economics

While a great many commons seek to develop alternatives to conventional businesses – and even to bypass markets altogether – the struggle to democratize capital should not be lost in the shuffle. Popular ownership of capital assets and business enterprises is still a great strategy for building the commons and advancing the public good. Fortunately, there's a growing enthusiasm for this approach.

One of the most eloquent advocates for socially friendly forms of capital ownership – the French call it the “social economy” – is Gar Alperovitz, a historian and political economist at the University of Maryland and a founder of the Democracy Collaborative.  Alperovitz's 2005 book, America Beyond Capitalism, was recently re-issued, presumably because it speaks to the political moment. How can we make economic progress when banks and large corporations are simply looking out for themselves? How can we reduce wealth inequality when government is captured by corporations and the affluent?

Alperovitz showcases the history and great potential of co-ops, worker-owned companies, and urban land trusts. He notes the constructive role that is played by municipal utilities, state-owned banks and state-chartered trusts such as the Alaska Permanent Fund. There are also dozens of cases in which states use their investment dollars to help communities, use government procurement to help worker-owned businesses, and provide venture capital to startups.

As we begin a new year, I thought it might be fun – and possibly useful – to try to identify where commons activism might make some breakthroughs in 2012. I won't venture specific predictions, which can easily miss the mark. But I do think we can usefully talk about areas of “quickening innovation” for the commons. Here's my list, along with brief explanations and speculations:

Digital and complementary currencies. As conventional national currencies crater and as digital networking technologies become more sophisticated, new sorts of commons-based currencies are emerging to fill the void. There is quite a bit of innovation going on in this space. Some new currencies are locally based; others are digital systems that can function globally. The rise of Bitcoin is only a hint of what may be coming down the pike. (See the terrific New Yorker profile of Bitcoin on October 10, 2011.) I am particularly fascinated by the Ven, a new international digital currency that is backed by real assets (about which I will blog shortly). In the meantime, a good way to acquaint yourself with the possibilities of alternative currencies is the book, Creating Wealth: Growing Local Economies With Local Currencies, by Gwendolyn Hallsmith and Bernard Lietaer.

Crowdsourcing as a source of capital formation. I see two trends that appear destined to converge: one is the growing use of cooperatives, community land trusts, worker-ownership and social enterprises to democratize wealth and empower communities; and the second is the expansion of crowdsourcing as a way to raise capital for specific projects if not companies.

The first topic, the democratization of capital, has received renewed attention thanks to the re-publication of Gar Alperovitz's book, America Beyond Capitalism (Democracy Collaborative Press). The second topic, crowdsourcing as a new means to capitalize projeccts (and not simply elicit donations or group suggestions), has received less attention, perhaps because any successful equity crowdsourcing project will need to comply with securities law. Still, the efficiencies of equity crowdsourcing are irresistible – and its synergies with traditional forms of democratizing capital are obvious. This may be wishful thinking on my part, but I expect to see some developments here in the coming year. (Here's a great P2P Foundation overview of existing crowdsourcing projects.)

Anthropologist David Graeber could not have timed his new book better. Debt: The First 5,000 Years is a sweeping historical survey of the social meaning of debt – or more precisely, the relationship between debtors and creditors. While many people regard this as a straight-forward moral matter – “everyone needs to pay the debts they owe” – Graeber invokes dozens of instances throughout world history to show how this relationship is highly complicated -- and essentially political.

Debt is not really a freely entered into contract between equals. It is a time-delayed market exchange in which the debtor agrees to be subordinate to the creditor for the duration of the loan. Upon full repayment of the debt, the debtor suddenly becomes an equal to the creditor again.

The subordination of debtors is not only morally fraught, as evidenced by synonyms for the word debt such as “sin” and “guilt.”  Debt is also (indeed, primarily) a political subordination. The creditor has the whip hand – and debtors are vulnerable to all sorts of contempt, abuse and punishment. In Roman times, a creditor could seize a debtor's wives and children as collateral, and make them personal slaves, if the debtor failed to repay a loan.  

My commons colleague in Germany, Silke Helfrich, has pulled together a succinct, persuasive account of how the commons helps us get beyond the relentless growth imperatives of the contemporary economy.  She presented her ideas two weeks ago at the Attac Congress, “Beyond Growth,” in Berlin.  (A German version of her talk, “Commons Beyond Growth,” is available here.) 

Below is Silke’s penetrating analysis about how the commons can help cultivate practical new models of provisioning without the pathologies of compulsive, unsustainable growth:

Summary

• Commons reduce money-induced growth because they make us more independent of money. The more we produce commons, the less we or the state has to pay for goods.
• Commons reduce population-induced growth because they are associated with a multiplicity of sufficiency strategies which create prosperity by sharing.
• Commons escape the growth compulsion, because all those things that are produced as commons, do not have to be made artificially scarce. And there is no incentive for artificial scarcity because commons are not produced as goods to be exchanged but they foster and maintain social relationships, satisfy needs and solve problems. Directly.

Thus far the vision of the future – but we have not got there yet. In the here and now a lot more must be thought through, discussed and fought for. Therefore, in what follows I will briefly give my reasoning.

