In Defence of Community Benefit Societies and People-Centred business

In the Guardian Last month, George Monbiot drew our attention to limitations placed on community energy initiatives by recent legislation, pointing out that:

'First, the Financial Conduct Authority (FCA) changed the rules under which energy co-operatives could be established. As a result of the Co-operative and Community Benefit Societies Act passed into law last year, the model that has proved so successful in Germany has been deemed ineligible here. The FCA has been rejecting attempts to establish new energy co-ops on the grounds that they sell the electricity they produce on to the grid, rather than to their members.

Then the treasurer, George Osborne, quietly slipped a change to the tax rules into last year’s autumn statement. Uniquely among small new businesses, community energy schemes will, from April, no longer be eligible for two major incentives to investors: Enterprise Investment Scheme and Seed Enterprise Investment Scheme tax relief.

A different relief scheme will be available to community groups, but only if they are set up as “community benefit societies”, which are “charitable or philanthropic in character”. The profits of these societies cannot be distributed to their members or shareholders. In other words there’s a tax incentive to invest in a business that cannot make you any money, but no incentive to invest in a business that can turn a profit. A perfect formula for ensuring that nothing changes.'

 

Back in 2004, we were perhaps unique in our call for an alternative economic paradigm which put people ahead of profit, it was called People-Centered Economic Development and in our business plan made the case for this model to be applied on a community by community basis across the UK. With a focus on tackling poverty through bottom up localised economic development. it proposed that 50% of profit be invested in local community development funding institutions and the remainer be retaing for replicating nationally.  The best match for this strategy was the Bencom or Community Benefit Society.

This purpose driven business model, we'd argued could be applied to benefit the community just as well as returning profit to private hands, if the shareholders and directors of said business deemed this to be the entire point. :

:

"The opportunity for poverty relief was identified not only as a moral imperative, but also as an increasingly pressing strategic imperative. People left to suffer and languish in poverty get one message very clearly: they are not important and do not matter. They are in effect told that they are disposable, expendable. Being left to suffer and die is, for the victim, little different than being done away with by more direct means. Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode. Poverty reduction and relief became the overriding principle and fundamental social objective in the emerging P-CED model.

“Dealing with poverty is nothing new. The question became ‘how does poverty still exist in a world with sufficient resources for a decent quality of life for everyone?’ The answer was that we have yet to develop any economic system capable redistributing finite resources in a way that everyone has at minimum enough for a decent life: food, decent housing, transportation, clothing, health care, and education. The problem has not been lack of resources, but adequate distribution of resources. Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.

"Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis.”

“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

Back in 1996, it began with a critique of debt creation, which it was argued allowed wealth to accumulate in the hands of a minority at the risk that those disenfranchised would rise up to defend their existence. A point re-iterated in the business plan.

In Sumy Ukrane, with the opportunity to present to the International Economics for Ecology conference in 2009, we drew attention to risk to our own survival while our efforts to leverage a 'Marshall Plan' to tackle Ukraine's developing social crisis. "This Changes Everything" said Naomi Klein recently drawing attention to the same root cause.    .       

The Bencom is perfectly suited to plans for a renewable energy initiative in my own Forest of Dean village.

It's not the only model that operates for community benefit. As one may see, Chris Cook has a very interesting approach to Funding the Natural Grid. With his Open Capital approach investment is returned in nths of a productive asset. KWh of electricity in this case. 

 As I've learned recenlty another local initiative from the Resilence Centre plans to apply a Community Benefit Society model to their wind energy production and The Transition Enterprise concept seems to align closely with the case for enterprise which operates for the benefit of the community as a whole  rather than the benefit of members.

Interestingly, the potential a people-centered business model has been recognised by both Cooperatives Europe and Fair Trade UK who are now collaborating to promote it.

Harriet Lamb, CEO of Fair Trade International, said: “Businesses alone are not enough to tackle poverty; the EU should foster people-centred businesses. Cooperatives and Fair Trade have shown that they put high standards and strict rules on businesses, that they put people first, and still they are successful”. 

Putting people first is very well but as we've come to understand capitalism favours less than 1% of people most.  This takes us back to where we started almost 20 years ago, when we asked which people::

"At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn't the purpose of economics, as well as business, people? Aren't people automatically the central focus of business and economic activities? Yes and no.

People certainly gain and benefit, but the rub is: which people? More than a billion children, women, and men on this planet suffer from hunger. It is a travesty that this is the case, a blight upon us all as a global social group. Perhaps an even greater travesty is that it does not have to be this way; the problems of human suffering on such a massive scale are not unsolvable. If a few businesses were conducted only slightly differently, much of the misery and suffering as we now know it could be eliminated. This is where the concept of a "people-centered" economics system comes in."

In the 'Marshall Plan for Ukraine it's stated clearly:

'This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way. '

Seemingly the EU is unaware of the existence of people-centred business having held a meeting almost two years ago to discuss the "concept

In 2008, the people-centred business model was introduced to the EU with the EU Citizens Consultation and since then I've repeatedly called on MEPs for support.  A year ago to pass on a call from Ukraine's Maidan NGO who included a 'Marshalll Plan' in their appeal for support. As we know they didn't get it. In 2012, however, Sir Graham Watson had obtained for us an acknowledgement of our efforts from EU Commissioner Michel Barnier who wasn't then aware of our participation and wrote of the potention for future collaboration. We didn't get that either.

Today even the 1% in the form of George Soros see the need for a 'Marshall Plan' and substantial EU funds to deploy it. That of course doesn't mean it's going to be people-centred or serve the interests of those in greatest need,    .

Neither does it mean that Coops Europe or Fair Trade International are going to support the cause. 

The Fairtrade business model derives income mostly from payment of licences to use their logo, whereas the people-centred business model was shared, free to use for social benefit.

If we were to pass ourselves off as a Fair Trade business they would be justified in challenging our action. How then can they justify passing off  people-centred business as their own.  Given the lack of inclusion and loss of vulnerable lives, this is indefensible.  .

Using trademarks to control markets. irrespective of good intentions is a practice on which our current global economy was established: