Consumer Socialism – Use Your Economic Vote
Lets break it down, consumers are people, business and the collective purchasing of the state locally or nationally. Socialism, a word often used as a broad but vague expression of ‘for the masses’, or ‘via the state’ or ‘fairness & redistribution’. Consumer socialism therefore is using the collective voice of consumers.
The system needs to be fixed for consumers by using all agents available to get the best for the majority. Trade Unions and organised labour are used to bargaining for their members’ rights to get a ‘fairer’ share of the profits for the labour that goes into the production goods and the provision of services. Consumers need a collective voice to get the best practice from the market. For a long time the cooperative movement has been about organised members as consumers, and a workforce as shared owners and stakeholders in a cooperative. In a way consumer socialism has its natural home in the cooperative movement. It should be pursued more strongly than currently by the Cooperative party and adopted by Labour thereafter. The state must be the driver of the economy not the passenger.
We face a scenario where there is little or no real consumer choice. The public cannot switch to an ethical or cheaper provider, not due to lack of information but for lack of alternatives. We face a situation where there are considerable barriers to switching. It is not made easy, quick or cheap for people to get out contracts in the energy market. The market is so concentrated and small providers cannot compete. Astonishingly, small providers cannot provide the ‘warm home discount’ schemes or payments meaning it is literally not an option for many of the most vulnerable in society too change providers.
Another example of an area we need the state to act as a collective consumer is the ‘Big Six’ banks. These banks have over 80% of the UK’s current accounts on their books, and at a time when small business lending is concentrated between a few providers it is obvious to see why the potential threat of another ‘bust’ is such a big problem. With this concentration of lending, small and medium enterprises (SMEs) access to finance is limited. George Osborne’s ‘Project Merlin’ aimed at boosting small business lending has been a failure because the Big Six, when faced with that prospect of increased lending, felt that it was easier to lend greater amounts to a smaller number of businesses rather than smaller amounts to a larger number of businesses. We need a government who understands, and who is willing to clamp down on the anti-competitive behaviour of the large banks; a government that will deliver the reckoning and push for community-based banking and a system that work for not against the economy.
The lack of choice also means there is effectively a cartel on fees, interest-bearing accounts and mortgage rates. Small and ethical competitors find it hard to enter the market, are bought out or destroyed. Building Societies and credit unions are more strictly regulated than banks and therefore cannot compete. An important factor here is that ethical and community-based banks would be unlikely to want to pursue the same practices of investment banks such as high-risk lending and ‘casino banking’ because that would threaten their members. Their members are more likely to be listened to than in a large multi-national bank, where a few shareholders will not directly feel the side effects if all goes wrong, but would reap huge rewards if it went well. This sort of moral hazard was a key factor in the last crash.
We need a government willing to drive SME growth, stand up for the little man and push for the economy that society wants. The text books say that we decide as rational consumers where the economy goes, what is produced and how. This may be the case with the outrage over Primark and the Bangladesh garment factory tragedy, or farmers and battery hens but it isn’t enough to only have the information to act. You need the extra capacity in your wallet to shop more ethically and start making dents in the economy. There are, frankly, large swathes of society who do care about ethical trading, ethical lending and ethical consumerism that cannot make a choice to go ‘organic’ or ‘fair trade’ when they are struggling to make ends meet. The government at all levels must be a leader in an economy. Unless you direct money to where society wants it to go, then people will not see the difference in their wallets.