Programmers and Cheese-makers, Unite!
Martin Bartels
12 May 2021
New powerful platforms
In recent years, we have seen the astounding rise of companies that, with the help of sophisticated Internet-based platforms, make it easy for their customers to avail themselves of valuable resources, usually at lower prices. Globally standardised apps allow people to access chauffeur services or holiday accommodation, for example.
While they do not own the resources, the platform operators are very efficient intermediaries. There is increasing criticism from the owners of the resources to be mediated because they feel disadvantaged in the distribution of economic yields. There is a view that the management of the platforms, and in particular the shareholders, not only have the longer leverage due to their technical control of the allocation, but also make an excessive use of it in their favour. The grievance is "exaggerated extraction."
The accusation may lead courts and legislators to intervene to shift the power structure of the operating companies in favour of the resource owners. In such cases, the owners may be guaranteed a minimum of benefits.
The platforms may perceive themselves as global and thus not national. In fact, however, the resources which they allocate are always national. Nation states undeniably have the right to define standards for their territory.
Extraction
The question of the adequacy of extraction by shareholders is as old as the first incorporated company. The Dutch East India Company (“Vereenigde Oostindische Compagnie”), founded in 1602, was the first company to limit the personal liability of its shareholders to the nominal value of their shares and to focus the interest of the shareholders solely on extraction. The shareholders made their revenue through transactions with the shares and through the distribution of profits.
https://dutchreview.com/culture/history/voc-dutch-east-india-company-explained/
https://www.businessinsider.com/rise-and-fall-of-united-east-india-2013-11?r=DE&IR=T
It is in the nature of the corporation, even today and regardless of its unfortunate beginnings as vehicles for colonialism, that shareholders are keen on extracting profits without having to be interested in how these are generated. We can call failures and abuses of the model "accidents" or give preference to Peter Schumpeter's notion of occasional "creative destruction". Nonetheless, there can be no doubt about the model's historical success. Over the centuries the concept has evolved in the finer details, stimulated national economies and promoted technical progress. This aspect is not the subject of this article, so we will not delve into it.
A modern attempt to replace the extraction model: “ownership economy”
In order to get straight to the core of the question, we will now skip the classical economic debates on the topic of "extraction" and turn our attention to the issues triggered by the platforms which were mentioned at the beginning of this article.
On 14 July 2020 (French Revolution Day!) Jesse Walden published a passionate article on what he labelled the “ownership economy”
https://variant.fund/the-ownership-economy-crypto-and-consumer-software/ .
Taking the crypto space’s success story as a point of departure, he argues that in the programming sector there is not always a need for shareholders interested only in extraction. Rather, the programmers who create economic value could secure the economic advantage for themselves without having to share it with outsiders. He describes examples of platforms through which programmers, independent of their locations, serve their clients directly and put themselves in a more advantageous position through their shared independence.
SingularityHub staff together issued an impassioned call to break free from shareholder chains and instead build cooperative structures that give profits only to operators.
https://singularityhub.com/2020/11/12/can-the-ownership-economy-fix-internet-platforms/
David Richins argues particularly enthusiastically that with the "ownership economy" a new model is now available that stands between the two irreconcilable systems of capitalism and socialism and avoids their disadvantages: "Something new and different is born.”
https://www.youtube.com/channel/UC0gAiB_tl9I9WNwb1iKq2nw
The ideal habitat for this new model that the masterminds unanimously recognise is the blockchain, whose structure is considered ideal for the operation of egalitarian networks.
https://www.forbes.com/sites/mattspoke/2020/10/27/blockchains-and-the-ownership-economy/
There is a growing consensus that mature electronic platforms are now the means to connect service providers in such a way that they can successfully distribute high-quality services together and without external shareholders.
Back to planet earth
There are no reasonable arguments against the substance of the "ownership economy" approach. However it serves the good cause to bring the feelings of enthusiasm from the stratosphere back to the ground. In fact, the range in which this logic can claim validity is much larger than the authors cited expect:
Modern alignment of human resources
Much of the “ownership economy” logic is to be seen against the background of constantly improving global infrastructure for fast communication and an economic model that includes and rewards talents in certain modern work processes regardless of their location and solely with regard to the value of their contributions. Particularly the software industry’s Open Source movement makes valuable contributions regardless of the geography and origin of those involved. This also serves the recognised goals of diversity in the talent pools and integration of emerging market economies without forcing specialists to emigrate.
Economic necessities with mainly positive side effects, not idealistic objectives, are at work here.
