iraq. This provided some grounds for optimism that the advanced industrial nations had reached the point of formulating a new world order. Underlying the new political alignments are the global structural environmental and economic crises. The two are intricately linked, for increases in GDP are positively correlated with increasing energy consumption, and the latter, since the Club of Rome Report (The Limits to Growth) in 1972, has been seen as a keystone in the environmental crisis.

Much is owed to the perspicacity and boldness of Mr Gorbachev. But the reason he acted as he did and his overtures were heard and accepted both within his empire and without was that the economic cost of the arms race could no longer be sustained by the superpowers. For some, though, this was a triumph of the marchers’ reason - part of the long march of Reason. History has yet to judge whether the efforts of the tens of thousands who took part in the peace movement made a significant contribution to the termination of the Cold War and the abandonment of the MAD process.²

There are cycles in human thought which move between polar opposites, for instance, authoritarianism and libertarianism. The eighteenth century was intoxicated by the newly discovered omnipotence of ‘reason’, which was expected to explain passions, politics and deities. With the publication of Spinosa’s Ethics, the world became reduced to an arithmetic problem. There could be no place for instinct and tradition in the new logic.

The antithesis to this Weltanschauung peaked at the end of the nineteenth century and early decades of the twentieth. The irrational, the ‘intuitive’, the ‘unconscious’ and the volatility of the crowd were captured and reflected in T. S. Eliot’s The Waste Land, and in the works of Freud and Sorel.³ At its zenith this way of thinking foreshadowed the nemesis of the free market philosophy and its supplantation by the institutional and intellectual bearers of the seed of rationality - the welfare state and scientific Marxism. Under Marxism-Leninism the laws of politics and society were as inexorable as the laws of thermodynamics. One of the slogans of the October 1917 revolution was: Communism = Soviet Power + Electrification. There was a profound belief in science: the social world was controllable and could be planned once the laws of social development were understood.

By the end of the 1980s, reaction had once again set in against the absolute knowability of the social world and its economic functioning. Today, not only in Russia, there is no longer a grand faith in science; governments are seen as being no more able to control the trade cycle than they can the weather. ‘Science’ itself has become debased and scientists are chided for polluting the world from their detergent laboratories. There has been a questioning and even partial rejection of the idea that Homo sapiens can control the environment. For this reason, among others, the ground has been well prepared for the almost joyous embrace of Adam Smith. The general acceptance of his hidden hand is revealing; it returns us to mysticism, superstition and the deus ex machina.

Macro-economic demand management by government, the Keynesian prescription, has been denounced and derided. Its place has been taken by micro-economics, in which each individual and household is sovereign in the market in the sky. The substitution of the ‘macro’ by the ‘micro’ in economics was accompanied by the shift from sociology to psychology: social ills and problems were the product, not of structures (and if so, then not amenable to ‘engineering’), but of individual failings. Hayek, while drawing on the work of sociologists, refused to acknowledge their contribution to his own thought. He deliberately denied the existence of sociology as a discipline: he discussed ‘social Darwinism’, but omitted to mention Herbert Spencer, its originator. The reasons for this neglect are to be found in his highly disparaging discussion of the subject:

The socialist bias of constructivism (i.e. rationalism) . . . displays its inability to comprehend economic phenomena most crudely in sociology. . . . Sociology itself might also be called a socialist science, having been openly presented as capable of creating a new order of socialism. . . . Sociology proceeds in sovereign disregard of knowledge gained by established disciplines that have long studied such grown structures as law, language and the market.⁴

Corporatism and Beyond

Karl Mannheim, also a sociologist, was aware of the direction of change brought about by technology and the way in which society was increasingly organising its members in terms of the most efficient orchestration of means and ends. He concluded that there was a decline in the ‘capacity to act intelligently in a given situation on the basis of one’s own insight into the interrelations of events’. However, he did not suggest that everything should be left to the market.⁵ In the post-war decades the ‘means’ chosen came to be conceptualised as corporatism.

This concept is itself difficult to define, partly because of the range of topics addressed under this heading and the disagreements over what constitutes the essential elements of the theory.⁶ Its virtue inhered in its offering a credible and distinctive alternative to pluralism as a way of interpreting organised interests and the manner in which they were integrated into the work of governments and their bureaucracies.

An important attempt to offer a concise statement on corporatism in the context of liberal democracies was made by Schmitter in 1974.⁷ According to him, corporatism consists of a system of functionally differentiated interest groups which are recognised or licensed by the state and granted a monopoly in exchange for observing certain controls on their selection of leaders and for filtering the demands they put forward. This last point is very important. These ‘interest organisations’ did not necessarily fully represent their members’ interests and could instead act as regulators of those interests by, for example, restraining even the legitimate wage demands of their membership, by tacitly or overtly accepting an incomes policy. This suggested that demands placed on the agenda by interest group mediators emanated from the organisation rather than from the individual members, or that the demands of the latter are shaped by their representatives, within their own conclave.

