COOPERATIVES, 
PAST, PRESENT, FUTURE ?

Cooperative Alternatives.

At the moment, January 2013, we live in a world of capitalist enterprise, in which most people are poor, and where less than 1% of the global population controls most of the global wealth.

1226 people are multi-billionaires, with $4.6 trillion

11million people have access to $42 trillion out of the total annual GDP of $60trillion.

And 7 billion people survive on less than $10 a day, of which 1.5 billion survive on less than $1 a day, and 1 billion die of hunger!

The present global society is not fair nor equitable nor equal nor just.

It is elitist.  A plutocracy managing a capitalist economy for their own benefit.   The owners and shareholders get maximum bonuses.The workers with minimum wages, and maximum prices for the consumers.

Many years of capitalism has enriched a minority. Yes, it has led to the creation of technological innovations that have totally changed ways of life!

However, if there is to be the creation of a fair and just global society, the wealth will have to be redistributed leading to  a transformation of elitist capitalism.

Instead of describing how this elitist capitalist society functions, it is time to begin to look at alternative systems, and to make alternative choices.

As we have witnessed in the USA during December 2012, it is no good standing at the top of the ‘fiscal cliff’ hoping that no one falls off. Serious efforts must be made by voters and politicians to alter the criteria of ‘tax and spend’.

The very wealthiest must stop complaining about the possibilities of personal taxation, and make efforts to support the poor with social benefits. Or even provide regular employment and a living wage!

If  7 billion people are to thrive on a living wage of say $10 an hour, the wealth of the elite plutocracy must be shared.  The wealth of the world should be managed in cooperation, and the enterprises could be organized as cooperatives in which the efforts of all are equally rewarded.

There are many cooperative enterprises across the world, particularly in agriculture, and retail e.g. Cooperative Wholesale Society, UK; Euro-Coop; Lega-Coop, Italy;  Coop, Switzerland;  MIGROS  Switzerland; Coop-City in New York; Best Western Hotels; Italian Social Coops; AMUL in India; FELDA in Malaysia, along with many others as listed by the International Cooperative Alliance:  

Go to

http://ica.coop

http://2012coop/en/global-300   

The ICA in their most recent report, 2012, declared that up to 1 billion people are actively involved in cooperatives, with the largest 300 cooperatives generating $1.6 trillion.

But this does not alter the fact that most of the wealth generated by capitalist enterprises, $60 trillion GDP 2011, has greatly enriched a minority, 11 million people out of 7 billion. Cooperative enterprises have not been so successful, and their presence has been ignored. The University of Wisconsin has reported that over the last few years, cooperatives in the USA have declined due to the running battles between capitalists and socialists where the arguments centre on whether business is for the enrichment of the few or the social benefits of the many?

From the mid-nineteenth century, mutual organisations in  Europe tried to  embrace the ideas of cooperation and sharing, and taxes and social enterprises  as economic enterprises: firstly amongst trades people, and later in cooperative stores, educational institutes, financial institutions and industrial enterprises. The common thread of ‘mutuality’ (enacted in different ways, and subject to the constraints of various systems of national law) is the principle that an enterprise or association should be owned and controlled by the people it serves, and share any surpluses on the basis of each members' cooperative contribution (as a producer, labourer or consumer) rather than their capacity to invest financial capital.

The cooperative movement has been fueled globally by ideas of economic democracy, a socioeconomic philosophy that suggests an expansion of decision-making power from a small minority of corporate shareholders to a larger majority of public stakeholders.
A cooperative is a legal entity owned and democratically controlled by its members. Members often have a close association with the enterprise as producers or consumers of its products or services, or as its employees.
In some countries, e.g. Finland and Sweden, there are specific forms of incorporation for cooperatives. Cooperatives may take the form of companies limited by shares or by guarantee, partnerships or unincorporated associations. In the UK they may also use the industrial and provident society structure, according to the Industrial and Providence Act 1965.  In the USA, cooperatives are often organized as non-capital stock corporations under state-specific cooperative laws.  Cooperatives often share their earnings with the membership as dividends, which are divided among the members according to their participation in the enterprise, such as patronage, instead of according to the value of their capital shareholdings (as is done by a joint stock company). Cooperatives are typically based on the cooperative values of "self-help, self-responsibility, democracy and equality, equity and solidarity".
If there are to be fair shares of resources and wealth, the future is to be ‘Cooperative’! We will need to  return to the ideas of cooperative socialism . The Rochdale Principles are a set of ideals for the operation of cooperatives. They were first set out by the Rochdale Society of Equitable Pioneers in Rochdale, England, in 1844, and have formed the basis for the principles on which co-operatives around the world operate to this day. The Rochdale Principles focus on  co-operative economics.
The original Rochdale Principles were officially adopted by the International Co-operative Alliance (ICA) in 1937 as the Rochdale Principles of Co-operation. Updated versions of the principles were adopted by the ICA in 1966 as the Co-operative Principles and in 1995 as part of the Statement on the Co-operative Identity:
1.  The first of the Rochdale Principles states that co-operative societies must have an open and voluntary membership. According to the ICA's Statement on the Co-operative Identity, "Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination."
2. The second principle states that co-operative societies must have democratic member control. According to the ICA's Statement on the Co-operative Identity, “Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives, members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.”
3. Member economic participation is one of the defining features of co-operative societies, and constitutes the third Rochdale Principle in the ICA's Statement on the Co-operative Identity. According to the ICA, co-operatives are enterprises in which “Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.” Co-operatives are a form of social enterprise.”
4. The fourth of the Rochdale Principles states that co-operative societies must be autonomous and independent. According to the ICA's Statement on the Co-operative Identity, “Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.”
5. The fifth principle states that co-operative societies must provide education and training to their members and the public. According to the ICA's Statement on the Co-operative Identity, “Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.”  Indeed organising  a cooperative enterprise can be complicated, requiring knowledge of the law, accounting procedures, business planning, marketing strategies, community investment, working  a democracy, resolving differences by negotiation, writing papers and proposals, working with officials, serving on boards of directors, recording minutes of meetings, and decisions. A wide range of new skills and knowledge are to be learnt.
The sixth of the Rochdale Principles states that co-operatives cooperate with each other. According to the ICA's Statement on the Co-operative Identity, “Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.”
The seventh of the Rochdale Principles states that co-operative societies must have concern for their communities. According to the ICA's Statement on the Co-operative Identity, “Co-operatives work for the sustainable development of their communities through policies approved by their members.”
These seven Rochdale principles are bought into play in creating a cooperative venture, whether it be a grocers shop or dairy or corn farm or wheat farm or market garden, a credit union or utility provision. . These seven principles help make a ‘cooperative’ different from a ‘capitalist’ enterprise: with its members working together, and decisions being made together. A cooperative is not focused on making the maximum profit. It is concerned with providing affordable products to local members.  
Marvin Schaars [1978] concludes that “If I were to name the principles, not practices if you please, which I feel any organization must include in its set-up to be a true cooperative, be it a grocery store company, a rural electric cooperative or a cooperative milk plant, I would list only three. These I call the "hard-core" underlying principles of cooperation. They are: . Services at cost to member-patrons;  Democratic control by member-patrons; Limited returns on equity capital.