The "ownership economy" is the continuation of a successful model
In the 19th century, when poor farmers had no capital to buy powerful agricultural machinery, they set up cooperatives with their savings. These then bought, maintained and used the expensive equipment together. In big cities, when low-income citizens could not afford to pay the rent, they set up housing cooperatives. These constructed and managed buildings that created affordable housing. In view of rising rents, membership in a housing cooperative is still an essential pillar for many people to secure their economic existence.
Individuals like
Friedrich Wilhelm Raiffeisen
https://www.youtube.com/watch?v=SwIfwgLFouU
https://www.iru.de/about-iru/,
Robert Owen
José María Arizmendiarrieta
https://www.youtube.com/watch?v=QPhk-ljfpdI
https://www.youtube.com/watch?v=zO9GicoqCTM
the Friendly Societies movement
https://omelas.co.uk/2019/08/16/the-forgotten-history-of-friendly-societies/
and the National Cooperative Business Association
stand at the beginning of economic models based on common ownership without external shareholders. A very large number of interconnected cooperatives are guided by this model and have become a powerful and valuable part of many economies. They are serious competitors of private enterprises and public institutions. One of their strengths lies in the loyalty of their members, who are co-owners.
Cooperatives do not refuse to make profits. They differ from charities, which do not pursue profit as a goal at all. Cooperatives do not know the pressure to pay dividends to external shareholders. Since the shareholders of the cooperatives are themselves, in whole or in part, the often numerous users or beneficiaries, they easily become rooted in society.
Cooperatives have conquered substantial market shares in many sectors: agriculture, housing, financial services, purchase and sale of e.g. shoes, electronics, foodstuffs, forestry and healthcare.
https://ec.europa.eu/growth/sectors/social-economy/cooperatives_en
Mondragón is the biggest cooperative group of the world
https://www.nytimes.com/2020/12/29/business/cooperatives-basque-spain-economy.html
https://www.youtube.com/watch?v=L9sV6peQgUk
On average, cooperatives are more stable in crisis situations than companies. The reason for their resilience may be that most cooperatives were created in response to emergencies. The defence mode is an essential part of their DNA.
As early as the 19th century, many nation states began to additionally stabilise cooperatives beyond their articles of association through statutory foundations. They continue to adapt this legislation to new requirements.
Close ranks
The study of the historical causes and the resulting ethical foundations of successful cooperatives is undoubtedly exciting. However the representatives of the "ownership economy" approach are concerned with concrete results. They will know that success is contagious. So the best approach to get their ideas on the road to success quickly and without unpleasant surprises is to take a pragmatic approach by talking to firmly established and dynamically growing cooperatives. These are open by nature.
Two questions seem particularly relevant:
• How can a cooperative expand quickly and sustainably where the market is mature and very competitive?
• How and in which areas can the new electronic platforms achieve the most valuable effects?
The proposal could be to talk to cooperatives that have managed to build up strong positions in very demanding markets. Additionally, cooperatives that, like the representatives of the "ownership economy", have potential to increasingly achieve their success with modern electronic means, should be of particular interest:
(i) Italian cheesemakers
Italy is a country with zero tolerance for bad or mediocre food. So this is a hugely challenging market for suppliers.
https://www.bbc.co.uk/reel/video/p09cstbb/the-surprising-link-between-food-sin-and-the-oral-phase
One of the globally highly valued top products is Parmesan cheese, “Parmigiano Reggiano”. This product is the result of centuries of accumulated expertise and continuous ambition to deliver best quality.
https://www.parmigianoreggiano.com/
85% of the Parmigiano factories are cooperatives co-owned by the dairy farmers who provide the milk
http://www.bbc.com/travel/story/20190127-italys-practically-perfect-food
https://caseificiofiordilatte.it/cheese-factory/
https://poggiolicoopcasearia.it/en/our-story/
https://www.youtube.com/watch?v=oj2wrNnhMpc
and are fighting to secure their prosperity with the best technical equipment and methods.
The farmers’ cooperatives are also innovative in terms of financing, because they use the cheese as collateral for bank loans already during the slow maturation process.
https://www.reuters.com/article/us-italy-bonds-parmesan-idUSKCN0VB1OQ
The wealth of experience in conquering and defending mature markets will be impressive.
