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Communities, co-operatives, and social businesses: Towards a systemic proposal

Editors introduction: When thinking about large scale super structures very few things have inspired me, to believe that another world is possible, quite like my visit to Mondragon Cooperative in the Basque Country, Spain. As such we’re very lucky to have this blog post written by Alejo Etchart, who was a long time worker at the Mondragon Cooperative, a dedicated Transitioner and an academically trained environmentalist and economist.

Alejo, has a unique position of experience and one I think of great value. In his article he identifies the core and fundamental flaws of our current economic system and then goes on to put together a practical proposal for an ‘evolutionary reconstruction’ (not reform or revolution) towards a far more fitting and desirable system. And what adds particular weight to his proposals is that these are not just nice ideas, Alejo, is by and large speaking from a position of proven experience. [Shane Hughes]

Abstract

The inability of economics to internalize social and environmental externalities makes it so that it essentially serves capital through a debt-based economic growth; thus moving away from its primary goal: the correct distribution of scarce resources in order to satisfy human needs. As a consequence, unless a dramatic change in the path of development is implemented, it (the economy and our economic system) is leading us to an abyss. On the flip side, the re-localization of economies and lifestyles, linked to the rise of social businesses and to the potential of cooperatives as a social form for a more equitable distribution of wealth, inspires an opportunity to reorient human evolution towards wellbeing-generation and the creation of a system that is resilient to the threats that the world is facing. Hundreds of cases now exist in which neighborhood communities are assuming an increasing role in the decisions that affect their own future. The key to an encouraging future might lie in providing these socially and environmentally desirable approaches with economical viability.

1. Introduction

Sara Robinson (2012) reflects perfectly the strong agreement that seems to exist as to the reason underlying the growing problems that threaten our common future: Capitalism has failed. It can be argued that capitalism has brought high levels of well-being to developed countries and development to developing countries, but it can hardly be denied that it has been at the cost of rising inequality and insecurity as well as resource, biodiversity, land, economic, energy, food, water and climate insecurities, among others. Increasingly these insecurities threaten our survival as a civilization; and we lack a widely shared vision of an alternative system – other systems of the industrial era, such as state communism or fascism, are far from being real alternatives.

 

 

The transition to a new economy capable of placing the commons at its core forces us to reverse deep rooted paradigms such as the imperative need of economic growth (Jackson 2012), the availability of abundant cheap energy or the supremacy of competition over cooperation as the best driver to efficiency (Felber 2012). These paradigms have to be challenged if we are to reallocate the distribution of goods, work and money; as well as to find new governance models that boost the process so that our planet and it current 7 billion human inhabitants could decently live and leave a livable world for the next generations. No responsible long-term analysis could defend that unconditional economic growth can deliver such a livable future, and any added conditionality is scarcely plausible (Etchart 2012a).

This article suggests that a combination of ‘social business’ and ‘cooperatives’, in a local community dimension, could create a sustainable evolution focused on building resilience. Many references are made to the Spanish case to illustrate the grotesque vision that presides over most of the current concepts of development.

After this introduction, Chapter 2 details the fundamentals of economic failure. Section 2.1 explains the reasons why the perspectives offered by an economic growth-led world are fatal if the economy remains oriented to primarily serve to financial capital, unable to internalize social and environmental ‘externalities’. Section 2.2 is a collection of statements from prestigious economists that affirms this. Section 2.3 points to capitalism being misinterpreted as the origin of the inevitable imbalances that it causes. Chapter 3 focuses on suggesting alternatives. Section 3.1 defends the vision of an ‘evolutionary reconstruction’ as a superior alternative to reforms or revolutions as the way to implement changes, and introduces some concepts that are presented later on as keys to the concept of evolutionary reconstruction. Section 3.2 argues that the concepts of ‘green economy’ and ‘corporate social responsibility’ are insufficient as systemic proposals and defends the significant potential of ‘social businesses’, when it is enacted through cooperatives and implemented in local communities. Section 3.3 suggests some of the values around the commons that a new economy should utilise and refers to some working examples of which the Transition Network is a remarkable example. Section 3.4 covers the challenges that community-based, cooperative social business approaches must tackle to become strong systemic proposals. Chapter 4, finally, shows the conclusions.

