Mutualism is the best way to ensure the long-term health of our banks and the economy, argues Michael Stephenson

The credit crunch and its painful aftermath is dominating the political landscape and is destined to do so for some time. Yet most of the analysis and commentary inflicted on an overwhelmed public have been both desperate in tone and conspicuously lacking in discussion of values and principles.

One of the most oft-repeated phrases of recent months has been that we can never go back to the way our economy, both domestic and global, used to be run. That if we fail to learn the lessons of our recent past we are destined to repeat them. That means more regulation, more transparency, more international cooperation and definitely less generous bonuses to the Fred Goodwins of this world.

Some on the left rightly see this recalibration of the political economy as an opportunity to reassert a progressive position yet, when pressed, many organisations across the Labour movement have not been able (or prepared) to mould this into anything more than a hastily cobbled together shopping list of reactive policies.

The Co-operative Party sees this opportunity very differently. For more than 90 years we have argued that the foundation of effective social justice is mutuality and cooperation and that the best way to achieve the society and economy we as progressives seek is through the creation of institutions and the implementation of policies that reflect those values and principles.

It is that intersection of values and principles, and the pragmatism of legislative and policy change working with our sister oganisation the Labour party, that makes the Co-operative Party a unique contributor to the future of the left.

We believe that there has never been a more important time for the cooperative ideal to flourish and that the way to rid our economy of the toxic shock of the credit crunch is to put mutuality at the heart, rather than at the periphery, of our economy.

The most immediate and effective way to do that is to undo the damage done to our building societies by the Tories. When the last Conservative government encouraged societies to demutualise through the 1986 Building Societies Act, it plundered generations of assets from mutual societies, replacing prudent mortgage providers with some of the worst culprits of casino capitalism.

Today we have a unique and unmissable opportunity to put that right. By recognising the enormous benefits of mutuality and taking action to allow societies to remutualise, we can return those institutions to their rightful position and bring stability and sustainability to the important work they can do for our economy and the millions of Britons who rely on them.

While the government was absolutely right to nationalise Northern Rock and Bradford & Bingley as a short-term measure, the Co-operative Party is calling for the newly nationalised banks to be converted into mutuals. Mutual ownership is the best solution for ensuring a stable long-term future for these companies, and making sure that the risk taken by taxpayers will deliver for consumers in the long term.

The government must not be swayed in its consideration of remutualisation by the recent plight of the Dunfermline Building Society. A comparatively small player in the mutual field, its bailout represented a tiny fraction of the cost of the taxpayer-funded rescue of so many of the massive high street banks. As many commentators have observed, the mutual sector has emerged from the credit crunch in much better shape than the traditional banking sector.

That is no accident. It is because the mutual model is much better suited to the task of meeting the robust challenges of an uncertain economic future, and because it is based on a set of values and principles that put sustainability and fairness above short-term profit. That is something that we as progressives should all be prepared to sign up to.

This article first appeared on Progress Online