The Commons and Co-operative Commonwealth

Pat Conatynew economics foundation and

Co-operatives UK4-5 November 2013

Energy

ReclaimingFinance

Democratizing & Localizing Ownership

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Resilience and TransitionBuilding a Co-operative Economy Closer to Home

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BASIC NEEDS: Food Shelter

Reclaiming the Commons

Four-fold crisis: a Volatile Cocktail1. Economic: The Great Recession and the Euro-crisis - Greece an

indicator of things to come.

2. Ecological: Global warming, climate change and food shortages.

3. Social: rising inequality, housing crisis, rising cost of energy, food and basic needs, huge cuts in public services, growing social unrest.

4. Political: widespread distrust of parties and politicians. Capture of the state by a global financial elite. Big Brother and Brave New World are pervasive.

The Ownership Question? 300 billionaires are wealthier than the poorest 3 billion citizens

• 2 billion people secure their livelihood through natural commons

• Over 3 billion micro-enterprises globally

• One billion people are members of co-operatives

• 1 to 2 million Civil Society organisations globally working for sustainability and justice

Commonwealth - a Provocative Thought

1. 400 US billionaires hold more wealth than 180 million Americans (the bottom 60%)

2. If this wealth was spread equitably, each American family of four could share an annual income of $200,000 or alternatively opt for $100,000 (twice the median family income) and choose to work a 20 hour week

The Commons and co-operative networks offer aa democratic way of working and living

• Commonwealth is wealth beyond measure – when times get hard co-operative solutions are always unearthed

• Micro-change agents need to think of how to connect mutually

• History and struggles to build co-operative commonwealth provides guidance on the How question

The Commons we Share

• Air and water• Parks• Libraries and books• The internet• Streets and sidewalks• The airwaves• Languages• Traditions• Dance steps

• Music and games• Outer space• Stories and jokes• Open-source software• Biodiversity• Food and recipes• Seeds and tools• Know-how• Caring and friendship• Much, much more……

Silence as a Commons

‘People called commons those part of the environment for which customary law [‘usually unwritten’]…… recognised claims of usage, not to produce commodities but to provide for the subsistence of their households.’

Ivan Illich

Mutual Aid origins of the Company

Guilds – earliest companies, rooted in ‘Fair Trade’ practice1. From ‘collegia’ in ancient Rome: mutual aid groups of

artisans for social insurance and burials: similar systems in India, China, Islamic Cordoba and west Africa

2. ‘Con pagus’ and ‘con panis’: companions3. Charters for delegated self-governance powers in exchange

for taxes: Guild of Guilds and Guildhall4. Local town management – just price, holy days,

prohibitions, trade marks from the Guildhall5. Oaths: mutually and to the town (social, economic,

religious, political and military obligations)

Communal MarketsTypical Guild rules for flour and bread: 1. Guild members agree what the price of grain will be with the

Justice of the Peace (appointed regulator)2. Grain may only be sold on market days and during fixed hours3. Purchases must be for the household’s own use and limited

in quantity to two bushels4. Grain may be sold later in the market day to resellers (bakers

and brewers) who must be licensed by the Justices of the Peace

Great Transformation Karl Polanyi thesis: communal markets replaced by

the commercial Market1. Medieval economy: ‘just prices’ regulated by guilds locally

but long-distance trade was unregulated2. Long-distance free trade linked increasingly with plunder and

colonisation under Merchant banking houses3. Mercantilism: early modern development of international

trade and nation state empires4. Royal Charters from 1407: The Merchant Adventurers5. Property rights created by private acts of enclosure that

commodified work (wage-labour), land (real estate) and money (debt) – legitimated in law by John Locke. Roman law displaced ‘commons’ custom and practices

The Loss of the Commons1. Commons land was widespread until the 14th century in

Great Britain and Ireland – open fields, no stone walls or hedges and land stewarded based on customs and practice

2. Ancient Roman land law: the law of ‘dominium’, private property precedent that sanctified conquest and plunder

3. First enclosure in England, the Statute of Merton 1235 ‘to approve [improve] the land in order to extract greater rent.’

