The horizon is not so far as we can see, but as far as we can imagine

Utilities As Mutual Companies

One of the big constant news stories recently has been about UK water utilities constantly flushing untreated sewage into the rivers and oceans near the UK, while raising prices, paying huge salaries to their executives and massive dividends. One solution is to take them back into public ownership.

But another possibility is to make the mutual companies. I worked for a mutual insurance company for a while, and helped it de-mutualize, at which point its prices went up, employees were treated worse, executives made more money and so on.

In a mutual companies, customers own the company. Dividends are paid to the customers. Prices tend to be lower than in stock companies (there’s plenty of research on this), employees are treated well and executives make less. Since customers own the company, they have a say in what the company does, and since customers of, say, water companies wouldn’t want sewage in the water or forest fires (for electrical companies like California’s PG&E) they might prove better for environmental concerns and also for customer service. Also a lot less likely to get situations where the customers water is full of lead and other pollutants.

There used to be a lot of mutual companies, but most of the de-mutualized because executives wanted to pay themselves more, especially thru stock grants and so on, but if a law was put in place that utilities and other public companies like railways and public transit are either public or mutual and can’t be stock companies, that might cure a lot of problems, especially if the owners(customers) have to approve executive salaries.

Worth a try, at any rate, though I’m aware of the political problems.

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Week-end Wrap – Political Economy – July 2, 2023


France Isn’t In A Civil War Yet, But It Is Close


  1. GrimJim

    Lovely thought, Ian, but people — that is, the Commons, the Poors — aren’t going to be allowed to own ANYTHING anymore.

    Not even the clothes on our backs.

    The West will become Rentier World, the US and UK first, with Europe following as closely behind as possible.

    That way, you will be too utterly terrified of speaking up about anything, and certainly won’t leave your job without permission!

    Because everything will be based on micropayments.

    You will have to make payments on everything every day.

    Automatically withdrawn.

    And if you do not have the money in your account to pay? You lose access to it, as instantly as possible.

    Can’t make your daily car payment? Your car shuts down. Can’t make your computer payment? Your computer shuts down. Can’t make your grocery payment? No food delivered for the next day.

    And so forth.

    You will own nothing, and they will own you, and you will like it, or you will die in a gutter.

    Or, if they arrest you first, you will live and then die in a Debtor’s Work Camp.

    Where you never quite make enough to pay your debt AND pay for your ongoing needs (bunk, food, water, etc,), so you go from Wage Slave to, well, Chain Gang Slave.

    And then Worked to Death Slave.

    At least, that’s the plan.

  2. Jorge

    On the topic of utilities, what are newer industries that should be operated as utilities?

    The governance concepts for utilities were developed when water, power, waste etc. were common industries, and newer industries have not been brought into the fold. Newer ones might be: operating airports, basic cloud computing (I worked at a company that only did cloud storage), railroads, telecom, anything with a large capital outlay and then smaller operating costs, and where the case can be made that maintenence of the capability is a social good.

    How about ammunition? It’s a commodity, necessary to the state and the US let its capability whither.

  3. StewartM

    This is a good idea. As an advocate for “socialism” where workers elect the leadership, I admit there can be some flaws in this model (say, discrimination can be practiced both within the company and among customers; or environmental matters) and maybe the mutual company model might alleviate some of those (or might not). Or possibly, a hybrid of both would be best (customers ‘own’ the company, workers elect the leadership contingent to the approval of the customers).

    I say this as a strong believer in the Asian business model, where:

    1) Customers come first, as you have no business without customers

    2) Employees come second, as you can’t please your customers without good employees,

    3) Stockholders come third.

    A mutual company turns #3 into #1, so that’s a good thing. They probably would be better to #2 than an American business (stockholders #1 and no one else counts) but maybe not as good as worker-controlled business. The whole goal is that business enterprises should work to better everyone in a society, not to enrich a few at everyone else’s expense (which is neoliberal model).

    (Of course, by that criteria we have whole classes of businesses that shouldn’t exist at all–private equity, payday and title loans, “we buy your assets”, reverse mortgages, etc).

  4. Daniel Lynch

    My electric utility is a co-op, a remnant of the New Deal rural electrification program. There is a board of directors who are selected from among customers, but it seems to be a “good ol’ boys” club. I have no vote in anything. The co-op, like most utilities, is hostile to “net metering,” that is to say buying electricity from customers who produce surplus power from solar or from small hydro. The co-op has no interest in producing its own green energy and instead defends the salmon-killing dams on the Snake & Columbia rivers. Rates are about the same as other utilities in my state. Overall, that co-op gets the job done, but not necessarily any better than a regulated private utility.

    My great grandfather started and was president of a local dairy co-op, that was owned by the dairy farmers who sold milk to the co-op. His co-op was a success while it lasted, It ended up producing most of the butter for the city of Buffalo, NY, and put the money in the farmers’ pockets instead of giving it to a monopolistic middle man. I think it worked because the farmers had a keen interest in making it work. That does not apply to all enterprises — i.e., Joe Average water consumer is not going to have a keen interest in managing a water company.

    More generally, I believe the best approach to dealing with monopolies, rather than regulation or non-profit, is straight up public ownership. Though, if the government is a corrupt fake democracy, as the U.S. government is today, then the enterprise is not likely to be managed well. Ditto for Britain’s current management of the NHS.

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