The legal definition of a cooperative varies greatly.  

It is correct that there are many different types of cooperatives.

A Retailers' cooperative  is an organization which employs economies of scale on behalf of its members to receive discounts from manufacturers and to pool marketing. It is common for locally owned grocery stores, hardware stores and pharmacies to be cooperative businesses rather than individuals.

A workers cooperative or producers cooperative is a cooperative,  that is owned and democratically controlled by its "worker-owners".

A volunteer cooperative is a cooperative that is run by and for a network of volunteers, for the benefit of a defined membership or the general public, to achieve some goal such as a social service.

A consumers' cooperative is a business owned by its customers. The world's largest consumers' cooperative is the Co-operative Group in the United Kingdom, which offers a variety of retail and financial services. 

A housing cooperative is a legal mechanism for ownership of housing where residents either own shares (share capital co-op) reflecting their equity in the cooperative's real estate, or have membership and occupancy rights in a not-for-profit cooperative (non-share capital co-op), and they underwrite their housing through paying subscriptions or rent.

Members of a building cooperative (in Britain known as a self-build housing cooperative) pool resources to build housing, normally using a high proportion of their own labour. When the building is finished, each member is the sole owner of a homestead, and the cooperative may be dissolved. This collective effort was at the origin of many of Britain's building societies, which however, developed into "permanent" mutual savings and loan organisations, a term which persisted in some of their names (such as the former Leeds Permanent)

A utility cooperative is a type of consumers' cooperative that is tasked with the delivery of a public utility such as electricity, water or telecommunications services to its members. In the case of electricity, cooperatives are generally either generation and transmission (G&T) co-ops that create and send power via the transmission grid or local distribution co-ops that gather electricity from a variety of sources and send it along to homes and businesses.

Agricultural cooperatives or farmers' cooperatives are cooperatives where farmers pool their resources for mutual economic benefit. Agricultural cooperatives are broadly divided into agricultural service cooperatives, which provide various services to their individual farming members, and agricultural production cooperatives, where production resources such as land or machinery are pooled and members farm jointly.  Agricultural supply cooperatives aggregate purchases, storage, and distribution of farm inputs for their members. By taking advantage of volume discounts and utilizing other economies of scale, supply cooperatives bring down members' costs. Supply cooperatives may provide seeds, fertilizers, chemicals, fuel, and farm machinery. Some supply cooperatives also operate machinery pools that provide mechanical field services (e.g., plowing, harvesting) to their members. Agricultural marketing cooperatives provide the services involved in moving a product from the point of production to the point of consumption. Agricultural marketing includes a series of inter-connected activities involving planning production, growing and harvesting, grading, packing, transport, storage, food processing, distribution and sale. Agricultural marketing cooperatives are often formed to promote specific commodities.                                                                                                                                Credit unions are cooperative financial institutions that are owned and controlled by their members. Credit unions provide the same financial services as banks but are considered not-for-profit organizations and adhere to cooperative principles.  The UK Co-operative Group includes both an insurance provider CIS and the Co-operative Bank, both noted for promoting ethical investment.                                                                                                       Cooperative wholesale society.  According to cooperative economist Charles Gide, the aim of a cooperative wholesale society is to arrange “bulk purchases, and, if possible, organise production.”                                                                                                    Cooperative union.   A second common form of cooperative federation is a cooperative union, whose objective (according to Gide) is “to develop the spirit of solidarity among societies and... in a word, to exercise the functions of a government whose authority, it is needless to say, is purely moral.”   Co-operatives UK and the International Cooperative Alliance are examples of such arrangements.

Cooperative political movements.  In some countries with a strong cooperative sector, such as the UK, cooperatives may find it advantageous to form political groupings to represent their interests. The British Cooperative Party, the Canadian Cooperative Commonwealth Federation and United Farmers of Alberta are prime examples of such arrangements.

Schaars  [1978] proposed that ‘a cooperative is a business, voluntarily owned  and controlled by its member-patrons and operated for them and by them on a non-profit or a cost basis.

According to Gide, [1904] ‘a cooperative is a group of persons pursuing common economic, social, and educational aims by means of a business’.

Legislators have wrestled with the problem of  profit or social ends for many years. Yet no definite conclusions are in sight. Even co-op scholars and researchers differ among themselves concerning the definition of a "true cooperative."  Nevertheless, there is general agreement with Schaars's conclusion that a "true"cooperative is one which provides; (1) service at cost, (2) democratic control by member-patrons and (3) limited returns on equity capital.

