Marjorie Kelly and Ted Howard (2019: xiii): The Making of a Democratic Economy. Building Prosperity for the Many, Not Just the Few.<\/em><\/span><\/p>\n The front page introduced the issues of economic democracy, (re) location of the economy and a \u2018real circular economy\u2019. We found we needed a \u2018solution multiplier\u2019<\/u> to tackle several challenges at the same time – inequality, environment, climate – and the very prerequisite for real democracy; Economic Democracy. We identified the Community Wealth Building Model<\/em> as such a multiplier. This page also serves as an overview, but a more elaborate one with more emphasize on tools for systems change.\u00a0<\/p>\n <\/p>\n Shall we tackle problems where they actually originate (\u2018upstream\u2019) or only treat symptoms (\u2018downstream\u2019). What kind of advice would you like from your own doctor? Another illustration:<\/p>\n \u00abYou and a friend are having a picnic by the side of a river. Suddenly you hear a shout from the direction of the water\u2014a child is drowning. Without thinking, you both dive in, grab the child, and swim to shore. Before you can recover, you hear another child cry for help. You and your friend jump back in the river to rescue her as well. <\/em><\/p>\n \u00a0<\/em>Then another struggling child drifts into sight . . . and another . . The two of you can barely keep up. Suddenly, you see your friend wading out of the water, seeming to leave you alone. \u201cWhere are you going?\u201d you demand. Your friend answers, \u201cI\u2019m going upstream to tackle the guy who\u2019s throwing all these kids in the water.\u00bb <\/em><\/p>\n Dan Heath (2020): Upstream. How to solve problems before they happen. <\/em>\u00a0[Who refer to this as \u2018a public health parable (adapted from the original, which is commonly attributed to Irving Zola\u2019]<\/span><\/p>\n System change is not about single issues such as corruption or pollution from plastics. Rather, it\u2019s about underlying structures that steers the economy, environment and society, not only in one area, but across the field. These are the structures we first have to identify, and then show alternatives for.<\/p>\n <\/p>\n Important underlying structures in our market economy relates to how corporations act:<\/p>\n \u00abFew businesspeople would dispute that their decisions must be designed primarily to serve their company’s and its owners’ interests. As former Goodyear Tire CEO Sam Gibara said, “If you really did what you wanted to do that suits your personal thoughts and your personal priorities, you’d act differently. But as a CEO you cannot do that.\u00bb<\/em><\/p>\n \u00a0Bakan, Joel. (2004:51): The Corporation: The pathological pursuit of profit and power<\/em><\/span><\/p>\n The long-term view:<\/u><\/p>\n The short-term view:<\/u><\/p>\n <\/p>\n Ridley-Duff and Bull (2019:367)[1]<\/sup><\/a> refer to Milton Friedman who argued that political power is much more difficult to distribute than economic power. If this is correct, then economic inequality may not\u00a0 best be fought through political institutions, at least not as a first priority. A more effective way to combat inequality would be to use collective property (‘group ownership’) with shared ownership and management of companies. \u2018Distributed stakeholder ownership\u2019 for example, may include all who contribute to the company’s income, i.e. investors, contractors, workers and consumers. The decisive factor is how the dividend is distributed between these.<\/strong><\/p>\n \u201cAccording to Piketty, any time period where the return from financial investment is higher than the overall growth in the economy will result in a systematic enrichment of the people and institutions responsible for the financial investments (at the expense of workers). For Piketty, the only way to eliminate structural inequality will be for the return to borrowers and to society to exceed that of investors<\/em>.\u201d<\/p>\n Ridley-Duff and Bull (2019:208)<\/span><\/p>\n In other words, \u2018If returns to capital remain consistently higher than returns to labour, <\/strong>working people will continue to be impoverished<\/strong><\/a><\/span> and those with less bargaining power will be impoverished the quickest\u2019 <\/strong>[<\/strong>Ridley-Duff and Bull 2019:367]. Ridley-Duff and Bull sums up four possible strategies for reversing this cycle: [2]<\/a><\/sup><\/p>\n \u00ab<\/p>\n \u00bb<\/p>\n 2022 World Inequality Report<\/a>: Why reduced inequality is important also with regard to climate<\/u><\/span><\/p>\n \u00abWhile the world’s poorest 50 per cent actually have very low emission levels, approximately 1.6 tonnes of CO2 per person per year, the richest ten per cent emit 31 tonnes and the richest one per cent 110 tonnes – per person!