Publications / Essay

Appropriate Technology and New Approaches to Ownership

Introduction

For the purposes of writing this paper certain assumptions about appropriate technology will have to be stated as underlying the proposals for structural development contained here. Although some attempt has been made (see Peter Harper: “Notes on Soft Technology” paper for the United Nations Education, Scientific, and Cultural Organization) to define appropriate technology, all of the various terms used are rather ambiguous and it would be difficult to set forth a clear definition which separates various attributes of “soft” from “alternative” or “appropriate”. Nevertheless, certain generally accepted common goals can be stated which underlie most of the adjectives used.

These could be summarized in the following expressions:

direct control by producers and/or consumers

absence of exploitation

regional or local self-sufficiency

resource conservation

ecological stability or diversity

work satisfaction

harmony with nature

survival after nuclear or eco-disaster

decentralization of power and control

 

This paper will focus on the “appropriate” institutions which must be created or strengthened to advance the goals of appropriate technology.   In this respect, the paper is concerned with the “software” side of appropriate technology, as opposed to the hardware side of it. Part of the assumption behind the following proposals is that appropriate technology hardware will be a natural concomitant of the development of alternative institutions. Of course, the growth of appropriate technology will  not automatically follow institutional change of the kind advocated here. On the other hand, without such institutional change, prospects for rapid or significant appropriate technology development is very poor.

This can, perhaps, best be illustrated in the case of agriculture. Present institutions of land tenure, long held sacred in the United States, place a tremendous financial burden on farmers where the average financial return on capital in the U.S. is only about 4%. This financial pressure forces farmers to buy land at prices far above productive value and at interest rates of 8% or more. This in turn forces them to exploit the soil with heavy nitrate fertilizers—even though they know that this practice will destroy, the soil in the long run. In this case, the appropriate technology vis-a-vis farming is ecologically sound “organic” or “bio-dynamic” practice. But this technology does not necessarily maximize production—at least in the short haul. Farmers are, therefore, encouraged to reject this technology because it is not considered “economic”. Community Land Trusts are an alternative institutional approach which by changing land tenure practice, relieves farmers of severe financial pressures, and thereby encourages organic or bio-dynamic practices.

Future Directions for Economic Enterprises and Structures

Increasingly,  people are coming to realize that the human race is at a turning point in history, and that appropriate technology is simply one expression of the direction in which we must go if we are not going to end in disaster. Seen from this historical perspective and with the understanding that technology must be joined” with religion, economics, and politics, the structures which we must explore for new economic enterprises come generally under the heading, “economic democracy”.

In most instances these appropriate structures appear as “trusteeships”. Since most enterprises are presently owned by one individual or a small group of individuals, the trusteeship approach allows for a voluntary devolution of power into the hands of workers and the broader community. New enterprises may begin with a commitment to worker participation and control while established organizations must develop processes for the devolution of control. For this to come about, present owners must come to perceive themselves as trustees of their wealth and power and voluntarily democratize decision making and ownership within their own enterprises. Although we see this occur only rarely today, it must become more common in the future if we are to avoid the chaos which will issue from an increasingly alienated and hostile population.

The rapid development of a land trust movement in the Northeast is evidence that more and more people believe that the principle of trusteeship should be applied to the use of our steadily declining natural resources. Nor is it a question of whether worker controlled enterprises are viable in the Northeast today since there are a number of successful enterprises of this kind (the Mohawk Valley Community Corporation, a furniture factory in Herkimer, N.Y., for example) in the region and the rest of the country. What is now at issue is how and where trusteeship can be applied to other industries and enterprises in the Northeast, and what forms this approach should take. For instance, should an industry include on its board representatives from the surrounding community? From its customers?

I will first describe the Community Land Trust movement and attempt to demonstrate how crucial  it could be in appropriate technology’s future in the Northeast, and then discuss trusteeship in its broader application to industry and the problem of capital formation needed to bring this about.

