Posted by steve on August 7, 2012
Just suppose we all decided – and I mean all of us, politicians, corporates, national economic policy experts, universities, bus drivers, dog owners .. you get the idea… to demand that, apart from everyone doing their level best to live sustainably, that a monetary system would be put in place to drive development in that direction.
Just suppose…. Humour me, this is a post on my new hobby – capitalism. It’s quite a fun hobby, I have been posting for several months and still haven’t come to the core of defining capitalism. Maybe, as some say, there is no definition. In which case it’s better to get on with the job in hand and look at how this money system could be set up.
One theme is in the diagram below. Quite simply, the aim of policy would be to drive development into the top left-hand corner. From people not having enough to eat to having sufficient. From environmental services being degraded to eco-systems maturing.
Alternative outcomes for economic policy
Now it might seen like nation economy policy makers have a lot of tools at their disposal. Forgive me if I have this wrong, but I can only count three: economic laws, interest rates and taxes.
That is not a lot to play with, but given the idea of introducing flexible fees to provide a mechanism to control engineer the economy, it might be possible.
Let’s look at each square of the matrix in turn. As the bottom left, worst case, is a combination of the other two we can analyse community challenge and eco-challenge.
Eco-challenge is where the needs of the community are being met, but at a price. Ecosystem services are depleting and so are minerals.
Here flexible fees kick in. Basically it works like this: A point where eco-system services are being degraded is identified. This is done by looking at the supply chain of essential goods and services. The substances that are the main cause are identified and traced back to where they are either imported or extracted. The extraction or import of these substances is subjected to a fee. The fee is raised or lowered at regular intervals at sufficiently large intervals until market behaviour changes.
At the same time, a large part of the fee collected goes back to the population via general tax rebates, for example. The effect is that substances, or practices with these substances, become relatively more expensive. Non-polluting things become cheaper. Investment flows to these now more competitive alternatives.
Read more in the white paper http://avbp.net/wordpress/wp-content/uploads//whitepaperFE_V2.pdf
But it need not stop there, there is plenty more that can be done. Take for example taxes. Every item for sale has a VAT – Value added tax or Sales tax levied on it even if it can be zero. And every item is coded in international systems for classifying what kind of item it is.
However, even though these systems distinguish between books and luxury items, food and alcoholic beverages, they do not distinguish between products and raw materials that are guaranteed organic. A simple twist of accounting could produce this – well maybe not simple but it is not rocket science.
Again, putting, say 25% VAT on industrially grown lettuce and 6% on certified organically grown would increase the competitiveness of the organic products.
The next blog will tackle how the monetary system can tackle the community challenge.
And maybe the next next I will consider what is stopping the simple development of accounting and taxation that could create the saying “money is making the world go green”.
Posted by steve on July 28, 2012
This blog from the Cooperative BANK, JAKs, summer seminar, is in English; most people in Sweden are familiar with HSB but co-operative co-housing is not as widespread in many other countries. For Transitioners this form of co-housing maybe offers possibilities to build or convert apartment buildings to be run on renewable energy, to recycle nutrients and use water ecologically.
Magnus Frank, board member for one of the regional cooperatives in central Sweden, presented the organisation for us.
The driver for co-housing and the cooperative housing association goes back to the late 1800s. Swedish towns were growing, housing was hard to find. It was the norm that 25m2 housed 7 people and not all of those m2 were standing room!
Most housing was rental and renters had not rights whatsoever and could find themselves suddenly out on the snowy streets with nowhere to go.
HSB started in 1923 with the ambition to provide “good living” housing. Like most co-operatives it held a variety of operations: construction, savings bank and factory -. even a stone quarry!
HSB demonstrates another quality many successful cooperatives show: innovation., HSB introduced rubbish chutes, communal laundry and were early with day care centres.
Like all cooperatives, one member one vote is the norm. Each building or block is a separate cooperative and a board takes care of the building. Each cooperative requires members to purchase both a share in the building as a whole and a right to use one particular house or apartment. It is this “right to use” that can be sold on the open market when the owner leaves.