2. Economic failure and the unfeasibility of economic growth

This whole chapter tries to support the argument that the current crisis is not only economic or circumstantial but systemic; and that any myopic, growth-based solution will only postpone the crisis by a few years or perhaps to next generations.

2.1. Rationale

The Spanish real-estate bubble (Salvados 2012a), is one of the many cases that demonstrate the subordination of national governments to the economy and the financial markets. Naredo (2012) shows how politicians are often mere instruments used by the owners of the economic power. The recent fiasco of the Summit Rio+20 (Etchart 2012b) demonstrates how economic power uses national governments to wield power over all other forms of global governance.

The economic failure is deep rooted in our economic concepts. Economics is the discipline that tries to solve the problem of resource scarcity to meet infinite human needs, thus, in theory, the science for resource allocation (Ayres 2008). If resources were unlimited, economics would not exist. There are four key groups of resources that need to be allocated. Firstly, we know that economics is unable to properly account for the scarcity of environmental resources (Brundtland et al. 2012). The Kyoto Protocol was the first attempt and we now know it has failed dramatically (Helm 2008). Then we know that labor is not a scarce resource, in fact, it’s underused or overly abundant. The economy only really serves capital and land, which are the remaining two groups of resources considered by economics. Among the two, evidence like real-estate speculation or the massive purchase of African land by China, make it clear that capital is the dominant resource served under the current system.

When a system fails partially, it fails as a whole (RAI n.d.). Therefore, our current concept of economics is invalid for its stated aims.

Interest on loans is an essential form of capital remuneration, when money is lent through financial entities. Interest does not exist without debt and indebtedness assumes a level of economic growth enough that, in the future, we are able to pay for both our current needs (that we couldn’t afford today) and our future needs. The problem comes when in future the capital will still need more interest, thus more indebtedness, thus more economic growth. Indefinite economic growth is impossible in a world with limited resources that the economy isn’t even able to consider. The higher the growth, the more it will be at the expense of those non-considered resources: environment and labor:

- The environment is mostly out of the equation. The costs of environmental degradation are not reflected in marketplaces but borne socially, either today or in the future (Zarsky 2002). As a consequence, the only possible end for the environment, in an economic growth-based development, is continuous degradation (Hardin 1968).

- With labor, unless there is legislation, such as a substantial reduction of working hours (NEF 2010), economic growth will be at the expense of increased unemployment or reduced salaries, as is happening across Europe. However, economic growth is not essential to employment. It does not guarantee a higher or better employment when in fact we’re actually seeing growth equating to increased inequality and accumulation of capital.

A simple reflection on the very basis of economics shows that sustained economic growth is not only impossible in practice, but, given the current imbalance of resources, is systemically oriented to serve capital against environment and labor.

In fact, statistics show how capital clearly accumulates because of economic growth. For the UK, numbers show (UNCTAD 2012) that from 1960 to 2010 economic GDP grew by over 30-fold, but the share of wages in GDP, compared to capital remuneration, diminished (from 61.3% to 59%) given that the population grew by 18.76% during the same period.

The Brundtland Report does not only state the definition of Sustainable Development (SD), but, in the second chapter (WCED 1987a), it dedicates over 20 pages to clarify and reinforce the concept. It highlights which are the imperative needs to be met though development: those for jobs, food, energy, water and sanitation. Later, it states: “Meeting essential needs depends in part on achieving full growth potential, and SD clearly requires economic growth in places where such needs are not being met. Elsewhere, it (SD) can be consistent with economic growth, provided the content of growth reflects the broad principles of sustainability and non-exploitation of others”. Economic growth is therefore not imperative in developed countries, where the essential needs are generally met. The report says that a minimum of economic growth, as required by financial institutions, can be environmentally sustainable only if industrialized nations shift their growth towards less material and energy intensive activities.