Trusteeship of Natural Resources

While the Northeast is rich in natural, renewable resources (forests, farms, and fish) these resources have been left undeveloped or underutilized. For many years the Northeast exploited its unique position as a center for industrialization as farming and forestry declined throughout the late 1800’s. This industrialization was based on several factors: good ports for importation from foreign countries, low-cost power from water, abundant low-cost labor and the so-called “Yankee ingenuity”. World War I and World War II destroyed much of the Northeast’s traditional   industrial advantages, just as it brought it new advantages in the form of high technology — “brains” and research capability (MIT, Harvard, etc.). The Northeast’s new advantage in high technology, however, remained centered within the small radius of the urban areas of the region (Boston, New York City, etc.). Many decision-makers still consider the region’s urban areas and “high technology” capabilities to be its strong point. Nevertheless, as Governor Langley’s Commission on Maine’s Future pointed out, the inherent natural resources of the region: farmland and fishing, remain the best, if not the only, future hope for most of the Northeast with the exception, perhaps, of the few suburban and exurban areas surrounding urban centers.

Appropriate technology needs to address the problem of how best to utilize and manage these natural resources. We need a new institutional approach to our natural resources. Such an approach must take recognition of four imperatives of appropriate technology: it must be simple, local in character, labor intensive, and ecologically sound. I call this approach trusteeship, or stewardship (in the religious sense). Its organizational form consists of locally organized, non-profit corporations, Community Land Trusts (CLTs), which acquire local land resources through purchase or gift. These CLTs, several of which already exist in the Northeast, hold land and lease it to users. The ultimate benefit of a CLT accrues to the entire community and its future generations. Perhaps the most important function of the CLT is that it helps to provide access to land and resources not only through its own low-cost leasing systems, but by retarding the increases in land prices which result from speculation. And it is this factor—the high price of land—which more than any other single factor, mitigates against the utilization of Northeastern land for farming and forestry.

Farming

If we look at farming in its present state, it is clear that one of the major reasons why young people are discouraged from becoming farmers is the fact that arable land cannot be purchased for its agricultural value. Usually the price of farmland (including woodlots) is two, three, or four times its productive value because prices are set for actual or potential development value. No one can buy a house lot and then afford to grow corn on it. Consider the high rate of interest charged for borrowed money, and it is easy to understand why the young are forced to look elsewhere for employment— thus creating more pressure on employment in the cities and reducing the potential food available from local   sources. (Currently, 85% of New England’s food is snipped in from outside its borders—Boston Globe article, Aug. 21, 1978.) While many people have joined forces to market locally grown produce at local markets or through consumer cooperatives (New England Food Cooperative) farming remains a very marginal   source of income for fewer and fewer people. It will remain so until considerably more farmland can be made available at realistic costs.

What advantages, then, can CLTs provide to present farmers or to young people who would like to farm but cannot afford the high cost of land and/or equipment for farming?

  • Through land gifts, or purchase below market prices, CLTs reduce the cost of agricultural land and provide access to young people for farming. CLTs can afford to lease land to young people at a yearly cost which is consistent with the real productive value of the land, rather than the development value of the land and without requiring a large “up front” cash payment. At the same time, the long term lease (99 years) provides the same security as actual ownership.
  • By providing tax advantages (property and estate taxes in particular) CLTs can considerably reduce the cost of land holding to present farmers (as well as new farmers) who give or sell their land to a CLT in return for a lifetime leasehold (see tax incentives below).
  • In addition, farmers can receive increased return on their woodlots when pooled and managed by CLTs (see below).
  • Finally, since one of the major objections of a CLT is sound ecological use of the land, it will seek to provide incentives to farmers to grow food with sound organic or biodynamic methods (appropriate technologies) without pesticide’s or other pollutants. Such incentives would include providing technical assistance to farmers on how to convert to organic methods, and through its membership and structure to provide better markets (such as farmers’ markets) for organically grown produce. CLTs in Maine and Vermont have already demonstrated their effectiveness in providing such markets.

Forestry

The forest of New England, which occupy 85% of its land mass, represent its greatest under-utilized resource. In fact, only 5% of these forests are utilized in any significant way. As in the case of farmland, the situation is due in large part to speculation, but also to the fact that many small landholders lack either the money or ability to manage their woodlots properly. To do so properly requires forest management of tracts as large as 2,000 to 5,000 acres. Here again, the CLT enters as an appropriate technology. It can facilitate the accumulation of small woodlots into larger “pools” for efficient forest management. This concept— pooling of small woodlot holdings— is not only an appropriate technology of the future which holds great promise, but is currently in usage. In the State of Maine, 1.8 million acres are right now under one collective management— the Seven Islands Land Company. The Green Diamond Forestry Company of Belchertown, Massachusetts, has demonstrated the advantage for local land owners of pooling their very small holdings.