… <\/strong>Also many of us who do not belong to the richest, have a material consumption that produces many times greater emissions than the poorest 50 per cent. We must therefore also reduce our consumption and redistribute wealth to the poor.\u00a0<\/em>\u00a0<\/em><\/p>\n In an interview with the well-known French economist, Thomas Piketty, reproduced in Klassekampen on 4 May 2022 [Norwegian daily], Piketty argues for measures that lead to such a redistribution. Political pressure must be created to ensure that the ten percent richest in society change their lifestyle and reduce their energy consumption.\u00bb\u00a0<\/em>\u00a0<\/em><\/p>\n Translated from Norwegian article: Cato Aall og Gunnar Kv\u00e5le (Klassekampen 9. sep. 22: 18): Et gr\u00f8nt skifte kommer ikke med privatjet<\/em><\/span><\/p>\n <\/p>\n From Piketty we derived the importance of collective business ownership to combat inequality. Spreading economic power also enables what Elinor Ostrom described as the optimal organization in terms of social and environmental sustainability. For our context, we can formulate this as follows:<\/p>\n Locally rooted and group-based ownership (i.e. shared ownership, not private) is the form of ownership that best matches social and environmental sustainability.\u00a0<\/em><\/p>\n [Diffusion of economic power is implicit, both because ownership is shared and because local ownership involves the spread of ownership to many smaller economic units].<\/p>\n In 2009, Ostrom received the Swedish “Riksbank’s Prize in Economic Science in Memory of Alfred Nobel” – popularly called the ‘Nobel Prize in Economics’ for her research on the management of common resources through group membership (collective ownership rather than private ownership).\u00a0Ostrom found that sustainability was strengthened in local group-based right-of-use systems, – assuming clear rules for use and management. This appears valid also for collective businesses in general- as long as they follow Ostrom’s spirit regarding said rules. The social & environmental argument for local and member-based business models can thus summarized:<\/p>\n When members have both rights and duties to maintain common resources, they will, instead of feeling alienated from the production they stand for, ‘re-establish the connection’ to this production.\u00a0 Internalization of social rights and protection of the environment thus becomes more likely.\u00a0<\/em><\/strong>\u00a0<\/em><\/p>\n Ideally, this is anchored in the statutes of the company\/cooperative in a to ensure ‘generative ownership\/ a regenerative economy’. We get generative ownership<\/u> when ownership rights are integrated with financial, social and environmental management responsibilities (‘stewardship<\/strong>‘). On the environmental side, we talk about ‘regenerative design<\/u>‘, best illustrated by the cradle to cradle principle<\/a> which links to the objective of a slower circular economy<\/strong>:<\/p>\n \u201cGrowth makes a circular economy impossible, even if all raw materials were recycled and all recycling was 100% efficient. The amount of used material that can be recycled will always be smaller than the material needed for growth. To compensate for that, we have to continuously extract more resources..\u201d<\/em><\/p>\n Kris De Decker (2018): How Circular is the Circular Economy?<\/a><\/strong><\/span><\/span><\/p>\n It is not enough to circulate resources to complete the circuit [‘close the loop’]. We must slow the flow by reducing both production and consumption. Hence the term \u2018slower circular economy<\/u><\/strong>\u2019. [3]<\/sup><\/strong><\/a><\/p>\n <\/p>\n We have argued that the spread of economic power is desirable both with respect to inequality and the environment. Below, it is argued that spreading economic power is also desirable – indeed necessary – if we are to have a real and strong democracy. As for cooperatives, these must be locally rooted so that members can identify with and actively participate in managing the business. Spreading economic power thus requires focus on the local economy as well as democratization of capital, ownership and governance.<\/strong> The quotes below illustrate the need for democratization.\u00a0<\/strong><\/p>\n \u00ab<\/strong>Writing as long ago as 1848, in his Principles of Political Economy<\/u>, <\/em>John Stuart Mill argued that a more democratic economy could be seen as a precondition for a more robustly democratic society<\/strong>, as only if workers had the opportunity to exercise judgement and control at work would they be able to develop the kind of ‘active character’ on which our political institutions rely for their proper functioning.