TALISM is in trouble and is failing to offer the best outcomes for society, incoming Co-operative chief Euan Sutherland told the group’s annual general meeting over the weekend, despite the mutual itself struggling with a weak bank unit.
The Co-op, which is owned by its members, argues its system beats shareholder capitalism by working for customers and staff.
But its banking arm recently had to drop out of its bid to acquire 632 Lloyds branches, was downgraded by ratings agency Moody’s and saw its boss Barry Tootell quit. On top of that analysts fear it has a major capital hole which may not be filled by the sale of its insurance and life arms, while ratings agency Standard and Poor’s fears the main group may end up being harmed.
“Traditional capitalist models are not providing the answers to people today,” said Sutherland.
“They are looking to us to provide the alternative.”
But critics said Sutherland has wrongly diagnosed the problems.
“The Co-op’s chief is right to attack capitalism as it operates now, but he’s doing so for the wrong reasons. We need more genuine free market capitalism, not less,” said Mark Littlewood from the Institute of Economic Affairs. “There is not enough competition, too much regulation and high barriers to entry. We need to reduce the size of the state to allow entrepreneurs and businesses to flourish, and deliver the jobs and growth we desperately need.”