What is at stake, however, with forestry is its potential not only for providing the Northeast with a local source of building lumber (rather than depending on West Coast supplies, with high shipping costs) but also a source of energy from the waste and thinning of a managed forest. According to Seven Islands, utilizations of all the waste from forest operations would increase total wood utilization by 400% or more over other uses. Forests could provide 20 to 50% of all the energy needed to heat and fuel New England’s houses and industry. Already a number of demonstrations have been made which utilize appropriate technology hardware (pyrolytic converters, wood gasifiers, efficient wood chip burning furnaces, small whole tree chippers, etc.) and which indicate the potential of low-cost energy from Northeastern forests. Burlington, Vermont for example has installed a wood burning electric generator showing savings of 30% over oil and coal. Yet it is unlikely that very much of this potential will be realized unless a new infrastructure such as the CLT is first developed.

What is needed now and for the future is:

  • To organize local or sub-regional CLTs which can act as the recipients of land or money gifts and as the local trustees for leasing farm or forestland;
  • To gain access by CLTs to land, both by maximum incentives to land owners to make gifts of land, and also by developing low-cost sources of capital for land purchase;
  • To integrate existing and developing CLTs into a federation which can strengthen the entire movement.

Already six CLTs exist in our region and several more are in the process of formation; still only a small amount of land is actually held in this way.

Incentives to Land Owners

There are two possible incentives for land owners to give land to a CLT. One of these is the tax advantage which may be realized, and the second is the increased potential for land resource {particularly forest) utilization which may be derived. Tax incentives can include reduced income tax and reduced property tax, but most importantly reduced inheritance taxes. Of these, the inheritance tax is likely to be the most important to farmers, whose children often must sell the land in order to pay federal and state taxes— not to mention the cost of legal fees. For example, if a farmer donates part of his land and sells part of his land to a CLT, he may remain on the land by long-term lease agreement and his children may inherit the lease. In this case, only the use value of the lease is taxable and this will be only a fraction of the taxable value of the land. While the trust cannot afford to buy the farm couple’s land with cash, since they will be using it rent free until their deaths, the Trust can afford to buy their woodlot trees from them at the actual “standing value” of the trees at the time of acquisition. The Trust will purchase them by actually issuing notes for the standing value. The CLT will, in turn, put the forest or woodlot into its “pool” of local forestland to be managed by its forester. The notes it gives the landowners will be designed to come due at the periods when the forest will produce timber (10-20 years). In the meantime, income from the forests derived from thinning waste wood for pulp or energy use, etc., should pay for forest management as well as the taxes on the property. Thus the farm couple will be relieved of two major costs, property taxes, and estate taxes and they can leave their children not only a lease on the use of the farm, but also the notes which will represent the income from the forests. In sum, this value may represent as much as or more than the value the children would receive if the farm were sold (even at “house lot” values) at their parents’ deaths and the income distributed among the heirs.

Advantages to the Community

In the meantime the CLT, representing the community, will be assured that the farm remains basically a productive farm. Since the woodlot has now become productive, the community will also receive additional value in terms of employment and energy from the woodlot. In the long run it will receive valuable lumber for local building. At the same time, the CLT may decide that a few acres of land—perhaps only three to five acres along the best road—could be used for a small cluster of housing (three to five houses). Thus, without over-developing, and at no cost for land, the CLT could provide needed housing for the local community. It might even utilize local lumber from its forests for the housing as well as wood waste for heat (such a proposal has been developed by an architect team, Moore and Weinrich for rural housing in Maine) thus reducing the house-costs considerably.

Fishing

When we examine the oceans as the Northeast’s other major natural resource we are, of course, dealing primarily with a traditional industry. In this area, it is interesting to note that the concept of trusteeship already prevails, i.e., no one claims exclusive ownership rights to any particular body of water. Fishermen have always treated the oceans as a trusteeship without any strong efforts to restrict access to any particular body of water— except on a national level.

