Lesley Riddoch: Co-operatives could be the way forward for Scotland

Finland has a 1300km land border with Russia, fought two wars in the 1940s to defend its territory, and is now applying to join NATO. There, most knowledge of Finland ends. Which is a shame.

Because a staple of Finnish life could offer a permanent solution to our energy, price and supply-side crises – relying on cooperatives not corporations to deliver.

I became aware of Finland’s cooperative default during a cycle round the Åland archipelago 12 years ago. Chatting to farmers heading for the local cooperatively-owned abattoir aboard a cooperatively-owned ferry, I discovered we had just been staying in a cooperatively-owned city-centre hotel and changed money in a cooperatively-owned bank.

What did cooperative ferry ownership do for them? “In a good year, our dividend is a breakfast share” – enough for one fry-up in the ferry cafe. But there was a greater reward for customer/owners than mere cash – local control. A third of all car places across the ferry chain are reserved for locals, ferries are constantly maintained and quickly replaced and tourists are required to break journeys with one overnight stop to boost tourism. As Hebridean islanders know, such local priorities and local control are assets beyond price.

But that snapshot of island cooperative life is just a tiny part of the story. Co-ops in Finland began in 1899, a movement designed to strengthen society after a period of “Russification” to suppress Finland’s burgeoning independence movement. Civic organisations gave local people a ‘non-political’ way to unite and avoid trading monopolies that left people overcharged and farmers underpaid. Ring any bells? The first Cooperative Act was passed in 1901 and co-op banks, dairies and shops opened immediately almost everywhere.

Even though they operated within the capitalist system, the workers’ movement backed co-ops as a way to develop civic abilities and rid people of subservient attitudes. Indeed, Finland became independent in 1917 and despite a terrible civil war and two Russian invasions during the 1940s, cooperatives continued, adapted, expanded and modernised (much like the resilient Finns) to become a defining aspect of the country today.

Finnish scientist A I Virtanen won the Nobel Prize for chemistry in 1945 and said: “We have no Rockefellers or Carnegies, but we do have co-operatives.”

Since then, Finland has become an economy based on mutuality. It’s also become the world’s happiest country for the fifth year running, according to the UN Sustainable Development Network. Are the two connected? How could they not be?

There are over 4000 cooperatives in Finland today and 7 million cooperative memberships (more than the population of 5.5 million Finns).

Water co-ops mean the crazy profits, fat cat salaries and under-investment that characterise privately owned English water companies are unknown in Finland. There are seven electricity co-ops and even more private companies using the Mankala principle whereby electricity is distributed at production cost instead of making a profit. Around two fifths of Finnish electricity is based on this principle, which means citizens of this sub-Arctic state won’t be freezing or rushing to heat banks this winter.

Cooperation is also big business producing 80% of meat and 97% of milk in Finland. The OP Financial Group – a network of 180 local cooperative banks and insurance companies – has over two million customer-owners and 40% market share. The 100,000 members of the Metsäliitto Cooperative own about half of Finnish private forests and consumer cooperatives produce half of all daily goods – much of it sold by the massive S-Group which has 1,800 outlets including supermarkets, department, hardware and speciality stores, petrol stations, travel and hospitality outlets, car dealerships, dairies, and a comprehensive banking service through S-Bank.

Its retail sales revenue last year totalled 12 billion euros – some paid out as bonuses to ‘client-owners,’ some paid as tax, some used to hold prices steady and some re-invested with a green agenda. Its businesses run almost entirely on S-group renewable energy, with company wind turbines producing around 80% of the group’s entire electricity demand. S-Group is the third-largest wind power producer in Finland, the biggest solar producer and one of the biggest co-ops, owned by 3 million people.

Despite its vast size though, S-Group is no monolith, run as 19 independent regional cooperatives, six local co-ops and a central procurement company (SOK) that’s owned and run by the regional cooperatives. Almost unthinkable in centralised, top-down Britain.

Risto Turnanen (pictured) started working in hotels as a bellboy 40 years ago. He worked his way up through the Sokos hotel group, becoming manager in Lahti – Finland’s seventh city. There are 60 hotels in the Sokos chain, but Risto has the freedom to source locally – from luxurious, design furniture in the bedrooms (‘expensive but eternal, we hope’) to baths and wash-hand basins of composite wood (prompted by Lahti’s reign as European Green Capital 2021.)

Risto can list the local sources of breakfast – honey comes from 6,500 bees in hives on the roof while eggs, sausages and bacon come from farms 15km away. The hotel has several restaurants including Kuja Street Food Lahti whose grunge décor - suggested by a hotel staff member - depicts local places and food favourites. It’s a million miles from the safe, neutral sameiness of most hotel chains and the restaurant is popular as a training and awayday location.

It's all possible because of local control. And yet the massive S-group was also a job-saver during Covid, because Risto and other staff could be redeployed to S-group supermarkets instead of facing the sack, like colleagues in private hotel chains.

Is there a lesson for crisis-struck Scots? Well, corporate isn’t the only game in town, big can also mean local, and control matters more to the majority of citizens than massive shareholder dividends. I’d guess most Scots agree. So what are we going to do about it?

Lesley travelled with FinnAir who fly daily direct between Edinburgh and Helsinki. She stayed at the Solo Sokos Hotel Lahden Seurahuone in Lahti. More info at Visit Lahti and Visit Finland.

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