<\/p>\n If we want to live in demo\u00adcratic societies, then we need to have democratic institutions that allow communities to shape their local economies, and to exert real control over the way in which those local economies develop over time. Treating the economy as some kind of separate technocratic domain in which the central values of a democratic society somehow do not apply is no longer good enough.<\/strong><\/em> \u00bb<\/em> \u00a0<\/em><\/p>\n \u00a0Joe Guinan and Martin O’Neill (2020:50,47): The Case for Community Wealth Building<\/em><\/span><\/p>\n \u00a0“<\/em>It\u2019s impossible to have a truly democratic society when the institutions that comprise it are not democratic. People employed in undemocratic workplaces are drained of agency, which is bad for democracy and bad for society overall.”<\/em><\/p>\n Dave Darby (May 2020)\u00a0The case for community wealth building: review<\/a>\u00a0<\/span><\/strong><\/span><\/p>\n <\/p>\n In order not to remain schizophrenic (see section C) we must adopt tools for system change. But what can give us real strength? The figure below illustrates why we must act collectively to stand against the strong predatory forces of today\u2019s economy.<\/p>\n Image credit: https:\/\/www.seedsforchange.org.uk\/workersco-ops.pdf<\/a>\u00a0 <\/strong><\/span>\u201cThis work is anti-copyright. \u00a0Feel free to copy, adapt, and distribute it as long as the final work remains anti-copyright\u201d.<\/span><\/p>\n When many people join together, individual risk is reduced, their bargaining position is strengthened, and, not least, the potential for real change increases as collective and self-interest coincide.<\/em><\/p>\n <\/p>\n Bj\u00f8rgulv Braanen (Commentary, Klassekampen, 29 April-21) [Norwegian daily] New spring for the cooperative idea <\/em>[text in brackets added]<\/span><\/p>\n The cooperative tradition [i]<\/a> [see endnote] is the best starting point because:<\/p>\n Nevertheless, the cooperatives must be revitalized because:<\/strong><\/p>\n <\/p>\n The undersigned’s course plan for Cooperative Social Entrepreneurship identifies five tools for system change (in addition to economic, social and environmental management obligations laid down in the company’s articles of association):\u00a0<\/p>\n Ownership Design\/Spreading Ownership: “While the environmental movement has focused on physical technologies, it has neglected the more fundamental issue of ownership design that drives corporate decisions.” <\/em>[4]<\/em><\/a> New ownership design enables value reorientation<\/u> and new forms of control (management), for example through Platform Cooperatives<\/a>, Open Cooperatives and Multi-stakeholder Enterprises.<\/p>\n<\/li>\n Democratization of Capital: Many locally rooted financial and organizational forms, known from England and the USA, provide opportunities to spread -and retain- capital in many more local hands, for example. through Community Shares, Credit Unions, Land Trusts, [House-] Building Societies, Civic-Public Partnerships and Cooperative-Municipal Partnerships.\u00a0<\/p>\n<\/li>\n Democratization of decision-making processes – including dedicated network solutions such as Loomio<\/a><\/p>\n<\/li>\n Copyright replaced by Open source (ideas, program code, design)\u00a0<\/p>\n<\/li>\n Decentralization of the means of production \/ Democratization of production: Design Global, Manufacture Local (DGML).*<\/span> <\/strong>Strengthens Local & Circular economy.<\/p>\n<\/li>\n<\/ol>\n (*)<\/strong> <\/span>Using ‘Computer-aided design’ (CAD), physical objects can be coded and read as digital information. Machines will then be able to use this information to control production processes such as wood milling, carving components in wood, metal and plastic, 3-D printing and much more. Open-source-available and\/or mass-produced circuit boards as well as inexpensive electronic components such as sensors and ‘actuation’ components (which start\/stop a process for an electrical article \/machine) may then contribute to the completion of a wide perspective of products, – independent of traditional factories.<\/p>\n Physical objects – coded as information and shared freely on the web – can thus be transformed into local production in distant areas. Moving electrons in the form of copyright-free information around the world is far cheaper and produces far less emissions and use of energy than transporting coal, steel and plastic. It also encourages the use of local resources, circular economy, shorter value chains and strengthening of the local economy.<\/strong><\/p>\n <\/p>\n \u00a0\u00a0\u00a0\u00a0 More references on the CWB-model are given later in this document.