What does it take for owners and managers to understand and liberate the true value of placing workers in charge of the business? How can we encourage the development of new, and the transformation of ‘conventional’ businesses, to become worker owned enterprises? What assumptions do we need to challenge to break the strong-hold of rapacious capitalism as the the dominant form of business?

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Originally published on The Conversation

Trina Hamilton, Winifred Curran: There are many indexes that aim to rank how green cities are. But what does it actually mean for a city to be green or sustainable?

We’ve written about what we call the “parks, cafes and a riverwalk” model of sustainability, which focuses on providing new green spaces, mainly for high-income people. This vision of shiny residential towers and waterfront parks has become a widely-shared conception of what green cities should look like. But it can drive up real estate prices and displace low- and middle-income residents.

As scholars who study gentrification and social justice, we prefer a model that recognizes all three aspects of sustainability: environment, economy and equity. The equity piece is often missing from development projects promoted as green or sustainable. We are interested in models of urban greening that produce real environmental improvements and also benefit long-term working-class residents in neighborhoods that are historically underserved.

Over a decade of research in an industrial section of New York City, we have seen an alternative vision take shape. This model, which we call “just green enough,” aims to clean up the environment while also retaining and creating living-wage blue-collar jobs. By doing so, it enables residents who have endured decades of contamination to stay in place and enjoy the benefits of a greener neighborhood.

‘Parks, cafes and a riverwalk’ can lead to gentrification

Gentrification has become a catch-all term used to describe neighborhood change, and is often misunderstood as the only path to neighborhood improvement. In fact, its defining feature is displacement. Typically, people who move into these changing neighborhoods are whiter, wealthier and more educated than residents who are displaced.

A recent spate of new research has focused on the displacement effects of environmental cleanup and green space initiatives. This phenomenon has variously been called environmental, eco- or green gentrification.

Land for new development and resources to fund extensive cleanup of toxic sites are scarce in many cities. This creates pressure to rezone industrial land for condo towers or lucrative commercial space, in exchange for developer-funded cleanup. And in neighborhoods where gentrification has already begun, a new park or farmers market can exacerbate the problem by making the area even more attractive to potential gentrifiers and pricing out long-term residents. In some cases, developers even create temporary community gardens or farmers markets or promise more green space than they eventually deliver, in order to market a neighborhood to buyers looking for green amenities.

Environmental gentrification naturalizes the disappearance of manufacturing and the working class. It makes deindustrialization seem both inevitable and desirable, often by quite literally replacing industry with more natural-looking landscapes. When these neighborhoods are finally cleaned up, after years of activism by longtime residents, those advocates often are unable to stay and enjoy the benefits of their efforts.

The River Walk in San Antonio, Texas, is a popular shopping and dining area catering to tourists. Ken Lund, CC BY-SA

Tools for greening differently

Greening and environmental cleanup do not automatically or necessarily lead to gentrification. There are tools that can make cities both greener and more inclusive, if the political will exists.

The work of the Newtown Creek Alliance in Brooklyn and Queens provides examples. The alliance is a community-led organization working to improve environmental conditions and revitalize industry in and along Newtown Creek, which separates these two boroughs. It focuses explicitly on social justice and environmental goals, as defined by the people who have been most negatively affected by contamination in the area.

The industrial zone surrounding Newtown Creek is a far cry from the toxic stew that The New York Times described in 1881 as “the worst smelling district in the world.” But it is also far from clean. For 220 years it has been a dumping ground for oil refineries, chemical plants, sugar refineries, fiber mills, copper smelting works, steel fabricators, tanneries, paint and varnish manufacturers, and lumber, coal and brick yards.

In the late 1970s, an investigation found that 17 million gallons of oil had leaked under the neighborhood and into the creek from a nearby oil storage terminal. The U.S. Environmental Protection Agency placed Newtown Creek on the Superfund list of heavily polluted toxic waste sites in 2010.

The Newtown Creek Alliance and other groups are working to make sure that the Superfund cleanup and other remediation efforts are as comprehensive as possible. At the same time, they are creating new green spaces within an area zoned for manufacturing, rather than pushing to rezone it.

As this approach shows, green cities don’t have to be postindustrial. Some 20,000 people work in the North Brooklyn industrial area that borders Newtown Creek. And a number of industrial businesses in the area have helped make environmental improvements.

Just green enough

The “just green enough” strategy uncouples environmental cleanup from high-end residential and commercial development. Our new anthology, “Just Green Enough: Urban Development and Environmental Gentrification,” provides many other examples of the need to plan for gentrification effects before displacement happens. It also describes efforts to create environmental improvements that explicitly consider equity concerns.