There are two arguments that could make growth in rich countries compatible with SD: de-materialization and technological improvements. But, as detailed next, they are both too unfeasible to be relied on.

Daly and Townsend (1993) think that de-materialization is in reality an unachievable concept, since a growth that pretends to satisfy the needs of the world’s poor must be based on things needed by the poor, which are not precisely information services but material things such as foods and clothes. It is therefore evident, that, in order to leave room for materialized economic growth in developing countries, rich ones should not focus their policies on growth. In other words, growth in developed countries is incompatible with SD in practice.

Many proponents of economic growth, remarkably the World Bank (Stern 2004), have long defended the existence of an Environmental Kuznets Curve that will finally reverse the increasing link between economic growth and environmental degradation through a de-materialization of the economy, but this theory has long been disputed and denied (Etchart 2009). Many calls have been made for decoupling the economy from resource use, but resources remain being taken from the future at an increasingly higher rate (Stakeholder Forum 2007). It is vital to distinguish between relative and absolute decoupling. Evidence for declining resource intensities (relative decoupling) are easy to identify, but the increases in the scale of economic activity lead to increases in absolute resource use. De-materialization has not emerged and nor, with rapid economic growth and population increases, is it likely to come anywhere near the kinds of cuts in emissions and impacts needed to make our current lives sustainable. Professor Tim Jackson (2009), calculates that carbon intensities would have to fall 16 times faster than they have done since 1990, if all nations aspired to the average EU income today (Jackson 2009). On the other side, unless growth in the richer nations is curtailed, the ecological implications of a truly shared prosperity become even more daunting to contemplate.

On the argument that technology could save the world from climate change, the IPAT identity (TSSP 2003) proves the very high unfeasibility of that argument, when not only technology, but also population and affluence (or consumption level) are considered for measuring the environmental impact. The IPAT identity implies that even to reach what many say is the far too high level of 450ppm CO2 concentration by 2050 (SGF 2009), with 2-3% developed world and 5-10% developing world growth, we would need energy-efficiencies eleven times higher than we have been able to gain so far (AP 2010).

The discourse for the reliance on a de-materialization of the economy or on technological improvements has proven too weak to prevent a full consideration of the precautionary principle, as defined in the Rio Declaration. Assuming that capitalism’s propensity for efficiency will allow the economy to stabilize the climate and protect against resource scarcity is, at least, extremely dangerous. Call it green or grey growth, as Chandran Fair (2008) stated, “policymakers must concede that economic growth has met its nemesis in climate change, and they should not be seduced by the market’s quick fixes”.

 

The Future We Want (UN 2012a) –main output from Rio+20— might therefore commit a fatal mistake when supporting unconditioned and sustained economic growth. Since poor countries need economic growth to overcome poverty and the rich do not renounce economic growth, the prospects of a world driven by these political arrangements is bleak. Given the need to deliver a decent world to following generations there appears to be a categorical imperative [objective to be unconditionally pursued] that the reins of development cannot be left to the government leaders who seem unable to withstand the pressures from the most economically powerful (Etchart 2012c). Ban Ki Moon’s statement (UN 2009) gains greater importance : “Our foot is stuck on the accelerator and we are heading towards an abyss”.

