Gaian Economics – Bill Ellis, 2009

CHAPTER  #10  -- ALTERNATIVES TO  ECONOMICS

Although since 1886 the legal purpose for all corporations has been the bottom line -- profit, not all corporations ignore their social responsibility.   Some Quaker and other NGOs have refused to support the military since the time of  the American Revolution.   But, in spite of warnings from presidents Lincoln, Teddy Roosevelt, FDR, and Eisenhower, banks, Wall Street, and economic theory still hold tightly to their mantra that "greed is good"  -- that self-interest alone is responsible for the wealth of America.  A couple of actions softened that thinking during the 1980s. One was university and street demonstrations calling for economic withdrawal and boycotts, of corporate investments supporting  apartheid in South Africa as well as more attention of peace, ecology. and civil rights.  A reminder of the Boston Tea Party.  The other was the consciousness raising of a few investors and the establishment of SRI (Socially Responsible Investing).  At first the economists and "the market" took SRI as a joke.  Publication like Esquire touted responsible investing as "feel good investing."

SOCIALLY RESPONSIBLE INVESTING  (SRI)

By the 1980s SRI mutual finds were springing up throughout the USA and overseas. Among the early screened funds were Pax, Calvert, Dommini, and Parnassus. These investment program called for not only the screening of corporations for peace, environment, health, civil rights and worker safety, but also the launching of stock holder initiatives in those and other areas. An important addition to the movement was the initiative of the Dommini Social Index in 1990.  This index of some 400 SRI corporations,  showed that in 10 years they grew more than the S&P 500 stock index. Investors now had a benchmark to measure the performance of screened investments versus their unscreened counterparts.  Measures like this propelled the SRI movement into the mainstream.  Now a majority of the investors recognize that self-Interest was , in fact, bad economics, and that social responsibility was good economics. Between 2001 and 2003, shareholder advocacy activities increased by 15 percent, growing from 269 social and to 310 in 2003. Likewise, the average percentage of votes received on these resolutions increased from 8.7 percent in 2001 to 11.4 percent in 2003.  Today there are over 400 SRI organizations with a total investment approaching $3,000,000,000  growing in the order of 25% per year.

THE GRAMEEN BANK

SRIs are a positive and constructive variation on the overreach of corporations But there are many other alternative economic experiments suggesting the possibility of a new corporate world order.

In 1980 during  a trip to Bangladesh I heard a buzz  in development quarters about  a unique program started in 1976 by an economist/banker  Mohammed Yunus with the assistance of banks of the country.  Yunus was experimenting with very small loans to poor people without  any collateral or credit  rating.   These  impoverished people, most often women,  needed  $10 to $100  or  so to buy tools for  cottage businesses, set up  a table in a local market, or buy a couple of chickens to start and egg business.   Yunus’s plan was to meet with a small groups of  such women in their villages and to suggest that  the small group work together on a small short term loan to one of them.  When that was paid back  another loan would be made to another  small time local entrepreneur. 

From 1976 to 1979 the experiment was confined to a small region around the capital of  Bangladesh.  In October 1983, the project became an independent bank, The Grameen Bank, owned by its borrowers, and served by “bare foot” bankers who traveled from village to village making loans and collecting repayments.  Today Grameen Bank, is 90% owned by the rural poor, while the remaining 10% is owned by the government.   As of December, 2007, it has 7.41 million borrowers, 97 percent of whom are women. With 2,481 branches, GB provides services in 80,678 villages, covering more than 96 percent of the total villages in Bangladesh.

The success of the bank is nearly the opposite of the standard banking system.  In this system the more you have the more you get.  A loan is dependent on collateral and credit rating.  In the Grameen bank credit is accepted as a human right.  Those who have the least are given the most help.  It holds that poverty is a potential waiting to be tapped.  This theory holds up,  the Grameen bank has a much higher rate of return and a much lower rate on nonpayment than do most other banks.

My own excitement over this concept of development fell on deaf ears in the World Bank and other financial institutions.  Why make $100 loans when with equal amount to time you could be make million dollar loans that we require no more paper work and bring in a much larger profit with much less effort. 

If the financial institutions showed little interest by the 1990s the nongovernmental development agencies were taking notice, and since 2000 the concept under the new rubrics. of micro credit, micro loans, peer lending, have become standard financial tools from Ghana to Brazil and Papua New Guinea to  India.  Even the wealthier nations have joined in.  My home county, Franklin County in Maine, has a peer lending program. 

World wide Grameen like program have over million clients  and disbursed more than $472 million in loans.

