economics

New Start magazine, a British magazine associated with the Manchester-based Centre for Local Economic Strategies, has just come out with a terrific issue (#525, October 2014) about co-operatives and commons.  The essays focus on how “more democratic forms of ownership – of land, housing, workplaces and the public realm – can revive our places.” 

While most of the essays deal with British co-ops and commons, the lessons and strategies mentioned have a relevance to many other places. Consider land ownership, a topic that is rarely a part of progressive political agendas.  Steve Bendle, director of a group called Community Land and Finance, offers a clear-eyed assessment of how government is obsessed with enhancing the value of land for landowners and developers – while largely ignoring how land could be used to serve citizens, taxpayers and the wider community. 

Unneeded land and government buildings, for example, are generally put up for sale on the market rather than used to serve the needs of a community for housing, work spaces or civic infrastructure.  The assumption is that privatized, market-driven uses of the assets will yield the greatest “value” (narrowly defined as return on investment to private investors). 

When government (i.e., taxpayers) finances new roads, subways or rail systems, the market value at key locations and buildings invariably rises.  But government rarely does much to capture this value for the public. 

Bendle concludes:  “So developers and landowners make profits, while the public sector struggles to secure a contribution to infrastructure costs or to deliver affordable homes despite successive attempts to change the planning system.”

I remember in the late 1970s how the corporate world essentially invented the use of cost-benefit analysis in health, safety and environmental regulation. It was a brazen attempt to redefine the terms for understanding social ethics and policy in terms favorable to capital and markets.  Instead of seeing the prevention of death, disease and ecological harm as a matter of social justice, period, American industry succeeded in recasting these issues as economic matters.  And of course, such arcane issues must be overseen by a credentialed priesthod of economists, not ordinary mortals whose concerns were snubbed as selfish NIMBYism (Not in My Backyard).

And so it came to be that, with the full sanction of law, a dollar sum could be assigned to our health, or to the cost of getting cancer, or to a statistical baby born with birth defects. Regulation was transformed into a pseudo-market transaction.  That mindset has become so pervasive three decades later that people can barely remember when ethical priorities actually trumped big money. 

It is therefore a joy to see Barbara Unmüssig’s essay, “Monetizing Nature:  Taking Precaution on a Slippery Slope,” which recently appeared on the Great Transition Initiative website.  Unmüssig is President of the Heinrich Boell Foundation in Germany and a stalwart supporter of the commons, especially in her backing of the 2010 and 2013 conferences in Berlin.

Striking a note that is note heard much these days, Unmüssig points out the serious dangers of seeing the natural world through the scrim of money.  Here is the abstract for her piece:

In the wake of declining political will for environmental protection, many in the environmental community are advocating for the monetization of nature. Some argue that monetization, by revealing the economic contribution of nature and its services, can heighten public awareness and bolster conservation efforts. Others go beyond such broad conceptual calculations and seek to establish tradable prices for ecosystem services, claiming that markets can achieve what politics has not.

However, such an approach collapses nature’s complex functions into a set of commodities stripped from their social, cultural, and ecological context and can pose a threat to the poor and indigenous communities who depend on the land for their livelihood. Although the path from valuation to commodification is not inevitable, it is indeed a slippery slope. Avoiding this pitfall requires a reaffirmation of the precautionary principle and a commitment to democratic decision-making and social justice as the foundations of a sound environmental policy for the twenty-first century.

In a sign of the growing convergence of alternative economic movements, the Degrowth movement’s fourth international conference in Leipzig, Germany, last week attracted more than 2,700 people.  While a large portion of the conference included academics presenting formal papers, there were also large contingents of activists from commons networks, cooperatives, the Social and Solidarity Economy movement, Transition Town participants, the “sharing economy,” and peer production. 

By my rough calculation from browsing the conference program, there were more than 350 separate panels over the course of five days. Topics ranged from all sorts of economic topics (free trade, business models for degrowth, GDP and happiness) to alternative approaches to building a new world (Ivan Illich’s “convivial society,” permaculture, cooperatives, edible forest gardens). 

Degrowth?  For most Americans, the idea of a movement dedicated to non-growth, let alone one that can attract so many people, is incomprehensible.  But in many parts of Europe and the global South, people see the invention of new socio-economic forms of production and sharing as critical, especially if we are going to address climate change and social inequality. 

Some degrowth activists are a bit defensive about the term degrowth because, in English, it sounds so negative and culturally provocative.  (The French term décroissance, meaning “reduction,” is apparently far less jarring than its literal transation as “degrowth.”)  One speaker at the conference conceded this fact, slyly noting, “But unlike other movements, it will be exceedingly hard for opponents to co-opt the term ‘degrowth’”!

