Market economy failings: warning signs appearing

Many agree with the efficacy of the basic market economy model (goods’ and service’s prices are set by sellers, and increase with demand and decrease with competition) in generating a living standard

However, many also see with dismay the downside of this way of organizing our daily lives: extraction and dumping of huge amounts of resources, high levels of fossil fuel use, greenhouse gas emissions etc.


Forgetting the luxury consumption side and concentrating on the must haves, we can see that market economy models in themselves is challenged to provide what people need when it is not in abundance. (see diagram)



The diagram below shows how the more expensive water is the only solution available to poor people in developing countries, as only the well-off have access to piped water. So it is the poor who have to pay more for this must have resource. To quote the World Bank (the source of the diagram) “On average, water from piped network operators (PNO) costs 1.5 times more than that from a formal utility, whereas, water from a point source (PS) costs, on average, up to 4.5 times the utility and, finally, water from the mobile distributors (MD) can costs up to 12 times more than the utility..”



In fact, since the 1800s there has been a rapid expansion in the number of poor people on the Earth, both in sheer numbers and percentage (read unable to purchase acceptable living standard)



A number of warning signs are appearing in Sweden: recent reports say the health of elderly people is getting worse, as is the general health of young people. Employment is at a standstill, and there is no hope in sight for job creation, rather an increase in outsourcing leading to an increase in GDP but decrease in employment.

For young people especially, both health and job prospects are at a low point.

Energy prices have also been in the debate. A group of tenant owner cooperatives and building owners, has been threatening the privately run utility, Fortum, with reprisals. After being privatized recently the company has raised prices for district heating, reaching an all time high of 25% above average.

What is particularly worrying is the impact of the end of cheap energy on this system. If it fails when GDP per capita is good, what will happen when GDP reduces as a result of the effects of spiraling energy costs? Will the average worker be turned into an energy slave, forced to pay more and more of their income on utilities and finding it harder to make ends meet just for the basics?

Working with social economy makes one aware of the need to focus on ways of producing the basics: food, energy, shelter and clothing. These can be produced independent of the market economy if necessary, by developing local, collaborative solutions of the kind supported by the COGS complementary currency.

Local food systems can be supported with complementary currency

Pathways to local food systems using a complimentary currency system like COGS.
Submitted by hipnot on Tue, 2005-10-18 08:34.
Robert Waldrop’s paper presented at the recent Community Solution conference offered ideas on how to set up local food systems. Based on his paper this article explores how to use our COGS currency or a similar complementary currency system to speed development of the community. As Robert says, this is not a cookie cutter recipe, take what you need and leave the rest!



fig 1 Local Food System
As you see from the diagram a group gets together to invest legal tender to buy what is needed to produce food. The group invests their voluntary time in the system too. What comes out is food, both as raw material but also preserves and even shared cooking rosters in community kitchens or restaurant duties.

COGS, or circle of gifts is a tally system where the voluntary work you do is given points, and when you receive the fruits of voluntary work, like take home a basket of vegetables, equivalent points are subtracted from your account.

Start small or we don’t start at all.
Robert suggests everyone star from their own situation. One simple start is to register as a COGS user on the clearing site and you can start giving and receiving COGS immediately. As members join you can configure the user group to include them and develop your information database.


fig 2 COGS Portal

COGS work in the voluntary, social economy world. One COG is the equivalent of one hour (with 100 points making up one hour), and we estimate that each person has 1020 give or take 20 per year available. So each hour a member of your group spends on developing Local Food Systems can be acknowledged with an hour to their account.

fig 3 Voluntary hours per year

Knowledge is power.
An information directory is one of the most important food structures, and Robert tells us how the Oklahoma Food Cooperative began initially as an internet directory. The COGS portal offers both database and cataloguing facilities. Furthermore, you can set the system up to reward members who contribute to the databases.

Knowledge shared gives points.
The COGS site rewards members for completing a poll, adding news, and posting downloads of useful information. So even before you have prepared the soil members start to see points accumulate.

