economic activities of the society

7/28/2019 Economic Activities of the Society

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The Associative Economy

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David Cecil Nurse


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Contents

Introduction 3The unhappy workplace 5Improving the Situation 7The mutual contract 10

Three Categories in Society 14The Communist System 21The Capitalist System 24The Danger of Passive Income 27Global Economy 31

An Associative Economy 35Conclusion 47


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Introduction

The dove of hope flying from the thefinancial crises is that we will learnfrom our mistakes.

The way we do business must belooked at. In our competitive searchfor short term profit making we hit afinancial disaster. It was greed thatmade us fall. When all we see is

ourselves how can we ever see the bigpicture?

As history has shown. An economybuilt on competitive selfishness is

fragile. Let us compare it to a house ofcards just waiting to collapse.


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In this booklet we will look at aalternative way of working together.


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The Unhappy Workplace

The reason we do business is not soleybecause we wish to earn our dailybread. It is also because we wish tofeel useful to society. It's easier to behappy when you are working. Notdoing pointless work as this wouldstill leave us feeling useless. We alsolook for some individual fulfillment.

If you ask an employee if he enjoyshis job the answer is often no. Manypeople speak of Sunday apprehensionbefore the Monday work day.

Let us consider a certain type ofbusiness commonly found today. It ishighly mechanized andcomputerized. Mechanization and


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computerization lead tostandardization. Standardization is

efficient when using machines.

This way of working has spilled overinto human realm itself. Clock cardsand time motion studies are made on

the workforce. The workforce itselffeels unimportant and unconsideredand resorts to collective bargaining toexpress their unhappiness in theworkplace.

Machines and products requirestandardization. Humans requirestandardization andindividualization. Treating theworkforce in a standard way and notconsidering individual desires willonly create unhappiness.


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Improving the Situation

If we are to improve the labour forcesattitude towards work we must treatthem more individually inconsidering their desires. We mustconsider their desires in the businessrelationship.

Dignity is one thing all people desire

- everybody has a feeling of selfworth. Dignity can be given tosomeone by considering their desiresand by negotiating with them so realmutual agreement can be obtained.

It must be realised that an employeeand and employer are equals in acontractual agreement. Contracts that


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are unfair create bad business.Legally some aspects are usually

protected - for example working overa certain number of hours orminimum wage.

What is important in a contract is

that it is as fair as possible andneither party is abused. There arecases of managers having ridiculousmoney making contracts with anenterprise - this has caused an uproar

in the media lately.

What is healthy in this contractualrelationship is a bit of give and takefrom both sides. A mutually beneficialrelationship should exist. An unhappyemployee is not creative, does thebare minimum and always wants


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more. The breakdown in relationshipleads to labour unions. This type of

bargaining creates even lessindividualized contracts.


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The Mutual Contract

Contracts can be the backbone of anhealthy economy. The old contracts ofsmall hidden legal clauses should beleft behind and a new form ofcontract be used. They should bedrawn up by the contractual partiesin a process of mutual flexibleagreement. It must be a flexibledocument otherwise it will lose all

mutuality.

The mutual contract is a tool forgreater efficiency and happiness inthe workplace. The employer knows

what the business needs and theemployee knows what he can give. Atraditional employer employeerelationship is best avoided - it should


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be considered more an agreementbetween equals.

An important thing is that thecontract is set for a certain period.This creates a good opportunity at theend of the contract for review. It

allows the two parties to decide whatcan be improved upon and whetherthe contract should be renewed ornot. A contract that is detrimental to abusiness should not be carried on -

why have people stuck in businessindefinetly when it is not workingmutually.

A contract should never be a contractof enslavement. That is why the termsof what is expected contractually isimportant. A person can not be


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expected to do what ever the oneparty desires.

Having a mutual beneficialrelationship in a contract can bedifficult when the one party is givingtoo much - this often happens when

the one party is more powerful in thegiven situation. However it is an idealto be mutually beneficial in an equalmanner.

Rules and regulations should beconsidered in the contract if it effectsthe delivery of goods and service.Rules and regulations dealing withinterpersonal relationships should bevoted on by a show of hands in thebusiness. It should then apply to allpeople equally.


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The human realm and the economic

realm must be differentiated.


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Three Categories in Society.

In society three basic categories canbe distinguished :

1)Economy

2)Government, laws, rights

3)Cultural, learning and all creativethinking. This includes religion.

These categories where explored bythe economic thinker Rudolf Steiner

in his book ' The Threefold SocialOrder'.


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These three categories must be keptseperate in society for there to be a

proper social structure.

