Jonathan Dawson
32 Resurgence No. 227 November/December 2004
There are signs of a growing awareness of the multiple dangers entailed in the loss of small-scale, locally based production systems. This is reflected in the growth in popularity of farmers’ markets, community-supported agriculture schemes, credit unions, buy-local campaigns, Fairtrade link-ups, and other initiatives to win back some community control over the processes of production and consumption. For the most part, these remain isolated initiatives: subscribers to organic box schemes, to give but one example, may have gone some way towards localising their food supply, but more than likely, in most other areas of their lives, they remain as dependent as ever on the global corporate economy. For the individual, for the household, even for groups of households the system is very hard to short-circuit. For a community of several hundred or more, however, especially if that community has a shared vision of creating an alternative to the global economy, the chance of success is significantly increased. And this is where the ecovillage model comes into its own as a seedbed for experimentation and innovation. Damanhur in Italy and the Findhorn Community in Scotland have consciously set out to reduce their dependence on the global corporate economy and to re-weave the web of a more complex, locally based, social economy. In an era where local shops, post offices, schools and other facilities are closing down in unprecedented numbers across Europe, these two communities are experiencing substantial growth and diversification, opening new enterprises and generating new employment. Findhorn and Damanhur have much in common. Both started as small initiatives in the 1960s and early 1970s. Both had, and continue to have, a strong spiritual focus to their activities. Both located themselves in economically marginalized areas: Damanhur in the alpine foothills of Piedmont, Findhorn in northern Scotland. Finally, both have experienced substantial growth in size over the decades: today, Damanhur is a federation of communities of more than 900 people, with many more supporters in the surrounding areas and indeed throughout Europe and the world; the Findhorn Community is home to around 450 people, with an extended international family of friends and partners. What is immediately striking on entering both ecovillages is the tangible feeling of activity and vitality. New buildings are being constructed, generally by companies owned by and employing community members. There are bakeries, theatres, shops and cafés that draw in visitors from far and wide. Local, organic cheeses, fruit and vegetables combine great quality with very low food miles. Crafts studios turn out beautiful ceramics, textiles, carvings and candles. Schools and training centres for both children and adults are flourishing. Publishing houses, printing presses, solar-panel manufacturers, waste-water system designers and consulting companies abound. Everywhere there is evidence of economic vitality and diversification. AT THE HEART of these success stories lies an astute understanding of the true nature of money and of how the rules that govern its movement can be managed so as to benefit the local economy. Damanhur and Findhorn have found a dual response to money management: to set up their own banks to retain their members’ savings within the community; and to create their own currencies to keep money circulating locally. Within Damanhur, the role of banker is taken on by the community’s real estate co-operative. This body was created as a vehicle for investing the savings of community members in the purchase of land and the building of accommodation, workshop and office space for community members and businesses. More recently, it has also come to play a role more akin to that of a mainstream bank, helping to identify business opportunities and providing loans and advice to community members who take them on. At the end of every year, the real-estate cooperative undertakes a study of the community economy, identifying which goods and services still need to be bought in from the outside, and seeking to promote new community enterprises to fill these gaps.The Findhorn Community has created Ekopia, a body with the status of an industrial provident society, to recycle locally the savings of its members. Here, projects in need of investment are identified, and share issues are raised against them. Each investor has one voting share only, irrespective of how much he or she invests, thus promoting a strongly communitarian ethic. This has enabled the community to draw on the financial resources of both current members and the wider Findhorn family, many of whom were previously members and all of whom share the community’s vision to create a more self-reliant and low impact human settlement. Both communities have also created their own currencies: the Credito in Damanhur and the Eko in Findhorn, each of which trades at parity with the national currency. While all transactions within Damanhur are undertaken using Creditos, residents and visitors to Findhorn have a choice and most use both national and community currencies. In both communities, all goods and services — for instance educational courses, building services, books, food, theatre tickets and printing — can be bought with the community currency. The beauty of these currencies from the point of view of the community economy is that they can only be spent locally and thus remain available to community members wishing to trade with each other. They are, in this sense, identical to Ithaca Hours, the currency system created by the social activist Paul Glover in the New York State town of Ithaca, in that they represent, in Paul’s words, money “with a boundary around it, so it stays in our community. It doesn’t come to town, shake a few hands and then wander out across the globe. It reinforces trading locally…they are untravellers’ cheques because you have to use them here — you cannot take them away.” SO MUCH FOR the theory. To see how the system works in practice, let us look in a little more detail at the Findhorn Community economy. The first of the share issues raised by Ekopia involved 220 individuals investing a total of £225,000 in a community-led buy-out of the community store, the Phoenix shop, which had previously been owned by the Findhorn Foundation. Share issues have also been raised to provide finance to the Findhorn Foundation (£100,000 has been raised) and the community educational facility, Newbold House (£25,000). Further community-based projects to finance the purchase of new wind turbines and affordable, eco-friendly houses are in the pipeline. This system delivers several benefits to the community. Investors become co-owners of the businesses in which they buy shares, they gain a five per cent discount on all purchases in the Phoenix shop, and they receive a dividend reflecting the growth in the value of the business. Ekopia calculates that, together, these various benefits equal a return of £100 per annum on an investment of one £500 share, compared to around £10 interest payments on £500 deposited in the bank. Secondly, community businesses are able to draw on the monetary savings of community members without needing to pay commercial bank fees and interest rates to do so. With bank interest rates at historically low levels, this factor is less important today than it is likely to be in the future; however, community businesses still make a saving of around £2,000 per annum on bank charges. Meanwhile, the Eko was launched in 2001 with an initial issue of 18,500 Ekos and a second issue of 20,000 Ekos. It is estimated that the first issue of Ekos generated a turnover of £150,000 in the first year of the scheme: almost ten full spending cycles. This is money that has stuck around, shaken plenty of hands and provided much valuable lubrication to the community economy. For sure, many of the products for sale within the community shop and other businesses originate outside the community and so money will necessarily leave the system to pay for them. Nonetheless, the use of the Eko has prevented a substantial leakage of purchasing power, making it much easier for genuinely local enterprises to emerge. Ekos are purchased from Ekopia with pounds sterling, one Eko to one pound, thus creating a loan fund for community businesses. The first of these loans, to the Phoenix shop for the renovation of its crafts department, generated enough in interest payments to pay for the printing of the first issue of Eko notes and the purchase of a marquee for community gatherings. THE CREATION OF Ekopia and of the Eko in the Findhorn Community and of the real-estate co-operative and the Credito in Damanhur have gone some way towards setting up a virtuous circle in which everyone wins. Investors gain more in terms of both financial returns and ownership of community businesses. Businesses get access to credit at a cheaper rate than through the conventional banking system. Expanding local businesses generate extra employment and purchasing power. And more of that purchasing power remains within the community.
Last, but far from least, though less easy to measure in purely economic terms, is the strong social dividend inherent in the strong feelings of ownership and participation felt by members of the community towards their own economy. Decisions relating to consumption, investment and work cease to be made purely according to criteria of profit maximisation. The divorce between head and heart that the current global economy enforces (whereby people often make consumer choices that they know to be socially or ecologically exploitative because of financial implications) is, to some degree at least, overcome. This ecovillage model thereby enables people to bring their desire for justice and sustainability back into alignment with their aspiration to live well and happily.
