What Money Can't Buy

Michael Sandel Sept 12, Labour Party Conference

Really enjoyed the talk by Michael Sandel from Harvard yesterday.  Funnily enough I was relistening to his Reith lectures the other week.  I'm a particular fan of the idea that we don't always want to be consumers, we do actually want to be citizens as well.

His idea that we are now living in a market society, not just a market economy, is particularly pertinent these days, especially when it comes to issues like trust that I have blogged about before.  Valuing things only when they have a price tag attached does not reflect the values that we all have.  CEO salaries no longer reflect the value that they bring to the job.  Price no longer tells us something about the real value of an item, all it tells us is how the 'item' wants to be valued.  

Responsible Capitalism-who do we trust?

Copyright Philippa Roberts 2012

It's been a grim week already on the economic news front, as we bounce from the Libor rate fixing scandal to resignations and fines in the face of wrong-doing.  Just a quick look at this week's headlines in the FT shows Bob Diamond leaving Barclays, GSK fined $3billion by the US authorities and an ex-Glencore staff member being sued for fixing the price of cotton.


I've just been listening to George Osbourne on the Today programme and was interested to hear him say that the regulators failed and 'this causes the current crisis' (that's not an exact quote btw).  I find this comment quite astonishing as it implies that we all need someone watching over us otherwise we'll be dishonest.  Obviously that's nonsense, but the role of the regulators is important.


We are in a period of significant change at the moment.  Our institutions, and our trust in them, is part of the glue that holds society together.  David Brooks talks in The Social Animal about how institutions pass on knowledge, and norms of behaviour, and are subject to incremental change over decades and generations.  However, at the moment, trust in key institutions is low.  We have been rocked by the Parliamentary expenses scandal, the media's phone hacking, the police taking cash for information and now the banks fixing rates that ultimately impact my, and your, mortgage.


I think we will look back on this period as being significant because these institutions are important, not only for what they do, but also for providing the checks and balances on each other.  At the moment, with scandal after scandal, it is difficult to see who should be trusted to play that role.  There has to be change, because the economy will never recover unless we have trust and confidence in the country's ability to make sure the game isn't rigged.  Why would I, as a small business owner, go to a bank right now if I needed capital?  Especially when I hear from my peers that it isn't lending.  Why would I be going through tender processes for new work if I think there is an old boy network in place and the winners will be the same companies as usual?


Confidence is key.  I'm a positive person, so think that the change will happen and that it will set us on a slightly different and better course.  I also think that at some point the sun will come out this summer, so don't put money on anything I say!  The important thing is that with so much uncertainty it is difficult to have positive growth plans; better to sit tight and wait and see what happens next.  We need our institutions to be strong and trustworthy. If we don't think that we all have an equal chance of making it (in however we define 'it') then why bother trying?

Glas Half Full

River Lugg, Herefordshire. Copyright Philippa Roberts

Glas Cymru, the not-for-profit parent company of Welsh Water has announced a massive spending programme for the next three years, which it says will create 1,500 jobs.  Chris Jones from the company says it is able to do this in part because of its not-for-profit model in an article in this week's Guardian.


Welsh Water's press release says that not only is this £100 million more than they originally planned to spend, but that 50% of it will be spent with local companies.  This is exactly the sort of investment I've talked about in a previous blog here, that I think we need to get the economy going.  It's productive investment, rather than speculative investment and it's interesting that Glas Cymru think this is possible because of their unusual ownership structure.  They are the only water company that is a not-for-profit and not state owned.


Obviously at this point I should declare an interest and say that not only do I live in Herefordshire and so am a Welsh Water customer, but I am also a member of Glas Cymru.  I feel proud to be part of such an innovative company and the reason why I became a member was because of this ownership structure.  (All of which doesn't mean that I think privatisation of the water companies was a good idea in the first place.)


Personal involvement aside, I think you'll agree that this is refreshingly good news when so much else is bad at the moment.  Only time will tell if it's going to be money well spent, but I think it's exactly what we need to do right now.

Podcast: Changing the Way We Think About Cars- Forever

Copyright Philippa Roberts 2012 Riversimple's car will be a whole lot more efficient than this

A discussion with Hugo Spowers from Riversimple about the hydrogen fuel-cell powered car of the future.  But you can't buy it!


