7 The Economics of the Commons
‘History teaches us that men and nations behave wisely once they have exhausted all other possibilities.’
- Abba Eban
‘Capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but… in itself it is in many ways extremely objectionable.’
- John Maynard Keynes — ‘The End of Laissez-Faire’.
The preceding three chapters have looked at polity and the various options that we have for governing ourselves. We focused in on deliberative democracy in particular — giving everyone a voice — and in so doing, tried to answer one of the questions from the Introduction — Who Decides? We’ve looked at the material economy in an earlier chapter, and in our chapter on the commons, fitted this into a view of nature, and seen the parallels between it and a further economy — the cultural economy of imagination and creativity. In this chapter we will explore two further economies, and fit them together with the material and the cultural so as to see the full composition of societies. As we bring in the ideas about ownership, sharing and the commons, we will try to relate these to this larger view of society. This in turn will allow us to revisit some of the other questions from the Introduction, What do we own? What should we share? What should we make? How should we trade? We will try to get some tentative answers to these questions, before moving on to that wider question of: How should we live? in the next four chapters.
As with Chapter 2, Gandhi’s sin of Wealth without Work is worth keeping in mind for this chapter. His further sin of Commerce without Morality is also relevant.
In our exploration of the commons in Chapter 3, we mentioned that a whole further area of explanation is missing. This I will label simply as ‘re-making’ — and we will explore the term in the course of this chapter. Re-making is the social commons and the emotional economy, and this chapter seeks to explore its importance to us and how we might bring it to light.
We have seen that it is often the material economy that is regarded as of prime importance in society, especially societies of the developed world. When people speak of ‘the economy’ it is usually just to the material economy of goods and services they are referring. Culture, nature, and the commons are all peripheral, for the most part. Or where they are included, there might be an attempt to fit them into the economic model that defines industrial manufacture — such as ‘creative industries’ — or viewing nature as providing ‘environmental services’. We looked at the parallels back in Chapter 3, and especially in Figure 3.3. Whilst economics includes various schools of thought on these matters, they mostly agree that the big factors in a society circle around labour, production, trade and consumption. Ha-Joon Chang summarises the situation neatly. He says:
‘Every society is seen as being built on an economic base, or mode of production. This base is made up of the forces of production (technologies, machines, human skill) and the relations of production (property rights, employment relationship, division of labour). Upon this base is the super-structure, which comprises culture, politics and other aspects of human life, which in turn affect the way the economy is run.’
In earlier chapters I have tried to give a description of this process, seeking mainly to point out the deep reliance on nature and our view of nature, as well as trying to relate things to our understanding of the commons. There are elements neglected or under-emphasised in economics’ description of the material economy, but I am not in any way questioning the basic legitimacy of the description. What this chapter is questioning however, is the idea that the material economy is all that matters — the claim that it is the base of society from which all else is derived.
I’m suggesting then that the material economy — material wealth and capital — are not the true base of society. Instead I want to promote the view that it is the social relations that determine the economic relations of a society. We can therefore introduce a further type of commons, mentioned briefly in Chapter 3, but kept back until now — the ‘social commons’, and with that, what has been described as the ‘emotional economy’, compassion, and what I have covered, for now, by the term ‘re-making’. Massimo d’Angelis (Omnia Sunt Communia) describes all this simply as ‘commoning’. Others refer to the ‘informal economy’, or what Ivan Illich refers to as the ‘shadow economy’ — or sometimes it is just called the ‘love economy’. (See Hildur Jackson — Designing your Local Economy in Gaian Economics — Living Well within Planetary Limits.) Labour, production, trade and consumption are the ‘formal relations’ within society. The suggestion is that these formal relations are ultimately based on the social relations — the social commons. Jeremy Rifkin tells us:
‘Without culture it would be impossible to engage in either commerce and trade or governance. The other two sectors require a continuous infusion of social trust to function. Indeed, the market and government sectors feed off social trust and weaken or collapse if it is withdrawn. That’s why there are no examples in history in which either markets or governments preceded culture or exist in its absence. Markets and governments are extensions of culture and never the reverse. They have always been and always will be secondary rather than primary institutions in the affairs of humanity because culture creates the empathic cloak of sociability that allows people to confidently engage each other either in the marketplace or the government sphere.’ Jeremy Rifkin — The Empathic Civilization.1 Meanwhile, Arturo Escobar tells us: ‘Of crucial importance … is the recognition that the base of biological existence is the act of emotioning, and that social coexistence is based on love, prior to any mode of appropriation and conflict that might set in. Patriarchal modern societies fail to realise that it is emotioning that constitutes human history, not reason or the economy, because it is our desires that determine the kinds of worlds we create.’ (Arturo Escobar — Designs for the Pluriverse. My emphases.)
As we’ve seen above, there are numerous terms we could use to describe the emotional economy. One of the terms I am favouring in this book is ‘re-making’. Why re-making? One reason is the link back to the problems inherent in the consumer capitalist society we have created. The way things are produced has alienated us from our making. To work with our hands, to be meaningfully engaged with what we do and to relate to others through our work — these things are the basis of genuine making. And there is a natural affinity between making and re-making, where re-making is the repair and maintenance of our material existence, but also the ‘repair and maintenance’, care and sustenance, of our own bodies and our relationships with others and with the natural world. The other reason for the use of the word re-making is our alienation from the feminine aspect of life. Just as we are separated from our making, we are also separated from the fact that we are made — and made by women. Likewise, it is women who do most of the re-making in our societies. So re-making is quite a deep concept — telling us about our needs for connection to our own natures, to Mother Nature and to the cosmos.
There is still some social relations involved in the material economy, for instance, the relationship of workers to their employers, businesses to their customers and suppliers, and employees with other members of staff. Indeed, it is these elements that were of key importance to Marx, so it is not fair to say that social relations are entirely irrelevant to economics as things stand now. For Marx and Engels, it seems to have been a bit of both the formal relations and the social relations. But, as the structure (ie. the economics) came to dominate, and continues to dominate, so it is that ‘economic thought’ (accountants’ truth!) is applied to more and more areas of human endeavour. The structure dominates, the super-structure is ignored or even swallowed up. A better way to describe this would be to say that it is only the purely formal, material and financial transactions that are taken account of in the material economy. (We might add that the relations, as well as being transactional, may also be exploitative, patronising and instrumental.) The rest is downplayed or ignored. By contrast, it is the recognition of the critical importance of the ‘emotional economy’ — especially those neglected aspects of ‘maintenance’, and often trivialised factors of creativity — that are important for a new story. The United Nations High Commission for Human Rights estimates that if, for instance, household labour were accounted for in our economies, it would represent between 10 and 39% of GDP. ‘To ask for capitalism to pay for care is to call for the end to capitalism.’ (Raj Patel and Jason W. Moore, A History of the World in Seven Cheap Things.)
If economics — and especially, the material economy — were really the driving force of society, then changing economics would change culture. But instead the suggestion is that if social relations were to change then economics would follow.2 Capitalism would morph into a new model. That key dichotomy that we have met in previous chapters — whether we need to change people or change our environment and structures — is therefore back with us in another form. If the social commons is really the driving force of society, and we feel that society needs improving, then we need to look, at least, at how culture might change in order to improve. And in looking at how we might change culture we may have to look at what we are like as individuals, and how we, in turn, may need to change.
Let’s continue our discussions by looking at what we neglect when focusing only on the material economy.
What we Neglect — Wild Nature and the Emotional Economy
Back in Chapter 3, I suggested that we needed to split our view of nature to include what we need to provide for ourselves as natural resources and what we choose to preserve, untouched, as wild nature. Wild nature, I suggested, is preserved for its own sake, as well as for the sake of the flora and fauna and the more abstract values of human flourishing. I related this split back to garden and wilderness, the reader may remember. We humans need to tend our gardens and leave the wilderness to do what it will. With regard to wild nature, we make two errors. Sometimes, we try to take all of it as resources — make it all garden — and don’t leave enough for the remainder of Earth’s inhabitants to live their lives. The other way we neglect wild nature is to disregard its importance for keeping everything going. Although looking at the commons has helped us in our understanding of our relationship with nature we can still end up just seeing the commons as another way of describing natural resources. So we need to broaden the idea of the commons — beyond just seeing them only as shared resources. As described by Massimo d’Angelis (Omnia Sunt Communia) the commons is also its social relations and our acts of commoning.
