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Linda Nowakowski (230)

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Current edit on Spring Interconnections article

Posted to: Linda Nowakowski (230) by Linda Nowakowski (230), Sun, 21 Feb 2010 13:28:15 PST
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Ethical Business Works.

Linda Nowakowski describes the upsurge of new sustainable businesses in the US, and argues Economics needs to expand its epistemological base if it can embrace the systemic and connected models that are emerging.

Linda Nowakowski

Traditional Economics tells (or at least tries to tell) us how things work and what we need to do to make good businesses: how much product to produce; how to price it; when to stay in business; when to get out of business; how many people to employ and how much to pay them; how to maximise profits by externalising costs. It confidently advises that businesses MUST grow. Economics has theories and models to provide us with all of this information needed in the world of markets. And what is fascinating to me is that it is based on a model where every transaction is done by individuals acting alone in self-interest; furthermore actions are based on the rational evaluation of each situation, weighing of the costs and benefits of all options in order to determine the resultant action. A simpler model has never been proposed. This model has resulted in a reductionist approach that would indicate that the whole is a simple sum of its parts. In this model, a person’s work life is deemed to be separate from their home life which is also separate from their spiritual life. However, there are different ways of determining how we lead our lives. In this article, I am exploring the upsurge of new companies, and the principles that help them flourish. I am more concerned here with the systems in which they operate rather than with the reductionist aspect, and with how economics may need to change in order to adapt to these new systems

Undoubtedly, human beings are complex creatures. Indeed, we can view people as complicated systems wrapped up in flesh and bounded by skin. As a complicated system, we have many simultaneous roles in our lives and routinely accomplish complicated tasks balancing obligations, relationships, and time among other things.We have a psychological, emotional, spiritual aspects to our being and these determine the actions that we take. Just like any other system however, any small change, anywhere in the system, can have disproportionate effects elsewhere. Just as an indiscriminate action caused by a short ‘bad’ mood can lead to possible divorce, in a different system, the sub-prime mortgages in US has created a world-wide crisis. To view the world and ourselves in it as systems gives us an alternate view of our existence and relationship to other systems. However, Economics, that cornerstone of business, is predicated upon a more limited view.

So that leaves us with a challenging question: if we are complex systems, is this model of homo economicus deep enough to provide us with viable Economic analysis and practice? Has Economics itself become split off from the reality it is supposed to describe?

Such a difference between the old and the new can be seen when we look at traditional as opposed to new emergent businesses. The traditional ( and still largely current) business climate is one in which businesses maximise profits by externalising costs, minimising expenses, growing increases in the bottom line or dying, and developing new products that are advertised in order to develop needs from wants. But today in business we can also see growing numbers of businesses that are not based on this old model. These businesses are not primarily motivated by a maximisation of returns. They are driven by very different motivations such as : their environmental and social impact; the people they work with are enabled to live full and growing lives;; organisations that the goods and services they provide satisfy real human needs. Such enterprises are not concerned with size particularly. They may simply stay small.

What is happening in reality?

What are the characteristics of the people starting these new businesses? What kind of people are they attracting to participate with them? In this complex system of economic engagement, and using the language of chaos and complexity what is/are the strange attractor(s) that ensure that these businesses flourish?

I recently spent two months in the Denver, Colorado area studying a number of businesses. I talked to founders, co-workers, sub-contractors, suppliers and clientele. I did in-depth work with five businesses all less than five years old. [1] I also interviewed people from three other companies. [2] The most mature of those companies was a brewery that is now 18 years old and has approximately 350 employees. The youngest company is an organic landscape design firm that is less than a year old and still only one person. The businesses are large and small, service, manufacturing, retail, wholesale, and education.

Traditionally, I would talk to you about how much money they are making, but actually, this would not be in keeping with what these businesses are about. Using a systems lens, however, is how these companies “feel”, how they interact with the larger systems of which they are part, and how they evolve and grow ( which may not be measured in terms of the bottom line). Each of these eight businesses was established by a person (or persons) who was (were) passionate about the work of the business. The work done by these businesses is quite varied.

