Upstream - Economic Democracy with Pat Conaty

Episode Date: March 12, 2016

Pat is a fellow Californian living in the U.K. He has worked with the New Economic Foundation since 1987 and is also a research associate of Co-operatives UK. Pat's work focuses on reclaiming money, land, and labor. We spoke about various forms of co-operative economic democracy, including community land trusts for housing, social co-operatives for care services, and ecological co-operatives for green energy and local food systems. Pat is a world leader in advocating on behalf of the commons and putting New Economics into practice.  This episode of Upstream was made possible with support from listeners like you. Upstream is a labor of love — we couldn't keep this project going without the generosity of our listeners and fans. Please consider chipping in a one-time or recurring donation at www.upstreampodcast.org/support If your organization wants to sponsor one of our upcoming documentaries, we have a number of sponsorship packages available. Find out more at upstreampodcast.org/sponsorship For more from Upstream, visit www.upstreampodcast.org and follow us on Twitter, Instagram, Facebook, and Bluesky. You can also subscribe to us on Apple Podcasts, Spotify, or wherever you listen to your favorite podcasts.

Hello and welcome. You're listening to an Upstream interview, which is part of the Economics for Transition project. I'm Della Duncan, and today we're in conversation with Pat Conaty, a research associate of Cooperatives UK, a fellow of the New Economics Foundation, and the co-author of The Resilience Imperative, Cooperative Transitions to a Steady State Economy. Thanks for joining me, Pat. Nice to be here. So let's just start with, if you could tell us a little bit more about your background

and what are some of the main themes that you work with? Basically, my work is in relationship to sector development so I take the ideas of cooperative economics and ecological economics and I try to apply them to real problems like the affordable housing crisis or the way that banks are set up and structured doing some projects at the moment on social care and community health and using the idea of a commons as a new operating system for the economy to develop innovation. And I've been doing that for a number of years.

I mean, spent about 15 years working on community land trust development, for example, in the UK, and that's been quite successful. And now working on community health in a quite focused way. So what brought you to do this type of work? What was the inspiration or what started it? I think, well, I think I've been involved with new economics and ecological economics since the late 1980s. And before that, I that involved in cooperative economic thinking and so as problems got worse particularly in the 90s and the debt problems got you know worse and worse and worse I became had worked actually for a long time in

legal services tackling problems with debt and homelessness and we set up a number of services in the UK like national deadline business deadline legal services for people with debt and then I got to say well you know what is the source of this problem it's getting worse and worse how can we actually go to the sources it is the source in the in the banking system itself if so what is the nature of that source and how can we tackle um the malignancy if you like um so that got me very interested in monetary reform and and and banking reform so it sounds like a series of questions leading deeper and deeper into what was

the source of the problem yeah well i mean i I mean, I had studied Schumacher's ideas and Ivan Ilyich and a whole range of alternative economic thinking in the 80s and the 70s, so I kind of knew the theory. I'd been involved in the practice working with organizations dealing with homelessness and people losing their possessions because of debt. So I thought, well, how do we take the alternative theory and apply it to an alternative economic model and what would that look like in relationship to the housing system or the banking system

or the food system? So I've been on a journey really trying to figure out what works and, you know, build things that people can see work and begin to think, right, oh, right, if this works for housing, how could it actually work for the whole housing system, not just for, you know, a community land trust for 20 people helps them, great, but could it work for 200 or 2,000 or 20,000 for the whole city? How can it scale up? Yeah, yeah, exactly, exactly.

So when you started to investigate what this deeper problem was within the banking system or the financial system, what was the root? What was the key thing that you came to? Well, I think there are some questions that are so fundamental that if you don't address them, you won't actually develop an infrastructure for a new economic model. And these are perennial questions that have been there since the beginning of the Industrial Revolution. So who owns the land? Who owns the money system? Who owns the corporations? So a thematic that's common to everything I've done is around how do we advance practical economic democracy, where actually we're challenging the ownership question and actually trying to extend democratic ownership, a whole

range of, you know, assets, means of production, that sort of thing. So it's a kind of a practical form of economic democracy that is guiding my work. And for those people, if you don't address the money question, and the land question, and the corporate ownership question, you're not addressing the cardinal questions of what a new economy has to focus on getting right. How would you describe new economics and ecological economics? That's a quandary. I think there has been a bewilderment about that for far too long. And I think it's interesting if you look at Schumacher,

he was, in his youth, he was quite a radical socialist. Then he worked with Keynes to develop, like, the Bretton Woods Agreement, for example, at the end of the Second World War. And then, of course, he became a green economist. So he went through different phases. So Schumacher is somebody who's had experience as a practical Keynesian, as a socialist economist in his youth, and also as a green economist. And I think that kind of work of Schumacher shows you how a blending

of those different types of economic models can actually happen. Because I don't think it's either or. I think it's both and. I think we have to defend a lot of the things that were secured through social democracy, like for example the welfare state, the National Health Service, you know, a whole range of things like that, public goods. But at the same time, the climate change requires us to, you know, to extend that