This leads to our other area of neglect — the whole area of compassion. Compassion sits outside the material and cultural economies, but plays a vital role in their continued functioning. I’ve taken up the terms from Charles Eisenstein (Sacred Economics) and from other authors in referring to the role of compassion and caring as the social commons, the emotional economy and re-making. In a sense, the material economy treats both wild nature and the social commons as ‘positive externalities’ — in other words, things provided for free by the wider environment, that material and cultural industries rely on in their production processes. The terms, emotional economy, social commons, and indeed, social capital, are not ideal descriptions. For one thing, as we discussed above, there is still an element of the social involved with material capital. For another thing, re-making covers a wide range of activities, from maintenance and reproduction, through to conviviality, friendship, relationships, intimacy and love, so describing this as an economy or as capital is a bit strange. Maybe, even those mundane chores that we do for ourselves and for others though, are done in love, as Marjorie Kelly suggests (Owning our Future). I’ll keep using the terms emotional economy, social commons and re-making as we go forward, and I hope the reader will keep in mind the broad reach that these terms encompass.
I hope that a parallel is now clear between how our economics regards nature and how it regards this re-making that we have been discussing. Wild nature is there all along, supporting everything we do, but often unacknowledged. Meanwhile, compassion and caring are there too, supporting the economies, but likewise going unacknowledged. We are ‘wild body’ and ‘wild mind’, but why, it may be asked, should we have to consider such things when talking about economics? Well, the reason is that these two neglected areas of society that we have been discussing, wild nature and compassion, are intimately linked. What is the ultimate source of what is referred to as ‘labour’ in the material economy and ‘work’ in the cultural economy? It is wild body and wild mind. These in turn rely, for their sustenance, on both wild nature and the re-making of ourselves by way of compassion. Ultimately all of these things are ‘embodied’. Our modern societies have however, separated us from our wildness — stuffed us into classrooms, offices and factories and institutionalised our minds. Some have suggested that the cultural economy produces things beyond its imputs from nature — that to some extent, our abstract world of thoughts, ideas, imagination and creativity is independent of natural resources. The intention of such an idea is that we could have a sustainable economy without an ever-increasing reliance on limited physical resources. But no, this is not going to work. The abstract economy of culture, is just that, abstract, and cannot produce anything without its reliance on nature. We do the same with the financial economy — believing it can somehow, in and of itself, produce more wealth. It cannot. Someone, somewhere has to pay for the ‘wealth’ the financial economy claims to create, and that wealth again has its ultimate source in wild body and wild mind.
Once again, I’d like to make clear that I am not seeking to change economics, only to expand our view of where all its inputs are coming from, if you will, and to shed some light on matters that are currently downplayed or neglected. If we were to fully address matters in relation to wild nature, be fully responsible in terms of what we take from nature by way of natural resources, and fully cleaned up after ourselves, by way of recycling and stopping pollution, this would not change economics. It would be, perhaps, an additional cost to the economy. As Richard Swift points out (SOS, Alternatives to Capitalism) these additional costs ultimately get passed on to the consumer, and thus the poor will suffer more than the rich. But does this mean we should not seek the changes? It could be argued that everything and anything that leads to higher costs causes more problems to the poor than to the rich. But that is not a reason for not making the change. Instead, it would be a reason for balancing things out with a fairer distribution of wealth through taxation or by some other means. If the natural commons are not taken properly into account, then the devastation that will be caused in the longer term will be even more of a problem to the poor than doing something about the problems now. And then there will not be a way back — we cannot tax our way out of ecological collapse. We could also point out that the extra costs envisaged by Swift and others could be, at worst, only temporary problems. It might be that an economy that really took proper cognisance of wild nature would ultimately be more prosperous rather than less.
One of the discussions about capitalism, that we will pick up on below, is to ask when normal trading turned into capitalism proper. One answer given to this question is related to value. The idea is that at one time — and even now, in some countries — goods were produced solely for the purpose of being useful, and often by the person who would be using them. So, they had ‘utility value’. There came a point however, when selling goods to others became more important than merely providing for one’s own basic needs, or the basic needs of one’s family or small community. This, in turn, is known as ‘exchange value’. Common sense tells us that we might well spend a great deal of time and effort fashioning some tool or weapon for our own use and, in a way, as our time is not dictated by a financial world, the degree of effort is not too important. Okay, so the tool-maker might have spent the time fishing, or hunting, or just sleeping, but no-one’s counting. In an industrial society however, the costs and time involved in producing goods for exchange become increasingly important. A business has to weigh up how much it pays for materials, labour, its buildings, energy costs and so on, and then determine whether it can still sell its product and make enough money to survive. Economists see, in particular, the cost of labour to be critically important in this analysis, so, in their terms, it is the labour expended on producing a product that creates its value. (It is ‘concrete labour’ that produces utility value — and ‘abstract labour’ that produces exchange value. The names given by economists reinforce the idea that we are separated — abstracted — from our making by entering into an exchange economy.) This proposes a labour-based theory of value. For our purposes, in this chapter, this leads to two observations.
The first observation about the labour theory of value is that it is not so obvious that the value of a particular product is really just related to the wages of the labourer, from the buyer’s point of view. Natural assets, for instance, have a value even when there is very little work involved in gathering them. The value of money also affects the price of commodities, so also does the way those commodities are perceived by the buyer — for instance, jewellery, artworks etc, can have a price well above their content in labour, because of the way they are valorised by society. As noted above, the theory separates the worker from their product — we become alienated from our making. And from the buyer’s, or the consumer’s point of view, the product ceases to have anything of the labourer within it — the product has become mere commodity, and as such, holds only a ‘commodity value’ or, ‘extrinsic value’.
The second observation — and most important to our discussion — is that the true cost of labour is not really recognised in this analysis. The reason is that the wage given to the worker is, in theory, at least sufficient for the worker to ‘reproduce’ themselves, and therefore to return to work the following day and continue in the production process. (The ‘real’ price of labour is the commodities for which the labour can be exchanged. The ‘nominal’ price of labour is the monetary value of those commodities.) But this act of ‘reproduction’ (what I am referring to as ‘re-making’ in this book) is only seen in terms of how much it costs for someone to live a reasonable life in society. As we’ve explored above, it disregards the input of compassion, friendship, love, community, solidarity and all the other elements that go to make up the social commons. As we touched on earlier, the production process therefore takes these as a ‘positive externality’, in other words, it profits from what the wider community provides for it free of charge. (Pollution, by contrast, is known as a ‘negative externality’, something bad added to society, but for which, again, the economy does not pay.)
In contrast to the extrinsic value of commodities, there is ‘intrinsic value’. I have mentioned intrinsic value previously in relation to wild nature — saying that nature has a value just for itself. We can expand this idea here to include, firstly, ourselves, as part of wild nature. Then, from the discussion above, I hope the reader will see that there is intrinsic value to our ‘making’, to the things that we produce, either for our own use or to barter or sell to others. There is intrinsic value also in the ideas we have — our imagination and creativity — the cultural commons. And finally, there is intrinsic value in our social relations — what I have called our ‘re-making’ — the social commons. The material economy monetises the natural commons (or that part of it we use as resources). We are a little more hesitant about monetising the cultural economy — or, creativity and imagination — but we have noted the parallels between the cultural and the material economies earlier in the work. What about monetising the emotional economy? A little is already monetised — the ‘services’ side of the material economy, often termed ‘social care’. But the rest is free — or, a gift — it has intrinsic value. Perhaps care, emotion, affection, compassion and love just have a deeper level of abstraction and will always resist commodification and monetisation.
For economics, every value can be translated into a monetary value — everything is commodified. So some might think it is entirely appropriate for economics to disregard the ideas I have described above. But the danger then is that we disregard the very things that give us sustenance. Anything that stands outside the process of commodification tends to get ignored. Before we move on, we need to get a handle on how this commodification and monetisation works in practice.
Value and Money — The Financial Economy
Back in Chapter 2, it was with some reluctance that we noted there is a separate financial economy, and indeed that it is often referred to as ‘capital’. Before we go on, we need to get more of an idea of how money functions in the economy.
Henry George reminds us: ‘nothing can be capital […] that is not wealth — that is to say, nothing can be capital that does not consist of actual, tangible things…’ George continues: ‘…the stocks, bonds, etc., which constitute another great part of what is commonly called capital, are not capital at all; but, in some of their shapes, these evidences of indebtedness so closely resemble capital and in some cases actually perform, or seem to perform, the functions of capital…’ (Henry George — Progress and Poverty. We should note however that Marx, and many recent economists, make a very close link between capital and money, so the question is not entirely settled.
Money wasn’t always the problem it is turning out to be. As we’ll hopefully see below, the financial economy is there to serve the material economy — to oil its wheels, so to speak — and allow for all the exchanges and operations needed for the smooth-running of society. Money, primarily, is a medium of exchange — it is a veil between us and the simple exchange of goods and services that it allows. As a medium of exchange, the value of money is itself arbitrary. Setting its value against something else, such as gold, is likewise arbitrary, because the value of that other thing is just a social construct — an agreement within society as to what constitutes stored value. If a society fails, then the value of money can plummet or become non-existent, as has happened from time to time throughout history.
