With 7.1 million workers engaged in ‘precarious’ employment and 77 per cent of the self-employed living in poverty, the report ‘Working Together: Trade Union and Co-operative Innovations for Precarious Work’ calls for increased protection for those operating in the so-called gig economy.  

“Not only do they have almost no security, but while the average employed worker is losing out year by year in real terms, the self-employed are doing even worse, earning less each year in cash terms,” said co-author Alex Bird. “1.7 million of those in precarious employment are earning less than the national minimum wage, with no real enforcement of the law, and the self-employed are not even covered by the existing legislation.”

There are solutions according to Working Together. The report, commissioned by Co-operatives UK and The Co-operative College, and supported by the Network for Social Change, Wales Co-operative Centre and the Institute for Solidarity Economics, identifies ‘co-operative solutions’ as well as partnerships with trade unions as a way of ensuring a fair deal for workers in an expanding gig economy.

It calls for the UK to replicate the ‘umbrella co-operative model’ for supporting freelancers and other precarious workers and points to Belgium-based SMart. The non-profit organisation enables precarious workers operating in the arts sector to obtain a range of welfare benefits – including unemployment benefit.

SMart also provides its 70,000 plus members with tax support and advice. Sarah de Heusch Ribassin, Project Officer for the Development Strategy Unit at Smart, said:

“Many of those who were self-employed found the legislation around taxes to be so complex and were afraid to do things wrong. SMart offered an alternative that meant they no longer had to worry about making errors that would affect their income.”

Working Together also identifies Indycube as a blueprint for how partnerships between trade union and co-operatives can flourish. Indycube is a rapidly growing network for freelancers and the self-employed and offers access to workspace in more than 30 locations, predominantly across Wales.

The not-for-profit co-operative works with the trade union Community to offer a range of benefits including advice on tax, insurance, pensions and employment law.

Mark Hooper, Founder of Indycube, sums up how the relationship with Community has developed. He said:

“We see this as the way to grow with Community’s resources, capacity and knowledge, and the plan provides an opportunity for third party representation of our self-employed members.

“On a practical level, freelancers often find themselves presented with complex contracts full of legal jargon, which can result in problematic agreements and issues with payment.

“Community’s legal team are able to advise on these sorts of documents which many independent workers wouldn’t otherwise be able to access. Likewise, Invoice Factoring is a service which is generally only available to bigger companies and organisations, but banding independent workers’ voices together and working in partnership with Community has allowed Indycube to secure access to Invoice Factoring services, effectively putting an end to late payments for our members.

“Fifty-one per cent of invoices are paid late, a figure we think is far too high, and Community’s support has enabled us to make progress in this area. Thanks to Community’s status as an established union, Indycube has been able to cement itself in the minds of policy-makers and others as a voice for the fast-growing group of independent workers.

“The more members we have, the stronger our collective voice, and the more work we can all do to make our futures better.”

Les Bayliss, National Officer and Head of Special Projects for Community, said: “Our partnership with Indycube is one of a number of newly developed initiatives where, as a trade union, we are reaching out to new workers in today’s world of work.

“We will continue to listen to and understand what they need from a trade union, providing support, representation, mediation and settlement. Working together we hope to develop a ‘one voice’ approach to the needs of self-employed, freelance workers, speaking out and campaigning on the issues that affect them most.

“As a trade union we will continue to learn from our new initiatives and our new members, building new alliances with others in the private, co-operative and not for profit sectors. We will reach out to workers by being relevant to them and their needs.”

The rise in the gig economy means businesses, trade unions and government must do more to protect workers according to Ed Mayo, secretary general of Co-operatives UK, the trade body that works to promote develop and unite co-operative enterprises. He said:

“The number of zero hours workers has increased by over 800,000 within the past decade. Some 77% of self-employed workers are living in poverty…

“These are incredible numbers. With increased precariousness comes the need for increased protection and support and we know that co-operatives and trade unions can be part of the solution to this growing need.”

Cilla Ross, Co-operative College Vice Principal and co-author of the report said,

“The experience of growing numbers of workers in education, from teachers in the compulsory (pre-16) sector through to further, higher and adult education, is one of casualisation and precarity. This report pulls together examples of how unions and co-ops are successfully working together and offers real solutions on how precarious work can be challenged.”

The full Working Together report can be viewed and downloaded here.

Additional Notes 

The Working Together report profiles a number of examples where trade unions and co-operatives are working together including:

Musicians Union (MU) and Musicians co-ops: Local Authority music service closure in 1998 led to the launch of Swindon Music Co-operative. The MU was an active supporter of the co-operative which is now the main provider of instrumental and vocal tuition in over 70 local schools. The co-op and trade union partnership has set up seven other musicians’ co-ops across England and Wales.

Actor Co-ops: There are 30 actors’ co-ops in England and Wales. Their development and success has been through a close working partnership over many years with the actors union, Equity. The partnership has secured workers’ rights through negotiated industry agreements.

Community Lives Consortium: This social care organisation has operated as a co-op since 2001. It provides housing and social care services for severely disabled adults in Swansea, Neath and Port Talbot. Unison has supported the development of the co-operative since 2001 and has a place on the board of directors.

Key findings and recommendations in the report include:

• Co-operative sector share of GDP is 2% in the UK while in Italy and other EU countries it is over 10%. There are only 474 worker co-ops in the UK versus over 23,000 worker and social co-ops in Italy where public policy support (including tax reliefs) and legislative changes in 1985 and 1991 have been transformative.
• A wider partnership with local authorities can make a real difference. Cities in the US are supporting programmes to establish an eco-system of support for co-operative development including legal and technical advice as well as enabling finance. Local government partnerships in Italy have assisted the significant growth of social co-operatives in the fields of social care and jobs for disadvantaged groups in the labour market.
• Platform co-operatives co-developed by trade unions and worker co-ops are emerging in the USA as an alternative to Uber. Other trade unions in the USA are working on Union Co-op platform solutions for childminders and district nurses. Union Co-op solutions like this are needed in the UK.
• Mutual guarantee societies were developed in Italy and considerably reduce the cost of development finance for co-operatives. 19 EU countries have adopted this innovation and the UK should do the same.
• Universal Basic Income could be introduced in the UK in tax neutral ways that would significantly benefit those in precarious work. Trade union interest in this reform is growing as an alternative to the widespread problems with Universal Credit.

About The Co-operative College, Co-operatives UK and Wales Co-operative Centre

The Co-operative College is an educational charity and has been a leading provider of education, training and research for the co-operative sector since 1919. As a membership based organisation, we work across the UK and internationally to promote co-operative values, ideas,  principles and practices. www.co-op.ac.uk

Wales Co-operative Centre is a co-operative development agency, working across Wales to promote social, financial and digital inclusion through a range of projects. For further information visit http://wales.coop.

Co-operatives UK is the network for Britain’s thousands of co-operatives. Together we work to promote, develop and unite member-owned businesses across the economy. From high street retailers to community owned pubs, fan owned football clubs to farmer controlled businesses, co-operatives are everywhere and together they are worth £37 billion to the British economy. www.uk.coop

For further information, please contact:

Dominic Mills:

Tel: 0161 2141767

Email: [email protected]

<small>Photo by Startup Stock Photos from Pexels https://www.pexels.com/photo/people-coffee-meeting-team-7096/</small>

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From the notes to the video

CLTs (Community Land Trusts) provide many benefits, including: getting people out of the rent trap, keeping properties from speculation and avoiding gentrification. This means that we can have more stable communities.

The post Community Land Trusts in a Nutshell appeared first on P2P Foundation.

DESCRIPTION

This course presents inspiring local, regional, and international solutions in community energy, local food, social care, land tenure, and cooperative finance that address current concerns for environmental and social well-being. It introduces the knowledge and practice of co-operation, economic democracy, and the commons and invites your participation in an intensive program of exploration, instruction, dialogue, and practical training in systems change and transition.

OBJECTIVES

• Outline and explain the problematic, and transformative vision.
• Discuss emerging food system alternatives and strategies for transitioning to just, sustainable food systems.
• Recognize the role of public policy and bottom-up innovation in renewable community energy.
• Outline the philosophy, rationale, and organizational forms of user-controlled models of health and social care.
• Discuss enclosure, and the alternatives of commons and land trusts.
• Describe community development finance and co-operative capital raising and their potential to secure democratic and socially directed investment for the common good.
• Synthesize key ideas and practices that define systemic transition.