Start: Who, or what are Riversimple?
5min: What is a hydrogen fuel cell and how does a hydrogen fuel cell car work?
9min: Mass decompounding explained
10min: The car company that doesn't sell cars
12min: Car materials - carbon fibre versus steel
15min: Business risks
17 min: End of life vehicles (ELV) - disassembly and recycling cars
19min: Open source design
23min: Company structure and innovative governance

Futuristic car, futuristic company

Had a great morning interviewing one of the founders of Riversimple.  It's the most inspirational company and one that caught my interest a few years ago because of its open source car design.

The company itself aspires to change personal transport, and so has created a hydrogen fuel cell car; no battery, no combustion engine.  Amazing what you can do when you start with a blank page and a problem - i.e. how to make transport sustainable.  When you compare this with the normal approach of  tweaking what you already have, you can understand why both their proposition and their business model is so exciting and, I think, demonstrates so well what I am talking about when I speak about collaborative capitalism.

More to follow.  I'll edit the podcast this week so you can hear all about it for yourselves!

Austerity versus Investment - the double dip answer

ONS GDP and the Labour Market - 2012 Q1 - April GDP update

Last week the ONS released the official statistics that show we are once again in recession.  As the table I've copied here, and the explanation summary that goes with this table state:

"..total output has declined by 0.5 % over the last two quarters.  The economy has not expanded at all over the last year.  Since 2010 Q3, when the economy had grown for five consecutive quarters following the 2008-09 recession, real GDP has contracted by a total of 0.2%."

Now as a Keynesian, I unashamedly will see this as an example of how the austerity package isn't working, especially when compared to the current performance of say, the USA.  However I believe it also demonstrates the importance of one of the key characteristics of collaborative capitalism - long-term sustainable investment.


When I talk about sustainable investment, I am of course talking about triple bottom line investment, but with the environment as perhaps the most important of the three factors.  The last Government invested heavily in our social infrastructure - in rebuilding schools and hospitals in particular.  What I believe is now needed is an investment in our environmental infrastructure, if we are to be truly competitive and have an economy that has a chance of being successful over the next few decades.


At the CIWM Midlands AGM last week, Martin Brocklehurst gave a great presentation about the importance of resource security and how that is currently driving the EU environmental agenda.  It is an argument I have mentioned before; one being made by the Green Alliance and the Ellen MacArthur Foundation in this country.  But it is one that our policy makers talk less about.  If we want to 'rebalance' the economy then we need to make sure that our manufacturers have a secure and price-stable source of the resources they need.  And the thing we know about most of these resources, if they are raw materials? That despite the dismissal of the limits to growth arguments, they will run out (in an economic, if not a real sense).  


Right now, China produces over 90% of the world's heavy rare earth metals which are used in mobile phones, computer screens and hybrid car technologies.  Until quite recently US demand was met by its domestic supply, now that demand is met by China.  This oft-cited example is a snapshot of potential future resource security issues, but there are many more examples on our doorstep.  In the waste and resources sector we collect valuable materials for recycling, and then send them abroad for processing, while domestic companies struggle to find the same clean materials as feedstocks for their processes.


Environmental investment would be investment in these areas.  We must support the infrastructure that will allow us to keep these valuable resources and materials in the UK, beingprocessed here and made available for manufacturing.  This is how we will support business and job growth in the future.


It's not just waste and resources infrastructure that needs the investment.  In environmental investment I also include energy, water and transport.  We have benefitted hugely from the Victorian legacy of infrastructure built to last and benefit future generations, not just this week's shareholders.  This is the type of investment that should be at the heart of Government policy right now.  It's a key part of Collaborative Capitalism and a should be top of George Osbourne's to-do list.

Podcast: The Co-op Approach to Solar

Copyright Ben Whittle 2012 Leominster's Solar PV

This podcast discusses what you need to do to get a community-owned solar PV project up and running.  Ben Whittle and Philippa Roberts talk about the issues faced in Leominster, Herefordshire.


Start: How Ben became involved
3min: Why a solar co-op?
6min: Who else is involved and why?
9min: How to set up a solar co-op
13min: Changes to the Feed in Tariff (FIT)
18min: Getting PV on the roof and the support from Good Energy
20 min: The future of community renewables.

