This blogpost examines whether the Co-operative Capitalism framework and the common bond concept (www.co-operativecapitalism.com) can be utilised to share the load of tackling global warming amongst employees everywhere.
Capitalist businesses and corporations are dominant in the world’s economy and their operating with shareholder obligations is a paradigm that does not lend itself to a shared overarching goal for mankind to protect this planet for our future generations. An expectation that corporates and shareholders shoulder the financial burden of what is needed to halt global warming is very unlikely to meet the required time frames. The most effective way of halting climate change is to make it a shared responsibility for mankind by sharing the load with employees everywhere. The co-operative capitalism framework which has universal application is a means of achieving that whilst retaining the essential capitalist tenet of free enterprise. This co-operative capitalism concept arises from a belief that capitalism is due an evolutionary step, and that mankind must reassert it’s humanity.
Assessing Progress in Halting Climate Change
The first UN Climate Change Conference was held in 1995 in Berlin. Conferences have been held annually since then under the framework of the United Nations Framework Convention on Climate Change (UNFCC). They serve as the formal meeting of the UNFCCC Parties (Conference of the Parties -COP) to assess progress in dealing with climate change and beginning in the mid-1990s, to negotiate the Kyoto Protocol to establish legally binding obligations for developed countries to reduce their greenhouse gas emissions. The 25th UNFCC was held in Madrid in December 2019. Alden Meyer director of strategy and policy for the Union of Concerned Scientists who has attended climate negotiations since 1991 stated that he had never seen before the almost total disconnect between what the science requires and what the climate negotiations are delivering in terms of meaningful action.
The 21st Climate Change Conference in Paris in 2015, through the collaboration of 196 diverse countries, reached a landmark admirable agreement to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future. The Paris Agreement builds upon the UNFCC and – for the first time – brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort.
The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.
The World Economic Forum in Davos, Switzerland January, 2020 presented two reports. The first report ’The Net-Zero Challenge: Global Climate Action at a Crossroads’ included assessments of progress made since the landmark Paris accord of 2015 as follows:-
‘In the four years since the historic meeting and 24 years after the first Conference of the Parties (COP) in 1995 progress on climate action has been limited at best. Global greenhouse gas emissions continued to increase by 1.5% per year in the past decade, with no signs of peaking. A reduction of approximately 5% per annum is needed to limit global warming to 1.5°C.
Government commitments so far are far from sufficient. Only 67 countries – among them none of the top five emitters – have committed to the goal of achieving net-zero carbon dioxide emissions. And even most countries with this commitment have not enacted sufficiently robust policies to attain the emission reductions required.’
Despite commitments from individual governments and companies this past decade, emissions have risen by 1.5% per year. Should this trajectory continue, the world is projected to warm by 3°C to 5°C by 2100, with catastrophic effects on human civilization.
According to the Intergovernmental Panel on Climate Change (IPCC), limiting global warming to 1.5°C requires net human caused carbon dioxide (CO2) emissions to fall by 45% by 2030 and to reach net zero by 2050. Other GHG emissions must also dramatically decrease.
The report graphically shows current CO2 emission trajectories and the required trajectories across all business sectors to attain net zero CO2 by 2050, highlighting how divergent the trends are and showing that progress since the Paris accord is alarmingly short of what is necessary.
The future of capitalism was a hot topic at the Annual Meeting this year, with a variety of opinions and positions taken by Davos participants.
Chancellor Angela Merkel told the audience at her special address
“‘The whole way that we do business, that we live and that we have grown accustomed to in the industrial age, will have to be changed. We will have to leave that behind us in the next 30 years and we have to come to completely new value chains."
Marc Benioff at the 'Stakeholder Capitalism: What is required from Corporate Leadership?’ session.
"Capitalism as we have known it is dead. This obsession we have with maximising profits for shareholders alone has lead to incredible inequality and a planetary emergency."
Feike Sijbesma at the same session.
"Maybe somewhere we derailed a little bit, where we thought making money is the real goal of the economy, where the real goal is to live happily here all together."
Professor Klaus Schwab in his op-ed ahead of the meeting: Why we need the Davos Manifesto for a better kind of Capitalism.
"Business leaders now have an incredible opportunity. By giving stakeholder capitalism concrete meaning, they can move beyond their legal obligations and uphold their duty to society. They can bring the world closer to achieving shared goals, such as those outlined in the Paris climate agreement and the United Nations Sustainable Development Agenda. If they really want to leave their mark on the world, there is no alternative."
HRH The Prince of Wales in his keynote speech
"Global warming, climate change and the devastating loss of biodiversity are the greatest threats humanity has ever faced."
HRH The Prince of Wales appealed for a new business model stating that the current model is no longer fit for purpose citing : -
Increased Income inequality
Loss of Species at unprecedented rates
Severe stress on food systems and water
Collective impact of irreversible climate change
Prince Charles concluded by asking the audience: "do we want to go down in history as the people who did nothing to bring the world back from the brink in time to restore the balance when we could have done?"
"We simply cannot waste anymore time ... the time to act is now."
