A New Economy: The System

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A New Economy: The System 2017-05-25T12:40:13+00:00

 

Societies are defined by the cultural and institutional systems that prescribe the economic relationships on which their members depend for their livelihoods. An Ecological Civilization requires a New Economy system in which money is valued only for its service to life and power resides with living communities in which people care for one another and the living Earth on which we all depend.

The economy is a system of relationships by which we engage with one another and Earth to create the essential means of our living. Given their centrality to our health and happiness—even to our existence—the institutions that define these relationships are the defining institutions of the society.

The economic system of an Ecological Civilization must reflect the defining realities of our human relationship to nature. Two aspects of this reality are foundational:

1.    We humans are a part of nature. Our health and well-being depends on the health and well-being of the rest of nature. Each individual organism is important, but as with the cells of an individual human body, the individual must act with a recognition that in the event of a conflict, the interests of the community must come first. It is the same as the warrior as the choice a warrior must sometimes make in combat to risk the survival of the self to secure the survival of the team.

2.    We humans are now a global species inhabiting a full and already overburdened living Earth. Our ability and responsibility to adapt to Earth exceeds Earth’s capacity and responsibility to adapt to us.

Three New Economy System Priorities

The New Economy of an Ecological Civilization will need to secure three essential system condition that are exact opposites of the current old economy outcomes:

  1. Earth Balance.  As living beings born of and nurtured by a finite living Earth, our health and well-being depends on Earth’s health and well-being. We must manage the economy to keep our aggregate consumption in balance with living Earth’s regenerative capacity. We currently consume at a rate an estimated 1.6 times what Earth can sustain. The excess 0.6 is depleting Earth’s capacity to support life—including human life.
  2. Shared Prosperity.  Earth is the common heritage of all Earth’s life and all of Earth’s people. We must share its available generative capacity to meet the essential material needs of all of Earth’s 7.5 billion people. There is no place on a full Earth for material extravagance. As of 2017, the financial wealth of world’s 8 wealthiest billionaires equaled that of poorest half of humanity.
  3. Living Democracy.  To fulfill conditions 1 and 2, our human economy must mimic Earth’s biosphere—a global system that organizes everywhere locally as a global holarchy of territorially defined living communities.  The decision-making processes by which living organisms adapt to local circumstances to meet local needs are everywhere local and participatory. There are no central decision makers. Think of it as a living systems version of radical democracy.

In each instance, the outcomes of cultural/institutional system of the old economy are the exact opposite of the outcomes we now need. Rather than enhance Earth’s capacity to sustain life, the destroy it. Rather than assuring material sufficiency for all people, they deepen the divide between the profligate and the desperate. Rather than, support the community control and capacity for self-organization essential to their own health and security, they strip them away.

New System Opportunity in Old System Failure

The imperative for change presents an unprecedented opportunity to create a more secure and fulfilling life for everyone, including those currently most privileged. Daunting as the challenges are, they can be addressed in ways that create jobs, increase job satisfaction, free time for family and community, improve health, and eliminate deprivation and wasted human potential.

We can significantly reduce the human burden on Earth by eliminating war and the pollution of carbon fuels and toxic chemicals; reducing crime, waste, and planned obsolescence; and reorganizing as eco-communities that facilitate meeting our daily needs by walking and biking and linked by energy efficient high speed transit that turns wasted hours stuck in traffic into pleasant and productive commutes.

As we restore the health of soils, waters, forests, and fisheries we as well restore Earth’s beauty and our own comfort.

We also have a substantial evidence that people who live in more equitable societies enjoy greater psychological, mental, social, and environmentally health and happiness. And when people organize as member of communities in which they know and care about one another, they share a sense of responsibility for their common well-being that allows democracy to flourish and governments to be less intrusive.

A New Economy Narrative

In exercising that leadership, we must embrace the most advanced of ethical standards, spiritual insight, and scientific understanding. Together these point to a guiding narrative for the work at hand.

