Restructuring
the Economy
By Alan N. Connor
Introduction
If nothing else persuades us that
we need a new model for the global economy, the present recession should.
A number of people reached that conclusion a few years before the “melt
down” in 2008.
John Cobb and Herman Daly[1] advocated for it before the turn of the century.
David Korten has called for a new economic paradigm in an Agenda for a New Economy[2].
It is obvious to many of us, who are studying and concerned about the present Economy, that the present system of the industrially developed world is not sustainable. It is based on perpetual economic growth and perpetual supply of natural resources that the Earth does not have. Those resources--fossil fuels, minerals, pure water, fertile top soil, timber--are being used, extracted, converted to goods much faster than nature can reproduce them. And they are discarded at a rate that is faster than nature can absorb them.
It is obvious to many of us, who are studying and concerned about the present Economy, that the present system of the industrially developed world is not sustainable. It is based on perpetual economic growth and perpetual supply of natural resources that the Earth does not have. Those resources--fossil fuels, minerals, pure water, fertile top soil, timber--are being used, extracted, converted to goods much faster than nature can reproduce them. And they are discarded at a rate that is faster than nature can absorb them.
Such a system requires ever increasing consumption to maintain ever increasing production by industries simply to continue to maximize profits that are shared by the wealthy investors who own most of the shares of stocks. Rather than meet need, it produces goods and services that are not necessary for a good quality of life. It creates demand for non-necessities via advertising that values individual and household opulence rather than the “good life”. It is a system that prices a significant portion of the population out of the market for necessities by limiting supply to keep the effective demand price high. Aggregation of luxurious goods and assets designates the winners in our competitive economic game.
The wealth gap between winners
(investment bankers and corporate executives) and losers (workers) increases inequitably. Costs of essential
goods and services, such as healthcare, shelter, transportation, education, food, fuel,
utilities, are inflated above their intrinsic value. And necessities are priced at levels many
low paid workers, doing work that sustains the community, cannot afford.
In addition, our present economic-industrial system emits gasses and micro particles into the atmosphere and pollutants into our water and soils that degrade them and are hazardous to the publics’ health. There is empirical evidence and consensus among atmospheric and eco-biological scientists that industrial and agricultural emissions and pollutants are changing the Earth’s climate and its ability to sustain existing life.[3]
In addition, our present economic-industrial system emits gasses and micro particles into the atmosphere and pollutants into our water and soils that degrade them and are hazardous to the publics’ health. There is empirical evidence and consensus among atmospheric and eco-biological scientists that industrial and agricultural emissions and pollutants are changing the Earth’s climate and its ability to sustain existing life.[3]
According to a number of economists
a limited or even a no growth economy in which a majority of people prosper is possible.[4] Some very credible ecological and development economists and atmospheric and biological scientists have
claimed that such an economy is necessary for human and most other life forms that inhabit
earth today to continue to exist. James Hanson, chief atmospheric scientist for the National
Aeronautics and Space Administration (NASA), has said and written that CO2 in
Earth’s atmosphere
must be limited to 350 parts per million (ppm) to avert a future
catastrophe.[5] The latest test indicated 400 ppm CO2 in the atmosphere.
Given the above information, plus
the extreme weather and catastrophic events the Earth and its inhabitants have experienced this decade,
designing an economy that is not driven by depleting fossil fuels and other minerals is worth
trying. Hanson and a few other Earth and atmospheric scientists, have said recently that
much of the Earth’s
altered ecosystems cannot be restored to their original condition and
function. Since we cannot restore them to their original condition, human and other life will
have to adapt to the extant ecology and perhaps regenerate the damaged and degraded eco-regions
so that they can once again support life as we know it.
Probably many of us have a vision
of how a new economy might be structured.
A few have written books and scholarly papers describing their
vision or some of the elements of what they believe a viable, sustainable economy include.
There are variations among the
visions cited, but there are similarities also. Korten and McKibben envision an economy that is local community
based, rather than globally based. Jackson, Daly and Brown and Garver envision global
governances and cultures that enable nations, regions and municipalities to establish and operate institutions,
polities and economies in which all citizens participate and have access
to the essentials of the “good life”.[6] All of them
see the necessity for an economy that is not reliant on and driven by non-renewable resources such as
fossil fuels, present state of the art nuclear power, minerals that are converted, used and discarded at rates faster than
they can be renewed. In order for an economy to be sustainable, the ecological environment in
which it exists and of which it is a subsystem, must be sustainable. Kenneth
Boulding in his seminal paper, “Earth as
a Spaceship”
wrote that humanity will need to cultivate the well being of all Earth’s ecosystems for
it to be sustainable into perpetuity.[7]
My Vision
My vision of a worldwide social system is one that consists
of local communities that are economically, ecologically and socio-culturally
sustainable. They are self organized
primarily to increase the probability that the settlement will persist
into perpetuity.[8] According to Parsons and Smelser, the original primary function of an
economy was to harvest and extract local natural resources and convert them into useful goods
and services that enable the local settlement to persist into the future. The goal and purpose
or mission of the economy is to sustain the community, not amass individual wealth. They
defined the function of the polity--organized politics--as acquisition and control of resources so the inhabitants of the settlement can perform its economic functions. The local
community culture then functions to create and promulgate values and behavioral norms that
enable its economy and polity to perform community sustaining functions.
Communities are social systems that
cannot persist very far into the future in isolation. Closed systems become entropic.[9] For any system to persist, be it social,
biological, mechanical or physical, it must put out some utile good into
one or more other systems and must input one or more utile good from beyond its boundary--i.e.
from one or more neighboring systems. All systems are interdependent.
Primitive settlements knew that.
In order for communities to persist
into perpetuity, they must be parsimonious in the extraction, harvesting, conversion and output of local
natural resources, particularly those resources (which customarily are
referred to as nonrenewable) that require centuries to regenerate or renew themselves.[10] Natural resources, whether renewable or
not, are a community‘s
natural capital assets. They need to be conserved. Throughput (extraction, harvesting, conversion, allocation, distribution and
consumption of a good) needs to be durable, reusable and recyclable. Renewable
resources that are developed as substitutes
for nonrenewables should be treated
as costs for the use of the materials they replace. Extraction and harvesting should be at a rate that is not faster
than the rate at which resources can regenerate and reproduce themselves .[11]
Internal
Community Systems
For a community to be sustainable
for seven generations or longer, its internal systems must function to sustain its inhabitants. A
community is a social-ecological system. It is social because it consists of people who settle in a more
or less proscribed environment and relate to and interact with one another. They collectively develop behavioral norms
and rules for relating and interacting in ways that do not harm
one another and the environment that sustains them.
It is ecological in that these particular people have settled in a place
that provides them with natural resources that support and
sustain lives.
We can consider the community or settlement a system of subsystems: the economy, the polity and the socio-culture.[12] Daly maintains that the economic system is a subsystem of the eco-region or ecological system.[13] For purposes of this discussion, let us consider the community system and its subsystems: economy, socio-culture and polity as subsystems of the local eco-region in which the community is located. Each of those subsystems can also be thought of as composed of a set of subsystems.
Within a community economy there
could be the following subsystems: manufacturing for producing, allocating and distributing goods that are
essential for a decent quality of life as defined by the local socio-culture; food production, allocation and distribution;
banking-the allocation and distribution of credit, accounting and
managing of local currency and the exchange of goods and services within the community and with
external communities.
The socio-cultural subsystem
includes: families and other household forms, religious, service and civic groups and organizations, educational
institutions, friendship groups. Those groups and organizations, formal and informal, develop
and model the community’s ethic, values, behavioral and social norms and develop informal
and formal means to reinforce compliance and punish noncompliance.
The polity consists of the institutions
that make or enact community public policy decisions and enact ordinances that conform to the community’s norms and values, and allocate and regulate
access to the community’s
ecological resources—i.e. natural capital assets.[14] It can enforce compliance to local public policy
through such institutions as police, fire, public healthcare, social and legal services, conflict
resolution organizations. It can planfor monitor and oversee the commons land use and infrastructure
building, management and maintenance.
A
Community Economic System
A community economic system would
produce for all the community’s
inhabitants such goods as safe, healthy and tasty food; shelter; pure,
fresh water for local agricultural, industrial, and household use; tools, energy and technology
that enable inhabitants to produce sustaining goods and perform sustaining services. It
would include the organizations and institutions that effectively and efficiently allocate
and distribute those goods and services to all the community’s
inhabitants consistent with their need. Those organizations and institutions form the communities’ polities. Because each inhabitant would
function in a social role the community values, a sustainable supply of
goods and services would be his/her right.
The goods produced from
non-renewable resources or resources that take centuries to regenerate or reproduce themselves, must be long lasting,
reusable, recyclable and could pass through a number of users. That would reduce
waste, hopefully, to the capacity at which it can be absorbed by the local environment. Tools
and technology used in any specific community would be appropriate for the local
ecological environment and to the tasks they are to perform. Some materials needed but not found in
the local community and its environs may need to be imported from as close as possible. Technology
can be designed
that is appropriate to the function it is to perform. The
communities involved in the transaction would seek to develop an exchange that would be advantageous
to each. They would be cooperators not competitors.
Means of production would be
locally owned and operated. Community businesses that required substantial investment could be
owned by local working and consumer investors. Community banks, cooperatively or
municipally owned and operated could lend funds to enable start ups stabilize
existing businesses. The bank would be repaid from business’ profits, as would local investors.
Much of the banks liquid capital would come from
deposits of community workers and consumers who might invest in local enterprises individually and from local government revenue
deposited in locally controlled banks. Such operations
could be cooperatives or locally owned limited liability partnerships or corporations. That would insure that the business’ products
and profits benefit their community and i inhabitants, primarily. If incorporated, the
corporation’s mission must be to provide a good or service that is for the community’s common good. If its
product or service ceases to benefit the community and its inhabitants, the
corporation should be dissolved. Local family and individual entrepreneurial ownership should
be encouraged and supported.
Locally
owned and operated banks, venture capital funds and business incubators could help provide startup and operating loans to local
businesses based on the Grameen micro loan model.[15] Community individuals, families,
banks, institutions, mutual insurers and the local government could purchase shares in such funds
and incubators. Banks would be owned by community depositors and /or municipal
governments. They could be credit unions, cooperatively owned banks and building and
loan associations. Wall Street bankers and brokerage houses and equity investors should be
prohibited from purchasing shares in community owned financial institutions. They tend
to suck wealth from the community and exacerbate local poverty rather than create
and spread prosperity.[16] No matter how the financial system is structured, its policies
should be determined by a board of directors consisting of local residents, blue and white collar
workers and small business operators as well as lawyers, accountants and local business
administrators and financiers.
Community government can deposit all its revenue in the municipally
owned bank, in the municipality
elects to charter its own bank, or one or more of the local depositor owned cooperative banks.
Then revenue would be available for community sustainability and development
purposes. Municipal and cooperatively
owned community banks would charge interest only
the net profit earned on a loan.[17]
Neighboring communities and urban
neighborhoods within the same watershed, or a portion of the same
large watershed, can organize regional banking and credit systems. They could provide backup
to local systems and help establish fair exchange rates between different community
currencies. For broader exchanges and transactions, a national currency would be
used.
A Community Polity
Parsons and
Smelser define the polity or political subsystem as one that “functions to acquire resources”. [18] For our purposes we can reword that to, “functions
to have access and control of natural resources”. In a community where the
local socioculture has adopted an ethic that considers all natural resources in the
community and its environs public capital assets or commons, those natural resources are controlled by
the people of the community through its democratically elected local government. That
government allocates access to residents on the basis of benefit to the community’s common good and the
applicant’s need and capacity use those natural assets to help sustain the
community.
The polity monitors how a community’s natural and human
capital resources, including open space, are
developed and used. If those uses are not compliant with the rules, ordinances and ethic of the
community’s inhabitants, the user can be deprived of further use of that resource and may be
required to compensate the community for any harm or environmental damage.
The polity, via its participatory
democratic legislative and administrative subsystems, monitors the public
behavior of the community’s
residents and visitors and enforces compliance to those behavioral norms and values that have
become rules and ordinances. It also monitors the public behavior of local businesses,
organizations, institutions and employed members of the local government. It judges the outcomes of those interactions and positively
sanctions those that benefit the common good of the community and its inhabitants and negatively sanctions interaction and
behavior that is not so beneficial.