There are 3800 such cooperatives in Sweden, and a total of some 500,000 individual members. Each cooperative in turn is a member of the regional cooperative which provides maintenance and operation and administration services to the member cooperatives and education and other services like a savings facility and bulk purchasing of white goods to members. The regional cooperative works to establish new cooperatives by being the main contractor for new buildings. They often have no construction operations themselves, but engage construction companies in the project. Financing can be 50 – 50 between the regional cooperative and the construction company. When the building is finished, it is sold to the cooperative that will live there. Profit is shared between the regional cooperative and the construction company.
Just now, new construction is expensive, meaning that only those who are a good way up the housing ladder can afford to buy an apartment. HSB regions are building apartments to rent instead to give young people a good start in life. At the same time, HSB runs a saving scheme that gives savers points in the queue to new apartments and money to invest in their new home.
HSB aligns to the seven principles of cooperatives as laid down by ICA the international Cooperative Association, so HSB is committed to teaching about cooperative principles and working sustainably and to promote the social good.
Posted by steve on July 24, 2012
The modern economy has undoubtedly given better lives to millions.
However, despite years of experience and development of macroeconomic theory, despite decades of Nobel prizes in Economics, there still doesn’t appear to be a way to run an economy without putting severe hardship on a large percentage of the population.
And this state of affairs is generally accepted.
Especially women, wives and mothers, it is women who end up suffering take from this hardship.
The other thing that I know that women particularly care about is the environment. Again, it is also generally accepted that pollution is unavoidable and depletion of natural resources the unavoidable price for economic stability. The costs of pollution and depletion are not paid for directly by the producers or consumer, but by society as a whole. They are called externalities. Externalities, it seems, are unavoidable if we want a stable economy. WAIT! There is more to read… read on »
Posted by steve on May 13, 2012
I promised in my last blog in the series capitalism: a hobby to delve into the status of Sweden using my ideas of capital value. Before I do that, however I need to give readers an idea of the over-riding plans that Sweden has for energy intensity reduction. We saw from previous analyses that oil is a finite natural capital. As this is used, huge sums of natural capital are converted to financial capital and some are converted to man-made capital like buildings.
As you will see from my notes below, the plans seem rather sketchy. I have done my best to summarize what I know from reading official documents.The graph below shows my interpretation of possibilities for fossil energy descent. The Swedish Government has announced that Sweden will be fossil-free by 2050 and that 2030 the dependency on fossil fuel in the transport system will be broken.
The graph above shows the present oil import to Sweden to be about 350 barrels/day, reducing to zero by the year 2050 (horizontal axis).
COLORED LINES SHOW PHASE OUT SCENARIOS
The colored lines each represent a different scenario for phasing out oil. The red line is a fast phase out starting today, with an immediate transition to alternatives.The orange represents the opposite, a slow phase out at first, accelerating as the deadline draws near.The blue is a straight-line phase out and the green somewhere between the orange and the blue.
TWO OF THREE MAJOR SUPPLIERS WILL STOP IN THIS PERIOD To include external events I included two of three of Sweden’s major suppliers of oil: Denmark and Norway. According to several sources (see references below), these countries will not be able to supply their own needs around this time and soon after that their own production will cease.
FROM NOW ON, NEW INVESTMENTS IN TRANSPORT VEHICLES MAY BRING POOR RETURNS
Another interesting aspect of this analysis is financial capital investments in man-made capital. Cars and trucks represent huge investments, and the ones made today should be expected (unless an undue stress is placed on the economy) to be functional for 10 -20 years.This will be quite a challenge: as Denmark as a major suppliers stops supplying during the life-time of vehicles already built, Sweden will have to find alternative supplies of fuel at prices that allow use of this existing infrastructure.In economic terms, the red curve scenario seems unlikely. To make that work, the government would need to stimulate already today the conversion of vehicles to alternative fuels, as a rapid transition will mean rapid increase in alternatives.
BEFORE VEHICLES ARE READY FOR SCRAP THIRD LESS FUEL AVAILABLE
Indeed, following the linear descent (blue line), over a third of all fuel will be unavailable at the end of the lifetime of existing vehicles. Perhaps authorities have considered the notion of using vehicles 30% less than today. This would drastically affect the very life-style of Swedes and probably harm economic growth.