The second report presented at the World Economic Forum ’The Net-Zero Challenge: Fast Forward to Decisive Climate Action’ demonstrated that action is not only imperative but also possible as follows:-
If unchecked warming continues, the consequences for human civilization will be severe. Rising sea levels could encroach on coastal regions and could flood major regions and metropolitan areas before the end of this century. Extended heat waves could threaten food security for a growing world population, while longer droughts could put access to drinking water at risk. Extreme weather events and changes to current ecosystems could produce millions of “climate refugees” and cause a deterioration in global development and economic growth. According to the Intergovernmental Panel on Climate Change, the per-capita impact of “no action” on global GDP has been estimated at minus 30% as of 2100 – in other words, it would reduce global GDP per capita by 30% (vs minus 8% for 1.5°C of warming).
Ours is the last generation that can prevent global disaster – and the need for action is immediate, and this report has demonstrated that action is possible. Multilateral policy coordination would be the best solution for halting the climate crisis.
Progress on climate action to date has been limited. On the government side, while 121 countries have now committed to be carbon neutral by 2050, they account for less than 25% remissions. None of these countries are among the top five emitters, and few, in spite of the commitment, have enacted policies that are robust enough to produce the desired effects. On the corporate side, only a minority of companies fully disclose their emissions.
In light of this global inertia, public pressure and global activism has surged in recent years, especially among the youth and in Western countries. However, public education on the threat of climate change and related climate action is still insufficient to make this a global phenomenon.
The transition to a net zero economy will be a transformational shift for all of society. Individuals have to take the lead in inciting governments, businesses and every part of society to move. The world is at a crossroads. We must fast-forward to decisive and cohesive action.
But with the slow pace of international climate negotiations to date and the complex political context , the reality is that a global consensus will probably not be established soon enough to counter the crisis. It therefore falls upon this generation of business, government and society leaders to accelerate action individually and through collaboration to develop new business models that contribute to achieving a low-carbon economy.
Governments can unilaterally enact national regulation to reduce emissions immediately. In parallel a push for action on the world stage is needed. Climate change is a global problem that ultimately demands a unified, global solution.
If unchecked warming continues, the consequences for human civilisation will be severe. The later humanity takes action, the more dire our position will become.
The future of capitalism was questioned at the World Economic Forum and several keynote speakers called for new business models. HRH Prince Charles stated that the current business model was no longer fit for purpose.
History of Capitalism
The processes by which capitalism emerged, evolved, and spread are the subject of extensive research and debate among historians. Key parameters of debate include: how far capitalism is a natural human behaviour and how far it arises from specific historical circumstances; whether its origins lie in towns and trade or in rural property relations; the role of class conflict; the role of the state; the extent to which capitalism is a distinctively European innovation; its relationship with European imperialism; whether technological change is a driver or merely an epiphenomenon of capitalism; and whether or not it is the most beneficial way to organise human societies.
Viewpoints on capitalism cover the polarised extremes of economic liberalism and socialism. The trickle down theory of the neo-liberalist economists of the past four decades has been discredited.
Regardless of the origins of capitalism it is a human construct that has been allowed to evolve to a point where the very benefits of capitalism in its infancy have now been eroded as detailed in the blog post commentaries-on-capitalism.html ‘Commentaries on the Failings of Capitalism’ dated 24th April 2019 (http://www.co-operativecapitalism.com/blog-posts). Along with the failings detailed in the above blog post, we are also seeing high levels of employee disengagement, high levels of social alienation (that sense of not being a part of a collective goal or hopeful vision) , increased inequality and more widespread stress and use of depression medication. Thomas Piketty’s book ‘Capital in the Twenty-First Century’ published following the WFC questioned the myth at the very heart of American life – that capitalism improves the quality of life for everyone. This is just not so, says Piketty, and he makes his case in a clear and rigorous manner that debunks everything that capitalists believe about the ethical status of making money, he also argued that we may well find that the 21st century will be a century of greater inequality, and therefore greater social discord, than the 19th century. Piketty stated that current trends in capitalism are creating increases in inequality that are unsustainable.
There is alarmingly slow progress by politicians and corporates on the imperative of halting a global warming that will make life unsurvivable for millions. Considering the severity of the irreversible outcome of global warming it would be a madness by intelligent man to allow an unsurvivable outcome for millions of lives on this, our miracle planet home.
All things considered is it not timely to consider a new beginning for capitalism?
Desperate times call for bold action and there exists an inclusive concept that can be applied universally. An inclusive concept that does retain free enterprise and wealth creation.
The website www.co-operativecapitalism.com was created in April 2016. The website has maintained prominence for four years on internet search engines throughout the world on the key words ‘co-operative capitalism’.
The author surmises that the web sites prominence on search engines is indicative of a widespread interest in potential alternatives or refinements to capitalism following the world financial crisis of 2008, two decades of neo-liberal capitalism and increasing inequality.
There are predictions now of over a million species being lost and an inability to feed the worlds population resulting in the loss of billions of lives because of climate change. Our intelligence cannot allow such a scenario to occur. If we need a shared overarching goal throughout the world for mankind to protect the planet then capitalism must be refined to become inclusive and co-operative.