2.2. Economists and economic growth

When K. Boulding (QFinance n.d.) said that “anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist”, he was clearly referring only to myopic economists, because many others have claimed against this paradigm (Daly 1987). J.S. Mill (1848) declared over one and a half centuries ago that the increase of wealth cannot be unlimited. J.K. Galbraith (1956) warned that our concern for growth in the number of goods produced (the growth rate of GNP) will necessarily have to give way to the more important quality of life they provide. H.E. Daly (1977) proposed to replace the ‘more is better’ by the much wiser axiom of ‘enough is the best’. J.S. Mill (1848) stated one century before the evidence that. E.F. Schumacher (1989) certifies that a lifestyle that is based on unlimited growth can not last long. He affirmed that the simplistic concentration of efforts in production and technology is dehumanizing; that work must be decent and meaningful before efficient; and that nature and natural price can simply not be priced, creating a school of thought followed by Robert Constanza, Amory Lovins, Paul Hawken and many others. Jackson (2009) reflects the great challenge of our times: economic growth is necessary for our economy not to collapse, in a world that cannot support that growth without collapsing, for reasons both environmental and social, as follows from previous paragraphs. Jackson (2012) concludes that economic growth is not the solution to the crisis, but precisely the underlying cause of it. Even J.M. Keynes (1935), whose proposals for expansion of public expenditure in crisis times were identified (World Bank 1990) as systemically harmful for macroeconomics, when called to consider values more important than wealth. He said that the challenge for change does not lie as much in new ideas as in escaping from the old ones, which have grown with us invading every corner of our minds. Keynes rallied against orthodox economists whose logic led to the disastrous Great Depression, because their logic boosted the spiral of speculation. Paradoxically, the application of Keynesian approaches during the first stages of the current crisis is said to have caused a governments-led speculation (El Confidencial 2012), which has multiplied the effects of the crisis. So the ideas that the world now needs to escape from might precisely be the ones that his school proposed.

Nevertheless, economic growth, as Bass (2007 :2) confirmed, remains “ considered an inviolable principle rather than people’s rights and welfare, or environmental processes and thresholds”. We are, therefore, watching a case that perfectly matches what Einstein stated: “We can’t solve problems by using the same kind of thinking we used when we created them” (Stakeholder Forum 2008).

2.3. Re-reading Adam Smith

The rationale of the capitalist system was built on A. Smith’s (1776) ‘The Wealth of Nations’. But this rationale left aside a previous key contribution from Smith (1759), ‘The Theory of Moral Sentiments’, whose consideration would have led to a dramatically different interpretation of the proposal that all will be well if people are allowed to follow their self-interest. The world has interpreted self-interest as equal to profit maximization. Adam Smith, who is often attributed with the origins of both economics and capitalism (Rodríguez Braun 2008; Cuevas Moreno 2009), might be at least as much of a critic as Karl Marx (BBC 2009; Casassas 2011) of the capitalism that ended up being built from his proposals. Neoliberalism is what many class as the current stage of capitalism (Li and Zhu 2005).

Following the interpretation of Profesor M. Yunus (2008) (developer of micro-credits and Nobel Peace Prize 2006), this interpretation of capitalism treats people as one-dimensional beings. But people are multi-dimensional, as Smith saw two and a half centuries back. While we all have our selfish dimension, at the same time, we also have a selfless dimension. The theory of capitalism, and the marketplace that has grown up around the theory, makes no room for the selfless dimension of  people. If the altruistic motivation that exists in people could be brought into the business world, there would be very few problems that we could not solve.

If people were given the opportunity, they would come into the market place to express their selfless urges by running special types of businesses specifically designed to improve the lot of humanity in general. Charitable efforts have always been with us, and they are noble and needed; but business has a greater ability than charity to innovate, to expand, and to reach more and more people through the power of the free market. Imagine what we could achieve if talented entrepreneurs and business executives around the world devoted themselves to goals such as ending malnutrition, providing shelter for the homeless, using unlimited renewable sources of energy or –as more globally proposed in this document— building resilience before future impacts. Notably resilience is originally the ability of a unit to absorb external impacts while still meeting its essential functions. E.g. steel can be ordered with a resilience of -40o when below this temperature it starts to lose the needed material hardness. A definition applied to social regards is: “In the context of exposure to significant adversity, resilience is both the capacity of individuals to navigate their way to the psychological, social, cultural, and physical resources that sustain their well-being, and their capacity individually and collectively to negotiate for these resources to be provided in culturally meaningful ways.” (Michael Ungar, Resilience ResearchCenter).

3. Alternatives going forward

This chapter defends the creation of a new governance architecture designed to deliver support to citizens, based on their own needs and capacities.

3.1. Reforms, revolution or evolution

Robinson (2012) thinks that there are three ways to change, which include reform, revolution or evolutionary reconstruction.

