Sketches on Permaculture and Society - Pt.4
Exploring Money, Cooperatives, and Bitcoin from Bill Mollison's Permaculture Designers Manual.
How to Change the World is a weekly blog about reversing American decline. I will (1) study successful models of governance throughout history, primarily in the West, (2) highlight what’s going wrong leading to institutional decline or ‘political decay’, and (3) present models of democratic innovation that could lead us into a prosperous, peaceful and abundant 21st century.
This is part 4 in a series looking over the final chapter of Bill Mollison’s Permaculture Designers Manual titled The Strategies of an Alternative Global Nation. You can find parts 1, 2 and 3 here.
The purpose of this series is to examine Bill Mollison’s ideas around community and the direction in which it should evolve to become more resilient, fair, and nurturing to both the human spirit and the planet.
I’ll simply take quotes right from his book and give a reaction. Hopefully by the end you have a better idea of what kinds of community practices, many of them at work today, were endorsed and encouraged by Mollison and hence are in line with Permaculture.
This week I’ll go over his thoughts on Money and Finance and Cooperatives. Next week we will continue with Local Currency.
Money and Finance
Faith in the fiscal system (an essential delusion if money is to maintain any barter value) is fading as nation states and giant corporations fail to meet their debts, and either repudiate debts or go into voluntary liquidation. In every case, the cost falls back on us.
I’ll remind the reader that Mollison wrote this in 1988. Two main takeaways from this quote: (1) it’s interesting to see that Mollison, a biologist and agriculturalist understood the fragility of the fiat financial system. Interesting but not surprising given his penetrating understanding of complex systems. (2) His frank statement that the cost for our failing systems ultimately come back down on us is not widely appreciated. Indeed, despite all of the trillions of dollars of taxes we’ve paid since 1988, our infrastructure, education, housing and healthcare systems are demonstrably worse in many ways, while our government debt has soared to levels that probably would have been unimaginable in his generation. Our debt-based fiat monetary systems are fuel, enabling the unsustainability of our systems at their core.
Fiscal (moneybased) societies give a false impression of security, which quickly falls apart every 40 or so years when inflation--which is itself due to greed--makes currency valueless. The final "inflation" is caused by the misuse of money, and is now upon us.
Mollison, like so many, missed the mark on his timing and assumed severity of inflation. However, his analysis that it is a major issue eroding the financial system has proven to be correct today.
Money is in itself not a resource, it represents (or should represent) a resource which lies "somewhere else". Money, in a sane society, must therefore be tied or fixed in value relative to a useful real asset
One of the reasons I’m exploring Mollison’s writings so in-depth is because I believe Permaculture is a ‘foundational’ value system which, if followed, could lead to tremendous renewal at the level of the individual, the community and the planet. One of the few other things I would put in that category is Bitcoin. So when I read a man like Mollison talk about money, I’m going to try to infer his opinion on the matter.
It would take an essay of its own to do justice to the topic but I will explore it here briefly. Firstly, based on the above quote he would like that Bitcoin is created through processing power requiring electricity rather than simply being created out of thin air by central bankers.
The accumulation of unused wealth, or wealth that does not lead to the proliferation of life, is a pollution of the same nature as any unused resource. Manure and money have much in common… Money is to the social fabric as water is to land-scape.
This tells me that Mollison may not appreciate the current ‘hodl’ culture of Bitcoin (where we buy and hold, rather than use it). Mollison is likely correct that from a community standpoint, the use of money rather than it’s accumulation is more beneficial. I won’t get into why this is difficult and perhaps not even optimal for Bitcoin at this time. But I take Mollison’s point that money should be in a state of flow for the sake of the community, and certainly that is the aspiration of most Bitcoiners. It’s simply a question of when. Perhaps, if we listen to Mollison, it’s now.
We should develop or create wealth just as we develop landscapes, by concentrating on conservation of energy and natural resources (reducing the need to earn), by developing procreative assets (proliferating forests, prairies, and life systems), by reducing the creation of degenerative assets (roads, monuments, cities), and by constantly divesting ourselves of any surplus wealth to these ends…
Would Mollison have taken issue with Bitcoin’s energy use? We see he makes a priority of conserving energy. The question then is whether he would think a money owned and controlled by the people rather than government and central bankers is a worthy use of Bitcoin’s admittedly vast electricity consumption. For the sake of intellectual honesty (or laziness), I won’t venture a guess, but will just leave that point of tension there. I think he would appreciate that it’s physics-based and user controlled, but it’s consumption would likely clash with Mollison’s “small is beautiful” ethos.
