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Taking Pope Francis’ Message Seriously Means Pushing for Worker-Owned, Green Cooperatives

September 23rd, 2015 | Gaya Sriskanthan

in these timesThe Pope’s visit to the USA this week comes just two months before pivotal UN climate talks that could lead to a global climate agreement. Climate change will be high on his agenda in planned addresses to the UN and Congress, and it is likely that one of his central concerns will be the economy. Pope Francis did not mince words in his recent encyclical on the theme of climate change and one of the main targets of his searing critique was our current economic system. He bemoaned that “the earth’s resources are … being plundered because of short-sighted approaches to the economy, commerce and production.” He chastised the dominance of the speculative finance sector over the economy, and the folly of looking to market growth to solve all social ills.

His core message is that we are currently locked in an economic growth model based on the premise we have an inexhaustible planet. The way the global economy is currently run will not ensure our long-term physical survival. There are some glaring signals that it won’t ensure our economic survival either. For starters, the financial crisis of 2008 and evidence that patterns of growing inequality are stunting economic growth. Recent admissions from the International Monetary Fund (IMF) that economic trickle down theory doesn’t work have further cast doubt on the logic of the current system.

Alongside experts such as the Nobel laureate Joseph Stiglitz and established economic institutions such as the IMF, the Pope is not alone in raising the alarm on “unbridled capitalism.” So in order to solve the greatest challenges of our time, climate change and inequality, we need an economic system that serves us better. However, it seems that beyond identifying and agreeing upon the problem, we often stop short at imagining solutions.

But there are signs that the seeds of a stronger and more responsible economy may already be taking root. Interest in existing models of enterprises, banks, cooperatives and networks that put social and environmental principles before profit is growing. These businesses have a strong emphasis on collective ownership, management and decision-making. Financial decisions are not left to the power of a few, whether government bureaucrats or corporate CEOs, but overseen more democratically by the main generators and beneficiaries of economic activity: the workers and customers.

This rich and diverse tapestry of economic activity witnessed around the world has been called a number of things: social economy, solidarity economy, local economy, new economy, the next system. Interest in the promise of these approaches has even spurred the UN to form a task force to investigate the potential of the social and solidarity economy in contributing to global development goals.

Sounds like a nice idea, but is this really economically viable? Surprisingly yes, and in many cases these enterprises are much more resilient and successful than current models that can result in job losses, bankruptcy and financial crashes. A recent UN report concluded that worker- and customer-owned banks made less risky decisions and outperformed investor owned banks during the recent global financial crisis. Research reveals that worker-owned cooperatives also have similar economic and social benefits that make them a better business model for communities and the economy as a whole.

One well-known example is that of Mondragon Cooperative Corporation, a highly successful worker-owned company of over 70,000 employees based in Spain. The company operates internationally and has a diverse portfolio, including the manufacture of industrial machinery. The 10th-largest company in Spain in terms of asset turnover, Mondragon had lower levels of unemployment compared to the rest of Spain during the 2008 recession and still remained globally competitive. Instead of firing staff during the economic downturn, employees voted to take pay cuts and top managers took their share of the burden. The Spanish cooperative is not alone. Over 2008, in the midst of the financial crisis, the combined turnover of the world’s 300 largest cooperatives was an impressive $1.6 trillion, comparable to the GDP of the ninth largest economy in the world.

Action to fight climate change could benefit from new economic approaches. Take the two sectors that contribute the most to global carbon emissions: energy and agriculture. In Germany, community-owned energy cooperatives are booming, supporting the rapid uptake of renewable energy without having to depend on the patronage of reluctant utility companies. The impressive success of wind power in Denmark is due largely to the rapid spread of community-owned wind turbines. In the United States, the move away from utility-scale power plants is also happening. Recent studies show that levels of solar power generation in the U.S. have been underestimated by as much as 50 percent. This is due to the exponential growth in rooftop solar, which is not yet systematically recorded. The opportunity to magnify the potential of small-scale energy producers could be immense.

With regards to agriculture, the UN advocates ecologically friendly methods based around small-scale farming, with more local production and consumption. This could lead to higher yields, better protect food systems from the impacts of climate change and reduce emissions from this sector. Agricultural cooperatives are critical to the success of smallholder farming, allowing independent farmers to remain competitive through collective purchasing and distribution networks. Climate action that supports agricultural cooperatives and low-emission, climate-proof farming methods could have positive economic, food security and climate outcomes.

Action on climate change could both support and benefit from a more stable and democratic economy. Climate finance and subsidies currently being swallowed by the fossil fuel industry could be redirected to promote locally owned and managed energy and farming, using socially responsible financial institutions to manage these funds. The result could be a stronger economy that works better for both people and the climate.

In his encyclical, the Pope entreated us to “seek other ways of understanding the economy and progress”. A framework for a more democratic, collectively owned and managed economy could be part of this. The re-imagination of the economy is already in motion. It’s time for the climate movement to get on board.

This Blog originally appeared on In These Times on September 23, 2015. Reprinted here with permission.

About the Author: Gaya Sriskanthan has over a decade of experience working on climate change, environmental protection, and sustainable development with a range of organizations including the United Nations and the UK Department for International Development. She currently focuses on indigenous peoples’ rights and civil society inclusion in climate change action. Follow her on Twitter: @gayasktn.

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