In a 2013 paper, “What is Degrowth:  From an Activist Slogan to a Social Movement” (pdf), Frederico Demaria et al. write:  “”’Degrowth’ became an interpretive frame for a new (and old) social movement where numerous streams of critical ideas and political actions converge.  It is an attempt to re-politicise debates about desired socio-environmental futures and an example of an activist-led science now consolidating into a concept in academic literature.”  A new beachhead of this academic inquiry is a book Degrowth:  A Vocabulary for a New Era, due out in November.

Everybody talks a lot about economic inequality, but there don’t seem to be many credible proposals out there, let alone ones that have political legs.  French economist Thomas Piketty documented the deep structural nature of inequality in Capital in the 21st Century, but the best solution he could come up with was a global wealth tax.  Good luck with that!

What a pleasure, then, to read Peter Barnes’ new book and discover some sensible, practical ideas.  Barnes is a writer, entrepreneur and long-time friend; we worked together a decade ago with the late Jonathan Rowe in exploring the great potential commons in re-imagining politics, policy, economics and culture. The author of pioneering policy ideas in Who Owns the Sky? and Capitalism 3.0, Barnes has just published With Liberty and Dividends for All:  How to Save Our Middle Class When Jobs Don’t Pay Enough (Berrett-Koehler Publishers). 

The book aims to reduce inequality not through the tax system or education and training, but by inventing new commons-based institutions that can generate nonlabor income for everyone.  The secret of the wealthy, of course, is that they don’t depend on salaries or wages, but on investment income from their equity assets. 

So how might commoners pull off this trick?  By generating income from common assets.  The money won’t come from government spending or redistribution, or from new taxes on business.  It will come from commoners seizing control of the shared equity assets they already own – the atmosphere, airwaves, the sovereign right to create money (now enjoyed by banks), and the public institutions that make stock markets and copyrights possible.

These equity assets belong to all of us. Unfortunately, most of the benefits from these assets have been privatized by banks, oil companies, telecom companies, the culture industries, depriving us of income to which we, as common property holders, are entitled.

Barnes proposes renting out various common assets to businesses that wish to use them.  This is a well-accepted principle – to pay for something owned by someone else.  Why should companies get a free ride on public assets?  Barnes proposes charging corporations for the use of the airwaves, the pollution sink of the atmosphere, and the right to monopoly protections such as copyrights, trademarks and patents.  Revenues from our common assets could be channeled into independent, non-governmental trust funds that would then regularly generate dividends for everyone.

One of the most influential works in my thinking about the commons has been Karl Polanyi’s 1944 book The Great Transformation:  The Political and Economic Origins of Our Times. A Hungarian economic historian and anthropologist, Polanyi  argued that world history dramatically changed in the 17th and 18th centuries when “Market Society” arose to displace societies that had been based on kinship, religion and social relationships.  Where once people were embedded in communities of reciprocity and redistribution, capitalist markets gradually turned societies into the alienated collectives of rational, utility-maximizing individuals dominated by the market order. The Great Transformation is a brilliant historical account of this transition from a commons-based world to market society.

Polanyi's book had the misfortune to be published at the wrong time, 1944, just as the nations of the world were racing to embrace market economics and soar into modern times.  In the 1950s and 1960s climate of the Cold War, go-go economic growth and gee-whiz technology, few serious people wanted to hear about how “the market” should be tamed and made to serve society – Polanyi’s primary theme.  The overriding goal of that period was to grow, grow, grow, with little thought for the long-term social and ecological consequences.

As a result, The Great Transformation has been largely exiled from the canon of mainstream economic literature for the past 70 years. Hayek’s The Road to Serfdom, also published in 1944, was far more in sync with the postwar cultural wave and went on to become a foundational book for modern corporatists and conservatives.  For decades the curious reader could only find archaic-looking reprint editions of The Great Transformation until Beacon Press came out with a new edition in 2001, with a new introduction by economist Joseph Stiglitz.

All of this is by way of background to the news that Concordia College has just gone live with a massive online archive of Polanyi’s work.  Exciting news! The archive is housed at the Karl Polanyi Institute of Political Economy, which was founded in 1988 at Concordia. The archive has an estimated 110,000 documents, which range from correspondence and unpublished papers to lecture notes, articles and manuscripts in Hungarian, German and English. Here is the official announcement of the archive at the Karl Polanyi Institute of Political Economy.