The polity enacts ordinances and rules
that regulate how persons occupying certain community roles should interact with members of the
community as well as what behaviors and functions are expected of them. It also monitors
interaction with the local ecosystem and enforces compliance to community determined regulations.
A Socio-cultural Subsystem
A socio-cultural system functions
to develop community values and norms by which residents, institutions, businesses and organizations
interact with one another, the local and surrounding environment and its natural and human resources.
In so doing, the system defines roles that are of value to the community. The
performance of those roles that benefit some or all members of the community, the community’s structure and
functions, become valued. Some behavioral norms will be legislated by the
polity as ordinances or rules. Some will be implied and unwritten--i.e. the community’s mores. Most will be
passed down from elder to younger by word of mouth, written and oral stories and role
modeling. That is an expectation of the family, the church, synagogue, mosque,
etc. and the school.
Some of the roles performed in the
community are publicly and legally defined, such as mayor and town council, fireman, policeman, public works
director and town clerk. Others are defined in contracts as job descriptions--e.g. school
principal, teacher, minister, rabbi, imam. Some are defined by employers via contract and in some
cases by oral agreement. In all those cases the expected interactive behaviors and
role functions are explicated or understood implicitly.
The responsibility and authority of the role occupant are also understood, although implicit expectations are not always
clear.
For many roles, there may not be a
clearly written or explicit definition. The roles of parent, child, neighbor and employer are seldom explicated.
Nevertheless, compliance with role expectations is positively reinforced and there are
penalties if persons assuming those roles perform them in ways that harm one or more community
members.
Local socio-cultures also can establish norms regarding the allocation of access to and control of the natural and human resources of the community and environs. Now days, how individuals, local governments, institutions, local and transnational businesses harvest, extract and utilize local resources is determined by state and national legislatures and agencies that often have little knowledge of how their decisions and policies affect communities and the eco-regions in which they exist. Since those resources are the communities’ common property, decisions determining who has access to them for what use should be determined by the communities in which those resources are located.
Local socio-cultures also can establish norms regarding the allocation of access to and control of the natural and human resources of the community and environs. Now days, how individuals, local governments, institutions, local and transnational businesses harvest, extract and utilize local resources is determined by state and national legislatures and agencies that often have little knowledge of how their decisions and policies affect communities and the eco-regions in which they exist. Since those resources are the communities’ common property, decisions determining who has access to them for what use should be determined by the communities in which those resources are located.
Integrating
Community Systems with Regional, National and Global Governance
Neighboring municipalities within a relatively proscribed area can cooperate and collaborate with regard to certain functions, thus forming a region. A logical proscribed area is a watershed or sub watershed. Each watershed forms an ecological region (eco-region). It has a unique set of ecological resources--i.e. natural capital: water, timber, minerals, soil, wetlands, topography, flora, wild life.
Each municipal community with its
unique polity, economy and culture, determines to whom access to land within its political boundaries is to be
allocated and how it is to be used. Some municipal lands will remain common--publicly
owned. Access to and use of that land and its resources will be determined and monitored by the
local polity. Each municipal community will need to monitor use of privately held land to
insure that the holder does not use it in ways that harm neighbors and other members of the
community. However, control of access to and location and use of land in the region not
within any municipality’s boundaries, could be the joint responsibility of the
polities of all the municipalities in the region. So a regional
polity or governance would need to be formed. Preferably, all governances would be democratic, impartial and operate in
the best interests of all persons and institutions within their jurisdictions.
Such regions already exist as counties
in the United States. Their boundaries
are usually determined by survey lines and surface
waterways. Those determined by waterways divide eco-regions. Those divided by surveys into sections
and townships often include parts of watersheds and eco-regions. Where watersheds and eco-regions
are split among municipalities and counties, some form of joint governance
seems logical. In making public policy regarding allocation and access to and uses of
eco-region resources, knowledge and consideration of regional social-culture is a requisite.
Within a region, even a small municipality such as village or rural township, there are likely to be conflicting social cultures. Different socio-economic, ethnic, religious and age groups may value community and eco-region resources differently. Those value conflicts need to be negotiated so that regional resource policy for the common good is established. There are three ways to resolve such conflict without third party intervention: contest, compromise and consensus.[19] In conquest, one side wins and all others lose. In compromise all give up something, thus all sides lose some, but less than they might in a contest. In consensus or synthesis a new solution is developed and all sides win, at least no one loses. Other functions that would benefit by inter-community planning, and policy-making, are ordnance monitoring and enforcement, public transportation, power generation and distribution, banking and trade and tertiary healthy care.