For proof that the model works in practice, one need look no further than a 2002 study undertaken by the local enterprise company Moray, Badenoch and Strathspey Enterprise into the economic impact of the Findhorn community on that of the north of Scotland. This study calculated that the community generates 400 jobs and over £5 million of business annually and commented on the value to the Scottish economy of the community’s diversification into economic activities beyond its original educational heartland. Meanwhile, the Damanhurian economy goes from strength to strength, its latest expansion being the purchase of a former Olivetti factory located nearby, a metaphor, perhaps, for the evolution from a corporate to an ecovillage-based society. These experiments demonstrate that it is, in practice, possible for local communities to short-circuit the global economy and to take back a good measure of control over their own economic destinies. They also suggest that at least three complementary elements need to be in place to permit them to do so. First, there needs to be a strong, shared vision and community of interest within a defined population to engage with the task. A population of around 200 people suggests itself as the minimum necessary to create an economic unit with sufficient diversity of enterprises and adequate purchasing power to make this viable. Secondly, leakages of monetary wealth out of the local economy need to be carefully identified and, to the degree possible, staunched. And finally, following the observation of Michael Shuman, the success of the model appears to be dependent on the synergies that emerge when local investment is combined with local ownership, local production and local employment. Converting the vicious cycle of today’s global economy, which effects such a strong and divisive fracture within the human heart and mind, into a virtuous and nourishing cycle will be no easy task. Community-based action in an economics of solidarity is required. The ecovillage movement has begun to develop interesting and strikingly effective models. The next task is to transfer these out of the intentional community seedbed and into the wider society.
Friday, March 19, 2010
Monday, March 15, 2010
Coops and Currencies Unite at Conference
At the California Coop Conference in Santa Rosa, Friday April 9 from 1:20-3pm
For more info and registration: http://cccd.coop/announcements/posts/321
“Local Currencies – Reclaiming Our Economic Power”
A workshop led by 3 leading local currency experts and innovators. We will evaluate local currency best practices using real existing and historical programs as examples, explore the potential of the cooperative structure for developing community trade networks, and highlight exciting innovations happening in the field.
Presenters:
Derek Huntington
Derek Huntington graduated from San Diego State University in 2005 as a Bachelor of Science in corporate finance with a minor in international politics. Since 2006, Derek has been researching and developing community-friendly credit and financing structures, culminating in the development of the Sustaining Capital model and the formation of Sustaining Technologies, LLC. He was one of the main organizers of the Sonoma County relocalization effort, and now serves as President of the Sonoma County GoLocal Cooperative.
Sustaining Technologies has developed an integrated website, business directory, and rewards card system currently being piloted with the Sonoma County GoLocal Cooperative. The platform will evolve into a social media and trading platform designed to strengthen relationships between individuals, businesses, and non-profits in communities. Visit www.golocal.coop to check it out.
Thomas H. Greco, Jr.
Tom Greco is a community and monetary economist, educator and former college professor at Rochester Institute of Technology. He is a leading authority on cashless exchange systems, monetary history and theory, credit clearing systems, complementary currencies, statistical analysis, and community economic development. He is the author of several books, including Money and Debt: A Solution to the Global Crisis and The End of Money and the Future of Civilization.
Chris Lindstrom
Chris Lindstrom is a long time student of community economic development and community exchange systems. He worked for the E.F. Schumacher Society as staff and program developer from 2003 to 2008. He was a founding board member of the BerkShares, one of the most widely acclaimed local currencies located in the Southern Berkshire region of Massachusetts. In 2004, he organized a conference for the Schumacher Society titled Local Currencies in the Twenty-First Century: Understanding Money, Building Local Economies, Renewing Community.
Lindstrom is currently a student at Goddard College and is writing his senior thesis on the philosophy, theory, and spirituality of money. He serves as the advisor and consultant to a number of complementary currency projects through out North America including GETS Plus, an incubator for green business barter and exchange systems
For more info and registration: http://cccd.coop/announcements/posts/321
“Local Currencies – Reclaiming Our Economic Power”
A workshop led by 3 leading local currency experts and innovators. We will evaluate local currency best practices using real existing and historical programs as examples, explore the potential of the cooperative structure for developing community trade networks, and highlight exciting innovations happening in the field.
Presenters:
Derek Huntington
Derek Huntington graduated from San Diego State University in 2005 as a Bachelor of Science in corporate finance with a minor in international politics. Since 2006, Derek has been researching and developing community-friendly credit and financing structures, culminating in the development of the Sustaining Capital model and the formation of Sustaining Technologies, LLC. He was one of the main organizers of the Sonoma County relocalization effort, and now serves as President of the Sonoma County GoLocal Cooperative.
Sustaining Technologies has developed an integrated website, business directory, and rewards card system currently being piloted with the Sonoma County GoLocal Cooperative. The platform will evolve into a social media and trading platform designed to strengthen relationships between individuals, businesses, and non-profits in communities. Visit www.golocal.coop to check it out.
Thomas H. Greco, Jr.
Tom Greco is a community and monetary economist, educator and former college professor at Rochester Institute of Technology. He is a leading authority on cashless exchange systems, monetary history and theory, credit clearing systems, complementary currencies, statistical analysis, and community economic development. He is the author of several books, including Money and Debt: A Solution to the Global Crisis and The End of Money and the Future of Civilization.
Chris Lindstrom
Chris Lindstrom is a long time student of community economic development and community exchange systems. He worked for the E.F. Schumacher Society as staff and program developer from 2003 to 2008. He was a founding board member of the BerkShares, one of the most widely acclaimed local currencies located in the Southern Berkshire region of Massachusetts. In 2004, he organized a conference for the Schumacher Society titled Local Currencies in the Twenty-First Century: Understanding Money, Building Local Economies, Renewing Community.
Lindstrom is currently a student at Goddard College and is writing his senior thesis on the philosophy, theory, and spirituality of money. He serves as the advisor and consultant to a number of complementary currency projects through out North America including GETS Plus, an incubator for green business barter and exchange systems
Saturday, March 13, 2010
To jumpstart US job market, turn workers into owners
Reposted from Christian Science Monitor
Many Americans build wealth through their home. Why not through work?
By Melissa Hoover and Beadsie Woo / January 11, 2010
San Francisco and Baltimore
Seldom do the United Steelworkers, the United Nations, and film director Michael Moore express the same idea at the same time. But all have, in their own way, promoted the benefits of cooperative businesses in recent months.
The Steelworkers Union, North America’s largest industrial union, has signed an agreement with a 100,000-member European co-op to help workers here gain an ownership stake in their workplace.
Just last month, the UN declared 2012 the International Year of Cooperatives. It’s urging governments worldwide to collaborate with the co-op movement to reduce poverty and create more productive societies.
And Michael Moore sent a valentine to the co-op movement in his latest film, “Capitalism: A Love Story.” As a form of economic democracy, he said in an interview, co-ops are “the patriotic thing to do.”
In hard times like these, the co-op model makes sense. After all, public confidence in corporations, banks, and the larger financial system is at low ebb, while unemployment is at its highest level in 25 years. Homeownership, historically a reliable way to build equity, has been rocked by foreclosures. People are looking for other ways to do business and save money.
Turning workers into investors isn’t new. We’re all familiar with dot-com employees whose vested stock options turned them into overnight millionaires. And Employee Stock Ownership Plans have long allowed workers to invest in their companies. But worker-owned co-ops are unique because employees own 100 percent of the business, so they have a voice in how it’s run.
Many people think of co-ops as the hippie-dippy grocery store that sells organic goods. In fact, a 2009 study by the University of Wisconsin Center for Cooperatives found more than 29,000 cooperatives in the US, which make $500 billion in annual revenue, support 83,000 people, and pay $25 billion in wages and benefits. They include national firms such as credit unions, and local businesses such as the Alvarado Street Bakery in Petaluma, Calif., or the Evergreen Cooperative Laundry in Cleveland.