Can Community Solar Survive?

Copyright Ben Whittle 2012

I recently interviewed Ben Whittle, a founding Director of the Leominster Community Solar Co-op.  This Herefordshire based community project aimed to put a large solar PV array on the local sports centre; owned and funded by people who lived in the area.  Unfortunately, the launch event happened a matter of days before the Government's first 'review' of the Feed-in tariff.

While the solar industry has seen strong growth in recent years, and should be considered a success story, it is under threat from a lack of faith in the investment environment.  Regular and unexpected changes to any subsidiary will always cause uncertainty, and make it harder for projects to get off the ground.  I personally know projects that were cancelled as a result.



So did the Leominster project make it?  Listen to the interview and find out!

Can Technology Save Us?

Interesting article from the TED Conference showing the contrasting views of Paul Guilding and Peter Diamandis.  While Paul argues that our obsession with economic growth is overloading the planet's capacity to support us, Peter believes that technology will save us.

It's an argument that has been going on for some time, and one I've written about before in an earlier blog.  It's hard to defend growth when you hear about the environmental limits, but harder still to not defend it in this time of austerity.

I think the conversation would be more fruitful if we were trying to figure out what sustainable 'growth' could look like.  It's probably true that we are measuring the wrong things, but GDP is going to be the indicator of choice for some time yet.  So while that is the case, now is the time to be looking at the new business models that will change the world.  There are ways to improve living standards that don't involve consuming more.  There are collaborative businesses that do this, whatever there legal status.  I'm tracking some of these down to find out how and why they do what they do, and will be writing about them here.  If you know of any, or you are one, please get in touch. I'll bring the biscuits when I come and visit.

Collaborative Capitalism - The Detail Behind the Soundbites?

"It’s the economy, stupid"

The centre-ground that is occupied successfully by any political party is the one that focusses on economic stability.  If a party cannot be trusted to be a safe pair of hands when managing the economy, then it has no credibility.

But since the last time we had this conversation twenty-odd years ago, things have changed.  Pay inequality has grown, as salary rises at the top vastly outstrip the increases in the middle and bottom.  Familiar companies that were considered national institutions have disappeared, gobbled up by private equity and larger corporations, without account being taken for their importance as national symbols of success and collaborative capitalism.  Building a business or a service, and creating value is not considered as interesting as the quick win of trading and the X Factor of takeovers.  Suddenly 'moral' capitalism is back battling against 'crony capitalism'. However I don't believe these  soundbites are anything but a reaction to what is happening.  There is very little detail on what a better future might look like.

Which is where collaborative capitalism comes in.  It has a long history in the co-operative movement and the Quaker-founded businesses of the eighteenth and nineteenth centuries: in the paternalistic industries from the turn of last century and the social enterprises of the last 50 years.  The time has surely come for a “less degenerate capitalism”.

Collaborative capitalism is based on the principle of working together.  It means a long-term approach to business and the economy.  It means productive investment: in skills for workers, in creating products that last, and buildings that are efficient.  It means working to the triple bottom line, where sustainability (in the Brundtland sense of the word) means considering the social, the environmental as well as the financial consequences of what you do.  It means support for SMEs and businesses that are embedded, and invest, in their communities.  Collaborative capitalism is innovative, because it pays attention to the viewpoints of many, not just the people with the largest share.  It is open-source, crowd-sourced and crowd-financed.  It is networked.

And it is happening. It’s happening with RiverSimple’s open-source car designs, with crowd-financed films like the Age of Stupid, with 38 degrees’ campaigns and in workspaces like The Hub.
The examples above of collaborative capitalism have happened in spite of, not because of, government.  However, there is a case for the state and it is one we should be arguing.

Government should provide the safety net for when things go wrong.  When entrepreneurs remortgage their homes, or invest their savings for projects they believe in, then there is an argument that this level of risk deserves a  different level of reward.  Taxes can be used to incentivise the long term holding of investments over the short-term trading for quick profit.  If we care about the environment, we need to have the conversation about whether ultimately resources should be taxed, rather than labour.  Government procurement should drive innovative change, not orders abroad.

Government is a partnership.  We must weed out the disingenuous arguments from the right that we’re all in it together when the economy is actually going backwards.  We need to show where growth can come from – collaborative capitalism is part of the solution.