Target Audience: We imagine that if you were attracted to this course, you will be someone who shares our general world view and vision, and wants to broaden and deepen it and join us and others to develop it. That is its principal purpose, but a secondary purpose is to link people and projects that share these views in practical ways. In this first presentation, you are likely to be people who are already engaged in social change work in three crucial movements – co-operation, commons, and sustainability. Most are already actively working to make this world view a reality. You may be active in the environmental movement, human or animal rights, social equality and development, the solidarity economy, co-operative finance and alternative currencies; the Transition Movement, permaculture, local food, eco-villages, the digital commons, peer-to-peer and open educational resources, community energy or many others.

Course is offered by Athabasca University in collaboration with Synergia.

COURSE INSTRUCTORS

Reposted from Canvas.net

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A new report by Co-operatives UK called “Not Alone:  Trade Union and Co-operative Solutions for Self-Employed Workers” offers a thoughtful, rigorous overview of this neglected sector of the economy.  Although it focuses on the UK, its findings easily apply internationally, particularly for co-operative and union-based solutions.

The author of the report, Pat Conaty, notes that “self-employment is at a record level” in the UK – some 15% of the workforce – and rising.  While some self-employed workers choose this status, a huge number are forced into through layoffs and job restructuring, with all the downward mobility and loss of security implied by them.

Few politicians or economists are honestly addressing the implications.  They assume that technological innovation will simply create a new wave of jobs to replace the ones being eliminated, same as it ever was.

The sad truth is that investors and companies benefit greatly from degrading full-time jobs into piecemeal, task-based projects tackled by a growing pool of precarious workers.  This situation is only going to become more desperate as artificial intelligence, automation, driverless vehicles and platform economics offshore and de-skill conventional jobs if they don’t permanently destroy them.

The “Not Alone” report does not tackle this larger mega-challenge, but it does fill an enormous void by addressing how the precariat might begin to fight back.  In many respects, the challenge is about basic survival for the Uber drivers and temp workers, agency staff and solo creatives, who are now forced to fend for themselves.  Conaty describes the basic problem:

The self-employed precariat do not enjoy employment rights and protections at work, or any of the implicit services associated with being an employee, such as payroll or workplace insurance – let alone pension or sick pay.  In addition, their potential income is indirectly eroded by other costs such as agency fees.  They face additional challenges related to being paid on time and the right to a contract.  To compound all of this, many self-employed are among the lowest paid workers in the UK.

Not only are many self-employed workers among the lowest paid, they often have careers based on “zero hours contracts” (no guaranteed work or income), part-time work and “portfolios” (multiple temporary or part-time jobs drawing on the same set of skills).  All of these developments may serve the interests of capital and companies, but do they really represent “progress” for most solo practitioners?

The report calls for the “cousins of the labor movement” – co-operatives, trade unions and mutual organizations – to come together, as they did in another era of history, to help form new institutions to help the precariat.

In the US, one such advocate for the self-employed is the Freelancers Union, which seeks to “connect freelancers to group-rate benefits, resources, community, and political action to improve their lives – and their bottom lines.”  The Freelancers Union is not a trade union or co-operative, but it does provide health, dental and other benefits to its 280,000 members.

In Belgium, a co-operative known as SMart provides invoicing and debt collection services for its 60,000 members who work in commercial art and design.  SMart functions as a kind of modern-day guild, helping members avoid the burden of setting up a company and providing small loans, training services, legal advice and shared workspaces.

General trade unions in the Netherlands and Spain represent self-employed workers and provide services.  In India, there is a Self-Employed Women’s Association that acts as a service co-operative for its 1.7 million members, providing “micro-insurance” and advocating for workers’ rights.

One of the more innovative mutual aid models is the “bread fund.”  It’s a new type of organization first developed in the Netherlands that provides sick pay to the self-employed.  Each bread fund has between 20 and 50 self-employed members who put aside money every month into their individual bread fund account. The money remains theirs, but is used to support them and other members if they become sick.  No bread fund may have more than 50 members. In the Netherlands, there are currently 170 bread funds in 88 towns and cities, with more than 7,000 participating members.

The report describes a large array of other self-help, co-operative solutions. They include mutual guarantee societies (co-operative societies of small businesses that guarantee each other’s loans), credit unions for the self-employed, and co-operative money and credit.

The report also discusses ways in which the government can help legally protect marginal survival activities – often known as the “informal economy” – and integrate them into the mainstream economy.  An entire section of the report deals with co-operatives in digital sectors, “social care” and the “solidarity economy.”

As far as general strategies for helping the self-employed, Conaty recommends four priority goals (my paraphrasing here):

1) Recognize this growing workforce by developing organizing strategies for them;

2) Focus on providing mutualized services to workers in creative industries, care services and the green economy;

3) Represent the interests of self-employed workers in national policymaking; and

4) Help develop regulatory solutions to enable collaboration among self-employed workers with respect to mutual guarantee societies and worker benefits.

There is much to digest in “Not Alone,” and many creative challenges to be met. This report illuminates this poorly understood landscape with insightful analyses, useful detail and lessons from the history of co-operatives and mutual aid.

Cross-posted from Bollier.org

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Self employment levels used to be a measure of how underdeveloped an economy was. Now, in the form of the ‘gig economy’, it has become something that is celebrated across developed countries.

In the US, new figures suggest that all net employment growth since 2005 is down to alternative work arrangements such as self employment. The reality is that we are seeing a new system of work evolve, enabled in part by new technology platforms, with its own political economy of risk and reward and just as previous eras saw the emergence of trade unions and co-operatives as a self-organising response, so the same is needed again today.

Here in the UK we are starting a new tax year. Fresh evidence shows that more than a quarter of the UK workforce is self-employed, and this figure is set to increase. This ongoing rise in the number of freelancers signals a fundamental shift in the nature of work.

Some, driven by the lure of freedom, are choosing to go self-employed; many others are going freelance out of necessity. Changes to the labour market mean that zero hours contracts, part time work and ‘portfolio’ careers are becoming more and more the norm.

Our new report, Not Alone, looks at recent trends in self-employment, both here in the UK and across the world. What we are seeing is more and more freelancers coming together and forming co-operatives in order to create security and cut costs for themselves. The co-ops are allowing people to work for themselves whilst sharing costs with others – whether that’s the cost of marketing products, workspace or back office services.

Take RICOL, a new interpreters’ co-op in London. The service for interpreters in London was shaken up in 2011 when the government moved from a national register of public service interpreters to a contract for all of England and Wales from a single provider, won by Applied Language Solutions, owned by Capita. To deliver on the contract, the firm then offered court interpreters work at what was in effect between 25% and 40% of the established rate.

There was a mass refusal to sign up and a protest group was launched, Interpreters for Justice. Many new interpreters hired by ALS were poorly qualified. Severe delays and chaos in the courts were widely reported in the press.

With help from Co-operatives UK, RICOL was established in November 2012 as a London-based interpreters and translators co-operative. They are now generating new work and contracts with law firms, commercial companies, human rights organisations and media companies.

It is early days for co-ops like these in the UK, but there are inspiring examples from overseas to learn from, such as the Self Employed Women’s Association in India, a trade union and co-operative network giving voice and opportunity to 1.7 million members.

As freelancing grows, we need a more systematic approach to supporting them. Not alone concludes with four recommendations centred on, on the one hand, trade unions and co-ops making a radical shift and working together to support self-employed people and, on the other, developing representation and legislation for self-employed people in government.

Ed Mayo is Secretary General of Co-operatives UK, the network for Britain’s thousands of co-operative businesses. The report can be downloaded from www.uk.coop/notalone.

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Self-employment has become the new yeast in the UK economy dough. 4.6 million today are self-employed (15% of the workforce) and since 2008 they have created two-thirds of new jobs. The record rise of self-employment is unprecedented. By 2018 it is expected that more people will be in self-employment than in public sector jobs.

While a proportion of the self-employed do well financially, they are today the exception. Indeed the stereotype of the self-employed as small businesses is less true than ever before. 83% of the UK self-employed work alone. Average earnings are far too low to employ anyone else. The median annual income of the self-employed plummeted from £15,000 in 2008 to £10,400 in 2013. Low pay however is only part of the picture. An absence of worker rights and support services aggravates hardship and makes matters worse.

Under European Union regulations temporary and agency staff are entitled as ‘workers’ to sickness and holiday pay. This is not the case for self-employed as the Not Alone report highlights. They also have to put in days of work unpaid for bidding, negotiating contracts, tax and national insurance administration, billing, accounts management and debt collection.

How can self-employed workers overcome lop-sided risks, over-bearing costs and additionally secure fair trade terms and conditions? To avoid ‘walking alone’, some freelancers are rediscovering solidarity, co-operation and the logic of mutual aid. Trade unions in the media sector in Germany, Scandinavia and the UK have been demonstrating ways to do this.