Cleaning ladies in the San Francisco area and home-care workers in New York have banded to pool resources as worker-owners of profitable enterprises. White-collar workers are getting involved, too: One of the most successful cooperatives is Isthmus Engineering, a Wisconsin firm where engineers bought the company from its owner.
For low-wage workers, owning a business cooperatively can play a particularly important role in helping them climb out of poverty and build savings. Cooperative Home Care Associates in New York’s South Bronx, for instance, lets its 1,600 members save money toward a $1,000 stake in the co-op, entitling them to annual dividends. The business offers them affordable health insurance, retirement plans, and other benefits.
In America, most families build wealth by buying homes, investing in businesses, or putting money into employer-sponsored retirement accounts. The federal government subsidizes this wealth-building to the tune of $367 billion a year. But most low-income families don’t have the money to buy a house or start a business. And they don’t have jobs that come with 401(k) plans. Many of those who stretched to buy a house this decade have lost their homes or their equity.
It was mass unemployment and widespread poverty in Spain’s Basque region that spurred the creation of the Mondragon co-op in the 1950s. Today it’s the region’s economic engine, with more than 100,000 workers. At Mondragon, workers make the investment and the decisions. They share the profits and the risk. The Steelworkers say the co-op structure empowers workers and makes business more accountable. It envisions converting an existing site or starting new ventures, a natural extension of the union’s role in giving workers a voice with owners. Except this time, the workers would also be the owners.
There is plenty America can do to help cooperative businesses flourish. The Small Business Administration could make clear that it guarantees loans to worker co-ops. Congress could set aside money for an urban co-op development initiative as it does now for rural cooperatives. State and local governments could provide tax breaks and loans to co-ops that create new jobs. They could also fund an employee-ownership bank to support these ventures. Charitable groups, too, could help develop and expand the co-op model as a strategic approach to creating jobs and building assets for working families.
A model based on human values rather than the unbridled pursuit of profit might be just what we need to create jobs, rebuild wealth, and support our communities. Keep your eye on co-ops.
Melissa Hoover is executive director of the US Federation of Worker Cooperatives. Lillian “Beadsie” Woo is a senior associate at the Annie E. Casey Foundation in Baltimore.
Many Americans build wealth through their home. Why not through work?
By Melissa Hoover and Beadsie Woo / January 11, 2010
San Francisco and Baltimore
Seldom do the United Steelworkers, the United Nations, and film director Michael Moore express the same idea at the same time. But all have, in their own way, promoted the benefits of cooperative businesses in recent months.
The Steelworkers Union, North America’s largest industrial union, has signed an agreement with a 100,000-member European co-op to help workers here gain an ownership stake in their workplace.
Just last month, the UN declared 2012 the International Year of Cooperatives. It’s urging governments worldwide to collaborate with the co-op movement to reduce poverty and create more productive societies.
And Michael Moore sent a valentine to the co-op movement in his latest film, “Capitalism: A Love Story.” As a form of economic democracy, he said in an interview, co-ops are “the patriotic thing to do.”
In hard times like these, the co-op model makes sense. After all, public confidence in corporations, banks, and the larger financial system is at low ebb, while unemployment is at its highest level in 25 years. Homeownership, historically a reliable way to build equity, has been rocked by foreclosures. People are looking for other ways to do business and save money.
Turning workers into investors isn’t new. We’re all familiar with dot-com employees whose vested stock options turned them into overnight millionaires. And Employee Stock Ownership Plans have long allowed workers to invest in their companies. But worker-owned co-ops are unique because employees own 100 percent of the business, so they have a voice in how it’s run.
Many people think of co-ops as the hippie-dippy grocery store that sells organic goods. In fact, a 2009 study by the University of Wisconsin Center for Cooperatives found more than 29,000 cooperatives in the US, which make $500 billion in annual revenue, support 83,000 people, and pay $25 billion in wages and benefits. They include national firms such as credit unions, and local businesses such as the Alvarado Street Bakery in Petaluma, Calif., or the Evergreen Cooperative Laundry in Cleveland.
Cleaning ladies in the San Francisco area and home-care workers in New York have banded to pool resources as worker-owners of profitable enterprises. White-collar workers are getting involved, too: One of the most successful cooperatives is Isthmus Engineering, a Wisconsin firm where engineers bought the company from its owner.
For low-wage workers, owning a business cooperatively can play a particularly important role in helping them climb out of poverty and build savings. Cooperative Home Care Associates in New York’s South Bronx, for instance, lets its 1,600 members save money toward a $1,000 stake in the co-op, entitling them to annual dividends. The business offers them affordable health insurance, retirement plans, and other benefits.
In America, most families build wealth by buying homes, investing in businesses, or putting money into employer-sponsored retirement accounts. The federal government subsidizes this wealth-building to the tune of $367 billion a year. But most low-income families don’t have the money to buy a house or start a business. And they don’t have jobs that come with 401(k) plans. Many of those who stretched to buy a house this decade have lost their homes or their equity.
It was mass unemployment and widespread poverty in Spain’s Basque region that spurred the creation of the Mondragon co-op in the 1950s. Today it’s the region’s economic engine, with more than 100,000 workers. At Mondragon, workers make the investment and the decisions. They share the profits and the risk. The Steelworkers say the co-op structure empowers workers and makes business more accountable. It envisions converting an existing site or starting new ventures, a natural extension of the union’s role in giving workers a voice with owners. Except this time, the workers would also be the owners.
There is plenty America can do to help cooperative businesses flourish. The Small Business Administration could make clear that it guarantees loans to worker co-ops. Congress could set aside money for an urban co-op development initiative as it does now for rural cooperatives. State and local governments could provide tax breaks and loans to co-ops that create new jobs. They could also fund an employee-ownership bank to support these ventures. Charitable groups, too, could help develop and expand the co-op model as a strategic approach to creating jobs and building assets for working families.
A model based on human values rather than the unbridled pursuit of profit might be just what we need to create jobs, rebuild wealth, and support our communities. Keep your eye on co-ops.
Melissa Hoover is executive director of the US Federation of Worker Cooperatives. Lillian “Beadsie” Woo is a senior associate at the Annie E. Casey Foundation in Baltimore.
Thursday, March 11, 2010
Reputation Currencies
Sunday, April 12, 2009
Posted by Alan Rosenblith on New Currency Frontiers
Reputations
I do not claim to be an expert on reputations systems. There are many who have gone way deeper on this subject than I. Instead, I hope to seed a conversation about the complex interplay between reputations currencies, exchange currencies, and the marketplace. While there are a whopping variety of reputations currencies in play today on the web, I see two basic categories.
Do I live up to my promises?
When two parties come together to make a transaction, both sides make a variety of promises. As a player in a given marketplace I get a reputation about whether or not I live up to my promises. Some of these promises are explicit and some are implicit. The seller explicitly promises things about their goods or services, such as “This mouse works with USB.” If I get home and the box has been incorrectly labeled, I am legally allowed to return it, since the seller’s explicit promise has been broken. If the seller frequently breaks their explicit promises, they earn a bad reputation and buyers avoid them (they may even be sued). Ebay makes excellent use of this principle with their “thumbs up / thumbs down” system that allows buyers to rate sellers.
On the buyer’s end, the story is a little more complicated. In some marketplaces, the promise might have to do with timely payment. When I receive an invoice, I have until a certain date to settle my account. If, as a buyer, I stop settling accounts on time, I develop a bad reputation.