Meals will come from basic ingredients
This system should produce high quality eating for less input of legal tender. It will also mean more food made from basic raw ingredients and should be healthier, and taste better. What you do not get is the convenience of manufactured foods.

Planning and organization will be needed
Because you will have the basic ingredients depending on harvest, you will have to plan your meals more. Instead of thinking “what shall we have tonight”, it will be “what is available right now?”
Frugal use of energy and resources will be rewarded.
All kitchen waste should be composted, and of course time spent on compost will be logged. If you replace electrical power with muscle power costs will come down as you ditch dishwashers, electric can openers, garbage compactors etc.



The main COGS accumulation method will probably be the time sheet. Each member records the time spent on the food system, and the administrator logsthis to their account at regular intervals. As time goes on your group will want to develop rules as to how much can be logged for what, the rules will be available on the clearing site.

Eating in season
Local food systems mean eating more with the seasons. Here again, knowledge is power and members can post down-loadable recipes for each season. For example you can set the rules so each download adds COGS to the recipe presenter and deducts them from the downloader.



fig 5 Database entry - recipe

Redeeming COGS put in
So far we have described how people input their time spent into timesheets. When harvest comes around it will be time to collect the food. This is easily done as members fetch the harvested food a certain number of COGS is debited from their account.

If someone sets up a kitchen or restaurant service you can do the same, and guests simply state their account number, rather like we state our room number in a hotel restaurant.

Maybe someone likes making preserves. They create a catalogue entry on the site and explain that e.g. the jam can be picked up in exchange for a voucher. The jam maker produces a voucher, which when downloaded debits the one account and credits the other.




fig 6 Voucher for jam
Vouchers can be used too for example for courses, where the trainer sets up a voucher to credit his or her account as they are downloaded, and debit the attendee.

If the group is small and everybody knows everyone else a simple list will probably suffice.

Sharing of all resources
As the group builds up resources, use of these could be subject to COGS points. For example, a common meeting room rented for a private party, or use of wine-making equipment.

And what about cultural events? After the festivities entertainers would be acknowledged with COGS, encouraging live entertainment.
As the Local Food System develops it benefits the living standard of all involved

Don’t let the perfect become the enemy of the good.
If you cannot see the whole solution step back and pick up that you can understand and do that.
As you start to work with COGS and local food systems we hope you will see how reducing the legal tender input, and raising your voluntary hours can reduce food bills, get you better food and you will make a lot of friends along the way.

Links
Robert Waldrops paper can be downloaded
From http://www.communitysolution.org

COGS can be found at http://cogs.avbp.net

Can community currency help? We think so

We think so, which is why we are joining the COGS scheme.

Click on the link for explanations.

POWER DOWN to survive

Our team has just finished analysing the impacts of energy shortages on organisations in general. We believe all organisations should start to work out their energy intensity strategy. Failure to craft strategy in time may catch an organisation unawares before they have time to react.


As a start we offer up our white paper on POWERDOWN, with sixteen factors to consider.

1. Oil pervades from raw material to product
2. Demand will outstrip supply sooner or later.
3. The issue is a liquid fuels one.
4. No easy replacement is available.
5. Moral challenges will overshadow technical issues.
6. The main challenge is to maintain the carrying capacity of the Earth on less fuel.
7. An economic slowdown – or worse – results from energy depletion
8. Huge supply chains will power down.
9. Beware of the trap of looking for a technical solution.
10. Human muscle power and animal power will re-emerge as part of the economy.
11. Powerdown strategies for cultural change are starting to emerge
12. Culture change measures offer several benefits.
13. Two other likely responses: Demand restriction and city re-planning.
14. Less than a 20-year time frame for mitigation could seriously impact living standards.
15. It is better to start mitigation early than late.
16. The strategic question is how quickly your organization can respond effectively to fuel supply shortfalls

Inventions process results in white paper

The methods used here as shown in earlier posts use the process
Quest>image stream>tapescript>blogged script (cleaned up)>story from the future>prototyping for commercial release.

