Place, Price, and Associative Economic Practice

By John Bloom

In response to my recent blog post “Towards an Economics of Place,” one reader raised a very interesting issue about a closer linkage between price and place. Of course, price itself is a very complex topic, no matter whether considered in the context of place-based or global exchange. I think it is fair to say that even an approximation of true price will never be achieved as long as there are any externalized costs; that is, when portions of the real costs are passed off to others not part of the consumer-producer price transaction. The consequences of externalized costs are more often than not the incalculable costs of human and ecological degradation. It is no small irony that such degradation cannot be anything other than place-based even if on a wide-spread basis.

The reader’s point was that it was possession or access to capital that allowed ships to sail to distant lands to bring back whatever precious goods were desired. Those on the home front driving the marketplace were blind to the procurement methods, or the inexorable social and environmental behavior of the procurers. The consumers had only their desire as a guide to what price they were willing to bear; merchants were driven by the accumulation of wealth without heed of or accountability for the destructive wake left behind. A more contemporary portrayal of this cycle can be seen in Annie Leonard’s The Story of Stuff, a short but poignant animated film about the way our current economic system works.

So the question remains about how to rethink a sustainable economic system which centers in place, has no externalized costs, and where price actually meets the basic needs of all the parties to the transactions. There are two threads to this inquiry that deserve attention. The first is the practice of associative economics as articulated by Rudolf Steiner in his lecture cycle Economics: The World as One Economy (1922). The second is Jane Jacobs’ notion of import replacement which she articulated in The Economy of Cities (1969), and again in Cities and the Wealth of Nations (1984). Both were innovative systems thinkers and addressed the economic reality or potential of place. Since Steiner posits price and how it is set as a key to a new economic practice, I will focus on his approach to association, and leave a fuller exploration of Jacobs’ concepts for a subsequent posting.

Perhaps the simplest and clearest application of associative economic practice is to be found under the heading of Community Supported Agriculture (CSA). The modern origins of this economic approach came with the development of biodynamic farming (also started by Rudolf Steiner) in the 1920s and CSA was first adopted in the US in the early 1980s. The form arose out of the question of how a farmer might make a sustainable living from his or her chosen vocation, and not be at the whim of the marketplace and the weather.

As a founding member of the first CSA west of the Mississippi (Live Power Community Farm) in 1988, I would like to describe how we work.  While there are various interpretations of what CSA is, there are some core principles that are essential to the deeper value of the practice—especially the relationships between the farmers and member-shareholder-eaters (the community), price, and risk. At Live Power, the farmers and some of the interested eaters gather to consider the annual budget for the farm. The farmer lays out all the costs for twelve months including seed, apprentices, housing, health insurance, transportation, maintenance, retirement funds, etc. Based upon the capacity of the garden, the farmers also determine how many families or shareholders they can reasonably grow food for in a year. After some (often lively) discussion of the details, this total annual cost is divided by the number of shareholders to arrive at the cost per share.

When this amount is determined, shareholder-eaters commit for the year and make a deposit for their share. The food comes over a seven and half month period, but the farmer is actually supported for all twelve months. This is a simple form of associative economics, but accomplishes many things. First, the food itself is not a commodity, because the shareholder is not paying for the food but rather the real cost of the farmers’ living and all that it takes to grow the food. Second, the farmer’s labor is not a commodity because there is no direct way to tie the work and winter rest to the farm income. The farmer manages a closed-loop, bio-diverse farm organism. He grows virtually all the feed the animals need, uses the manure for compost to renew the soil, and then from the soil grows the food and feed. There are no imported inputs, no externalized costs. The farmer works constantly on building the fertility of the soil rather than thinking of the land, as in petro-chemical farming, as nothing more than a vehicle to produce food. Being supported by the community, the associative form operates completely outside the market economy. What this also means is that the community shares the risk of the farm and the produce. The farmer will still have a means of support even if the growing season is bad; in fact, they will be able to make it financially to the next season when things will hopefully be better.

I have been asked how this approach is different than a farmers’ market or a veggie-box subscription. Both these approaches are warmer, friendlier (and better for the farmer) versions of a commodity marketplace. While there is less intermediation between the farmer and the customer than in a typical grocery store system, it is also true that the farmer will have no income if there is no produce to sell. And how are the prices for food at the farmers’ market set? On what basis—what the traffic will bear?

In an associative economic model such as Community Supported Agriculture, place and price are inseparable. The community connection to the farm and farmers is fundamental. It is in many ways an economic form that parallels the organic processes in bio-matter compost. In the associative price setting process, all aspects of the farm and operations (except, of course, who will do the farming) are visible and up for consideration. The multiple perspectives of the eaters and the farmers are transformed through the community dialogue process with price as the outcome—a price that reflects a market-free system warmed by care for the land and the vocation of farming. Such an associative approach is demanding of time and human effort, and not every farmer or eater can work in this way. But, the “inconvenience” of such an economic community is well worth the convening if transformation of economic practice is a heartfelt longing.

John Bloom is the Director of Organizational Culture at RSF Social Finance.  If you enjoyed this post, look for John’s recently published book, The Genius of Money, now available from steinerbooks.org.