A national conversation has begun which is alarming, yet also familiar. It talks about costs and trade-offs, losses and accounts. It is a conversation about human lives framed in the language of economics.

A recent study by Philip Thomas, professor of risk management at Bristol University, suggests that ‘If the coronavirus lockdown leads to a fall in GDP of more than 6.4 per cent more years of life will be lost due to recession than will be gained through beating the virus’.

Research like this presents us with a terrible dilemma, even leading some people to wonder whether the trade-off for trying to save elderly and vulnerable lives is really worth it, when it would cripple the economy for decades.

In times like these it helps to remember that we are presented with this misleading narrative every time we decide to act on our conscience. We are told we cannot halt the arms trade, because we will lose jobs. We are told we cannot reduce carbon emissions, because we will lose jobs. Now we are told we cannot save people’s lives, because we will lose jobs. For decades governments have used the threat of recession to badger us into maintaining an economic system that has made the poor poorer and the rich richer at the expense of the Earth’s support system. We are told this makes economic sense, but does it? 

Economics vs Chrematistics

In their book ‘For the Common Good’ economist Herman Daly and theologian John Cobb, Jr explain the difference between the practice of economics (from the Greek word oikonomia ‘the management of the household so as to increase its use value to all members over the long term’) and chrematistics (from khrema, meaning money and referring to ‘the branch of political economy relating to the manipulation of property and wealth so as to maximize short-term monetary exchange value to the owner’):

“Oikonomia differs from chrematistics in three ways. First, it takes the long-run rather than the short-run view. Second, it considers costs and benefits to the whole community, not just to the parties to the transaction. Third, it focuses on concrete use value and the limited accumulation thereof, rather than on an abstract exchange value and its impetus towards unlimited accumulation…. For oikonomia, there is such a thing as enough. For chrematistics, more is always better… “

In this definition of economics financial wealth does not trump the wellbeing of the community, as it is distinct from the actions a society must undertake to look after its members. The threat to our livelihoods that a fall in GDP represents is due to a conflation of economics with chrematistics.  

If for a moment we were to prise them apart we would see a different picture.

Whereas the lockdown has caused a drop in GDP growth (chrematistics) with the threat of recession and likely hardship for many people, apart from restricting our movements, it generally does not make us less able. It will mean many of us will not have access to society’s current means of exchange (money), but it does not represent a loss of ability, talent and willingness to contribute in the population at large. 

In fact, despite the fear and anxiety generated by the crisis, what we are witnessing is a phenomenal upsurge in generosity and creativity as people pull together to support each other with whatever they have. We are collectively defying the popular economic notion of humans as selfish utility maximising individuals and mostly showing solidarity and kindness. In the process we are realising who the real wealth creators are. They are the frontline workers in the caring economy: the nurses and doctors, the shop assistants and delivery drivers, the shelf stackers, the cleaners, the 750.000 (and counting) volunteers that have come forward to help the NHS. Online, they are the people offering free education, performances, exercise classes, financial advice, museum tours, mental health support, the list just goes on.  Behind closed doors it is those managing the domestic life: the family members doing their best to keep their children and themselves healthy and happy and sane, the friends joining together at a distance via a multitude of platforms. 

In this moment of crisis the fragilities of a globalised system have been exposed and it is ‘ordinary people’ and communities working together that are heading off socio-economic breakdown. They are demonstrating in the words of Naomi Klein in her book No is Not Enough, that ‘If the goal is to move from a society based on endless taking and depletion to one based on caretaking and renewal, then all of our relationships have to be grounded in those same principles of reciprocity and care —because our relationships with one another are our most valuable resource of all.’

The effects of Covid 19 will continue to place an unprecedented strain on societies that will require international cooperation, imagination and courage to overcome, but these efforts must not be geared towards returning to business as usual. Instead, we need to foreground the countless social and economic practices that have been developed over the last four decades by academics and practitioners dedicated to creating economic systems that serve all life on earth, and put in place mechanisms that reward people for generating real wealth and value. 

Time for bold solutions

After years of waiting in the wings Universal Basic Income (UBI) has now entered public discourse. Many pilots are underway, but the oldest ongoing experiment, The Alaska Dividend Fund, has shown no decrease in labour market participation and has ‘significantly mitigated poverty, especially among Alaska’s vulnerable rural Indigenous population.’ 

