“We want to try a new operating system, but we have to always install it on Windows 95”
Our current economic models need a rethink, was the general consensus among those who attended a recent Edgeryders webinar that looked at a case study of the economy of the Messina district in Sicily.
Edgeryders co-founder Dr Alberto Cottica spoke about the economic winter that started in the 1980s and 1990s with the policies of free trade and free movement of capital, people on the ground were ignoring the models and building small scale economies.
There is a lot we can learn from the example of Messina, from how it began, to the projects it undertakes, how it funds itself to remain independent and navigate its strategic direction.
The context of Messina
Giacomo Pinaffo of Fondazione Communita Di Messina explains how the model worked, first placing it in the context of Sicily.
“…to quote data from 2018, the region had the highest unemployment rate in Italy. We’re talking about more than 20%.
“…22.5% of families live below the relative poverty line and almost 20% of the economy is black (market) and illegal.”
“In addition to this, there is an influence of the organized crime or so called mafia.”
How it began
“People got tired of the local situation. Everything started at the beginning of the nineties, after the murders of the most important and most famous anti-mafia judges,” Giacomo explained
“They started, citizens, to self-organize themselves in organizations, movements, and try to change things locally, where they were directly engaged.
First project
A foundation was established and the group went to a local minister, asking to help reintegrate patients who had criminal record and were placed in a psychiatric facility back into society.
“(we) went to the minister and said, look, this jail costs a lot to society because you are spending thousands of euros per year per person there. And you’re not solving anything,” Giacomo said.
“We - the foundation - suggest a different possibility. You provide us with a lump sum amount, which is, the amount you spend for one year per person. We are able to get out of there and we insure you that we’ll be able to raise, serve that person into society.”
The state agreed to let 56 people from the institute be involved in the project.
“They used it (the money the state would spend on the care of the 56 in the facility) to invest in a
photovoltaic plant… that was used by several public institutions and, families, above all poor families living in Messina” Giacomo said
“Free energy to the people who are hosting the panels and public subsidies were going directly to the foundation of an income flow that was granted for 20 years.”
“The people from the psychiatric institute were inserted in several cooperatives, agricultural cooperatives, or even the co-operative that was created… to implement the power plants”
The employers paid a wage based on the serving of work done, while the foundation made up the remaining sum needed to reach a fair wage with its income from the subsidies. Supports were also put in place for those who were reintegrating
What we can learn from this?
Alberto highlighted:
- It used the public spending on the health care of very serious patients to reintegrate some of them into a kind of normal life,
- It managed to reduce the consumption of fossil fuels in town
- It spawned several new businesses - these cooperatives that are doing things like landscaping and maintenance and so on and so forth.
- It managed to fund the activity of the foundation as a policy maker.
- The fact that now there are hundreds of businesses and households and schools and hospitals that have had solar panels installed by the Messina foundation means they are friends:
“In English this will be called relational goods and varies with the idea in economic theory, we think of goods, commodities, not so we just trade them. They rightly point out that some goods store value because they include relationships.”
Second model - social housing
“Freedom is the main objective with the foundation. And when we say expansion argument freedoms, we are referring to the Amartya Sen’s capabilities approach - which means expanding the opportunity of choice for people, above all the weakest,” Giacomo said.
“In Messina, there are some slum neighbourhoods.They started back in 1908. after the earthquake of 1908 and after the bombing of the second world war.”
“These are very, hard places, where to live, we did research and discovered that just… people living there have a life expectancy that is seven years lower than the average of the rest of the city. It’s controlled by crime. It’s highly deprived.”
“Part of these people out of these slums, we’re talking about 2,500 families, totally living in the slums neighborhoods. And we, our project, affected about 200 families. So 700 people, totally.”
The foundation offered people three options:
- One was to actually go through the public programs - pay low rent, house is owned by state
- Part of the slums were demolished and on the site new eco houses were built with modern tech and energy efficient. Families had a choice to get one of these.
- Take a lump sum from the state that covered 80% the price of the house - giving them a choice on their housing solution. The Foundation set up a microcredit institute and loaned the remaining 20%. Set up the support to teach and guide people who are financially illiterate through this choice.
“You empower them by giving them ownership of choice,” Giacomo explained.
“Let’s say (you change) the mind of one person, two, 200 people, 700 people. Then, you start changing step by step, the general approach in the local, local society.”
** Over the years and in part based on the culture of the founders,The foundation was able to come up with practices that are self-evident to them, but counterintuitive to us.
One example: they have assembled an art collection without buying any of the pieces.
They acquired them all through donations or artist residencies. The collection is worth several millions now, and Guggenheim has tried to acquire it, but of course the foundation can never sell it without destroying the goodwill that made it possible to acquire it in the first place.
That the collection cannot be sold does not mean it is worthless.
It has value in two senses: as the embodiment of the relationship of mutual trust between the Foundation and artists, and as a collateral to roll out revenue-generating projects. The collection is valued not for its resale value, but for its potential to grow and catalyze more activities. You do not realize this value by cashing out on the asset, but by stewarding and growing it. This is a very different value theory from the one dominant in capitalism and neoclassical economics. It is an example of the kind of thinking that can emerge from mutual aid communities. This is where Edgeryders wants to be.
While seemingly simple and fairly easy to adopt these principles in other places, it is also easy to underestimate the complexity of local differences and embeddedness, as well as of local and regional inequalities.**
Can these models be replicated? Only if the change from system to network takes place
“We see a lot of networks, just a lot of entities that are cooperating among themselves but keeping their identity and keeping their position and their activity. They are independent and autonomous. They just (focus) on specific issues and decide to work with other entities where anyway, they see a profit for them, for themselves,” Giacomo explained.
