(This post follows on from Ten Principles for a New Economy 1/3 and covers the second 5 principles in the New Economy Network’s Principles for a New Economy (PDF) )
“All monetary systems and financial institutions shall be regulated as essential public utilities for the benefit of society as a whole, and for nurturing the real economy.”
The two key phrases here are “essential public utilities” and “real economy”.
One core reason there was a financial meltdown in 2008 was because the real economy (the actual production of goods and services) had become secondary in financiers’ and politicians’ minds to the buying and selling of shares, options and positions on the financial markets.
This is like expecting a car to drive as fast as possible irrespective of the engine put into it.
Another core reason, and arguably a much more important one, is that finance remained essentially in the hands of a few people even though it’s almost impossible to survive in today’s capitalist society without getting into debt. It is, in effect, a utility required by society in order to function correctly, and so should be treated as one.
This is a good moment to pause and reflect on why these Ten Principles are actually “good stuff” and worth taking on board. They’re not anti-capitalist or pro-socialist … there’s no mention in there of nationalising banks, and there’s no concept that capital investment wil always be for society’s good.
Like sustainability, these Ten Principles push businessmen and economists beyond the left/right wealth and class arguments of the past century and look instead at how politics and finance can be shaped in a way which reflects today’s multi/social media society .. not the society of our great-grandparents who barely knew what a letter or an automobile was.
“Significant economic inequality shall be understood to be inherently and profoundly antihectical* to achieving human and ecological well-being, and shall be rapidly reduced.”
One of the deep flaws of the market economy is that it relies upon economic inequality. This is why we’ve had cheap goods from China for so long and where there is now a rush to market at the “Bottom of the Pyramid”.
There will always be social and economic inequality .. that’s the nature of the beast. However whether that inequality translates to unfairness is a different matter. There are plenty of examples around, from a privately educated child who’s expected to write 10 pages on the solar system vs a publicly educated one who’s expected to write one sheet of A4 on one planet, through to the withdrawal of the Colombian candidate from the race to be President of the IMF because he felt the contest had become politicised.
Equality has to mean equality of opportunity, not equality of income, wealth or social standing. It is how the economy is run and regulated which allows people to make their way according to their desires and abilities, not their background, race, gender or class. Today financial return is allowed to trump these equitable considerations, and that makes the economy profoundly unfair.
Providing Fulfilling Livelihoods
“Individuals shall be assured of substantial opportunities for decent paid work, employee ownership, and the right to organize in the workplace, and shall be accorded proper recognition for work performed outside the formal wage economy owing to its fundamental role in enriching community and family well-being.”
In other words: no more slaves, no more servants.
Many people’s quality of life has deteriorated significantly over the past 50 years or so. Gone is the suburban commute of Reggie Perrin (or even the consummate breakdown) and in are long working hours, evening and weekend toil and the sacrifice of personal fulfillment over professional advancement.
Employees at all levels must have a significant voice in how the business is run, have opportunities made available to them as they arise and should be able to count their professional training as part of their working day. This is the only way in which a proper work-life balance can be achieved.
Fostering New Values
“Economic values shall be redirected, by all fair and reasonable means, away from excessive materialism and shifted towards values that prioritize flourishing communities, individual happiness, and a healthy and resilient world based on lower material flows”
The economy, through consumerism and capitalism, has become an engine through which luxury is sold to those who can least afford it, no matter where on the income scale those consumers sit. This emphasis on luxury means that people are encouraged to get into debt in order to gain more material possessions.
In the meantime pubs and corner shops are closing, effective working hours are increasing and social media is exploding. There is no halcyon of yesteryear which we should try and restore, but we need to look very carefully at how the need for stuff is driving us apart and causing us misery.
The values which are being inculcated into our communities are driving us apart, reducing our ability to meet each other face to face and driving brand-orientated wedges between sectors of society who could otherwise get on with one another.
A new set of values are needed which will put the community at the forefront and enable people of disparate background and wealth to view one another as equals. These are the new values of the new economy.
“International economic relations shall rest upon the same principles enumerated above that apply to economic activities within nations, such that economic justice also becomes embedded in such relations.”
Globalisation, like capitalism, is a fact of life today. Get over it.
However globalisation, like capitalism, has to date been driven by the near medieval need to make profit and dominate communities. Thanks to the liberal policies of yesteryear this trend has also gone hand in hand with a desire to educate and enlighten the local population, meaning that people around the world now realise they have been taken advantage of, used and abused in order to make a few people at the top even more wealthy.
I’m not going to say “this has to stop”. To do so would be like condemning a farmer for sowing his crops because he then has a monopoly on selling his farm’s produce. Out of his own effort he has produced the basic nutrition upon which we all rely. Of course he has a right to retain power and control over his own farm, but he would rightly be condemned for withholding produce on the grounds of who could pay for it and would be doubly condemned for making healthy sustenance a luxury item.
The simile extends quite happily into the economic environment. Any part of the economy should address the public need and provide tangible benefit to the community addressed. This is where globalisation has gone wrong. Big brands, from sports goods manufacturers to peddlers in nicotine and financial advisors, see nothing more in globalisation than an opportunity to sell their product or service for a centralised profit.
It may be their only community involvement is that they’ve brought their brand into a new community which will better that community because, um, they’re now buying that brand. Or, perhaps, a vanishingly small proportion of the profit made from selling in that community will be reinvested in it. Wonderful!
Globalisation needs to be redefined, and with it the very premise of capitalism. The use of capital to support and invest in businesses should be primarily to build a a more equitable and resilient economy for the good of all concerned. This is the change of values which is needed, and globalisation should see it propagated the world over.
*antihectical is a remarkably obscure word, even for an essay on economic principles. I’ll leave to you to look up for yourselves, but suffice to say its meaning is self evident by its context
(This is part 2 of Ten Principles for a New Economy. Part one can be read here; part three will look at the four things a new economy should NOT do)
Picture Credit: Meeting image from the New Economy Network website
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