The Associative Economy by David Nurse - HTML preview

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David Cecil Nurse

Contents

Introduction
The unhappy workplace 5 Improving the Situation
The mutual contract 10 Three Categories in Society 14 The Communist System 21 The Capitalist System 24 The Danger of Passive Income 27 Global Economy 31 An Associative Economy 35 Conclusion 47

Introduction

The dove of hope flying from the the financial crises is that we will learn from our mistakes.

The way we do business must be looked at. In our competitive search for short term profit making we hit a financial disaster. It was greed that made us fall. When all we see is ourselves how can we ever see the big picture?

As history has shown. An economy built on competitive selfishness is fragile. Let us compare it to a house of cards just waiting to collapse.
In this booklet we will look at a alternative way of working together.

The Unhappy Workplace

The reason we do business is not soley because we wish to earn our daily bread. It is also because we wish to feel useful to society. It's easier to be happy when you are working. Not doing pointless work as this would still leave us feeling useless. We also look for some individual fulfillment.

If you ask an employee if he enjoys his job the answer is often no. Many people speak of Sunday apprehension before the Monday work day.

Let us consider a certain type of business commonly found today. It is highly mechanized and
computerized. Mechanization and computerization lead to
standardization. Standardization is efficient when using machines.

This way of working has spilled over into human realm itself. Clock cards and time motion studies are made on the workforce. The workforce itself feels unimportant and unconsidered and resorts to collective bargaining to express their unhappiness in the workplace.

Machines and products require standardization. Humans require standardization and
individualization. Treating the workforce in a standard way and not considering individual desires will only create unhappiness.

Improving the Situation

If we are to improve the labour forces attitude towards work we must treat them more individually in
considering their desires. We must consider their desires in the business relationship.

Dignity is one thing all people desire
- everybody has a feeling of self worth. Dignity can be given to someone by considering their desires and by negotiating with them so real mutual agreement can be obtained.

It must be realised that an employee and and employer are equals in a contractual agreement. Contracts that are unfair create bad business. Legally some aspects are usually protected - for example working over a certain number of hours or
minimum wage.

What is important in a contract is that it is as fair as possible and neither party is abused. There are cases of managers having ridiculous money making contracts with an enterprise - this has caused an uproar in the media lately.

What is healthy in this contractual relationship is a bit of give and take from both sides. A mutually beneficial relationship should exist. An unhappy employee is not creative, does the bare minimum and always wants more. The breakdown in relationship leads to labour unions. This type of bargaining creates even less
individualized contracts.

The Mutual Contract

Contracts can be the backbone of an healthy economy. The old contracts of small hidden legal clauses should be left behind and a new form of
contract be used. They should be drawn up by the contractual parties in a process of mutual flexible
agreement. It must be a flexible document otherwise it will lose all mutuality.

The mutual contract is a tool for greater efficiency and happiness in the workplace. The employer knows what the business needs and the employee knows what he can give. A traditional employer employee relationship is best avoided - it should be considered more an agreement between equals.

An important thing is that the
contract is set for a certain period. This creates a good opportunity at the end of the contract for review. It allows the two parties to decide what can be improved upon and whether the contract should be renewed or not. A contract that is detrimental to a business should not be carried on why have people stuck in business indefinetly when it is not working mutually.

A contract should never be a contract of enslavement. That is why the terms of what is expected contractually is important. A person can not be expected to do what ever the one party desires.

Having a mutual beneficial
relationship in a contract can be difficult when the one party is giving too much - this often happens when the one party is more powerful in the given situation. However it is an ideal to be mutually beneficial in an equal manner.

Rules and regulations should be considered in the contract if it effects the delivery of goods and service. Rules and regulations dealing with interpersonal relationships should be voted on by a show of hands in the business. It should then apply to all people equally.
The human realm and the economic realm must be differentiated.

Three Categories in Society.

In society three basic categories can be distinguished :

 

1)Economy

 

2)Government, laws, rights

 

3)Cultural, learning and all creative thinking. This includes religion.

These categories where explored by the economic thinker Rudolf Steiner in his book ' The Threefold Social Order'.
These three categories must be kept seperate in society for there to be a proper social structure.