The Federation of Entertainment Unions (FEU) is the UK network of trade unions in media. Members include the National Union of Journalists (NUJ), BECTU, Equity and the Musicians Union; all have a high proportion of self-employed members. A common FEU strategy is to secure ‘worker status’ for their freelance members and then to negotiate worker rights.

Co-operatively owned employment agencies can provide the operational means to achieve this outcome and especially if backed by a trade union. For example, faced by rising agency fees, 50 music teachers in Swindon formed a co-op to market their services to schools, to assist with negotiations and to provide other collective services. The Musicians Union and Co-operatives UK  have jointly promoted this strategy and music supply teachers in many other regions have done the same. Likewise Actors Co-ops have steadily expanded to 30 in England and Wales. The co-ops work closely as a network with Equity, the actor’s union.

Co-operatives UK supported RICOL, a co-operative agency for interpreters and translators, that was set up in 2012 after the interpreting service for the law courts was contracted out to Capita who reduced the terms and conditions on offer.

Co-operative innovators in France and Belgium have developed integrated services for self-employed workers in relation to affordable workspace, back office services, debt collection, low-cost insurance and for securing sickness and benefit payments from the state. These Business and Employment Co-operatives (BECs) pioneers include the CAE network in France with 72 local co-operatives and Smart in Belgium – a co-operative with over 60,000 members.

In the USA, new Union Co-ops are emerging. Under a joint agreement, the US Steelworkers, the largest union in the USA, and the successful Mondragon Co-operatives from Spain are co-developing the model. Union Co-ops are being set up in a range of industries and cities from Pittsburg to Los Angeles. In Cincinnati, Ohio, there are seven Union Co-ops including a food hub, a railway manufacturer, a ‘green laundry’ and a jewellery manufacturer.

The Freelancers Union in the USA has developed as a mutual to provide insurance and other legal and advocacy services for more than 280,000 members. In the Netherlands and in Spain, general unions for the self-employed have emerged and developed since the 1990s.

To help secure rights for self-employed workers, the International Confederation of Free Trade Unions, the ILO and the International Co-operative Alliance have developed an organisers’ handbook. Solidarity economy strategies are growing but are still fragmented. Bringing together best practice internationally could trigger a new game plan that might snowball by bringing together solidarity solutions. The trade union and co-operative movements need to unite to make this happen.

Photo by blakespot

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“Working alone can be aspirational, but it can also be lonely and anxious. There is an extraordinary opportunity for new co-operative solutions for self-employed people, giving them the freedom of freelancing with the muscle of mutuality.”

Cooperatives UK have just released an in depth report full of examples of best practices for co-operatives collaborating to meet the needs of a growing class of dispossessed workers – over 70% of whom in the UK are in poverty. We will cover various aspects of the report in the following days and you can also read the full report here.

The new tax year, starting on 6 April (2016) will see record numbers of self?employed workers, according to new data published by Co-operatives UK.

The Not Alone report tracks current levels of self-employment and the ways in which co-ops can help freelancers meet shared needs. Key findings are:

• At 15% of the workforce, government statistics show that 4.6 million people are now self-employed – the highest numbers in the UK since records began
• One in four people (27%) of employees in medium-sized firms in the UK would like to work in self-employment (22% in small firms, 14% in the public sector)
• The number of freelancers is likely to grow further over the next year, reflecting a significant change in the pattern of work in the economy

Ed Mayo, Secretary General of Co-operatives UK, said: “More and more people are turning to self-employment, whether out of choice or necessity. Our data shows this is likely to grow, with a significant number of people who are currently in employment interested in going freelance.

“Self-employment offers freedom and, by coming together in co-ops, freelancers can share the risks and responsibility.”

In line with this growth in self-employment, the report identifies examples of freelancers coming together to form co-operatives for shared services, from back-office support, debt management and contract advice to access to finance and sickness insurance and the shared use of equipment and access to workspace.

There are a number of examples across the UK of co-ops of self-employed workers, from 50 music teachers forming a co-operative to market their services to schools, to interpreters laid off by Capita providing interpretation services in judicial courts through a co-op.

“Working as a private peripatetic music teacher can be a very isolating experience. The Music Co-operative enables our members to feel part of something, and to feel connected to other like-minded professionals.” Janet Hodgson, Swindon Music Co-operative 

But the report also identifies considerable scope for the growth of services in the UK, pointing to well-developed approaches overseas. In the USA, the Freelancers Union provides its 280,000 members with advice and insurance. In Belgium, SMart is a co-op offering invoicing and payments for 60,000 freelancer members. In France, new legislation allows self-employed workers to access the sickness pay and benefits of conventional employees through co-operatives.

TUC General Secretary Frances O’Grady said: “This research shows how the world of work is rapidly changing and becoming more precarious.

“While some choose to be self-employed, many people are forced into it.  The lack of stable income and poor job security often associated with self-employment can make it hard for workers to pay their bills and spend quality time with their families.

“That’s why 300,000 self-employed people have joined trade unions in the UK to get better rights at work. Many more could benefit from being part of co-ops and unions, and as a movement we need to reach out to them.”

Pat Conaty, co-author of the report and a freelancer himself, said: “Self?employment is at a record level, but it is not yet at the high water mark. The pressure and the promise that lead people to go freelance will continue to swell the ranks of the self-employed over the coming year.

“Working alone can be aspirational, but it can also be lonely and anxious. There is an extraordinary opportunity for new co-operative solutions for self-employed people, giving them the freedom of freelancing with the muscle of mutuality.”

The Not Alone report has been produced in partnership with Wales Co-operative Centre and Unity Trust Bank. The full report and a summary can be downloaded here.

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Strategies for Transforming Neoliberal Finance Through Commons-Based Alternatives

By David Bollier and Pat Conaty. A Report on a Commons Strategies Group Workshop in cooperation with the Heinrich Böll Foundation. Berlin, Germany / September 8-10, 2015

Download this Executive Summary as a PDF.

“Democratic Money and Capital for the Commons: Strategies for Transforming Neoliberal Finance Through Commons-Based Alternatives,” Download the full 54 page report here (PDF)

Executive Summary

The logic of neoliberal capitalism is responsible for at least three interrelated, systemic problems that urgently need to be addressed – the destruction of ecosystems, market enclosures of commons, and assaults on equality, social justice and the capacity of society to provide social care to its citizens. None of these problems is likely to be overcome unless we can find ways to develop innovative co-operative finance and money systems that can address all three problems in integrated ways.

A key driver of these pathologies is debt-driven growth and deregulated finance, which are central elements of the neoliberal economics introduced by Thatcher and Reagan in the early 1980s as the successor to the Keynesian paradigm. This shift was marked by the abolition or relaxation of legal interest rate caps in most countries, which has resulted in usurious rates for many conventional loans and rates as high as 5,000% for payday loans. While such predation was once mostly directed at the poor, precarious workers and the global South, it spread under other forms to middle-class Europeans and Americans in the 1990s and in the 2000s. Over-indebtedness has become a ubiquitous condition that has, deepened since the 2008 crisis, strangling economies all over the world and inflicting great social injustice. Yet business-as-usual continues and mainstream politics has no interest in fundamental reforms.

Fortunately, new opportunities to pursue systemic change are arising. As the internal contradictions of capitalist finance become more evident and more damaging, insurgent critiques of the money system are gaining ground as is the development of practical alternatives. Near-forgotten historical models of cooperative finance are being rediscovered as new technologies enable novel DIY credit systems, alternative currencies and cooperative organizational models. One might say that a post-capitalist vision for finance and money is fitfully emerging.

But can the eclectic jumble of piecemeal solutions – alternative banks, currencies, lending systems, cooperative digital platforms, policy proposals, and more – be synthesized into a coherent new vision? Can the various projects and players in this sprawling realm find each other, initiate deeper collaborations, and attract wider support? To explore the possibilities, the Commons Strategies Group, working in cooperation with the Heinrich Böll Foundation, convened twenty-four leading thinkers, activists, policy innovators and funders for a two-day “Deep Dive” strategy workshop.

I. Why A Transformation of Money, Banking and Finance Is Essential

Neoliberal capitalism, especially in the aftermath of the 2008 meltdown, is demonstrably unable to meet basic human needs in socially fair, ecologically responsible ways. Its obsession with economic growth and private wealth accumulation has become predatory and socially parasitic, and the overall system is wired to produce recurrent, catastrophic booms and busts. But it is not widely appreciated that money and the money system are social creations that act as invisible instruments of social engineering and order. To many, they seem a kind of natural economic order. But it is entirely possible to recapture public (government) control of the ability to create money from the private sector so that money can be used to serve public, democratically determined needs rather than the narrow profit-making goals of private banks and financial institutions.