It is significant that, at this time, share-owning capitalist enterprises are normal in USA, Europe, Russia, Australia, Brazil, China, India, Japan, and across the world. All these enterprises have share-holders. If they are successful, the profits are paid to the shareholders. If the principal shareholders are family investors [such as the Gates family, or Apple, or Tata or Branson or Buffet, and the rest of the Forbes 500,] they will receive the dividends and bonuses agreed by the Board of Directors, and reap the maximum profits. We have to remember that the success of such capitalist enterprises depends upon paying the workers low wages and charging maximum prices to the consumers: that is, capitalist exploitation. Whatever problems there are in defining a cooperative, it is most important that cooperative enterprises are owned and controlled by members, patrons, workers, consumers as well as investors. The benefits and profits of the cooperative enterprise are shared by all those involved, not just the elite investors.

I would suggest that a ‘true cooperative’ provides services and products at prices agreed by the democratic votes of member-patrons in the light of the democratically agreed returns on equity capital. Every one with an interest in the operation of the cooperative enterprise is involved in making decisions about practices, products  profits, and benefits.

The United Nations has declared 2012  the Year of the Cooperative.
The United Nations Year of the Cooperative will express:  "Cooperative Enterprises Build A Better World" and highlight the key aspects of cooperative enterprises which allow them to fulfill this rule.

Cooperative enterprises build a better world.

Cooperative enterprises are member owned, member serving and member driven

Cooperatives empower people

Cooperatives improve livelihoods and strengthen the economy

Cooperatives enable sustainable development

Cooperatives promote rural development

Cooperatives balance both social and economic demands

Cooperatives promote democratic principles

Cooperatives and gender: a pathway out of poverty

Cooperatives: a sustainable business model for youth

REFERENCES/ 2013
Marvin Schaars: Cooperatives, Principles and Practices 1978
Frank Groves: Philosophy of Cooperation 1985
www.un.org/en/events/coopsyear
http://social.un.org/coopsyear
http://ica.coop
www.cooperative.coop
www.cooperatives-uk.coop
www.peoples.coop/cooperative
www.en.wikipedia.org
www.infoplease.com
www.encyclopedia.com
www.uwcc.wisc.edu
www.thenews.coop:cooperativenews
http://neweconomics.org
www.positivemoney.org
http://news.bbc.co.uk/democracylive
www.rurdev.usda.gov
www.ace.coop

BANKING, MONEY, AND DEBT:

A MONEY GAME.

               In the UK there has been a series of investigations into the workings of the banking system trying to identify why the system collapsed in 2008.

The Independent Commission into Banking, known as the Vickers Commission, produced a report that insisted there should be a distinction between retail banks and wholesale banks.

The retail banks are to be designed to provide customer services such as cash deposits, savings, payments/salary and pensions , over drafts, cheque books, cash cards, credit cards, as well as house buying and mortgages. 

The wholesale banks are to continue to be involved in trading books, securities,  derivatives, hedge funds, investment funds, currencies, bonds, sovereign funds, and corporate loans: all forms of financial speculation.

Most personal customers assume that their local bank fulfils retail functions, using deposits and savings to provide loans. Since  the 1980’s most banks have become involved in wholesale functions, and speculation, with traders sitting in front of computer screens not personal customers. 

The Vickers Commission emphasized that retail functions are to be strictly ring-fenced from all wholesale functions. It concluded that the collapse of banks resulted from the demands of the wholesale sections invading the retail sections by consuming all their capital, and then calling on the Government to cover their losses. In future, the Vickers Report concluded all banks are to have enough capital in reserve to absorb any losses. They are to change from ‘fractional reserve banks’ to ‘full reserve banks’.

The most recent investigation is being carried out by the Parliamentary Committee on Banking Standards. It is intended that this committee identifies how best to implement the proposed Banking Reform Act. It has been involved in interrogating John Vickers, and the Governor of the Bank of England, and his deputies, about the best ways to implement the recommendations of the Vickers Report. The committee is determined to reform the system so that the tax payer will no longer be subject to demands for bail out by banks. The UK banks generate over GBP6 trillion and must be designed to cover their own losses.

These investigations are involved in identifying the rules and procedures that will be required to allow the banking system to operate efficiently. They assume the relations between savings and loans, debit and credit: that deposits provide the loans. They seem indifferent to the fact that most ‘money’ is digital not cash, and that it is not possible to place GBP6 trillion on a table for inspection, and verification! Nor to inspect the $600 trillion generated by the derivatives market. These sums exist as entries on a balance sheet or in a trading book, and are presented as summaries on a computer screen. They are ‘digital money’.

 Money

I want to try and clarify my thoughts about ‘money’. I realize that ‘money’ is any thing that is accepted in exchange for goods, property, labour, services. In following the ideas of the New Economics Foundation, and Positive Money, as well as the Steady State Economics of Herman Daly, I have found it very difficult to keep focused on the nature of money. For most of my life I have assumed that all my bank dealings are in cash transfers. But most of my financial dealings are numbers on a balance sheet. My monthly salary during my working life, and now my pensions, are not delivered as cash, they appear as numbers. They exist as numbers. My use of credit cards involves the purchase of items on the promise to pay in the future. When I bought a house in 1976, my family did not give the bank the cash price. The bank did not give us cash. Having agreed a mortgage contract, and the collateral, the bank made entries in my bank account, and then transferred the entries to the seller, and charged me for the deal.  When I came to sell the house, the same procedures applied. In all these transactions, cash as coins or notes is not exchanged.

In fact, the only time I use cash is when I go to the local shop. And even then, many shops/restaurants/services do not want cash, they use credit cards - the cashless society.  All of these transactions depend upon the credit entries in your bank account. We are involved in a system whereby customers think cash, but transactions are digital. It is not surprising therefore that in the UK, 3% of money payments are cash, and 97% of money payments are ‘digital’; are numbers; are entries on a balance sheet.