We want to avoid the following situations:

the government controlling the economy (eg communism).This creates beaurocratic corruption and

inefficiency.
religion controlling the government or government controlling religion or learning. This can create
discrimination and religious abuse. Communism destroyed the culture of its people by mixing the
government and the culture (eg Late Roman Empire or communism) the economy controlling culture. The result is uncreative money driven projects. Creative ideas must be initially formed separately. They can be brought into the economy later. Religion can become tainted if it becomes too much of a money making exercise.

It is a good exercise to consider the difficulties arising in history from the mixing of the three categories.

It must be realized however that there will be links connecting the three categories. For example the rights and laws for humans will come into the economic sphere. Minimum wage and maximum working hours per week must be considered by the government itself. However we don't want the government participating directly in the economy itself.
Government interference in the economy is not encouraged. Recent interference in the economy has been largely critisized and the long term effects must be considered.

There are qualities suited to the three categories :

The cultural, religious and learning category should carry the quality of freedom. Research should be
unbiased, religion a free choice and entertainment a creative process not ruined by meddling financers.

The government, laws and rights category should treat people equally. Everybody should have a vote when it comes down to communal issues and each vote should carry equal power. A vito vote is dictatorial. The laws should not discriminate, they must be equal for all and not change
according to race, sex or economic status. So the quality for the second category is 'equality'.

The economic category must carry a brotherly quality. It is a fact for an enterprise to work it needs people to work together. Suppliers, consumers and staff work together to make a business work.

The idea that economy must be based on competition is simplistic and is a result of not observing the economic process properly.

The result of competition should realistically be monopolisation. In a fight there should be a winner a top dog and that would be a monopoly.

Monopolies are not good for the economy. It may be good for its own economy but not for the economy in general.

The idea that competition creates competitive prices is not necessarily true. Monopolies usually rig the prices or collude with other big companies if they are not an out right monopoly.

A form of brotherly working together seems more productive. Producers and consumers together. If we consider a team effort in housework it runs more smoothly. If we try thwart each others work we waste both parties time and waste valuable energy.

The thing why we don't have to worry about inefficiency in an associative economy is that we enter freely into contractual relationships with each other. If we are unhappy we need not renew the contract. This will be discussed later where we will say how an associative economy works.

Let is just state now that a associative economy is not competition based.

The Communist System

It is easy to say that communism doesn't work. But why doesn't it work ? Most people will proberly answer that it doesn't provide an incentive to work. They think of the carrot and the donkey. There is a different sort of carrot in communism - it is a big carrot that must be shared among the whole population.

The reason for the communistic failure is largely due to to destroying the creative human spirit. What you need for an economy to work is creativity and a good economic structure and support.

It is useless if you have cheap raw material and labour but a no creative spirit. Creative spirit was destroyed in communistic countries by punishing any individualistic thinking. The education did not support creativity nor the economic incentive either.

The plan and simple problem was that the the social organism was not split into three. This created a beaurocratic unwieldy uncreative economy.

However we must realise that the saddest part of communism in the past was the destruction of healthy cultural life. It is a money, bread and milk obsessed system. It was believed that if the population concentrated solely on economy they would be happy. Freedom of culture and thinking was destroyed.

Just like the financial crises it was greed and laziness that brought this system into trouble. There was a few rich communists while the majority of the people were poor.

It was an attempt initially at an unselfish community based economy, however it turned into a selfish beaurocratic disaster.

The Capitalist Sytem

The free-market has been a greater success. The success of the system has largely been the cultural and learning freedom along with a non-meddling government in the economy.

General western markets should be split into two main ideas. The idea of a free-market and the idea of
capitalism or credit.

A large part of the capitalist growth in past years has been the idea of credit. Credit money is spending tomorrows money today. This is bound to push initial growth until you have to pay it back. Credit money can be useful in an economy when used correctly. When credit money is spent in the right way profitable businesses can be established.

Western so called free-market economy has used mostly individual's capital while communism used governmental capital.

The big problem in capitalism today is the seeming loss of control of business. We have share owners handing over responsibility to managers and directors. The
managers and directors have then falling into the trap of chasing short term profits. This chasing short term profits has been largely fuelled by speculative short term investors. So we then find the managers and directors saying that they had no real steering ability in the business that they were just expected to chase short term profits.