POSSIBILITIES TO BUILD NEW INFRASTRUCTURE
Literature available puts new heavy technology changes at about 20 years to become widely available. If Sweden is to be fossil free by 2050, then at the latest a program of rebuild and retrofit needs to start in 2030. Big projects need big decisions, and these take time, with all the permits, political backing, financing, etc needed. It may well take 5 years to get started, so the planning needs to start at latest 2025. Before that, there should be, say, five years of envisioning and research. That brings us to 2020, so we are eight years away from launching the most radical technical transformation of the industrial age.
POLLUTING TECHNOLOGY IS SO LAST CENTURY Further conclusions can be drawn when you consider the life-time of a building where 90% of costs are from use, not construction. Investments being planned today will be operating in a completely different energy climate and a different regulatory climate. Those who plan for investments to look like those of yesterday are surely planning to lose money.The same should go for public sector functions like schooling, health care, care of the elderly, etc, Today, these operations are fuel dependent, thanks partly to centralization and increases in efficiency.
FOSSIL FUEL FREE TRANSPORT BY 2030?
What is most surprising from the simple exercise of counting backwards, is the proclamation of a fossil free 2030. Considering that a new vehicle program usually takes many years to commercialize, and considering that building out filling stations takes ten years, and that vehicles last 20 years, it is high time that Sweden went beyond vision and started the assembly lines rolling. According to the analysis from my graph, and if we say that a vehicle fleet not dependant on fossil fuels is where 50 % of vehicles have alternative fuel, and it takes 20 years to replace all vehicles, then it takes 10 years to replace 50%. (illustrated in yellow on my diagram)
So the new range of vehicles need to be rolled out commercially 2020. To do this they need 10 years of research and development, meaning that manufacturers are now, 2012, two years at least into the new generation of fossil-free vehicles.
I hope they are. They say they are, but the massive investment needed seems to be absent.
FOSSIL DEPENDENCY IS PLAIN TO SEE FOR ANYONE WHO LOOKS
The diagram below comes from the Swedish County of Jönköping, in their energy strategy document. On the left are inputs and on the right, uses.
Although it’s in Swedish I think international readers will get the idea. The black “blob” at the bottom shows the county reliance on fossil-fuel for transports, only a small percentage being funneled off to industry, agriculture, household heating etc.
Perhaps another view of how Sweden should invest financial capital and develop infrastructure is needed, but that is for a later blog.
Norway’s production fall
Swedish 2030 policy
The Hirsch report
Swedish University studies of Peal Oil in the book “Peeking at Peak Oil”
Posted by steve on May 9, 2012
This is interesting. I started out to make capitalism my hobby and have got stuck posting about what capital is. My revelation from the last post was if you add up all the debt in the world, and then you add up all the money people possess in the world you get – zero.
This is because money nowadays is created as debt. A plus on someone’s back account becomes a minus in the bank’s account.This is essentially a pyramid scheme, albeit a legal one and if that is capitalism then give me whatever the alternative is. But that’s the problem. It isn’t capitalism. There is no definition of capitalism, rather it is a set of things. Rather like doctors give names to things they say aren’t sicknesses as we know them, but a collection of symptoms.
I digress. I wanted to stick with the idea of financial capital. Remember, financial capital is backed up by debt – or claims on other kinds of capital; I like to call this real capital. Now, to look at this from a sustainability point of view you need to realize that there are different kinds of substances that are vital to our way of life.
- Some are non-renewable, finite, and if released into nature degrade the eco-system’s maturity, or affect it functioning to deliver eco-system services. Example: oil and coal.
- Some are in short supply, hard to get and cause a problem if released into eco-systems by reducing ecological maturity. Example: phosphorous.
- Some are abundant, but if they accumulate in wrong places affect the performance of eco-systems. Example: nitrogen.
So if you are investing in a sustainable society, that is, spending money to create infrastructure, you will want to invest in one which 1) Uses renewable sources of energy2) Recycles elements that are in short supply3) Ensures abundant, essential elements circulate.
Before we consider this further we should look into how capital is turned into services.