Reforms: The case of Spain

To tackle the current crisis, efforts have been made with economic reforms, keeping the economic growth as the essential objective, without considering that the crisis is not only economic or circumstantial but systemic.

The case of Spain is symbolic of how politicians are making reforms trying to recover from the crisis to a model that is similar to the one that has led to the current crisis. Incomes for those in the system’s borders, as well as investments in education and research, that constitute the solid pillars of a country’s future, are dramatically cut; the President of the Government recognizes that “Spain is in a very weak position for its excessive indebtedness” (Rajoy 2012a) while regulations are approved to recover creditworthiness within the EU (Rajoy 2012b); financial institutions, whose corrupt or inept management are the root cause of the crisis, are rescued with public money. All that, in honor of an economic growth that is only an escape forward, because a debt-based economic growth assumes that next generations will be able to pay for what ours cannot afford, even though in relative terms less and less people will have to take responsibility for covering the costs of an increasingly old age population (given the reversal of the population pyramid), with lower and lower salaries (as the reality is showing as a logical consequence explained in Section 2.1) and with an exhausted natural base. If any certitude exists, it is that the next generations will simply not pay for our debts. Thus the collapse of a kind of reformed system remains inevitable; and this can be affirmed even without considering environmental arguments.

In Spain, the general public astonishingly contemplates higher tax rates to finance a debt caused by, among others, sumptuous infrastructures –high speed rail (Etchart et al. 2011), highways and airports (DFC 2011), macro libraries (El País 2011), etc. (Salvados 2012b)—, that systematically fail to meet the budgets used to justify them, both in the costs side and in the incomes generated once finished. Big infrastructures have long been the preferential destination of public investments, but now with the reduction in external debt used to partially finance those infrastructure projects and actually paying the interest on that debt has become the priority. It is very well-known, and it has even been denounced by the EU in the case of the HSR (LNE 2010), that the underlying reasons for so many public infrastructure projects are merely political; this is, based not in real demands or needs or in scientific studies, but in power dealings and corruption, either personal or collective – for example, the widely known irregular financing of political parties and administrations though a 5% commission for land re-qualifications or public concessions. Former Spanish Judge Baltasar Garzón, now removed from the bench by its political enemies (NYT 2012) considers that, in the Spanish case, “corruption and economic crisis go hand in hand” (Salvados 2012c). The list of Spanish politicians charged with corruption is embarrassing.

Revolution

Others, more and more, given the grotesque political (lack of) vision, claim for a revolution through a kind of popular uprising, pursuing a completely radical change. Nevertheless, revolution is dangerous. History shows that many revolutions moved out of the scope of their well-intentioned precursors when they could not control the extremist movements aligned in chaotic movements.

Evolutionary reconstruction

The final approach is that of ‘evolutionary reconstruction. The Transition Movement, which is a movement of approximately 2,000 community groups, aligns with the thesis by Gar Alperovitz (2012) around an ‘evolutionary reconstruction’ as a superior alternative to reform or revolution. Leaders like Mahatma Gandhi followed such an approach. Alperovitz proposes that we dedicate energies to the construction of new and parallel institutions to the currently existing ones, without confrontation. Governments from all around the world are devastated for the lack of incomes. As old institutional infrastructures decline and even collapse due to the income reduction that they are suffering worldwide, and trust issues grow as they fail to meet their commitments, the new ones would be ready to take over.

A paradox of the current sitution is that every new generation is the best prepared ever, for example through expansion of human knowledge in all fields such as scientific and humanities fields but at the same time unemployment and the threats from development become more and more daunting.

The following sections defend that taking this evolutionary reconstruction forward implies the creation of social businesses, local cooperatives and governance units focused on the really important things like creation of well-being and the building of the resilience needed to face future impacts, either social, environmental or economic. These new institutions would make citizens more responsible for their futures and allow them to gain a voice in the decisions that affect them.