For example, UPROSE, Brooklyn’s oldest Latino community-based organization, is combining racial justice activism with climate resilience planning in Brooklyn’s Sunset Park neighborhood. The group advocates for investment and training for existing small businesses that often are Latino-owned. Its goal is not only to expand well-paid manufacturing jobs, but to include these businesses in rethinking what a sustainable economy looks like. Rather than rezoning the waterfront for high-end commercial and residential use, UPROSE is working for an inclusive vision of the neighborhood, built on the experience and expertise of its largely working-class immigrant residents.

This approach illustrates a broader pattern identified by Macalester College geographer Dan Trudeau in his chapter for our book. His research on residential developments throughout the United States shows that socially and environmentally just neighborhoods have to be planned as such from the beginning, including affordable housing and green amenities for all residents. Trudeau highlights the need to find “patient capital” – investment that does not expect a quick profit – and shows that local governments need to take responsibility for setting out a vision and strategy for housing equity and inclusion.

In our view, it is time to expand the notion of what a green city looks like and who it is for. For cities to be truly sustainable, all residents should have access to affordable housing, living-wage jobs, clean air and water, and green space. Urban residents should not have to accept a false choice between contamination and environmental gentrification.

Header photo: Small tankers unload along New York’s Newtown Creek in 2008. Jim Henderson

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Megan Hafner and Elizabeth Ramaccia:  Far too many young people in the United States today are growing up without tangible examples of people impacted by a problem having the opportunity to shape their own reality. A teenager in a rural community could feel this absence after the town’s lone employer, which long provided the power and leadership to look after the basic needs of most people, shutters its doors, and no one knows quite how to fill its shoes. For a teenager growing up in an urban Rust Belt neighborhood, it could be because for decades her community was redlined, and power was, and still is, systematically denied.

We believe that knowing how to shape your own reality—be it individually in professional or personal matters, or together as communities—should be a core part of young people’s education. With that knowledge, they will be better equipped to navigate their own futures as well as participate in shaping the future of the place they call home. This belief, however, begs the questions: What does it look like for a community to own its own future? What do the people who make up a community need to know and be able to do?

In 2014, we founded Why We Work Here (WWWH) and embarked on a year of research to observe, record, and analyze what it looks like when various place-based groups seek not just to “fix” problems head on but also to make problem solving an inclusive, community-driven process, wherein power and leadership are shared. We selected six groups to look at across the country, representing a range of sectors (nonprofit, private, and philanthropic) and issue areas (economic development, environmental sustainability, education, housing). Each group distinguished itself in how it saw its role in and relationship to its community, and the degree to which it controlled decision-making processes. All saw measurable, positive, equitable change ensue from their efforts. We wanted to know: How do they do what they do? What do they believe? And, technical skills aside, what do they know how to do?

We discovered that, despite hailing from different sectors and geographical locations, the approaches used by these organizations have strong common threads, including:

• Leadership development and capacity building. The groups recognize that supporting self-aware, empathetic, and action-oriented residents capable of working collaboratively across differences is critical for change to be transformative and enduring. Specific projects or efforts are vehicles for ongoing capacity building as much as they are about project-specific outcomes.
• Building a foundation of trust. The groups prioritize the development and sustenance of trusting relationships, both between them and the greater community and among community members. They do this through supporting diverse constituencies by identifying common values, being transparent in their own decision making and operations, and delivering on their word.
• Shared vision. The groups recognize the value of “looking at the same picture,” and work to ensure that stakeholders are a part of the development and execution of a shared vision.

These tenets, along with the specific skills and mindsets we identified through our research as essential to the groups’ effectiveness, are the inspiration and underpinnings for WWWH’s current work with educators and high school students. Through real, project-based experiences that are contextualized in the community, we support young people to recognize their own agency in shaping both individual and community-wide outcomes, and equip them with the skills to act with courage. We work closely with educators so that they can lead these programs and integrate skill-building activities into the regular school day.

We would like to share the stories of three of the groups we researched in the hope that tangible examples can help others imagine how their own actions could support alternative futures for their own communities.¹ 

Incourage Community Foundation

Gus (left) was a high school principal in 2000, when Consolidated Papers, Inc. and the regional economy collapsed. Today, he and his teammates (Corey, center, and Heather, right) facilitate resident engagement efforts at Incourage and focus on building strong relationships and networks founded on trust. Their goal is to move people from a place of “They will take care of it,” to “I have a responsibility to be involved,” and eventually to “We can have shared stewardship of this place.”

Incourage is a community foundation that’s fostering a participatory culture whereby residents are shaping a renewed, inclusive economy in south Wood County, Wisconsin.