Money is further premised on trust in the future. Trust in money means that it is a store of value. Trust in credit, for instance, amounts to believing that someone, somewhere — probably the person who has borrowed the money — will produce goods and services to earn money to pay back their loan. So money is a standard of deferred payment. This process need not involve ‘growth’ necessarily, or indeed the exploitation of non-renewable commons, but, of course, very often it does.
The figure below builds on the figures in Chapter 3, to show the financial economy.
Figure 7.1
The figure is really just showing that there is a flow of money around the material economy, keeping the process going, and in this sense, the use of money is a benign use. Changing our views, for instance, with regard to wild nature, would not alter the basic functioning of the economy and would not alter the flow of money to support it — the same structure would still pertain, but society’s increased care of wild nature would nonetheless greatly improve our lives.
With all of the above thoughts in mind, we can return now to some of those questions raised in the Introduction.
Whilst governments usually have policies in place to combat monopolies, the biggest monopoly of all is allowed to play out without much comment or criticism — it is, of course, the speculation in land and property. Chapter 2 on ownership looked, in particular, at land. The chapter suggested that ownership itself is less of an issue than the notion of being a steward or custodian of land, and thereby having a measure of responsibility with regard to how the land is used. Chapter 3, on the commons, expanded this thought to include all areas of the natural commons — the oceans, the air, fish stocks, ores, minerals, forests, and so on. Chapter 3 suggested that since these resources could be considered as held in common by all of us, then anyone who taps into them should pay something back to the rest of the population.
In Chapter 4, on polity, we saw how the question of ownership is an important factor in the type of governance system we may choose to adopt. Some systems reject all forms of ownership and suggest everything in life is shared. Other systems, meanwhile, regard ownership as a primary right of the individual and see governments responsible for protecting that right — even if this means that distribution to the less fortunate members of society is thereby curtailed.
In this chapter, and from the perspective of the material economy, we’ve seen that if owners of land, and all businesses that extract resources from nature, are required to pay something back to the community for this privilege, then this does not change economics, it simply means that additional costs are added to the business as a result. What was once a positive externality is now a further cost that needs to be met. This might mean that the process, whatever it may be, becomes uneconomic, so the business will either have to find ways to reduce costs in other areas of its production, or it will have to change to producing something else that does not incur such heavy production costs.
So, nothing changes in economics, but a lot may change by recognition of a commons. Two points can then be raised. Firstly, if we were given the opportunity to decide on imposing charges on the exploitation of the commons, we may well ask for something given back for the whole population in return for a particular company’s ownership of land, or use of a natural resource. We would then have to accept the consequences — that some products may therefore be more costly and some things may be too costly to produce at all. Secondly, and once again, this is not a new economics of any kind — economics is still the same.
We can ask then, how does the social commons respond to ownership? What impact does the emotional economy have on ownership? Well, the difficult answer is that a recognition of the social commons will mean that people will be more aware of their responsibilities to wild nature, natural resources and the commons. Even without legislation being put in place, as described above, owners and businesses will voluntarily either stop some activities all together, or change or curtail their business models, because they recognise that social responsibility is asking this from them. Recognition of the commons could then be imposed by legislation (whatever form of government is in place) or it could come about by businesses’ and individuals’ recognition of the commons. In the latter case, this would prompt action from an ‘ethical’ stance on what would be fair for everyone. Such change, being deeper-rooted, would be a more lasting and reliable result.
What Should we Share? Equality and the Welfare Net
The big difference between the material and cultural economies is that the material economy deals mainly with ‘things that can be used up’ and things that cannot be shared. For instance, if I eat an apple, the apple is not there for anyone else to consume. Culture though, can very often be enjoyed by many people without it being used up — it is still there for others to enjoy. This is part of the story of seeing the cultural economy as a gift, and we can extend this idea into the emotional economy of re-making. We don’t use up our compassion, conviviality, friendship, conversation, harmony, intimacy and love. The apple is an ‘excludable’ good. The social commons is not excludable. Radio waves are ‘rival goods’ — one broadcaster’s use of a particular wavelength limits its use by other broadcasters. The social commons, by contrast, deal in ‘non-rival’ goods. The goods of the social commons (compassion, conviviality, etc.) are often also termed ‘inclusive, or ‘expansive’. In Chapter 3, we looked at the idea that a certain amount of sharing is appropriate, as we are all joint owners of the commons. Therefore, as I’ve summarised in the previous section, exploitation of land and natural resources requires a sharing out of the benefits to the rest of the population. Chapter 4, on polity, extended the idea of sharing, and noted the range of views, from absolute equality — what is described as equality of outcome — through to, at most, a welfare net, to rescue anyone who is so badly off that they risk homelessness and starvation as a result of their poverty. Part of the problem of deciding the best approach here is that there are various different ways of interpreting what equality actually means. Lyman Tower Sargent tells us that the confusion over the meaning of equality leads to a lot of problems. He says:
‘Equality as a general concept contains five separate types of equality; political equality, equality before the law, equality of opportunity, economic equality and social equality, or equality of respect.’
Lyman Tower Sargent — Contemporary Political Ideologies.
In our earlier discussions we saw that ‘equality of opportunity’ is generally accepted as a reasonable goal. In the quote above, we can take ‘economic equality’ to refer to ‘equality of outcome’. ‘Equality of outcome’ is the type of equality that is contested by different types of governance system. As we’ve seen elsewhere, a sense of fairness is often taken to be more important than treating everyone exactly the same — equity triumphs over equality. Or, again to take up Tower Sargant’s terms above, we might say there is a balance between economic equality and political and social equality.
When we looked at deliberative democracy in the last two chapters, we were really dealing with that balance between all the types of equality Tower Sargant has identified. Under a system of Parapolity, everyone has a voice — so we would all be politically equal. Not only that, but everyone’s opinion would be listened to and considered, so, there is equality of respect. Then it would be down to the governance system to determine our legal and economic equalities and to ensure equal opportunity for all citizens.
Towards this end, a system of Parapolity would decide on the level of welfare net that was thought appropriate and put this in place, probably through the normal means of taxation, or perhaps by ‘pre-distribution’. (P)re-distribution is a negotiation — a conversation.
Does economics have anything to add to these questions around equality? In one sense, and so far as the material and cultural economies are concerned, no. The economics is only about crunching the numbers, it is not about deciding on whether one outcome is fair or unfair to one particular person or group, or business. If we add in our consideration of the social commons however, we arrive at a different perspective. The awareness of a social commons means that we will look at the material and cultural economies as primarily about serving the needs of the community, rather than purely about profit. The material and cultural economies are diminished in their role of serving the social commons when they are so exclusively monetised. The books need to balance, of course, so again, the economics is not changed. But the emphasis has shifted. As with the natural commons above, this is partly brought about by any legislation decided on by deliberative democracy. But again, it might also be by a shift in attitude towards greater social responsibility.
What Should we Make? How Should we Trade?
What should we make? The question of what we produce starts with our use of the natural commons. A particular aspect of natural commons is that some resources are, so far as the Earth is concerned, non-renewable. Fossil fuels, for instance, cannot reasonably be replaced once used. Metals and minerals cannot be replaced, but might be recycled. Wind, solar and tidal power, by contrast, are renewable resources by definition. Some ‘resources’ such as old growth forests are on the borderline between these two. They are ‘replaceable’ in the fairly long-term, but arguably should be retained as wild nature, not used as resources. Fish stocks are only renewable in so far as enough fish remain to reproduce. We also need to remember that the part of the natural commons that we use as resource relies nonetheless on wild nature for its continued sustenance. Bees must pollinate half of all our food crops. Pollination by a small fly is ultimately what the world relies on for the production of chocolate. Eco-systems must be viable. The play-off between wild nature and the natural commons is always a moveable feast.
This is not the way things are done now however. Care of nature is not the first concern of agriculture and energy production — in fact it is often the last. The market economy — where decisions on what gets made are for the most part determined by what people want to buy — is the way things happen right now. We don’t even have to go as far as saying that business is often only run for profit. The problem is right there in the market trying to satisfy every whim of an increasingly affluent population. This is fuelled by advertising. The argument made in favour of a market economy is that it really runs itself. The alternative — a planned economy — has to make decisions about whether people’s perceived needs and desires are reasonable. So we can see that this is a tricky problem. It is so much easier to let the market decide. But to achieve a fair society, and ultimately a sustainable society, it looks like some kind of planned economy is required. And that in turn needs alternative forms of governance system.