3.2. Social businesses

The current debate about ‘green economy’ is around its guiding principles rather than about its definition. A document by Stakeholder Forum (2012a) gathers fifteen guiding principles that consolidate existing international agreements and other proposals, cutting across the Stockholm, Rio and Johannesburg declarations, and three other relevant documents (Etchart 2012e). The principles gathered are: equitable distribution of wealth; economic equity and fairness; intergenerational equity; precautionary approach; right to development; internalization of externalities; international cooperation; international liability; information, participation and accountability; sustainable consumption and production; strategic, coordinated and integrated planning; a fair and just transition; redefinition of well-being; gender equality; and the safeguarding of biodiversity and pollution prevention.

Assuming that these principles can be seen as the essential social and environmental profiles required in the economy, if the economy was able to internalize the positive and negatives of the externalities that are listed above , then seeking profits would carry not only financial, but also social and environmental returns – but is this likely to happen now? Previously, in Section 2.1 we talked about how the systemic economic failings, as well as the weight of evidence, make it an impossible for this level of change to happen.

Moreover, Corporate Social Responsibility (Corporate Watch 2006) seems unable to include altruistic criteria in traditional businesses. It’s too often used it to sell more through green washing (Dahl 2010) than as a way to reflect a real and honest ethical commitment with society.

However, a new concept of business is emerging that fully internalizes social criteria: the social business. Following Prof. Yunus (2012), a social business is “a non-loss, non-dividend company created to address and solve a social problem”. It might be necessary to add “according to the general principles of sustainability” (WCED 1987b) to include harmony with the environment and so give the needed integral sense of sustainability to this proposal, although this might already be considered as included. EU’s Social Business Initiative (European Commission 2011) definition of social businesses agrees with Yunus’, but it seems to restrict its application to vulnerable and disadvantaged groups, but actually we know that a social business can positively affect all social groupings. This nuance gains profile considering that we are all increasingly exposed to poverty and exclusion.

 

On the other side, the UN recently recognized the importance of cooperatives (and the cooperative business model) by celebrating 2012 as the International Year of Cooperatives. This UN initiative was intended to raise public awareness of the invaluable contributions of cooperative enterprises to poverty reduction, employment generation and social integration. The recognition also highlighted the strengths of the cooperative business model as an alternative means of doing business and furthering socioeconomic development. UN’s Secretary General says that cooperatives have proven themselves as having a resilient and viable business model that can prosper even during difficult times (UN 2012).

In a time when the EU is losing position in global markets, due in part to a lack of internalization of externalities, a repositioning of the EU beyond financial returns might provide it with a solid position in the trend to a new economy, without the imperative need for global governance agreements; and so contribute to implementing an imperatively needed global change toward a re-localization of the economies (Etchart et al 2012).

3.3. The values of a new economy and proposals that integrate them

We’re currently lacking a shared vision. All we have now to go forward is an emerging new set of values and the contributions from some visionaries. Values that say the new economy should protect the commons, include real costs, link prices to the real value of use and, above all, foster the values that have historically been the essentials of human happiness: community, nature, family, health, creativity… Values that have been depreciated by an individualist pattern of development.

Many of us believe in the ‘small is beautiful’ (Schumacher 1973). Some advocate for proposals that place local communities as the cells of a sustainable evolution. It is about a more localized economy, where local people build a significant part of their well-being using local resources in a creative way. Nevertheless, local resources would hardly provide a computer, a washing machine, a motor vehicle, a telephone or a complete transportation system, so these proposals are far from being about autarky.

The re-localization of living patterns is pointed to by many authors (see Etchart et al. 2012) as an imperative to partially restore the autonomy, security and control over the ways to satisfy our basic needs. This alternative has been ousted by large corporations through their size. Although the big size is initially justified by economies of scale, corporations have grown to have enormous power that it has allowed them to control governments, media, financial agents, and finally, the mass public. The accumulation of power has turned the market economy into an enemy of democracy (Dake 2010), of really free markets. This kind of freedom is based, by nature, in a small scale.

Re-localization intends to take to a more human scale those services that can be locally supplied, that, among others, might include: generation and use of electricity, water management, food, P2P services, shared use of goods, spaces for senior or children. They can be sourced through local production and consumption cooperatives, time banks, local currencies and other local institutions.