Time and money are often interchangeable. To control the cash flow of our society is to control our lives.
Cooperatives
People who steal our independence steal our lifetimes; our personal independence relies on a cooperative human society.
Calling back to a point I made in a previous post - Mollison’s now bygone brand of politics combines liberal and conservative elements. Consider how Cooperatives are generally thought to be a progressive cause. However, systems of self-reliance are considered conservative. This blending of cooperation and self-reliance is the magic formula that Mollison is constantly trying to drive us towards. Creating systems in which people can willingly meet each others needs at the community level rather than having to rely on coercive central planning may be the primary focus of this entire series.
While “independence” has become a buzzword that all political parties use, the reality is that if a policy is designed to create a web of “dependence” between an individual and large, opaque bureaucracies or government, then that policy does not support independence. In Mollison’s view, independence requires a cooperative society, working and providing things like healthcare, education, and housing for each other.
I’m going to give a lengthy example of the Mondagron cooperative because it paints such an effective picture, and because it has succeeded greatly to this day.
The worker-cooperatives centered around Mondragon, in the Basque region of Spain, are worthy of note. In less than 30 years, 96 worker cooperatives, employing 17,000 worker-members, have emerged. Each person is required to invest about $5,000 when joining. This can be borrowed from the bank or obtained by installments deducted from wages over a two year period. Of this investment, 20% is a contribution to collectively owned funds, and 80% is for the purchase of an individual shareholding or capital account (which is normally not drawn upon by the worker except on retirement, death. or in cases of extreme hardship). In this way, a co-op can partially fund itself, with generous help from the cooperative bank.
Present day, Mondagron employs 80,000 people and makes over $12 Billion in revenue. Here are further details on it’s administration in 1988. I’m not sure how much of this holds true today, but that these principles got them to where they are now tells you a lot.
10% of the profits must be returned to the community for public services. 20% of the profits are held as capital reserves, and 70% are distributed to workers, although not all of this is available for withdrawal until a worker leaves the cooperative, at which point all of their financial interest in the business must be withdrawn. The worker is, in effect, "loaning" the cooperative the money, and so receives interest.
A cooperatively run bank oversees the functioning of all new cooperatives in the group, finances new cooperatives (up to 90%), and offers expert management skills.
No redundancies in the cooperatives--workers are retrained and new jobs found in other expanding co-operative groups.
The ratio of the lowest to the highest paid person is never greater than1:5.
An annual meeting of all workers in a particular enterprise elects both directors (managers) to run the business and a social council (union) to negotiate with directors on work conditions, pay, education, etc. The meeting observes the principle of one worker, one vote.
Each cooperative averages about 200-300 worker-owners; large numbers become too impersonal, and large cooperatives are divided into smaller independent units.
The community has cooperative schools, hospitals, university, housing and welfare services, a a Technical research laboratory, super-markets, banks, computer centers: all at these are cooperatives, and schools earn part of their costs by contract to manufacturing cooperatives.
These principles have led to a cooperative that’s provided benefit to its worker-owners for over 60 years. In truth, there were circumstances unique to these cooperatives that makes them hard to replicate. For instance they were spearheaded by a great man and a priest, Father José María Arizmendiarrieta who dedicated his life to their success.
Even in cooperatives, the functions of management (supervision, administration, accounting, and assessing) and worker representation (unions) are necessary, but unlike privately owned businesses, the whole workforce are shareholders, and all vote for people to fill these positions. Thus, the work force has total control over the composition of representatives.
The relationship between ownership and good work is well-founded. Cooperatives seek to spread that ownership around to such a broad extent that all workers have access. As with many of the ideas the Mollison promotes, they are powerful but administratively challenging.
On to finance..
Finance and Insurance
Anyone who belongs to an identifiable group of 30 or more people can start a credit union. The purpose or charter of this credit union can be to fund local or neighborhood self-reliance. A community credit union can pay all routine accounts of a household; some credit unions even have a cheque account service.