While access to fishing grounds has not been a problem for fishermen, accessibility [sic] to markets is a major problem. In a few instances, fishing cooperatives such as the Point Judith Cooperative, Point Judith, Rhode Island have been fairly successful in developing processing plants and gaining access to markets, but, on the whole, Northeast fishermen remain at the mercy of the processing and marketing syndicates which have captured the market. In part, this is due to the fisherman’s lack of understanding of how the markets operate and their lack of business expertise, and in part this is due to lack of capital.

Structure of CLTs as the Basis for Utilizing New England’s Natural Resources

Rather than base the structure of CLTs on the existing town structure, what is envisaged is rather a mini-region concept, where two or three small towns might be combined into a single region and the board of trustees for the CLTs would consist of members from each town. A nine member board is suggested, with three members being elected representatives from the membership of the local CLT, three members selected from other CLTs in the surrounding region and three associate members comprised of local official organizations such as regional planning commissions, selectmen, or professionals with relevant skills (lawyers, architects, land use planners, etc.). These members will be appointed by the six other members. Such a board composition will integrate a regional network of CLTs.

Strategy for Development

A national level strategy is needed as the first step in the development of CLTs— even though the region is the primary focus. This is partly because tax deductible status is important in accomplishing the land gift objectives of CLTs, and partly because a national level program will provide the “status” which may be required to elicit significant land gifts. Thus, a national organization with board members of national status such as the Nature Conservancy can encourage land gifts of thousands of acres. In its initial stages at least a broad based CLT program will need this kind of status and capability. It will need men and women of national reputation on its board to achieve the status necessary to encourage land gifts. Further down the road, state level legislation (or even national legislation) will be easier to accomplish because of the national status [sic] of such an organization.

Once a national level organization has been established and land gifts have become common, the national organization could “recycle” the land to local CLT organizations through both sale and contract. All land would be acquired at the national level in accord with the conservation purpose of the national organization.   All land which is either forested or in farming will continue to be used through leasing the farm land and managing the forestland.   As soon as local CLTs are organized in the region where land gifts are available, the national organization may pass on this land to the local CLT.

Urban CLT Structure

A similar situation prevails in the urban areas of the Northeast except that the primary problem here is that the so-called re-development of center city areas is forcing neighborhood people from bad into worse housing. A CLT regional network structure will affect this problem in several ways. First, it will resist (just as in rural areas) speculative pressures on land and housing prices, and, thereby, reduce the pressure on neighborhood people. Secondly, it will also provide access to alternative rural housing and employment for city families who would like to relocate in rural   areas. Thirdly, it will provide the framework for the promotion of local appropriate technology presently advocated by many urban groups including the Institute for Self-Reliance, Fallarones Institute, Institute for Neighborhood Development, etc.  These include: alternative energy (solar, wind, etc), food grown in greenhouses, fish farm aquariums, etc. Moreover, with its links to the network an urban CLT would provide the basis for consumer cooperatives, farmers markets, etc., wherein the food supply could come from the rural CLT networks.

Future Possibilities

With the development of a strong CLT trusteeship movement in the Northeast, future possibilities could include large scale decentralization, or even new towns with a greater degree of self-reliance. Such new towns have been proposed for land now occupied by the Defense Department. Modern warfare has decreased the need for the many military training camps which occupy large land areas often located near present urban areas.

During the transitional period from the industrial to the post-industrial era, the Northeast will be forced to continue large scale subsidy of unemployed young people as well as those on fixed incomes. During this period new towns utilizing the CLT lease holding system could be developed on land, such as former military bases, at considerably lower costs (land and development costs presently represent 20-25% of total housing costs). If such new housing utilized greater conservation of energy, solar heat, and wood waste for heat they would provide additional savings.   If integrated food production as well as appropriate technology industries were planned as part of the development, then employment possibilities could be greatly enhanced. In California, Governor Brown’s Task Force on Solar Energy (see People and Energy, May-June, 1978) estimated that three to four times the employment on a state-wide level would result from solar technology than from conventional energy sources. Some of this industry could locate in the new towns where land would be held in trusteeship and leased for housing, industrial and other purposes.