This way would reinforce the connection of people with their own creativity –now almost impossible having been unnecessary for so long—and with other members of their community. The alienation of individualism and consumption would dissipate, and more time would be available for family and friends. And this would allow space for, what seem to us now as somewhat crazy ideas about the values that make up real richness of our lives.

It is a desirable and seductive proposal. It pledges that if people dare to share and cooperate they could meet the best available quality of living. Further, it is proving to be feasible. Indeed, it is the core of resilience-building proposals such as Transition Network, Post carbon Cities or the originally Swedish Ecomunicipalities. These proposals extol the virtues of local communities to regenerate the economy by giving value to the local capacities available to face a common future, self-providing with the most needed resources. At the same time, they are proving to provide people with higher well-being through a reinforcement of the communities they live in.

The Transition Network’s Initiatives suggest a processes of experimentation risen up from local communities in order to:

- raise awareness about the need, responsibility and feasibility to act before climate change, peak oil and other threats;

- consolidate community feelings;

- explore the capabilities that they have to help themselves meet their needs and aspirations, and

- start community initiatives,

oriented to build resilience and more prolific and fruitful livings. Of particular interest is the approach by Transition Network’s REconomy project, that tries to provide tools to help local community groups build a new kind of local economy.

Such initiatives might inspire the dawn of a generation of social businesses initiated by responsible citizens that embrace alternative ways of development, empowered through their living communities and fuelled by motivations of responsibility, justice, or food, energy, water or climate security, rather than by institutional support. These socially innovative initiatives are proposing a different way of thinking in order to solve the problems caused by prevailing paradigms of obsessive economic growth, cheap energy, wealth accumulation and individualism. They rely on the assets that exist within communities, reorienting them to resilience-building and to serve the common well-being, while meeting the above referred basic principles of sustainable development. Thus, the key to their success is not the financial capital, but the social one, so financial credit is not a critical issue to overcome.

On the other side, these initiatives are generating resilience in social groups. Reality shows increasing threats in several dimensions: economic (unemployment, budget cuts, energy and food insecurities, poor perspectives), social (inequality, migrations, outrage, aging population), environmental (climate change, resource depletion) and political (short-term view, transferring to next generations the increasing economic and environmental debts). Those communities with a higher cohesion and sociologic diversity, a better use of energy and water, a lower reliance on external, distant sources, and that are prepared to help those who become more affected by external impacts, will be more resilient. Resilience and reinforced community-living can be seen as the two sides of a same coin when talking about the ability of people and social groups to face adversities.

These Transition groups being set up worldwide (Transition Network 2012) through bottom-up driving forces, but they still need to be promoted with top-down incentives if they are to be globally adopted. These incentives should not only spread the voice for the case but also, critically, focus on building the economic viability of community approaches that are socially and environmentally desirable –thus completing, and fundamentally rebalancing, the three scopes of sustainability. It is about fostering innovation for social business models that, through resilience-building, address well-being; compared with traditional businesses that, through economic growth, address wealth.

There is an additional force spreading these initiatives, which is the scaling and adaptations of benchmark practices implemented in certain places to the local circumstances of other distant places. The above-referred networks are some of the ones that are contributing to spreading the practices, although hundreds of other non-associated examples exist. Wheatley and Frieze (2011) gather some of them in a book published in 2011.

Among the recommendations from that book, P. Senge (2011) –guru of organizational development—, reflects perfectly the vital contribution of community approaches: “If there is any hope for us it lies in rediscovering and recreating community – bringing forth our DNA as social animals into today’s world”. The necessary innovation to be promoted is thus not technological but social –or, rather, systemic.

A reading of some pre-Rio documents (‘Resilient People, Resilient Planet (…)’ (UN 2012b), the original Draft Zero (UN 2012c) and the previous Coordination Notes (Lalonde 2012) with this vision in mind, shows how they align with it (Etchart 2012d). But, regretfully, this vision could not overcome the stupidity that governs the world with visions that are as myopic as the one of the economists referred by Boulding. It is a fatal consequence of the tragedy of the commons (Hardin 1968).