Braden Organic Landscape Design [3] is a permaculture gardening business that was set up to provide a real-life proof of concept of an alternative/supplemental economic system that allows communities to thrive by providing additional transactions that can include people and other living species that are not valued in the current economic system. This has the additional benefit of also healing nature. This was started by forming a number of community organic gardens where the people participating owned the means of production. It progressed this fall to teaching people how to start to process the produce for future use either for self consumption or as an exchange product. It is now working to see how to accomplish vertical integration of businesses in order to achieve economies of integration. Possibilities for economies of integration here might be: Utilizing hoop houses to pre-start seedlings and then also be able to sell excess, teaching classes in permaculture, providing garden/landscaping maintenance, processing garden products for home consumption or sale, opening a restaurant to use produce, etc.

Hooked on Colfax [4] is a coffee bar in a Denver neighborhood that is working to revitalize after years of community neglect and deterioration. The owners decided to open the business in order to be a part of helping to bring the neighborhood back to what they had previously known. They not only provide a wonderful, high quality, retail product but they also work full time promoting the community. The people who work in the shop all live in the neighborhood. The businesses in the neighborhood blatantly promote each other and cooperate to encourage community development. Neighborhood meetings are held in the shop and the décor and entertainment celebrate local artists.

The owner of Moondance Botanicals [5] told me: “I wanted to help women, specifically women…helping them really nurture themselves on a really deep level because I feel like if we are nurturing ourselves, we are going to be able to nurture our kids and our partners and the earth and those we interact with.” She explained that she came to this realization as she was leaving a corporate management position because she had chosen not to deal with the stress anymore. The company has built a community that is geographically local but growing. It has expanded over its four years of business to provide massage therapy and classes in holistic health care among other offerings. It was this same woman who told me directly: “I don’t consider them (the people working here) employees, but I have about eight different women that are involved here.” This business encourages the women involved in it to develop products and services and the owner nurtures them and assists them to go out on their own.

Two women with a passion for hand-crafts, knitting and crocheting and a deep belief that the creativity that that kind of work develops brings mental and spiritual health came together to develop Fancy Tiger Crafts [6]. They teach classes in sewing, quilting, spinning, knitting, crocheting, felting and embroidery. The teachers that they sub-contract with and most of the clientele are from the local neighborhood. Every employee indicated that they could not imagine leaving this workplace.

Blue and Yellow Logic [7] is a social enterprise founded and powered by wo(men) of color.” This social enterprise took two women who had been working in sustainability and turned them into social entrepreneurs providing educational services to train people of color in black and Hispanic neighborhoods in what it means to be “green” with the goal of moving these undervalued people into productive green jobs. Their belief is that until these people understand and embrace the value of a green lifestyle, they cannot value those potential jobs. Recently all of the “employees” were turned into sub-contractors due to the instability in the market. In interviewing some of these employees I didn’t find disgruntled employees, but rather I found people working on their own time continuing to develop the networks and programs that will help this business succeed.

Picture two brothers and their father starting a new international business, and making it a huge success and you will be imagining the history of Novo Coffee [8]. One of the brothers is an inveterate traveller. He had made some contacts with a family of coffee growers in Ethiopia and wanted to help provide overseas markets for them. His brother and father joined him in the challenge and they have in a few short years, moved from nothing to being named the 21st best cup of coffee in the US in 2008 [9], and the best coffee in Denver in 2009 [10]. Their fair trade coffee now comes from other countries than Ethiopia and helps more people around the world while providing their customers an excellent quality product.

SAME (So All May Eat) Café [11] is not like any restaurant you have experienced. There is no menu and there are no prices. Portions are small but seconds (and thirds) are encouraged. (This procedure minimizes the amount of food waste.) The organisational structure is as a non-profit providing gourmet, organic, whole food for the homeless and unemployed. Meal payment can be in service or financial donation. Much of the labor is provided by volunteers. The philosophy: “Everyone, regardless of economic status, deserves the chance to eat healthy food while being treated with dignity.”