4. 4000 Acts of enclosure - Commons and waste land today is only 8% of land in the United Kingdom

5. 40,000 people (0.06% of the population) own nearly half of all land in the UK

‘Common rights’: Past and Present

Bodmin Moor, Cornwall: Local commons, existing rights 1. Pannage: to graze pigs on acorns2. Estovers: to take underwood, loppings, braken and

furze3. Turbary: to cut turf (peat) for fuel4. Piscary: to fish from local streams and lakes5. Pasture: to graze other animals6. Soil: to take sand, gravel, stone or minerals

Land Enclosure

Linked with development of commercial farming:

1. The medieval wool trade – under the Tudors2. Exclusion of serfs and peasants from the land3. Creation of vagabonds and wage-labour4. Pre-condition for the development of capitalism:

‘primitive accumulation of capital’ (debt-based money) and creating the ‘dependency of wage-labour’

Market Economy and Land Enclosure

‘What we call land…..invests man’s life with stability… it is a condition of his physical safety…

‘We might as well imagine being born without hands and feet as carrying on life without land…

‘ yet to separate land from man and organise society to satisfy the requirements of a real-estate market was a vital part of the utopian concept of market economy.’

Karl Polanyi, The Great Transformation (1944)

Struggles against Enclosure and for Co-operative Commonwealth and ‘the Vote’

1. Levellers and Diggers – Arguments to Cromwell for Land tax, franchise, annual Parliaments, co-operative commonwealth: Gerrard Winstanley and ‘Law of Freedom Platform’ (1652)

2. Thomas Spence – Parish Land Trusts for land stewardship locally and capturing rents for community benefit: ‘real rights of man’ (1775)

3. Chartist Land Company (1847) – to secure ‘the vote’ and develop co-operative villages, community facilities and 2-4 acres per family – 60,000 investors and several co-op villages developed

Thomas Spence – Parish Land Trusts

(i) 1774: Inspired by grass roots campaign to stop enclosure of Newcastle Town Moor

(ii) 1775: Parish Land Trust Plan to capture the ‘unearned increment’ and differential rents for the people

(iii) Co-operative Land Society model – ‘you use the land, or lose it’: community is the landlord and leases to citizens

(iv) Aristocratic and commercial rents are transformed into community income

(iii) 1793: Real Rights of Man – disagreed with Tom Paine, argued that ‘all dominion is rooted and grounded in Land’ – real democracy needs a ‘commons rights’ foundation

Citizen Corporate Charters – USA (1780 to 1860)

1. US Declaration of Independence against colonial oppression 2. Company charters issued by US states from 17803. Charters of companies were time limited (3 to 10 years usually)

and revocable - both for profit and not for profit companies – charters regularly revoked or not renewed by citizen groups

4. Banks had the shortest charters and private banks banned in Indiana and Illinois

5. Jury trials for company directors for corporate malfeasance - Unlimited liability and Directors prosecuted for disobeying their

charter conditions 6. Shareholders only had one vote (no voting shares)7. Political donations illegal and limits to land and property holding

Co-operative Commonwealth Movements

Re-forged in times of Depression since 1815• 1820s: Birth of co-operative movements in Britain and France• 1840s: Hungry 40s and ‘Rochdale principles’ developed• 1870s: Long Depression - Knights of Labor and Greenbacks• 1890s: Syndicalism, Guild socialism, Garden cities• 1920s: Movements on the rise but repressed brutally• 1970s: New wave internationally spreads• 2010s: A rebirth………La Via Campesina, P2P Foundation, New

Economy Coalition (USA and Canada)?

1844: Joint Stock Companies Act (UK)

• Curtailed Parliamentary charters in the UK – companies could be just registered

• Limited requirements: to keep accounts, complete an annual audited balance sheet

• 1855 subsequent law introduced limited liability• 1862 law abolished accounting requirements, only one

obligation to maximise shareholder profit• 1929 crash brought back the requirement of audited

accounts

1844: The Rochdale PioneersDeveloped Co-operative law and the 7 Co-operative Principles(i) Democracy: one-member, one vote(ii)Open and inclusive membership(iii)Distribution of surplus in proportion to trade(iv)Payment of limited interest on capital(v)Political and religious neutrality(vi)Cash trading and provision of pure, unadulterated goods(vii)Education of member households from a levy on surpluses