Trusteeship and Worker Ownership

The concept of trusteeship must finally be carried over into industry as a whole— if the potential for appropriate technology is to be realized in New England. Trusteeship in industry as enunciated by such leaders as M. Gandhi and E. F. Schumacher would mean an entirely different attitude on the part of industrial managers and owners:

If we are interested in ‘economics as if people mattered,’ we must work for technologies as if people mattered, or you might say technologies with a human face. Once created they will carry trusteeship and pave the way towards equality. To create them swiftly and effectively requires the climate of trusteeship.

E. F. Schumacher

 

By the non-violent method we seek not to destroy the capitalist: we seek to destroy capitalism. We invite the capitalist to regard himself as a Trustee for those on whom he depends for the making, the retention and the increase of his capital.

M. K. Gandhi

Trusteeship would bring democracy into the workplace, eliminate conflict between workers and owners, and distribute profits and capital in a far more equitable basis than is possible today. Just as important, trusteeship would make the products of northeastern factories— even high technology factories— more competitive with products from around the world.

Perhaps the best example of trusteeship in industry, may be borrowed from the Englishman, Scott Bader. Bader, presently in his eighties, decided a number of years ago to place the ownership and control of his industry (a multimillion dollar plastics plant with around 2,000 workers) in the hands of the workers. Virtually all stock was turned over to a trust which held the stock in the name of the workers. The board of this trust is elected by the workers and the board, in turn, appoints directors to serve on the firm’s management committee which was initially composed of Mr. Bader and his son. This provided for the devolution of corporate control.

In the Northeast, many local industries have become less attractive to owners (often large conglomerates without any local interest) because of changing economic conditions. As a result these plants, known as “run away industries,” are closed down or offered for sale. In many cases the economic conditions which make them unattractive to their conglomerate owners is unrelated to the basic soundness of the industry but rather stems from other external factors, such as federal taxes, attraction of overseas low cost labor, etc. The industry itself remains feasible. This is particularly true if the labor costs can be reduced through incentives for increased productivity or other benefits. These incentives follow directly from worker control and ownership. In the Northeast this factor if widely employed, could become significant and perhaps, the key to a successful restructuring of small industries keeping them competitive in an unpredictable market place. An excellent example is a Herkimer, N.Y. furniture factory which was sold to the workers by its former owner, Sperry Rand Corporation. The plant is now returning a net profit of over 20% to its owners. The benefits to the surrounding community include the continual employment of workers feeding available cash into local commerce, and maintaining a market for hardwood, coming in from local farm woodlots.

Capital

A major need for the development of appropriate technology in New England is for capital development. Existing sources of investment capital, whether through banks, venture capital companies, or government agencies such as Farmer’s Home Administration, Economic Development Agency, Department of Energy, are not oriented towards either the concept or an understanding of A.T. Government agencies such as the Center for Appropriate Technology may provide grants for research and development but what is needed is to provide companies and alternative institutions [sic] (such as CLTs) access to adequate amounts of capital for long range investment. Traditional financial institutions are undisposed to view such developments as worker owned factories, CLTs, or cooperatives favorably (with some exceptions, of course) and are naturally biased towards establishment “solutions,” or approaches. Therefore, new institutions for financial involvement in appropriate technology are necessary, and should be established by A.T. groups and interested people.

The Community Investment Fund is an example of this type of institution. It is now being developed by the Institute for Community Economics, Inc., of Cambridge, Massachusetts.

The Community Investment Fund

The Community Investment Fund is being developed for the purpose of primarily supporting appropriate technology. While designed to be national in scope, it will focus very heavily on the Northeast— particularly with its venture capital funds. Although the Fund intends to emphasize investments in companies producing A.T. hardware such as solar collectors, pyrolytic converters, etc., its emphasis will be to select companies which are structured along lines of worker control and ownership, or are prepared to transform themselves through the trusteeship process.

Although most of its investments will be made in the form of loans rather than equity, interest rates, and other forms of compensation will reflect risk factors in each case. In addition, the Fund expects to make large secured investments in housing and industry where building and equipment is guaranteed by government agencies in the cases of cooperatives, or A.T. industries [sic].