“A creation of a system means having entities that are able also to change themselves, to modify their structure, to adapt themselves to the context, to get closer to the other entities in order to work for a common project and a common dream.”
“What makes local territorial systems capable of becoming self-organizing entities?” Giacomo asked.
“That’s quite an issue, a point that we want to also understand and to be able to see where we can work in cooperating with these other territorial systems throughout the Mediterranean basin.”
Let’s break down some of the ways the Foundation operates
Subsidies vs stocks
The foundation buys stocks so it can maintain its own flow of money and maintain its independence.
“If you’re always asking for flow from external, investors or entities, you also have to normally… comply with their requirements in order to get that kind of flow,” Giacomo said.
Investors don’t like the co-operative structure which limits the growth of many social enterprises.
“So the governance in the corporate system, you have one had one vote. So it doesn’t matter how much money you’ve put in it. You have one head, you have one vote. this obviously has an impact on the capacity to collect equity. Investors are not so happy to invest a lot of money,” Giacomo highlighted.
Stocks allow the foundation to make a ten year strategic plan.
Recognising that economy has a direction
“Economy actually has a direction and that direction is easy in your case it is producing more freedom for people,” Alberto said, highlighting the idea that innovation considered economic growth rate but not the direction is flawed.
“In innovation policy… we should have missions. We should have the Apollo program, the decriminalisation of the economy and then we will create in practice more and better growth,” he explained, making reference to economist Mariana Mazzucato.
Creating things that benefit all society
The foundation supported a local brewery that was going to be shut down through a workers buyout option. This ties into the idea of relational goods.This is when you encode human relationship with physical goods.
“The tradition of the brewery has had an impact on the whole local society, not just that were going to be fired.”
The Messina crowd allied with laid off brewery workers to start a new brewery. The beer made there encodes human values of dignity, local regeneration and hope.
Systems over networks
The foundation acts like a malleable system that adapts to change rather than acting as an independent organisation that is solving one probblem. (This is a capitalist model and how businesses begin but a system that social enterprises mock too.)
Dyson’s sphere model ( the Dyson sphere is an imaginary artifact built all around a star to capture its energy. The idea is to create prosperity for every member of the system: when a client comes around wanting, say, a consultant to organize a workshop, they are immediately asked if they also need a venue, a translation service, a travel agency and so on… all parts of the system).
Other models, discussions and thoughts from our breakout sessions
The Cleveland model
Stoneybatter festival in North Dublin suggested as an example of bringing together a diverse group of people. It is an old area that had high rates of crime and historically concentrated social housing, with newer professionals recently moving into the area.
Public housing model in Vienna
Differences and similarities between Sicily and Sweden:
“Sweden really trusts civic society… but I would say the demographic of Sweden has changed and become a less equal society… So now it’s actually quite unequal in terms of how much support the risks from civic society…” Hugi said.
“We are very aware of the overhead that comes with it because for every group you go into, there’s going to be a minority within that group that are difficult to work with and they need a lot of support.”
Those in favour of a circular economy
“If you look at everything else on this earth, it’s circular, except everything we created is non-circular,” Oscar said.
“What I think for long term sustainability is a circular economy. In the beginning it might be more expensive for the implementation, but in the long term should yield better results,” Bojan said.
“And I think any investment, usually you have to have an investment. It seems expensive, if it works out it’s high risk, maybe it’s a gamble. If it works out, you’ll get it back, you’ll come back. And if your thinking is circular, it has to come back because it’s circular, whatever you put in, will come back,” Christina said
What can we implement from the lessons learned from Messina?
Nora Bateson says that systems when they are stuck they don’t get unstuck if someone says it, but only if the systems learn together. Experience of creating transcontextuality - experiences with different identities, empathy, get the glimpse of the context of others, go beyond the polarisations and the idea of the democratic process. Lack of trust in society - part of the core things not working. Automatization of who we are. The idea of subsidiarity - top down, not bottom up and it is completely missing as well the dynamic ways of doing policies. We need a dynamic way of testing and designing policies and interventions. Locally driven and context dependent. Forget about the scalability.
A key aspect is that we are going to need to experiment new processes and models for working with movement building to get something to happen, and then protect its integrity for long enough that the desired results become visible. A process which embeds the means to strengthen the political/ideological movements that have supported and protected it.
An interesting example of what happens when you don’t manage to do this is the Finnish Basic Income experiment. A well thought through proposal originally came from progressive activism. but was co-opted by the political platform of the liberals which then executed it badly - ignoring fundamental elements. For example that you would need to give basic income to a sample of minimum 30,000 individuals (if I recall correctly) - and that the citizens to include should be selected randomly, and not just people on social welfare etc. Both conditions were not fulfilled. Also, it ran for less than half of the time estimate for the experiment to succeed in meeting its main target: it did not bring about significant employment effects (Demos Helsinki has published the full report here).
One conclusion we draw is that we need to embed the idea of Citizen Engagement as community action on experimenting local development economic models, rather than as citizen-to-institution consultation.
Because the citizen-engagement-as-consultation mindset is not looking at the issue of power. Consulting citizens is one of those ideas that sound like a no-brainer, but it is very difficult to get the incentives aligned right for. It’s like experiments: the idea of policy experiments sounds great, but try proposing in a European forum “let’s have an experiment: revoke the copyright directive for Latvia”. You won’t get far, because the powerful people already have what they want. You can experiment only if you can override them, but if you could do that you could also attempt to establish an alternative policy anyway. With consultation it is the same. If the results of the consultation go against what powerful stakeholders want, the temptation to tell citizens “we have heard you, but we do not think we can go by what you recommend” is going to be too strong.