However, if we look a little deeper we see there are explicit promises backing up the exchange medium itself. Money is an IOU, and, as such, someone had to make an explicit promise to a bank to pay back a loan (with interest) in the future for it to be issued in the first place. While that kind of explicit promise is at the foundation of exchange currency, we rarely perceive money that way. If I develop a bad history as a borrower of money, my credit rating (a reputation currency) is negatively affected, and I lose access to exchange currency.
Reputations outside the explicit promise
Let’s say I own a pizza place. I advertise that, because I care about the environment, I will only employ people who deliver pizzas with their bicycles. You care about the environment too. You order a pizza, but when you get it, the delivery person is driving a Hummer. You feel cheated. Part of what you were paying for was benefit to the environment. This is an example of the first kind of reputation. I as a seller broke my explicit promise.
But what happens if everything is the same, except I didn’t promise bicycles for delivery vehicles? You might still be outraged that a Hummer was the delivery vehicle, but I didn’t promise anything to the contrary. This situation is an example of the second kind of reputation. This kind of reputation may have been what Adam Smith was talking about with his prescription for successful markets: there must be symmetrical information between buyers and sellers. I didn’t know I was supporting a pizza place that used Hummers. I accidentally caused an environmental externality that could have been avoided if I had had access to better information. We could solve this problem by introducing a reputations currency that measured buyers’ perceptions of sellers’ ecological impact. Buyers who cared could go to only those sellers who also cared (or more precisely, imbued buyers with that perception).
Complications
This situation gets murky very quickly, however. What happens if, in the above scenario, I advertise that I, as a pizza seller, care about the environment, but don’t make a promise about delivery vehicles? Perhaps I compost all my waste, or recycle soda cans, or use environmentally friendly cleaners. Since, you as a buyer sitting at home don’t see those behaviors, you are not getting the whole picture. Again, we have asymmetric information.
I might incur an unfair reputation as an ecological monster, since the people who contribute to my reputation don’t see most of my environmentally friendly behavior. A buyer-issued reputations currency would therefore bias me towards enacting environmentally friendly practices that were visible to buyers. However, many of the most important environmental practices might not be things that buyers normally see.
Enter the third party rating service. I, as a seller, can choose to be environmentally audited by a disinterested third party. An auditor gets a thorough look at all my practices and issues credentials to me based on them (another reputations currency). However, there is a tricky balance in this transaction. Since I, as a seller, probably have to pay for this service, I want to make sure there is a good chance I will receive the credentials in question. Therefore, I am biased towards hiring less stringent auditors. However, buyers are not served by this arrangement, and if word gets out that the auditors aren’t stringent, the auditor loses its reputation as an auditor. This means that auditors are trying to appeal to sellers as likely to grant credentials, while simultaneously trying to appeal to buyers as stringent.
One way to solve this dilemma might be to have the buyers rather than sellers pay for the auditing. However, sellers still need to grant access to the auditors. They might only want to grant access to auditors who are less stringent. And if auditors don’t get access to a broad enough swath of businesses, how can they charge buyers for their service?
Also, there are clearly situations where sellers make implicit rather than explicit promises. I might, as a seller, imply something about my practices or my product without making an explicit promise about them. Into which category should we put reputations around these promises? Due to the subtle nature of these reputations currencies, an open source development process that includes the communities that make use of them is the only way to ensure they can be sufficiently dynamic.
Domains of Trust
One final complication: Let’s say we are aggregating reputations about the first kind of reputation (do I live up to explicit promises?). Because (in a hypothetical near future) we have transitioned into a fully open data context, we can see the Ebay seller rating of someone as we buy something from them on Craigslist. But, does an Ebay rating have any meaning in a Craigslist marketplace? It does, IF AND ONLY IF, the rating can travel in the other direction as well, and I incur a consequence on Ebay as a result. If I transact with someone on Craigslist, and they decided to trust me on the basis of my Ebay rating, I could very easily abuse that trust unless they have the ability to post a rating about that transaction back to Ebay. Therefore the consequences of my actions must be applied across all relevant domains.
This gets even more complicated though, because how do we know that the person on Craigslist is rating me based on the same criteria? If they weren’t, we would be comparing apples and oranges, and my Ebay rating would cease to have any meaning at all. The only way to solve this problem is to have open standardized reputation currencies that could be imported and exported across domains. Meta-currency project, here we come!
Posted by Alan Rosenblith on New Currency Frontiers
Reputations
I do not claim to be an expert on reputations systems. There are many who have gone way deeper on this subject than I. Instead, I hope to seed a conversation about the complex interplay between reputations currencies, exchange currencies, and the marketplace. While there are a whopping variety of reputations currencies in play today on the web, I see two basic categories.
Do I live up to my promises?
When two parties come together to make a transaction, both sides make a variety of promises. As a player in a given marketplace I get a reputation about whether or not I live up to my promises. Some of these promises are explicit and some are implicit. The seller explicitly promises things about their goods or services, such as “This mouse works with USB.” If I get home and the box has been incorrectly labeled, I am legally allowed to return it, since the seller’s explicit promise has been broken. If the seller frequently breaks their explicit promises, they earn a bad reputation and buyers avoid them (they may even be sued). Ebay makes excellent use of this principle with their “thumbs up / thumbs down” system that allows buyers to rate sellers.
On the buyer’s end, the story is a little more complicated. In some marketplaces, the promise might have to do with timely payment. When I receive an invoice, I have until a certain date to settle my account. If, as a buyer, I stop settling accounts on time, I develop a bad reputation.
However, if we look a little deeper we see there are explicit promises backing up the exchange medium itself. Money is an IOU, and, as such, someone had to make an explicit promise to a bank to pay back a loan (with interest) in the future for it to be issued in the first place. While that kind of explicit promise is at the foundation of exchange currency, we rarely perceive money that way. If I develop a bad history as a borrower of money, my credit rating (a reputation currency) is negatively affected, and I lose access to exchange currency.
Reputations outside the explicit promise
Let’s say I own a pizza place. I advertise that, because I care about the environment, I will only employ people who deliver pizzas with their bicycles. You care about the environment too. You order a pizza, but when you get it, the delivery person is driving a Hummer. You feel cheated. Part of what you were paying for was benefit to the environment. This is an example of the first kind of reputation. I as a seller broke my explicit promise.
But what happens if everything is the same, except I didn’t promise bicycles for delivery vehicles? You might still be outraged that a Hummer was the delivery vehicle, but I didn’t promise anything to the contrary. This situation is an example of the second kind of reputation. This kind of reputation may have been what Adam Smith was talking about with his prescription for successful markets: there must be symmetrical information between buyers and sellers. I didn’t know I was supporting a pizza place that used Hummers. I accidentally caused an environmental externality that could have been avoided if I had had access to better information. We could solve this problem by introducing a reputations currency that measured buyers’ perceptions of sellers’ ecological impact. Buyers who cared could go to only those sellers who also cared (or more precisely, imbued buyers with that perception).
Complications
This situation gets murky very quickly, however. What happens if, in the above scenario, I advertise that I, as a pizza seller, care about the environment, but don’t make a promise about delivery vehicles? Perhaps I compost all my waste, or recycle soda cans, or use environmentally friendly cleaners. Since, you as a buyer sitting at home don’t see those behaviors, you are not getting the whole picture. Again, we have asymmetric information.
I might incur an unfair reputation as an ecological monster, since the people who contribute to my reputation don’t see most of my environmentally friendly behavior. A buyer-issued reputations currency would therefore bias me towards enacting environmentally friendly practices that were visible to buyers. However, many of the most important environmental practices might not be things that buyers normally see.