Commonwealth Economy Thinkers

Co-operative political economy ‘Heretics’• Robert Owen and the Utopian socialists• John Stuart Mill and Harriet Taylor Mill• Ruskin, William Morris and the Arts and Crafts movement• Henry George, Tolstoy, Kropotkin and Martin Buber• RH Tawney, Bertrand Russell, GDH Cole - the Guild Socialists• Karl Polanyi and Erich Fromm• Gandhi, Vinoba Bhave and JP Narayan • Ivan Illich and EF Schumacher• Jane Jacobs, Vandana Shiva and Elinor Ostrom

John Stuart Mill: Co-operative Economist

1. Principles of Political Economy (1852) – Book 42. Supply-side economist: studied Sismondi3. Banking defect: argued in 1841 that depressions caused by

failure of businesses to access productive capital 4. Faulty markets: markets good at creating economic values

but poor at distribution – distribution is a social and political matter

5. Solutions: Producer Co-ops, land reform, suffrage (men and women) and inheritance tax

6. Inspired development of municipal land reform in Europe, Single Tax on land and helped pass first law for Co-ops

Henry George – Land Value Tax1. Progress and Poverty (1879): inspired by JS Mill proposals and vision2. Mill and Leon Walras in France argued for land nationalisation – Single

Tax is a pragmatic reform devised by Henry George to achieve this3. Mill inspired public land creation to clean up cities, develop municipal

energy companies, parks, allotments for food and affordable housing 4. George active in the American co-operative movement: showed links

between land values, homelessness, poverty and costs for small business – strong support in USA, UK and Ireland

5. Land Value Tax (LVT) implemented in Liberal People’s Budget of 1909 (rejected by House of Lords and dropped) – Lloyd George and Churchill

6. LVT implemented in some cities of Pennsylvania and in Hong Kong (38% of tax revenue from a land value tax)

Wealth v Illth John Ruskin – Unto this last (1862) – ‘co-operative economy’ vision

– a ‘Political Economy of Art’ inspired Tolstoy, Gandhi, RH Tawney and the Guild Socialist movement

1. Chrematistics : the usurious manipulation of money, property and wealth to maximise exchange value (‘illth’)

2. Oikonomia: the wise management of resources and use values for the well-being of society – ‘wealth is life’

3. Guild of St. George: social economy venture from 1871 for preserving vernacular skills, bringing land and buildings into co-operative trusteeship and reviving the commons by ‘tithes of property’ – inspired by medieval craftsmanship

4. Non-profit housing (1870) pioneer with Octavia Hill

RH Tawney – Guild Socialist1. Acquisitive Society (1920): ‘Property and Improperty’ – need

to replace ‘absentee ownership’ with up close, and dispersed ownership of productive assets

2. Francis Bacon: ‘Wealth is like muck, it works best when it is well spread.’

3. Evolutionary theory of Democracy and Property RightsStage 1: Rights to trade (early charters to artisans)Stage 2: Religious freedom (freedom of thought)Stage 3: Civil rights – bill of rights: press, vote, speech, etcStage 4: Economic democracy (workplace and public ownership

and governance) – highest stage and ‘mutual liberty’

1920-40: Destruction of Co-operatives

- Italy: Mussolini (1921-24) seized assets of 8000 Italian co-ops and took them over, killed leaders and burned shops

- Russia: Lenin repressed them but allowed them to revive before Stalin destroyed agricultural co-ops (65% of food provision) and then urban ones in the 1935

- Germany: Hitler seized their assets and nationalised them – 1100 consumer co-ops, 21,00 credit unions, 4000 co-op savings banks and 7000 agricultural co-ops

- Austria: following Hitler’s invasion leaders replaced by fascists- Spain: Franco arrested and killed leaders, many took exile in

Latin America

Co-operative Commonwealth Development – ‘Convivial Tools’ for Economic Democracy

1. Co-operative land reform2. Democratic corporate reform3. Co-operative money and co-operative capitalSources: 1. Ward Morehouse, Bob Swann, George Benello and Shann Turnbull,

Building Sustainable Communities, 1989, Bootstrap Press. 2. Mike Lewis and Pat Conaty, The Resilience Imperative – Co-operative Transitions to a Steady-State Economy, 2012, New Society

Publishers.

