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Common ownership is a principle according to which the assets of an enterprise or other organisation are held indivisibly rather than in the names of the individual members. Thus, rather than being “owners” of the enterprise, its members are held to be trustees of it and its assets for future generations. Common ownership is a way of “neutralising” capital, and vesting control of an enterprise by virtue of participation in it, rather than by the injection of capital.
Purpose
It is the practical application of the socialist desire to achieve the “common ownership of the means of production” (see Clause IV). Its purpose, by preventing control being obtained through the purchase of a company’s share capital, is to ensure that the founders’ aims are pursued in perpetuity. This is particularly desirable to the founders of a workers’ co-operative, who, inspired by solidarity and the desire to create fulfilling employment, will typically build the business up through hard and low-paid work (misleadingly called “sweat equity”). They may out of a sense of fairness wish to hinder future generations of employees, or their heirs, from winding up the co-operative so as to be able to share the sale proceeds among themselves (see asset stripping).
In practice
Common ownership is practised by large numbers of voluntary associations and non-profit organizations, by all charities, as well as implicitly by all public bodies. Most co-operatives have some element of common ownership, but some part of their capital may be individually owned.
A very significant early influence on the movement has been the Scott Bader Commonwealth, a composites and speciality polymer plastics manufacturing company in Wellingborough, Northamptonshire, which its owner, Ernest Bader, gave to the workforce in installments through the late 1950s to early 1960s. (Contrary to the popular concept of common ownership organisations as being small organisations, this is a high-technology chemical manufacturer whose turnover has exceeded £100 million per annum since the early 1990s with a workforce of hundreds.)
From the collective movement, the most significant experience is probably Suma Wholefoods in Elland, West Yorkshire.
In London, Calverts is another rare example of an established worker co-operative with a policy of pay parity.
History of the movement
The principle was adopted by the “new wave” workers’ co-operative movement during the 1970s, and continues to this day although it is less common. In 1976 the British parliament passed the Industrial Common Ownership Act (“ICO Act”), which gave £100,000 of seed funding to the Industrial Common Ownership Movement (ICOM) and £50,000 to the Scottish Co-operative Development Committee (SCDC). ICOM was fuelled by three strands of thought – Christian socialism, workers’ control and “rice and sandals” alternativism – and successfully promoted the creation of over 2,000 worker’s co-operatives, before merging in 2001 with the Co-operative Union to form Co-operatives UK, thus reuniting the worker co-operative and consumer co-operative sectors.
In parallel the growth of some 60 local co-operative development agencies (CDAs) supported by local authorities gave on-the spot start-up help to groups wanting to start a co-operative. Sometimes the local retail co-operative societies were also active. By combining personal, community and business development this movement brought many disadvantaged people the opportunity to go into business for themselves. Combining the agendas of economic democracy, equal opportunities and social inclusion in this way has many good points, but has led to the establishment of many rather weak businesses, reflecting a “lifestyle” rather than seeking profits and growth.
Finance: The ICO Act also established a £250,000 rotating loan fund managed by Industrial Common Ownership Finance Ltd (ICOF). ICOF - since 2005 trading as Co-operative and Community Finance - has grown steadily and now manages a range of funds totalling some £4.5 million. Some of these have been endowed by public bodies and others raised through public subscription. This was the start of the ethical investment movement in Britain.
Nowadays, as signalled by the British Labour Party’s abandonment of “clause 4” of its constitution, which called for common ownership and was printed on party membership cards, ideology has given way to pragmatism, and the social enterprise movement focuses on outcomes rather than structures.
UK law
The principle is typically implemented through inserting two clauses in a company’s memorandum of association, or an industrial and provident society’s rules.
- the first provides that the company’s assets shall be applied solely in furtherance of its objectives and may not be divided among the members or trustees.
- the second provides for "altruistic dissolution”, whereby if the enterprise is wound up, remaining assets exceeding liabilities shall not be divided among the members but shall be transferred to another enterprise with similar aims or to charity.
British law has been reluctant to entrench common ownership, insisting that a three-quarters majority of a company’s members, by passing a “special resolution”, have the right to amend a company’s memorandum of association. However such entrenchment has been written into the Community Interest Company (CIC), a new legal status that was introduced in 2005.
See also
"Common ownership"