Enter the third party rating service. I, as a seller, can choose to be environmentally audited by a disinterested third party. An auditor gets a thorough look at all my practices and issues credentials to me based on them (another reputations currency). However, there is a tricky balance in this transaction. Since I, as a seller, probably have to pay for this service, I want to make sure there is a good chance I will receive the credentials in question. Therefore, I am biased towards hiring less stringent auditors. However, buyers are not served by this arrangement, and if word gets out that the auditors aren’t stringent, the auditor loses its reputation as an auditor. This means that auditors are trying to appeal to sellers as likely to grant credentials, while simultaneously trying to appeal to buyers as stringent.
One way to solve this dilemma might be to have the buyers rather than sellers pay for the auditing. However, sellers still need to grant access to the auditors. They might only want to grant access to auditors who are less stringent. And if auditors don’t get access to a broad enough swath of businesses, how can they charge buyers for their service?
Also, there are clearly situations where sellers make implicit rather than explicit promises. I might, as a seller, imply something about my practices or my product without making an explicit promise about them. Into which category should we put reputations around these promises? Due to the subtle nature of these reputations currencies, an open source development process that includes the communities that make use of them is the only way to ensure they can be sufficiently dynamic.
Domains of Trust
One final complication: Let’s say we are aggregating reputations about the first kind of reputation (do I live up to explicit promises?). Because (in a hypothetical near future) we have transitioned into a fully open data context, we can see the Ebay seller rating of someone as we buy something from them on Craigslist. But, does an Ebay rating have any meaning in a Craigslist marketplace? It does, IF AND ONLY IF, the rating can travel in the other direction as well, and I incur a consequence on Ebay as a result. If I transact with someone on Craigslist, and they decided to trust me on the basis of my Ebay rating, I could very easily abuse that trust unless they have the ability to post a rating about that transaction back to Ebay. Therefore the consequences of my actions must be applied across all relevant domains.
This gets even more complicated though, because how do we know that the person on Craigslist is rating me based on the same criteria? If they weren’t, we would be comparing apples and oranges, and my Ebay rating would cease to have any meaning at all. The only way to solve this problem is to have open standardized reputation currencies that could be imported and exported across domains. Meta-currency project, here we come!
The Metacurrency Project
We are building platforms and protocols necessary for an open source economy. This requires new technology capacities which need to function in a non-monopolizable manner.
* Open Identity: Create, manage and own your identity in a trustworthy manner, independent of any central authority.
* Open Rules: Know the rules of any currency you participate in and see when they change.
* Open Transport: A protocol to enable a participant to transact with any other participant and a currency to interact with any other currency.
* Open Data: The ability to share, decentralize and distribute data (like your account balance) and ensure its integrity and privacy… also, to allow you to be a reliable authority of your own data. (You can represent your own accounts, and I can validate your data.)
For more info see Metacurrency Project.
* Open Identity: Create, manage and own your identity in a trustworthy manner, independent of any central authority.
* Open Rules: Know the rules of any currency you participate in and see when they change.
* Open Transport: A protocol to enable a participant to transact with any other participant and a currency to interact with any other currency.
* Open Data: The ability to share, decentralize and distribute data (like your account balance) and ensure its integrity and privacy… also, to allow you to be a reliable authority of your own data. (You can represent your own accounts, and I can validate your data.)
For more info see Metacurrency Project.
Wednesday, March 10, 2010
Co-ops at center of coming elections in Great Britain
March 10, 2010
from Workers Paradise
Are British politicians proposing to alleviate austerity by creating co-operative public services?
In Great Britain this spring, the Labour Party, in power for thirteen years, is threatened with electoral defeat by the Conservatives. The British public, disgusted with Labour’s submissiveness to the bankers, may vote for the Conservatives as a protest – a political dynamic Americans will recognize.
The Labour Party re-branded itself as New Labour to return to power in the late ‘90’s after twenty years in opposition. It formally jettisoned its socialist heritage (abandoned in practice since the 60’s) and opting for a “progressive” neo-liberalism. Labour’s new leader, the young and photogenic Tony Blair modeled his campaign on Bill Clinton’s, and even hired Clinton’s managers to direct it. Labour won handsomely.
Blair’s star declined two years ago (he can thank Bush and the Iraq war) and Gordon Brown, his Chancellor of the Exchequer (Finance Minister) became party leader and Prime Minister. Brown, as Finance Minister and then as Prime Minister championed unbridled financialization until the banks collapsed, so it’s fitting he gets booted out of office. The Conservatives, not a better alternative, are however not certain of victory – their “numbers” are declining – and so both parties have been scurrying about to find a Big New Idea to wrap themselves in.
That idea is to have public services, like healthcare and education, managed by their staff. To push this program, bizarre in itself, both parties are endorsing the participatory management structure of John Lewis, a home furnishings retailer and supermarket chain. This 150 year-old enterprise, employing 70,000 and grossing £6.05 billion ($7.5 billion), introduced profit-sharing in the 20’s along with a system of employee respect and recognition that today accommodates staff-wide communication from the clerk up to the president. It’s not a worker co-operative. There is no equivalent business that Americans can related it to; it might be characterize as a firm where the employees have stockholder privileges without holding any stock (!) and the closest equivalent might be a “democratic” Employee Stock Option Plan (ESOP). It does provide, without question, far more worker participation than any business outside of the British co-operative community.
To have both major parties in Great Britain vying over schemes of worker participation elevates the concept to the popularity attained in the 70’s, when several thousand small worker co-operatives blossomed in the contentious political terrain of that era, also a period of economic decline. When the Conservative Party came into power it de-funded the Cooperative Development Agencies that Labour had created to aid this new economic sector. Without the necessary professional help the fledgling worker co-ops declined to the point that today fewer than 400 exist. Unlike in the US, where agriculture and energy are the major players in the co-operative sector, in the UK, the Co-op Supermarket dominates. And that network is huge. In fact, it’s the world’s largest consumer-owned business, with over 4.5 million members and 123,000 employees.
It’s interesting to note that UK’s largest worker co-operative, with 130 members, also functions in the food sector. Suma, a food wholesaler wholly managed by its worker force, supplies organic and fairly traded food to co-ops and natural foods stores. Despite its size, Suma proudly maintains its founding vision: it combats hierarchy by paying all members the same wage, and it encourages job rotation.
Something is rotten in the United Kingdom
Both the Conservatives and Labour recognize that the economic collapse, coupled with a House of Commons scandal over expense account fraud affecting members from all parties, has generated unprecedented popular anger. As in the States, the bank bailouts have been the focus for much of this anger, but unlike in the States, where at best we are encouraged to move our money to small banks, among the Brits a movement has grown to seize one of the largest banks, Northern Rock, and transform it into a community-owned bank.
Another aspect of the popular outrage in the UK resembles a growing hostility to large corporations that we see here. And for the same reasons: overweening political influence, off-shoring, growing inequality of wealth and severe cutbacks of wages and benefits. The “ethical deficit” of modern corporations has spurred universal condemnation.
The politicians in the UK, however, have created a clever way (they hope) of defusing outrage against the private sector by seemingly endorsing a radical response – worker control of the public sector. They are proclaiming a radical new kind of citizen participation as their answer to popular discontent and their lack of legitimacy.
It should be noted that for several years the British have been re-structuring both health-care services and education through community and staff collaboration. These efforts, called Trusts (and sometimes referred to as “Mutuals” share similar characteristics to multi-stakeholder co-operatives), have been somewhat successful in eliminating bureaucratic overreach and streamlining operations to better serve the public. And they have been financially successful; they have saved the government money.
Co-opting popular outrage
While the two major parties ostensibly endorse these new management arrangements in hospitals and schools, they nonetheless do have rival brands of “citizen control” on offer. The electoral circus must appear as a contest between rivals for votes, after all. Here’s what’s being proposed, first by the Conservatives and then Labour.