 The implication of this analysis is that most payments and receipts are digital entries on a balance sheet; or in the past were entries made by a bank clerk.  I do accept that the entries ‘represent’  cash/gold/silver/notes.  What is more difficult to accept is that the cash…..notes do not have to exist as ‘real objects’. It is sufficient for people to accept their exchange value, and that they exist as numbers. The ‘numbers’ are ‘money; As long as the numbers balance, we can all carry out money transactions and exchanges, payments and receipts. We are living in a conceptual world of money. And yet we behave as if the money is ‘real’. In fact we do go to the ATM and take out cash, notes. On BBC World recently they chose to represent the $900 million stolen from KABUL BANK with pictures of many packets of money. This underlined the view that money is cash. It is more likely that the theft was made simply by an officer of the bank transferring numbers from one account to another.

The money cycle is that in return for work done; products made; goods sold; numbers are entered into bank accounts as wages and payments. The banks are obliged to convert wages into cash if required. Payments are transferred from accounts of buyers to sellers as entries on statements.

For those who do not have a bank account, all their dealings will be made in coins and notes. In Greece, where I live now, I regularly see BRINKS armoured vehicles collecting and transporting cash, as Securicor used to do in the UK. Many shops and services here do not accept card payments, only cash. Employers have to pay cash to their workers. This is no longer the case in the UK. Payments can be made by Internet and mobile phones.

It is the case that ‘money ‘is represented by number entries on a balance sheet. But how is the new money created? If money was coins/gold/notes, then governments and their Central Banks have the authority to mint coins and print notes to cover their financial needs. For example, a government could print the monies required to finance their health service and education service, etc. instead of raising taxes or taking loans.

 The renowned New Deal developed by President Roosevelt in the USA during the 1930’s marks a classic example of government funding at a time of economic crisis. Faced by mass unemployment, bankruptcy, homelessness, hunger, Roosevelt decided that ‘we must spend money that we do not have!’. If he waited for the recovery and growth, it could be a long wait. The money was needed ‘now’. So the government undertook to develop major schemes of development that led to greatly increased employment such as the Tennessee Valley Authority, and later the Hoover Dam Project. At the same time monies were directed to the Pentagon for the manufacture of military equipment.  The government became the major employer, paying wages, insurance funds and providing equipment. All funded by printing the money.

 This no longer seems to be common practice as the issuance of cash leads to inflation and devaluation. More recently, governments have borrowed the money, not printed it, and paid the interest. Central Banks raise money by buying government bonds and debts for interest. Commercial banks create new money by leveraging their deposits. This means that deposits worth GBP1000 can be leveraged up to GBP 70,000; GBP1 million up to GBP 70million.

The most important way for banks to make new money is by making loans, and charging interest and adding number entries to balance sheets. This is money as debt.  For example, I must spend money that I do not have. What should I do? Borrow it from friends or relatives for free?  Go to the bank, apply for a loan and pay interest.

A bank loan creates new money. In the first place, there is the principal, say 1000. This is created by the bank by entering the sum as a number in an account.  Second, the interest: 20 years @ 8%= 4660.96; or 10years @ 8% = 2158.92; third, the repayment, over time, of the principal + the interest : 1000 + 4660.96=5660.96. The principal sum can be multiplied by 1000, and become 1,000,000, for which the repayment would be 5,660,960…..that is, more than 5 times the original sum. Loans are debt. New money is debt. It is clear that ‘loans’ are a lucrative business for banks and for building societies. If there are no loans, no new money is created, and no profits are made. It is worth noting that the principal and the repayment cancel each other out: 1000 cancels 1000, and leaves the interest as profit. In fact, when the principal is repaid, it is cancelled. It is in the interests of any bank to charge as much interest as possible.

If we consider larger loans, like sovereign loans, it is easy to see that the loan plus the interest can disrupt a country’s finances. For example, Greece may have borrowed  Euros 1 billion and more, but will have to pay back up to 4.6 billion: principal + interest =  a total of 5.6 billion….that is 5.6 times the principal. It may struggle to pay the interest, and go bankrupt, even though the principal has been paid.

At this stage, it is apparent that bankers and financiers are involved in playing a money game. They will create the principal on their key board, creating the numbers and then devising a contract to be signed by the borrower promising to pay principal + interest. No cash is involved. The ‘money’ is digital.

On reflection, banks are involved in speculative lending. It is based on the assumption that you will pay back. The recent sub-prime mortgages scandal in the USA involved banks lending money to people who would have difficulty repayng the principal, no matter the interest. When repayments stopped, banks went bust! And looked for rescue.

We are told that ‘economic growth’ is essential for the creation of new money for profits and investment. Speculative banking is at the root of this banking. The banks identify projects and enterprises with good prospects and invest via loans. The creation of digital money is so simple that these investments will go ahead quickly and economic growth can proceed rapidly. In fact, the development of digital money is closely linked with capitalist growth. It enables money transfers, debits and credits, to happen without trouble and for companies to trade.

Previously, if one wanted a mortgage, or an investment, one had to put forward collateral, a security for the loan. For example, when I wanted a mortgage in 1976, I was required to save more than one-third of the price as a deposit; and  nominate a quarantor.  Saving the deposit took 4 or 5 years, so the whole business was slow and subject to refusal by the bank. More recently, it became more straightforward. Clients were given a mortgage without a deposit, and in some places without any regular income. The banks were much more interested in the interest payments, and the market value of the house so that they could sell it on at a profit later. In fact, banks like Lloyds in the UK entered the housing market, controlled the selling price, bought houses and put them out for rental or sale.

The Vickers report identified mortgages as a legitimate function of the retail bank. Such a ruling misses the point that many branches are actively involved in their local housing market, speculating over prices, and busy making new money through loans, and accruing a lot of interest payments. Their profits depend on selling mortgages, and manipulating the market when necessary. It is known that local banks tied in with surveyors and estate agents so as to manipulate the market.  If we are to avoid a repeat of the 2008 Housing bubble, and credit defaults, a robust regulatory framework needs to be introduced and questions raised as to the best services to be part of a retail bank.

What is money?

It is any item, number or object that is recognized by the banks and the government and the tax authorities as having value, which gives it exchange value. At the present time, numbers on a balance sheet, stamped by a bank, are money. The numbers are versatile, and easy to transfer from one account to others. The numbers are ‘digital entries of value’ and can be created at the stroke of a keyboard by a licensed bank. The money can be wages or pensions. It can be debt, generated by a loan. It can be the result of company growth.