The general public is not aware that money is created by private banks through the creation of new debt, repayable by governments and households with interest. However, instead of seeing money as something that government must borrow from banks, we might also see it as a common good – a public supply of currency that could prioritize socially necessary expenditures, including investments in the private economy, without first raising revenues through taxes. There need be no “deficit” resulting from public borrowing from banks. Money would simply represent a public source of new currency, a function that private banks already perform by generating money as debt. The difference would be that public currencies would be interest-free and support democratically determined needs; they would not need to meet the commercial, profit-driven priorities of private lenders. Money for the common good could be democratically created as a public service and allocated for the public interest.

II. How Can We Finance Commons and Commoning?

The conventional financial system is dedicated to an economy of exploitation and extraction. It amounts to a pyramid scheme with a built-in growth imperative because in order to repay interest – an add-on to the initial sum of money created by banks – the general population must take on ever more debt, and at a faster rate than the economy grows. This debt treadmill driven – by compound interest – invariably leads to speculation and boom-and-bust economic crises. Unlike 1929, which led to Keynesian reforms and a New Deal in the US and the emergence of the modern welfare state, the global banking and money system since 2008 has been shored up without any fundamental reform. Our money and banking system is now based on rent extraction that uses privatization, the division of labor, and the enclosure of common resources to create a surplus.

This process is supported by a diversity of financial instruments that create a variety of constraints and claims on the privatized resources and labor. These financial realities prohibit the generation of new capital for public and common uses and frustrate the capacity of commoners to create their own value and capital for common purposes. Instead the existing production and financial system is designed to siphon all value creation into private pockets. Thus, the only hope for commoners and those committed to finance as a tool for promoting the public good lies in dismantling the existing rentier system and reintegrating the realms of nature and social value into a reconceptualized whole in which capital serves the collective aims of ocieties.

In short, we need to reimagine and reconstruct the role of money and credit if we are to create a commons-based society that is both democratic and equitable. This means using finance to enable people to engage in commoning and the promotion of economic and social co-operation through a process of envisioning, articulating, and creating shared resources as common goods. This is a very different mentality than the feverish buying and creating of private assets which is the primary aim of conventional lending. It’s about funding a process for mutualization. This requires a wholly different set of institutions, legal regimes and social practices for managing (and mutualizing) money, credit and risk.

III. Nine Institutional Forms to Transform Finance

But we need not start from zero. The good news is that credit and risk can be reconceptualized to serve the commons. It has been done before in various limited ways. There are a wide variety of historically proven and promising examples that have already emerged to address these issues. The Deep Dive explored nine innovative models of finance.

1. Social and Ethical Lending.

Ethical social banks such as Fiare in Spain and Banca Etica in Italy are actively concerned with the social and environmental impact of their loans. They therefore focus on borrowers associated with the fair trade movement, corporate social responsibility, local businesses generating local good work, and other co-operative and social concerns. With its linkage to over 400 local government administrations, Banca Etica has a strong public sector and community component. The co-operative bank’s equity, currently 52 million euros, is owned by over 35,000 shareholders and 90 local groups, which actively help develop the bank’s products and services and hold it accountable to its social mandate.

2. Community Development Finance Institutions.

CDFIs are a species of cooperative and mutual lending institutions that have proliferated in the U.S. as a way to democratize access to credit, especially in the face of racial discrimination. Thanks to strong support from Presidents Clinton and Obama, there are now more than 1,000 mission-driven organizations officially recognized as CDFIs, and another two or three times as many institutions doing similar work but without official certification. Their collective assets amount to tens of billions of US dollars. CDFIs have also been developed in the UK and are growing in similar ways.

3. Public Banks.

An attractive alternative to the boom-and-bust economy spurred by the commercial banking system is public banks. Public banks can immediately lower public borrowing costs; provide capital to address social needs in ways that are not extractive; and lower the cost of infrastructure investments by half by reducing the interests costs of such projects. One example is the Bank of North Dakota which provides low-interest loans for small businesses, students, and farmers while generating over $300 million in dividends over ten years for North Dakota’s 600,000 residents. Between 1938 and 1974 the Bank of Canada operated in this way through a public banking arm and on a national scale. Some of Canada’s largest infrastructure projects – like the St. Lawrence Seaway – were financed in this way. There are many good examples of public banking internationally, including municipal banks.

4. Transition-Oriented Credit.

One key problem with traditional banks is that they struggle in circumstances of non-growth, or when the market rate of interest is low. Some ecologically minded communities are therefore trying to devise a credit or finance model that can work well in circumstances of no growth that can still support a resilient local economy. The Sambruket community in Sweden has concluded that it needs to establish both a natural resource commons and a complementary financial commons to work sustainably. As a co-operative, it is experimenting with a crowd-equity nonprofit mechanism as a way to support local sustainable development.

5. The Blockchain Ledger as a Community Infrastructure.

Despite controversy about its role in speculation, Bitcoin is a significant financial advance because of its innovative “distributed ledger” or “blockchain” technology. This breakthrough system allows people on open networks to validate the authenticity of an individual bitcoin (or digital certificate or document) without the need for a third-party guarantor such as a bank or government body. This has far-reaching ramifications because blockchain technology can be used reliably to manage social relationships on network platforms, such as the establishment of “distributed collaborative organizations” based on digital networks, or frameworks for collective governance of a group. If users can avoid the usual need to verify the reliability or trustworthiness of other users, it allows an indefinitely large number of participants to engage in exchange relations on open network systems.

6. Complementary Currencies.

Community Forge – communityforge.net – is a social networking platform that lets communities create their own local currency, manage exchanges and member accounts, and advertise individual and collective needs. More than 400 communities use the Drupal-based platform to manage their complementary currencies. By the end of 2014, Community Forge supported 550 LETS projects in France, 113 in Belgium, 63 in Switzerland, and 150 timebanks. One interesting alternative currency is uCoin, a project in France that seeks to implement a basic income through the use of cryptocurrency.

7. Crowdfunding for the Commons.

One of the most innovative crowdfunding enterprises is Goteo, a Spain-based open-source platform dedicated to advancing commons projects and principles. Goteo differs from standard crowdfunding sites in that it invites public participation in improving projects and greater accountability to donors. To date, Goteo has funded more than 400 projects, with a 60-70% success rate in meeting fundraising goals. It has more than 50,000 users and has raised more than 2 million euros since its founding in 2011.

8. Enspiral and Commons-based Virtual Banking.

Enspiral is a New Zealand-based network of entrepreneurs, professionals and hackers who are “using the tools of business and technology to make positive social change.” The enterprise uses software platforms to create novel organizational structures for hosting new types of collective self-provisioning and financing. One such platform, my.enspiral, allows the members of the Enspiral Services freelancer and contractor collective to use an internal banking system within a walled garden of autonomy and flexibility. Enspiral also has a Cobudget platform that lets participants allocate money in the collective budget in proportion to how much they contributed to it.

9. New Organizational Forms for Cooperative Accumulation.

Some organizational forms are showing great promise in fostering new types of “cooperative accumulation” – i.e., the collective accumulation of financial resources for mutual benefit. One notable example is the “solidarity economy” and multi-stakeholder cooperative models, especially as developed in Italy, Quebec, Canada, and more recently in New York City (Solidarity NYC). The issuing of Co-operative Shares, developed in the 1990s by the Fair Trade movement in the UK, has been revived since 2008 to raise capital for a wide diversity of local and community needs, including the development of renewable energy, saving rural shops, the community buy-outs of pubs, land acquisition for local food production, and other purposes. The UK community shares movement, which has spread to Canada, highlights how co-operative forms of equity capital can be raised to help meet common needs.

IV. Strategies for Moving Forward

Participants identified five key strategies for moving forward:

1. Democratize Money. Commoners must re-capture the money-creation system for public purposes and replace debt–based money. The government of Iceland has produced a 2015 report showing how to do this.

2. Get Beyond Money (As We Know It). Since money tends to promote social relationships that require the exchange of equivalents (agreed upon prices for the purchase of goods) and behaviors that exclude those with no money, many commoners wish to move “beyond money” by honoring the indirect reciprocity of commons and to welcome different types of money in different contexts as ways to give communities greater self-determination.