The website www.co-operativecapitalism.com has given us an inclusive co-operative framework that is practical, that retains free enterprise and can be applied universally giving us a worldwide movement that enables a responsibility of employees everywhere in combating climate change.
With high level political support a global movement for co-operative capitalism becomes an attainable very timely goal.
Co-operative capitalism is not the new economic system that Prince Charles appealed for at the
World Economic Forum in Davos, Switzerland. This is one small refinement for Capitalism but a giant step forward for mankind for social cohesiveness, productivity, profitability, engagement , providing a brake on rising inequality and reasserting our humanity. The concept builds on the research findings of human motivation (Daniel Pink 'Drive') and the significant human motivation of being part of something larger than ourselves, whether it be the success of the employees employing enterprise or being a part of mankind’s shared responsibility of combatting global warming worldwide.
The concept is relatively simple and can be applied universally. The introduction
of a co-operative capitalism framework in workplaces throughout the world will restore mankind’s
humanity, rekindle hope and yet still retain free enterprise and wealth creation for entrepreneurs.
Co-operative capitalism is not socialism it is smart capitalism.
A worldwide movement to Co-operative Capitalism initiated in New Zealand is seen as the most
effective way of creating a shared responsibility within workplaces generally whilst retaining free
enterprise. It also gives us a framework that eases the transitioning of businesses to more
sustainable operations as the business is now operating with a co-operative culture that has the
employees onside for the success of the enterprise and also with the goal of halting global warming.
A natural consequence of a fresh concept is that it becomes a focal point for new thinking.
Admittedly this is a grandiose viewpoint but a fresh concept can increase hope and enthusiasm for improving lives around the world and for employees everywhere to be onside with whatever
actions are needed.
There were calls at the World Economic Forum for new business models and something called Stakeholder Capitalism but political leaders and policy makers appear to be stuck in an impasse on exactly how these were to be achieved in the timeframe necessary. An impasse, by its nature, blocks progress and frustrates hope.
The website www.co-operativecapitalism.com details the financial and social benefits for the concept, the research findings on human motivation (Daniel Pink 'Drive'), and also contains many of the details for establishing and operating the framework.
Co-operative capitalism and the concept of a common bond for all employees has been criticised on two counts only:-
All employees qualify for Co-operating Units (maximum of 4) equally and the end of year payment amount for each co-operating unit is the same for all employees. A reminder that this concept is a mechanism for creating a unifying transparent common bond for all employees in businesses of at least three employees, and annual payments from this framework are not individual performance payments but co-operation payments. There is an overriding caveat to the amount of co-operation payment an employee may receive - 'that the total amount cannot exceed 20% of total basic remuneration'.
In the case that a company is able to pay $4000 per co-operating unit following a successful year, an employee with a basic wage /salary of $40000 would have a 20% maximum cap of $8000 regardless of how many qualifying co-operating units he had accumulated. This is a framework that gives incentives to employees to improve their skill levels and take on more responsibility for the enterprise, thereby increase their base remuneration and a subsequent increased benefit from co-operation payments. An encouragement to self achieve and improve their well being which is a basis of capitalism. The criticism has been dismissive and not considered.
When a goal is worthwhile achieving we can determine to progressively bring those employees into the cooperative capitalism framework. Capitalism has evolved through many refinements and that will be so with co-operative capitalism. Public service employees can ultimately receive a cooperation payment that is the average for profit making businesses. They will then reciprocally be playing their part in a healthy society through their efficiency and productivity. There will be more social cohesiveness, a natural permanent feature of healthy society.
Sir David Attenborough has left us in no doubt that a million species will be lost forever and that this is a critical moment in time, the decisions we make now will influence the future of animals, humanity and indeed all life on earth.
When we have the science of mankind’s most effective motivating factors and also the science of climate change it makes sense to utilise the positive findings in the former to tackle difficult issues of the latter. At this stage of an impending crisis of global warming making this miracle planet home unliveable, intelligent man must not double deny. If we are determined we can achieve.
I call on the Honourable Grant Robertson, Minister of Finance to investigate amendments to New Zealand’s remuneration tax framework to allow for co-operation payments recorded separately on tax returns at a reduced tax rate than normal PAYE rates. Progressive management companies will reap the benefits of the co-operative culture within the workplace as described in the www.co-operative capitalism 'in-depth proposal'
The United Nations can initiate a worldwide move to co-operative capitalism by promoting the concept and follow New Zealand’s lead.
Postcript - 6th April '20
Throughout the above Blog Post the payments arising from an enterprise co-operative culture have been referred to as 'co-operating payments'. Considering this current massive impact on our economy of combatting the effects of the coronovirus, and in anticipation of an emerging recovery phase, the payments could be referred to as 'Recovery Payments' for the first five years and then revert to the label co-operating payments. The phraseology 'recovery payments' will gird New Zealand employees to the task of re-establishing a strong economy and ease that aspiration for the Minister of Finance.