We want to avoid the followingsituations:

the government controlling theeconomy (eg communism).Thiscreates beaurocratic corruption and

inefficiency.

religion controlling the governmentor government controlling religionor learning. This can creatediscrimination and religious abuse.Communism destroyed the culture

of its people by mixing thegovernment and the culture (eg LateRoman Empire or communism)

the economy controlling culture.


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The result is uncreative moneydriven projects. Creative ideas must

be initially formed separately. Theycan be brought into the economylater. Religion can become tainted ifit becomes too much of a moneymaking exercise.

It is a good exercise to consider thedifficulties arising in history from themixing of the three categories.

It must be realized however that therewill be links connecting the threecategories. For example the rights andlaws for humans will come into theeconomic sphere. Minimum wageand maximum working hours perweek must be considered by thegovernment itself. However we don't


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want the government participatingdirectly in the economy itself.

Government interference in theeconomy is not encouraged. Recentinterference in the economy has beenlargely critisized and the long termeffects must be considered.

There are qualities suited to the threecategories :

The cultural, religious and learning

category should carry the quality offreedom. Research should beunbiased, religion a free choice andentertainment a creative process notruined by meddling financers.

The government, laws and rightscategory should treat people equally.


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Everybody should have a vote when itcomes down to communal issues and

each vote should carry equal power.A vito vote is dictatorial. The lawsshould not discriminate, they must beequal for all and not changeaccording to race, sex or economic

status. So the quality for the secondcategory is 'equality'.

The economic category must carry abrotherly quality. It is a fact for an

enterprise to work it needs people towork together. Suppliers, consumersand staff work together to make abusiness work.

The idea that economy must be basedon competition is simplistic and is aresult of not observing the economic


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process properly.

The result of competition shouldrealistically be monopolisation. In afight there should be a winner a topdog and that would be a monopoly.

Monopolies are not good for theeconomy. It may be good for its owneconomy but not for the economy ingeneral.

The idea that competition createscompetitive prices is not necessarilytrue. Monopolies usually rig theprices or collude with other bigcompanies if they are not an out rightmonopoly.

A form of brotherly working together


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seems more productive. Producersand consumers together. If we

consider a team effort in houseworkit runs more smoothly. If we trythwart each others work we wasteboth parties time and waste valuableenergy.

The thing why we don't have toworry about inefficiency in anassociative economy is that we enterfreely into contractual relationships

with each other. If we are unhappywe need not renew the contract. Thiswill be discussed later where we willsay how an associative economyworks.

Let is just state now that a associativeeconomy is not competition based.


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The Communist System

It is easy to say that communismdoesn't work. But why doesn't it work? Most people will proberly answerthat it doesn't provide an incentive towork. They think of the carrot andthe donkey. There is a different sort ofcarrot in communism - it is a bigcarrot that must be shared among thewhole population.

The reason for the communisticfailure is largely due to to destroyingthe creative human spirit. What youneed for an economy to work is

creativity and a good economicstructure and support.

It is useless if you have cheap raw


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material and labour but a no creativespirit. Creative spirit was destroyed in

communistic countries by punishingany individualistic thinking. Theeducation did not support creativitynor the economic incentive either.

The plan and simple problem wasthat the the social organism was notsplit into three. This created abeaurocratic unwieldy uncreativeeconomy.

However we must realise that thesaddest part of communism in thepast was the destruction of healthycultural life. It is a money, bread andmilk obsessed system. It was believedthat if the population concentratedsolely on economy they would be


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happy. Freedom of culture andthinking was destroyed.

Just like the financial crises it wasgreed and laziness that brought thissystem into trouble. There was a fewrich communists while the majorityof the people were poor.

It was an attempt initially at anunselfish community based economy,however it turned into a selfishbeaurocratic disaster.


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The Capitalist Sytem

The free-market has been a greatersuccess. The success of the system haslargely been the cultural and learningfreedom along with a non-meddlinggovernment in the economy.

General western markets should besplit into two main ideas. The idea ofa free-market and the idea ofcapitalism or credit.

A large part of the capitalist growthin past years has been the idea ofcredit. Credit money is spending

tomorrows money today. This isbound to push initial growth untilyou have to pay it back. Credit moneycan be useful in an economy when


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used correctly. When credit money isspent in the right way profitable

businesses can be established.

Western so called free-marketeconomy has used mostly individual'scapital while communism used

governmental capital.

The big problem in capitalism todayis the seeming loss of control ofbusiness. We have share owners

handing over responsibility tomanagers and directors. Themanagers and directors have thenfalling into the trap of chasing shortterm profits. This chasing short termprofits has been largely fuelled byspeculative short term investors. Sowe then find the managers and


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directors saying that they had no realsteering ability in the business that

they were just expected to chase shortterm profits.