Trusteeship Companies

Gandhi’s idea of Socialisation (1931)1. An alternative to nationalisation and privatisation2. Co-operative economy path between capitalism and

communism3. Builds on Ruskin’s ideas of co-operative trusteeship in Unto

this last – a co-operative economic solution4. Developed by Vinoba Bhave and JP Narayan after Gandhi died

– Bhoodan and Gramdan land reform movements5. Inspired Martin Luther King and the Community Land Trust

movement in the USA

Land Trusteeship in India1. Bhoodan: ‘land gift’ movement (1951-57) - Vinoba Bhave led campaign in 1950s to get large landlords to gift one

sixth of their land to the rural poor - Movement raised significant acres of land in 1000 villages but much

land lost when recipients borrowed on it and it was repossessed2. Gramdan: ‘village gift’ movement (1952-70) - Another strategy to persuade gifted land and other small plots to be

organised as village trusts – overcome the risk of repossession - Both Bhoodan and Gramdan together secured 5 million acres of land

over 20 years3. Big barrier that impeded progress – access to low-cost finance for co-

operative economy development

CLT Pioneer in ScotlandIsle of Eigg Heritage Trust – Land for People(i) Community buy-out of the island for £1.5 million: struggle

by the islanders with absentee landlords and corporations(ii) CLT established in 1997 – has developed community

owned businesses: including shop, tourist facilities, workspace, hydro power plants and wind farm (energy now 98% renewable)

(iii) Successful struggle led to Community Land Unit and Land Reform (Scotland) Act 2003 giving communities a pre-emptive ‘right to buy’ – See Alastair McIntosh’s book, Soil and Soul: People versus Corporate Power

(iv) 250 CLTs in the USA and 50 CLTs in the UK

Enclosure – The End Game

• Mega-corporations, China and global banks are buying up increasingly scarce “natural and public capital”, removing equitable access and accelerating ecological destruction

• There is a life and death battle to protect land, water, atmosphere and social security.

Beyond the Fragments?• Alternatives exist

everywhere in small, dispersed community-based local approaches. The Blessed Unrest of Paul Hawkins.... But??

• How do we resist, unite and democratically build

a social and ecological economy?

The Commons and co-operative economy networks: Brian Davey, Feasta (Ireland)

• Consider these diagrams as three stages of knitting together a more powerful relationship between civil society, co-operatives and commons organisations without compromising their diversity and uniqueness, and without creating a top down hierarchy?

Co-operative Economy – Inverting the Paradigm

The Need to create ‘Co-operative Oceans’ ‘Co-ops in the West are a bit like sea water fish in a

freshwater pond. The capitalist world in the last 200 years has evolved its own institutions, instruments, political frameworks, etc. ………Economic democracy needs its own institutions.’

Professor Jaroslav Vanek, Cornell University

Co-operative Sector – Latent Transformative Power

• I billion members worldwide• Providing services to 3 billion people weekly• More employees than the multinationals• Involved in all sectors of the economy• Co-ops UK: Trust in corporations only 18% by citizens

compared to 79% trust level in Co-op business• Co-op sector growth of 20% in the UK 2008 -2012

compared to economy growth of 2%

‘For Service’ – the Co-operative Motto

1. For profits (investor owned corporations)2. Non-profits (NGOs: due to their legal structure have

restricted legal potential for citizen investor membership)3. Not-for-profits (Co-operative movement motto: ‘not for

profit, not for charity but for service’)4. ‘Foundational economy’ (Prof. Karel Williams) is hard wired

locally to regions: for ‘provisioning of food, housing, utilities, finance, repairs, maintenance, health, social services, education, advice, knowledge transfer, etc)

5. Strategic opportunity for the Co-operative movement: because in OECD countries over half the jobs are in services

Guild Socialism and Associative Democracy

Movement in Great Britain: 1907 to 1949(i) Co-operative strategy to organise industry democratically – national

guilds (railways, mines and construction) and local guilds – active work 1919 to 1929

(ii) Agricultural guilds for farming and the food sector(iii)Garden cities and towns – for regional self-reliance(iv)Social credit proposals for monetary reform (Major Douglas)(v) Agricultural guilds, Garden City movement advanced and National

Construction Guild established that built affordable housing in many big cities

(vi)Access to low-cost finance was a problem (vii)Movement leaders led work to create the Welfare State and the NHS in

the 1940s

Pluralist CommonwealthGar Alperovitz (USA) strategy: What then must we do?1. An agenda for ‘evolutionary reconstruction’2. Lack of countervailing power: Trade unions 36% of workers in 1946 and

today only 12%; but Co-ops 130 million members in the USA – 4 in 10 citizens.