Different numbers in different locations do have different value. For example, as part of the Eurozone crisis over Greece debt, it has been argued that Greece return to the drachma and leave the Eurozone. This is possible if Greece wants to stop international trading. The drachma is a local currency and has no international exchange value. It cannot be used as payment of international credits and debits nor as the basis of any loan contract. Given that Greece depends on international trading and loans, the return to the drachma would serve no purpose. The money a country uses has to be recognized by other countries, and given an exchange value, otherwise it has only a local value. The US$, or GBP or Euro are international currencies accepted round the world. The drachma is not: it is hardly recognized in Greece.

Money Games

The more I think about it, the more I come to realize that we are all involved in the ‘money game’. Currencies are given symbolic significance which has little to do with their value. For example, the drachma as a symbol of Greek independence; the dollar as a statement of US superiority against Japan, China, Europe; the Euro as a symbol of European unity; the GBP was once the marker for Imperial trade and is now promoted as a symbol of British trade and financial security. Money numbers are taken as symbols representing the desirable characteristics of all home countries.

It would be correct to admit that ‘money’ was based on shells, gold/ silver/ copper coins, IOU notes, in the past. But as these have become too cumbersome to handle in response to the increase in circulation, and the globalization of banking, so it has become necessary to make money exchanges simpler and faster.  We are living at a time when trillions of pounds/dollars/euros/yen are in circulation. The sums are too great to deal with satisfactorily, manually.  It is much more straightforward for money to be represented by numbers on a balance sheet on a computer screen and moved according to dealings.

REFERENCE  

WWW.NEWECONOMICS.ORG

WWW.POSITIVEMONEY.ORG

IMPLICATIONS OF CLIMATE CHANGE. 

REPORTS BY CGIAR/FAO/WFP.CCAFS, CSACC 

The reports published by the Food and Agriculture Organisation;

the World Food Programme;

the Consultative Group on International Agricultural Research [November];

Climate Change, Agriculture and Food Security [October];

Commission on Sustainable Agriculture and Climate Change [March];

during 2012 were concerned to identify that Climate Change will result in significant changes in the distribution of poverty and hunger,

the organization of World Trade,

the social and economic priorities of governments,

the development of social protection of the poor,

the types of food that can be grown and the emergence of sustainable diets,

cultural changes associated with food: vegetarian/vegan/omnivores. 

They wished to emphasise that climate changes over the next 40 years will not only lead to different weather, rain, heat, winds, drought, storms but also to economic, social, political, cultural  changes.

However, it is clear that the UN and Agriculture agencies support the current systems of trade and growth, and ignore the impacts of economic inequality. They identify the roles of small holders in growing local foods for local communities without paying any attention to the realities of  the economic power of the 1%.........their control of  funding and investment. If local farmers are to be able to respond to the failure of crops, it is necessary for them to have direct access to finances that will allow them to innovate and develop new crops and new methods.

Inequality, Poverty, Hunger, Injustice

At a time when more food is grown in a year than at any other time, 1 billion people are undernourished - go hungry, and 1 billion suffer obesity -the effects of over-eating!

In 2012, out of a world population of 7 billion, 10 million are multi-millionaires with access to $42 trillion, of which 1225 are billionaires with $4.2 trillion: the so-called 1%!  The unregulated global banking services operate derivative/ futures markets creating $800 trillion, along with a credit default swaps market creating $600 trillion.  The Gross Domestic Product of global trading is estimated  by the Bank of England at $500 trillion. Clearly, we live in a world where there is more money than ever before. But most of it is controlled by  a small minority. Unless this wealth is released for agriculture, it is unlikely that the poor and hungry will survive.

Alongside this elite minority of plutocrats, there are 1.5 billion people who are trying to survive on less than $1.25 a day. There are up to 1 billion people who go hungry everyday.

 The reports published in 2012  by the FAO, WFP, IFAD, CGIAR, CCAFS declared that 868 million people suffer undernourishment.   30% of the world’s population suffer micronutrient deficiency. 2 billion people suffer the consequences of micro-nutrient deficiencies. 100 million children under 5 are underweight. 2.5 million children die every year due to malnutrition. 12.5% of the global population are undernourished. There are more hungry people in Sub Saharan Africa, western Asia, and North Africa now than in 1992. The number of overweight children has reduced, and the stunting of children under 5 has decreased.

We live in a global society in which the majority  are poor.

The extent of deprivation is appalling, given the luxury of the few!   

Many of their problems could be eliminated if the elite plutocracy shared their wealth in cooperation with the poor majority! If the cycle of poverty is to be broken, political action is required to redistribute wealth, and develop social welfare programmes.

World Trade

Most of the world’s poor depend on farming. Therefore, agricultural growth could reduce poverty. But the reports reveal that agricultural situations are very complicated.

The farmers are not necessarily the owners of the land. One of the impacts of globalization has been that many  crops and land are controlled by sovereign funds [that is, national governments] and banking investment funds. World Trade influences what is grown, harvested, and sold. For example, China controls many acres in Ethiopia. The crops are stored for use in China, not sold for food in Ethiopia.  The UK and the EU sponsor farmers in Kenya to grow flowers for export on some of the most fertile lands in the country. Crops are not always grown to feed local communities. Too many crops are grown as products of world trade.

Across the world, commodity corporations like Glenstrata, Unilever, Walmart and other supermarket corporations, support the growth of such crops as wheat, maize, rice, potatoes, bananas, oranges, apples, satsumas, tea, coffee, lemons, pineapples, palm oil, olive oil, sugar, nuts, and so on,  for sale across the world. They keep prices of food low in the field, and protect their profits by manipulating the prices in the shops.

In the face of a world population rising to 9 billion, the global demand for food is expected to increase by 60% by 2050. [It is worth noting that no report explores the possibility that the undernourished and hungry will die, and the world population will decline or be static].

