Monday, November 1, 2010

Building a Local Living Economy

Published in Green Fire Times, November, 2010.

When people my age were growing up, progressives had this mindset that everything important had to happen in the margins, not the mainstream. Whether you were thinking about artistic pursuits, politics, or what sorts of professions were offered – people just made that assumption, because so much of the industrial system was still in place. We need to get over that mindset, because so much of it is not marginal anymore. We are the workforce now, and there are plenty of chances to earn a living while doing the things you believe in. A local living economy organizes all of that. It’s a thoughtful people-centered economy that is rapidly becoming our mainstream economy. And there’s no other alternative out there once you realize that we can’t keep shoring up the industrial model.

Localization is not a crusade; it’s a significant evolution of our culture. It’s happening because people are working hard at it. I really think the Santa Fe Alliance is part of a movement that, looking back, won’t be seen as a movement. It will be seen as some huge inevitable turn in the course of our economy. The economy that’s out there isn’t something that inherently can be fair, it’s just not the economy we want, and it’s already falling apart. It’s just never going to make a stable economy for our region. I think the local living economy movement is one place where social justice concerns and environmentalism can come together. The local economy movement is bringing social considerations back into economic decisions.

Social Enterprise
The deal that we perfected in the 19th century was that you could make money on railroads or coal mines or any number of things that have hidden external costs, and then give back to society later by building a library or a museum. With the social enterprise model, we are slowing that process down to say ‘okay, let’s take some of the profits from every sale, every month, every year, and put it back into hidden environmental and social costs.’ A social enterprise benefits society in the course of doing business, and in the way that it does business.

Of course, there are a lot of obstacles in changing this paradigm, and that’s why there’s an advocacy side of Santa Fe Alliance. The Alliance has pushed for a lot of ‘level-the-playing-field’ types of things, like closing tax loopholes for out of state companies. Conventional business models are full of hidden costs, and there is a competitive advantage to keeping them hidden. When we make those costs visible, and make sure everyone has to pay to clean up after themselves, it opens the field to locally owned businesses, social enterprises, and green businesses. It can also lead to significant innovations -- if you can find a way not to make the mess in the first place, the cost savings become a competitive advantage.

It takes a mix of regulation and consumer demand to make these changes happen. When people said that they didn’t want hormone disruptors in their plastic water bottles the whole industry transformed in less than twelve months. Consumer demand lead the issue, starting with baby bottles. We don’t have a na├»ve public anymore. When people hear about these things, it spreads in so many different ways, because of social media. The push for supply chain transparency is a great example of the combination of consumer and regulatory pressure. People want to know where the product is from, and who made it, and certification standards are sprouting up to address this demand. Sometimes though, you get sad results when you ask people to vote with their dollars. They buy the cheapest thing that still makes them feel good about the issues on the table.

Localization versus Protectionism
It is easy it is to confuse localization with protectionism. Protectionism is part of an economy of scarcity. There’s a working assumption in most peoples’ model of capitalism that there’s not enough ‘stuff,’ and that supply and demand is a natural mechanism that satisfies unlimited desires with limited resources. You can read that in most economics textbooks. The funny thing is that when you look at the actual mechanics of supply and demand, it turns out everybody always has to manipulate supply and demand because it doesn’t work organically. There’s been a lot written about manufacturing desire and the manipulation of desire. The scarcity model is based on the assumption that we have these insatiable desires. Manufacturing those desires is actually a huge industry that’s failing to keep up right now.

In Mexico, the birthplace of corn, importing U.S. GMO (genetically modified) corn is really pretty outrageous. I’m not even talking about the importing of corn seed, which is another dimension of that fight; just literally bushels of corn grown on industrial farms in Kansas being made into tamales way deep down into Mexico. It makes no sense. Protectionism is a stop-gap response to these situations, but it leaves the underlying economic model intact.