When we bring economics into the picture, what changes? Well, ecological collapse and climate chaos, with considerable understatement, has been described as a ‘market failure’! The reason is that there is no ‘opportunity cost’ set against such things as clean air and water, a stable climate and healthy eco-systems. As we have explored earlier, these things are just considered as a given — as positive externalities. If a resource is non-renewable, then it becomes gradually more expensive, until either a cheaper alternative is found or production ceases. It is only if society puts an extra price on non-renewables, for instance, then the balance shifts to finding alternatives more quickly. If a price were put on clean air, water, soil, climate, forests and so on, then the economics, in just crunching the numbers, would perhaps be able to encapsulate all of these things into ‘the market’ and re-balance the books. At the moment however, economics mainly regards these as outside the market, so outside its domain. It is as a society that we would need to decide to change our approach to certain materials and products and to clean air, freedom from pollution and a healthy environment.
When we look at the economics and the social relations, maybe the problem is less about being separated from the ‘means of production’ as it is about being separated from our making — from the power-to, from the freedom-to, the freedom-to-make. The making and re-making apply just as much to the social relations and to culture as they do to material wealth. Massimo d’Angelis sums it up thus: ‘The freedom that the commons gives you is a freedom you will find nowhere else: that is, the freedom to shape, together with others, the condition of your doing, of your caring, of your commoning.’
When we introduce the idea of a social commons, then we have a similar picture to the previous two sections. People will want to bring about changes of their own volition, and not because of legislation. But when we look at the contrast between the market economy and a possible planned economy, things are a bit more complex. When we discussed Parecon, in Chapter 6, it was suggested that this start with public works, where the market economy would have less influence. It would be up to a system of deliberative democracy to decide how much further a planned economy may be introduced, or not introduced.
When we add the social commons into the mix, then arguably certain products and services may come to be viewed as socially irresponsible and therefore voluntarily renounced. I’d still say economics is unchanged, in terms of the number crunching, but clearly, from the point of view of an individual business, a planned economy could have a huge impact. If demand for a product drops then normal practice would be to try to increase demand by, say, lowering price. But these strategies may not be enough under a planned economy. Businesses may have to change to different products or cease trading. As with the discussion in the sections above, changing attitudes in the social commons are the driving force that changes our making, sharing, owning and trading, and not some new theory of economics. Social change drives economic change. This view, that our economies must take into account nature and social concerns as well as the normal concerns of production, consumption and markets, is sometimes known as the ‘triple bottom line’. The triple bottom line is sometimes described as the economy, the environment and social justice — or, more simply — price, planet and people.
Back in Chapter 2, we looked at the three basic ways wealth is created without working — through renting land and property, profiting from the work of others and making money from money itself (all of these known collectively as economic rent). We’ve also seen that, whilst these three things have always been around in industrialised nations to lead to disparities of wealth, there are new forms of economic rent emerging. Developed nations are coming to practice a ‘rentier’ capitalism to sit alongside the strange value system of neo-liberalism. So it is no longer the greedy capitalists, or the big corporations or the 1% who are the enemy — we are all becoming rentiers.
It is often argued that capitalism, to be capitalism, must be premised on debt. Debt, of course, has become ever more complex. It’s even said that no-one really knows what is happening when the various types of financial ‘products’ are traded in micro-seconds. The big banks are a world of their own and proving increasingly difficult to regulate, even if there was a will to do so. The figure below is an extended version of the previous figure, showing the financial economy. The new arrow added within the financial economy represents all those purely financial exchanges that are taking place, which, it is suggested, are increasingly abstract in relation to the ‘real’ economy from which they are supposedly derived. It’s this that is the danger. As we’ve touched on above, the financial economy seems to believe that wealth can be created independently of nature — and that therefore unlimited growth is possible in a finite world. There is a similar idea proposed for the cultural economy. Its products are arguably abstract, to a degree, and therefore again, infinite growth may be possible. But it is only the way economics evaluates these things that make them seem abstract. The inventor, artist, entrepreneur and educator still need to eat, to live somewhere and to benefit from the care and conviviality of society. All of that — part of our re-making — is ignored or devalued. So there is really no ‘something-for-nothing’ in the cultural or the financial economies. There is no expansion of any economy without the natural commons.
Figure 7.2
Despite what I’ve said above — that the economics is just about number crunching — nevertheless there is a view that different schools of economics take different approaches to society. Economics may claim to be neutral, but it almost always has an underlying view of the world — and generally a rather negative one — that underpins its theories. Today, especially, it is what is sometimes called laissez-faire economics that is said to predominate, which, as we discussed above, means essentially to leave it to the markets to settle things and keep things stable. So it is price and what consumers choose that determines how the economy operates. Things, in reality, are a bit more complex than this. Laissez-faire economics is what we are told we have, but underlying this is a whole series of political and social manoeuvres that has come to be known as neo-liberalism.
Firstly, to introduce these ideas, the meaning of liberalism is rather different in the UK than in the USA, but, with regard to our economic concerns, we could say that it is characterised by two things, the laissez-faire — let-the-market-decide — form of trading we have discussed above, and by free trade, meaning a freedom from government legislation which may limit or prohibit certain types of trading at home and abroad. (See endnote for a little more on liberalism.3)
What we have in neo-liberalism is not this. Neo-liberalism starts from monetarism — the idea that it is the supply of money that determines the functioning of the economy. The term neo-liberalism was first coined by bringing together the ‘neo’ of neo-classical economics and the liberal values of a free society. So, to begin, neo-liberalism takes up the neo-classical form of economics as part of its intentions. Ha-Joon Chang describes how neo-liberalism has shifted the concerns of the economy towards consumption. He says:
‘The school [Neo-classical] conceptualised the economy as a collection of rational and selfish individuals, rather than as a collection of distinct classes, as the Classical school did. The individual is envisaged in Neo-classical economics as a rather one-dimensional being — a ‘pleasure machine’, as he was called, devoted to the maximisation of pleasure (utility) and the minimisation of pain (disutility), usually in narrowly defined material terms… this severely limits the explanatory power of Neoclassical economics.
‘The Neoclassical school shifted the focus of economics from production to consumption and exchange. For the Classical school, especially Adam Smith, production was at the heart of the economic system….’
Ha-Joon Chang — Economics: The User’s Guide.
Ha-Joon Chang goes on to look in more detail at the differences of approach between classical, Marxist and neo-classical economics.4 So, in moving from the classical to the neo-classical school, it is a move from an emphasis on labour and production to an emphasis on consumption. This emphasis on consumption has expanded into the presumed autonomy of the individual and moral responsibility being put squarely into the domain of the market — us consumers — rather than upheld by government and industry. The change from labour and production to consumerism seems like an innocent enough change (and after all it is easy to see that value is not only about labour and production). But the change from looking at social issues around capital, stock, wages and industry, to private interests in consumption is a pernicious one — or so it is understood by those who see the influence of new-liberalism expanding into more and more of society. The commodification, under neo-liberalism, is now not just about individual consumerism but is extending into health and social care, education, and more besides. The key point is that matters of production and employment are social concerns, whilst matters of consumption and commodification are individual concerns. This is the subtle but significant shift that links neo-classical economics to the wider mindset of neo-liberalism. Perhaps the originators of these ideas had intended this to be a benign link — even, a helpful one — but this is not how things have turned out. We could say, commodification is the new enclosure.
We can also mention here the term ‘opportunity cost’, as defined by economics. The opportunity cost is usually described as the thing we would give up in order to arrive at our choice of the thing we actually do, (or buy). The example often given is Robinson Crusoe deciding between fishing or collecting coconuts. If Robinson chooses fishing then the coconuts he has given up in order to fish are the opportunity cost of the fish. Modern economists usually leave it there — at individual choices — so this informs our discussion above. But it is not difficult to stretch the concept of opportunity cost to include businesses, societies, nations and even the whole planet. Friedrich von Wieser, who first coined the term opportunity cost, seemed to suggest that it should indeed be extended to whole societies. But later economists such as von Mises, Friedrich Hayek and Lionel Robbins apply it only on an individual basis. If we stretched the term to the whole planet, we could say that the opportunity cost of Western consumer capitalism is the sustainable planet we are giving up.