Within a region, even a small municipality such as village or rural township, there are likely to be conflicting social cultures. Different socio-economic, ethnic, religious and age groups may value community and eco-region resources differently. Those value conflicts need to be negotiated so that regional resource policy for the common good is established. There are three ways to resolve such conflict without third party intervention: contest, compromise and consensus.[19] In conquest, one side wins and all others lose. In compromise all give up something, thus all sides lose some, but less than they might in a contest. In consensus or synthesis a new solution is developed and all sides win, at least no one loses. Other functions that would benefit by inter-community planning, and policy-making, are ordnance monitoring and enforcement, public transportation, power generation and distribution, banking and trade and tertiary healthy care.
Municipal and Regional Healthcare Systems
Primary and much secondary
healthcare, are for the most part, local community concerns. That is especially true for disease and
injury prevention. Geology, geography, topography and climate vary
from community to community. Thus the
prevalence of disease and injury varies from
community to community. Local health
service providers and consumers are most
knowledgeable about the diseases and injuries that are most prevalent in their communities. They also
tend to be most knowledgeable about treatments that are most effective in their
communities.
So the mission
and functions of a community based and controlled healthcare system would be to assure that the
highest quality care is accessible to all residents of and visitors to the community as promptly as
possible.
The system also is to assure that the most effective treatments are available when needed. To assure that all members of and visitors to the community have access to top quality care from the local system when needed, the system probably would need a significant amount of local public funding. A source of funds for such a system could be local taxes on real property or other taxes that fund other necessary local services such as police, firefighters, infrastructure construction and maintenance, waste pickup and disposal, snow removal and other forms of emergency assistance that may be needed from time to time. If such a service were administered and delivered by the community’s regional health department or a community agency established specifically to deliver healthcare services, a progressive premium payment system could be designed to operate a prepaid healthcare delivery service. Or a community might opt for a combination of local tax and premium payment funding.
Policy regarding where and by whom treatment and support
services should be delivered should be made by a
democratic body of local service providers and knowledgeable local consumers.
Policy regarding funding such a local community system and costs of treatment and
support and ancillary services also would be determined and monitored by such a body. A local body authorized to oversee ethical practices
of local providers will need to be
established. Such a body could also determine how local health service providers would
be paid and how much they would be paid.
Not
every municipality has a population large enough to support a secondary or tertiary care medical facility
with state-of-the-art diagnostic and treatment technology. A group of neighboring
communities with well administered primary care facilities could form a network to jointly fund,
develop policy for and oversee a secondary and tertiary regional health care
service. An entity consisting of representatives of local community health care delivery agencies
and knowledgeable consumer advocates could oversee and administer such a system.
Municipal, Regional and Interregional Public
Transit
Efficient, convenient, inter-municipality, region wide public transit can have a lot of payoffs for all the people in the region and its communities. It reduces private auto use which:
- Reduces commuting costs to households
- Reduces the need for acres and acres of impervious parking lots and expensive multi-story and underground parking structures thus reducing polluting storm water runoff.
- Makes more space available for residential and commercial use of in-town land thus supporting non-motor and pedestrian scale development.
- Reduces the amount of impervious roadway needed which further reduces polluting storm water runoff and the cost of street, road and highway construction and maintenance.
- Reduces the amount of greenhouse gasses emitted to the atmosphere, which improves the quality of local air and the threat to local and regional public health and the rate of global climate change.
- Reduces costs to municipalities and regions that are external to transportation operations.
Transportation
systems, including public right-of-way for private vehicles, are not self supporting. They
require taxpayer support. Public transit
requires less subsidy than streets, roads, highways and bridges for millions of private
vehicles. As use of public transit increases and private vehicle use decreases, costs for infrastructure
and maintenance are reduced. External costs are also reduced. Inter-region and inter-urban public transit
systems can have the same positive consequences as region-wide public transit
systems. They need an inter-regional governing and planning institution with
authority to match their responsibility and that understands the socio-cultural and ecological
values and ethos of the regions involved so they can make transportation policy consistent with
those values and ethos.