Based on the ideological premise that Labour’s statist approach to public services, mainly in education and health-care produces inefficiencies and waste, the Tories propose to have state-funded services managed by their staff. They actually have called for “worker co-operatives” and, further, that the staff would pocket any savings resulting from efficient operations.
Labour, on the other hand, offers a borough of London, Lambeth, as its model of public control of public services. Here the local council government experiments with volunteer community efforts. They point to a successful urban garden program, for instance, that the local council organized by hiring an experienced activist who organized 50 community gardens. Besides the gardens, her efforts to involve the community achieved a benefit that is commendable but can’t be easily tabulated. However paying one skilled community activist was a lot cheaper than hiring a crew of gardeners.
This same borough encouraged parents to petition to take over a local closed school and transform it into a community center, especially for after-school youth programs. And again the participants’ time was not calculated in the local budget and, of course, neither was the newly generated “social capital.” Labour seems to see this as a “problem” that can be addressed by offering local tax rebates to community members who participate in the volunteer projects.
Lambeth, not inconsequentially, is the home of a successful worker cooperative that may have been influential by its example of good management. Greenwich Leisure, was taken over by its staff in the 90’s when the cash-strapped Lambeth council could no longer maintain the services. Today the original leisure center has been replicated to include 70 facilities in thirteen London boroughs. While managed by the staff, these centers have community members on their boards to broaden involvement. This is the model that Labour seeks to adopt with maybe more community and less worker control. It differs from the Conservative’s proposal that seeks only the participation of staff, which many fear will eventually lead to privatization.
Again, once more, smoke and mirrors
Though innovative on the surface these proposals, by Labour and their “rival,” present some organizational (and political) difficulties that need to be considered.
Both parties advocate a form of participation that differs considerably from the worker cooperative model situated in the private economy. When public funds are the sole source of financing how much control will the staff actually possess? And what to do when funds are cut? Already the Lambeth council expects at least 20 percent less funding for 2010. And what about the physical plant? Will it be leased? Sold? Can the worker co-op institute its own for-profit ventures? And what will be the role of unions in all this? These and other “details” the Labour leader of Lambeth says will be discussed in commission hearings later this year.
Currently the Conservatives, in local councils that they control, propose to respond to funding cuts by charging for services above a minimum level. The wealthy, in other words, will move to the head of the line, a familiar scenario in the US. Or worse, they will be privatized, and we know what that means also.
So the Labour initiative on public services seems a wiser choice. It allows, in theory, for more local control by the users, the public, and the staff. If the follow-through reduces bureaucracy and top-down control, then this could be a positive development and mark a significant departure from the way public services are currently delivered.
Transforming the public sector to be more “user-friendly” is a worthwhile goal. But whether that goal will be met in the manner Labour, much less the Conservatives, are pursuing it seems dubious. The hallmark of co-operative ventures must be their democratic practice, without that we have just verbiage in tow to political gain. Something similar happened in the US during the discussion last summer about so-called healthcare co-operatives. No politician wanted local, democratic control of healthcare.
If the Borough of Lambeth were proposing something like participatory budgeting based on the extensive municipal practice pioneered in Brazil, where citizens actually had at least a bit of control over some funds to improve services, then maybe the goal of true community involvement could be attained. But without a radical revision of how local government allocates resources, especially in a time of austerity, enticing local community support with monetary perks, as has been suggested, risks creating a claque of self-interested locals who, for whatever reason, pursue their agenda instead that of the community.
Civic engagement occurs for many reasons that need not entail comprehensive, centralized administration. The joy of working on a worthwhile project with one’s neighbors needs little stimulus from some bureaucrat in an office someplace. Encouragement to engage in larger projects is needed. Who will entice strangers to collaborate, so that they cease being “unknowns” and successfully engage in pursuit of meaningful activity? Having access to real power, the goal of participatory budgeting, may be the possible institutional avenue towards reviving civic life by creating significant, practical change people easily recognize.
Diverting the focus from the private economy to the public realm appears to be a pretty transparent attempt to change the subject. One suspects that both Labour and certainly the Conservatives have no idea how to salvage an economy that has been devastated by more than twenty years of neo-liberal practices. The UK for instance has lost manufacturing on a scale similar to the US. The recent Cadbury Chocolate take-over by Kraft Foods was just the last episode in a recurring story. The trade unions anticipate huge cuts in the 7,000 jobs so that Kraft’s heavily indebted exposure is repaired.
The recent closing of the only large turbine facility in Great Britain by its Danish owner without a response exposed Labour’s inability to think creatively about retaining manufacturing.
Creating a co-operative economy
While the politicians prepare their circus acts, the real news on economic matters in Great Britain comes from Scotland. There, a four year-old co-operative development group is successfully establishing employee-managed firms. This group can advise for a range of alternatives, from start-ups to employee buy-outs of firms ready for transition of ownership. Scottish government development funds finance them and over the years they have assisted a host of thriving firms and have gained valuable experience creating ventures that provide for economic sustainability.
If Labour (or the Conservatives) really wanted to tackle economic development and not simply pose with a half-baked idea, they would fund replications of Co-operative Development Scotland in all major British cities. This act alone would not solve all the problems of an economy facing the worst prospects in generations, but it is at least a start. It would be a real demonstration that there are alternatives to another financial bubble economy. And it would place the focus on local economic development as the prime response to strengthening initiatives to deal with climate change and food security issues.
Funding local co-operative development agencies should also be considered a viable program for the US to adopt. The Obama administration has restored Bush’s cutbacks to the Cooperative Rural Development Grant Program, and in the current budget will double its funds. This granting program has proved effective in strengthening rural economic development. The next step would be to create an urban equivalent maybe modeled after the Dept of Commerce Minority Business Development Agency. Co-op projects already underway in the Bronx, Cleveland, Detroit, Milwaukee and Chicago, to name the most prominent and recent examples, demonstrate the viability of this approach. Isn’t it time for the federal government to recognize these accomplishments and fund more of them?
Bernard Marszalek
info@jasecon.org
March 10, 2010
from Workers Paradise
Are British politicians proposing to alleviate austerity by creating co-operative public services?
In Great Britain this spring, the Labour Party, in power for thirteen years, is threatened with electoral defeat by the Conservatives. The British public, disgusted with Labour’s submissiveness to the bankers, may vote for the Conservatives as a protest – a political dynamic Americans will recognize.
The Labour Party re-branded itself as New Labour to return to power in the late ‘90’s after twenty years in opposition. It formally jettisoned its socialist heritage (abandoned in practice since the 60’s) and opting for a “progressive” neo-liberalism. Labour’s new leader, the young and photogenic Tony Blair modeled his campaign on Bill Clinton’s, and even hired Clinton’s managers to direct it. Labour won handsomely.
Blair’s star declined two years ago (he can thank Bush and the Iraq war) and Gordon Brown, his Chancellor of the Exchequer (Finance Minister) became party leader and Prime Minister. Brown, as Finance Minister and then as Prime Minister championed unbridled financialization until the banks collapsed, so it’s fitting he gets booted out of office. The Conservatives, not a better alternative, are however not certain of victory – their “numbers” are declining – and so both parties have been scurrying about to find a Big New Idea to wrap themselves in.
