An economy that works for everyone

Clem McCartney

When the New Zealand Labour Party won the recent general election, the party leader and Prime Minister, Jacinda Ardern, said they must seize the opportunity “to build an economy that works for everyone.”  As a slogan it compares favorably to “Build back better” or “Make the country great again.”  “Back” and “again” imply recreating the past rather than looking forward to new solutions to current problems.  And there is little precision in the terms “better” or “great.”  They could be interpreted very differently.  “Works for everyone” sets down some criteria for measuring success.  Everyone will benefit and, ideally, everyone will be able to judge what is better for them.  These are the kinds of considerations that lie at the roots of a Shared Society in which the benefits of the society – as well as the values, culture, customs, practices, beliefs and ways of life – are not owned by any one group but belong to all. 

Socio-economic systems, past and present

But how do we create an economy that works for all?  We cannot say that it exists at present and we certainly do not have a world economy that works for all.  Nor does it work for the planet as we continue to over-exploit the world’s resources, degrade the environment, increase the emission of greenhouse gases and fail to tackle climate change.  It is easy to identify problems with the present economic systems around the world.  They are not fit for purpose.  They are all governed by short-term considerations and do not take into account long-term impacts; they lead to inequality; they depend on growth based on continued consumption, even if that consumption is unsustainable, and pointless if that consumption has no benefit.

It’s become increasingly evident that the current economy doesn’t work for all people.

When we look back in history and across the world today we see many ways in which societies have developed different economic practices and systems:  hunter-gathering; pastoralism; self-sufficient cultivation, division of labour; exchange of goods; ownership of land; resources held in common; monetary systems; dues, taxation and public finance; accumulation of wealth and resources; slavery; feudalism; capitalism and communism.  Most started as ad hoc responses to the needs of the moment, limitations of existing systems, new technologies, capacities for social organisation, and struggles between powerful interests.  So, one family might have seen that they could devise a means to grind their grain using waterpower, and then provided this service to neighbours, who would in time offer rewards in return.  On the other hand, rice growers had little need to grind their grain, but devised means to extend their crops by managing water resources more effectively as a common resource through canals and rice paddies.  Most of these practices were intended to work for the benefit of the whole community. 

There was no awareness of or intention to create an economic system, but in time those with more power adapted them intentionally for their own advantage, often with corresponding disadvantage to others.  And as these systems grew and created surplus wealth, they facilitated the accumulation and control of that wealth and resources by those with some advantage, thereby increasing the monopoly of power. 

Communism is an exception in that it was devised as a comprehensive, planned system fully formed from the start, with the express intention to correct the inequalities and injustice of capitalism, and to create a system that works for all.  But we now know that it replicated some of the problems of earlier systems and discovered new problems. 

On a smaller scale, there have been and still exist many intentional sharing communities.  Those that have survived best have a religious or other ideal, which may have given them greater resilience, but there were also considerable misgivings about their beliefs as well as the paths to realize them. One can think of the Bruderhof, founded in 1920 in Germany and now with communities also in Paraguay, South Korea, Australia, Austria, USA and United Kingdom.  They are involved in agriculture and also have significant enterprises making display boards in Australia and children’s toys and aids for disabled people in the USA.   Kibbutzim collective communities in Israel were first established in 1909, and, while they are not such a significant feature of Israeli society today, many are still thriving.  They were traditionally based on agriculture but today many have diversified into industrial and high tech enterprises.

Protecting the status quo

While most economic systems have developed in an ad hoc fashion, with hindsight they have been regarded as immutable and the expression of certain fundamental laws such as “the invisible hand of the market” or the “superior race,” and aphorisms such as Rudyard Kipling’s “white man’s burden.”  It is instructive that ideas such as Aesop’s “the Lord helps those who help themselves” or the Koran’s “Allah will not change the conditions of a population until they change what is in themselves” have been used to justify the free market. There is, however, tension within most economic systems between, on the one hand, their capacity to meet the needs of all and contribute to the wellbeing of all, and, on the other, their tendency to serve and facilitate the accumulation of resources by the few, and in most cases the latter tendency prevails.  Globalization is a recent example where open borders should have benefited everyone, but it has been developed in such a way that powerful interests have benefited to the detriment of the rest.  The impact of greenhouse gas emissions on climate change threatens the whole planet, but the global community has been reluctant to introduce adequate measures to address the problem because vested interests have been able to ensure that carbon-reduction measures do not adversely affect their personal and business activities. 