and move to this concept of green economics. How did, you know, agroecology, for example, would be a new approach to the alternative to industrial farming and pesticides and all the rest of it. So it's this kind of coming together of practical, intelligent forms of social economy, ecological democracy, that I think is where we need to go to answer the question. But, you know, there's loads of good examples of things coming out of different streams of economic thinking. And I just think we have to figure out a way of bringing that together, uniting the different forces. Yeah, it seems to me like it's not helpful to keep ecological economics, new economics, solidarity economics separate. Because ultimately, the best form of economics is an economic system

that's good for the individual, good for the collective, and good for the planet. Yes, exactly. And so how do you, you know, sometimes you do have to make choices that will either not hurt or harm the individual, but benefit the collective over the individual, but benefit the collective over the individual or benefit the planet over the collective or the collective over the planet. So sometimes you do need to make these choices. But what does that system look like that really goes with all three of these? Some sort of hybrid between ecological and new economics? Is there a word for that? Well, in the book I did with Mike Lewis, The Resilience Imperative, we talked about sea change.

So in other words, how do we actually re-embed economics in social values? How do we re-embed economics in a sense of ecological values? And so we talked about how you can qualify economics as something that actually should not be just neutral. By prefacing it with social values and ecological values, so it leads to a system we call sea change, social and ecological economics. It's a combination of three strands. So it's a triple bottom line in that sense,

that the values have to be a balance between, you know, some degree of economic rationality. But, you know, so markets can have their place, but they have to be in some way qualified and regulated and controlled beneficially for people and for planet. So it's thinking of the economy in three or four dimensions. And that's perfectly possible to do.

It's complex, therefore economics should not be as linear and vulgar as it is. It needs to be developed in a much more real sense in those three or four dimensions. And there are people working in all those fields, sociologists, environmentalists, and people working on tackling the affordable housing crisis etc etc how can those movements come together and share a science or an art i mean in some ways it's more art than science i think in going forward but um and that that's what the challenge is yeah and you know you talked about the triple bottom line. And sometimes it can seem that an organization or business can have a triple bottom line, but that profit really is ultimately always the bottom bottom line.

There's almost that way. And partially that's because there's the kind of maybe a myth that that triple bottom line couldn't really compete because our system is based on competition with companies that do have, you know, the bottom bottom line is profit. And so what you're saying is, well, one way to get over that is to collaborate and cooperate between organizations so that they can support each other in having their triple bottom line instead of the profit as the bottom line well i think yeah profitability is driven by scarcity as well and uh we are you know we're we really are in in age of abundance we have the technical capacity

to feed clothe house the, but it's not happening. Why is it not happening? Because actually the maximization of, you know, the multiplication and maximization and the growth of capital is driving everything. So money is actually a master, not servant. So you have to somehow, you know, if money actually becomes something that is is not uh the goal money becomes actually something that's uh tamed and socialized and and greened um then the qualities of money would be totally different than they would be today and so therefore we'd say sea change because economics is the last of the three the first of the three are what we're trying to do

is we're trying to achieve earth care and people care with money being, however we refashion it because it'll have to be changed to achieve this sort of outcome, to be made servant rather than master. So it's the reverse of a triple bottom line that is basically a bit of greenery and a bit of corporate social

responsibility. And it's all flummery, really. I mean, that's not what we're talking about. We're talking about something that actually is much more about well-being and the quality of life and the movement to a steady state where we don't have to grow the economy for its own sake. Why does the economy need to grow anymore anymore it doesn't make any sense to me people need to have their needs met people need to secure well-being you know all those things are important but the the growth imperative needs to be challenged there are many definitions of well-being and these kind of things how do you define it or what what constitutes well-being and these kind of things. How do you define it? Or what constitutes well-being for you, either on the collective or the individual level?

Well, Gandhi had a term for it. He called it sarvodaya, the welfare of all. Martin Luther King was driven by that. Dr. Martin Luther King was driven by that, Dr. Martin Luther King was driven by that agenda as well. So there are humanistic and other ways of defining what well-being is. But I think people know if they have enough. It is much more about sufficiency rather than efficiency. It is much more about sufficiency rather than efficiency.

And Gandhi's point about there is enough for everybody if we actually develop commonwealth. So how do we develop commonwealth? So the amount of private ownership is... I do believe in private ownership within limits, but I think there's a point where you've got too big a piece of the pie because you've been too greedy. So how do you kind of moderate your own needs? And you'll be happier because you'll have less rubbish to look after. Less space to clean.

Yeah, exactly. It's about kind about beneficial constraints. There's ethical choices there. And that's where the idea of commons comes in, because it's very important to think about, okay, what kind of security do we want in terms of our personal belongings? But beyond that, how do we develop commons and commonwealth? A good health service, a better educational system, more public transport, looking after

the environment, more parkland, a food system that actually isn't poisoning the soil, an atmosphere that you can breathe. I mean, all those sorts of things are within our our our our our intellectual capacity but we have to change our value system and also we have to change the technology that we use so it's actually more convivial not harmful appropriate technology appropriate yeah human scale all those sorts of things that illich and Schumacher and others, and Hazel Henderson, were talking about in the 70s and the 80s, so relevant to today. We don't talk about the politics of technology. Some technology is enormously predatory.

Other technology is enormously convivial and ecological. is enormously convivial and ecological. Illich said, well, technology does have politics depending on how it's been designed. Is it designed to secure well-being or is it designed to actually just maximize profitability? These are all questions. So one of the big things that you're saying is the root is that it's our values and our value system.