First, using human, natural, social and man-made capital minerals and biomass are extracted. These natural capital elements are converted to man-made capital. Examples could be to make a building . Using the input of human capital and natural capital it can provide a service, like a hotel.
Let us imagine that man-made capital consists of many different connected objects. Any object could be represented usign the diagram below. The social capital is the company, the human capital is supplied by employees, the input is natural capital and the man-made capital is the machines to drive the processes.The prodiuct in the end is a service, as shown above.
Each of these objects will require an input of energy and materials to construct them, and an input of energy and materials to operate and maintain them. Essentially we could construct a matrix representing the four different classes of objects. The horizontal axis represents the energy needed to operate the object, and the verticla represents the energy needed to construct it.Let us examine the four categories. As energy is expensive, much financial capital to be converted to create this man-made capital.
The first category is expensive to run and expensive to make. The best example is the car. Costs a lot to buy, a lot to run and all you have after 12 years is a rusty, broken-down car that is worth very little. This category of object is the “convert to another category type of object”.
One that costs little to construct, but uses a lot of energy in use is like an oil lamp. This category is also a convert category. One example from Bangladesh is where people gave a micro-lending bank what they spent on oil as a part payment on a solar panel. Cleaner and cheaper in the long run. This was a conversion to the “expensive to buy but cheap to run category”. Or I call it build once, use for a generation.
The last category is cheap to make and cheap to use. Baskets are wonderful examples of this category. They are easy to recycle too, just put them in the earth and they help make soil. All products in this category are great if they are soil-builders.
So, this is as far as I can go on how to view the combination of the different types of capital to create services sustainably. Quite simple really. You could use it to expand on the earlier idea of assessing performance of a society. For example, looking at financial capital vs man-made capital.
Top left we have a situation where financial capital is low, but man-made is high. Depending on what objects have been invested in, this is a good situation. Action: build financial capital, ensure the objects are build once use a generation.
If financial and man-made capital are both high, this is cause for celebration. Action: enjoy whilst ensuring resilience and capability for future generations.If man-made capital is low, and financial capital is low there is a problem situation. In this case, there needs to be a societal pooling of all resources to remedy the situation. Food and water security need to come first, then housing.
If man-made capital is low, but financial capital is high the action is spend wisely. Choose build once – use a generation solutions and find cheap to make and cheap to use solutions as well.
Let’s make an index table like the one in the previous postHere we see three different countries and I think they figures tell a story. I’d love to do this for real countries.
So there is the secret: invest in build once use a generation, and concentrate on having the infrastructure recycle precious elements using renewable energy.
Posted by steve on April 4, 2012
We need to change the way we account for things as we hit the resource wall. We cannot continue to regard, from an accounting point of view, resources as infinate.
Her’s an attempt to form a sustainable approach:
Technology is a collection of inventions and capabilities to solve a problem or need.
Work is the application of technology to deliver a solution to the problem or need.
Sustainable technology is a collection of inventions and capabilities to solve problems in a way that preserves financial, natural and mineral capital. Sustainable work applies sustainable technology to delivering the services required to live.
Let us take a group of people and for sake of argument let us take a village of 100 houses with 300 residents, some under age. High up on the list of required services would be – not in any order – access to 1) housing 2) food 3) security, 4) clothing.
Posted by steve on
What we call technology is actually a narrow practice including mechanics, electronics and computer science. This confusion is hampering human development, especially when the expectation is on not developing financial and social technology but demanding mechanical solutions when simple agreements could suffice. Modern technology is failing, we are not addressing the challenges in front of us. For some reason, our very use of language is holding us back and preventing us from thinking clearly. WAIT! There is more to read… read on »
Posted by steve on January 15, 2012
Could we rapidly transition from a global to a local economy? This article explores how it could happen. Click here to read.
The idea is for businesses to offer investment instruments as well as products. For a deeper discussion see the white paper.
Posted by steve on November 23, 2011
The vision is simple: if everyone lived in intentional, sustainable communities – villages, city/town blocks – then the whole world would be sustainable. Supporting that vision is the Open World Villages networking site, newly launched by the Open World Foundation.