So what we end up having is hugebusinesses with no one that interested

in the long term future of thebusiness. Runaway trains.

This is a generalisation but is true inmany large businesses. That control

has been lost that the business hasbeen handed over to market forces.


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The Danger of Passive Income

We face dangers in the westerncapitalist markets. People think afree-market must just run itself butthis is a very lazy viewpoint. We mustsee the consequences of our actions.

The major problem with a capital orcredit obsessed economy is therequirement of constant growth. Thisis a bit short sighted. Constant growthis not a definate (although this prettymuch happened the whole of the lastcentury). A child stops growing at acertain point; he does not grow

indefinately.

Why does a capitalist economyrequire constant growth?


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It is because so many people have

become dependent on passive incomeand so many people have becomedependent on growth to pay theirdebt.

I am considering dividends, interestand rentals as passive income.

OK here is the situation we findourselves:

If their is no growth then the stockmarket does not grow. People aredepending on passive income fortheir money. They can try take theirmoney out of stocks and earn interest.However the people who will bepaying the interest will need growth


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in their economy to pay the interest.When the economy is not this interest

is hard to pay. We have all themillions of people depending oncredit going bankrupt and all thepeople investing losing their source ofincome. They stop investing creating

even less growth.

It has been said that the cause of the2008 economic collapse was tiggeredby excess capital and no real

economic growth. Because there wasexcess capital people started givingaway risky loans. No real growth inthe economy resulted in these loandefaults which where risky in thefirst place.

Debt has been handed over to the


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governement to try keep thiseconomy rolling. However they are

just digging themselves a deeper hole.If there is no growth governmentsthemselves will not be able to pay inthe long term.

If governments just print money topay their debts they just devalue thereal growth of the economy (In theU.S. the government loans moneyfrom the federal reserve thus

effectively printing money). They aretransfering the woes of badly runcompanies on to the generalpopulation.

Once again we have a crossing ofsocial categories with governmentmeddling in the economy.


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The Global Economy

Global trade has created a hugeeconomy with some super rich peopleand much of this money has filtereddown to the poorer people.

However certain problems havearisen due to the global economy.Production shifts to countries withweak currencies and cheap labour.

This shifting of the means ofproduction is not necessarily moreefficient on resources. We have tokeep building new factories,

transporting goods all over the worldand producing for a speculativemarket.


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Due to favourable exchange rates,cheap labour and economies of scale

it has become very difficult tocompete on the open market. TheChinese economy is an interestingphenomena at the moment creating ahuge trade surplus.

Let us look at the flow of the money:

Money is like water. It must flow in acyclical manner or run dry. So we

have all this money flowing intoChina from the rest of the world -how does it flow back into the rest ofthe world. Well that is the problem atthe moment - China is building uphuge foreign reserves. They arethinking of ways to invest theirmillions but it will most probably be


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investing so they can ensure theirtrade ascendency. The rough part of

it is that they have in the recent pastpegged the value of their currencythus destroying the balancing sytemin the world economy. They wish tokeep the ascendency of their poor

currency artificially.

We can only hope that China knowsthat money must be cyclical. If notthey will destroy their own foreign

trade market.

It can be argued that it is better tokeep economy more local andknowledge more global. The flow ofmoney should not cause boom- bustsituations depending on currency. Amore local economy can be argued to


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be more easily observed, serve thevarious regions and be more stable

than an extreme global market.

Trade between different economiesneeds to be kept equal so we canbuild stable economies.

The glamourous global economy hasbrought us this far- bringing thegood and the bad. What is its future ?

It appears the global economy willcontinue a while longer. What it mustbe aware of is market self regulation.It would be better if we could seeproblems coming instead of waitingfor disasters to hit us out of the blue.


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An Associative Economy - Apossible solution

Small businesses are the hope of amore fair equal distribution ofwealth.

We need to create a system to supportsmall business. The non-powerfulmust not be sidelined in society. Thegiant enterprises will not help us

much in the future I feel. They are toobig and unwieldy they easily run overthe individuals needs like a gianttruck.

The question is how can we makesmall business work better. How canwe have our daily bread and not be


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competitive or greedy. We must allseek to find these answers so we can

have the dignity we deserve ashumans.

An associative economy is largelytaking place in our market today.

Sometimes we work in a moreassociative way, sometimes in a morecompetitive unconcious way.

The associative economy is in

opposition to the individual economyor a selfish economy. It is a socialactivity based on networking likeminded people.

An economy that works onco-operation and not competition iscalled an associative economy.


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The sad thing is that people have

been so obsessed with ideas likecapitalism and communism that theyhave overlooked the real issue athand.