And if we value efficiency and profit maximization and also, you know, a business, a standard business model is so much easier than developing a cooperative, as people see. Yeah, yeah. And it could even be cheaper to probably figure out, you know. And so what you're saying is we have to really change our values. Well, we need to change our values, but we actually have to put people in the driving seat. That's more important. And so the key question, well, what do you think about the land question? What do you think about the corporate ownership question? What do you think about who owns the money system? Those are fundamental.

Because if you have more economic democracy, if more people actually own businesses, or through community land trusts manage sites and land in the cities, it's possible to have conversations, conversations with people in the road or people in the same firm and put workers and consumers in the driving seat of what the business is going to try to do in the year. What are the sorts of things it's going to do to remain viable? What are the sorts of things it's going to do to be a good business? You could say the triple bottom line sense or uh to secure the values that the people who are part of the business the stakeholders in the business um think are important for well-being it's a conversation about the quality of life and how the business is

expressive of those values and people see the business they can see straight away there's qualitative difference in that particular cooperative. I mean, you could have cooperatives that are actually not walking the talk, so it doesn't go necessarily by just the form itself doesn't determine the content. The form itself could be pretty vacuous. And pretty profit-maximizing. Yeah, you have a number of cooperatives that I think have totally lost their way. And you can't distinguish them from for-profit investor-owned corporations.

In some cases, I'm afraid to say that has happened, or where the management has brought in people from big corporations who don't have the right values, and they, of course, change the cooperative to something that they're more comfortable with, corporations who don't have the right values and they of course change the cooperative um to something that they're more comfortable with which you know then the co-op is actually dead yeah what are the key elements of a co-op well i think what's interesting about what's important about cooperatives is that actually they they they should live and breathe the cooperative principles. One member, one vote, limited return on equity,

elements of economic democracy, fair trade ideas, educating your members. You know, there's a set of ethics there that goes with what a cooperative is. Now, not a number of social enterprises, for example, because they don't um have any ethical uh compass like the seven cooperative principles um they can be rudderless and get lost very fast and a number of non-profits and and and and there are said charities um they're they're they're they're they may be doing good work,

but they're not transforming the economic and the social system. Some break that rule. I mean, they're so extraordinary that despite their legal status, they're actually, well, I would say they're practicing a set of values that you know is fantastic and and so there are exceptions as well to the rule but but if you don't actually have a set of ethical principles like the seven cooperative principles since 1844 have stood the test of time been updated from time to time um then you know cooperatives have those ethical rules that other businesses don't have. And that's fundamentally important.

Is there anything about ecology or sustainability or resilience in those principles? Well, that's an interesting question because we, in the book, The Resilience Imperative, we thought, well, how can we bring together green thinkers and green practitioners with social justice practitioners? So if we say, to be crude about it, that a number of social justice or social economy practitioners think that the seven cooperative principles make a lot of sense, and that is kind of re-embedding the economy in social values, social values, how can we also equally embed this new business we're trying to work and develop or this new institution in ecological values as well? So we look to the seven resilience principles as a way of complementing the seven cooperative

principles. So that kind of yin-yang approach is what sea change is about so it's social values which you know you could start with the seven cooperative principles as a good kind of way to get going start with the seven resilience principles this is a good way to begin to put into practice the ecological dimension of sea change and that will take you a long way down the road of actually kind of bringing together i you know, like the green movement and the social justice movement. That's, that's what the core argument to our book. So that hasn't been done before. So we, you know, we think, we think it's critical to do it. It hasn't been done before for an organization.

I think one of the organizations that comes closest to it which we do as a case study in the book is the saikatsu cooperatives in japan they in 1965 began effectively the community supported agriculture movement and they're amazing because they they since the 80s they've been doing a lot of work with social cooperatives for care services for disabled people or healthcare. Where their green movement around community supported agriculture began in the 60s, in the 80s they began developing the social justice work around care services. They've got two wings to their movement, these social and ecological co-ops in Japan.

And their motto is Earth Care and People Care. So we think they're one of the closest forms of cooperation that is really doing two things at the same time, and that they're extraordinary in that way. And it's a significant movement with 350,000 members, uh it's not a small co-op you mentioned what the seven uh cooperative principles are what are the seven resilience principles oh there you go well i mean not to test you but the general theme and also if you could explain a little bit about what resilience means because it's often not used as much as sustainability, yet it has a very different meaning. Well, resilience comes out of complexity theory and it also comes out of thinking like

the ideas of Schumacher in Small is Beautiful around subsidiarity so it's it's arguments around how do we decent you know that there's a richness in nature and the richest in nature is the way that nature is kind of organized in kind of more fractals that you have these small things that actually are that you can see the same patterns all over and they're very very kind of autonomous you know in their own small way and that and that gives them the sense of resilience their power is in you know the power of you know kind of small plants small seeds and and to have a lot of resilience in let's say for a forest is not to have just a

monoculture or a culture of a pine trees that actually crowd out all the other light and all the other plants but to have a rich diversity of flora and fauna. And so that rich diversity, which you can see in nature, is a certain natural architecture, which is so rich, and it actually enriches an ecosystem. So we've seen with industrial society a movement towards monoculture and factory farming and