3. Back to the Future: Blending the Old and the New. The historical experiences and wisdom of the older co-operative models associated with the labor movement and left politics should be blended with new models based on digital technologies that are being developed by a younger generation. Many time-tested models such as JAK fee-based banking, demurrage (negative interest) currency and the WIR currency developed during the Great Depression to stimulate local economies, are inspiring innovative forms of money.

4. Engineer Systems for Cooperative Accumulation. It is essential to devise new organizational forms (not just financial systems) that have the capacity to enable “cooperative accumulation” – i.e., to accumulate financial reserves or assets that can be mutualized, democratically managed, and mobilized to develop and sustain forms of capital that create commonwealth. Multi-stakeholder co-operatives like in Italy, Quebec and Japan can provide guidance on how to develop convivial legal structures for commoners, co-operators, and sustainable community development.

5. Macro-Map the New Monetary System as a Commons. We must differentiate between the “Real Economy” that meets people’s everyday needs and the “Unreal Economy” that is dominated by parasitic “rentier-finance.” A macro-mapping of a commons-based credit and finance system can help us visualize the relationships for structuring and operationalizing the new economy.

Next Steps

A number of specific action steps were identified for moving the above goals forward. They include: Theoretical and conceptual research; policy development and outreach; the development of a richer, broader discourse about finance and the commons; the creation of new venues for collaboration and activism; the intensification of experiments in new currencies; and funding for project development and commons institutions. One immediate proposal was to advise and support Syriza and the people of Greece as they struggle to develop effective responses to the social and economic crisis ravaging that country.

The Deep Dive discussions showed that a commons-based system of money and capital based on democratic and equitable principles is entirely feasible. Many existing and emerging models can overcome the prevailing system of debt and interest, and bring about the transformation that our societies need. The challenge is in achieving root-and-branch change and the creation of transition institutions within a system that has so many complicated and seemingly disconnected facets. It is therefore difficult, both practically and strategically, to transform the current system so that it can be made inclusive, democratically accountable, socially constructive, and ecologically benign.

However, it is also clear from the discussions that there are many options to pursue and that they should not be seen as either/or choices, but as both/and challenges. We can find inspiration and guidance from many historic and current examples of interest-free money, public sector money not based on debt, and forms of public, social and co-operative banking. Each of these innovations serve different needs and functions, but all are complementary and can be integrated in a convivial money system that can provide equitable capital and other ethical and useful financial services for commoners and their communities. The evident problem with developing the available options today is the disjointed and weakly organized character of existing reform initiatives. There is not yet a shared meta-narrative to galvanize and unite a monetary reform movement that is both democratic and devoted to sustainable and humane forms of development.

Commons principles and practices can help establish a dynamic and integrated agenda for change, and draw upon many robust tools and policy proposals. A unifying narrative is also essential for both resisting and offering concrete alternatives to the unaccountable private-sector power of banks to create debt-based money out of thin air. The state and the people need to strip bankers of this sovereign power. Co-operative and democratically accountable forms of organization can provide a feasible alternative social architecture that can protect, maintain, and steward these practices in service to the common good.

But immense popular pressure is necessary to achieve these changes. Money needs to be democratized. Debt bondage needs to be abolished. New systems of co-operative finance, banking, and publicly generated currency need to be established. Only in this way will the commons be protected, promoted, and placed at the service of all – not enclosed and expropriated for the benefit of the privileged few.

Download the full 54 page report here.

See also Robin Murray’s notes on the Deep Dive.

Lead image by Paolo Margari.

The post Democratic Money and Capital for the Commons appeared first on P2P Foundation.

DEMOCRATIC MONEY AND CAPITAL FOR THE COMMONS

Strategies for Transforming Neoliberal Finance Through Commons-Based Alternatives

By David Bollier and Pat Conaty. A Report on a Commons Strategies Group Workshop in cooperation with the Heinrich Böll Foundation. Berlin, Germany / September 8-10, 2015

Download this Executive Summary as a PDF.

“Democratic Money and Capital for the Commons: Strategies for Transforming Neoliberal Finance Through Commons-Based Alternatives,” Download the full 54 page report here (PDF)

Executive Summary

The logic of neoliberal capitalism is responsible for at least three interrelated, systemic problems that urgently need to be addressed – the destruction of ecosystems, market enclosures of commons, and assaults on equality, social justice and the capacity of society to provide social care to its citizens. None of these problems is likely to be overcome unless we can find ways to develop innovative co-operative finance and money systems that can address all three problems in integrated ways.

A key driver of these pathologies is debt-driven growth and deregulated finance, which are central elements of the neoliberal economics introduced by Thatcher and Reagan in the early 1980s as the successor to the Keynesian paradigm. This shift was marked by the abolition or relaxation of legal interest rate caps in most countries, which has resulted in usurious rates for many conventional loans and rates as high as 5,000% for payday loans. While such predation was once mostly directed at the poor, precarious workers and the global South, it spread under other forms to middle-class Europeans and Americans in the 1990s and in the 2000s. Over-indebtedness has become a ubiquitous condition that has, deepened since the 2008 crisis, strangling economies all over the world and inflicting great social injustice. Yet business-as-usual continues and mainstream politics has no interest in fundamental reforms.

Fortunately, new opportunities to pursue systemic change are arising. As the internal contradictions of capitalist finance become more evident and more damaging, insurgent critiques of the money system are gaining ground as is the development of practical alternatives. Near-forgotten historical models of cooperative finance are being rediscovered as new technologies enable novel DIY credit systems, alternative currencies and cooperative organizational models. One might say that a post-capitalist vision for finance and money is fitfully emerging.

But can the eclectic jumble of piecemeal solutions – alternative banks, currencies, lending systems, cooperative digital platforms, policy proposals, and more – be synthesized into a coherent new vision? Can the various projects and players in this sprawling realm find each other, initiate deeper collaborations, and attract wider support? To explore the possibilities, the Commons Strategies Group, working in cooperation with the Heinrich Böll Foundation, convened twenty-four leading thinkers, activists, policy innovators and funders for a two-day “Deep Dive” strategy workshop.

I. Why A Transformation of Money, Banking and Finance Is Essential

Neoliberal capitalism, especially in the aftermath of the 2008 meltdown, is demonstrably unable to meet basic human needs in socially fair, ecologically responsible ways. Its obsession with economic growth and private wealth accumulation has become predatory and socially parasitic, and the overall system is wired to produce recurrent, catastrophic booms and busts. But it is not widely appreciated that money and the money system are social creations that act as invisible instruments of social engineering and order. To many, they seem a kind of natural economic order. But it is entirely possible to recapture public (government) control of the ability to create money from the private sector so that money can be used to serve public, democratically determined needs rather than the narrow profit-making goals of private banks and financial institutions.

The general public is not aware that money is created by private banks through the creation of new debt, repayable by governments and households with interest. However, instead of seeing money as something that government must borrow from banks, we might also see it as a common good – a public supply of currency that could prioritize socially necessary expenditures, including investments in the private economy, without first raising revenues through taxes. There need be no “deficit” resulting from public borrowing from banks. Money would simply represent a public source of new currency, a function that private banks already perform by generating money as debt. The difference would be that public currencies would be interest-free and support democratically determined needs; they would not need to meet the commercial, profit-driven priorities of private lenders. Money for the common good could be democratically created as a public service and allocated for the public interest.

II. How Can We Finance Commons and Commoning?

The conventional financial system is dedicated to an economy of exploitation and extraction. It amounts to a pyramid scheme with a built-in growth imperative because in order to repay interest – an add-on to the initial sum of money created by banks – the general population must take on ever more debt, and at a faster rate than the economy grows. This debt treadmill driven – by compound interest – invariably leads to speculation and boom-and-bust economic crises. Unlike 1929, which led to Keynesian reforms and a New Deal in the US and the emergence of the modern welfare state, the global banking and money system since 2008 has been shored up without any fundamental reform. Our money and banking system is now based on rent extraction that uses privatization, the division of labor, and the enclosure of common resources to create a surplus.

This process is supported by a diversity of financial instruments that create a variety of constraints and claims on the privatized resources and labor. These financial realities prohibit the generation of new capital for public and common uses and frustrate the capacity of commoners to create their own value and capital for common purposes. Instead the existing production and financial system is designed to siphon all value creation into private pockets. Thus, the only hope for commoners and those committed to finance as a tool for promoting the public good lies in dismantling the existing rentier system and reintegrating the realms of nature and social value into a reconceptualized whole in which capital serves the collective aims of ocieties.