Based on the powerful NING platform, the site is bringing together experts in their field (called Academy fellows) with existing villages and initiatives as well as individuals longing to get in contact with like-minded souls to create villages or move into expanding initiatives.
Open World Villages is looking into ways of purchasing land to create a portfolio of initiatives to drive the move to sustainable, intentional living.
But there is more: the site wants to bring together village-scale technology and service providers with people who want to promote and sell what they produce. The vision is a world not of business to consumer or business to business but villager to villager (V2V).
Read more on the Open World Villages site. Membership is free.
Posted by steve on November 15, 2011
Accenture's ad reflects a strange view of nature and its own capabilites. The hubris of the modern corporation?
What is the best way to organise society? That question has been around since we started to be able to talk. In my world I like to add “what is the best way to organise society so it develops resilience and sustainability”.
I have pointed to writers like Aldous Huxley who, in his book “Brave New World revisited” , argues that our urbanization brings forth the desire for “the good order” and that the desire for “the good order” gets misued and turns into some kind of dictatorship. In Huxley’s case the Brave New World he refers to is his vision of a future Britain, where every child is produced in a test-tube to ensure genetic suitability.
One aspect of “the good order” is the idea that corporations are a good way to organize our activities. The basic design is neat: shareholders take the risk and share in the rewards, the corporation contributes to society by paying tax, and the corporation provides people with what they need and with jobs. So pervasive is the the idea that corporations are the best way that they can become the standard solution for a myriad of problems. Problems with healthcare? Privatise. Fed up with looking after support staff like reception, cleaning, etc? Bring in a company to do it. Got a business problem? Bring in a consulting company. Want a job? Look for a company to work for. Need new technology developing? Give a research grant to a company. The list goes on.
All corporations get income directly from the individual pockets of citizens (nowadays called consumers) or indirectly via authorities spending on behalf of citizens (like selling arms to a nation’s defence). Now, in this system corporations line up to compete for capital and to compete for the income from consumers. They also need to compete by pressing prices down and income up.
However, once you let this piece of societal DNA code loose – this corporate legislation – it may have unintended consequences. This is the idea of COPORATOCRACY – when corporate influence grows so large it manages in practice to side-step democracy and influence decision-making only for the good of the corporations. Corporacracy can go so far as to convince citizens that it is better to live in a corporacracy than a democracy – with arguments like “you get cooler gadgets and definitely better cars”.
Are we in that situation already? The recent US decision to allow corporations to spend limitlessly and anonymously on political campaigns would point to that we are dangerously close. And is this the situation we want? Maybe it is right, that our societal evolution should go from democracy to corporacracy.
To help you judge for yourself I list the characteristics of corporations below – against each one you can ask the question – has this gone too far out of all proportion to the point where it is actually threatening the way we live?
They need to grow. Growth brings the ability to pay equity owners a dividend, it brings economies of scale to push costs down, it makes the corporation more present and able to reach wider markets. It also means more taxes paid and a rise in popularity with local authorities.
They need to control. To ensure costs are kept down, to ensure competitors do not take their markets , to ensure consumers keep a friendly view of them – a level of control is needed.
They need to monetise. If anything is free it should not be fun. People having fun without paying is a lost business opportunity.
They need to inspire awe, to keep competitors away, to keep customers from complaining, to keep authorities from regulating them etc.
They need investors and consumers to believe in them. If you adopt the corporate model – where for example you get your milk from a corporation and not from a farmer – then you need to believe in that product is OK and that the corporation will do what it says it will do. You need to accept that the corporation has the power to deliver so you need to give the corporation the same level of trust you earlier put in the man who ran the local shop or the local farmer.
They need to standardise and repeat. Standardization means it is easier to control, and also reduces costs. The world run by corporations is one very much standardised. And they need repeat sales to keep the income flowing in to pay investors.
They need to communicate basic messages often. They will define concepts for their own benefits and convey messages as truths, regularly to keep up a profile and customers coming back for more.
They need to constantly get more money out of their system, for example by cutting input costs, raising prices or getting more out from what they put in.
For more on this topic, see my article on how Copenhagen city planning and architecture now reflects a complete sell-out to corporacracy.