Traditional economics saw people as ‘rational actors’, who make decisions based on utility. Neo-liberalism takes this ‘rational actor’ idea and extends it to all areas of life. This is an important point, as it shows the influence of the social and political on the economic. However, it is not the informed and conscious social commons that we have been discussing above, and it would be a stretch, to say the least, to say that there is much room for compassion. Here is a quote from Wendy Brown, that I include in full, because it sums up our current situation well:
‘Neo-liberalism… constructs individuals as entrepreneurial actors in every sphere of life. It figures individuals as rational, calculating creatures whose moral autonomy is measured by their capacity for “self-care” — the ability to provide for their own needs and service their own ambitions. In making the individual fully responsible for her- or himself, neo-liberalism equates moral responsibility with rational action; it erases the discrepancy between economic and moral behaviour by configuring morality entirely as a matter of rational deliberation about costs, benefits and consequences. But, in doing so, it carries responsibility for the self to new heights: the rationally calculating individual bears full responsibility for the consequences of his or her action, no matter how severe the constraints on this action — for example, lack of skills, education and child care, in a period of high unemployment and limited welfare benefits.’ Wendy Brown — ‘Neo-liberalism and the end of liberal democracy’, in Theory and Event, 7.1, 2003. (We might also add here that the rational self-interested individual of classical economics is itself somewhat suspect — quite apart from the extension of the concept to all areas of life, where everything is decided on the basis of a cost-benefit analysis. As humans we are often irrational and we are motivated by a whole variety of interests beyond self-interest — even in our purchases — let alone other areas of our lives. In this book it is accepted that people are motivated by pleasure, but pleasure is by no means the same as self-interest.)
Neo-liberalism promotes the idea that businesses, left alone to do their work, will provide a better outcome for society than state-run services and infrastructure. So, where possible, it promotes the idea of privatisation. But again, this is not all that it appears to suggest.
Neo-liberalism tries to take control (covertly) of the state and bend it to its own purposes. (See Nick Srnicek and Alex Williams, Inventing the Future.) Neo-liberalism uses the state to try to maintain the stability of markets, so — far from its pretence of letting-the-market-decide — in fact, neo-liberalism often ends up with large amounts of legislation and control, put in place to protect the market arrangements that favour those already wealthy and in power.
When it comes to ‘free trade’ we see a similar contrast, from what the term seems to suggest (open borders, no tariffs, equal opportunities in the marketplace) to what is actually occurring. Free trade is a very ambiguous term and is very much a straw man set up in order to be shot down. It could be about the abolition of tariffs. This would probably benefit poorer countries a great deal. For wealthy countries, some imports would be cheaper, so they would see lower prices. But, of course, jobs in the wealthier countries would be threatened, at least in the short-term — the main reason for imposing tariffs in the first place. On the other hand, ‘free-trade’ could mean companies doing business with the minimum of interference from government (often referred to as a ‘free market’). The two types of free trade do not sit happily together. Neo-liberalism seems to favour the free market idea of free trade. In practice though, the free market does not really happen. There are always regulations imposed by governments, and efforts to avert these, such as the proposed TTIP arrangement, meet with considerable opposition. (Thomas Sowell, author of Basic Economics, suggests that the benefits of genuine free trade are so self-evident that economists don’t usually even bother to try to defend it. Free trade — or, the lack of it — is a political rather than an economic decision.)
Guy Standing gives us some insights into the neo-liberal approach to markets:
‘[Neo-liberalism] meant the liberalisation of markets, the commodification and privatisation of everything that could be commodified or privatised and the systematic dismantling of all institutions of social solidarity that protected people from ‘market forces’. Regulations were justified only if they promoted economic growth; if not, they had to go.’ Standing continues: ‘At the heart of neo-liberalism is a contradiction. While its proponents profess a belief in free “unregulated” markets, they favour regulations to prevent collective bodies from operating in favour of social solidarity. That is why they want controls over unions, collective bargaining, professional associations and occupational guilds. When the interests of free markets and property clash, they favour the latter. Neo-liberalism is a convenient rationale for rentier capitalism.’ (Guy Standing — The Corruption of Capitalism.)
So, of the three components of neo-liberalism — privatisation, free trade (trade liberalisation) and de-regulation — we have looked at above, supposedly neo-liberal societies contradict all of these. John Maynard Keynes looked forward to the eventual disappearance of the ‘rentier’ problems that we have discussed above and in earlier chapters. He said: ‘I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when its work is done. And with the disappearance of its rentier aspect much else in it besides will suffer a sea-change.’ (The General Theory of Employment, Interest and Money.) But following on from the quotes above, we can see neo-liberalism extending the notion of the ‘rentier’ — originally a small elite who owned property and businesses — to a ‘rentier capitalism’ of buy-to-let landlords, AirBnB, Uber and even self-employed delivery drivers. Entrepreneurship may be a positive thing for some, but society is increasingly structured so as to force everyone to be their own micro-business. A ‘gig economy’ is not entrepreneurship, it is another form of slavery. (One of the founders of neo-liberalism took many of his ideas from Ludwig von Mises, whose writing, in turn, is very class-based and disparaging towards ‘the masses’.)
Again, I want to emphasise that it is not really the neo-classical economics that is the problem with neo-liberalism. There are societal influences that are causing the problems that we have outlined above. This though, is not the society of ordinary people, trying their best for their families and trying to earn an honest living. It is in the corridors of power where the problems lie. Once again, we have no voice, no opportunity to question what is going on and why regulations turn out the way they do; why some businesses get bailed out and others left to go to the wall; why trading with some nations is encouraged and others blocked; why the system is so heavily regulated yet claims to be free, open and equal. The main suggestion of this chapter is that the recognition of a social commons would shed light on these matters and with a system of deliberative democracy in place, we would have the opportunity to scrutinise and change things where necessary. There may, of course, be self-confessed neo-liberal economists, who take the above criticisms on the chin and see the behaviour of neo-liberalism as perfectly reasonable in the interests of a greater good — in their eyes. But still, I’d argue that this is not a distortion of economics as such, but a distortion of social relations. However, I doubt whether those who act in the ways I have described as neo-liberal would actually call themselves neo-liberals. It seems far more likely that they would see the various processes of privatisation and commodification as just common sense. Meanwhile, neo-liberalism can be just a term that the left uses to bundle all the activities that they find damaging and objectionable.
To sum up this section, neo-liberals are far from liberal and indeed liberals are not really liberal, and no political party seems to be what it says it is! Republicans are not republicans, Democrats are not democratic, Conservatives are not conservative and the labour party is no longer socialist. But then, no-one would really want to be called the neo-liberal oligarch party!
Dietrich Bonhoeffer told us that giving is the primary relationship between people. If we returned to the question of value, discussed earlier, we could say that whilst a commodity has value, a gift has worth. To say something has worth is to imply that a price cannot be set against it. By way of contrast to neo-liberalism, the idea of a ‘gift economy’ (as promoted especially by Charles Eisenstein in Sacred Economics) takes a very different approach. The reader will recall that it is from Eisenstein that I have adopted the various definitions of commons used throughout this book, including the social commons, which has been our focus in this chapter. Eisenstein, and others who promote the idea of a commons, often do so with the intention of removing or radically changing the influence of finance and transactions from our economies and replacing them with co-operation, free exchange, bartering and other systems that are grouped under the term, ‘gift economy’. We have seen, for instance, that in the cultural commons, where pure manufacture, trade and commerce are less clear-cut, the argument is to move towards a ‘creative commons’ (as opposed to creative industries) such that ideas, intellectual property and creative copyright are free exchanges rather than financial transactions protected, as monopolies, under copyright laws. To an extent, the free exchange of the arts (where this still exists) is held up as an example of how the material economy should function. The social commons is where free exchange still more or less rules, but even this is being eroded by the professionalisation and monetisation of care, for instance. Those promoting a gift economy take the social commons as their starting point and work back towards the point where much more of life is on the basis of free co-operation. The gift economy is about relationship as opposed to transaction. As such, it is best practised at the small-scale, local level. Here it has the opportunity to be simple and elegant. It contrasts favourably with our current system of high infrastructure costs, health and safety regulations, professionalism and insurance, much of which has to be held in place because, in a world of transactions, we cannot trust each other.
So can we see the social commons/emotional economy as the basis for a gift economy? It’s certainly true that other people are of value to us just for who they are in themselves. It’s doubtful that many people would disagree, for instance, with the idea that community is a good thing, at least in principle. Most people seem to value the concept of closer community, but as things stand right now, we only get together with our neighbours and friends for entertainment purposes. Is the gift economy then a different kind of economy from the material, cultural and financial economies we’ve been looking at so far? Would the number-crunching of economists come to a halt if all of life were based on the gift? I think, yes, such a change would be so big that we could no longer argue that economics remains unaffected. But, as with all that we have discussed in this chapter, society would need to change first so that the desire to share, the expressions of kindness and compassion and good community will lead potentially towards more of the gift. This would be a very radical change to make and at the moment it seems far-fetched to think it’s going to happen.