Municipal and Regional Power Generation and
Transmission
To the extent space permits, each
community or neighborhood within a city can have its own electric generating and transmission system. On site generation combined with net metering, should be encouraged, particularly for public
facilities. Solar, wind and low-head, hydro-electric generation and combinations thereof could be
used where practicable. Using local renewable energy to produce energy for local
industrial, commercial, municipal and household use increases energy efficiency, reduces cost and
the local carbon footprint. It also reduces external costs such as mitigation of
environmental degradation and healthcare.
Non-profit
municipal and cooperatively owned systems can reduce the cost of power to consumers and increase
generation and transmission efficiency.
Efficiency is increased because transmission distances from local generation plants
to local consumers are less than distances from monopolistic. corporation owned, centrally
controlled power generation plants that transmit electricity over long distances. Much
of that electricity is lost as stray voltage. Costs to consumers are reduced because of increased
efficiency and small local systems’
mission is to provide a local service rather than maximize profits and enable
its executives and principal shareholders to amass wealth.
Local
community electric power generation systems can inter-connect to one smart grid and set of batteries to
store electricity that will be available when demand in one or more communities exceeds normal peak
usage and in emergencies. Two way net metering can enable costs to be accurately
accounted for and assessed.
Conclusion
My vision of a restructured
economy is one in which local community citizens cooperatively make decisions that effect their community’s
environment, its unincorporated environs and the social lives of its residents. Community is
defined as a self-organizing settlement consisting of families and individuals living in
households that interact with one another for the purpose of sustaining that settlement and
its inhabitants into perpetuity. Members of the community—i.e. citizens--perceive their
community as a subsystem within a naturall, ecological system that contains the natural
assets/resources that provide the necessities that support lives. And the community in turn
organizes a number of interactive subsystems that need to function collaboratively to increase
the probability that the community and its inhabitants are sustained into perpetuity.
The three major community systems
are the socio-culture, the economy and the polity. The socio-cultural system develops values and interactive
norms that, when adhered to, enable community residents to occupy and perform community
and eco-system sustaining roles. The economic system produces and manufactures goods
from locally grown and extracted renewable and nonrenewable (on a human life cycle time span) natural assets
that help sustain the community.
It also imports needed resources that are not available locally from other communities in exchange for local resources and
goods other communities may need to sustain themselves. The economy develops means for local investment,
establishing credit and intra-community exchange. The polity’s functions
include: controlling access to the community’s common natural assets, organizing entities
consisting of local citizens that monitor access to and use of such assets, in compliance with
interactive socio-cultural norms.
Examples of
functions of community services, considered here as subsystems of the of the above three are discussed briefly. We also try to show how each of those subsystem’s needs to develop networks with systems of neighbor
communities for local community subsystems to function with optimum effectiveness and efficiency—i.e.
sustainability.
We argue
that local community systems designed and operated by community residents, owned in common can operate to sustain
communities and their environs into the distant future. In such communities valued social roles can
develop for each resident. Those roles enable them to contribute to the welfare and
sustainability of their communities. We maintain that cooperation among neighboring communities is
more sustainable than community competition.
Notes
1. Daly (1996) and (1973) and Daly and Cobb
(1989.)
2.
Korten (2008)
3.
IPCC report (2007), Ehrlich
4.
Daly (1996), Daly and Cobb, Jackson (2009),
Korten (2008), McKibben (2007), Robertson (1999).
5.
Hansen
6.
Jackson (2009), Peter Brown and Garver (2009),
J. W. Smith (2009), Korten (2008), Lester Brown (2008) McKibben (2007), Daly
(1973).
7.
Boulding, in Daly, (1973)
8.
Parsons and Smelser (1956)
9.
Von Bertalantfy. (1968)
10. Daly
(2003, 1996), Lester Brown (2008), McKibben (2007)
11. Daly
(Ibid)
12. Parsons
and Smelser Op. cit
13. Daly
(1996)
14. Parsons
& Smelser Op. cit.
15. Foley,
(2011)
16. Brown
Ellen (2004)
17. Ibid.
18. Parsons
and Smelser Op. Cit
19. Dunham
(1970) pp. 241-243