The thing that makes the same product from somewhere else cheaper is, in most cases, a hidden environmental or social impact. We can keep making money in this 19th century way where we don’t consider any of the impacts, or we can gradually expose the hidden costs and build them into the business model. The competitive environment adjusts and everyone can still make money. That’s the local living economies model.

Our current economic paradigm is that people have desires, someone makes a product that satisfy that desire, and we do a cash transaction. I pay for my costs and take a profit. And there is nothing wrong with that model, necessarily. It’s just that it’s not how human beings really work, it doesn’t match an anthropologist’s view of what economic exchanges are really about.

What social enterprise takes into account is that all these economic decisions also actually mean something to people. There is a cultural and social dimension to it. The localization movement is a deeper look into ‘what does all this mean for me?’

Community Livelihood
Livelihood is actually the central concept for me in all of this. It’s being able to supply whatever needs your family has while at the same time having actual satisfaction in your work. Livelihood is everything that makes a more meaningful work experience for everyone in your community. One of the things the local living economy is pushing back against is the commodification of everything – the fact that everything is measured in dollars. If you switch away from the scarcity model and from the assumption that endless desires drive purchases, and from the assumption that you have to measure it in dollars for it to be part of our economy, then you rediscover a whole set of activities that people have always done for and with each other that have economic value. When you look at this from a community economic perspective, you can actually measure and visualize the benefits to the community’s collective livelihood. Measuring things helps up to be more strategic, and there are ways to measure our economy and our economic health in units other than dollars.

The local economy movement has made itself comfortable with the idea that some of these things are actually better to do outside of the dollar economy; that you get all kinds of positive network effects from letting things happen in a family circle, in a friends circle, in a local cooperative circle, rather than pushing things into the dollar economy. Offering a product or service with a dollar price tag on it is going to still be the majority of how people make their living. But there are big categories (childcare, entertainment, etc.) that are arguably better left to an informal economy. There should be a protective layer of informal economy around any given set of formal (dollar) activities. So in healthcare, for example, we need a layer of commonsense mutual care that kicks in before you have to go to the hospital. The irony is that the cost savings in U.S. dollars of even a modest social intervention in community health is tremendous.

Let’s look at local investing. People want to be able to measure risk, and it is harder for banks to assess the risks of local investments. As we move from an image of investing as a form of gambling to an image of investing as a form of community building, we discover new measures for risk. Community resilience is one of the strongest of these measures -- does the investment increase stability and prosperity in the community? We’ve learned a lot from micro-finance about the impact of social factors on the success of investments. Its time to bring those lessons home to our own economies.

New Motivations
There are gross inequalities and injustices built into our current system, and people are inspired to correct them.  How can we build a culture around the satisfaction that people get from being intimately involved - from having positions of responsibility in supplying basic community needs?

We are building an economy that is more efficient and more resilient, a system that considers long-term impacts, but that’s still a very functionalist way of looking at the world. If you want to live in a more magical and deeply personal world, then the exercise becomes how to bring meaning to each little part of our collective livelihood. And that in itself becomes a reason to change the system --- and it’s actually a deeper motivation. There’s nothing wrong with the motivation of, ‘hey, let’s do this better.’ But let’s also do it in a more meaningful way. Let’s do this in a way that can bring acknowledgment and social satisfaction to more of the people involved.

Every job does something to benefit the people around you. But most jobs aren’t set up to acknowledge the meaning of the work, especially basic jobs. If you drive a truck or maintain a power plant, you should be acknowledged as the person who brings food and energy to the community. We have to allow it to mean something socially. When the bakers get to come out of the back room and actually meet the people eating the bread, that’s what makes the job meaningful. We have to cultivate a layer of social-cultural “informal economy” activities around the core of livelihood activities. That’s where the satisfaction is, and that’s what creates the economic value.

Roy Wroth is the Board President of Santa Fe Alliance. He has worked in urbanism and community development in Santa Fe for 14 years, and is currently the Executive Director of Santa Fe Complex, an economic development organization that supports independent workers in science, technology and the arts.