(ii) Hamburg taxi drivers
It is a mistake to believe that classic regulated taxi companies are moribund. In Hamburg, a traditional taxi company, a cooperative, has positioned itself in such a way that the new chauffeur services find it difficult to compete, despite lower prices.
https://www.taxi211211.de/en/home.htm
"Hansa-Taxi" used to be and still is the market leader in Hamburg. The company is faring well even under the conditions of the COVID pandemic. The recipe for success is a well-developed combination of classic and new success factors:
• The customer orders a ride either via a now popular app or by phone. There is no compulsion to use the electronic route, so customers with more traditional preferences feel no hurdles.
• The response is pleasantly personal for registered customers and always extremely polite.
• The company only uses only modern and well-maintained cars.
• It immediately addresses special needs (e.g. child seats).
• Special services (e.g. pick-up from the airport, tourist guides) complete the offer.
• The drivers have undergone special training so that the passenger feels as if (s)he is being accompanied by a first-class butler in terms of courtesy and assistance.
The cleverly designed combination of modern technology with the traditional personal needs of customers has an inclusive effect simply because it appeals to more people. No customer senses an attempt to force them to use electronics, not even a nudge, but everyone has the opportunity. Hamburgers honour the freedom to choose and consciously pay a higher price to the cooperative than they would for the use of the new chauffeur services.
It is likely that the renunciation of pushing the customer down a particular use case scenario alone is a key to customer satisfaction and thus to market success. Forcing the customer to use a service a particular way is not free of coercive elements. It is better to do without it.
The Hamburg cooperative will have a few more recipes for success that are valuable for the masterminds of the "ownership economy".
Further expansion
It is probably fair to say that the evolving model of the "ownership economy" fits harmoniously into the cooperative movement, adding the use of location-independent electronic platforms for the coordination of high-value human resources as an additional building block.
Advanced blockchain technology is already being used where cooperatives started, namely in the distribution of usage rights for agricultural machinery.
In which areas can the next successes be achieved using the absence of extraction by external shareholders?
In addition to programming, obvious areas are those in which high-quality online services are already beginning to develop and can be expected to grow qualitatively: Education, media, medical counselling. The prognosis for finding further areas of application is promising. And creativity, just like electronics, needs no borders.
We know for sure that cooperatives are more resilient than corporations and have the ability to enrich the market with high quality services and goods, the quality of which they continue to perfect. This leads to the next question, which we cannot answer here:
How "agile" are they in the modern sense of the word?
To set the stage
Lao Tzu’s words sum up a dramatic contemporary scenario: While in some parts of the world people are increasingly affected by water scarcity, others face the growing threat of too much water due to extremely heavy rainfall and rising sea levels.
While the poem captures the ambivalence of water perfectly, the words "soft and weak" also seem to describe the way modern civilisations have responded to it. Their foggy perception and sluggish action is just as dangerous as the threats themselves.
Why Water?
The focus of this essay is to use the prominent example of water to help identify concrete approaches for dealing rationally with the issue of climate change. Climate change affects us in many ways, including the expansion of deserts, forest fires, the salinisation of soils, landslides, extreme weather events, agricultural crop losses, loss of biodiversity, spread of disease and human and wildlife migration.
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Scientists and engineers have laid the foundations for our prosperity. And only these elites can show us the way to overcome the harmful externalities of these very engines of our wealth. This article supports the thesis that we are technologically and organisationally in a position to successfully meet these challenges, step by step.
One obstacle to the mobilisation of existing resources lies in the fact that the general public has only a vague understanding of the issue. They do not realise that, unless we make controlled sacrifices, nature will impose uncontrollable sacrifices on us.
We urgently need to overcome the human tendency to trivialise and understand with our minds and hearts what will happen if we do not listen to the guidance of our scientists and engineers. However, while these experts hold the keys to the right strategies, they are only trained to communicate with other scientists. This leads to a situation of misunderstanding and therefore a lack of adequate action.
Blurred perception of facts
Every day, we are all exposed to an overdose of reports about minor and major disasters in all forms of media. We more or less defend ourselves against this by ignoring some news, i.e. reducing the strain on our nerves by filtering information. It is human nature to rely on the mostly correct assumption that unpleasant developments will eventually end and change for the better. In the case of climate change, however, looking away and hoping things resolve themselves doesn’t appear to be a winning strategy.
A wealth of scientific analyses on climate change is available to everyone, but these are mostly comprehensible only for other scientists.
We should openly acknowledge that most people in the northern hemisphere have a sense of empathy for people "in the south" who are plagued by overpowering rains, flooded lowlands, islands disappearing into the water, eroding coastlines or droughts. However, the geographical distance and lack of awareness of the frequency of such disasters dilute solidarity. Collective psychological repression can set in quickly.