Their success was not missed by the banking institution.  In one critical article an American banker stated “we have always been peer lending institution.”  What he didn’t mention was that the banks’ peers were the other institution with a billion dollars or more.

Mohammed Yunus suffered inconspicuousness for over 20 years although his innovation of “micro loans” was replicated by many developmnent NGOs.   Finaly, in 2006,  Yunus was awarded the Nobel Prize in Economics for “turning the banking practice upside down.”  His fame as well of his ideas have spread.  This year  (2008) he is taking   his ides on poverty to a new level with his new book “Banker to the Poor: Micro-Lending and the Battle Against World Poverty” that explores the economic causes of poverty as well as his social innovation that could solve it.

THE  TRICKLE  UP PROGRAM

I would be unfair if  I left this topic with out giving credit to the “Trickle Up” foundation. About the same time Yunus started the peer lending movement a couple in New York City,  Glen and Mildred Robbins,  had observed Third World poverty.   As they traveled the world,  particularly Africa, they discovered poor women whose productivity could the increased a thousand time by the purchase of  a slightly more appropriate technology.  Without the support of any institution, they took $1000 of their own money  and made 100 personal loans to individuals with nothing but their word on repayment.  Their small loans never made headline news but  hundreds of villages still remember those passing  visitors.  And many other individuals volunteered and donated to expand the program.  Because of their success they established the Trickle Up Program.

Since its unheralded start the Trickle Up Program has helped some 150,000 entrepreneurs, the average program no has 5 participants.  TUP makes over 10,000 loans per year.  It has representatives around the world Africa, Asia and South America. A review of one  loanees in one year found that:  for 81%  their business is their main source of income;  76%  provide better, more nutritious food for their  families; 69% feel more financially secure as they face the future; 55% can afford better medical care; 52% can afford to send more of their children to school;  52% are wearing higher-quality clothing (52 percent); and  27% have improved their housing.

Certainly all involved in this program desire high praise.  But its success as a people to people program without the need for government or corporate help is possible the most remarkable part of the story.  It should move us all to recognize our own potential for changing the world through mutual aid.

MICRO FINANCE 

A new dimension to micro finance has been established in the peer to peers lending program, MicroPlace, established by The New America Foundation, e-Bay, Calvert SRI. This program allows the  less affluent socially-minded Americans to invest to bring the working poor out of poverty and make a financial as well as a psychic return with their savings.  MicroPlace on e-Bay is a place for the average American to maintain his retirement account while helping other move into the working world, and to become part of  today’s economic system.

We in no way want to  belittle the important changes in the milieu of American business.  But we can not forget that the economic system is still bound by the dominator paradigm.   For most of America the purpose of life is still, and is supposed to be, self-interest, competition and material accumulation.  As long as the Courts, the press, and the Congress hold to the personhood of the corporation with their only purpose to make a  monetary profit.  The Damascus sword is hanging over the heads of all other ethical values. Programs like those above give us hope that the corporate agenda might be tweaked for the good of all.  But we may also see an alternative to corporate economics in the steady growth toward a cooperative commonwealth.  We will explore, below,  some examples the alternatives to money economics in which people come before profits.

THE ROCHADALE SOCIETY OF PIONEERS

Early in the days of the concentration of private wealth the concept of cooperative community economics was forming.  As new  technologies came on line the cost was putting cottage industries out of business.  The new machines were more expensive than the home made alternatives.   The corporate greed solution was for wealthy land owners to buy the machines and rent them to the workers, or to gather them in an existing buildings and pay the workers a minimal wage for their labor.   Charles Dickens paints heart wrenching portraits of the corporate world in many of his novels.  A potential solution came to a group of poor unemployed spinners and weavers in England.  In 1844 they formed the Rochdale Society of Equitable Pioneers.  

The driving goal of these pioneers was mutual aid. They would help one another.  The would buy food and supplies together, help build houses for their community, set up training and educational programs, and help members obtain the tools needed for employment.  Every member who joined the co-op was equal to every other.  Sex, race, religion, social position, and politics had no standing among members.  Every member had one vote, an an equal share of any capital purchased and an equal share of any profit made by that capital.  Their first agreement was to gather whatever money members could donate.  In a few meeting they were able to gather 12 pounds. Their first rent was at 31 Toad Lane.  It became their store font their meeting space, their office space, their school room and it soon housed spinning wheels and looms so members could add co-op income to their goods and services.  This model grew to compete with other factories in the area.  It was also copied by other communal groups to become the world wide co-op movement we know today.