In short, we need to reimagine and reconstruct the role of money and credit if we are to create a commons-based society that is both democratic and equitable. This means using finance to enable people to engage in commoning and the promotion of economic and social co-operation through a process of envisioning, articulating, and creating shared resources as common goods. This is a very different mentality than the feverish buying and creating of private assets which is the primary aim of conventional lending. It’s about funding a process for mutualization. This requires a wholly different set of institutions, legal regimes and social practices for managing (and mutualizing) money, credit and risk.

III. Nine Institutional Forms to Transform Finance

But we need not start from zero. The good news is that credit and risk can be reconceptualized to serve the commons. It has been done before in various limited ways. There are a wide variety of historically proven and promising examples that have already emerged to address these issues. The Deep Dive explored nine innovative models of finance.

1. Social and Ethical Lending.

Ethical social banks such as Fiare in Spain and Banca Etica in Italy are actively concerned with the social and environmental impact of their loans. They therefore focus on borrowers associated with the fair trade movement, corporate social responsibility, local businesses generating local good work, and other co-operative and social concerns. With its linkage to over 400 local government administrations, Banca Etica has a strong public sector and community component. The co-operative bank’s equity, currently 52 million euros, is owned by over 35,000 shareholders and 90 local groups, which actively help develop the bank’s products and services and hold it accountable to its social mandate.

2. Community Development Finance Institutions.

CDFIs are a species of cooperative and mutual lending institutions that have proliferated in the U.S. as a way to democratize access to credit, especially in the face of racial discrimination. Thanks to strong support from Presidents Clinton and Obama, there are now more than 1,000 mission-driven organizations officially recognized as CDFIs, and another two or three times as many institutions doing similar work but without official certification. Their collective assets amount to tens of billions of US dollars. CDFIs have also been developed in the UK and are growing in similar ways.

3. Public Banks.

An attractive alternative to the boom-and-bust economy spurred by the commercial banking system is public banks. Public banks can immediately lower public borrowing costs; provide capital to address social needs in ways that are not extractive; and lower the cost of infrastructure investments by half by reducing the interests costs of such projects. One example is the Bank of North Dakota which provides low-interest loans for small businesses, students, and farmers while generating over $300 million in dividends over ten years for North Dakota’s 600,000 residents. Between 1938 and 1974 the Bank of Canada operated in this way through a public banking arm and on a national scale. Some of Canada’s largest infrastructure projects – like the St. Lawrence Seaway – were financed in this way. There are many good examples of public banking internationally, including municipal banks.

4. Transition-Oriented Credit.

One key problem with traditional banks is that they struggle in circumstances of non-growth, or when the market rate of interest is low. Some ecologically minded communities are therefore trying to devise a credit or finance model that can work well in circumstances of no growth that can still support a resilient local economy. The Sambruket community in Sweden has concluded that it needs to establish both a natural resource commons and a complementary financial commons to work sustainably. As a co-operative, it is experimenting with a crowd-equity nonprofit mechanism as a way to support local sustainable development.

5. The Blockchain Ledger as a Community Infrastructure.

Despite controversy about its role in speculation, Bitcoin is a significant financial advance because of its innovative “distributed ledger” or “blockchain” technology. This breakthrough system allows people on open networks to validate the authenticity of an individual bitcoin (or digital certificate or document) without the need for a third-party guarantor such as a bank or government body. This has far-reaching ramifications because blockchain technology can be used reliably to manage social relationships on network platforms, such as the establishment of “distributed collaborative organizations” based on digital networks, or frameworks for collective governance of a group. If users can avoid the usual need to verify the reliability or trustworthiness of other users, it allows an indefinitely large number of participants to engage in exchange relations on open network systems.

6. Complementary Currencies.

Community Forge – communityforge.net – is a social networking platform that lets communities create their own local currency, manage exchanges and member accounts, and advertise individual and collective needs. More than 400 communities use the Drupal-based platform to manage their complementary currencies. By the end of 2014, Community Forge supported 550 LETS projects in France, 113 in Belgium, 63 in Switzerland, and 150 timebanks. One interesting alternative currency is uCoin, a project in France that seeks to implement a basic income through the use of cryptocurrency.

7. Crowdfunding for the Commons.

One of the most innovative crowdfunding enterprises is Goteo, a Spain-based open-source platform dedicated to advancing commons projects and principles. Goteo differs from standard crowdfunding sites in that it invites public participation in improving projects and greater accountability to donors. To date, Goteo has funded more than 400 projects, with a 60-70% success rate in meeting fundraising goals. It has more than 50,000 users and has raised more than 2 million euros since its founding in 2011.

8. Enspiral and Commons-based Virtual Banking.

Enspiral is a New Zealand-based network of entrepreneurs, professionals and hackers who are “using the tools of business and technology to make positive social change.” The enterprise uses software platforms to create novel organizational structures for hosting new types of collective self-provisioning and financing. One such platform, my.enspiral, allows the members of the Enspiral Services freelancer and contractor collective to use an internal banking system within a walled garden of autonomy and flexibility. Enspiral also has a Cobudget platform that lets participants allocate money in the collective budget in proportion to how much they contributed to it.

9. New Organizational Forms for Cooperative Accumulation.

Some organizational forms are showing great promise in fostering new types of “cooperative accumulation” – i.e., the collective accumulation of financial resources for mutual benefit. One notable example is the “solidarity economy” and multi-stakeholder cooperative models, especially as developed in Italy, Quebec, Canada, and more recently in New York City (Solidarity NYC). The issuing of Co-operative Shares, developed in the 1990s by the Fair Trade movement in the UK, has been revived since 2008 to raise capital for a wide diversity of local and community needs, including the development of renewable energy, saving rural shops, the community buy-outs of pubs, land acquisition for local food production, and other purposes. The UK community shares movement, which has spread to Canada, highlights how co-operative forms of equity capital can be raised to help meet common needs.

IV. Strategies for Moving Forward

Participants identified five key strategies for moving forward:

1. Democratize Money. Commoners must re-capture the money-creation system for public purposes and replace debt–based money. The government of Iceland has produced a 2015 report showing how to do this.

2. Get Beyond Money (As We Know It). Since money tends to promote social relationships that require the exchange of equivalents (agreed upon prices for the purchase of goods) and behaviors that exclude those with no money, many commoners wish to move “beyond money” by honoring the indirect reciprocity of commons and to welcome different types of money in different contexts as ways to give communities greater self-determination.

3. Back to the Future: Blending the Old and the New. The historical experiences and wisdom of the older co-operative models associated with the labor movement and left politics should be blended with new models based on digital technologies that are being developed by a younger generation. Many time-tested models such as JAK fee-based banking, demurrage (negative interest) currency and the WIR currency developed during the Great Depression to stimulate local economies, are inspiring innovative forms of money.

4. Engineer Systems for Cooperative Accumulation. It is essential to devise new organizational forms (not just financial systems) that have the capacity to enable “cooperative accumulation” – i.e., to accumulate financial reserves or assets that can be mutualized, democratically managed, and mobilized to develop and sustain forms of capital that create commonwealth. Multi-stakeholder co-operatives like in Italy, Quebec and Japan can provide guidance on how to develop convivial legal structures for commoners, co-operators, and sustainable community development.

5. Macro-Map the New Monetary System as a Commons. We must differentiate between the “Real Economy” that meets people’s everyday needs and the “Unreal Economy” that is dominated by parasitic “rentier-finance.” A macro-mapping of a commons-based credit and finance system can help us visualize the relationships for structuring and operationalizing the new economy.

Next Steps

A number of specific action steps were identified for moving the above goals forward. They include: Theoretical and conceptual research; policy development and outreach; the development of a richer, broader discourse about finance and the commons; the creation of new venues for collaboration and activism; the intensification of experiments in new currencies; and funding for project development and commons institutions. One immediate proposal was to advise and support Syriza and the people of Greece as they struggle to develop effective responses to the social and economic crisis ravaging that country.

The Deep Dive discussions showed that a commons-based system of money and capital based on democratic and equitable principles is entirely feasible. Many existing and emerging models can overcome the prevailing system of debt and interest, and bring about the transformation that our societies need. The challenge is in achieving root-and-branch change and the creation of transition institutions within a system that has so many complicated and seemingly disconnected facets. It is therefore difficult, both practically and strategically, to transform the current system so that it can be made inclusive, democratically accountable, socially constructive, and ecologically benign.

However, it is also clear from the discussions that there are many options to pursue and that they should not be seen as either/or choices, but as both/and challenges. We can find inspiration and guidance from many historic and current examples of interest-free money, public sector money not based on debt, and forms of public, social and co-operative banking. Each of these innovations serve different needs and functions, but all are complementary and can be integrated in a convivial money system that can provide equitable capital and other ethical and useful financial services for commoners and their communities. The evident problem with developing the available options today is the disjointed and weakly organized character of existing reform initiatives. There is not yet a shared meta-narrative to galvanize and unite a monetary reform movement that is both democratic and devoted to sustainable and humane forms of development.