At the moment, agriculture is regarded as a good investment by many corporations, countries, and investment funds not for the food but for the profits. It is these agricultural investors who manipulate supplies and demands, and prices, making food supplies more insecure. It is important to realize that not only climate change  imperils food security, it is traders and investors, who alter food prices at a time of maximum production? who decide that bio-energy crops are more profitable than food crops, without any regard for the needs of the vulnerable and hungry and deprived -the poor.

Social Priorities

Given that we live in a global society in which most of the wealth is controlled by an elite plutocracy, and the majority of people are poor, the social and economic priorities must change in the future. The  FAO insists that in order for economic growth to enhance the nutrition of the neediest, the poor must participate in the growth process and its benefits: (i) Growth needs to involve and reach the poor - small holders should share the profits of their labour, and not be subject to capitalist exploitation.

(ii) the poor need to use the additional income for improving the quantity and quality of their diets and for improved health services; and

(iii) governments need to use additional public resources for public goods and services to benefit the poor and hungry. Agricultural growth involving smallholders, especially women, will be most effective in reducing extreme poverty and hunger when it increases income to farmers and generates employment for the poor.

 In those countries where most people are dependent on agriculture, small holders play a key role in meeting food demands.  The FAO asserts that small holders are more efficient than large scale monocultures; more sustainable, and promote a green economy. The FAO argues that in the future, so as to respond positively to the predicted rising demands for food small holders will need

access to credit so as to be able to invest in new crops and land;

to gain access to transport;  and storage  with  refrigeration,   so that they can look after the harvests and reduce waste;  

to secure land tenure,  and establish their property rights so that they can withstand land grabs by corporations and governments;

constant access to education, in particular literacy and numeracy,  so that they can understand new laws and policies and practices.  

Social Protection

Social protection is crucial for accelerating hunger reduction. First, it can protect the most vulnerable who have not benefited from economic growth. Second, social protection, properly structured, can contribute directly to more rapid economic growth through human resource development and strengthened ability of the poor, especially smallholders, to manage risks and adopt improved technologies with higher productivity.

Economic and agricultural growth should be “nutrition-sensitive”. Growth needs to result in better nutritional outcomes through enhanced opportunities for the poor to diversify their diets; improved access to safe drinking water and sanitation; improved access to health services; better consumer awareness regarding adequate nutrition and child care practices; and targeted distribution of supplements in situations of acute micronutrient deficiencies. Good nutrition, in turn, is key to sustainable economic growth.

To accelerate hunger reduction, economic growth needs to be accompanied by purposeful and decisive public action. Public policies and programmes must create a conducive environment for pro-poor long-term economic growth. Key elements of enabling environments include provision of public goods and services for the development of the productive sectors, equitable access to resources by the poor, empowerment of women, and design and implementation of social protection systems. An improved governance system, based on transparency, participation, accountability, rule of law and human rights, is essential for the effectiveness of such policies and programmes. Of course, the problem is that in many countries of the world these programmes are not being developed, and government elites are taking all grant-aid monies for their own benefits, and their families. The recent revolts in Libya, Egypt, Tunisia, Yemen, Syria have revealed that the ruling families have taken all the money to sponsor their lives of absolute luxury! in the midst of total poverty.

The United Nations must work to educate citizens and their rulers as to the needs for hunger reduction, for social protection, for the empowerment of women, for human rights, and rule of law.

Diet Changes

Climate patterns will lead to direct changes to crop survival. Droughts and floods will cause crop failure immediately. 2012 has seen the failure of the maize crops in the USA. The FAO and its agencies are exploring the implications of climate change for food crops that provide the staples of regional and local diets. The three main sources of our calories, maize, rice and wheat, face  extreme weather events that could significantly depress yields. Key sources of animal protein, including cattle, goats, sheep, and fish likewise may be imperiled.

According to the FAO, more than half of the calories consumed globally come from the three crops: but maize, wheat and rice production will be severely challenged by climate change. In some places, it may be possible to overcome the challenges by breeding more resilient varieties, such as those that can withstand high heat, drought or flooding. But  climate change may threaten the livelihoods of nearly one billion people living on less than two dollars per day who keep livestock. Already, they do not eat enough food to meet their energy requirements. This problem will rapidly intensify as an additional two billion people populate the planet during the next 40 years. The dramatic increases in food production that are needed must take account of the impact of climate change on farming regions and crop varieties.

So what is going to happen when it is no longer possible to grow wheat, rice, and maize? How many people will die?

One of the crops that can be used to fill this calorie gap is cassava, which is both a cash crop and a food staple in Africa and Asia. More importantly, cassava tolerates numerous stresses, ranging from infertile soils to heat and drought. Certainly, cassava could help to meet food needs in South Asia, where higher temperatures and prolonged dry periods will reduce the viability of wheat and rice.

Bananas are another crop that could fill regional agricultural gaps. Plantains and cooking bananas provide some 70 million Africans with more than a quarter of their calorie requirements. They are currently grown in the humid and sub-humid tropics, the tropical highlands and drier subtropics. Climate change may affect banana cultivation in certain areas, but its range is expected to adjust, not shrink. In the near future, it may be possible

to cultivate bananas at higher altitudes with a shorter time between planting and harvesting (although bunch size may decrease).

The important point is that agriculture has to adapt beyond maintaining the viability of wheat, maize and rice in the face of climate change and finding replacement crops. And given the thicket of technical, environmental, cultural and political issues involved in shifting dietary staples, this adaptation work needs to rapidly accelerate to keep pace with climate change. Adaptation will have to take place all the time over the next 40 years in response to climate changes and population growth

One of the more common sources of vegetable protein is the soybean. While widely grown in the United States, Brazil and China, soybean is a relatively new crop in sub-Saharan Africa. But it has been adopted with some success in the savannah regions. Some African cultures are already adding the soybean, high in protein and vegetable oil, to their traditional recipes. Soybeans, however, are extremely susceptible to increased temperatures. The areas in the US and Brazil that cultivate proteins for export would face steep declines once the temperature exceeds 30°C. There are estimates that US soybean production alone could decrease by as much as 80 percent in this century.