Most people in the northern hemisphere do not consider an increase in average temperatures of a few degrees to be alarming. Many even express relief that the winter is often milder than in the past. Loud protests by campaigners are experienced and understood by most citizens as a disturbance or perhaps exaggerated fearmongering.
At the level of policy, scientifically informed decision-makers attend international conferences on climate change, where they negotiate with other decision-makers on action plans that have no teeth but are presented as hard-won progress. And they are increasingly supporting “green” sectors of the economy. However, they are often reluctant to share the full extent of their knowledge about the problem because they do not want to jeopardise their recognition by “rocking the boat”.
The factual impact level is decisive for citizens
There is controversy about the interplay of causes of climate warming (industrial emissions, volcanic activity, ocean currents, etc.). We don't want to debate that here. What is more relevant are the changes in global average temperatures and their trends, as determined by scientific methods.
- Uniqueness: The most important fact is that a warming of 1.5%, 2% or even more is highly unusual in geological terms. If we are looking for a comparable global warming of this magnitude, we have to go back to the Pliocene: "Paleocene-Eocene Thermal Maximum". This period was 5.3 to 1.8 million years before our era. The causes back then were different and the temperature rise did not occur at the same speed as today. A comparison with the more imaginable “Medieval Warm Period” in the years from 750 to 1350 CE may appear plausible at first sight. However, this consideration cannot reassure us, because the temperatures were lower than today, and it was not a global phenomenon.
- Causality: Increasing global warming is causing glaciers and polar ice sheets to melt. At the same time, the increased temperatures in the oceans are causing the mass of water to expand. The combination of both factors has an impact on islands and the coastlines of the continents. These include the rising of sea levels and temporary or long lasting floods inland. The number of extreme rainfall events inland with destructive power has increased significantly in recent decades, with regional differences. East Asia is most affected. An additional knock-on effect results from the release of the greenhouse gas methane, much of which has been previously locked up in frozen land and is now being released as it thaws.
- Dimension: The Intergovernmental Panel on Climate Change (“IPCC”) has concluded that there has been a 1% increase of average temperatures since preindustrial times until 2017. The IPCC projects another 0.5% increase over the next 20 years. This assumes what is not certain, namely that greenhouse gas emissions will be reduced immediately, quickly and on a large scale. However, the latest "sclerosponge thermometry" research results suggest that the rise in average temperature is 0.5°C higher than the IPCC consensus. This means that by the end of this decade, almost 20 years earlier than expected, global warming could already be 2°C above pre-industrial levels. . In the following, however, we continue to refer to the lower IPCC estimates. According to IPCC calculations, it is to be expected that water levels will rise between 0.65 and 1.1 metres by the year 2100. Other models project between 1 and 3 metres by the year 2100. Not all coastal areas will be exposed in the same way. Ocean currents, tidal range and the topography of the coastal areas will make major differences. Through simulations, readers are given a vivid idea of how water will change our living conditions. It is important to note that the northern hemisphere does not enjoy a privilege, meaning that torrential rain, flooding and storm surges are increasing and will continue to do so there too. It should be noted that sea level rises of up to 30 metres are not unusual in geological history.
- Other causes:
There have been dramatic rises in sea levels in history that were linked to the melting of ice at the end of an ice age, i.e. not to the CO2 content of the atmosphere. At the end of the last ice age, around 10,000 years ago, there was a rise of up to 120 metres, albeit through a slower process than the change caused by climate gases today. The result was a significant retreat of coastlines.
Instantaneous interruption or reversal of a climatic process?
Changes to the climate are not new in human history, and certain events have triggered reductions in temperature. A striking example of a break in climatic developments is the eruption of an Icelandic volcano in the year 536 CE, whose dust made the atmosphere in the northern hemisphere so opaque to sunlight over a period of more than 20 years that temperatures fell drastically ("Little Ice Age").
Recently, it has been hypothesised that ice ages were triggered by asteroids.
It may be tempting to pin our hopes on the possibility of such events helping us to mitigate climate change, but while we cannot rule them out, events of this kind are rare and unpredictable, we must not include them in projections. It would be absurd to hope for random external causes that could interrupt or stop the progress of global warming. While hope is a human propensity, it is not suitable for contingency planning.
Our real bottleneck
What is preventing us from taking appropriate action to minimise and reverse the rise in average temperatures?
Citizen perception of the nature and dimension of the threat is inevitably blurred, because the daily reports from the media are mostly unstructured and not comprehensible to non-scientists. The reports do not allow us to recognise the essentials.