That idea is to have public services, like healthcare and education, managed by their staff. To push this program, bizarre in itself, both parties are endorsing the participatory management structure of John Lewis, a home furnishings retailer and supermarket chain. This 150 year-old enterprise, employing 70,000 and grossing £6.05 billion ($7.5 billion), introduced profit-sharing in the 20’s along with a system of employee respect and recognition that today accommodates staff-wide communication from the clerk up to the president. It’s not a worker co-operative. There is no equivalent business that Americans can related it to; it might be characterize as a firm where the employees have stockholder privileges without holding any stock (!) and the closest equivalent might be a “democratic” Employee Stock Option Plan (ESOP). It does provide, without question, far more worker participation than any business outside of the British co-operative community.
To have both major parties in Great Britain vying over schemes of worker participation elevates the concept to the popularity attained in the 70’s, when several thousand small worker co-operatives blossomed in the contentious political terrain of that era, also a period of economic decline. When the Conservative Party came into power it de-funded the Cooperative Development Agencies that Labour had created to aid this new economic sector. Without the necessary professional help the fledgling worker co-ops declined to the point that today fewer than 400 exist. Unlike in the US, where agriculture and energy are the major players in the co-operative sector, in the UK, the Co-op Supermarket dominates. And that network is huge. In fact, it’s the world’s largest consumer-owned business, with over 4.5 million members and 123,000 employees.
It’s interesting to note that UK’s largest worker co-operative, with 130 members, also functions in the food sector. Suma, a food wholesaler wholly managed by its worker force, supplies organic and fairly traded food to co-ops and natural foods stores. Despite its size, Suma proudly maintains its founding vision: it combats hierarchy by paying all members the same wage, and it encourages job rotation.
Something is rotten in the United Kingdom
Both the Conservatives and Labour recognize that the economic collapse, coupled with a House of Commons scandal over expense account fraud affecting members from all parties, has generated unprecedented popular anger. As in the States, the bank bailouts have been the focus for much of this anger, but unlike in the States, where at best we are encouraged to move our money to small banks, among the Brits a movement has grown to seize one of the largest banks, Northern Rock, and transform it into a community-owned bank.
Another aspect of the popular outrage in the UK resembles a growing hostility to large corporations that we see here. And for the same reasons: overweening political influence, off-shoring, growing inequality of wealth and severe cutbacks of wages and benefits. The “ethical deficit” of modern corporations has spurred universal condemnation.
The politicians in the UK, however, have created a clever way (they hope) of defusing outrage against the private sector by seemingly endorsing a radical response – worker control of the public sector. They are proclaiming a radical new kind of citizen participation as their answer to popular discontent and their lack of legitimacy.
It should be noted that for several years the British have been re-structuring both health-care services and education through community and staff collaboration. These efforts, called Trusts (and sometimes referred to as “Mutuals” share similar characteristics to multi-stakeholder co-operatives), have been somewhat successful in eliminating bureaucratic overreach and streamlining operations to better serve the public. And they have been financially successful; they have saved the government money.
Co-opting popular outrage
While the two major parties ostensibly endorse these new management arrangements in hospitals and schools, they nonetheless do have rival brands of “citizen control” on offer. The electoral circus must appear as a contest between rivals for votes, after all. Here’s what’s being proposed, first by the Conservatives and then Labour.
Based on the ideological premise that Labour’s statist approach to public services, mainly in education and health-care produces inefficiencies and waste, the Tories propose to have state-funded services managed by their staff. They actually have called for “worker co-operatives” and, further, that the staff would pocket any savings resulting from efficient operations.
Labour, on the other hand, offers a borough of London, Lambeth, as its model of public control of public services. Here the local council government experiments with volunteer community efforts. They point to a successful urban garden program, for instance, that the local council organized by hiring an experienced activist who organized 50 community gardens. Besides the gardens, her efforts to involve the community achieved a benefit that is commendable but can’t be easily tabulated. However paying one skilled community activist was a lot cheaper than hiring a crew of gardeners.
This same borough encouraged parents to petition to take over a local closed school and transform it into a community center, especially for after-school youth programs. And again the participants’ time was not calculated in the local budget and, of course, neither was the newly generated “social capital.” Labour seems to see this as a “problem” that can be addressed by offering local tax rebates to community members who participate in the volunteer projects.
Lambeth, not inconsequentially, is the home of a successful worker cooperative that may have been influential by its example of good management. Greenwich Leisure, was taken over by its staff in the 90’s when the cash-strapped Lambeth council could no longer maintain the services. Today the original leisure center has been replicated to include 70 facilities in thirteen London boroughs. While managed by the staff, these centers have community members on their boards to broaden involvement. This is the model that Labour seeks to adopt with maybe more community and less worker control. It differs from the Conservative’s proposal that seeks only the participation of staff, which many fear will eventually lead to privatization.
Again, once more, smoke and mirrors
Though innovative on the surface these proposals, by Labour and their “rival,” present some organizational (and political) difficulties that need to be considered.
Both parties advocate a form of participation that differs considerably from the worker cooperative model situated in the private economy. When public funds are the sole source of financing how much control will the staff actually possess? And what to do when funds are cut? Already the Lambeth council expects at least 20 percent less funding for 2010. And what about the physical plant? Will it be leased? Sold? Can the worker co-op institute its own for-profit ventures? And what will be the role of unions in all this? These and other “details” the Labour leader of Lambeth says will be discussed in commission hearings later this year.
Currently the Conservatives, in local councils that they control, propose to respond to funding cuts by charging for services above a minimum level. The wealthy, in other words, will move to the head of the line, a familiar scenario in the US. Or worse, they will be privatized, and we know what that means also.
So the Labour initiative on public services seems a wiser choice. It allows, in theory, for more local control by the users, the public, and the staff. If the follow-through reduces bureaucracy and top-down control, then this could be a positive development and mark a significant departure from the way public services are currently delivered.
Transforming the public sector to be more “user-friendly” is a worthwhile goal. But whether that goal will be met in the manner Labour, much less the Conservatives, are pursuing it seems dubious. The hallmark of co-operative ventures must be their democratic practice, without that we have just verbiage in tow to political gain. Something similar happened in the US during the discussion last summer about so-called healthcare co-operatives. No politician wanted local, democratic control of healthcare.
If the Borough of Lambeth were proposing something like participatory budgeting based on the extensive municipal practice pioneered in Brazil, where citizens actually had at least a bit of control over some funds to improve services, then maybe the goal of true community involvement could be attained. But without a radical revision of how local government allocates resources, especially in a time of austerity, enticing local community support with monetary perks, as has been suggested, risks creating a claque of self-interested locals who, for whatever reason, pursue their agenda instead that of the community.
Civic engagement occurs for many reasons that need not entail comprehensive, centralized administration. The joy of working on a worthwhile project with one’s neighbors needs little stimulus from some bureaucrat in an office someplace. Encouragement to engage in larger projects is needed. Who will entice strangers to collaborate, so that they cease being “unknowns” and successfully engage in pursuit of meaningful activity? Having access to real power, the goal of participatory budgeting, may be the possible institutional avenue towards reviving civic life by creating significant, practical change people easily recognize.
Diverting the focus from the private economy to the public realm appears to be a pretty transparent attempt to change the subject. One suspects that both Labour and certainly the Conservatives have no idea how to salvage an economy that has been devastated by more than twenty years of neo-liberal practices. The UK for instance has lost manufacturing on a scale similar to the US. The recent Cadbury Chocolate take-over by Kraft Foods was just the last episode in a recurring story. The trade unions anticipate huge cuts in the 7,000 jobs so that Kraft’s heavily indebted exposure is repaired.
The recent closing of the only large turbine facility in Great Britain by its Danish owner without a response exposed Labour’s inability to think creatively about retaining manufacturing.
