The trouble with a bi-polar view of the world is that there only ever seem to be two rival ways of doing anything. The choices are strictly limited. In the midst of the financial crisis, the pendulum has swung from the private sector ownership of banks to public sector ownership, as though these were the only two conceivable possibilities.
Grid-group cultural theory offers an analytical prism through which to see that there are not two but four ways of organising (and of disorganising) anything. The Individualist approach (Privatise!) and the Hierarchical approach (Nationalise!) are complimented by the Fatalist approach (it’s all a lottery!) and the Egalitarian approach. For reeling financial institutions it’s this latter that now has great potential.
While private banks are go under and governments struggle to work out how to salvage the wreckage into nationalised institutions, the mutual sector has survived relatively unscathed and remains robust. Now it the time to consider expanding it, not least by re-mutualising the institutions that were aggressively de-mutualised during the zenith of free-market triumphalism.
The mutual option has been overlooked or denigrated for a long time because it reflects neither the Individualist nor the Hierarchical worldview. It is an Egalitarian way of organising, with owners, tellingly, being termed members.
But mutuality doesn’t really need cheerleaders. As mortgages and other forms of loans increasingly dry up, people are likely to get together to solve the problem themselves. After all, this is how the mutual sector arose in the first place. The chief question is whether or not those who are opposed on ideological grounds to Egalitarianism, will now get out of the way.
Having said this, it would surely be damaging to the overall ecology of finance if mutuality, or for that matter any other model, were to come to dominate. This is unlikely in the long term, given the fluid and dynamic nature of the environment in which it finance operates. The short term danger is that, refusing to see that we always have four options, we may seek to promote one alone, to the exclusion of all else. This is the recent history of the financial sector and it hasn’t been pretty. As the Cultural Theorists might say, the only thing worse than a clumsy but workable solution is the elegant but disastrous failure we see all around us.
See more on clumsy solutions.
Four Cultures 
Mutuals have suffered from what I’d term legislative ablation over the last 30 years. While their forms have remained, changes to the law have left them with all their distinctive responsibilities and no advantages for them (co-operative’s ‘streaming’ of tax liabilities was removed for example, while it was still allowed for “family trusts”, the hierarchists look after their own). Further advantages (or at least a commonly understood certainty among the run-of-the-mill) which ordinary companies in raising capital are removed. Even worse for those credit unions, they cannot compete with banks in capital raising and most are desperate to merge or become banks, their mutual form is positively holding them back, current crisis not withstanding.
Egalitarians have not been investing the time and effort in legal and commercial studies, generally preferring to drop out altogether, when not being positively revolting, thus leaving the fox in charge of the hen house.
The examples that do exist are a rump. Perhaps not useless but do little ‘conditioning’ of the business environment.
I doubt if there is even a PhD scholarship for co-operatives in a business/law school anywhere in the country.
meika, good point. The mutual sector has been hollowed out bit by bit. My hope is that the time may now be right for a re-invigoration. The four cultures analysis might suggest that it’s easier to allow for some plurality in the system than it is to have to start again from scratch. Since the 1980s any financial arrangement that wasn’t Individualist has been portrayed as inefficient and irrational. So now its going to be harder to kick start what’s left of Egalitarian financial institutions.
Oh, and check out Matthew Taylor’s blog on bankers saying sorry…