3. Pluralist strategy for Systems Change – ‘America After Capitalism’ and Paradigm Shift

4. Key elements of the strategy include: - Democratic ownership (Co-ops, ESOPs, municipal) - Checkerboard strategy for decentralisation: municipal-social partnerships

(e.g. Evergreen Co-ops in Cleveland) - Public banking and social finance systems

Evergreen Co-operatives (USA) – The Democracy Collaborative

‘Green Economy’ Co-operative Partnership• Cleveland, Ohio: a city that has lost half its population through de-

industrialisation over recent decades• Partnership backed by anchor institutions including the City, universities,

hospitals, the Ohio Co-op movement and the Cleveland Foundation• $200 million social investment fund set up to invest at 1% to capitalise

worker ownership co-ops using a Mondragon model• Co-ops created for solar energy installation, local food enterprises and a

low-carbon laundry for hospitals• Largest urban farm in the USA set up with a wind power heated

greenhouse (3.5 acres) and growing annually 7 million heads of lettuce and 500 tons of herbs

How can we spread Co-operative Networks?

1. Network co-ordination is a mutual service function – not imposed by top-down management

2. Co-operating units are semi-autonomous and activate co-operative network activities in the interests of a greater whole/narrative rooted in common values and co-operative principles

3. Co-operative Consortia connect the nodes together at city, regional and national levels

4. Co-operative finance and mutual insurance systems co-manage risk and social investment

Co-operative Consortia, Mutual Guarantee Societies and Social Co-op Investment

1. Co-operative Consortia in Italy unite co-ops in specific trade sectors (280 sub-regional ones have been developed for social co-ops); provide legal advice, training, regulatory, back office administration services, tendering and negotiating power through a federated structure of service provision to their co-op member firms

2. Mutual Guarantee Societies (MGS): pool finance risk among co-ops and enable lower cost capital to be secured from Co-op banks and social investors

3. Co-op investment systems:: Consorzio Gino Mattarelli Finance (national – consortium for the social co-op movement) and CGM (the national consortium) does research, national development work and training for provincial consortia trainers

Social Co-ops – An emerging international movement

1. Italian Social Co-op movement growth transformative over 20 years - 14,500 in 2013: 360,000 paid workers, 40,000 disadvantaged paid

workers, over 31,000 volunteers and 57% growth since 2005 - more than 50% of the non-profit sector workforce service provision for almost 5 million people and annual turnover of €9

billion - typical social co-operative size of 30 worker members2. Social Co-op legislation and growth in other countries: France (1997

law), Poland (2003 law), Spain, Portugal, Hungary and Quebec (1997 law)

3. A Public-Social Partnership model for England and Wales – Co-ops UK research being completed

Commonwealth Reconstruction

‘Convivial tools are those which give each person the greatest opportunity to enrich the environment with the fruits of their vision. Industrial tools deny this possibility and they allow their designers to determine the meaning and expectations of others.’

Ivan Illich (1973) Tools for Conviviality

A Commons – Three Elements

1. a Resource2. a Community of stakeholders3. an agreed set of rules for provisioning and

stewardship

Elinor Ostrom – Commons Design Principles

1. Clearly defined boundaries which defines who has access.2. Appropriation and provisioning rules tailored to local conditions.3. Collective choice arrangements that allow resource appropriators to

participate in decision-making.4. Effective monitoring and accountability to appropriators.5. Graduated sanctions for resource appropriators who violate operational

community rules.6. Conflict resolution mechanisms that cheap and rapidly accessed.7. Self-determination of the community and recognition by higher-level

authorities.8. Larger common pool resource systems are organised in the form of

nested enterprises of multiple levels with smaller ones at local base level.

Closing Thought

‘Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed it is the only thing that ever has.’

Margaret Mead