the efficiency triumphs everything else and that is very very counter to resilience yet in the history of farming there has been a kind of an amazing approach which we've lost really a lot of

and that is the small family farm, which was producing a mixture of things and it was producing a mixture of animals and vegetables and forest products and whatever. So the history, the kind of the resilience of the small family farm, which we're losing so fast, is exemplar of, you know, within agroecology, what a new resilient farming system would look like. But we can think the same thing in terms of a city and how a city can become much much very culturally diverse and free the spirits of the citizens of the town of

the city and to support you know a diversity of of arts and culture and businesses and so on and so forth. So it's that blending of kind of cooperation and collaboration on one hand with this kind of diversity and resilience and subsidiarity. On the other hand, bringing them both together and then sea change exemplifies that. And in terms of, well the the commons and you were mentioning the small farmers and how there's those farms are being made bigger and bigger right and it seems like there's more the case of commons lands going to privatization than the other way around. And it's actually harder to go the other way around. It's easier to make a commons privatized than a private area, space, whatever, commons.

And so what can people do to reverse that flow? Well, I mean, there is... In different countries, there is, in different countries there is a development, you know, the nature conservation work has advanced in different countries in different ways, and also the community land trust work for affordable housing. So there are land movements that are either trying to protect farmland from loss of farmland for reasons of biodiversity, for enabling for food security and things like that, and for the development in some places of organic farming, biodynamic farming, different movements to try to secure farmland for the common good and put it

into trust because as farmers age the farm gets put on the market, it's lost, a big corporation buys it and therefore how do younger people, how do we actually have a new generation of farmers? It's a big issue. The reproduction of a group of farmers is a big issue in Europe. So I think the land trust movement for food security, the land trust movement for community land trust for affordable housing, they're operating at the moment in almost parallel tracks. They're operating at the moment in almost parallel tracks. And I think there is a bigger question about what is common's land? How can it have multi-purposes? How can we blend the people's passion?

You're back again to the diversity. So that, you know, in some ways the green movement and the social justice movement are walking away from each other they're they're they're walking towards something that in its own right makes is is has a common good nature to it but actually can we get them to turn around and walk more towards each other and then develop more synergies between the different efforts to either fight the battle for community land trust for affordable housing, to fight the battle and win it for food security. We need to have a common conversation, a dialogue, so that those two movements can converge. They would have more political clout if they did that. There's enormous potential there.

But as you're saying, at the moment, the loss of land in Africa, for example, in China, in most of the developing countries where public lands or land that doesn't have a clear title is being sold. I mean, it's going, you know, I think the last I saw in The Economist, there was an article saying that about every year we're losing a common's land or the equivalent to privatization at a rate about the size of the United Kingdom every year. Wow.

So, so this is a big issue. And that's, um, total, including what's gained the other way. Like that's the net total. That's the net loss.

Yeah. The net loss. Wow. So, so yeah, you're absolutely right. I think the battle, um, is being lost. And, um, you're absolutely right. I think the battle is being lost and that's

staggering really. But there are fantastic efforts to reverse that. La Villa Campesina is a huge international movement fighting for agroecology and food sovereignty and land and the land is a big question uh that is you know in their in their mission so it sounds like this divide between ecological movement and social justice movement is a big a big deal or as you see yeah yeah yeah and so what what when you go really like deep into it what what is at the heart what are the the assumptions or the values or the beliefs that are at the heart of this division and what could you what could be done to bring this back together because for me i see them as very they're very in line you know what's good for the planet is what's good for people yeah you

know if if you change what what you really need or you ask what you really need or or reconnection with nature that would bring you you know in harmony more with deep ecology or ecological economics so but what do you see as kind of the deeper issues there between that divide i think i think the big issue is um carl polanyi put it very well in The Great Transformation. He said, fundamentally, what's most important are three key questions. How can we take nature out of the market or prevent it going into the market in the first place? How can we take people out of the market?. How can we take people out of the market?

And how can we take money out of the market? He saw those as fictitious commodities, that those were created by enclosure. And so a movement for saving people and planet fundamentally is about overcoming the force of enclosure, which is wanting to monetize everything. And so that's really crucial. So therefore, the land question, the money question, the who owns the corporation question is crucial.

Because it is like if you owe nothing but your wage labor, you're very dependent. So it's important that economic democracy advance so that social security can be also achieved through more democratic ownership of businesses but also developing other forms of public ownership as well and Commons ownership which is another another way of looking at it those are complementary and supplementary but they're all about developing what I would regard as the commons economy or securing cooperative commonwealth. For environmentalists who don't actually address the ownership question, I think they're never

going to get anywhere because the game is really about the loss of the commons and the need to advance a commons economy for the 21st century that's crucial fundamental and that and you know the and those three things taking people out of the market taking land out of the market, taking land out of the market, and also developing forms of economic democracy and overcoming wage labor or wage slavery, which is growing. I mean, less and less people actually have jobs that have employment protection, have pensions. More and more people are working zero-hour contracts

and in precarious forms of work. So the wage labor question is really a central question. So I love those questions, those three questions, Karl Polanyi's question. So take nature out of the economy that looks like community land trust. Or the equivalent. Or what? Or the equivalent. Or the equivalent. Take nature out of the economy that looks like community land trust or land trust. Or the equivalent, yeah. Or what?