The international efforts at addressing climate change and myriad other environmental problems haven’t worked because of the possible damage they may do to the economic interests of the power elite.

The above discussion suggests that the problem is not the economic system itself, though some have a greater potential for distortion and imbalance than others, but a large part of the problem lies in the social and cultural systems within which they are embedded.  These are invariably hierarchical, reflecting the frame of reference of individuals and interest groups with more power, and exclusionary, reflecting the frame of reference of the community within which they develop.  The economic, cultural and social systems mutually reinforce their hierarchical and exclusionary tendencies so that the weaker members of the community and other communities are disadvantaged or even suppressed by those with status and authority.

Introducing the social dimension

Therefore we need an economy and a society that works for all – a Shared Society. History provides us with many societal experiments, which were predicated on that idea and attained varying levels of success. Confucius, more than two and a half thousand years ago talked of the concept of Datong Shijie, which, though hierarchical, also envisaged a society in which rulers are selected according to their wisdom and ability, mutual confidence is promoted and good neighborliness cultivated. The aged are all respected, the young properly cared for, the able-bodied employed, the helpless and disabled well cared for, men have their respective occupations and women their homes, wealth not kept for self-gratification, indolence despised, energy not used for self-benefit, selfish scheming repressed, robbers, thieves and other lawless person no longer exist so that people do not have to shut their outer doors.

In the 14th century, the Islamic scholar, Ibn Khaldoun of Tunisia wrote about asabiyyah or social solidarity, characterised by unity, group consciousness and a sense of shared purpose.  He went further by arguing that this not only created an effective society, but also facilitated economic development because greater social cohesion allows more complex division of labour. 

In the early stages of the industrial revolution, mill owners created model villages with the intention of ensuring better living conditions for their workers. New Lanark in Scotland was one of the first established in 1786.  The mills closed in 1968 and it is now a UNESCO World Heritage Site.  One of the early owners, Robert Owen, subsequently went to the USA and attempted, unsuccessfully, to establish a similar community at New Harmony, Indiana. Another example, Bessbrook in Ireland, was founded by John Richardson, in 1845, based on a philosophy of “Three P’s”: no need for public house, pawn shop, and police station. Many of the houses were of such good quality that they are still inhabited today, and each had an allotment for growing vegetables.

New Lanark was influential in many ways. Around 1813, a shop was established on co-operative principles, very different to the notorious company store in the USA in the early twentieth century, which made workers indebted and dependent on their employer.  Instead, the New Lanark shop was a forerunner of the co-operative movement.  Co-operatives include in their aims the wellbeing of their members and fairness, justice and equity.  Some lasted for only a few years but others for centuries and most remain true to their original ideals.  

New Lanark was established in the 19th century as a “model village” in Scotland. It is now a UNESCO World Heritage site.

Contemporary explorations

In modern times we can think of many initiatives based on new social-economic structures, some drawing on traditional systems of common ownership and challenging directly the current, dominant system. In India, the Vikalp Sangam (Confluence Of Alternatives) initiative started by “Kalpavriksh Environmental Action Group” and other partner organizations, is a grassroots attempt at creating alternative ways of meeting human needs and aspirations, which are ecologically sustainable and economically egalitarian. Kalpavriksh has also launched an international initiative called the “Global Tapestry of Alternatives” to link such explorations for alternatives under the ideological rubric of “Radical Ecological Democracy”.  Other schemes are more adaptive to the market economy.  Communities have mobilised to acquire land, either as gifts or at market value, for environmental protection and the benefit of the community.  In Scotland there are many such initiatives, perhaps influenced by the long history of common ownership and the bitter memory of the enclosure of much of the land and the clearance of the peasant farmers in the 18th and 19th century.  “Community Land Scotland” gives an idea of the size of this trend as the network has 104 communities, who own 2266 square kilometres of land, around 3% of Scotland’s total land area and home to around 25,000 people.