The last business is New Belgium Brewing Company [12] in Fort Collins, Colorado. The oldest of the companies, founded in 1991, is also the largest of the companies with 348 employees as of August 25, 2009. This company is operated as an Employee Stock Ownership Plan (ESOP) where the employees are expected to accept the responsibilities of ownership not just the benefits. The company has two full time sustainability officers, effectively recycles their waste stream, is the first wind-powered brewery and works diligently with community organisations where they are distributed as well as where they manufacture. They are actively working toward responsible beer consumption and work/corporate cultures. They have a written a vision statement and a strategic plan that are worked day in and day out.

Sense of community and common good

The most striking common aspect of these organisations is their unflagging sense of community and the common good. The organisations themselves form a community and each one sees development of external community as one of its major goals and responsibilities. There is a sense of responsibility for each other. There is real caring in these businesses at every level.

This has been an initial state for each of these companies; it has been a part of the culture from the beginning. But there is no accepted definition of social enterprise or social entrepreneur. All of these businesses would qualify. And many other businesses that did not start out with these same ideals have functionally become social enterprises over years of operation. For example the local garage [13] that simply started out as a garage but over the years found that the community it worked in depended on its quality and integrity. The company found that making the community a part of its life benefited the company, the employees and the community. This view of the work of the company changes how you do things. Externalities are now seen as affecting your community, your friends, your family and yourself. They become unacceptable behaviour. 9 Linda, I don’t understand last two sentences) When you see your customer as more than an isolated third party, then you begin to treat them as persons rather than customers.

Community creates responsibility

We are seeing an emergence or more likely a re-emergence, of personal attachment to and responsibility for our business actions as we find ourselves back in a community. Here, the lives of lives of employees, customers and other stakeholders are integrated within a business and social community, as opposed to distant third party and hierarchical relationships that exist in our larger companies, based on the traditional economic model. The change in our methods changes how we know and how we know changes our methods. Whereas traditional economics works from an abstract theoretical and rational model, we can see that these companies are thriving on a different type of ‘knowledge’ which comes from practice itself. Changing our Economics models

Traditional Economics theory uses an epistemology based on reason, logic and critical thinking. These examples cited above show quite clearly, that there are other ways of knowing which include trusting the source of the knowledge, intuition or personal inspiration, and personal experience. Rational choice theory would hold that knowing something by any of these other means would not be rational and therefore cannot be involved in or affect economics decisions. However, clearly decisions made in every other sphere of human life, are not only based on rational or self-interested choices. These thriving and committed companies were making decisions made on many different factors. This moves us on from thinking about businesses as clockwork mechanisms to ones in which the business is defined by the people who make them up but who are equally influenced and developed by the work they perform. It is much more an interactive dance than a static model.

If we consider homo economicus, then as a complex system, then we need new models of action and choice. Rather than reducing the complex system to component parts and analyzing those parts to understand the whole, in a complex system, we might look at the whole as a dynamic (living) interaction of subunits where the subunits help define the whole while they themselves can only be defined in terms of the whole.

What I saw in these emergent community businesses were the seeds of a post-industrial economy that is holistic, vibrant, ethical, and sustainable – based on community and focused on local production that is primarily for local consumption. It heralds a potential economic development model that can provide real integral development in local communities on a global scale. Even if traditional economists do not change their models, my observations suggest that action of the ground will eventually lead to a reevaluation of the epistemology and methodology of research in economics – if it is to exist as a viable source of guidance in the future.

[1]Braden Organic Landscaping Company, Hooked on Colfax, Moondance Botanicals, Lucky Tiger Crafts, and Blue and Yellow Logic.
[2]Novo Coffee, SAME Café, and New Belgian Brewing Company.
[3]http://www.organiclandscapedesig n.org/
[4]http://www.myspace.com/hookedonc olfax
[5]http://www.moondancebotanicals.c om/
[6]http://www.fancytiger.com/crafti ndex.html
[7]http://www.blueandyellowlogic.co m/
[8]http://www.novocoffee.com/
[9]Digital City. http://www.digitalcity.com/2008/ 10/01/the-21-best-cups-of-coffee -in-america/
[10]Westworld. http://www.westword.com/bestof/2 009/award/best-coffee-beans-1053 480/
[11]http://www.soallmayeat.org/
[12]http://www.newbelgium.com/
[13]http://www.jeffsautomotiverepair .com/


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