Or the equivalent. Or the equivalent. Yeah. And then taking people out of the economy, that would be having economic democracies. So people have more control over their labor and more ability to have a say and have communication in it what does taking money out of the economy look like is that interest-free banking or the different ways of doing it um um for example in the 1930s um the uh the economist Keynes, he's more known for his fiscal economic ideas of, you know, the economy in the Great Depression could be kick the economy is actually flat to, you know, and to overcome deflation. And that was key in Roosevelt's New Deal.

But more importantly, I think, and that's not unimportant, it is important. I think, and that's not unimportant. It is important. More importantly, Keynes recommended monetary reform, which was to, the government should regulate the banks very, you know, very strictly, so that they can't get into all sorts of casino economy games. And the Glass-Steagall Act in the 1930s separated commercial banks from investment banks, from

stock exchanges, from insurance companies, and built kind of Chinese walls around them and had separately regulated them so they couldn't actually kind of all come together. Of course, that law was repealed by Clinton. And we saw a decade later what happened in 2007 and 2008. So, re-regulating the financial system is important. Wait, really quick. So, why did that deregulation cause what happened in 2007, 2008? So, you lifted these walls. What did that do? Well, it allowed, for example, banks to be coming together of banks and insurance companies.

They could merge together. Investment banking and commercial banking could actually form these global mega corporations. And today, most of the world's banking is dominated by 10 global corporations. So you've seen the emergence of oligopolistic, monopolistic banking. But that was unleashed by taking those Chinese walls down. It gave much more freedom for JPMorgan Chase to get that much bigger, and the same for Barclays and Deutsche Bank. So, you know, it was a constraint.

It was a system of constraint that the Rooseveltian New Deal put in place and it was actually taken away. But what Keynes also had recommended in the general theory in 1936 was that interest rates needed to be actually regulated by the central bank or by the treasury in a way that long-term government borrowing would be capped at about 2.5% and short-term government borrowing would be capped at about 1.25%, 1.5%. So in other words, it was actually bringing government borrowing down to very, very, very low levels.

And that was a policy of, you know, kind of a law against usury, effectively, that led to the ability at the end of the Second World War for there to be something like 25 to 30 years of low cost public sector capital that could actually build public housing, rebuild Europe, develop infrastructure, create jobs, develop the public sector, create universities. A whole range of public goods were created through Keynesian monetary policy. I mean, over a period of time it got forgotten about and the plot was lost. But for some considerable period of time, it was very important. So that was a way of, if you like, decommodifying money.

Because you're controlling, Keynes called it cheap money. You're actually keeping the cost of capital very cheap for public welfare, public goods. public welfare, public goods. And in the deregulation that we saw under Nixon and then under Reagan, under Mrs. Thatcher, neoliberalism emerged. And so we're back to a situation like the laissez-faire model that led to the 1929 crash. So Carl Polanyi talks about the double movement, that historically there's been a double

movement where social justice groups, could be trade unions, farmers, push for the market to be reined in, regulated, beneficial constraints. Those could be, you know, the reduction from a 12-hour day to the 10-hour day to the 8-hour day, no holidays, no child labor. Those social struggles against an unregulated free market historically have been there since the beginning of the Industrial Revolution as pushback, social movement pushback. Sometimes those movements of social justice pushback become powerful and they engage the state and they engage parties to actually make that the norm

rather than the exception. And that happens in the post-war period in much of Europe. And it needs to happen again. We do need to have a social movement that actually puts this unregulated market, which is very dangerous, in a cage. And therefore, public policy is enormously important to fight for and win. At the same time, there has been the kind of ideas that Keynes drew upon for cheap money came from experiments in the 19th century, for example, where in the UK and Ireland there were many, many lenders that were lending interest-free. Terminating building societies were very common in the 19th century that were interest-free lenders.

People would save in pubs, and they'd save so much in a group, and they'd buy a plot of land, and then they'd save more, and they'd draw a loan down to build a house and widespread practices of interest-free lending. You can see that today with the JAK bank, for example, in Sweden and Denmark, which is an ongoing legacy and continuation of those practices. But a lot of cooperative organizations have gone over to just normal kind of capital and interest lending, which I think has to be questioned personally, because I think there's no reason why they couldn't kind of take up some of this interest-free cooperative lending. And in this climate of very low interest rates,

where savers are actually gaining very little by putting money into a bank, could benefit from actually having a JAK loan to acquire a house. How are young people going to kind of acquire housing, you know, with land prices being where they're at and banks charging such high rates when interest rates, prime rates are kind of, you know, half percent or whatever. I mean, it's, you know, the issue of the cost of capital is really, really crucial. So how does J JK Bank work? It works

similarly to the old terminating building sites in Great Britain and Ireland in the 19th century, which really were made illegal around 1910. But in the Great Depression in the 1930s,

the Danish farmers saw that their land was being repossessed because they couldn't afford, because of the Great Depression, to pay the loans on the land or the capital they'd have had for the crops. And the banks were repossessing them, so there was a movement in Denmark amongst the farmers to create their own interest-free cooperative banks and they were created in Denmark and became more and more successful in the 1960s in Sweden. In 1965, a similar bank in Sweden was created. Effectively, what they do is that people actually save.