I’ve always been uncomfortable using the words “developing” and “developed” when talking about countries.  At a certain intuitive level I felt that that very axis of valuation was wrong.  Should the United States be considered the apotheosis of “development” – an obvious ideal of human progress and satisfaction that the rest of the world should emulate? 

In light of the many unsustainable ecological and social pathologies that the neoliberal market order has spawned, that seems presumptuous, if not ridiculous.  Similarly, to call India or Brazil or Costa Rica a “developing” country is to imply that they are lagging behind the “developed” nations even though their cultures may be far healthier and happier than ours. 

So how did the whole discourse of “development” and its theory of value get going in the first place, and evolve into the international ideal of human aspiration?  I just had a crash course on that topic by reading a fantastic book, The History of Development:  From Western Origins to Global Faith, by Gilbert Rist, a Swiss scholar of development.  The book first appeared in French in 1996, and was translated into English only in 2008; the latest edition, the third, by Zed Books, came out in 2010.

So what do digital technologies and the Internet mean for the future of work?  That was the topic of last year’s Information Roundtable at the Aspen Institute’s Communications and Society Program, an annual event that brings together some heavyweight businesspeople, technologies and academics to discuss a breaking issue.

It was a fascinating discussion because so many of these issues are not probed in such depth by such diverse experts.  Once again, I was the rapporteur for the three-day gathering.  My report, The Future of Work:  What It Means for Individuals, Businesses, Markets and Governments is now available online as a pdf file.  The report focuses on the concerns of traditional businesses and startups as they grapple with the new competitive environment created by digital technologies and networks.  The report examines how the technologies are altering market structures, business strategies, the organization of work, and individuals’ work lives.

A memorable Dilbert cartoon strip features Dogbert as a “creativity consultant” who is directed by his boss to come up with some hard quantitative data.  The boss barks:  “The only way to make decisions is to pull numbers of the air, call them ‘assumptions,’ and calculate the net present value.”  The punchline:  “Of course, you have to use the right discount rate, otherwise it’s meaningless.”

That encapsulates the faux-rigor of regulatory decisions for protecting health, safety and the environment.  Ascertaining the dollar value of human life using the most rigorous science possible is a politically useful charade. 

As the New York Times recently reported, the scientifically determined value of a life at the Environmental Protection Agency has gone up from $6.8 million in the Bush II years to $9.1 million at present.  Across town, the FDA decides whether to ban an unsafe drug based on a valuation of $7.9 million per life.  In deciding whether automakers will install new safety features, the Transportation Department figures $6 million.

My colleague at the Commons Strategy Group, Silke Helfrich recently spoke at the World Social Forum in Dakar, Senegal, about how we might shift from the logic of the market to the logic of the commons.  An account of her talk can be read on her blog, CommonsBlog, here.  Below, an excerpt from her talk followed by a useful chart that contrasts how the logic of the market and commons differ. 

Helfrich's talk:

The process of privatizing gains and socializing losses is very alive (the recent bail-out of banks by taxpayers money is just one of its examples). This process does confirm an historic experience:  Within the current logic, both Market AND State tend to smash the commons. And common people have to pay for it. This is not only dramatic for being essentially unfair. It is especially dramatic because – over the long run – this kind of enclosure of the social commons undermines and even destroys the capacity of communities to govern and protect their commons.

The larger cultural campaign to fight the huge inefficiencies of global trade and foster re-localization of the economy has gotten a nice boost from a new film, The Economics of Happiness, produced by the International Society for Ecology and Culture. The film, available as a DVD, describes how “going local” is a powerful way to make our economic lives and culture more stable, eco-friendly and socially benign.

Helena Norberg-Hodge, director of the ISEC, points out the madness that tuna caught off the East Coast of the U.S. is flown to Japan to be packed, and then is shipped back to the U.S. for sale. By the lights of 18th Century economic theorists, this is considered “efficient” and “rational.” Of course, the economics of global trade only work because the vast externalized costs and hidden subsidies are ignored. Companies enjoy huge subsidies to use more energy and technologies to ship more things around the world. The costs of massive unemployment, rural migrations to cities in poor countries, and ecological destruction are “off the books.”

This happens to me all the time:  I’m standing in a supermarket aisle paralyzed by choices.  Do I want a toothpaste that whitens teeth, cleans tartar, freshens my mouth, has the flavor of cinnamon, mint or peach, or is just the plain-old “original” brand.  I face the same problem when it comes to spaghetti sauce (with basil or garlic or mushrooms?), laundry detergent (unscented or “sea breeze” or fabric softener?), orange juice (pulp or no pulp, Vitamin D or no?).  And we haven’t even gotten to that classic encounter with the world of over-choice, Starbucks.

There’s obviously much to be said for consumer choice.  But it’s also true that a life marked by boundless choice ends up being a life of hyper-calculation in pursuit of a perfection that always seems just a little bit out of reach.  When buying a big-ticket item – a car, a refrigerator, a camera – no one wants to make the “wrong” choice,” so we really bear down and do comparative research.  The fantasy takes shape that if only we make the right choice, a kind of worldly beatitude will prevail.