Currency experts such as Bernard Lietaer have shown that diversifying our exchange systems will make them more resilient to shocks in the global market and enable us to support social and ecological regeneration. The Human Scale Development framework developed in Latin America in the 1980s can help us evaluate whether what we are currently producing is actually meeting our real needs or pseudo satisfying manufactured wants. Together with Doughnut Economics and Steady State Economics such frameworks can help us steer a course that keeps our economic activity within the Earth’s limits. 

Vulnerable international food chains must now be replaced by regenerative local food systems. Building a vibrant food culture could simultaneously tackle obesity and youth unemployment, while ensuring future food security and restoring our soils. Land and property ownership must come under scrutiny and re-imagined to ensure food sovereignty, the regeneration of natural habitats and truly affordable and secure housing for all. The creation of worker cooperatives and support for local businesses have been shown to multiply local wealth and wellbeing, and will be needed to create more cohesive living and working communities.

In order to give people a say in shaping their lives and their communities, local authorities could introduce participatory budgeting, citizens’ assemblies and community charters.  Both nationally and internationally we must look at ways to abolish the crippling debt that is forcing people into unsafe work or destitution. We must also urgently start a discussion about the internet as a public utility. Work done by the P2P Foundation and the Institute for Local Self-Reliance can provide a guiding framework for sharing the wealth created by our communal efforts and make sure we all have access to its vital services.

The unintended social experiment precipitated by the virus presents a once-only window of opportunity to re-think our economic and social organisation in ways that can help us survive both the Corona epidemic and the greater threat of climate change that is now playing out. Instead of making people and planet fit around the numbers, it is time for numbers (financial mechanisms, exchange systems) to start fitting around people and planet. 

GDP does not measure what we value most. This crisis must be an opportunity to challenge what we have allowed corporations around the world to do with the natural environment (conveniently referred to as resources) and people (labour) in the name of economic growth. Thatcher was wrong: there are alternatives. Many of us have been working on them for decades. We are ready to take our rightful place at the table to help us turn the corner into a possible and hopeful future.  

Lead image by Tim Mossholder

The post No more business as usual – Rethinking economic value for a post-Covid world appeared first on P2P Foundation.

But question capitalism in public and you’re likely to get some angry responses. People immediately assume that you want to see socialism or communism instead. They tell you to go and live in Venezuela, the current flogging-horse for socialism, or they hit you with dreary images of Soviet Russia with all its violence, dysfunction, and gray conformity. They don’t consider that you might want something beyond caricatures and old dogmas.

These old “isms” lurk in the shadows of any discussion on capitalism. The cyber-punk author William Gibson has a term for this effect: “semiotic ghosts”–one concept that haunts another, regardless of any useful or intended connection.

There’s no good reason to remain captive to these old ghosts. All they do is stop us having a clearheaded conversation about the future. Soviet Russia was an unmitigated social and economic disaster; that’s easy to dispel. But, of course, not all experiments with socialist principles have gone so horribly wrong. Take the social democracies of Sweden and Finland, for example, or even postwar Britain and the New Deal in the U.S. There are many systems that have effectively harnessed the economy to deliver shared prosperity.But here’s the thing. While these systems clearly produce more positive social outcomes than laissez-faire systems do (think about the record-high levels of health, education, and well-being in Scandinavian countries, for example), even the best of them don’t offer the solutions we so urgently need right now, in an era of climate change and ecological collapse. Right now we are overshooting Earth’s carrying capacity by a crushing 64% each year, in terms of our resource use and greenhouse gas emissions.

The socialism that exists in the world today, on its own, has nothing much to say about this. Just like capitalism, it relies on endless exponential GDP growth, ever-increasing levels of extraction and production and consumption. The two systems may disagree about how best to distribute the yields of a plundered Earth, but they do not question the process of plunder itself.

Fortunately, there is already a wealth of language and ideas out there that stretch well beyond these dusty old binaries. They are driven by a hugely diverse community of thinkers, innovators, and practitioners. There are organizations like the P2P (Peer to Peer) Foundation, Evonomics, the Next System Project, and the Institute for New Economic Thinking reimagining the global economy. The proposed models are even more varied: from complexity, to post-growth, de-growth, land-based, regenerative, circular, and even the deliciously named doughnut economics.