For much of the twentieth century, the regional economy of south Wood County was dominated by the paper industry and flush with stable jobs that allowed most people to live comfortably. In 1999, however, Consolidated Papers, Inc.—a Fortune 500 company headquartered there—announced that it was cutting seven hundred jobs, and the following year it was sold to a foreign company. By 2005, total employment in the county had been cut by 40 percent.² The sudden loss of this economic anchor heightened social divisions and the sense of hopelessness throughout the community, and resulted in the loss of a shared identity.³

The collapse was a wake-up call for Incourage—then the Community Foundation of Greater South Wood County—which at the time operated the same way as many community foundations: it reacted to the needs of the community. Its board and staff began reexamining the foundation’s role toward helping the region heal and regenerate a local economy. Their belief was that upward, lasting change would be possible if residents could develop the enduring confidence and competencies to envision and implement community-wide transformation.

In the past decade, Incourage has invested in efforts that are laying the groundwork for a new culture of collective self-determination locally, including their most ambitious project yet—the community-led redevelopment of the Tribune Building, once the home of the local newspaper. Incourage purchased the abandoned building in 2012, and since then it has facilitated a process for the community to direct the building’s redevelopment and programming.⁴

As anyone involved will tell you, this was about more than a building. At its core, the Tribune is a vehicle for building relationships based on mutual interests and hopes, for establishing new skills and ways to collaborate constructively, and for rebuilding a collective sense of confidence to act proactively. Regular meetings begin with a discussion of what progress has been made to date and how the current evening’s activities will influence the development process. Community members—usually several hundred in attendance—work in groups around a programmatic component of shared interest: the microbrewery, the kitchen incubator, the children’s spaces. Groups are led by community members who are trained facilitators.

While the Tribune process itself encourages new expectations, behaviors, and mindsets in participants, it also builds off of previous efforts investing in adaptive leadership skill development and building partnerships to support a stronger local economy. “What we’re seeing now wouldn’t have been possible previously,” an Incourage staff member explained, referencing the way participants are coming together to hear one another and collaborate and recognizing the value and potential of their own ideas.

Saint Paul Federation of Teachers

When her undergraduate advisor encouraged her to do her internship with SPFT, Zuki said, “Are you crazy?!” She felt like she’d been burned by teachers as she tried, and failed, to get answers and support during the first few years of her oldest son’s schooling. She reluctantly took the internship, however, and found herself a part of the pre-contract-negotiation listening sessions SPFT was facilitating. She saw how many teachers had both the same desires and frustrations as she did. Today, she’s a huge advocate for teachers, and she wants more parents and teachers to have control over how their schools are run. She’s a trainer for Parent Teacher Home Visits, a PTO chair, and she was elected to the school board in late 2015.

The Saint Paul Federation of Teachers (SPFT)⁵ is a teachers union that has evolved its priorities and built stronger relationships with parents in order to support the development of “the school system Saint Paul students deserve” (one of SPFT’s main rallying cries). Nationally, the dialogue about the problems with U.S. schools often focuses on the deficits of teachers and the ineffectiveness of teachers unions. This story was playing out in Saint Paul, Minnesota, as well, and many teachers felt deeply discouraged by the divisive climate and narrative that excluded the voices of the people at the heart of the matter: teachers, parents, and students.

SPFT functioned for many years like a traditional union: members paid dues, and contract negotiations centered on pay and benefits. In 2005, in light of the heightened debate about education and teachers, the union’s new leadership saw an urgent need to rethink the role and strategy of the union in order to better support teachers and respond to the real needs of schools and students.

Since then, SPFT has transformed its organization in a number of ways—including, most emblematically, its approach to contract negotiations. Arguably one of the biggest tools a union has to turn a vision into reality, SPFT uses the process of developing its negotiation document as an opportunity to build a shared vision for the district that’s grounded in the needs of students, parents, and teachers.

SPFT functioned for many years like a traditional union: members paid dues, and contract negotiations centered on pay and benefits. In 2005, in light of the heightened debate about education and teachers, the union’s new leadership saw an urgent need to rethink the role and strategy of the union in order to better support teachers and respond to the real needs of schools and students.

Since then, SPFT has transformed its organization in a number of ways—including, most emblematically, its approach to contract negotiations. Arguably one of the biggest tools a union has to turn a vision into reality, SPFT uses the process of developing its negotiation document as an opportunity to build a shared vision for the district that’s grounded in the needs of students, parents, and teachers.

During this process leading up to its 2013 negotiations, SPFT engaged teachers and parents in a series of listening sessions. They discussed three questions: “What are the schools Saint Paul children deserve?”; “Who are the teachers Saint Paul children deserve?”; and “What is the profession those teachers deserve?”⁶ What they came up with was a bold, constructive vision that became a guide for the union’s negotiations. Just as important, teachers and parents saw each other as allies who ultimately wanted the same opportunities and outcomes for children and wanted to support one another to achieve their shared goals.