MONDRAGON CO-OPERATIVE FEDERATION

An outstanding example of the co-op movement today is the Mondragon network of cooperatives in the Basque county in the Pyrenees mountains of Spain.  A local priest,  Jose´ Maria Arizmendiarrieta initiated the idea of the firs Mondragon co-op and shepherded its growth to become the largest cooperative network in the world.  The MCC network in 2006, accounted for 3.8% of all jobs in the Basque Autonomous Community and for 8.6% of employment in industry. Its cooperative bank, Caja Laboral- Euskadiko Kutxa, profit before taxes increases by 24.3% over the first nine months of 2007, One of its cooperative factories, Fagor, makes one out of every three pyrolytic ovens sold in Spain. Its co-op supermarket chain, Eroski. continues its rapid rate of growth in 2007, with the opening of 50 new stores.

This amazing growth started with Azmendi's recognition that, in spite of his teaching in the local traditional schools, his students were unable to find jobs and the local community was unable to supply job opportunities.  His approach to the solution was two pronged.  One to provide job training, and two to provide local jobs.  In 1956, using the first letter of the surnames of , 5 of his young graduates, he founded  the first cooperative, ULGOR  (It is now called  Fagor Electrodomésticos) .   In following year other worker co-ops organized in much the same way.  In 1959  a new level of service was provided to the workers and to new start up cooperatives,  the Caja Laboral Popular ("People's Worker Bank"), a credit union.  The bank also invited other co-ops to participate in the network and helped failing small business to revive as co-ops.  The 150 co-ops in the network in 1980 formed MCC (the Mondragon Cooperative Corporation} . and in 1990 extended their education function with the foundation of Mondragon University.

As of 2007 MCC had over 83,000 employees in 256 companies with 44% in the Basque area 80% of whom were co-op members.  Over 65 of their worker cooperative plants were outside of Spain including plants in Brazil France German, India  Italy and including 18 countries in all of which the United States is one. Where laws permit the cooperative organization is used so that over half of all employees are co-op members and the goal is to be closer to 100% by the end of 1980.  Mondragon has proven that cooperatives can compete on a global scale with greed based corporations while at the same time maintain their values of personal and community well being.

SEIKATSU CLUB

Our own favorite cooperative community experience was with the Seikatsu Cooperative Consumers Club in Japan.  We were part of a small experimental tour of alternatives in Japan.  We arrived in Tokyo after a long flight from Maine to be housed on a organic farm in the heart of Tokyo.  The farm had been in the Ohara family for many generations.  It now grew organic vegetables for the Emperor and for the Seikatsu Club (SC),  SC is a club of 230,000 japanese housewives.  It started in 1965 when one Tokyo housewife convince 100 others to buy milk together directly from the local farmers cutting out the middle men and reducing costs to the farmers and the price to the co-op members.  Now housewives around the nation are organized into hans of eight families each. Each han elects it own representative who meet in branches of about 50 hans that make their own plans and send representatives to a general assembly that elects SC's Board of  Directors.

While we were there a Tokyo branch of some 50 kimono clad housewives met with 6 or so farmers who grew produce for them only.  One issue taken up was the need for a larger supply of a specific green vegetable used in one of their traditional Japanese celebrations.  In the discussion the farmers agreed to increase the amount produced on that special day to what the han members called for.   This like other produce was sold in supermarkets owned by the SC.  These supermarkets reduced the number of products on the shelves by selecting only those that met the organic, environmental, health, and price standards.

At another time we met for a traditional Japanese high tea ceremony high up on the side of a mountain fruit orchard with the owner who had been a Japanese officer during the war.  We learned the intricacies of the ceremony and examined the super large fruit on the well manicured trees.  As we wound our way down the narrow foot path we'd climbed to get there we passed a group of Japanese women climbing up to inspect the fruit and bargain with the owner for its purchase by the Seikatsu Club. At their store front in the town below we learned that when suppliers could not provide the quality of goods these house wives wanted they set up their own manufacturing plant.   One example was a chemical-free soap powder for dishwashing.

As well as providing healthy, safe, and environmentally friendly products the SC promoted recycling, an employment service for women, equality for all, resource conservation, and a democratic society.