Then, there are the many communities of practice, from the Zapatistas in Mexico to the barter economies of Detroit, from the global Transition Network, to Bhutan, with its Gross National Happiness index. There are even serious economists and writers, from Jeremy Rifkin to David Flemming to Paul Mason, making a spirited case that the evolution beyond capitalism is well underway and unstoppable, thanks to already active ecological feedback loops and/or the arrival of the near zero-marginal cost products and services. This list barely scratches the surface.

The thinking is rich and varied, but all of these approaches share the virtue of being informed by up-to-date science and the reality of today’s big problems. They move beyond the reductionist dogmas of orthodox economics and embrace complexity; they focus on regenerating rather than simply using up our planet’s resources; they think more holistically about how to live well within ecological boundaries. Some of them draw on indigenous knowledge and lore about how to stay in balance with nature; others confront the contradictions of endless growth head on.

Not all would necessarily describe themselves as anti- or even post-capitalist, but they are all, in one way or another, breaking through the dry seals of neoclassical economic theory upon which capitalism rests.
Still, resistance to innovation is strong. One reason is surely that our culture has been stewed in capitalist logic for so long that it feels impregnable. Our instinct is now to see it as natural; some even go so far as to deem it divine. The notion that we should prioritize the production of capital over all other things has become a kind of common sense; the way humans must organize.

Another reason, clearly linked, is the blindness of much of the academic world. Take, for example, the University of Manchester, where a group of economics students asked for their syllabus to be upgraded to account for the realities of a post-crash world. Joe Earle, one of the organizers of what the Guardian described as a “quiet revolution against orthodox free-market teaching” told the newspaper: “[Neoclassical economics] is given such a dominant position in our modules that many students aren’t even aware that there are other distinct theories out there that question the assumptions, methodologies, and conclusions of the economics we are taught.”In much the same way as House minority leader Nancy Pelosi rebuffed college student Trevor Hill when he asked whether the Democratic Party would consider any alternatives to capitalism, Manchester University’s response was a flat no. Their economics course, they said, “focuses on mainstream approaches, reflecting the current state of the discipline.” Mainstream, current, anything but fresh. Such attitudes have spawned a global student movement, Rethinking Economics, with chapters as far afield as Ecuador, Uganda, and China.

Capitalism has become a dogma, and dogmas die very slowly and very reluctantly. It is a system that has co-evolved with modernity, so it has the full force of social and institutional norms behind it. Its essential logic is even woven into most of our worldviews, which is to say, our brains. To question it can trigger a visceral reaction; it can feel like an attack not just on common sense but on our personal identities.

But even if you believe it was once the best system ever, you can still see that today it has become necrotic and dangerous. This is demonstrated most starkly by two facts: The first is that the system is doing little now to improve the lives of the majority of humans: by some estimates, 4.3 billion of us are living in poverty, and that number has risen significantly over the past few decades. The ghostly responses to this tend to be either unimaginative–“If you think it’s bad, try living in Zimbabwe”–or zealous: “Well, that’s because there’s not enough capitalism. Let it loose with more deregulation, or give it time and it will raise their incomes too.”

One of the many problems with this last argument is the second fact: With just half of us living above the poverty line, capitalism’s endless need for resources is already driving us over the cliff-edge of climate change and ecological collapse. This ranges from those that are both finite and dangerous to use, like fossil fuels, to those that are being used so fast that they don’t have time to regenerate, like fish stocks and the soil in which we grow our food. Those 4.3 billion more people living “successful” hyper-consumption lifestyles? The laws of physics would need to change. Even Elon Musk can’t do that.

It would be a sad and defeated world that simply accepted the prebaked assumption that capitalism (or socialism, or communism) represents the last stage of human thought; our ingenuity exhausted. Capitalism’s fundamental rules–like the necessity for endless GDP growth, which requires treating our planet as an infinite pit of value and damage to it as an “externality”–can be upgraded. Of course they can. There are plenty of options on the table. When have we humans ever accepted the idea that change for the better is a thing of the past?Of course, transcending capitalism might feel impossible right now. The political mainstream has its feet firmly planted and deeply rooted in that soil. But with the pace of events today, the unimaginable can become the possible, and even the inevitable with remarkable speed. The path to a better future will be cut by regular people being curious and open enough to challenge the wisdom received from our schools, our parents, and our governments, and look at the world with fresh eyes.

We can let the ghosts go. We can allow ourselves the freedom to do what humans do best: innovate.

Photo by andres musta

The post Don’t Be Scared About The End Of Capitalism–Be Excited To Build What Comes Next appeared first on P2P Foundation.