There is a choice to be a co-operatinginformed concious participant in theeconomy or someone who says thefree-market system will sorteverything out for us.

There is a certain degree ofco-operation in the competitiveeconomy otherwise it would not workat all. However there is not enoughco-operation.

What we want is social improvement.


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A society is not enough if it has highGDP but the standard of living is

poor.

An associative society must keep itsthree categories separate. As spokenabout in chapter four.

Let us explain the basic principals ofan associative economy.

An associative economy wants to

increase small business as opposed tobig. It is based on networking. Thething is that small businesses struggleto compete with big businesses. Wehave to undercut our risks and costsin ways different to big business. Thiscalls for co-operation. The businessmust secure contracts to supply


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certain people ~ a regular supply ishelpful. Risk must be taken out of it

whether a market will be found forthe business's goods or not.

So you need bunch of people in acertain area to buy and sell to each

other. It works best in a certain areawith a critical number of people.When basic goods and services aresupplied in a given area transportcosts are minimised and social

networking becomes easier. It is notfundamental that it take place locally,it is just usually easier.

When a specialised product isrequired the associative economy mayhave to look to other associativeeconomies in other areas to find the


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product. You may even have tosearch in the competitive free-market

for the product. Highly specialisedbusinesses may have to supply severaleconomies to sell the critical massrequired to survive.

Why would people want to be part ofan associative economy? The reasonwould be that the mark-up would bemuch less than in the competitivefree-market. Bussinesses in the

associative economy can charge alower mark up since they will bemuch more sure of the demand fortheir products due to contracts andcommunication.

The thing with an associativeeconomy is that the people must work


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together to create efficiency.

The different players in theassociative economy must inform thesellers of what products they willrequire in advance. This is so theseller of the product can plan his

purchases and production withminimum wastage.

Contracts are needed so people can

specify in advance what they willneed. A yearly contract of regularsupply or a half yearly contract couldbe useful without too muchbeaurocracy. This way the farmer forexample will know what to plant,how much to plant and that he willhave a market for his produce. With


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this support the smaller farmershould be able to compete pricewise

with the huge competitive basedenterprises out there.

So an associative economy can growout of a competitive speculative

market. They can be operating in thesame area at the same time with somepeople working in the associativeeconomy and others not. Some peoplewould be involved in both.

What is of extreme importance in theassociative economy is that all peopleinvolved are aware that by workingtogether people can avoid a lot ofcosts:

high mark-up costs


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transport costswastage

advertising and packaging staff costs -eg sales staff etc needed

for speculative whim basedconsumption

less capital needed as less stock

holding required less time wasted with traffic( less

transport)

It is a win win situation for all

involved. Cheaper prices or betterquality products and more smallbusinesses for the people with smallamounts of capital needed.

If you want world domination withyour business then perhapes thecompetive market is for you.


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However the competive market needslarge capital which results in an

increased passive income burdon. Thefew super rich and the majority pooris the competive market route. Theco-operative moderately wealthygeneral population is the associative

market route.

The associative economy is not a newor ingenious idea. Parts of it are inuse today by many for example those

who support local businesses anddon't throw their societies money intoblack-hole bank accounts ofmonopolistic businesses never to beseen again.

Small business are the only chancefor a fair distribution of wealth and


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small businesses are usually local innature.

A lot of support to each other andcommunication are required in anassociative economy. Certainsacrifices will need to be made on

both sides to make the contractsefficient.

So if you want to start an associativeeconomy- start by writing a few

contracts with people you know andsuggesting to them to start a smallbusiness in the same way. More andmore people should join and a livingcan then be made.

If people want to be part of but aretoo greedy with price, well then


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obviously no contracts will be signed.Its all about being mutually

beneficial.

Everybody in an association will notrequire the same goods and somepeople will be in the competitive

market and partially in the associativemarket. It is a very free system but byworking together you can make smallbusinesses work.

It should not close itself off from therest of the world. That is why itshould not be a closed assocativebody but the individuals should befree to do business with whomeverthey choose. Its just a bunch of peoplewho want to do business in a certainway.


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Conclusion

If we wish to change the economy wemust start with being concious ofwhere our money ends up. Lets stopblaming society and look to ourselvesto improve our way of life.

The real issue in the economy today isnot so much the structure and formas the moral attitude of the people.Fear has made us think we must fendfor ourselves- that if we look afterourselves we'll be OK. This however isan absolute lie. The economy is asocial system - if you think you are

rich only because of yourself- thenyou are part of this lie.

So lets work together to create


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businesses that serves us as acommunity. Stop trying to make

millions out of your neighbours. Letskeep business simple and mutuallybeneficial. Work together becausebusiness is a social activity.

economic activities of the society

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