There are a number of upcoming conferences focusing on various sorts of commons.  For those of you with a passionate interest in any of the following, check out these four gatherings in coming months:

A Virtual Town Hall for the Great Lakes Commons, March 18

What would happen if the Great Lakes in North America were managed on principles and practices that empower communities to become stewards of the water?  What if decisionmaking was local and collective? To discuss these themes, several organizations are convening the first webinar in a series, “Protect the Great Lakes Forever Virtual Town Halls.”  This first one will take place on March 18 from noon to 1 pm ET. For more information, visit here.  Or check out the Facebook invite. 

The event is convened by Alexa Bradley (Program Director for On the Commons), Sue Chiblow (Environmental Consultant for the Mississauga First Nation) and Jim Olson (Founder and Chair of FLOW for Water). Emma Lui (Water Campaigner for the Council of Canadians) will be moderator.  The organizers want to use the commons to “prioritize the basic needs of communities, the rights of indigenous peoples and the sustainability of the land,” noting that “the lens of the commons can act as a political framework for many Great Lakes issues including extreme energy projects, bottled water extraction, invasive species and pollution.”

Knowledge Commons Conference in September

Make plans now to attend the International Association for the Study of Commons’ second Thematic Conference on Knowledge Commons, to be held at NYU’s Engelberg Center on Innovation, Law and Policy, from September 5 to 7, 2014. 

The interdisciplinary conference seeks “to better understand how knowledge commons work, where they come from, what contributes to their durability and effectiveness, and what undermines them.”  This year, the focus will be on “Governing Pooled Knowledge Resources, with special attention to the fields of medicine and the environment.” 

Keynote talks will be given by Yochai Benkler (Harvard Law School), Eric von Hippel (MIT Sloan School of Management), and Michael McGinnis (Political Science, Indiana University, Bloomington).  Co-chairs of the conference are Katherine Strandburg, NYU School of Law, and Charlie Schweik of the University of Massachusetts, Amherst. More information at the conference website.  

CommonsFest in Greece To Explore Peer to Peer Civilization

CommonsFest is an initiative to "promote freedom of knowledge (or free knowledge) and peer-to-peer collaboration for the creation and management of the commons." The focus of CommonsFest will be on “the emergence of the peer to peer civilization and political economy.” Festival organizers explain that peer production "has spread through free software communities and extends to many aspects of our daily lives, such as the arts, governance, construction of machinery, tools and other goods. Through an exhibition, talks, screenings and workshops, the aim of the festival is to promote the achievements of this philosophy to the public and become a motive for further adoption."

The Green Party of England and Wales really knows how to stake out some fresh territory in their national politics!  At the autumn conference, the Greens adopted a resolution calling for “a programme of reform to remove the power to create money from private banks, and to fully restore the supply of our national currency to democratic and public control so that it can be issued free of debt and directed to environmentally and socially beneficial areas.” 

Bold thinking!  The Greens explain why the existing banking system is so pernicious: 

"The existing banking system is undemocratic, unfair and highly damaging.  Banks not only create money, they also decide how it is first used – and have used this power to fund financial speculation and reckless mortgage lending, rather than to finance investment in productive businesses.  Through the interest charged on the loans on which all credit is based, the current banking system increases inequality.  It also regularly causes economic crises:  banks create and lend more and more money until the level of debt becomes unsustainable, boom turns to bust, and the taxpayer bails out banks that are ‘too big to fail.’  Finally, the need to service the growing mountain of debt on which our money is based is a key driver of unsustainable economic growth that is destroying the environment."

The right to create money and profit from it is known as seignorage.  Banks currently enjoy this right and exercise it through their lending, which creates most of the money in circulation.  Governments have effectively let banks privatize control of the money supply.  In so doing, governments have forfeited the opportunity to provide debt-free lending to support productive enterprises and public needs as opposed to fueling boom-and-bust speculation and relentless economic growth that destroys the environment.

Reclaiming seignorage for public benefit has been a serious idea among many progressive economists for years.  A notable figure in this regard is James Robertson, the founder of the new economic foundation in Great Britain, in 1986, who has championed this issue for years.  Robertson’s most recent book Future Money explains how re-gaining public control over how new money is created and circulated could result in “an annual savings to all citizens of the UK of £75bn, and second in a one-off benefit to the public purse totalling £1.5bn over a three-year transition period.”

Now that free market dogma has become the dominant narrative about value – and yet that narrative is neither credible nor readily displaced -- we are descending deeper and deeper into a legitimacy crisis.  There is no shared moral justification for the power of markets and civil institutions in our lives.  Since the 2008 financial crisis, the idea of “rational markets” has become something of a joke.  There are too many external forces propping up markets – government subsidies, legal privileges, oligopoly power, etc. – to believe the textbook explanations of “free markets.”