COOPERATIVES IN THE USA

Cooperatives had an early introduction in the United States.  Benjamin Franklin's vision of a new nation was one of cooperatives -- free citizens on their own organized  for mutual aid.  Time after time, Franklin gathered people together to form new institutions to meet citizen needs.  Franklin founded the; Library Company (1731), Union Fire Company (1736), American Philosophical Society (1743), University of Pennsylvania (1749), Pennsylvania Hospital (1751), and The Philadelphia Contributionship (1752). When in 1747 the Quaker colony of Pennsylvania declined to participate in a military action to defend the port of Philadelphia from a British threat to capture it,  Franklin raised a volunteer militia. His militia elected its own officers. When the first Continental Congress met in Philadelphia in 1774  in a hall owned by a cooperative of carpenters,  with the cooperative Library Company on the second floor.  Samuel Adams and the Continental Congress took advantage of and thanked the library for its service during the Congress.  In 1785 when the group gathered to  draft the Declaration of Independence the Library again offered its books.  Nine signers of the Declaration were also members of the cooperative Library Company.    The freedom of The United States of America was thus assured by the concept of cooperatives.

Since those days the US cooperative movement has grown immensely. There are now over 40,000 cooperatives providing more than 100 million Americans with $123 billion in good and services not to count the millions of housing co-ops, health co-ops, credit unions and other specialty forms of cooperative business and living .  

Most of these are in one or another cooperative federation.   Many for cooperatives bonds with other cooperatives to exchange products and mutual aid.  A few live completely within their cooperative network.  Some work towards a "global cooperative commonwealth"  -- a network of cooperatives each producing what others need coordinated so that everything anyone needs is produced and distributed to them.  They see a future global cooperative commonwealth that could replace the current corporate agenda.  A true adoption of  a Gaian paradigm  

THE COOPERATIVE FUND OF NEW ENGLAND (CFNE) 

One of our favorite American cooperative services is the Cooperative Fund of New England.  Although my family rainy day fund, is now being saved for old age,  it is productively saved in an SRI, and we tithe 1/10 of it for loans to emerging cooperatives through CFNE.   CFNE is a joint fund to which individuals or organization loan, or donate, money for the use of helping co-ops or or other democratically controlled local organizations. Supporting loaners to the fund may choose the return they need -- from 0 to 4%.  CFNE makes loans to existing or starting co-ops or all kinds --  Food Co-ops,  Worker co-op, collectives, housing co-ops, Land trusts cooperative schools, etc.  In 1975, their first year of operation, they had $60,000 in loans  In 1993 they had $1,000,000.  In 2007 they had $5.000,000.

In the past, loans have usually been for working capital.  In 2007 CFNE initiate an affiliate The Cooperative Capital Fund of New England, Inc. (CCF) is a socially responsible investment fund that will invest in cooperative businesses in the form of "patient capital", or equity-like financing. CCF seeks to assist the New England cooperative industry to grow and flourish by

providing capital that acts like equity without requiring cooperative businesses to give up control

over their own management and destiny.

The rapid growth since 1993 reminds one of the rapid grown in the 1980s of SRI (Socially Responsible Investment) and the impact it had on corporate economics.  The pool of money in the savings of the millions of middle class Americans must be close to equal to the few wealthy American at the top.  But we middle class citizens are not in the position of starting new foundations or making large grants.  We are in the position of loaning a small percent of our savings until the moment of family need.  Cooperative Community Loan Funds like CFNE might have a larger impact on transforming society from one of corporate greed to one of community well being.

LETS etc

There are many other local eexperimental money systems laying the fundation for a Gaian alternative to economics.  LETS (Local Exchang and Trading Systems) keep a credit-debit record, often on computers, of member’s accounts.  And two member can decide on the cost in credits of and exchange.  That amount it recorded as a credit for the seller and a debit for the buyer.  Those credits are paid off by devbits of future exchanes.  Members are responsible for maintain low accounts. 

LOCAL SCRIPTS some local communities print local scripts.  Individuals and businesses in the area agree to accept those local scripts for goods and services.  The local flow of goods and services within the area is thereby not dependent on the national economic health.  Locally grown food, cooked goods, house keeping and repair services, locally made producs and, in some communities, health care and bank loans may be payed for in the local script.  

TIME DOLLARS in other communities hours of work devoted to helping others is recorded as “time dollars” for the community. the time dollars earned are repaid by and equall number of hours in service.  Baby sitting pools are a good example of this. But it is being extended to many other kinds of service.  Mowing the lawn, doing the dishes,  chauffering, painting,  sewing and any service you wish to offer can be payed for in time dollars.

CREDIT UNIONS are member owned  cooperative financial institutions offering most of the services of a local bank. They have savings and checking accounts paying reassonable rates.  Loans are made to members usually for local purchases sucha automoblies, mortgages, and the development of local businesses.  They are recognizedm, authorized and served by the federal government, but are controlled by a board elected the the members.