In contrast to pluralism, which views the political arena as consisting of pressure groups competing in the marketplace, corporatism was a system of state-licensed monopolies. Such a system emerged because ‘bourgeois dominated’ polities need stability in an environment characterised by the concentration of ownership, increasing competition between national economies, and a growth in the public domain.

Other authors saw corporatism as a distinctive form of political economic organisation differing from both capitalism and socialism. In fact one writer described it as ‘an economic system in which the state directs and controls predominantly privately owned business according to four principles: unity, order, nati.onalism and success’.⁸ It was a social formation that had developed as a consequence of structural changes in the economy, such as the increased concentration of investment resources in a smaller number of large industrial conglomerates, declining profitability, higher expenditures on research and technological development, and intensified international competition. These all had the effect of drawing the state more and more into the economic arena. This interpretation was in a sense a generalised sketch - an academic cartoon - of the trend in the UK and other industrialised societies. It represented another sort of ‘third way’ - neither capitalism nor socialism, but a hybrid in which the dominant power groups in society were ‘ incorporated’ into the state machinery to maintain social, economic and political stability. Corporatism was adapted to explain the compromise reached during the Brezhnev era between the political leadership and various interests.⁹

The major European states had to find ways of dealing with the turmoil of 1968 and the impact of the oil crisis of 1973, which brought with it the threat of higher inflation and economic dislocation. The trade unions were strong (their membership figures were buoyant) and yet there was mounting evidence that full employment might not be sustainable. Moreover, despite burgeoning public expenditure it seemed that the post-war commitment to the other pillars of the welfare state might also be difficult to maintain. The postKeynesian era had dawned, although Friedman’s dome still lay beneath the horizon.

Although political parties still appealed to the public to participate in the parliamentary decision-making process, in fact deals were being done behind closed doors with leaders of powerful interest groups - ‘the beer and sandwiches at No. 10 syndrome’ (until Margaret Thatcher became mistress of the house). Corporatism was an expression of the high point of consensus politics. However, in retrospect these manoeuvres were attempts by national governments to employ domestic institutional measures to tackle essentially international problems. This type of politics represented a rational way of resolving conflicts over the distribution of goods and services in both private and public sectors. The theory appeared to apply to, and adequately describe, the political ordering of affairs in the UK and USSR in the late 1970s under the unimaginative, docile and compromising leaderships of James Callaghan and Leonid Brezhnev.

At the ‘meso’ level, corporatism was evident in certain economic sectors where public policy functions were being devolved to private groups. Whole sectors, properly comprising part of the public domain, could be seen to be operated and regulated by private interest associations who performed ‘public’ roles. The activities of water boards, for example, were regulated neither by market forces nor by state bureaucracies answerable to Parliament.¹⁰ Studies carried out on ‘quasi-autonomous government organisations’ (quangos), especially in the public sector, uncovered a disturbing aspect of the functioning of liberal democracies, namely that they contained sectors which were quasi-public associations, responsible neither to shareholders nor to the electorate. From the standpoint of the 1990s the boards and associations falling into this category were an ‘unstable’ political- economic form and already in transition to becoming private.

It is now being suggested that a supranational corporatism is emerging which has to meet the needs of an integrated Europe. The future European political economy will be held together by a combination of technocratic professionalism shared by all the major players regardless of divergent specific interests and by a dense and durable web of bi-, tri- and multilateral bargaining relationships involving both public and private bodies. Ideally, this system should maintain order in the supranational organism by ensuring that all parties practise self-restraint and consent to compromise. However, there are serious limitations to extending the concepts and institutions of the national corporatist state to the supranational level.

The international organisations set up after 1945 - OECD, GATT, UNCTAD, the World Bank and IMF- have far from outlived their usefulness. But during the 1970s it became clear that there were no technically viable institutional mechanisms to provide mutually acceptable political solutions to the economic and ecological problems faced by national governments functioning in the international arena. In their absence, national corporatist strategies were deployed. The medicine prescribed was no more than a placebo. Rather than use the breathing space to find new institutional mechanisms, as in the 1920s politicians looked back to the ‘golden age’ of free trade: capital markets were deregulated, the...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Acknowledgements
• Introduction
• Part I: From Corporatist State To Co-Operative Commonwealth?
• Part II: Russia and the Co-Operative Alternative
• Part III: Housing Co-Operatives in Europe
• Conclusion
• Postscript