We humans are living beings born of and nurtured by a living Earth. Life exists only in living communities of place that create and maintain the conditions essential to their own existence. Human health and happiness depend on the relationships of strong and healthy families and communities. Money is just a number of no intrinsic value or existence outside the human mind. It has value only because we accept in exchange for things of real value, like our labor and real capital assets like land.

An economy in which the richest people make the rules to maximize financial returns to themselves without regard to consequences for others will inevitably destroy the social and environmental foundations on which it depends. The economy’s only legitimate purpose is to support living communities in meeting the essential needs of healthy, happy, and productive living with each person using no more than their just and rightful share of our Earth mother’s life sustaining gifts.

Societies  that equitably share wealth and work enjoy greater physical and emotional health, stronger families and communities, less violence, greater resilience, and a healthier natural environment. In return for sacrificing material excess, violence, and competition for dominance, we gain life, material sufficiency, community, love, meaning, and spiritual abundance.

Ownership is Power

In any society, power ultimately resides with those who own or control access to the essential means of living, including food, water, shelter, security, transportation, recreation, education, and health care.  The power of kings resided in their ownership of the lands and waters from which their subjects harvested their food and quenched their thirst. Under state socialism, government owns these assets in the name, but not necessarily in the interest, of the people. Both centralize control over decisions best made locally.

Under a system of global corporate oligopoly, the powers of ownership reside increasingly with global corporations that use them to control our access to jobs, resources, and markets. The result is destruction of Earth’s capacity to sustain human life, an extreme concentration of wealth, and consignment of all but a tiny minority to lives of wage and debt slavery.

This system bears no resemblance either to Thomas Jefferson’s vision of a rural popular democracy of yeoman farmers or to Adam Smith’s vision of local market economies populated by small farmers, artisans, and shopkeepers. Though Jefferson focused on the politics and Smith focused on the economics, both recognized that the two are inextricably intertwined and ownership of real economic resources is key.

Despite claims of progress toward eliminating poverty, we now have the greatest global maldistribution of the ownership of real wealth in human history. The greater this maldistribution the more the economic power of owners trumps the political power of voters.

The more concentrated the ownership of Earth’s shrinking pool of real wealth, the more dysfunctional the culture and institutions of the old economy. Marginal income gains for the poor are meaningless when the rich are concentrating their control of the essentials of living to demand an ever-higher price. In a full and finite world, the defining issue is equity.

Corrective action to prevent collapse while actualizing these current opportunities will not come from within the institutions that are empowered by the deceptions that drive the collapse. It can come only from awakened and aware people drawn to a shared vision of the possibilities presented by the New Economy of an Ecological Civilization.

Capitalism is a Market Pathology

Many of us have grown up with the idea that markets are the best way to organize economies and that the only alternative to market capitalism is the failed ideology state socialism that China and the former Soviet Union abandoned decades ago. Markets are indeed one of our most important and effective institutional mechanisms for facilitating self-organization within and between human communities.

Money and markets are among the most important and beneficial of human inventions when recognizes as tools or means for facilitating economic exchange within a framework of rules and ethical standards. Capitalism is a pathology to which money and markets are subject when we forget that they are instruments and make them object of worship.

Capitalism is best described as an idolatry devoted to the worship of money and markets restrained by rules or moral standards. Though it claims to be a champion of markets and democracy, its opposition to the rules and ethical practice essential to the proper function of markets and democracy it is the moral enemy of both.

Real Democracy and Real Markets

Real democracy is a one person, one vote popular democracy. It bears no meaningful resemblance to one dollar one vote plutocracy. Similarly, the market economy of Adam Smith’s vision bears no resemblance to a global corporate oligopoly that honors none of the essential principles of a social efficient market economy. These principles include:

  • Buyers and sellers must be too small to influence the market price.
  • Income and ownership must be distributed equitably with no extremes of wealth or poverty.
  • Complete information must be available to all participants, and there can be no trade secrets.
  • Sellers must bear the full cost of the products they sell and incorporate it into the sale price.
  • Investment capital must remain within national borders, and trade between countries must be balanced.
  • Savings must be invested in the creation of productive capital rather than in speculative trading.