So we have to be clear just how different a gift economy is in its world-view, because it is easy to see it as just an alternative style of ‘transaction’. It can be seen as a ‘you-scratch-my-back’ form of exchange, and indeed, even the term ‘reciprocity’ tends to give this impression. The term ‘commoning’ helps us get beyond this. We could say — and this is a subtle point — that commoning is multiplying others’ gifts, without, necessarily, any literal exchanges taking place. (This definition comes from Massimo d’Angelis.) Remember it is the cost-benefit analysis view of things that we are trying to get away from. Instead, commoning, and the gift economy, is about embodying abundance, trust, generosity and conviviality. Commoning is inclusive in every sense of the word. Commoning is grace, if you will. Commoning is the essence of the new story. For more on the gift economy, see Karl Polanyi — Primitive, Archaic and Modern Economies, Lewis Hyde — The Gift, Genevieve Vaughan — For-Giving, Scott Burns — Home Inc., and Edgar Cahn — No More Throw Away People.
Closely related to a gift economy is a ‘resource-based’ economy. The idea here is that the increasingly financialised world has distorted our concepts of value. Abolishing money would mean that our sense of value would relate once more to the usefulness of resources. A fair distribution of resources is all that would be required to live well. The most famous example of a resource-based economic model is ‘The Venus Project’ (nothing to do with the planet), with its chief proponent a French architect called Jacque Fresco.
We have hinted that a gift economy might be the way that re-making — commoning, the emotional economy — is fully realised. But it is certainly difficult to provide examples. There are billions of small gifts, rather than one particular formula for realising a gift economy. This is where culture can help — by showing how we might build each other up — how we might ‘multiply the gifts of others’ — rather than just live a life of transactions to meet our own needs and desires.
Eisenstein, in his version of a gift economy, is not entirely abandoning money. As discussed earlier in the chapter, he points out that, of course, money is just a socially agreed convention. Its value is based on mutual consent. Because of the interest received, there is a tendency for the rich to hold onto money. Setting its value against some commodity — such as, traditionally, gold or silver — does not overcome this. In fact we hoard the useless thing that serves as money. Instead, Eisenstein suggests, if the value of money were linked to something that has genuine worth in its own right, then this may result in changed priorities and different behaviour around finance. So he offers us a very close connection between money and the commons. He suggests linking the commons to the value of money. Money would be related to something of real worth — land, clean water, clean air, eco-systems. The focus of our economies would be positively focused on things that really matter rather than the environment being simply disregarded. We would then ‘hoard’ the good things of wild nature and the natural commons because they would be the source of value.
Looking at these ideas, it is difficult to get away from the notion that it is just another way of putting a monetary value on the natural commons and perhaps also wild nature — as suggested by Dietar Helm, amongst others — but presented to us in slightly different form. I get the impression that this is not what Eisenstein is really meaning to promote, but it is difficult to be really clear how the value of money can be linked to the commons without the commons thereby being reduced to purely financial value. The principle seems to be moving us towards preservation of scarce resources, protection of natural habitats and sustaining eco-systems, so, all things we could probably agree as positive. But there is still a danger in offering a financial incentive to bring about something that is a ‘moral’ good — the preservation of the commons, abandoning fossil fuels, cleaning up pollution, etc. This has a potential to backfire. Perhaps it needs to be looked at differently and instead we encourage people to do moral things because they believe in the underlying moral values and not because we are offered financial incentives. A further idea, from Peter Barnes (Capitalism 3.0) is to set up independent trusts, which would be responsible for looking after various aspects of the commons. The trusts would administer the commons in such a way that society would benefit by renting them back to those who use them. This turns the idea of economic rent on its head, by making it serve society rather than exploit it. The commons managers would be the ‘rentiers’ and would be serving the public good. I feel this is broadly in the same spirit as Eisenstein, but it is probably easier to follow how the idea would work in practice.
In Sacred Economics, Eisenstein was writing shortly after the credit crunch of 2008. It seemed likely to him that this was the beginning of the end of capitalism. Whilst we have not suffered a dramatic crash since then, there has not been any substantial improvement in economic performance of Western nations as currently measured. Indeed, it seems that most supposed ‘growth’ may be down to financial transactions and therefore based on increasing levels of debt (which still shows up as a positive growth in terms of GDP). The ‘real’ economy of nations (our material economy of goods and services) has been in decline for many years. So Eisenstein is coming from a place where he believes in the imminent collapse of capitalism. This is why he feels the change to a gift economy is viable, even although we seem a long way off from it at present. So, let’s look at the potential collapse of capitalism in more detail.
Does Capitalism have a Future?
For many, capitalism is the enemy. However, I ask the reader to stand back from the theories for a moment and consider how much we are all embedded in the system. Even for simple things like buying food, or having a mortgage it is almost impossible to escape from the capitalist system. To try to sweep all this away and long for the ‘collapse’ of capitalism, or for its overthrow, is a dangerous vision. Reports that capitalism is dead have been greatly exaggerated. Capitalism will adapt to the future and very likely survive. Claiming that capitalism is the cause of all our woes is more or less a conspiracy theory. Like all conspiracy theories, it is too simplistic and absolves the believer from having to think too deeply or try to work out real solutions.
There is always commodification. Those who wish to see the end of capitalism because of its appropriation and commodification are being disingenuous — they (and I) only have the liberty to criticise capitalism because we ourselves participate in its commodification. The gift economy is just the opposite end of the ‘commodity spectrum’ — it must still commodify up to a point, but it tries to see value outside of commodity. We can, at best, just strike a balance between commodity and gift. So, very strong and realistic alternatives have to be brought by those who wish to see a radical change. Revolution is not an option — it is just not going to happen. Society is too complex, and as we have seen, disruption of any kind to institutions and infrastructure of a modern society is likely to result in chaos.
If the economy works then does it matter if we call it capitalism or not? If everyone’s needs are met, the planet is protected and people are satisfied with their work, then what is the use of economic growth? Some economists think capitalism will lead to equality, but many (see, in particular, Thomas Picketty — Capitalism in the 20th Century) accept that it leads to greater disparities in wealth. Another criticism of capitalism — at least, in its current form — is that it creates useless commodities because it requires consumption, above all else, to maintain growth. Some look to modifying capitalism, to a greater or lesser extent, in order to try to address its shortcomings, without overthrowing the system and starting over.
We can ask, at what point does capitalism begin? One view is that capitalism began when wage labour was introduced, such that workers were no longer fending for themselves, but had to sell their labour to another in order to provide for their sustenance. Another view, discussed earlier in the chapter, is that capitalism began when goods were no longer produced solely for their ‘use-value’ but also, or instead, for their ‘exchange value’ — so becoming ‘commodities’. Yet another view is that it is the tendency for the rate of profit to fall (identified by Adam Smith, and Ricardo, as well as by Marx) that keeps capitalism going (a view that is now mostly discredited). Perhaps the most important reason that capitalism continues — as we touched on in Chapter 2 — is related to debt. True capitalism, it is argued, began where there is borrowing and therefore debt. Even money brought into existence by governments is as a loan, and therefore a debt. Meanwhile, money created as private loans also means that growth is necessary to keep up with the creation of new money. Also, note that this does not, for the most part, go to new production, but is often for the purchase of land and buildings. This tends to inflate the price of land and property. (See Rethinking the Economics of Land and Property by Josh Ryan-Collins, Toby Lloyd and Laurie MacFarlane.) For several decades now the ‘growth’ is in the financial sector — but this must inevitably be based on the eventual (hypothetical) repayment via goods and services, ie. through the real world economy. If the debt fell due now, there is no way it could ever be met. Debt means that more has to be produced in order to service the debt as well as just maintaining a living. It is especially compound interest that is the reason the economy is forced to grow. Even if the population was stable and there was no desire to improve living standards, then arguably debt still forces growth.
What if there was no debt? The jury’s out as to whether a system not based on debt would still be a capitalist system. The number crunching is still the same and the economic theories can remain unchanged, but borrowing would stop. Small businesses may well be fine with such a situation, free of any debt worries and repayments, they can just work with what they have and get by. But a lot of production now is so large-scale that no business could save its way to a point where they could make the kind of investments needed for complex manufacture. So a growth-free economy may be possible, but a debt-free economy is more of a challenge. The best we might hope for is to rein in the ridiculous levels of debt we have at the moment and to stop creating money through debt.
We can ask then, is all this inevitable? Should we not just get rid of growth or debt, or both? I suggest that there could still be economic growth without destroying our natural commons, or using them up at any increased rate. Or we could have a stable economy with no growth. John Maynard Keynes (The General Theory of Employment, Interest and Money) seems to have thought that this would be possible. It would seem to require that profit be abandoned, and as such, some would consider a zero-growth economy would not be true capitalism, as the premise of capitalism is that it must grow, but perhaps that’s just an argument over semantics. A zero-growth economy could be a stable economy, whether we call it capitalism or not.
