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The elements of new economics?

An interview with Pat Conaty (main pic), one of the authors of the Resilience Imperative, by Naresh Giangrande of the Transition Network. This book examines the many elements from which resilient local economies can be built. Pat Conaty and Mike Lewis have done the leg work of collating and critiquing the many examples of how this has been achieved all over the world over the last 150 years. It is both strong on theory and an excellent reference book on the practical pieces of a resilient local economy. Here’s what Pat had to say about it…

Naresh Giangrande: Why should someone involved in a Transition Initiative read this book?

Pat Conaty: Mike and I were aware that although there have been many social and environmental change solutions developed, there has been a lack of strategic thinking. How can we join these partial solutions up? Through co-researching and co-writing the book over three years, we felt that we could clarify a Great Transition strategy for going forward by bringing together different fragments of positive change strategically and practically.

We saw a need to bring ecological and cooperative economics together. Kenneth Boulding, a founder of ecological economics was the first to call for a Great Transition in the mid 60’s, and saw the need to link cooperative and ecological economics together.

So to make a start, we thought what if we brought together ecological principles of resilience and the 7 cooperative principles? Could this linking up provide a compass for a new theory and practice of SEE (social, ecological and economic) Change? Through using the integrated resilience and co-operative principles as signposts, this book demonstrates in a very practical way what you would make and what sort of systems and enterprises would you need to set up and link up for SEE Change and the Great Transition.

NG: You were involved in the 1990’s in The Real World Coalition seeking to bring together the third world development, green movement, social justice movement, small business, and micro credit movements. Is this book in some way an expression of that impulse?

PC: The Real World Coalition united over 30 NGOs in the UK from these sectors and was led by Jonathan Porritt, Sara Parkin and Mike Jacobs. It was unique in that it spent three years developing a common manifesto among the NGOs. We need something like this again. How do we unite the fragments of change, to tackle the big issues? We have to come together.

Yes this book is looking at the intervening years and what are the practical, tried and tested ways that people have been cooperating and been successful in creating the pieces of local resilience. SEE Change offers four steps as a process. First: sharing problems, second: seeing the world differently through a radical integrated theory, third: seeking solutions that work and fourth: securing integrated solutions for the paradigm shift.

NG: If you were to synthesize ecological and cooperative economics what would you come up with?

PC: To root the integrated theory with practice, we looked at basic needs – food, shelter, finance, and energy services – and how could we meet human needs co-operatively and what are the practical ways that have been pioneered to satisfy these needs and build a sustainable society.

Having been involved with the new economics foundation (nef) for 25 years- I feel no one has yet completely explained what new economics is- so this is an attempt to define the new economics and root the theory in practice to meet basic needs through regional resources that could be mobilised creatively and dynamically. 

NG: I loved your tables at the end of chapter showing the costs to an average family.

PC: Yes we took a family of four and looked at what if we were addressing their needs in the new economics way and what would be the impact on their household budget. We substituted usury based on high rates of compound interest with mutual fee based money, and private energy and food monopolies with energy and food coops.

 

 

We also show savings by converting housing to Community Land Trusts to take the land cost out of the market. The result we found is that there are significant savings to be made in each instance and the cumulative results show the practical potential for a steady state economy.

For an average family of four, you make a savings on energy and financing of over $360,000 over 25 years. Local organic food would be more expensive, but the net savings including food are still $280,000 over 25 years. We converted this to life hours which translated into saving 10 hours a week per household. This is significant.

What Tim Jackson says in his most recent work is that we should move to work sharing. If we do, our needs for income can be less through the co-operative economy reforms profiled. Also by work sharing our needs can be reduced for income, and we can then self provision to some extent as we work less hours in paid employment. If we want an economic democracy we can’t be working 50 hour weeks. We need to have more time for self governance.

If we changed our systems for living in a radical root and branch way where economic growth wouldn’t be needed we could achieve this. We provide the evidence in the book. Co-operative economy methods for land reform, money/capital reform and corporate reform are essential though.

NG: You have a keen sense of how there is nothing new… the need for land reform, social justice and even things like the REconomy Project – that others have been over this ground many times before?

PC: We have lost sight of the historic and international struggles over the past 170 years for achieving land reform, economic democracy and for a co-operastive economy. As a result each generation typically starts with a blank page which is tragic because we lose sight of what these struggles can tell us so we can move forward faster and more effectively.