[For an elaboration and adaptation of these principles see “Ten Rules for Healthy Living Earth Markets.”}

Unregulated markets do not support these principles. To the contrary, unrestrained market forces systematically violate each of them, as the corporate ruled suicide economy demonstrates.

By and For Living People

A democratic, market-based economy is what we in fact seek. And it must be organized by and for people seeking to make a living as members of healthy vibrant communities; not corporations seeking to making a killing in service to global financial markets. Life must be the defining value and power must reside with living people who cherish life.

Economic democracy is an essential foundation of both political democracy and a true market economy. To support larger-scale enterprises, the rights and power of ownership may be exercised cooperatively. Control, however, must always be with people who depend on the enterprise for their livelihoods. Smaller enterprises are generally preferable to larger enterprises. And the interests of the individual firm must always be subordinate to the interests of the larger community in which it does business.

Leading from Below

The millions of people the world over who are joining together to rebuild their local economies and communities are the true patriots of our time.  They support locally owned human-scale businesses and family farms, develop local financial institutions, restore the healthy vitality of farm and forest lands, advance land use policies that concentrate human populations in urban centers and compact rural communities, reduce automobile dependence, retrofit buildings to conserve energy, and work toward local self reliance in food, energy, and other basic essentials.

To Birth a New System

Our future depends on navigating the transition to a New Economy that approximates the structures and dynamics of Earth’s biosphere. This requires shifting the economic system’s

  • Defining value from money to life
  • Locus of power from global corporations and financial markets to place-based living democracy communities,
  • Favored dynamic from competition to cooperation,
  • Defining ethic from reckless externalization of costs to responsible cost internalization, and
  • Primary purpose from growing the financial fortunes of the few to assuring the health and well-being of everyone.

Implementing actions will include redirecting economic resources from:

  • Instruments of war to health care and environmental rejuvenation.
  • Automobiles to public transportation.
  • Suburban sprawl to compact communities and the reclamation of forest and agricultural land.
  • Advertising to education.
  • Financial speculation to local investment and entrepreneurship.

Additional New Economy Resources

Many organizations dedicated to deep systemic change are mobilizing under a new economy banner. The New Economy Coalition brings together organizations from across the United States working to make a just and sustainable New Economy a reality. The Next System Project is exploring system design options. The New Economy section of the YES! Magazine website carries daily updates on the people who are living the New Economy into being.

The living systems perspective on the New Economy outlined here is spelled out in more detail in the Living Economy Forum’s various books. And is continuously elaborated and updated in my YES! Magazine Living Earth Economy column, and my Twitter and Facebook feeds.

These are some of the additional New Economy resources on this website.

  • The New Economy: A Living Earth System Model. This report prepared for the Next System Project is our most current and comprehensive presentation of the living Earth economy system frame.
  • Ten Common Sense Economic Truths foundational to a functional economy.
  • Ten Rules for Healthy Living Earth Markets. Essential rules for a market responsive to the needs and values of a living Earth economy.
  • Which Story? contrasts the underlying assumptions of the old and new economies and asks you to identify which you find more consistent with your experience and understanding.
  • Healthy Markets spells out the essential design principles of a healthy market economy that supports the structures and self-organizing processes of a healthy ecosystem.
  • Money Rules addresses the system design choices that determine whether money flows to the phantom wealth Wall Street economy to create inflated financial assets or to the real wealth Main Street economy to create a better life for all.
  • Confronting Systemic Evil. How capitalism undermines the rules and ethical standards essential to the proper functions of markets and democracy.
  • Life as Teacher outlines the case for looking to healthy living systems for the design principles guide our design of a new economy.
  • Advancing Transformation outlines eight action clusters framing a new economy policy agenda.
  • What’s New About this New Economy? spells out the differences between two contrasting visions of a New Economy: the magical high-tech fantasy economy and the reality-based living Earth economy.
  • New Economy Resources provides a guide to resources for further study, organizing discussions, and action engagement.

See <new-economy-resources> for more details. You will also find a wealth of additional materials in the library section of this site.