Paul Collier (The Future of Capitalism) identifies three core problems with capitalism — the thriving metropolis with a hinterland of dead and dying smaller towns and cities; the disparity between a well-educated elite and the rest of society who are left behind and the collapse of social responsibility. Inequality then, is one of the entrenched problems of capitalism. The growth of consumerism, identified above, has in turn contributed to the collapse of social responsibility Collier identifies. This last point is critical if we are to see the social commons as a means of healing the problems inherent in capitalism.
From gift economies to communism, the solutions offered are extreme. I cannot prove that a more moderate change is sufficient to solve the problems of capitalism without collapsing the economy. But take this simple example. Imagine a crop in a field. The harvest is plentiful — or would be — but there is no-one to bring in the harvest. Not that there are no people, just that there is no-one willing to do the harvesting for the money offered. Clearly, everything is well — there are people to do the work of harvesting and if they harvested they could eat. But, otherwise, things are not well — ‘the system’ cannot allow the harvesting to take place. This example calls into question the notion that life is somehow ‘impossible’ without some kind of economic system. The ‘scarcity’ created by the situation I’ve described is a false scarcity. (Economists would actually refer to this as ‘economic scarcity’!) Actually there is very often an abundance of resources and an abundance of labour to create society’s wealth. The world could survive and thrive without capitalism in its current form.
The Importance of Corporations
Traditional economics says that individuals are free to act and will generally act in their own best interests. Therefore Adam Smith famously stated that everyone working separately will, like an ‘invisible hand’, make society as a whole more prosperous. Corporations, however, do not seem to act with the same freedom. The solution to this was to give corporations the same moral freedom allegedly enjoyed by individuals — making them ‘persons’ under the law. Therefore, so the theory goes, the corporation, having the same freedoms as people, would have the same stabilising effect on the economy as the individual whilst at the same time working in their own best interests. The logic seems impeccable, so why might it not work? Well, for one thing (as we have seen elsewhere) individuals do not act in rational self-interest. For another, even if they did, then as we have seen, this can and does lead to the Tragedy of the Commons. So corporations are as likely, if not more likely, to behave randomly and not in the best interests of anyone. The logic is flawed all the way through. Commerce without Morality. Large corporations are effectively institutions. They can be set in their ways, only changing, if at all, when change is forced upon them. Their business practices become a business ethic, which in turn is inflexible — their vision and mission can become set in stone. Such a situation harms a company’s employees and the business owners will eventually fail, even if they are making short-term gains.
We might conclude that it is best just to get rid of bad businesses. But getting rid of a corporation just means that someone else will take their place. A better option might be to seek accountability. Of course, some businesses really need to make massive changes. But perhaps even here it is these companies who are best placed to clear up the mess they have made rather than have them completely replaced.
More systemic change is needed before businesses will be ready to act with better standards. Like families and societies at large, business needs to recognise reciprocal obligations. See Paul Collier — The Future of Capitalism. As we saw above, we can choose to legislate to try to curb the problems that are caused by the activities of big business. Also, we can look to the social commons, the emotional economy and compassion to ask for a rethink about how businesses operate. Informed customers can vote with their feet and bring dubious businesses to their knees.
The basis of the commons, as explored in Chapter 3, is that the commons should not be owned or exploited privately. Instead we looked at recognising commons as shared inheritance and distributing this to the wider population in some way. The most basic way suggested is to introduce a tax for the use of land. A Land Value Tax — to use its normal description — has been proposed many times and in particular by Henry George (Progress and Poverty) and more recently by Martin Adams (Land). Here again is the quote from Thomas Paine:
‘It is a position not to be controverted that the earth, in its natural, uncultivated state was, and ever would have continued to be, the common property of the human race… It is the value of the improvement only, and not the earth itself, that is an individual property. Every proprietor, therefore, of cultivated land, owes to the community a ground-rent (for I know of no better term to express this idea) for the land which he holds; and it is from the ground-rent that the fund proposed in this plan is to issue.’ (Thomas Paine — Agrarian Justice.)
In a similar vein, John Locke: ‘Land that is left wholly to nature, that hath no improvement of pasturage, tillage or planting, is called, and indeed is, waste… Let any one consider what the difference is between an acre of land planted with tobacco, or sugar, sown with wheat or barley, and an acre of the same land lying in common, without any husbandry upon it, and he will find, that the improvement of labour makes the far greater part of the value.’ John Locke — The Treatises of Government.)5
A Land Value Tax (LVT) does not seem like too big a stretch from the community or council taxes that many of us pay at the moment for local services (although of course, the tax would be paid by landowners and landlords only, not by those who are renting). Martin Adams suggests that an LVT could replace all other taxes. Even Milton Friedman — neo-liberal mentor to Margaret Thatcher — described LVT as ‘the least bad tax’!
In my own country of Scotland — part of the United Kingdom — a lot of land is owned by just a few individuals who often do not even live on their property. A similar situation pertains in many other nations. This is one of the main concerns of an LVT — the rich elite landowners are likely to bitterly oppose it. Another concern is the effect on property prices, which are currently bundled into the land on which the property sits. Some have proposed a gradual introduction of an LVT to help ameliorate the effect on property price.
Closely related to taxing land would be taxes and incentives related to wild nature. The owners — or rather, custodians — of land may benefit from incentives if they use land in particular ways. This may include; leaving wild land wild, returning ‘developed’ land to wilderness and planting particular trees or crops. More on this is explored in the next chapter.
When we looked from land to the wider natural commons, ores, minerals, and so on, a sovereign wealth fund is another method for fairly distributing the wealth derived from these activities.
For fossil fuels, and oil in particular, activists in the USA and several other countries have proposed a ‘fee and dividend’ scheme. Under the scheme, companies producing fossil fuels would pay for their extraction — this is the fee. The resulting revenue would be distributed equally throughout the adult population — the dividend. Hence we would all be receiving payment for the use of natural commons — it would not just be a few rich corporations who would benefit.
If we were to be serious about ‘free trade’ we would recognise this as allowing fully open trading between nations rather than some rather dubious claim to have ‘free markets’. So, it’s the abolition of tariffs that would be the real ‘free trade’. If we are to take seriously the rights of people in every nation then we would see the need to introduce this. The difficulties that would be faced by richer nations as a result are little compared to the enormous benefits that would be afforded to poorer nations. Such difficulties could reasonably be alleviated by governments for those businesses directly affected. In the longer term we in the wealthier nations would benefit from lower prices as goods from poorer countries would be cheaper. With the wealth disparities that exist between nations just now, we could summarise by saying poor countries would be better with high tariffs, and rich countries would help poorer nations substantially by having low tariffs. One concern here though is that free trade would not see the benefits accrued to poorer nations spread evenly across their populations. It may be the rich in poorer nations who benefit most, whilst the poor get nothing. Another concern is that business is increasingly international. It might be that these agreements between nations are simply outdated and we need instead to fight for workers rights and good business across all nations and across borders rather than focus just on tariffs. We have to find ways of encouraging local economies, but might seek to do this in different ways than by adjusting tariffs.
Universal Basic Income (UBI) is another idea that has been around for a while. Some schemes have already run successfully and at the time of writing there is a proposal for a trial run in my home county of Fife in Scotland. The idea is simply to give each citizen, no matter their work status, a minimum income sufficient to pay for the essentials of life. People would then be free to choose whether to work and increase their income, perhaps just working part-time. This in turn might help to address the reduction of work opportunities that may come about through increasing mechanisation, AI and robotics. People may choose to improve their education and so take up work opportunities less prone to mechanisation. UBI is sometimes called ‘social dividend’ or ‘dividends-for-all’. It is also sometimes called the ‘Stipe’ — after Michael Stipe of the band REM —referencing the band’s album, Automatic for the People. Another proposal is a ‘Basic Rental Income’ for everyone who rents rather than owns a house.
Critics of UBI argue that there will be ‘free-riders’ who will never do anything with their lives and giving them a basic income simply rewards them for staying lazy. Whilst this may be true of a small number of people, the trials that have taken place to date suggest that the majority of poorer people gain a lot from UBI. More importantly perhaps, the UBI gives people dignity whilst the benefits system it would partly replace in many countries very often treats people with contempt.
Closely related to arguments for a UBI are discussions over a shorter working week. With less need to work long hours and the increasing mechanisation of many jobs, this seems almost inevitable. In some countries there is an increasing gap between high earners working very long hours and a lot of often unskilled labour unable to find work. There is a disparity here between the types of work. What Michael Albert would describe as co-ordinator class jobs are often the ones demanding the long hours.