Other initiatives take the form of local exchange trading systems (LETS), which create their own community currencies, and in contrast, cryptocurrencies, such as Bitcoin, rely on the Internet to create and exchange funds using Blockchain distributed ledger technology, but they are not known for their concern about social and environmental wellbeing.  Ways to obtaining finance include micro-finance to help individuals and small businesses that lack access to conventional banking services become self sufficient, credit unions, member-owned providers of small loans, and crowd-funding, which uses the internet to raise funds. 

Triodos Bank, founded in the Netherlands in 1980, operates as a commercial bank but says, “We are more than a bank. We are a community”.  It aims tohelp create a society that protects and promotes the quality of life of all its members, that has human dignity at its core and that benefits the environment.  It has an organisational structure, which aims to protect its mission and value and is a B Corporation or B Corp. 

Traditional corporations have a legal duty to create dividends for their shareholders and could be challenged if their commitment to social and environmental concerns reduced their profits.   Therefore the B Corp model, which began operating in 2007, means that companies, which adopt the model, are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment. 

The human dimension

Clearly we can think of new economic structures and systems which will be fairer and more equitable, but we have seen that there will be a constant tension between ensuring the wellbeing of all and the benefit of sectional interests. In this sense, there never will be “an end to history”. Over time any system is likely to be captured by the most powerful groups who will then modify the system to entrench their position. This is even more likely when we try to scale up small initiatives.  Throughout history we have seen the results of the tension between the powerful who exercise their power with intent to dominate or careless of the implications for others and the frustration of those ignored and marginalized: the peasant revolts; campaigns for democratic rights and freedoms; trade union action; secessionist movements and so on. Often they have begun peacefully with education and awareness raising activities, self-help provision of welfare services and poverty relief, campaigns and lobbying, but sometimes these efforts have been forcibly suppressed, and on other times, when there has been little progress violence has broken out.  Even when change comes about, the original ideals are later lost.  Democracy was intended to give voice to the people, but in many countries the electorate is manipulated and, in some places, the system is corrupted, so that in time the democratic system has become an empty shell, and, rather than expressing the true feelings of the electorate, gives validity to the appointment of the leader.    

Modern representative democracies are prone to corruption from the ruling class.

So, we cannot rely on material conditions to determine a fair and sustainable socioeconomic system to serve the people and planet, nor can we depend on the ideals of enlightened individuals.   We need to bring the human dimension and life in general into a central role in any economic system in ways that people are able to play a full and active part as informed, engaged and committed participants in decision making, and not simply as passive recipients of the goods and services that are provided for them. They can then act as a check and balance on the accumulation of power by vested interests and unrestrained exploitation of the human and natural resources in the drive for growth and profit.

This is where the Shared Societies Approach shows a way forward.  From the Shared Societies perspective, the hierarchy of the current dominant discourse is reversed, so that the economic system is a mechanism that should exist to adapt to and serve the needs of the desired social system and the wellbeing of all, not that the social system’s role is to serve the existing economic system, no matter how distorted.

What needs to be done?

Firstly we need a new set of values.  The Working Group convened by the Club de Madrid on Environmental Sustainability and Shared Societies endorsed the values of the Shared Societies with minor changes to take account of environmental concerns: 

  • Respect for the dignity of every individual;
  • Respect for human rights and the rule of law;
  • Altruism and identification with the needs of other individuals, of the community and of future generations, in a spirit of solidarity and collective action;
  • Equity, fairness and inclusiveness;
  • Democratic participation in a way which enhances the ability of all sections of society to express their aspirations and their needs;
  • Individual and community self-reliance and autonomy in their own affairs, along with networks of interconnectedness, caring and sharing;
  • Respect for the environment and the rights of nature and all species;
  • Respect for the earth’s natural boundaries;
  • Recognition of the irreplaceability of the global commons – for example, sea, freshwater, air and space – and therefore that their protection takes precedence over other considerations;
  • Modesty and restraint in consumption, lifestyle and use of the earth’s resources; and
  • Peace and harmony. 