So what we end up having is huge businesses with no one that interested in the long term future of the
business. Runaway trains.

This is a generalisation but is true in many large businesses. That control has been lost that the business has been handed over to market forces.

The Danger of Passive Income

We face dangers in the western capitalist markets. People think a free-market must just run itself but this is a very lazy viewpoint. We must see the consequences of our actions.

The major problem with a capital or credit obsessed economy is the requirement of constant growth. This is a bit short sighted. Constant growth is not a definate (although this pretty much happened the whole of the last century). A child stops growing at a certain point; he does not grow indefinately.

Why does a capitalist economy require constant growth?
It is because so many people have become dependent on passive income and so many people have become dependent on growth to pay their debt.

I am considering dividends, interest and rentals as passive income.

 

OK here is the situation we find ourselves:

If their is no growth then the stock market does not grow. People are depending on passive income for their money. They can try take their money out of stocks and earn interest. However the people who will be paying the interest will need growth in their economy to pay the interest. When the economy is not this interest is hard to pay. We have all the millions of people depending on credit going bankrupt and all the people investing losing their source of income. They stop investing creating even less growth.

It has been said that the cause of the 2008 economic collapse was tiggered by excess capital and no real
economic growth. Because there was excess capital people started giving away risky loans. No real growth in the economy resulted in these loan defaults which where risky in the first place.

Debt has been handed over to the governement to try keep this
economy rolling. However they are just digging themselves a deeper hole. If there is no growth governments themselves will not be able to pay in the long term.

If governments just print money to pay their debts they just devalue the real growth of the economy (In the U.S. the government loans money from the federal reserve thus
effectively printing money). They are transfering the woes of badly run companies on to the general
population.

Once again we have a crossing of social categories with government meddling in the economy.

The Global Economy

Global trade has created a huge economy with some super rich people and much of this money has filtered down to the poorer people.

However certain problems have arisen due to the global economy. Production shifts to countries with weak currencies and cheap labour.

This shifting of the means of
production is not necessarily more efficient on resources. We have to keep building new factories,
transporting goods all over the world and producing for a speculative market.
Due to favourable exchange rates, cheap labour and economies of scale it has become very difficult to
compete on the open market. The Chinese economy is an interesting phenomena at the moment creating a huge trade surplus.

Let us look at the flow of the money:

Money is like water. It must flow in a cyclical manner or run dry. So we have all this money flowing into China from the rest of the world how does it flow back into the rest of the world. Well that is the problem at the moment - China is building up huge foreign reserves. They are thinking of ways to invest their millions but it will most probably be investing so they can ensure their trade ascendency. The rough part of it is that they have in the recent past pegged the value of their currency thus destroying the balancing sytem in the world economy. They wish to keep the ascendency of their poor currency artificially.

We can only hope that China knows that money must be cyclical. If not they will destroy their own foreign trade market.

It can be argued that it is better to keep economy more local and
knowledge more global. The flow of money should not cause boom- bust situations depending on currency. A more local economy can be argued to be more easily observed, serve the various regions and be more stable than an extreme global market.

Trade between different economies needs to be kept equal so we can build stable economies.

The glamourous global economy has brought us this far- bringing the good and the bad. What is its future ?

It appears the global economy will continue a while longer. What it must be aware of is market self regulation. It would be better if we could see problems coming instead of waiting for disasters to hit us out of the blue.

An Associative Economy - A possible solution

Small businesses are the hope of a more fair equal distribution of wealth.

We need to create a system to support small business. The non-powerful must not be sidelined in society. The giant enterprises will not help us much in the future I feel. They are too big and unwieldy they easily run over the individuals needs like a giant truck.

The question is how can we make small business work better. How can we have our daily bread and not be competitive or greedy. We must all seek to find these answers so we can have the dignity we deserve as humans.

An associative economy is largely taking place in our market today. Sometimes we work in a more associative way, sometimes in a more competitive unconcious way.

The associative economy is in
opposition to the individual economy or a selfish economy. It is a social activity based on networking like minded people.

An economy that works on
co-operation and not competition is called an associative economy. The sad thing is that people have been so obsessed with ideas like capitalism and communism that they have overlooked the real issue at hand.