Chickpeas, another traditional source of vegetable protein, are grown and eaten across

five continents, including regions where hunger is a constant concern. The chickpea may be vulnerable to climate shifts, in part because it is usually grown on marginal lands and with minimal amounts of fertilizer and irrigation. In these settings, the crop is already vulnerable to attacks from pests and environmental stresses.

Climate change is likely to have a mixed effect on chickpeas. The anticipated increase in carbon dioxide levels could be beneficial, but higher temperatures will hinder their growth.

Cowpea, known in sub-Saharan Africa as a “poor man’s meat,” is an essential part of the

diet in many regions. Not only does it have ample protein, but several varieties contain

an exceptional amount of micronutrients. The crop is grown mostly in the dry savannahs and is generally more drought-tolerant than other plants. Cowpea vines play a valuable role in providing dry-season feed for ruminant livestock.

Barley is one cereal, though, that could help improve nutrition, especially in drier parts of the world. It contains high levels of micronutrients—especially zinc and iron—and can be used as livestock feed. Barley also can fetch a relatively high price in markets as the grain is valued in producing alcoholic beverages. Barley could be attractive in a world of rising seas and more frequent droughts, as it is known for its ability to withstand salinity in the soil, in addition to heat and drought. There needs to be more research to determine just how much stress barley can sustain, but its ability to adapt to climate change appears to surpass many of today’s most important crops.

Millet and lentils are highly nutritious foods that are similarly able to withstand harsher growing environments. They are ready-made to help poor communities maintain and increase food security as climate conditions reduce yields from other food sources. However, they are not a bullet-proof adaptation option since certain climate stresses can reduce their yields as well.

Cultural Change

The FAO and agencies accept that food and cooking and diets are important aspects of ways of living, and expressions of social cultures. For example, the Mediterranean diet with olive oil, yoghurt, oranges, apples, herbs, feta, garlic, fresh fish, tomatoes, wheat is seen as part and parcel of living in Greece, Italy, and Spain.  The adoption and use of new crops and different foods and cooking requires farming changes as well as different eating habits.

Crops, such as cassava, yam, barley, cowpea, millet and lentils  could fill in the gaps caused by declining harvests of other crop  types. A key source of tension, however, surrounds adaptation that would involve abandoning a traditional food source for an entirely different one: for example, forsaking maize in the face of rising temperatures and cultivating cowpea instead. Will people embrace the new staple, however nutritious it may be? This cultural challenge is another facet of climate change adaptation that should get as much attention as plant breeding.

Despite the enormous challenges climate change will bring to food production in the developing world, and in wealthy countries as well, a number of actions can be undertaken to prevent these problems from exploding into costly crises. In its final report, issued in March 2012, the Commission on Sustainable Agriculture and Climate Change issued a number of recommendations that that can help ensure agriculture not only survives but also thrives.

These include:

Financing initiatives to help agricultural production systems become more resilient to weather variability and shocks, while contributing significantly to mitigating climate change. This includes supporting national climate risk assessments and developing mitigation and adaptation strategies.

Reshaping food access and consumption patterns to ensure basic nutritional needs are met and to foster healthy and sustainable eating patterns worldwide, and then promoting these changes through innovative education and outreach campaigns.

Significantly raising the level of global investment in sustainable agriculture and food systems in the next decade. This includes increasing the knowledge of best practices and innovation by supporting revitalized extension services, technology transfers and communities of practice.

Developing specific programs and policies to assist populations and sectors that are most vulnerable to climate changes and food insecurity. This includes creating and supporting safety nets and other programs to help vulnerable populations in all countries become food secure.

Establishing robust emergency food reserves and a financing capacity that can deliver rapid humanitarian responses to vulnerable populations threatened by food crises.

These recommendations focus our attention on the necessity for making finance available; promoting sustainable diets; sustainable agriculture; support for vulnerable populations; and food reserves. 

REFERENCES

Recalibrating Food Production in the Developing World, Policy Brief 6

CGIAR/CCAFS 2012.

Achieving Food Security: final report by the Commission on Sustainable Agriculture and Climate Change/ CGIAR 2012.

Climate Change and Food Systems: Annual Review Environmental Resources.

Vermeulen, Campbell, Ingram 2012

State of Food Insecurity in the World FAO/ WFP/ IFAD.  2012

TOWARDS A GREEN ECONOMY

CLIMATIC EVENTS.

October 29/30 2012, Hurricane Sandy, a weather system covering over 1000 square miles of the Atlantic Ocean, is busy wreaking havoc across the eastern coasts of North America.

Its size and energy has revealed clearly to the tenants of the ‘millionaire cities’ of the USA and Canada how helpless they are in the face of climatic catastrophe. For example, it is reported that 7.4 million people are without electric power, and 12,000 flights have been cancelled, and all airports closed. In New York, all people have been told by Mayor Bloomberg to stay home! Upstairs!

Its size and energy has shown that rich communities in New York, New Jersey and Washington DC are as subject to storm destruction as the poor villages of Haiti and Cuba.

Its size and energy has restarted the debates in the USA about climate change and global warming.

GLOBAL WARMING

Global warming and climate change are linked to the pollution of the atmosphere by human action.  Pollutants stop heat escaping from the biosphere, and increase the temperature differences between the tropics and the polar zones, and the upper and lower atmosphere. The greenhouse gas emissions of carbon dioxide from plants and fossil fuels; methane from animals;  chloroflourocarbons, CFCs, from refridgerants; and sulfur dioxide from volcanoes and other sources of geo-thermal energy release excess heat energy into the atmosphere . Atmospheric carbon dioxide comes from the decay of plants, volcanic eruptions, waste products of animal respiration. It is removed by photosynthesis in plants, and dissolved in water. It stays in the atmosphere for 100 years. These emissions are recorded as particles per million: 450ppm is critical, and 600 is catastrophic. This year it has been reported that 400ppm have been found above the Arctic, and that 395ppm will become normal, leading to significant climate change, and weather extremes.