\u00a0\u00a0<\/p>\n <\/p>\n The below illustrates the need to relocate \u2018back to the local\u2019:<\/p>\n “Before Uber there was in Milan, Italy, in Lyon, France, two or three mini-cab companies that used to compete. The owner of that company would be worth 1 million or 2 million bucks. He was a rich guy in the local community. You had that in every city in Europe. They’ve all ceased to exist.<\/em>\u00a0<\/em><\/p>\n The same thing will happen all over the world. You will still have drivers. But that’s the most unskilled job in the line. The rest of the money will flow to Uber shareholders in Silicon Valley. So a huge chunk of the Italian GDP just moved to Silicon Valley.<\/strong><\/em>\u00a0<\/em><\/p>\n With these platforms, the Valley has become like ancient Rome. It exerts tribute from all its provinces. The tribute is the fact that it owns these platform businesses. Every classified ad in Italy used to go into a town newspaper. Now it goes to Google. Pinterest will basically replace magazine sales. Now Uber dominates transport.”<\/em>\u00a0<\/em><\/p>\n He sees the same trend taking place with his permanent landlord, Airbnb, as it “will replace massive chunks of the boutique hotel industry and self-catering.” On the whole, Charlie observes that as sharing platforms expand, “the value flows to one of the places in the world that can produce tech platforms. So the global regional inequality is going to be unlike anything we’ve ever seen.”<\/em><\/p>\n Charlie Songhurst cited in Alex Ross (2017): The Industries of the Future.<\/em><\/span><\/p>\n <\/p>\n Platform Cooperativism: Enabling Re-location, Economic Democracy & Democratic Ownership\u00a0<\/strong><\/p>\n What if Uber was owned and run by the drivers? What if Airbnb was owned and managed by those who actually rent? Say welcome to Platform Cooperatives. The formula is simple: combine the efficiency and reduced transaction costs of digital platforms with the horizontal ownership and democratic control that characterize worker-owned cooperatives.<\/em><\/p>\n Examples of successful cooperative platforms include Modo<\/a>, a Canada-based car-sharing cooperative. Stocksy United<\/a><\/strong><\/span>, \u00a0a artist owned cooperative that sells photographies online and Co-op Cabs<\/a> (Canada). Cleaning is another example with Up & Go Co-op<\/span><\/strong><\/a> (New York):<\/strong><\/p>\n \u00ab<\/strong>Up & Go relies on its own app to attract and book clients in the classic gig economy fashion. But while other booking services may pocket 20-50 cents on the dollar for lining up jobs, Up & Go cleaners, as co-owners of the co-op, keep 95 cents on the dollar and pay only 5 cents for booking.\u00bb<\/em><\/p>\nPart I. About the need for System Change and Effective Tools<\/h2>\n
A. Shall we tackle Root Causes or treat Symptoms?<\/h3>\n
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B.\u00a0 Focus on Root Causes means focus on System Change<\/h3>\n
C. Why we need System Change; Family and Business Values are Incompatible<\/h3>\n
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D.\u00a0 Why System Change has to include Spreading of Economic Power<\/h3>\n
(1)\u00a0 Spreading economic power is necessary to reduce Inequality: Some strategies based on Piketty’s research<\/u><\/h3>\n
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(2) Spreading of economic power is necessary to maximize use of organizational forms optimal for social and environmental sustainability\u00a0<\/u><\/h3>\n
(3) \u00a0It is only with Economic Democracy we get Real Democracy<\/u><\/h3>\n
E.\u00a0 How to Enable the System Changes Required: Collective Action<\/h3>\n
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<\/p>\nF.\u00a0 The Cooperative Tradition is the best starting point for Collective Action and Business<\/h3>\n
[But ] “From attending broad public and societal interests, being an opposing force, ..[Norwegian cooperatives] act today in the same way and according to the same\u00a0principles as privately owned actors [businesses]”<\/h4>\n
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G.\u00a0 Tools for System Change<\/h3>\n
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Part II. On Relocation of the Economy \u00a0<\/h2>\n
(Re) Localising the Economy; Summary Rational and Linkages<\/u><\/h3>\n
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Building local, democratic ownership means that inequality no longer need to be addressed by redistribution alone. Democratic ownership design enables pre-distribution of the very sources of value creation. <\/strong>\u00a0<\/strong><\/li>\n<\/ol>\n\n
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Relocalization of the Economy; It\u2019s significance for Reduction of Inequality<\/u><\/h3>\n