While most collective bargaining sessions remain closed, SPFT opened its sessions to the public. Because of SPFT’s consistent and deep investment in teachers and parents up to this point, throngs of people filled the negotiating room as conversations heated up. Union members and parents went door to door and rallied outside in the depth of winter. Parents created their own Facebook pages to better organize themselves in support of their students’ schools and teachers. Ultimately, the school board agreed to negotiate on every point they presented, which included smaller class sizes, less standardized testing, and the hiring of additional librarians, nurses, social workers, and counselors.

Today, more teachers are joining the union and more parents are getting involved in ways ranging from running for the school board to becoming trainers for the Parent Teacher Home Visits.⁷ In a move to support leadership development for both teachers and parents, SPFT employs two full-time organizers, who support long-term constructive strategies and focus on matching people’s interests and availability with opportunities to get involved.

People United for Sustainable Housing

Often referred to colloquially as “the mayor of the West Side,” David “Saint” Rodriguez is a leader, activist, and prominent personality in the neighborhood. A lifelong resident there, Saint struggled for much of his life and was imprisoned for several years. He had a hard time finding work after his release, but noticed a construction crew rehabbing a house nearby and started showing up every day as a volunteer. “I treated it like a job,” he recalls. Soon, it became one. His basic needs met, Saint was able to look beyond the paycheck from PUSH and see the holistic way the organization facilitates neighborhood-led local development. Today, he carries a strong sense of neighborhood responsibility with him and is an active member of PUSH’s board.

People United for Sustainable Housing (PUSH) in Buffalo, New York, is a member-driven organization that combines community development and organizing to address Buffalo’s West Side residents’ needs and build greater community control of resources.

Buffalo’s West Side is a poor neighborhood in one of the nation’s poorest cities, and has suffered from decades of disinvestment. Yet the neighborhood has a rich cultural legacy, and today it’s more diverse than ever. Its affordability allows many to build new lives—including refugees from Burma, Somalia, and other countries beset by conflict—yet because it borders a rapidly gentrifying neighborhood, the West Side’s affordability is being jeopardized as property values rise.

PUSH began, humbly, in 2005, when its cofounders went door-to-door listening to issues voiced by residents. Jennifer Mecozzi, PUSH’s organizing director (now its logistics coordinator), was one such resident. “[One of the founders] came to my house one day and asked all these questions…. He didn’t write anything down, but he must have really written a book after he left. He came back about three months later…and he brought up everything I had talked about. I was totally impressed…so I thought, ‘Well, you took the time to do this, so I’ll go to a meeting.’”⁸

Based on what the founders heard—that vacant and substandard housing was a major problem for many—they began rehabbing a house in the neighborhood. Many service providers had previously entered and exited the neighborhood, and many residents had grown accustomed to and skeptical of newcomers promising support and solutions. PUSH quickly set itself apart from its predecessors by being action oriented, responsive, and accountable to the conversations staff had with residents.

Today, PUSH is building a self-supporting ecosystem in the West Side neighborhood: it builds housing for sale and rent; provides energy-efficiency retrofits; develops urban gardens and storm-water management infrastructures; manages green economy and construction crews who hire locally and pay living wages; and runs an afterschool program for neighborhood youth. The ideas that become campaigns or programs come from residents through many avenues, including annual community congresses, regularly convening working groups, and conversations community members and PUSH staff have that happen organically.⁹

PUSH’s focus on building human capital every step of the way gives this ecosystem durability and power. The success of its capacity building and leadership-development efforts relies on first addressing the most basic, unmet needs of residents (housing, employment) and then supporting individuals to participate more deeply in actions that support their community’s shared future.

These groups recognize that making inclusive, community-driven processes the norm and sharing power and leadership calls for a cultural transformation that takes a long time to evolve, necessitates immense patience and thoughtfulness, and requires an appetite for risk and for practices atypical of their sector. Their investments are paying off, however, and we hope that their pioneering efforts will serve as examples that will help other organizations, regardless of sector, issue area, or geography, to facilitate deep cultural transformation in their own communities.