Secondly we need new voices at the heart of decision-making.  One way in which that has been done is by enshrining in international law the right of indigenous peoples to give or withhold “free, prior and informed consent” and to pursue their economic, social and cultural development through, for example, the UN Declaration on the Rights of Indigenous Peoplesand Convention 169of the International Labour Organization, as well as in some national laws.  When such Declarations and Conventions are respected, the views of local communities cannot be ignored.  People are the experts in their own situation and know what works for them and their environment, but they may not know how to bring that about.  They need economists and others to show how it can be done, rather than telling them that the immutable laws of economics mean their needs have to be subordinated to market forces.  But discrimination and inequalities of power may make participation ineffective.  Against their better judgement, poor, weak communities may agree to demands because of the financial or other inducements offered.  They may accept payments in return for allowing exploitation of their environment, because they have no other sources of income.  They have not really made a free choice.  Therefore, meaningful dialogue requires management of the power imbalance.

The power imbalance within societies can only be tackled by making the decision making process decentralized.

In a globalised world everyone’s attitudes, decisions and actions can have an impact anywhere, contributing to the exploitation of people elsewhere and the degradation of the environment, just as their wellbeing is impacted on by others.  They also are stakeholders and have to be included in the decision making process in an informed way, but often they find it convenient and are encouraged to ignore such matters and rely on the judgement of people they trust in politics, advertising, news media and social media.  When occasionally tragedies, such as famines or floods, are reported in the media it can bring the suffering home to them and they react generously, showing people’s capacity to be sensitive and concerned for others.  If they were aware that they live in a shared planet where we all have to work together for the good of all, not only in our own family and community but nationally and internationally, then they would not want many economic decisions to be taken in their name.  By being brought closer to decision making, without barriers to understanding being put in the way, they will become more aware of these realities and act accordingly, adopting sharing as a guiding principle.

A fresh look at economics

We also need to rethink economics.  We need to debunk the myth of the market as a self-correcting system that over time will make necessary corrections to deal with distortions and imbalances.  An associated myth is that the market is unregulated and regulation will undermine the market’s own capacity to regulate itself.  In fact the economy and the market are human constructions and have built-in regulations, some unspoken and some explicit, that benefit those who control it.  The opposition to regulations is really opposition to regulation, which will damage their interests. 

We know that much of the wealth created is not made available for improving economic, social and ecological wellbeing.  In any case, the planet cannot sustain current levels of growth and exploitation, and so we need more economists to pay more attention to the limits of growth and how to address the consequences of slower growth.  It is encouraging that there are many groups critiquing the dominant assumptions underlying economic and fiscal policies, which advocate for the the free market; the reliance on growth and Gross Domestic Product as a measure of a successful economy rather than well being or happiness; austerity for the those who are already economically impoverished as a means to balance the budget, etc. 

We also need to reject the conceptualisation of homo economicus,“ and not only for its outdated gender bias.  It assumes that human beings are inherently selfish and materialistic, and that self-interest and the profit motive are the most effective way to incentivize people.  In contrast, we know that self-fulfilment and a sense of achievement can be more important than material incentives, and we are also becoming more aware of the limitations of self-interest as a self-organizing principle.  This is a very pernicious conceptualisation because it disregards individual agency, but yet our economic systems are based on promoting homo economicus and denying the self-actualising person who does not conform to the requirements of the growth economy.  We need to rethink the utility of the advertising industry and its role in this process.  People need to be fully informed about the choices they face.  They need to be partners, no longer units whose role in the system is to be consumers and tax payers in order to keep wealth circulating in unsustainable ways. 

This requires a rethink of the role of economists and their training.  We need them to find us ways and means to achieve agreed, socially desirable goals, not to defend the system and say what cannot be done on the basis of existing dogma. 

The practice of economics has to be recalibrated to promote socially desirable goals rather than the profit motive of the growth economy.

As noted earlier the economy has always contained a tension between, on the one hand, meeting the needs of all and contributing to their wellbeing, and, on the other, serving and facilitating the accumulation of resources by the few.  Now the situation is increasingly critical because of the speed of change and the capacity to accumulate great wealth at the expense of the environment and greater inequality.

