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Reconomy: Is a Transition Enterprise people-centered?

Today we are faced by both an enviromental and a human crisis - of poverty. Typically these have been seen as discreet issues with the world sustainability often used in the environmental context, by corporations in particular. Some even make "too many people" the central point.

What if sustainable business adopted a "people first" strategy where human rights is a key component?              .

I was struck by the potential alignment when I first discovered the Transition Enterprise definition last year, 

Transition Enterprise definition

A Transition Enterprise (TE) is a financially viable trading* entity that fulfils a real community need, delivers social benefits and has beneficial, or at least neutral, environmental impacts.

*  viability means to at least meet costs, and means of exchange other than money may be used.

A TE does not have to emerge from a Transition Initiative, it is just the term we are using to help identify those enterprises that have the traits which align with Transition principles. If you have a better generic name than ‘Transition Enterpirse’ please let us know.

 

Characteristics of a Transition Enterprise

1. Resilience  outcome – TEs contribute to the increased resilience of communities in the face of, for example, economic uncertainty, energy and resource shortages and climate change impacts. As part of their community, TEs are also resilient in themselves, seeking to be financially sustainable and as independent as possible of external funding.

2. Appropriate resource use - TEs make efficient and appropriate use of natural resources (including energy), respecting finite limits and minimising and integrating waste streams. The use of fossil fuels in particular is minimised.

3. Appropriate localisation – TEs operate at a scale appropriate to the environment, economy and business sector with regard to sourcing, distribution and interaction with the wider economy.

4. More than profit – TEs exist to provide affordable, sustainable products and services and decent livelihoods rather than to generate profits for others. TEs can be profitable, but the use of their excess profits prioritises the community benefit rather than benefit to investors.

5. Part of the community - TEs work towards building a common wealth, owned and controlled as much as is practical by their workers, customers, users, tenants and communities. They have structures or business models which are as open, autonomous, equitable, democratic, inclusive and accountable as possible. They complement and work in harmony with other TEs.

People-Centered Economic Development

P-CED is clearly about putting people in the centre of economic development and began with a paper on an alternative to traditional capitalism, a social purpose concept that today is reflected by terms like social business, fourth sector and "more than profit" Essentially a business which operates for the benefit of the community. In 2004, we began using the term "profit for purpose" to describe it, The P-CED model is a self-sustaining business which distributes no dividend and invests at least 50% of profit in stimulating the local economy. We describe this as the new 'bottom line"

There is certainly a resilence outcome which can be illustrated by the proof of concept project in Russia and subsequent activity in Eastern Europe. In 1999 Russia was in the grip of an economic crisis and US efforts to create a free market economy had floundered. The suggestion made at the time was to invert the top down development strategy and put the necessary resources in the hands of those in greatest need - the poorest. The Tomsk Regional Initiative and microfinance bank were the outcome, leading to the creation of 10,000 microenterprises. There was also considerable reslience ready made in the culture of Dacha cultivation which kept many unpaid Russians from starvation.  

As we say: "P-CED advocates for the development of localized people-centered economics on a global basis"

In the US Local Food Systems inc make the distinction between a production and a people-centered local economy, saying

 

"For some, a local economy is production-centered as represented in the graphic above.  In this model, production is the starting point in the center.  Examples include goat cheese (thanks to Abbe Turner and Lucky Penny Creamery for hosting our session!), lambs for meat, and CSAs.  Output, whether food, water, energy, fuel, or housing and clothing, targets specific market niches among people in the outer ring (the arrows point outward). Output has the option of passing through the steps of processing, preparation, and retail along the way.  The system is designed according to three organizing principles: money rules, keep your business to yourself (the brutal free enterprise system at work), and scale up at every opportunity to extract a competitive advantage."

"The alternative local economy is people-centered, as depicted in the graphic above.  In this instance the system starts with people as a market block in the center who, collectively, draw the output of the various systems to them based on satisfying a critical need in the most affordable, convenient, healthy, safe, and secure manner.  In other words, people in a local area become the integrative agents who define the system and bring the elements together on their terms.  This can be as simple as serving a plate of food from local sources, or as complex as manufactured components and assemblies in a major advanced energy installation made in local distributed manufacturing operations. "

It should also be clear that the production centered approach is also our prevailing economic paradigm, which aligns with the profit maximisation model of major distrbutors. Walmart is the classic example,with its stance against paying a living wage. In 2003, it was P-CED founder Terry Halman's fast for US government to ratify the International Covenant on Economic, Social and Cultural Rights, which began our engagement with a US Senator who would subsequently stand for election as President with a camapaign against global poverty.   Similary, with a fundamental predicate that no person can be disposable, he took a stand on the case of 'Death Camps, For Children' to place all children in loving family homes.

With  a post growth people-centered local economy we make shift from production and profit maximisation toward what local people need with consequent reduction of demand on planetary resources.   .  

With his 'Economics in Transition'  presentation paper to the 2009 Economics for Ecology conference, Hallman had pointed out:

"The prevailing economics systems in the twentieth century were capitalism and communism.  Both systems were hypothetically aimed at creating a means of providing people with comfortable, safe and secure life.

Along the way, in the process of attempting different forms of economics from capitalism to communism, we have managed to pollute and contaminate our own environment to the extent of causing environmental change to the point of quite possible catastrophe for people around the world.  Neither the capitalist system nor the communist system – nor the various fascist systems attempted in such as Germany, Spain and Italy – lived up to their promises.  Communist and fascist systems became infamous for mass murder.  The Western capitalist was less murderous. Overall, capitalism was able to produce a much larger middle class of people between rich and poor, and has gained precedence due to making safe and secure life possible for more people.   But, it's various methods over the past 100 years left millions of people to suffer and die more indirectly than outright murder.  Those people were dismissed as relatively unimportant, mostly left to die from deprivation rather than outright execution.  In all systems, some rationale was created to either dismiss people and leave them to die, or, kill people outright.  In the end, for the victims, the result was identical.

In that context of disposing of people, by all economic systems, and with capitalism having become predominant, financial profit came to rule the day.  Profit, the bottom line, was master of all else.  People and the environment we live in were secondary considerations.  The vehicle of Western capitalism was, and is, corporations.

Corporations are legal structures created as legal entities to carry out the business – financial – objectives.  Under US law, corporations are a legal person.  What sort of person?  According the psychological assessment measures in the Diagnostics and Statistical Manual, Fourth Edition (DSM-IV) used for personality assessment, corporations meet the strict clinical definition of a psychopath.  “Psychopath” is another word for lunatic, or, someone who is legally, criminally insane."

In 2009, there was a call for social and economic justice from within the UN, from a Nicuaraguan priest, who said:

“The anti-values of greed, individualism and exclusion should be replaced by solidarity, common good and inclusion. The objective of our economic and social activity should not be the limitless, endless, mindless accumulation of wealth in a profit-centred economy but rather a people-centred economy that guarantees human needs, human rights, and human security, as well as conserves life on earth. These should be universal values that underpin our ethical and moral responsibility.”

- Miguel D’Escoto Brockmann, the President of the United Nations General Assembly speaking in 2009

Last year for the MIX initiative, with the article 'Reimaginging Capitalism for People and Planet' I described how people-centered economics began with the question "what if business were about serving people?"  As Matthew Lynch says in his 'Beyond Sustainability' presentation about regenerative economies - "people, planet and profit in that order"