Challenge for Europe

In every society, throughout all of history, we can discern pivotal actors. They are not necessarily the most powerful but society is nonetheless organized by them and around them. In Europe’s past, cities, the church, feudalism and royalty played this role.

The State and Big Business: Pivotal but not Adapted

States, since the 17th century, and businesses, in particular large corporations since the 19th century, have progressively become the pivotal actors in Europe. States assumed more and more responsibility in the organization of society, from defense through to education and the organization of the national economy. Businesses, in particular the largest among them, turned out to be particularly capable of mobilizing the ingredients of economic development, mobilizing of capital, transforming of knowledge into techniques and know-how, mobilizing and organizing large workforces, and adapting to diverse markets. This superiority of states and large businesses gives off an illusion of permanence. But, with the internationalization of production processes, we have the impression that the state and big business are still the warp and the weft of our economic fabric. The state manages territorial coherence vertically, while business organizes a system of production and international trade around it horizontally.

The force of these pivotal actors gives an impression today that they are permanent structures. No actor in the past has given up their privileged position by their own volition, but neither did they subsist with impunity in any sort of sustainable way once they became unfit for the state of societies needs: either they were replaced by others or they maintained their maladjusted form in society in ways that eventually proved to be deadly. This is the choice that the state and big business face today. The state often finds itself built to the wrong scale now: too small to manage interdependence globally but too big not to be compartmentalized and work on a scale that allows it to maintain the triple coherence that is indispensable to society. This triple coherence consists of economic development in a knowledge economy, social cohesion and the well-being of – and equilibrium between – humanity and the biosphere. As for large productive enterprises, their power has been contested over the past 30 years with the rise to power of their large redistribution networks, financial institutions, and logistical systems which tend to reorganize the redistribution of value-added along the production chain to their own benefit. But it is above all else its profound inability to adapt to both the current and future needs of society that will sooner or later lead, not to the disappearance of big business, but to the demise of its role as a pivotal actor. On one hand, its juridical status as an association of shareholders corresponds less and less with an economy of knowledge where human and intangible capital play and essential role and are fundamentally the joint property of those who contribute both capital and expertise. Also, business is becoming incapable of providing for everyone in that it is not creating a long term balance between humanity and the biosphere. Business only finds its equilibrium in unlimited growth. The proof of its declining stature lies in the realization of imbalances that is leading to the promotion of social and environmental responsibility for businesses. At the moment, the balance between efficiency and responsibility is tilted heavily in favour of the former, with a few grains of sand on one side failing to outweigh the Sisyphean boulder on the other.

Under these conditions, who will be the pivotal actors necessary to the 21st century and how can the European Union play a leading role to promote them?

We will need, as in the past, a weft to assure the management of vertical relations and a warp to assure the horizontal ones.

The weft, in our view, must be recast as territory. By this we mean the city with its rural surrounding, working as a basin of jobs and homes, and eventually the network of cities. The waft must be the production chain.

Territory: The New Kingpin

Territory is the level where society takes on a concrete reality. These days, the globalized economy organizes itself around urban and regional dynamics more than national entities. Territory is the new level where we can organize the mobilization of different types of capital, both public like infrastructure networks and private like human, intangible, and natural resources. Territories are also the privileged places of human interaction and solidarity. They are the islands of confidence necessary to the proper functioning of society. It is also on the territorial scale that we can, in a territorial approach to ecology, look after those whose byproducts of economic activity are also the primary resources of another’s. Here, we can endeavour to “close the production cycle” with an eye towards saving raw materials and energy. This is the main organizational scale of public services. It is the level where we can organize synergies between public policies. It is here where we receive and make use of the primary education on citizenship that needs to be transmitted around the world. 70% of final energy consumption depends on the organization of territorial space. The more the question how to management relations becomes importance in society, the more territory imposes itself as the natural scale for the management of these relations.

The Production chain: A link between the social and the technical

Regarding the production chain, it imposes itself naturally since it must assure itself that the systems of production are as efficient as possible with non-renewable resources, energy, and primary resources. It must assure a balance between technical efficiency and social cohesion. In the past, some businesses attempted, through vertical integration, to reassemble all the links in the chain under the same hierarchical authority. This happened notably in the case of socialist countries through central planning. In general, the whole system caved in under its own weight. Giving the production chain a pivotal role in the future does not necessarily mean resuscitating these dinosaurs, but it means imposing transparency throughout the production process to define and then impose sustainable criteria onto the production chain.

One objection springs immediately to mind: territory and the production chain already exist in fact but are still not social “actors” with an institutional status or centralized organizations at their disposal. Or at least not in the conventional sense of the term “actor.” But the concept of “actors” needs to be expanded. First of all, it should include any human assembly capable of constructing a way of understanding the world (notably alongside a metric for measurement), with the internal and external capacity for dialogue, and the capacity to begin a project – whether they are unified in an institution or not. Next, in place of the idea of an institution we need to substitute the idea of institutional organization: a collection of actors, institutions and stable relations that are established between one another.

Our Proposal

Europe can play a key role on the global scale by contributing to a profound recasting of economic thought, institutional organization and international commerce. It can first strengthen the role of territories by deepening the reflections already underway in the commission in the green book on territory and social cohesion by building a juridical framework of new territorial institutional organizations that will allow us to better comprehend territorial metabolism while transforming territories into real collective actors capable of simultaneously managing the economy alongside social and environmental cohesion. They can then, with all concerned actors (from productive enterprises down to consumers), and in partnership with the International Organization for Standardization, define the norms and criteria of sustainable networks. They can finally open a negotiation under the framework of the WTO on the transparency of systems of production and exchange and on socially and environmentally sustainable production chains. Only in this way will legitimate preoccupations with social and environmental clauses that seem like disguised forms of protectionism will take on their proper meaning under a coherent framework.

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