Notes

1. The stories are from interviews conducted by the authors over a four-month period in 2015, and from the organization’s websites and/or other supplemental materials.
2. Judith Millesen and Kelly Ryan, “Community Foundation Leadership in the Second Century: Adaptive and Agile,” from Here For Good: Community Foundations and the Challenges of the 21st Century, Terry Mazany and David C. Perr (New York: Routledge, 2014).
3. Ibid.
4. “Tribune: Our Community Accelerator,” Incourage Community Foundation website, August 31, 2015.
5. All information in this section was taken from Eric S. Fought, Power of Community: Organizing for the schools St. Paul children deserve (St. Paul, MN: Federation of Teachers, 2014).
6. Fought, Power of Community, 11.
7. “Parent Teacher Home Visits,” Saint Paul Federation of Teachers website, accessed November 7, 2015.
8. From an interview with the authors, October 2014.
9. “About Us,” PUSH Buffalo website, accessed November 7, 2015.

Megan Hafner is one of the cofounders of Why We Work Here, a community stewardship development program for high school youth. Previously, she worked with Elizabeth Ramaccia on the strategy team at Purpose, a social impact consultancy and incubator in New York City. Megan has a background in media, storytelling, education, and community organizing. At Purpose, she focused on projects connected to public education and sustainable food systems. She has also worked with the independent global TV/radio news hour “Democracy Now!,” in New York City.

Elizabeth Ramaccia is one of the cofounders of Why We Work Here, a community stewardship development program for high school youth. Previously, she worked with Megan Hafner on the strategy team at Purpose, a social impact consultancy and incubator in New York City. Elizabeth has a background in community development and civic participation. Prior to Purpose, she led community-based design projects at a housing nonprofit in rural Alabama. Her prior research focused on the role of design thinking in community leadership development in underresourced American communities.

Photo by Johnny Silvercloud

The post What Does It Look Like for a Community to Own Its Future? appeared first on P2P Foundation.

 To help transform our economy over the last few years, Stir to Action has organised national workshop programmes to support communities. Now, we are now planning to launch a year-long programme of practical workshops, 3-day residentials, mentoring, and live crowdfunding to build a new economy that works for everyone.

For this to be successful — and with your support — we are hoping to raise the £12,500 we need to cover programme costs. Pledges on our campaign over the next five weeks will support subsidised workshop places, local workshop venues, programme design, our mentoring network, and provide the resources to engage new communities with these ideas. This is our first programme at this scale, but we aim for it to be an annual programme!

We’re continuing to build our inspiring mentoring network during the campaign — would you like to join?!
Get in touch via [email protected]

Click here to support our crowdfund

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Certain changes to the cooperative form could permit the creation of enterprises that would not belong to anyone specifically but would be at the disposal of its users, workers and clients alike

We have argued in the past few years for a new form of ‘open cooperativism’ in which cooperatives would engage themselves structurally and legally to the production of common goods (the common good, the commons), i.e. not just work for their own members in a form of ‘collective capitalism’. The following article is a very good explanation of the differences, tensions and potential convergences of common and cooperative forms of ownership

By BENOÎT BORRITS: “Company buy-outs and transformation into cooperative enterprises are often presented as a step in the construction of commons, as the various stakeholders – workers and users – are involved in the process of preserving and developing a resource. However, even though the cooperative form departs from the traditional rules of capital, it still remains essentially private in nature, which leads to frequent capitalist drifts when the cooperative is successful. What changes to the cooperative form would permit a better construction of the commons?

While realising the construction of commons is a co-activity between a number of stakeholders managing a resource²⁵, cooperative ownership remains private in nature. Not all stakeholders can be represented in a cooperative and similarly, every person who participates in the life of the cooperative is not necessarily a member of it, as applications can sometimes be rejected. Likewise, to become a member of a cooperative a share must be bought, an investment made, albeit often minimal²⁶, and this constitutes ownership. In addition, cooperative shares cannot be freely transferred; they are generally bought back by the cooperative itself²⁷. Although all these elements are obvious deviations from traditional private ownership of a capitalist nature, it is still true that cooperative shares do belong to a clearly defined natural or legal person.

The third principle of the cooperative²⁸ is that the company’s reserves cannot be disbursed. When a company makes a profit that is not distributed as salaries or dividends, it is accounted for as reserves which increase the value of the company’s equity²⁹. In the classic regime of a capital company, shareholders have a right to the equity commensurate with their holdings. This means that the sales price of a share always includes this portion of the reserves. In cooperative law, due to the limited remuneration of the contributions, the profits made cannot be distributed to members and therefore become indivisible, which means that they belong exclusively to the cooperative and not to its members. This is why transactions are always done at the nominal value of the share. Do these indivisible reserves presage the construction of a common? This is far from certain.

Reserves build up as soon as the company turns a profit. In the competitive environment of today’s economies, these reserves, like the price of members’ shares, are a force driving the development of the company. Just like any capitalist shareholder, cooperative members do not want to see their shares depreciate. Nor do they want to divest themselves of reserves, once built up, as they represent both a security net for their shares and a way of developing the cooperative further. When a cooperative grows economically, it can often be observed that the cooperative spirit that powered the organisation at the beginning gives way to typically capitalist behaviour. One of the most obvious examples of this is the cooperative group Mondragón.