There is a choice to be a co-operating informed concious participant in the economy or someone who says the free-market system will sort
everything out for us.

There is a certain degree of
co-operation in the competitive economy otherwise it would not work at all. However there is not enough co-operation.

What we want is social improvement. A society is not enough if it has high GDP but the standard of living is poor.

An associative society must keep its three categories separate. As spoken about in chapter four.

Let us explain the basic principals of an associative economy.

An associative economy wants to increase small business as opposed to big. It is based on networking. The thing is that small businesses struggle to compete with big businesses. We have to undercut our risks and costs in ways different to big business. This calls for co-operation. The business must secure contracts to supply certain people ~ a regular supply is helpful. Risk must be taken out of it whether a market will be found for the business's goods or not.

So you need bunch of people in a certain area to buy and sell to each other. It works best in a certain area with a critical number of people. When basic goods and services are supplied in a given area transport costs are minimised and social networking becomes easier. It is not fundamental that it take place locally, it is just usually easier.

When a specialised product is
required the associative economy may have to look to other associative economies in other areas to find the product. You may even have to search in the competitive free-market for the product. Highly specialised businesses may have to supply several economies to sell the critical mass required to survive.

Why would people want to be part of an associative economy? The reason would be that the mark-up would be much less than in the competitive free-market. Bussinesses in the associative economy can charge a lower mark up since they will be much more sure of the demand for their products due to contracts and communication.

The thing with an associative

 

economy is that the people must work together to create efficiency.

The different players in the
associative economy must inform the sellers of what products they will require in advance. This is so the seller of the product can plan his purchases and production with minimum wastage.

Contracts are needed so people can specify in advance what they will need. A yearly contract of regular supply or a half yearly contract could be useful without too much
beaurocracy. This way the farmer for example will know what to plant, how much to plant and that he will have a market for his produce. With this support the smaller farmer should be able to compete pricewise with the huge competitive based enterprises out there.

So an associative economy can grow out of a competitive speculative market. They can be operating in the same area at the same time with some people working in the associative economy and others not. Some people would be involved in both.

What is of extreme importance in the associative economy is that all people involved are aware that by working together people can avoid a lot of costs:

high mark-up costs transport costs
wastage
advertising and packaging
staff costs -eg sales staff etc needed for speculative whim based
consumption
less capital needed as less stock holding required
less time wasted with traffic( less transport)

It is a win win situation for all involved. Cheaper prices or better quality products and more small businesses for the people with small amounts of capital needed.

If you want world domination with your business then perhapes the competive market is for you. However the competive market needs large capital which results in an increased passive income burdon. The few super rich and the majority poor is the competive market route. The co-operative moderately wealthy general population is the associative market route.

The associative economy is not a new or ingenious idea. Parts of it are in use today by many for example those who support local businesses and don't throw their societies money into black-hole bank accounts of
monopolistic businesses never to be seen again.

Small business are the only chance for a fair distribution of wealth and small businesses are usually local in nature.

A lot of support to each other and communication are required in an associative economy. Certain sacrifices will need to be made on both sides to make the contracts efficient.

So if you want to start an associative economy- start by writing a few contracts with people you know and suggesting to them to start a small business in the same way. More and more people should join and a living can then be made.

If people want to be part of but are too greedy with price, well then obviously no contracts will be signed. Its all about being mutually
beneficial.

Everybody in an association will not require the same goods and some people will be in the competitive market and partially in the associative market. It is a very free system but by working together you can make small businesses work.

It should not close itself off from the rest of the world. That is why it should not be a closed assocative body but the individuals should be free to do business with whomever they choose. Its just a bunch of people who want to do business in a certain way.

Conclusion

If we wish to change the economy we must start with being concious of where our money ends up. Lets stop blaming society and look to ourselves to improve our way of life.

The real issue in the economy today is not so much the structure and form as the moral attitude of the people. Fear has made us think we must fend for ourselves- that if we look after ourselves we'll be OK. This however is an absolute lie. The economy is a social system - if you think you are rich only because of yourself- then you are part of this lie.

So lets work together to create
businesses that serves us as a
community. Stop trying to make millions out of your neighbours. Lets keep business simple and mutually beneficial. Work together because business is a social activity.

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