This is a serious quandary.  We’re stuck with a threadbare story that few people really believe -- the “magic of the marketplace” advancing human progress and opportunity – and yet it is simply too useful for elites to abandon.  How else can they justify their entitlements?  These are among the themes explored in an astute new book, The Ethical Economy:  Rebuilding Value After the Crisis  (Columbia University Press, 2013), by sociologist Adam Arvidsson and entrepreneur/scholar Nicolai Peitersen. 

The implicit “social contract” that people have with the reigning institutions of society is coming apart.  As the authors note:  “Three decades of neoliberal policies have separated the market from larger social concerns and relegated the latter to the private sphere, creating a situation where there is no society, only individuals and their families, as Margaret Thatcher famously put it, and no values, only prices.”  Meanwhile, the catastrophic ecological harm being caused by relentless consumerism and economic growth is becoming all too clear, especially as climate change inexorably worsens.

Our “value crisis” is tenacious, say Arvidsson and Peitersen, because we have “no common language by means of which value conflicts can be settled, or even articulated.”  Few people believe in “free markets” and government as benign, mostly responsible influences any more; there is simply too much evidence to the contrary.  And who believes that the Market/State as constituted can solve the many cataclysms on the horizon?

Arvidsson & Peitersen’s ambitious goal is to outline a scenario by which we might come to accept a new, more socially credible justification for socially responsive production and governance.  They want to imagine a “new rationality” that could explain and justify a fair, productive economics and civil polity.  A tall order! 

While I don’t agree with all of their arguments, they do make a penetrating critique of the problems caused by neoliberalism and offer some useful new concepts for understanding how we might imagine a new order.  The Ethical Economy provides a bracing, sophisticated look at these issues.

A few weeks ago I had an extensive dialogue with Bill Baue, a “corporate sustainability architect” who works with corporations and others to design “systemic transformation and company-level solutions.”  He had wanted the commons community to engage with the idea of “context-based sustainability,” a system used by some companies to “measure, manage and report sustainability performance.” The whole idea is that there are stocks of financial, natural, and human (or social) capital that can be prudently managed to respect the “carrying capacity” of the capital. 

Given my grounding in the commons world, I was profoundly skeptical – but open to a frank exploration of the ideas.  Below is a record of an exchange that I had with Baue. My disagreements centered on whether corporations can or should be the primary arbiters of sustainability (that much-abused term), and whether treating nature and social relationships as “capital” is even appropriate. I instead advocated for commons-based approaches that first, would not regard commons as mere resources, but as socio-ecological systems, ans second, that would empower commoners, especially in contrast to market-based systems.

Baue recently posted our dialogue on the website, SustainableBrands.com, as a two-part series. I have copied it all below. To read our entire exchange on the SustainableBrands.com website – along with some comments that have cropped up – here are the links to Part I  and Part II.  

Sustainable Brands bills itself as “a learning, collaboration and commerce community of over 348,000 sustainable business leaders from around the globe.  Our mission is to empower more brands to prosper by leading the way to a better world.  We produce content, events, and other learning solutions designed to inspire, engage and equip our community to profitably innovate for sustainability.” 

For the past three days I've been attending a fantastic conference, "After the Crisis:  The Thought of Ivan Illich today," in Oakland, California, at the Oakland School for the Arts.  Illich was an iconoclastic social critic, Jesuit priest, radical Christian, historian, scientist and public intellectual who was especially famous in the 1970s and 1980s for his searing critiques of the oppressive nature of institutions and service professions.  His writings also explored the nature of the nonmarket economy, or "vernacular domains," as he put it, which are the source of so much of our humanity and, indeed, the source of commoning.

We have not had a social critic of Illich's originality and caliber in some time.  He was a classically trained yet traversed disciplinary boundaries with ease and rigor. He was disdainful of conventional political categories and ideology because his critique came from a much deeper place, beyond left or right.  He was passionate, humanistic and contemptuous of the harms caused by modernity and economics to the life of the spirit, especially as seen from within the Catholic tradition. 

This gathering, organized by Professor Sajay Samuel, has been a wonderful reunion of Illich's former colleagues, friends and admirers, as well as a venue for Bay Area political activists and citizens to get to learn more about Illich.  Governor Jerry Brown, a friend of Illich's going back to the 1970s, gave an opening talk at the conference and showed up for the later sessions to listen.  I am told that the nine talks given at the conference will eventually be put online; I will give any updates on that promise.

In the meantime, here is the talk that I gave yesterday:

The Quiet Realization of Ivan Illich's Ideas in the Contemporary Commons Movement 

I come here today as an ambassador of the commons movement – a growing international movement of activists, thinkers, project leaders and academics who are attempting to build a new world from the ground up.  It’s not just about politics and policy.  It’s about social practices and the design of societal institutions that help us live as caring, intelligent human beings in spiritually satisfying ways.