Commons principles and practices can help establish a dynamic and integrated agenda for change, and draw upon many robust tools and policy proposals. A unifying narrative is also essential for both resisting and offering concrete alternatives to the unaccountable private-sector power of banks to create debt-based money out of thin air. The state and the people need to strip bankers of this sovereign power. Co-operative and democratically accountable forms of organization can provide a feasible alternative social architecture that can protect, maintain, and steward these practices in service to the common good.

But immense popular pressure is necessary to achieve these changes. Money needs to be democratized. Debt bondage needs to be abolished. New systems of co-operative finance, banking, and publicly generated currency need to be established. Only in this way will the commons be protected, promoted, and placed at the service of all – not enclosed and expropriated for the benefit of the privileged few.

Democratic Money and Capital for the Commons Report

Lead image by Paolo Margari.

The post Democratic Money and Capital for the Commons: Exec. Summary and Full Report appeared first on P2P Foundation.

One of the more complicated, mostly unresolved issues facing most commons is how to assure the independence of commons when the dominant systems of finance, banking and money are so hostile to commoning. How can commoners meet their needs without replicating (perhaps in only modestly less harmful ways) the structural problems of the dominant money system?

Fortunately, there are a number of fascinating, creative initiatives around the world that can help illuminate answers to this question – from co-operative finance and crowdequity schemes to alternative currencies and the blockchain ledger used in Bitcoin, to reclaiming public control over money-creation to enable “quantitative easing for people” (and not just banks).

To help start a new conversation on these issues, the Commons Strategies Group, working in cooperation with the Heinrich Böll Foundation, co-organized a Deep Dive strategy workshop in Berlin, Germany, last September. We brought together 24 activists and experts on such topics as public money, complementary currencies, community development finance institutions, public banks, social and ethical lending, commons-based virtual banking, and new organizational forms to enable “co-operative accumulation” (the ability of collectives to secure equity ownership and control over assets that matter to them).

I’m happy to report that a report synthesizing the key themes and cross-currents of dialogue at that workshop is now available. The report is called “Democratic Money and Capital for the Commons: Strategies for Transforming Neoliberal Finance Through Commons-Based Alternatives,” (pdf file) by David Bollier and Pat Conaty.

You could consider the 54-page report an opening gambit for commoners to discuss how money, banking and finance could better serve their interests as commoners. There are no quick and easy answers if only because so much of the existing money system is oriented towards servicing the conventional capitalist economy. Even basic financial terms often have an embedded logic that skews toward promoting relentless economic growth, the extractivist economy and its pathologies, and the notion that money itself IS wealth.

That said, commoners have many important reasons for engaging with this topic. As we put it in the Introduction to the report, “The logic of neoliberal capitalism is responsible for at least three interrelated, systemic problems that urgently need to be addressed – the destruction of ecosystems, market enclosures of commons, and assaults on equality, social justice and the capacity of society to provide social care to its citizens. None of these problems is likely to be overcome unless we can find ways to develop innovative co-operative finance and money systems that can address all three problems in integrated ways.”

To continue with the Introduction:

A key driver of these pathologies is debt-driven growth and deregulated finance, which are central elements of the neoliberal economics introduced by Thatcher and Reagan in the early 1980s as the successor to the Keynesian paradigm. This shift was marked by the abolition or relaxation of legal interest rate caps in most countries, which has resulted in usurious rates for many conventional loans and rates as high as 5,000% for payday loans. While such predation was once mostly directed at the poor, precarious workers and the global South, it spread under other forms to middle-class Europeans and Americans in the 1990s and in the 2000s. Over-indebtedness has become a ubiquitous condition that has, deepened since the 2008 crisis, strangling economies all over the world and inflicting great social injustice. Yet business-as-usual continues and mainstream politics has no interest in fundamental reforms.

Fortunately, new opportunities to pursue systemic change are arising. As the internal contradictions of capitalist finance become more evident and more damaging, insurgent critiques of the money system are gaining ground as is the development of practical alternatives. Near-forgotten historical models of cooperative finance are being rediscovered as new technologies enable novel DIY credit systems, alternative currencies and cooperative organizational models. One might say that a post-capitalist vision for finance and money is fitfully emerging.

But can the eclectic jumble of piecemeal solutions – alternative banks, currencies, lending systems, cooperative digital platforms, policy proposals, and more – be synthesized into a coherent new vision? Can the various projects and players in this sprawling realm find each other, initiate deeper collaborations, and attract wider support?

This was the goal of the Deep Dive. You can download a pdf version of the 54-page report here – and here is a seven-page Executive Summary.

My co-author Pat Conaty and I wish to thank the participants of the Deep Dive for sharing their deep wisdom on so many important topics, and for helping us refine the text of the final report.

To give you a better idea of the material covered, here is the remainder of the Executive Summary:

I. Why A Transformation of Money, Banking and Finance Is Essential

Neoliberal capitalism, especially in the aftermath of the 2008 meltdown, is demonstrably unable to meet basic human needs in socially fair, ecologically responsible ways. Its obsession with economic growth and private wealth accumulation has become predatory and socially parasitic, and the overall system is wired to produce recurrent, catastrophic booms and busts. But it is not widely appreciated that money and the money system are social creations that act as invisible instruments of social engineering and order. To many, they seem a kind of natural economic order. But it is entirely possible to recapture public (government) control of the ability to create money from the private sector so that money can be used to serve public, democratically determined needs rather than the narrow profit-making goals of private banks and financial institutions.

The general public is not aware that money is created by private banks through the creation of new debt, repayable by governments and households with interest. However, instead of seeing money as something that government must borrow from banks, we might also see it as a common good – a public supply of currency that could prioritize socially necessary expenditures, including investments in the private economy, without first raising revenues through taxes. There need be no “deficit” resulting from public borrowing from banks. Money would simply represent a public source of new currency, a function that private banks already perform by generating money as debt. The difference would be that public currencies would be interest-free and support democratically determined needs; they would not need to meet the commercial, profit-driven priorities of private lenders. Money for the common good could be democratically created as a public service and allocated for the public interest.

II. How Can We Finance Commons and Commoning?

The conventional financial system is dedicated to an economy of exploitation and extraction. It amounts to a pyramid scheme with a built-in growth imperative because in order to repay interest – an add-on to the initial sum of money created by banks – the general population must take on ever more debt, and at a faster rate than the economy grows. This debt treadmill driven – by compound interest – invariably leads to speculation and boom-and-bust economic crises. Unlike 1929, which led to Keynesian reforms and a New Deal in the US and the emergence of the modern welfare state, the global banking and money system since 2008 has been shored up without any fundamental reform. Our money and banking system is now based on rent extraction that uses privatization, the division of labor, and the enclosure of common resources to create a surplus.

This process is supported by a diversity of financial instruments that create a variety of constraints and claims on the privatized resources and labor. These financial realities prohibit the generation of new capital for public and common uses and frustrate the capacity of commoners to create their own value and capital for common purposes. Instead the existing production and financial system is designed to siphon all value creation into private pockets. Thus, the only hope for commoners and those committed to finance as a tool for promoting the public good lies in dismantling the existing rentier system and reintegrating the realms of nature and social value into a reconceptualized whole in which capital serves the collective aims of societies.

In short, we need to reimagine and reconstruct the role of money and credit if we are to create a commons-based society that is both democratic and equitable. This means using finance to enable people to engage in commoning and the promotion of economic and social co-operation through a process of envisioning, articulating, and creating shared resources as common goods. This is a very different mentality than the feverish buying and creating of private assets which is the primary aim of conventional lending. It’s about funding a process for mutualization. This requires a wholly different set of institutions, legal regimes and social practices for managing (and mutualizing) money, credit and risk.

III. Nine Innovative Institutional Forms to Transform Finance

But we need not start from zero. The good news is that credit and risk can be reconceptualized to serve the commons. It has been done before in various limited ways. There are a wide variety of historically proven and promising examples that have already emerged to address these issues. The Deep Dive explored nine innovative models of finance.

1. Social and Ethical Lending.

Ethical social banks such as Fiare in Spain and Banca Etica in Italy are actively concerned with the social and environmental impact of their loans. They therefore focus on borrowers associated with the fair trade movement, corporate social responsibility, local businesses generating local good work, and other co-operative and social concerns. With its linkage to over 400 local government administrations, Banca Etica has a strong public sector and community component. The co-operative bank’s equity, currently 52 million euros, is owned by over 35,000 shareholders and 90 local groups, which actively help develop the bank’s products and services and hold it accountable to its social mandate.