A maximum wage, sometimes defined and set as a multiple of the salary of the poorest paid employee, is often suggested as a means of redressing this imbalance. I have mixed feelings, as it kind of implies a shared work ethic between business owners and employees that may not be there in reality. Far better if there is a very much more substantial sharing in all aspects of the business.
If businesses were run as co-operatives, with profits shared out between the workers, then arguably this goes some way towards addressing that age-old concern of who owns the ‘means of production’. Profits from the business could be shared with all of the staff, not just the business owners, or all income ploughed back into the business in other ways.
For the financial economy, one suggestion is to split up the banks. Stopping banks from holding too many assets would allow some of them to fail without bringing down whole economies. Bring money back closer to its links with goods and services. Make banking more local and personal. Return it to being a service.
Another idea, known as the Tobin Tax — after American economist, James Tobin — is to tax financial transactions. (A similar idea was proposed by John Maynard Keynes.) In particular it is aimed at reducing the excessive trading in shares as these would arguably be hit hardest by the tax. Money crossing national borders — as it so often does in the financial economy — is especially problematic. It is a symptom of the severe abstraction of finance from the real world of goods and services, people and communities, which it is allegedly supposed to be serving. Perhaps only tighter regulations can address this.
A further idea is to put a minimum term on the ownership of shares. This would return stocks and shares to their original function of investing in the future of a business rather than the casino gaming of the financial economy that trade in shares has become. But there can be drawbacks to this strategy, as it would tend to discourage speculative investment that can aid new ventures.
Another idea (also proposed by Maynard Keynes) is money that is de-valued over time, so could, for instance, require some kind of stamp attached to it (often literally a postage stamp) in order to bring it back up to the bank note’s nominal value. The intention is to prevent money from being hoarded. The greater circulation of money then helps the economy.
Capitalism must convert our natural commons into commodities in order to continue. Not only that, but, so the theory goes, capitalism must continue to grow, so the speed with which the natural commons is used up is ever-increasing as a result. Some authors suggest that a sustainable life is impossible under capitalism, but that without capitalism, life as we know it is equally impossible. With all these issues, many conclude that for better or worse we are stuck with capitalism. But are there any alternatives? One alternative might be that governments could spend money into existence by creating debt-free finance for public goods, sometimes referred to as ‘sovereign money’. (See, for instance, Ellen Hodgson Brown — The Web of Debt and Andrew Jackson and Ben Dyson — Modernising Money.)
How Do the Utopias View the Social Commons?
The reader, at this point, may well be expecting me to ascribe the monetisation of the economies to Privatopia and Cornucopia, and suggest that Ecotopia stands out as giving due regard to the social commons, re-making, the emotional economy and compassion. However, I’m choosing to break ranks! I think all the utopias recognise the importance of the social commons in their various ways. In Privatopia, our emotional economy is frustrated — closed in by the system that no longer serves us — but it is still there beneath the surface, waiting to be set free. I’d also like to pick out the Cornucopians, in particular, for their belief in abundance. We often view economics as a dull science of graphs, statistics and confusing rhetoric, but essentially it is about trying to give us prosperity and secure our ongoing viability. The positivity of the Cornucopians at least shares that hunger for a future of security and abundance. In later chapters we will see that this might be realised in a lot of different ways — most importantly we may work with nature, rather than against her — and see both human flourishing and restored and enhanced eco-systems.
Ecotopians are often the promoters of a gift economy, but they also just leave it there, without really getting to grips with what it might mean. I hope this chapter has shown that ‘the gift’ is a lot more prevalent in our lives than we might realise — in fact, transactions are the aberration, gift is the norm. My wish for the Ecotopians is that they would take this more fully on board, rather than bending to the temptation to treat nature as a cost-benefit analysis.
We could ask at this point, what is the purpose of the economy? Is it to maximise profit? To maximise production? To make the best of scarce resources? Is it even to maximise employment? Economics, at least of the more traditional varieties, would suggest one or more of these alternatives. But in this book I would suggest that the purpose of the economy may best be described as what would serve people most effectively. There is enough for everyone on Earth to have a comfortable life and for nature still to flourish — if we could only sort out our issues of fair distribution, sensible agriculture, sensible energy use and consumption. We have grown enough. We have come of age. It is time to work to other values. Scarcity — often regarding as the starting point for economics — is really just relevant to our material economy (if indeed it is relevant at all). Abundance is the rule for all the other economies we have discussed and this is enhanced by our human desires for pleasure and flourishing.
Putting economics first puts money first, with all value derived from money. By contrast, putting social relations first puts value and worth back into other things as a priority over finance. We need to be making a life, not just making a living. The social commons, re-making, compassion and the emotional economy undergird all else that we do. Compassion is the currency of the emotional economy. It is about pleasure, caring, community, celebration, art, music, humour. The value espoused by the emotional economy is intrinsic value, in other words, things have value just for being themselves. Community and relationships have a worth that cannot be translated into financial transactions.
Could we devise a diagram to show the workings of the emotional economy, to sit within nature and place and alongside the material and cultural economies? Well, to do this we need to step back a little. Look again at the diagrams in Chapter 2. We can note a couple of points. Firstly, stuff just magically appears at the start of the economy and at the end of the process it seems to disappear — consumption is, on this model, the ‘death’ of stuff. This probably doesn’t seem so strange to us. We have grown up with a narrative of things beginning out of nothing and a further narrative that we can throw things away and that’s the end of them. But of course, when we look at the later figures in Chapter 3, we see that this is not the case. Everything comes from nature and from a particular place, and everything, one way or another, returns to her — whether it is ‘consumed’ by humans, or thrown away as waste. So there is a circular economy. Whether or not we intend it to be circular is another matter. If we use nature blindly, it is a bad circle. If we use her resources wisely, it could be a virtuous circle. So, this is our first diagram, the circular economy, and it fits especially well with the emotional economy we have been discussing in this chapter. It fits quite well with culture too, and of course nature is our prime example of a virtuous circle. Circular economies are the focus of John Todd of the New Alchemy Institute, Masachussets, the book, Cradle to Cradle, by William McDonough and Michael Braungart and Walter Stahel of the Product Life Institute in Switzerland. (It was Stahel who coined the phrase ‘cradle to cradle’.)
Figure 7.3 The Circular Economy
We can extend the same logic to all of the economies that we have looked at — nature, place (I am using the term ‘spatial economy’ here), culture and the emotional economy. As I’ve hinted at above, thinking of some of these economies as circular may be a stretch, and perhaps it is more of an aspiration than a reality. Nevertheless, I’d suggest they could all reasonably be circular. Furthermore, to provide another view of all these economies, as they have been described in preceding chapters, we can arrange them as nested one within another. So this gives us our second diagram.
Figure 7.4 Nested Economies
Finally, we can go back and re-visit the discussions on the gift economy, earlier in this chapter. The key idea there is that the gift is given to build others up. Whilst the ideas explored around gift may seem alien to us, I think this is because our culture has immersed us in buying, selling, trading and transactions. I’d suggest instead that gifting is always going on. So, our final diagram shows this idea of a gift exchange back and forth between two economies. The principle could be applied to all of the five economies we have described.
Figure 7.5 Gift Exchange between Two Economies
All of the economies flow into one another. The material economy has elements of the cultural economy, by way of invention and technical know-how. The cultural economy has elements of the material, as many of its ‘products’ are physical things. So too, then, we can see maintenance and care — aspects of the emotional economy — as features of the service sector, that are usually bundled up with the ‘goods and services’ of the material economy. The gift economy is based on relationship, as opposed to our current, limited, material economy, based on transaction.
Nature, places, culture and people are all brimming with an abundance of gifts. If we were to be more aware of this then perhaps we would see a great many things in a different light. It is not that I am suggesting that we abandon money. It is rather that we place things into a wider context. The wider context includes nature, the commons and our relationships around place, culture, making and re-making. And it includes a vision of a new story.
The issues raised by the social commons/emotional economy bring us back to the question of changing the system or changing people — a question we have encountered several times throughout this work. But these alternative options are not really so different. For the system to change, those who make decisions — be it a few people, or all, or most, of the population — must change. Otherwise, if people were already different, the system would already be changing. Could a few people, who just happen to be our leaders, change without some part of society changing as well? It seems unlikely. It seem more likely that a wider change will need to occur, and then our leaders will be forced to follow.
The next four chapters try to put all of the foregoing discussions into some context — in relation to nature, place, compassion and pleasure. The chapter on compassion, in particular, takes up this theme of changing individuals and communities as the key to more structural change. But, as we have explored in this chapter, all of this ultimately leads back to nature. So we start with nature in the next chapter.