They're similar to a credit union, you save interest-free over a period of time. You can then, after a period of time you've saved so much, you can apply for a loan and get a loan from the JAK or the interest-free bank. And then you need to continue after you've had the loan to save for everyone else. So everyone continues to pre-save for a loan. Once they get a loan, they need to continue to post-save if they've got a 10-year loan, to post-save for 10 years so that other people in the cooperative can access the same interest-free loan.

So rather than actually paying 7% or six percent for a mortgage or for a home improvement loan um you'd be paying the equivalent of about two percent or one and a half percent so you pay a fee you pay some administration charges a small risk premium but it works out really, really, really, really cheap. And how is it related or different to Muslim banking? It's similar. I mean, you know, Islamic banking is, I mean, some Islamic banking, you know, one question is whether it's much different than existing banking. So sometimes it's like higher purchase kind of arrangements. But yeah, it would be in terms of principles of Islamic banking, there would be compatibility. In fact, some Islamic scholars who looked at Jack Bank

and said, yeah, that's halal. So yeah. I mean, it digs into that common faith tradition that questions usury. Most religions have questioned that, but most religions, not all, have moved away from it and have accepted usury. So this is saying, you know, money is basically barren, there's no gold behind it anymore, it's just a bond to repay, IOU or whatever. So why don't we make it as affordable as possible? Some calculations have been done by the late Margaret Kennedy in Germany

in a book she wrote called Interest and Inflation-Free Money that in an interest-based system, about 85% of most people in most countries lose out and 15% of people who are better off, the richer 15%, gain. So if we went to this particular interest-free model of finance, the vast majority of people would actually be better off. We'd reverse the social injustice that is embedded in a compound interest based system. We would charge fees instead of interest. We'd charge administration costs. We'd charge risk. But that would be a lot less than compound interest rates in most circumstances.

So is the JAK Bank an isolated example or is this catching on or is this just the beginning? Well, no, it's not an isolated example. It's a good example in Scandinavia and Denmark and Sweden. There's another interesting organization in Brazil called Co-op Hab. And it's a little bit similar, but it's actually more like the old Terminating Billings Society. And the deal there is that Co-op Hab organizes people, low and moderate income people, into savings groups. And the savings groups that they set up and organize are for 1,000 people.

So people agree in those groups to save for 10 years and they draw lots so that every year they give out 100 mortgages interest-free 200 out of the thousand so at the end of 10 years every person who's saved for that 10 years gets an interest-free mortgage and those loans are for apartments co-op apartments or small co-op homes and it's extraordinarily successful um equally a lot of people don't know that habitat for humanity is a very interesting organization in that they set up the fund for humanity it was set up decades ago and the fund for humanity basically is a fund that supports community self-building groups uh who are building their own home and getting support and as self-builders

um the fund for humanity has sought contributions um uh to people to put into the fund, like crowdfunding. It's a non-profit organization. And capital has been solicited and come into the funds out of solidarity for the community self-builders. And self-builders can draw on that fund and pay something like the rate of a jack loan. a jack loan and it's created over the last 35 years or so over 500,000 homes in more than 90 countries. It's a phenomenal success, right? It's there, it's out there. So it's not as if these examples are so oddly... There are many more examples than you would imagine.

It's just that they're not getting the press coverage that they should be getting. So it works. You can go and visit and see what's been built. It does work. It's just the poverty of the imagination that's holding us back. And having to, if somebody does have this idea, thinking they're the only one or the first having to reinvent the wheel, when it just so happens that there's another group in another town or community who've already done this. This sort of stuff is in the vernacular.

It's in our culture. It's been done, you know, when they started the first building society that had no interest was set up in Birmingham by a guy called Richard Ketley, who ran a pub in 1775. It's been, you know, it went, it ran for, well, it certainly ran into the 1930s. And the system spread with interest-free terminating building societies to New Zealand, to Australia, you know, to other Commonwealth countries. It's generally been made illegal or, you know, it's been marginalized, but it did work for a long time. It was the most common form of mortgage lending for working-class people in 1870.

You know, there were a thousand of them across great britain and ireland they vanished we've had it we've lost the plot bring them back you know it's you know so bring them back okay so there's many ways to do that right there's like you mentioned there's the national level like something like the glass steagle act being put back. And so that would be in the hands of maybe policy makers, lawmakers, or politicians. And then we have people creating together, either land trusts or banks or that kind of thing. And then we have protests, right?

Is that what you see is some of the main leverage points or the way in ways of you know because i hear you on all those things all those things all those things are important um but there is a more fundamental question as well and that is that 97% in the UK and maybe 95% in other countries and 92% in another country, but the vast majority of money today is created by banks. Every time they make a loan, they create new money. The Bank of England report in 2014 about money creation, verified that. And so there is a fundamental need, which is the argument for positive money or sovereign money or 100% money, which is really an argument that was exemplified by what Lincoln did in the American Civil War in 1862.