Creating a co-operative economy
While the politicians prepare their circus acts, the real news on economic matters in Great Britain comes from Scotland. There, a four year-old co-operative development group is successfully establishing employee-managed firms. This group can advise for a range of alternatives, from start-ups to employee buy-outs of firms ready for transition of ownership. Scottish government development funds finance them and over the years they have assisted a host of thriving firms and have gained valuable experience creating ventures that provide for economic sustainability.
If Labour (or the Conservatives) really wanted to tackle economic development and not simply pose with a half-baked idea, they would fund replications of Co-operative Development Scotland in all major British cities. This act alone would not solve all the problems of an economy facing the worst prospects in generations, but it is at least a start. It would be a real demonstration that there are alternatives to another financial bubble economy. And it would place the focus on local economic development as the prime response to strengthening initiatives to deal with climate change and food security issues.
Funding local co-operative development agencies should also be considered a viable program for the US to adopt. The Obama administration has restored Bush’s cutbacks to the Cooperative Rural Development Grant Program, and in the current budget will double its funds. This granting program has proved effective in strengthening rural economic development. The next step would be to create an urban equivalent maybe modeled after the Dept of Commerce Minority Business Development Agency. Co-op projects already underway in the Bronx, Cleveland, Detroit, Milwaukee and Chicago, to name the most prominent and recent examples, demonstrate the viability of this approach. Isn’t it time for the federal government to recognize these accomplishments and fund more of them?
Bernard Marszalek
info@jasecon.org
March 10, 2010
Tuesday, March 9, 2010
Ukiah's first barter market
Ukiah's first barter market: People trade goods and wares while getting a crash course on alternative currency
By MONICA STARK The Daily Journal
Updated: 03/08/2010 12:01:21 AM PST
In an effort to build social justice and get people what they need without them spending money, community members organized Ukiah's first ever barter market on Sunday at the Saturday Afternoon Clubhouse, which resulted in about 40 people becoming local Time Bank members. The idea is that for every hour Time Bank members spend doing something for someone in the Time Bank community, they earn one time dollar, which some people on Sunday spent on locally made goods, be it produce, jewelry or other crafts. Others plan on trading in their time dollars for a service they want. Some offerings included: bellydance instruction and horseback trail rides.
Those who became Time Bank members received a crash course on how this alternative economy can change the world by changing the money economy, which they argue, does not value the kind of work it takes to create healthy homes, families and communities.
Jenn Douthit, one of the presenters used baby sitting as an example that is not very valued in society, yet it's an "extremely needed skill."
In Time Banking all people's time is of equal value, she explained. "So whether you got your master's degree in English and you're editing a paper for someone for $5; or you are using a shovel to dig up someone's plants they don't want in their garden anymore-- that is equal time. So we don't value one person's skill over another occupation based on their education or opportunities. We're all spending the same amount of time to do it."
However, time dollars aren't intended to be a currency that replaces money, organizer Julia Frech explained. They are intended to create a means and incentive for people to help each other. "You would never tell your friend or neighbor, for example, if he needed help in some way, that: I'll help you for an hour now, if you help me for five hours later.' This would undoubtably create some resentment," Frech said.
One of the concerns about Time Bank systems is that it can weed out high demand jobs, such as lawyers or doctors, who need of a lot of education to get to where they are and who might be less likely to trade their services than a tutor or massage therapist.
Frech said that she's come across some literature that tells of doctors in other Time Banks who will see patients for time dollars. "To them, they feel good about serving those that don't have the means to pay them, and because the patients are still giving up something of value, they are more likely to heed the doctor's orders," Frech said.
She said that there hasn't been any targeted new member recruitment yet, but in the near future she is planning to approach organizations serving the needy, as well as professionals whose services tend to be well valued in the current economy. "I imagine those with lots of well paid work, if they do participate, will do so because they want to give back to their community, and a Time Bank is a great way to do that," she said.
Those who bartered goods for other goods on Sunday (rather than in exchange for time dollars), are required to file Form 1099-B and include all transactions to the Internal Revenue Service.
On the other hand, time dollars, Frech said, have been ruled tax exempt by the IRS. "(Because) an hour is always valued at one hour, there is no legal responsibility on anyone's part to redeem a time dollar, and the purpose of time dollars is charitable."
Items that were traded on Sunday in time dollars, followed a general rule, which was to charge time dollars (One time dollar = One hour) for the time it takes to make something, and money for the raw materials. Examples included handmade items and produce. Further, Frech explained that a Time Bank can't set an exchange rate between time dollars/hours and money, because if there were an equivalent, it would become taxable.
"This is one reason the Time Bank model is so attractive-- members are making a commitment to value people's time equally," she said.
Monica Stark can be reached at udjfeatures@pacific.net
By MONICA STARK The Daily Journal
Updated: 03/08/2010 12:01:21 AM PST
In an effort to build social justice and get people what they need without them spending money, community members organized Ukiah's first ever barter market on Sunday at the Saturday Afternoon Clubhouse, which resulted in about 40 people becoming local Time Bank members. The idea is that for every hour Time Bank members spend doing something for someone in the Time Bank community, they earn one time dollar, which some people on Sunday spent on locally made goods, be it produce, jewelry or other crafts. Others plan on trading in their time dollars for a service they want. Some offerings included: bellydance instruction and horseback trail rides.
Those who became Time Bank members received a crash course on how this alternative economy can change the world by changing the money economy, which they argue, does not value the kind of work it takes to create healthy homes, families and communities.
Jenn Douthit, one of the presenters used baby sitting as an example that is not very valued in society, yet it's an "extremely needed skill."
In Time Banking all people's time is of equal value, she explained. "So whether you got your master's degree in English and you're editing a paper for someone for $5; or you are using a shovel to dig up someone's plants they don't want in their garden anymore-- that is equal time. So we don't value one person's skill over another occupation based on their education or opportunities. We're all spending the same amount of time to do it."
However, time dollars aren't intended to be a currency that replaces money, organizer Julia Frech explained. They are intended to create a means and incentive for people to help each other. "You would never tell your friend or neighbor, for example, if he needed help in some way, that: I'll help you for an hour now, if you help me for five hours later.' This would undoubtably create some resentment," Frech said.
One of the concerns about Time Bank systems is that it can weed out high demand jobs, such as lawyers or doctors, who need of a lot of education to get to where they are and who might be less likely to trade their services than a tutor or massage therapist.
Frech said that she's come across some literature that tells of doctors in other Time Banks who will see patients for time dollars. "To them, they feel good about serving those that don't have the means to pay them, and because the patients are still giving up something of value, they are more likely to heed the doctor's orders," Frech said.
She said that there hasn't been any targeted new member recruitment yet, but in the near future she is planning to approach organizations serving the needy, as well as professionals whose services tend to be well valued in the current economy. "I imagine those with lots of well paid work, if they do participate, will do so because they want to give back to their community, and a Time Bank is a great way to do that," she said.
Those who bartered goods for other goods on Sunday (rather than in exchange for time dollars), are required to file Form 1099-B and include all transactions to the Internal Revenue Service.
On the other hand, time dollars, Frech said, have been ruled tax exempt by the IRS. "(Because) an hour is always valued at one hour, there is no legal responsibility on anyone's part to redeem a time dollar, and the purpose of time dollars is charitable."
Items that were traded on Sunday in time dollars, followed a general rule, which was to charge time dollars (One time dollar = One hour) for the time it takes to make something, and money for the raw materials. Examples included handmade items and produce. Further, Frech explained that a Time Bank can't set an exchange rate between time dollars/hours and money, because if there were an equivalent, it would become taxable.
"This is one reason the Time Bank model is so attractive-- members are making a commitment to value people's time equally," she said.
Monica Stark can be reached at udjfeatures@pacific.net
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