3.4. Challenges

Previous sections have defended community-based, cooperative social businesses as a feasible way to build resilience, empower citizens, commit each of us to our own future and lead to more fruitful living experiences. Nevertheless, such businesses must face a number of challenges in order to become wide-spread systemic proposals. Some of them are introduced by Robinson (2012), among which:

- The basic infrastructure that would allow re-localization is not yet mature. Research would be necessary with the aim of getting these alternative proposals to connect economic viability to what is socially and environmentally desirable.

- They are far from being shared by governments at different levels, probably due either to ignorance or to mistrust in the ability of people to decide their future.

- Economic re-localization implies to opt between two often incompatible options. On the one side cost efficiency, for many industrialised decades, has meant manufacturing in large centralized factories, while local resilience reportedly demands increased costs due to lower economies of scale.

The challenges for these proposals are not trivial. Systemic thinking is needed when setting out solutions (Allen 2011), but we live in a world of single dimensional thinking typical in a world of specialists (Ecimovic et al. 2002).

The change involved might cause vertigo; but if our generation does not make the change we will be irresponsible to future generations. In any case, those who think that such vision is idealistic might realize that what is really unrealistic is to continue developing using the same patterns that have generated the current systemic crisis. The Peruvian philosopher C. Cuello (1997) said that any holistic conception of sustainable development is a challenge to those understandings that proclaim change while leaving untouched the basic structures of the present model of industrial society, because it would necessarily imply fundamental changes at all levels of social, economic, political, and cultural structures, thus a fundamental restructuring of present society.

4. Conclusions

The increasing threats that our civilization faces mirror a failed economy that drives the world to a fatal future. Governments have richly shown their subordination of policy to an economy that systemically fails to meet its goal of allocating resources efficiently, but is rather an instrument to maximize the returns of capital. Resilience-building practices are necessary to face the resulting multidimensional threats. When these practices are addressed bottom-up in local communities and implemented by their own citizenry more fruitful living experiences are generated. Many cases already exist where the reinforcement of local communities are already showing to be a powerful approach to development. Nevertheless, this approach still face major challenges to becoming a systemic proposal, among which is to build the economic viability of their socially and environmentally desirable approaches.

Nevertheless, no impediment prevents people from starting to test desirable ways to face the future. Nothing prevents people from starting to create cooperative social businesses. Such processes can start today, with a full faith that they will adapt better to people’s needs than the old capitalist structures.

 

After discussing the reasons why continuous economic growth is not only impossible but the ultimate cause of the systemic crisis, this document has tried to introduce some of the recent concepts that may enlighten the path to a systemic sustainability: resilience-building as a goal and the combination of social businesses and cooperatives in a local dimension as a form of implementation.

The process of community-led change has already started and the number of good practice benchmarks are growing. The generalization of approach might take time if it is not more actively supported by top-down measures, but the motivation of the people involved is high enough not to be hindered by the lack of support. As H. Daly (1991 :194) affirmed 35 years ago, that it will take “a Great Ecological Spasm to convince people that something is wrong with an economic theory that denies the very possibility of an economy exceeding its optimal scale. But even in that unhappy event, it is still necessary to have an alternative vision ready to present when crisis conditions provide a receptive public”.

A publication by H. Stoddart (Stakeholder Forum 2012b) suggested that solutions have been given to many of the threats that the world tackles, but the lack of a systemic approach that integrates the three pillars of sustainable development is a significant obstacle to implement it globally. If the existing technical solutions are complemented with the social business and cooperative approaches, we might see a very solid systemic proposal to help face our common future.

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Credits: Author: Alejo Etchart, January 2013 with editorial and translation support from Shane Hughes

Images: Impossible Hamster: New Economics Foundation, Capitalism isn’t working: Celesteh, Rio +20 The future we dread: Committee For A Constructive Tomorrow, Puzzle head: digitalart

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