I am convinced that cooperative solutions lie at the heart of the new economy. We explore in diverse chapters the growing social solidarity economy internationally – which is generally below the radar – but none the less a powerful force. It is often unaware of its power, despite the fact that co-ops globally employ more people than multinationals.

We looked at the historical way in which social change movements have evolved- so that now at this critical time we don’t have to reinvent the co-operative commonwealth wheel. Some exciting work we show is going on with La Via Campesina uniting small farmers globally, in Quebec with co-op federations in Montreal and in the social co-ops in Northern Italy.

For instance, we have all this interest in time banks and local currencies- but monetary reform movements go back to the 19th century and were widespread in the 1930s. So it’s important to look at how these Co-op money and capital methods were used in the past and how they achieved far greater scale then, far more than today.

NG: You are very interested in cooperative ownership. Why?

PC: We singularly focus on wages and salaries, while machines are increasingly efficient and are an untapped source of a secondary income for all citizens, enabling potentially far less wage slavery. But the machines and the corporations are owned by the 1% who get richer and richer while average incomes have stagnated. Unless we democratise ownership of the means of production,, we will never get off the treadmill of paying off debt and working longer hours to keep up.

In the late 1920’s John Lewis transferred his department store to create The John Lewis Partnership, which is one of our huge success stories. Partners (there are no employees only partners) get two sources of income- wages and profits. If more companies can be set up on this basis (or transformed to transfer ownership) – where everyone earns wages and profits, people can then work less.

A binary income is a very practical way out of our current economic morass. Trapping the profitability that would otherwise go to the 1% spreads the wealth which could happen through trusteeship companies. Gandhi recommended this in 1931 and EF Schumacher looked at this corporate reform in the last chapter of Small is Beautiful. Our book shows diverse ways for doing this using current legislation 

NG: What about larger scales, cities or bioregions? What of practical value is there to Transitioners?

At a larger scale city or bioregional scale we looked at the Emilia Romagna region of Italy, and their phenomenal cooperative economy and also the Mondragon area of the Basque country in Spain. These are two regions where over the past forty years they have adopted coop development strategies. As a result they really have changed the number and density of coops in each region. Today these regions have the lowest level of poverty in EU. They have achieved this in cities and towns.

 

 

In both these regions they have developed co-operative banking and insurance systems and brought family businesses and farmers into more cooperative ways of procuring resources and selling their goods rather than undermining each other through typical cut-throat competition. The Thatcherite, ‘Free Market’ idea that it is actually better for small businesses to be competitive has no basis in reality. The partnerships with local government to develop a co-operative economy, especially in northern Italy, has been critically important.

We also looked at Denmark to examine how they have achieved a low cost Renewable Energy transition since the 1980s. It is through a partnership with local government, farmers, and the public. We show through many examples in the book that a public social partnership is better than a public private partnership. It doesn’t make sense say with a Combined Heat and Power system (that is a natural monopoly) to create competition. With any natural monopoly like water supply or heat supply, you have be concerned about democratic governance.

As the Danes have shown, it is better to create a partnership with local authorities and consumers of energy services through co-operative governance models. That way there are natural check and balances in the system that can transparently keep people honest and prices affordable.

NG: What about the recent Libor rate fixing and the gas market fixing scandals in Britain?

PC: In the time of the Robber Barons in the early 20th century, the sheer greed led to a trust busting time. Corporations run by the Rockefellers, JP Morgan etc were caught colluding; like now, the cost of energy, food, transport were all priced by cartels basically.

Today these same rip off practices are self-evident and government is not challenging this oligopoly power. Meanwhile, ordinary people are getting soaked. Individual and separate time banks, community loan funds, local currencies , social banks, co-operative banks are too weak on their own to make a real difference, but if they could come together it would be powerful.

As we show in the book, a fair trade banking movement could be developed. We can’t make the Great Transition without harnessing the power of the small business sector and small business finance and other sources of people’s investment. We need co-operative leadership and strategic co-operation with local government to develop SEE Change and to get the Great Transition underway.

 

The Resilience Imperative by Michael Lewis and Pat Conaty, New Society Publishers, 2012.

Paperback: ISBN: 978-0-86571-707-7, ebook ISBN: 978-1-55092-505-0

All images are from the book.

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