Such pools of investment funds which can be made available for housing cooperatives and worker controlled industries, should provide encouragement and incentives to government agencies which are empowered to make such guarantees but are reluctant to do so in view of the reluctance in the “money market” to purchase these guaranteed mortgages. In addition, of course, it will make loans to CLTs where traditional bank sources are reluctant.

The structure of the Fund is itself an attempt at innovative management. Although the Fund is established as for-profit corporations, the Board of Directors consists of individuals elected without compensation by the investors. The staff is also entirely on a salaried basis without stock in the company. In this sense board and staff are more related to non-profit organizations. The Fund is searching for other methods whereby it can decentralize its structure. It envisions future local groups organized as affiliates which will take over at the local level, all of the decision making power required to select local investments and market   securities. The Fund would also like to broaden the electoral constituency at the local level to include greater representation from the community. In short, members of the board and staff see themselves as Trustees of capital and are researching for better ways to carry out their trusteeship role.

Summary and Conclusions

The development of appropriate technology in the Northeast, as elsewhere in the U.S., will depend, in part, on the establishment of alternative institutions for ownership both of land and natural resources as well as in industry and business. Until basic economic problems, such as land speculation, are addressed by new institutions such as Community Land Trusts operating under the Trusteeship principle, it will be difficult for more than a small minority of farmers to shift from destructive farming practices to appropriate technologies such as organic or biodynamic farming. For the same reason low cost housing which utilizes solar or other alternative energy sources will be difficult until access to low cost land through CLTs is made available. An example of such low cost housing on CLT land is presently being developed in Maine by H.O.M.E. cooperative near Bangor. It utilizes both solar and wood heat and provides good housing at a cost which an average Maine family can afford.

Worker owned and controlled industries are an appropriate structure for the Northeast for many reasons: They provide an opportunity to continue to employ local workers in the case of “run away” shops when industry is economically viable but no longer attractive to the parent company, or conglomerate. They also provide a more competitive pricing structure within the industry, because of the incentive for workers, and a more conducive or motivating environment within the workplace. And, finally, they are harmonious with the objective of the Appropriate Technology movement in that they are locally controlled and, of necessity usually small in scale. Thus, it is also likely that innovative, or creative inventions and appropriate technologies are more likely to grow out of such work places where the workers themselves are responsible for the quality and quantity of the productive process.

Research Projects Needed to Help Establish New Approaches to Ownership

 

CLT Projects

Investigation of land holding patterns in the Northeast to determine attitude of landowners towards trusteeship and lifetime leaseholds rather than present ownership concepts. Is the attitude shifting? How feasible is a large scale trusteeship pattern?

Will further incentives, provided by the government in the form of tax advantages, or other, be required in order to develop a broad based CLT movement?

What is the best approach to communities [sic] and land owners to convince them that sound economic development must be derived from ecological use of natural resources— including farmland and forests?

Study cost benefit ratios of utilizing various technologies in timber management: large scale machinery and tractors, etc. vs. horses and low cost equipment. Study would include environmental impact of different technologies, and varied employment levels with different technologies.

 

Worker Controlled Industries

What is the best structure for effective management of worker controlled industries? This requires research into examples on a world wide basis—as well as research into actual examples of worker management in the Northeast.

What is needed to encourage capital investment in worker managed industry? Are new laws needed? Changes in present laws?

What kind of training and education is needed for both workers and managers of cooperatives and worker controlled industries? How could it be established?

Publication By

Robert Swann

Robert (Bob) Swann was the founder of the E. F. Schumacher Society, now the Schumacher Center for a New Economics. In 1974 E. F. Schumacher asked Robert Swann to start a sister organization to his own Intermediate Technology Development Group, but it was not until 1980, when prompted by Resurgence editor Satish Kumar, that Swann organized the E. F. … Continued

Related Lectures

A Conversation About Land and Liberation
Prophecy of the Seventh Fire: Choosing the Path That Is Green
Ecological Redemption: Ocean Farming in the Era of Climate Change
Public Voice for Schumacher Center’s Sustainable Economic Policies
What is a Work of Art in the Age of a $120,000 Art Degree? “Entrepreneurs of the Self” in the New Economy