2. Community Development Finance Institutions.

CDFIs are a species of cooperative and mutual lending institutions that have proliferated in the U.S. as a way to democratize access to credit, especially in the face of racial discrimination. Thanks to strong support from Presidents Clinton and Obama, there are now more than 1,000 mission-driven organizations officially recognized as CDFIs, and another two or three times as many institutions doing similar work but without official certification. Their collective assets amount to tens of billions of US dollars. CDFIs have also been developed in the UK and are growing in similar ways.

3. Public Banks.

An attractive alternative to the boom-and-bust economy spurred by the commercial banking system is public banks. Public banks can immediately lower public borrowing costs; provide capital to address social needs in ways that are not extractive; and lower the cost of infrastructure investments by half by reducing the interests costs of such projects. One example is the Bank of North Dakota which provides low-interest loans for small businesses, students, and farmers while generating over $300 million in dividends over ten years for North Dakota’s 600,000 residents. Between 1938 and 1974 the Bank of Canada operated in this way through a public banking arm and on a national scale. Some of Canada’s largest infrastructure projects – like the St. Lawrence Seaway – were financed in this way. There are many good examples of public banking internationally, including municipal banks.

4. Transition-Oriented Credit.

One key problem with traditional banks is that they struggle in circumstances of non-growth, or when the market rate of interest is low. Some ecologically minded communities are therefore trying to devise a credit or finance model that can work well in circumstances of no growth that can still support a resilient local economy. The Sambruket community in Sweden has concluded that it needs to establish both a natural resource commons and a complementary financial commons to work sustainably. As a co-operative, it is experimenting with a crowd-equity nonprofit mechanism as a way to support local sustainable development.

5. The Blockchain Ledger as a Community Infrastructure.

Despite controversy about its role in speculation, Bitcoin is a significant financial advance because of its innovative “distributed ledger” or “blockchain” technology. This breakthrough system allows people on open networks to validate the authenticity of an individual bitcoin (or digital certificate or document) without the need for a third-party guarantor such as a bank or government body. This has far-reaching ramifications because blockchain technology can be used reliably to manage social relationships on network platforms, such as the establishment of “distributed collaborative organizations” based on digital networks, or frameworks for collective governance of a group. If users can avoid the usual need to verify the reliability or trustworthiness of other users, it allows an indefinitely large number of participants to engage in exchange relations on open network systems.

6. Complementary Currencies.

Community Forge – communityforge.net – is a social networking platform that lets communities create their own local currency, manage exchanges and member accounts, and advertise individual and collective needs. More than 400 communities use the Drupal-based platform to manage their complementary currencies. By the end of 2014, Community Forge supported 550 LETS projects in France, 113 in Belgium, 63 in Switzerland, and 150 timebanks. One interesting alternative currency is uCoin, a project in France that seeks to implement a basic income through the use of cryptocurrency.

7. Crowdfunding for the Commons.

One of the most innovative crowdfunding enterprises is Goteo, a Spain-based open-source platform dedicated to advancing commons projects and principles. Goteo differs from standard crowdfunding sites in that it invites public participation in improving projects and greater accountability to donors. To date, Goteo has funded more than 400 projects, with a 60-70% success rate in meeting fundraising goals. It has more than 50,000 users and has raised more than 2 million euros since its founding in 2011.

8. Enspiral and Commons-based Virtual Banking.

Enspiral is a New Zealand-based network of entrepreneurs, professionals and hackers who are “using the tools of business and technology to make positive social change.” The enterprise uses software platforms to create novel organizational structures for hosting new types of collective self-provisioning and financing. One such platform, my.enspiral, allows the members of the Enspiral Services freelancer and contractor collective to use an internal banking system within a walled garden of autonomy and flexibility. Enspiral also has a Cobudget platform that lets participants allocate money in the collective budget in proportion to how much they contributed to it.

9. New Organizational Forms for Cooperative Accumulation.

Some organizational forms are showing great promise in fostering new types of “cooperative accumulation” – i.e., the collective accumulation of financial resources for mutual benefit. One notable example is the “solidarity economy” and multi-stakeholder cooperative models, especially as developed in Italy, Quebec, Canada, and more recently in New York City (Solidarity NYC). The issuing of Co-operative Shares, developed in the 1990s by the Fair Trade movement in the UK, has been revived since 2008 to raise capital for a wide diversity of local and community needs, including the development of renewable energy, saving rural shops, the community buy-outs of pubs, land acquisition for local food production, and other purposes. The UK community shares movement, which has spread to Canada, highlights how co-operative forms of equity capital can be raised to help meet common needs.

IV. Strategies for Moving Forward

Participants identified five key strategies for moving forward:

1. Democratize Money. Commoners must re-capture the money-creation system for public purposes and replace debt–based money. The government of Iceland has produced a 2015 report showing how to do this.

2. Get Beyond Money (As We Know It). Since money tends to promote social relationships that require the exchange of equivalents (agreed upon prices for the purchase of goods) and behaviors that exclude those with no money, many commoners wish to move “beyond money” by honoring the indirect reciprocity of commons and to welcome different types of money in different contexts as ways to give communities greater self-determination.

3. Back to the Future: Blending the Old and the New. The historical experiences and wisdom of the older co-operative models associated with the labor movement and left politics should be blended with new models based on digital technologies that are being developed by a younger generation. Many time-tested models such as JAK fee-based banking, demurrage (negative interest) currency and the WIR currency developed during the Great Depression to stimulate local economies, are inspiring innovative forms of money.

4. Engineer Systems for Cooperative Accumulation. It is essential to devise new organizational forms (not just financial systems) that have the capacity to enable “cooperative accumulation” – i.e., to accumulate financial reserves or assets that can be mutualized, democratically managed, and mobilized to develop and sustain forms of capital that create commonwealth. Multi-stakeholder co-operatives like in Italy, Quebec and Japan can provide guidance on how to develop convivial legal structures for commoners, co-operators, and sustainable community development.

5. Macro-Map the New Monetary System as a Commons. We must differentiate between the “Real Economy” that meets people’s everyday needs and the “Unreal Economy” that is dominated by parasitic “rentier-finance.” A macro-mapping of a commons-based credit and finance system can help us visualize the relationships for structuring and operationalizing the new economy.

Next Steps

A number of specific action steps were identified for moving the above goals forward. They include: Theoretical and conceptual research; policy development and outreach; the development of a richer, broader discourse about finance and the commons; the creation of new venues for collaboration and activism; the intensification of experiments in new currencies; and funding for project development and commons institutions. One immediate proposal was to advise and support Syriza and the people of Greece as they struggle to develop effective responses to the social and economic crisis ravaging that country.

Conclusion

The Deep Dive discussions showed that a commons-based system of money and capital based on democratic and equitable principles is entirely feasible. Many existing and emerging models can overcome the prevailing system of debt and interest, and bring about the transformation that our societies need. The challenge is in achieving root-and-branch change and the creation of transition institutions within a system that has so many complicated and seemingly disconnected facets. It is therefore difficult, both practically and strategically, to transform the current system so that it can be made inclusive, democratically accountable, socially constructive, and ecologically benign.

However, it is also clear from the discussions that there are many options to pursue and that they should not be seen as either/or choices, but as both/and challenges. We can find inspiration and guidance from many historic and current examples of interest-free money, public sector money not based on debt, and forms of public, social and co-operative banking. Each of these innovations serve different needs and functions, but all are complementary and can be integrated in a convivial money system that can provide equitable capital and other ethical and useful financial services for commoners and their communities. The evident problem with developing the available options today is the disjointed and weakly organized character of existing reform initiatives. There is not yet a shared meta-narrative to galvanize and unite a monetary reform movement that is both democratic and devoted to sustainable and humane forms of development.

Commons principles and practices can help establish a dynamic and integrated agenda for change, and draw upon many robust tools and policy proposals. A unifying narrative is also essential for both resisting and offering concrete alternatives to the unaccountable private-sector power of banks to create debt-based money out of thin air. The state and the people need to strip bankers of this sovereign power. Co-operative and democratically accountable forms of organization can provide a feasible alternative social architecture that can protect, maintain, and steward these practices in service to the common good.

But immense popular pressure is necessary to achieve these changes. Money needs to be democratized. Debt bondage needs to be abolished. New systems of co-operative finance, banking, and publicly generated currency need to be established. Only in this way will the commons be protected, promoted, and placed at the service of all – not enclosed and expropriated for the benefit of the privileged few.

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