At the peak of its growth, the group was made up of 125 cooperatives linked through second level cooperatives and the governing body elected by a group assembly made up of representatives of the various cooperatives. Mainly comprising industrial cooperatives, the group had to face the issue of globalisation after Spain joined the European Union in 1996. To do so it introduced a policy of acquiring foreign companies which remained subsidiaries of Mondragón cooperatives and were not turned into new cooperatives. The workers of these subsidiaries kept the status of employees, reporting to the company management and did not become members like their counterparts in Spain. So the question is, why didn’t these employees become members? A number of different explanations have been mooted (legal difficulties, membership reserved to the Basque Country, etc.) which remain unconvincing. There is, however, another reason which is far more prosaic.

At the end of 2012, the group’s equity amounted to €3.95 billion, composed of 2.05 billion of shares and 1.9 of billion indivisible reserves. Unlike French workers’ cooperatives (SCOPs), the shares in Mondragón cooperatives are revalued. One might think that this fact would facilitate the entry of new members as they join the cooperatives on the basis of a share that is revalued every year. But it is not a full revaluation, as we can see from the existence of indivisible reserves which almost equal the number of shares. Even if these indivisible reserves do not belong to Mondragón members individually, they do represent a safety net for them and the potential for investment and development. So it is easy to understand that they are attached to them and want to keep them. From a strictly financial point of view, a new member of a Mondragón cooperative benefits from a discount of approximately 50% to access the group’s equity simply due to the build-up of these reserves. There is no doubt that current members are happy to introduce new people in the general and every day running of the cooperative, but doing so on a large scale and integrating employees of the subsidiaries bought is another problem entirely.

In other words, although the indivisible reserves are indisputably collective property, it is still private from the point of view of people outside of the cooperative. The reserves are indivisible due to the third pillar of cooperatives: limited remuneration of the capital. This does not resolve the issue of ownership linked to the existence of equity. A new approach could be tested, that of an equity-free company that is financed by debt alone. This would be an unprecedented political revolution that would pursue the idea of creating common property: power would no longer be defined in terms of holding company shares, but one’s place in relation to the production unit. Co-activity would grant the power to decide. Workers would manage production and users would be able to have their say on the direction and quality of production. But is this credible? Is equity really avoidable?

The world of finance justifies the existence of equity by stating that lenders need to see that owners have more to lose than lenders do: a loan entails a commitment to repay, regardless of how the company performs financially. It is, however, the shareholders who suffer first from a fall in activity or shrinking margin, provided that the capital is significant and the shareholders have something to lose. This is why financiers always check the amount of equity in the company before granting any credit to a capital company, often of the opinion that a ratio of one to one is reasonable. In the world of workers’ cooperatives, however, we can see that the approaches are much more aggressive.

We can refer here to the example of the Ceralep SCOP, based in Saint Vallier in the French department of Drôme. A manufacturer of very high tension electrical insulators, this company was liquidated in 2004 by its owner, an American group. The employees put together a plan to turn the company into a cooperative in order to save jobs. Funding of €900,000 was needed. All the banks, with the exception of Crédit coopératif, refused to finance the project. The cooperative movement – risk capital organisms from the SCOP movement and the Crédit coopératif – put up €800,000 in loans and quasi equity funding (shares). The employees were asked to contribute €100,000 which they did not have. In the end, they contributed €51,000 and the rest came from subscriptions from locals in support of employment. This enterprise has just celebrated its 10 year anniversary, during which the enterprise has increased salaries while still taking on additional staff, all this with an initial contribution of just 5.67% of the necessary operating costs, a ratio which is absolutely unimaginable in classic finance.

More recently a tech company was turned into a SCOP by its employees: SET. The company, which belonged to a bankrupt Swiss start-up, had been put up for sale. An American-Singaporean group, K&S, put in a bid. The staff, fearing they were going to lose the technology they had developed over a number of years³⁰, wanted to put in a takeover bid. With only limited funds at their disposal (€160,000), they did not manage to find classic financial partners. Although they had not intended to turn the company into an SCOP, it was the cooperative movement that found the solution by issuing shares to build up equity so that the enterprise could borrow from the banks Crédit coopératif and CIC (a subsidiary of Crédit Mutuel). Out of a total €2 million, the staff only contributed 8% of this amount. After two years of being in business, the company is doing very well and continues to innovate and increase turnover.