Will it be possible to limit the pollution of the atmosphere by controlling gas emissions from farming, forestry, fisheries, fossil fuels like petroleum and coal and timber? At the moment, by products of farming create a lot of gases and pollutants. For example, many supermarkets and food commodity companies grow foods which are transported by lorries and shipping across the globe all year round.

Extensive attempts have been made to produce bio-ethanol from maize and other crops, and to limit the use of fossil fuels. But these attempts have resulted in increasing competition for land and crops, food and fuel, and water supplies, making the conditions worse in parts of Africa, Brazil. 

SUSTAINABLE FARMING

At this time, October 2012, the Food and Agriculture Organisation, the World Health Organisation,  the United Nations Environment Programme and other agencies of the United Nations, as well as other environmental groups, have decided to promote sustainable farming by linking what farmers grow with what people eat: sustainable diets.

If many people want to eat meat, then the farmers will rear cattle, sheep, goats, chickens. And the production of methane will increase.

If people want to have milk, cream, yoghurts, then farmers will produce dairy products,

with cows grazing on grasslands creating methane and carbon dioxide.

The evidence is that as communities become wealthier, meat consumption increases, using more resources such as land and water to raise sheep, poultry, cattle.

Ironically, as people become more affluent they adopt poor eating habits such as ‘take-away foods’, ‘fast foods’ leading to poor nutrition, obesity, poor health. The so-called ‘western food model’ with high meat, high salt, high sugar, low fibre, low nutrient content has led to 2 billion people being overweight and obese. The increasing competition for land and crops has resulted in 1 billion people suffering from hunger and malnutrition, and 2 billion showing under nutrition and micro-nutrient deficiencies [2011]

While there is no agreement on the nature of sustainable diets, there is agreement that there should be less meat and dairy products, and more vegetables and fruits.

The Mediterranean diet is held up as a model: with olive oil, wine, nuts, fruits, vegetables, pulses, beans, herbs, spices, low fat yoghurts, meats: all locally grown.

It has been realized that farmers produce what they can sell, what people eat. So if we want to alter what is grown on the farm, we have to alter what people eat. When people eat more fruit and vegetables, farmers will grow  more. The argument is that :

Sustainable diets lead to sustainable farming and encourage local foods at local farmers markets.

Current practices which use chemical fertilizers, as part of  industrial scale monocrop  farming, with irrigation  and global transport and international storage, undercut basic natural conditions, including water, soil formation, biodiversity.

Current practices have side effects such as ground water contamination; pollution of surface waters; green house gas emissions; soil erosion, degradation.

Threats to agriculture arise from competition for water; competition for land such as

 bioenergy crops or food crops or expanding cities; and climate change.

Food waste and loss is huge! Globally, 1.3 billion tonnes per year, an estimated one-third of food produced for human consumption, is lost or wasted in storage or transport.

Current practices will have to change.

Sustainable food systems are part of a ‘Green Economy’.

Sustainable diets aim to reduce the impact of food production on resources and the environment by encouraging consumption of foods that require smaller amounts of  resources than others; a plant based diet that enhances the nutrition of diets so that fewer people suffer from diseases, malnutrition, or obesity.

A sustainable diet is one which is good for humans and the eco-sphere both in the present and

the long term and take into account factors such as

• environmental: including biodiversity, energy, climate change, water, land use, and

soil preservation;

• public health: including food safety, nutrition, equality of access, and waste reduction;

• socio-cultural: including acceptability, ethical and moral, identity, information, and

education;

• economic: including affordability, accessibility, true price, productivity, efficiency,

employment and waste reduction;

• qualitative: including taste, pleasure, appearance, perceived value, freshness, and

seasonality.

These factors are often addressed in food policy and supply practice as separate ‘single issues’ when they need to be viewed coherently, as an integrated policy framework.

The challenge for the twenty-first century is to produce sustainable diets that are

biodiversity-promoting, food-based diets meeting nutrient requirements while conserving and

promoting sustainable ecosystems and human wellbeing, optimizing natural resources and

respecting environment carrying capacity. Sustainable diets require a strong emphasis on local production, distribution and consumption, to reduce embedded energy, while others stress the need to prioritize incomes of farmers, associated workers as well as of the food industry or respecting and protecting cultures of consumers and communities.

In this regard,  the Sustainable Development Commission (SDC) of the United Kingdom Government  suggested a new definition of food security in terms of “genuinely sustainable food systems where the core goal is to feed everyone sustainably, equitably and healthily; which addresses needs for availability, affordability and accessibility; which is diverse, ecologically-sound and resilient; which builds the capabilities and skills necessary for future generations” [2009]

According to FAO, sustainable diets are defined as “those diets with low environmental impacts which contribute to food and nutrition security and to healthy life for present and future generations. Sustainable diets are protective and respectful of biodiversity and ecosystems, culturally acceptable, accessible, economically fair and affordable; nutritionally adequate, safe and healthy; while optimizing natural and human resources” (FAO, 2010).

A Green Economy

UNEP defines a green economy as one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In its simplest expression, a green economy can be thought of as one which is low carbon, resource efficient and socially inclusive. In a green economy, growth in income and employment should be driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource

efficiency, and prevent the loss of biodiversity and ecosystem services. These investments need to

be catalysed and supported by targeted public expenditure, policy reforms and regulation changes. The development path should maintain, enhance and, where necessary, rebuild natural capital as a critical economic asset and as a source of public benefits, especially for poor people whose livelihoods and security depend on nature. The concept of a “green economy” does not replace sustainable development, but there is now a growing recognition that achieving sustainability rests almost entirely on getting the economy right.

UNEP: Towards a Green Economy, 2011

UNEP: Avoiding Future Famines, 2012

FAO: Sustainability Diets and BioDiversity 2012

www.sustainablediets.com

www.eateco.org/environment