At that time, the costs that the bankers were charging for the Civil War on the Union side and also on the Confederate side was just enormous. And it was really the whole Treasury of the U.S. was under strain. And Lincoln decided to issue, there wasn't any paper money at the time. There was only coinage. The paper money was introduced as greenback dollars in 1862. And by about 1863, there were $450 million of of the screenback dollars which were basically just printing money it was just treasury notes put out there you know you know this has behind it um the credit of the u.s nation or the or the union the union part of the u.s so money created

by the treasury department use credit and and and And people accepted it because you could pay your taxes in it. And then there was pressure after Lincoln died to replace these notes with notes that would be backed by gold. And that happened. Not all of them were withdrawn, but a lot of them were withdrawn. Not all of them were withdrawn, but a lot of them were withdrawn. But this idea of quantitative easing at that time, because it was actually printing the money, is something that has been done during periods of war. It was done during the Napoleonic Wars by the British. It was also done at the beginning of the first war by Lloyd George.

For the very first part, the Bradbury notes were actually produced without borrowing from the banks. And really quick, quantitative easing is the government making the money. The government making money, printing money electronically, which has been part of what's happened since 2008 as part of the bank bailouts. So the argument for people's quantitative easing that could be not just in times of extremists, like, for example, in the Civil War. But they didn't do it in the Great Depression.

There was an argument put to Roosevelt, not only to do Glass-Steagall,all and to follow Keynes, which he did, but also to effectively introduce money that would be recognized by the government as emergency currency. recognized by the government as emergency currency. So Irving Fisher wrote a book called Stamp Script. He was a famous economist from Yale, arguing that there were, at that time, many hundreds of what we call complementary currency schemes in the Great Depression. And the argument was, well,

let's allow these complementary currencies to be acceptable for local taxes so that you could pay your municipality or your town for certain tax responsibilities um roosevelt decided after advice from harvard harvard economists not to accept that and so it never actually happened but it did happen in places like Austria with the Virgil experiment where towns did introduced negative interest currency which would expire after a year and the Virgil experiment over 15 months basically reduced higher levels of unemployment to zero,

then it was banned. So the monetary reform possibilities are enormously important as another part of money and banking reform. So yes to things like Glass-Steagall re-regulation, yes to things like cheap money in the way that Keynes argued for it, yes to things like JAK banks, yes to things like monetary reform emergency currencies. You know, there's a whole range of the public banks. The Bank of North Dakota is a very interesting example of the only U.S. bank that's publicly owned by a state

of any of all the 50 states. There's only one in North Dakota, which was set up with a farmer's struggle during the First World War. And it's been enormously successful in keeping solvent the public finances in North Dakota. And their interest rates are low there or well it's a bank for um basically what happens is that in north dakota all the money of the state is put into this bank its own public bank so so all so they don't they don't bank with uh bank of america they don't bank with the private bank.

They have their own bank. So they hold their own tax receipts and their own money. And they also invest directly in infrastructure. They make low interest loans to farmers. They make very low interest loans to students. Wow. So the interest rates are much lower than they would be in others. So this is the work of Ellen Brown in California

and the Public Banking Institute to promote the development of more public banks. Germany, for example, has a public bank. The U.S. set up the Bank for Reconstruction. Roosevelt set that up during the Great Depression as well, but it was actually phased out during the 1950s. But as part of the Marshall Plan to rebuild Germany, there was a bank called KFW, which is a public development bank, which was set up and is still operating.

called KFW, which is a public development bank, which was set up and is still operating. And under a conservative government at the moment with Merkel, they've got this green housing program, this energy transformation program, where they're actually retrofitting something like a million homes a year, making at about two and a half percent to homeowners if you show that you save carbon you get a three quarters of a percent rebate back so you're actually getting loans with the rebate is about one and three quarters of percent to put in renewable energy to put in more insulation to to build passive housing for new construction. In post-Fukushima, when Germany decided to go green in the big time, this particular public development bank, KfW, has been crucial in terms of green jobs and reviving the construction

industry, retraining people to be green builders, you know, that's what a public bank can do. It's another important, vital piece of the jigsaw. So once I said, as I said at the beginning, it's not either or, it's both and and and, yeah? Yeah. Because money and banking are a complex adaptive system and they need to be democratized in many different ways um because the the ecology

of money and banking has to be respected and we need many many different types of interventions that actually form a kind of mosaic an alternative mosaic for uh democratic money and cooperative capital yeah you're reminding me of when I worked at UC Berkeley, we banked with Bank of America. So all of the student money would have to go through Bank of America. And I always thought, wow, that's so strange, because we're paying fees and all this stuff to a corporate bank, and yet we're the University of California,

so we're a state institution. the university of california so we're a state institution so yeah ellen brown she ran for um treasury um uh ran for the state treasurer's post for the green party i mean she didn't get close but but she she she rang or she ran her campaign with the green party on a public bank for california um the the rail network that the high-speed train that they're building in California, she's shown that with a public bank, the costs can be massively reduced because any lending that would be done for that infrastructure, the interest on the loans comes back to the people of California because they own the bank.