Making Change Happen

How can these shifts in approach come about? We can draw a number of encouraging insights from history:

  • Systems do change and are always in flux and changing.  Capitalism today is not the same as capitalism at the beginning of the industrial revolution.
  • Change can be rapid.  Capitalism, for example, began to emerge in Northwest Europe in the 16th century but the industrial revolution propelled its rapid development at the turn of the 19th century.  In 2020 the Covid-19 pandemic drove many countries to introduce measures and systems, which were not given serious consideration a few months before.  When the Covid crisis recedes, these rapid changes are likely to be reversed.
  • Most changes begin incrementally.  They are an ad hoc response to specific problems, which the existing system cannot cope with or new opportunities of which the existing system cannot take advantage.  Some are successful and spread, some wither and are not repeated.
  • Incremental change if successful consolidates, systematizes and spreads horizontally and vertically.  These processes will be encouraged by those who consider it positive, and resisted by others.
  •  In the modern global world, global change benefits from effective intergovernmental organisations.  Globalization disadvantaged groups both in the global north and global south because of lack of effective intergovernmental oversight.  On the other hand the United Nations’ Agenda 2030 and the Sustainable Development Goals, as well as the Pathways for Peace show the potential of such bodies to provide signposts toward progress for all.  It was heartening that both these documents emphasised inclusive approaches, which had not been given significant attention in earlier drafts.
  • Change in one system propels change in others.  Social and political structures, governance systems and legal concepts changed, often unnoticed, to meet the needs of industrialisation.
  • In the process of change there is contest between different stakeholders, and different interests to shape emerging systems or resist change in order to protect their interests.
  • The contest is not equal.  Some interests have advantages and are more powerful; some have no voice or expectation of being heard; some are unclear what their interests are.  It is not surprising that many of the early industrialists were already big landowners.  During the early development of the automobile, the oil lobby was able to ensure the dominance of the petrol engine over electric power with the resultant level of pollution.
  • It is therefore important to find ways to balance the power between different stakeholders to ensure all voices are heard and ensure greater attention is given to the needs of all people and the planet.

On the basis of these lessons we can draw some hopeful conclusions for the future:

– Raise awareness and understanding of:

  • The need for change
  • Everyone is my neighbour
  • Everyone matters
  • Everyone can contribute to positive change

– It is not a question of finding new systems but finding practical solutions that work for all and which can model and shape the overall systemic change that is needed.

– No matter how ideal a system or model may look on paper, it is more important in the flux of change to focus on defending principles:

  • Respect for all, including people, all other living things and the planet.  This means listening to all and seeking out ways to hear the needs of those who have no voice, including the natural world and the environment
  • Sharing before accumulating
  • Wellbeing before wealth and possessions
  • Human security before growth
  • Equity and fairness through social protection and progressive tax systems
People are increasingly becoming conscious of the shared nature of society, and the need to defend its principles.

If we can defend these principles in the process of system change then we will have new systems that work for everyone, and we can move towards achieving a Shared Society.  A virtuous circle will develop as people are acknowledged for the work they do towards realizing these changes, and also, themselves, benefit from those changes. They will be more committed to respect others and be concerned for their interests, which creates a positive feedback loop.  People everywhere become ready to take more responsibility, they feel more confident, they are able to express the more altruistic aspects of their nature and curb the more self- centered aspects.  A Shared Society is particularly important when we face crises that not only require public support and compliance but also need every individual to take responsibility, feel a personal commitment to the good of the whole society whether locally, nationally or internationally, and monitor their own behavior and contribution to tackling the challenges.  The responses to the Covid-19 pandemic has shown that the most resilient countries have been those where these qualities have been evident and they are even more necessary as we face the challenge of building global commitment to tackling climate change.

It was noted in the beginning that Jacinda Ardern’s goal is an economy that works for everyone.  The “Shared Societies” principles could help address that challenge. And, if that experiment is successful, it could very well become a template for other societies around the world.

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Clem McCartney has been an independent research consultant on conflict and community issues for the last 40 years, working in many parts of the world with organizations such as Conciliation Resources, Berghof Foundation and the World Leadership Alliance/Club de Madrid.


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