These two examples – we could look at hundreds of others – show us that the cooperative movement and the world of finance have different approaches. It is not the equity that serves as a guarantee but the desire of workers to keep their jobs. In fact, if the legal form of the cooperative did not require members and therefore shares, cooperatives could work just as well without any financing from workers. If this can often be established (without claiming that this is always the case) can enterprise in practice work with debt as the only method of funding?

Debt financing means that workers are not doing any self-financing³¹ and that they therefore get the full market value for whatever they produce³². At a first glance this looks tricky as equity is subject to discussion and applying different accounting standards results in different equity evaluations. The difficulty is evaluating the shares³³. But rather than trying to give them a value, shouldn’t we accept that all assets, whether tangible or intangible, must be financed? This is already the case for long-term tangible investments. A company that wants to invest in a piece of equipment that will be used for 20 years would, for example, finance the purchase by means of a bank loan for the same length of time³⁴. The same should be done for any intangible asset such as research and development or a publicity campaign. A research and development programme must first be quantified and would be funded on a risk capital basis with variable rates depending on the business outcomes of the research. Similarly, a marketing campaign must be funded in advance for the period of time over which the company hopes to see results, probably with a repayment schedule that would quickly repay the bulk of the campaign then with smaller repayments corresponding to the staggered publicity achieved during the campaign. Finally, a large part of assets rely on short-term elements such as stocks, client receivables less short-term debts. This is a classic assessment of the running costs requirement. The idea is therefore that banks give companies lines of credit commensurate with this running costs requirement, which will be continuously re-evaluated based on each accounting statement.

Debt financing social enterprises is therefore technically possible. It would allow the creation of enterprises without equity that would not belong to anyone specifically but would be at the disposal of its users, workers and clients alike. Under this format, and unlike cooperatives that only differ from the capitalist way of thinking partly, the entity would not accumulate profits for itself. This means that workers would be remunerated at the exact market value of their work, perhaps enhanced or adjusted by subsidies or deductions. This presupposes the existence of a banking and financial services sector that would permit collective ownership of manufacturing means at different levels and represent the commons at higher levels in the company. In this context, investment decisions would be taken jointly by the company’s workers and users and a socialised credit agency that would agree to a funding proposal, thereby heralding an instance of commons held by them with a view to creating a federation of commons.”

Notes:

• ²⁵ Commun, Essai sur la révolution au XXe siècle, [Commons, an essay on the revolution of the 20th century] Pierre Dardot and Christian Laval, Editions La Découverte, 2014
• ²⁶ Which is not always the case of workers’ cooperative, in particular those in the Mondragón group in Spain.
• ²⁷ This is why they are variable capital companies.
• ²⁸ http://www.entreprises.coop/7-principes-cooperatifs/85-decouvrir-les-cooperatives/quest-ce-quune-cooperative/166.html
• ²⁹ Reserves are defined, among other things, as being the difference between the assets and liabilities.
• ³⁰ The SET was set up in 1975. It was then bought out by a German electronics group and then by the Swedish start-up which saw the technology developed by SET as an asset to its own expansion.
• ³¹ Which would lead to the creation of equity.
• ³² By disregarding the regulatory mechanisms of redistribution of the wealth produced such as social security contributions.
• ³³ Although debts are relatively easy to quantify, as they are sums of money that must be repaid, the lack of certainty in relation to evaluating equity is due to the assets, as the liabilities are always equal to the assets.
• ³⁴ Or sometimes leasing. In this case, the equipment does not even belong to the company and is not listed as an asset.

Photo by jmarello

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There is no true ambition or justice in a global climate deal that undermines the principles of sharing, equity and justice. But after the ‘COP-out’ negotiations in Paris, there is still every hope that the growing power of the people’s voice can usher in a more equal and sustainable world.

Now that all the world leaders, diplomats, lobbyists, and NGOs have returned home after COP21, environmental campaigners are still taking stock of the new climate deal agreed in Paris. In many ways, the newspaper headlines heralding a ‘major leap for mankind’ and ‘the world’s greatest diplomatic success’ were justified. The aspirational goal to keep temperatures at 1.5C above pre-industrial levels is certainly more ambitious than expected, and much has been made of the ultimate goal of ‘net-zero human emissions’ in the second half of this century.

Despite the fanfare, however, it’s impossible to call the Paris Agreement an actual success in terms of environmental sustainability or global justice. Green groups have widely argued that the 1.5C aspiration is meaningless without concrete measures for hitting it, while the individual emissions reductions promised by world powers will not be sufficient to prevent global temperatures rising beyond 2C. We are still headed for a catastrophic rise of 3C, and even these existing pledges are not legally binding. So far from being ambitious in any real sense, there are no longer binding targets or meaningful carbon cuts obligated on rich countries—which is almost a step backwards from the Kyoto Protocol (itself deemed inadequate in 1997).