Citizens need an overview that is communicated in an honest, understandable and clearly structured way. Only when citizens have realised the nature and scale of the problem will decision-makers have the courage to take action with determination. In essence, it is about legitimising protection strategies that are considered unpopular today.
Given that citizens do not have access to graspable knowledge, we have a transformation problem. And this can be overcome if science presents the overall scenario from a certain distance. Figuratively speaking: It is not about describing every pixel point of an image, but about showing the image as a whole. The holistic representation deviates from the usual approach of scientists, because each of them is professionally held to focus on "pixel points" in their respective area of specialisation. This is the only way science makes progress, but that's not what is needed here.
The contours of the hologram can be communicated in an understandable way using e.g. the key points mentioned above:
- uniqueness: there has never been a rise in atmospheric temperatures as fast as now
- causality: the most important trigger is industrial emissions
- dimension: a rise in atmospheric temperatures of 1.5 or 2° Celsius or more above pre-industrialisation levels will massively weaken our civilisations
- other causes: additional factors can further exacerbate the process
If the effect of a detail is not legible, the presentation of the measurement can be improved. In particular, the exponential impact of very small changes in average temperatures in the atmosphere goes very much against human intuition. We can compensate for this disadvantage in perspective: Instead of referring to changes in temperature in degrees Celsius, we should consistently communicate changes in basis points, i.e. in hundredths of a degree Celsius. For example, labelling a temperature rise as "32 basis points" would be correct and would make the difference easier to comprehend than "0.32 °C". This method is a common practice in the financial industry. There, too, this method of representation is helpful in raising awareness that a small change can have massive implications.
Comparing our planet with human bodies helps us to comprehend the effect of changes in temperature: If your body temperature rises by 1° Celsius, you have a fever and are not feeling well. If the temperature rises by 1.5 or even 2° Celsius, you are very ill and hardly able to work. It is similar with our planet: If it experiences increases in average temperatures of this magnitude, it shows the symptoms of a "serious illness". However, this "fever" does not go away after a few days.Truthful and comprehensible holographic description will work like a call to action as sensible citizens will refuse to accept the idea that their lives, that of their children or that of their grandchildren, will be exposed to significant and unparalleled danger.
Here is a simple example of a call to action: It is true that the onset of toothache does not necessarily trigger a reaction in us straight away. We are perhaps still hoping that it will go away on its own. But at some point we turn to the dentist for help. We may later find the dentist's bill stressful, but the relief of finding a solution to the problem outweighs this. It is necessary that we anticipate, that we sense the expected greater pain, in order to take the initiative.
Governments will only act vigorously when informed citizens demand it vigorously. There has been pressure from sections of the population for a long time, but its direction has always been vague and therefore not sufficiently effective.
And like a dentist, a government cannot act for free, but will send bills to taxpayers. The later the comprehensive strategy is implemented, the higher the bill.
Defensive and offensive measures
The necessary government action plans are not the subject of this article. It should only be mentioned that defensive measures are necessary first, e.g., improved meteorological warning systems, raising and strengthening of dams and dykes on the sea coast and rivers, preparation for the abandonment of non-defensible areas. In addition, measures are needed to halt the dangerous trend and then slowly reverse it. These essentially consist of avoiding emissions and removing greenhouse gases from the atmosphere.
Desperate measures?
The keyword for desperate actions is "geoengineering". This could imply approaches such as making either the atmosphere or our oceans absorb less sunlight or bind more CO2. While these approaches sound exciting, they are not fully developed and run the risk of causing irreversible damage. As such it is unlikely they will be used.
Sabotage of the communication of scientific work
There are two groups working against open and fair communication between science and the citizens.
Refuseniks who are not interested in facts work against this. They are used to believing their own feelings and those of their friends from social networks. There should be no discussion with them, because deviations from their assumptions act as fuel for them. Science will not lead them out of their dream worlds.
Then there are the sceptics, who may have expert knowledge but only select those parts of it for their thinking and communication that seem to support their rejection of action. This is a dangerous species, because “expert” sceptics can claim some credibility and can disrupt societal communication successfully. The only way to weaken these people is to persistently ask them for better and well-founded alternatives. Then they have to provide verifiable answers or quietly hoist the white flag.
Acknowledgements:
My heartfelt thanks go to Professor Reinhard Gast. As a practising geologist and experienced researcher, he has helped me to grasp the exponential impact of seemingly minimal changes in the temperature of our atmosphere, similar to our own bodies, and the uniqueness of the current situation.
Authorship disclosure:
Fully human generated