I previously outlined how different types of business paradigms are setting out to change how we do business (See (previous post Businesses making a difference). Much of this post is from my Sustainable Living Text but I will introduce it here in this blog. Since business is so much a part of the technology in our lives that we take for granted and encompasses things we use everyday that we mostly cannot do for ourselves, it will stay around. It’s not about getting rid of ‘big, bad business’ but getting past the unholy control it exerts in our lives. We need to revisit the social contracts that began at the start of the industrial revolution and even earlier – social contract definition; an implicit agreement among the members of a society to cooperate for social benefits.
Rebuilding Economic Community
What is understood as capitalism varies a lot from country to country. Even among the richest economies of the developed world there are variations in what it means. In America and Britain, a public company has traditionally had one overriding goal, which is to maximize returns to shareholders and investors. In Japan, and much of continental Europe by contrast, corporations have a much broader obligation that is meant to balance the interests of investment shareholders against those of other stakeholders such as employees, suppliers, customers and the wider general community in which it operates. This tends to be superficial at times. Yet, many of these international corporations are showing good adherence to socially responsible practices. In essence this is part of the common good that was espoused by economist Adam Smith as part of the social contract of a business within a community.
In today’s complex world, few people have all the skills, knowledge, and personal characteristics needed to establish and manage a creative and successful enterprise. For example, a successful business of selling products requires a good salesperson and an administrator to manage and look after the business. A successful manufacturing business needs three people, one each for production, sales and administration to be effective. What this means is that every business is a cooperative endeavor that takes persistence and patience to succeed. Yet, in the modern neoclassical economic system one person, usually the investor, takes all the risk and responsibility. Since many modern entrepreneurs often lack patience and seek quick rewards, turnover of businesses that fail within 5 years is high. In a community economy (or a tribal business) the people themselves (often called a cooperative) share the risks and the rewards. Economist Richard Douthwaite saw that we need to envision a new type of commercially owned organization that has “features of a craft guild, some of the Briarpatch, and some of an investment trust. Its primary goal is to serve the people of its area rather than make profits for owners or investors.”
As a kind of community cooperative, all the community would hold ownership and shares with the whole community acting as guides and advisors for all its enterprises. There may be multiple businesses involved within this system – the needs would be determined by the community itself and by its overall community size. There would most likely be a variety of local markets to meet a diversity of needs. This would necessitate a diversity of small producers and community cooperatives working on a lot of small-scale projects. It is important to note that this would not simply be a scaled down manageable version of the industrial economy, but a reinvention (or perhaps a rediscovery) of the localized cottage style industries of pre-industrial society. Notably, new economic communities are not simply a return to the smaller scale systems of the past, but recognition of the community resiliency created by localized systems. A characteristic feature of the industrial revolution was the increase of mass production necessitating the migration of rural workers to urban mills and factories with the simultaneously the erosion of cottage industries. This created the subsequent disintegration of rural communities and ultimately a loss of the cultural commons that held communities intact. Much of the rural worker revolts (such as the English luddites and the Dutch saboteurs) of the early 1800s were predicated upon this problem. It wasn’t the loss of jobs to technology, since most factory owners kept the work force steady and increased output through technology, but the loss of rural culture that historians now see as the cause of much social unrest in that period.
We blindly stand behind our current industrial system hoping that it will somehow improve itself. That way we don’t have think about having to deal with any radical changes in the way we live. The system continues to entice us and we continue to look forward to reaping the rewards of globalization, despite the obvious worldwide injustices, greed of the elites, corporate dominance, and economic recessions and meltdowns that are now almost a common feature of our whole world. Governments are unable to remedy any of the real problems since they are oblivious to the consequences of the system they wholeheartedly support. They focus on flawed economic growth indices in the belief that is must get better and that simply increasing the money thrown at the problem is the simple solution to all our problems. Until we all recognize that happiness, well-being and real prosperity are rooted in factors other than money, this change will have to come from the grass-roots level. Communities all around the world are now trying the community economic experiment. It often comes under the term of ‘relocalization’ and communities that are doing it seem to be working well. Yet it doesn’t have to be villages or small towns that create this relocalization. Urban areas within cities are also taking up the challenge. One aspect of relocalization in large towns and cities is the blossoming of urban or community gardening.
In this globalized world it is inevitable that while a societal structure exists we will still need large corporations for things like computers and other specialized technology, but much of our business should and will be generated locally. How they exist is up to us since social contracts are always negotiable and it is about time we stood up and renegotiated how we want this world to run for us and not the hierarchy!
TBC…
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