There is also no justice in an agreement in which no new money is pledged to help developing countries adapt to climate change and move beyond fossil fuels. The pre-existing pledge of $100 billion per year of climate finance is about one quarter of the sums needed, according to civil society analysis, and this again is non-legally binding and couched in vague language. As campaigners have long reasoned, it is not a question of aid, loans or charity; it is about the historical debt of rich countries to the majority world. Yet this was far from the basis of the Paris negotiations, where the obligation was shifted back onto poor countries and proposals for climate reparations were pushed off limits. At the same time, the final agreement dropped any reference to human rights or Indigenous rights in the main text.

A growing call for ‘fair shares’

On a more positive note, a global call for sharing is now a central theme among civil society activists who focus on environmental justice issues. Indeed the crunch point in the Paris talks involved—as ever—the vexed issue of how to share responsibility for climate change between developed and developing countries. Campaigners have meticulously articulated how fairness and equity is key to the success of any climate negotiations, as reflected in the major ‘fair shares’ civil society review of government pledges to reduce carbon emissions. Demands for rich countries to remember their #FairShares at COP21 was even a rallying cry of protesters who staged actions outside the talks.

As anticipated, the final agreement did not include a clear reference to a global carbon budget as a basis for targets, which is imperative for any discussion about how to fairly share the Earth’s atmospheric space between rich and poor countries. The talks spelled out no vision of equity or fairness; on the contrary, the United States did everything it could to undermine the landmark principle of equity in the UNFCCC negotiations—known as Common But Differentiated Responsibilities and Respective Capabilities—by using bullying tactics and bribery to get its way.

Instead of addressing the root causes of climate change and committing to the measures needed to reduce inequality and overconsumption, most world leaders continue to sanction an unjust economic system that is fuelled by fossil fuel extraction. There is an obvious contradiction in major industrialised nations signing the Paris deal on one hand, while pushing for environmentally damaging trade deals such as the TTIP and TPP on the other. As widely pointed out, there was no mentioning in the text of the word ‘fossil fuel’ (let alone the need to keep 80% of fossil fuels in the ground), and there was no reference to the global military industrial complex that is next to the fossil fuel industry in its global GHG emissions.

The polluters’ great escape

The latest climate agreement will be remembered in history as “the Polluters’ Great Escape”, according to one progressive analyst, since it weakens the rules on rich countries and promises no fundamental changes in how the global economy is structured. Far from discussing the difficult political, economic and social changes that are needed to tackle climate change in the near and longer term, the door is also opened once again to carbon markets and other false solutions that suit big corporations.

For all these reasons and many others, the real hope for building a more just and sustainable economic system falls ever more firmly on the shoulders of ordinary, engaged citizens. The last words of many environmental activists following COP21 can only be repeated: that the main obstacles to change are not scientific or technical, but social and political. That history will not be made in convention centres and government institutions, but on the streets in massive peaceful protests and direct actions. That we as people of goodwill are not yet strong enough to dismantle the power of global corporations, but there is increasing evidence that the movement for transformative systemic change is growing apace.

So even if the Paris Agreement failed to reflect the principles of sharing, justice and equity in anything near to their true form of global expression, the great challenge of the 21st century—to fairly distribute the planet’s resources within environmental constraints—has never been more clear or urgent.

As STWR’s Mohammed Mesbahi comments: “There are many committed activists who campaign with passion and intelligence about the need to keep fossil fuels in the ground, to switch to renewable energy resources, to protect the commons, to live more simply and so forth. But they are a comparatively small number of people trying to do a job that requires the backing of the whole population. They’re on their own trying to do the job for everyone else, which doesn’t make sense when you listen to the warnings from scientists who say we’re heading for a climate catastrophe. Those scientists are not just talking to the governments: they are talking to us, you and me, the people of the world.

“Every family should be its own government when it comes to environmental issues today. We should become our own presidents and prime ministers who each plays their part in working to save our planet, as if we are all ambassadors for humanity.

“Most of all, we must carry on organising more protest actions, until those protests catch on and get bigger and bigger. We have observed how world leaders make many promises during these global summits, then go home and put on another mask for the business of making profits for global corporations. Hence we have to persist until those politicians understand that their agenda of commercialisation is incompatible with protecting and healing the environment.

“We have to scale up our existing demands for shifting money away from fossil fuels and armaments, towards climate finance and renewable energies. We know we have all the technology, all the ingenuity, all the money. But governments will not shift their priorities without enormous pressure from the public that is expressed through constant and peaceful mobilisations.”

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