So it can be reinvested. That's wonderful. So it's not actually being extracted it's being reinvested and what was the name of her organization in case people want to public the public banking institute public banking institute okay so just two more questions one is uh how do you see when there's there's all these metaphors for the economy and one of them is uh that i love is by gibson graham two feminist co-writers about a capitalist sea with islands of alternative economies and then there's another metaphor that's uh a huge burning volcano exploding with like a tiny little house that's the new system right next to it implying it will never make it it'll be destroyed so how do you see you know all these different things that

you're thinking of do you see it as uh you know or a phoenix rising from the ashes like you know what do you what do you see when you see the the global landscape of the economy? Well, I think we need to change the biosphere and the social economy environment insofar as there is this kind of the mantra of the neoliberal um model uh you know whether reaganomics or whatever you want to call but since the kind of the 70s is compete compete compete um rather than cooperate cooperate cooperate so we have to change uh the mentality towards one of solidarity that's for a start but But it's important also that it's very difficult in a free market kind of tank of water or whatever for saltwater fish to operate.

So in a sense, the problem is that you have saltwater fish, let's say, are cooperative organizations or economic democracy organizations. that you have a saltwater fish let's say our cooperative organizations or economic democracy organizations and they have to find their way to the wide saltwater ocean you know so they have to find their way to to that ocean so so we need cooperative oceans we need to get these fish into cooperative oceans so so that's the challenge we have to kind of bring salt to the water or whatever. We have to change the chemistry of the environment so that it's enabling, so that it is oriented towards peace and cooperation and social justice. And that's a massive collective challenge. Yes. But it can only be done by different movements for social change,

whether it's the peace movement or the environmental movement or the social justice movement or the anti-homelessness movement or whatever it is, the organic farming movement, for those movements to actually find common cause and to pursue what we argue for in the book is sea change. It is fundamental sea change. It's a complete transformation. But if you focus on the land question, the money question, the corporate ownership question, who owns the technology, who owns the knowledge systems intellectual capital you know those sorts of questions

will help orient you towards kind of the ab abcs of of what you need to focus on to get going and keep going in the right direction what are the what are the deep inquiries or the questions right now for you what's kind of alive for you or what are you the questions right now for you? What's kind of alive for you or what are you working on right now at the moment? Well, I spent a lot of time working on finance questions for about 15 years. And I'm still actually working on money questions. I have been working a lot for 15 years on things like Humanity Land Trust and practical land solutions. But I've been working a lot on care services, particularly multi-stakeholder cooperatives for community health, for tackling things like drug addiction and people who coming out of prison you know kind of reform of

criminal justice system to try to create a commonwealth system for those services and I've been very impressed with the work in Italy since the 70s to create these social cooperatives for care and for service for disabled people, for immigrants, homeless people, people who are coming out of prison. There's some 15,000 of these social cooperatives in Italy. They have their own finance system. They've managed to secure through negotiations with the government since the 90s, special tax benefits, special kind of access to low rates of corporation tax, lower rates of value-added tax, and they're thriving.

The movement has spread to Spain, to Greece, to France. It's being developed in Germany, and we've been developing it in England and Wales. So it's an interesting model because most traditionally a cooperative has been either a consumer cooperative, a farmer cooperative, or a worker cooperative. But this model is a multi-stakeholder cooperative.

So some of them are worker co-ops, but a lot of them are um where the people in the co-op are let's say um the uh the patient the carer the perfect you know the carer the volunteer who's doing care uh the paid carer and and maybe members of the family and they're trying to embed that into a system that they're developing cooperative ownership solutions for social care or for community health. And in Italy, where you've got these cooperatives developing this system, they're actually working in partnership with the Italian National Health Service.

So they're actually developing a very interesting partnership with the state services. So you get these public-social partnerships developing, which is very different than the neoliberal public-private partnership. Yeah. So you can see on a, you know, with, I mean, they've already created 400,000 jobs in in in in Italy with this model which is interesting because that's about there's about 400,000 jobs being created in the private care cert you know private home care in the UK so it gives shows you the comparison that yeah private home care

is very very dominant in the market but in italy these this cooperative um social care system is a big player yeah um so huge potential it also sounds like co-production the idea of working it's yeah absolutely it's very very very similar to co-production but this goes beyond that in the way that the ownership is actually multi-stakeholder, not just the production of it. Yeah, the ownership of the co-op. Yes. It could be, you know, users, service users and workers. It could be service users, workers and volunteers.

Yeah. Service users, workers, volunteers and family. So there's different combinations, permutations of ownership. Wow. Including patients or no? Absolutely. Oh, yeah. Absolutely.

Wow. Well, where can people go if they want to read more about your work? The Cooperatives UK website has got my report called Common Sense, which is around cooperative solutions for housing and cities. There's another on the Cooperatives UK website. There's another report called Social Cooperatives, which is around what I've just been talking about, about the cooperative solutions for social care and community health and criminal justice. So those two reports are on the cooperatives UK website under my name. Yeah. Under your name, Pat Conaty. And then of course there's the book, the resilience imperative cooperative transitions to a steady state economy. And, uh, you've been listening to an upstream interview. I've been Della Duncan, and it's been really great to talk to you, Pat. And if you want to know more about Upstream or Economics for Transition or listen to any of the other episodes or interviews, you can visit www.economicsfortransition.org.

Thank you again. Thank you again. Thank you. Flowers blooming from our boats that break To the morning we run to shoreline Calling us to speak of sin Waves under the earth and rocks Casting ghostly shadows Tall like giants As we set fire to the sea We are currently fundraising for this project, so if you like what you hear, please visit www.economicsfortransition.org

to make a donation. Thank you.