We have taken to writing white papers as a way for engaging potential partners as a more "professional approach" to sustainable inventing.

An image stream quest to find communities fully engaged in developing towards sustainability turned up a collaboration process which we have written a white paper around. Click on the link to download the paper.

Full instructions for Sustainable Inventing

Don't just read about my inventions - go do your own!

The techniques I use are called "Beachead" invented by Win Wenger. I always tape my sessions and as often as not I just post a cleaned up version of the tapescript. The other methods of publishing are "articles from the future" or "white papers".

Don't be put off by the simplicity - or unusualness of the methods. If they work for me (judge for yourself from this blog) they will for you. Click on the link and let me know how you get on! I might even publish one here.

This is why we need ingenuity: we are in an energy hole

Matt Simmons, financial advisor to the energy industry has released this presentation which spells out the urgency of the situation.

Energy production is at its maximum, exacerbated by hurricane Katrina. Demand is rising, and unless we start decreasing the energy intensity of the way we live the coming shortfall will not only impact economic growth, but cause extreme physical hardship.

Now is the time for all think tanks - ours included - to step up our efforts to find low energy solutions and maybe more importantly - new approaches to business and money.

British Newspaper spells out grim prospects of Peak oil and calls for "war economy" response.

Says the New Statesman: Such is our dependence on oil, we face a shock that will dwarf any crisis of the past. It’s a good job the government hasn’t ruled out rations – only the effort of a war economy is likely to help.

It had to happen sometime. Credit to this British Newspaper, sticking out its neck in a special supplement spelling out the grim prospects peak oil will mean for everyone and calling for drastic action on the scale of a "war economy".

Especially interesting is the in-depth analysis of just Britain's situation, a tiny crowded island probably not able to grow enough food without fossil fuel driven agriculture and distribution.

Excellent reading - click on the link to download the whole supplement.

Swedish Government Plans for oil independence by 2020

Today 1 October, in an article in the debate section of the Swedish national daily, DN, Minister for Sustainable Development Mona Sahlin announces the government plan to break dependency on oil by 2020. This makes Sweden the first country to publicly announce its intention to break away from oil. The government intend for Sweden to be the first country to reach oil independence.

Mona Sahlin cites two reasons for this new political goal. One is the need to curb greenhouse gas emissions to reduce the effects of global warming. The other is the vulnerability nations face as disruptions to oil and petrol production upset economies throughout the world. Recent catastrophes have underlined this.

Mona Sahlin says an early break from oil dependency will give Sweden a competitive edge among other things as an exporter of technology in the renewable fuel and energy efficiency sector.

Sweden has already made some progress. The percentage of oil used in home heating and energy production is low by international standards. Since 1994 oil use has reduced by 15.2 TWh. Industrial consumption of oil has remained at the same levels for nearly a decade, despite production output increases of 70%.

Sweden offers already several political instruments to encourage users away from oil: investment subsides, energy consumption standards, loans with subsidized interest rates and information campaigns.

The new plan will contain several elements:
• Tax discounts for house owners to convert away from oil heating.
• An extended program of “Green Energy” certification of electricity. From 2002 levels the amount of renewable energy produced will increase by 15TWh.
• A government backed inquiry into the possibilities of increasing agricultural production of renewable energy sources.
• Directive to the state owned electricity production company Vattenfall to substantially increase investment in renewable energy.
• Strengthening of incentives to stimulate renewable fuels. For cars, free parking and exemption from congestion charges, carbon dioxide and energy tax exemptions on renewable fuels during a five year period. Tax exemptions also for company cars running on renewable fuels.
• Next year the government will propose an increase in investments into renewable energy. Research and development will lead to energy production from renewable resources and further increases in energy efficiency.
• Development of district heating will continue. Economic incentives will encourage use of bio-fuels and environmentally friendly heating.