This is a reminder that there are already so many models in place to draw from when seeking to re-center economics.
Friendly societies handle health and insurance.
I admit, I had never heard of Friendly Societies before, but they seem very worth looking into. It appears they answer my burning question of how people got insurance and “social welfare” before the government took it over. Once the government has moved into a sector, it confiscates people’s money and then offers the services “for free,” which is impossible to compete with. Naturally, this causes locally run organizations designed to meet this need to wither and die. Over time though, government performance usually becomes so bad that we may ask ourselves “what did we do before this?” and the answer may lead to an innovative solution, especially when paired with modern technology.
The Revolving Loan Fund
It’s worth adding two more models for local finance which were sunset for reasons I’m not aware of, but which have very interesting elements.
The basic principle of a revolving loans fund is that people put in $500-5,000 capital at a nominated interest (from 010%) into an established financial institution, and this is then loaned out to new businesses within the community. On average, informed and concerned people will initially contribute a few hundred dollars, just "to see a good thing go". This is enough; others will have good ideas about small essential services and businesses, and the research group can be very busy researching and publicizing "leaks" of money from the area, so that under or unemployed people can start up services and supplies to stop these leaks, e.g. Does the area make its own bread, yoghurt, sausages, shoes, clothes, pots and paper? Does it reuse its waste wood, glass, metal, paper, or organic wastes? Does it provide a wide range of services from haircutting to legal advice? If not, jobs are open and funds to start them are available! Loans, at low local interest (6-11% is fair) are made, and every borrower must be a contributor (active investment)... Very few of such publicly needed, publicly funded and publicly open businesses fail. Everybody is self-interested in their success! Fund managers should always be ready to fund the start-up of more advanced money systems such as investment advisors in ethical trusts, local insurance and banking, and a local "mint" to print a district currency of non-inflatable money, which in the end is also non-interest bearing.
One challenge is that I couldn’t find where this is still being done. Is that because despite this being a beneficial model, society was simply heading toward more centralized times, or because there was a flaw in the model itself? Although it’s intriguing, it does come across as very labor intensive and individuals would require a lot of incentive to keep it held together.
S.H.A.R.E.
S.H.A.R.E. stands for SelfHelp Association for a Regional Economy. It is a local nonprofit corporation formed to help encourage small businesses that are producing necessary goods and services for the community (in this case, the Berkshire area in Massachusetts, U.S.A.). It works in conjunction with a local bank in the area. Members of the community can become S.H.A.R.E. members, which means they open a S.H.A.R.E. joint account with the bank. They receive only 6% interest (but this means small loans can be given out at 10% interest). The person receiving the loan must first collect references from people who know them as responsible and conscientious. They must show that the proposed business will attract customers from the community or even from outside the community. By doing this preliminary work, the borrower gets to know many people, and the community has a keen interest in seeing that the business succeeds.
As you see here, it apparently worked perfectly well and had a 100% rate of repayment. But for whatever reason, it was retired in 1992.
What went wrong? I can’t help but suspect it was the administrative burden, combined with the fact that centralized institutions were having their hay day. But what happens when those same centralized institutions are in decline? Do these models all of a sudden provide ideas for how our institutions could be rebuilt and devolved to a local level?
Next week we’ll continue with Local Currencies.
Until then, friends, believe that democracy’s best days are ahead.
Matt Harder runs the public engagement firm Civic Trust, where he helps cities strengthen their civic environment by helping residents, civic organizations, and local government work together to create public projects. Follow him on Twitter.
Nice reflections. Thanks for this series.
You touched on it a bit when you were talking about Mollison's views on money being "used", but what are your thoughts in general on how we think through the Keynesian insistence that the health of the economy is intimately tied to the velocity of spending (which seems very similar to Mollison's quote: "The accumulation of unused wealth, or wealth that does not lead to the proliferation of life, is a pollution of the same nature as any unused resource.")? Is the response to simply state "Yes, investment leads to innovation and growth (of many different kinds), but you can't invest what you don't at first have!". Or are their more insightful ways at getting at this?
And your discussion of mutual aid-like societies made me think of this interesting series by Samuel Hammond at Second Best (https://www.secondbest.ca/p/mormon-integralism-part-1) on Mormon successes in these undertakings. I had never heard of these before but it makes sense that such a "parallel society" would have them.