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Economy Reset: Principles of a New Economy

Submitted by: Dr. Allen L. White

Posted: Nov 09, 2011 – 11:53 PM EST

Tags: csr, new economy, ows, living economy, sustainability

 
Allenwhite

By Allen White

The multiple economic crises confronting Western nations – threat of contagious bank failures, escalating sovereign debt, anemic job markets, wealth disparities – suggest we are fast approaching a new chapter in defining citizen-government-business relationships. It may be a moment when the most fundamental of all economic questions finally receives the attention it urgently deserves: What is the purpose of an economic system?

A decade of booms and busts in technology, housing and global capital markets. The financial crisis, bailout and ensuing Great Recession in the US. The fragility of the EC banking and prospect of collapse of the community itself. Rising income inequality in the US and public despair over the political paralysis in addressing joblessness and the housing crisis. The confluence of these conditions is leading to soul-searching among a disillusioned citizenry in search of a "New Economy" alternative to the dysfunctional system perceived by many as privatizing wealth for the few (the "1%") while socializing risk for the many (the "99%").

In early 2011, a Working Group (WG) of the New Economy Network (NEN) launched an effort to define a set of foundational principles for a "New Economy." NEN, founded in 2009 as a "meta-network," functions as a coalition of organizations and individuals dedicated to supporting a "transition to a new economy where the priority is to sustain people and the planet; social justice and cohesion are prized; and peace, communities, democracy and nature all flourish."

At the inception of the WG, NEN opted not to define New Economy principles, leaving the concept flexible instead to present itself with maximum inclusiveness among potential network participants. A year after its formation, a few NEN participants – myself included – concluded that the time had come for such principles to help bring cohesion and efficacy to NEN's activities. Toward this end, the WG began a six-month process of dialogue, drafting and consensus-building (see below for WG members).

However, the WG's effort was not the first of its kind.

Under a banner of the solidarity economy, the living economy or the inclusive economy, the past few years of intensifying anger and disillusionment with the economic status quo has spawned a host of initiatives to redesign relations between citizens, corporations, government and the broader economy.

At the corporate (vs. macroeconomic) level, Corporation 20/20, an international network of some 300 participants, has developed six Principles of Corporate Redesign. David Korten, in his Agenda for a New Economy offers seven "Principles for healthy living systems." Gus Speth, in a proposed "Transformation Project," put forward measures by which to measure progress toward a "New Economy and a New Politics." (Both Korten and Speth are members of the NEN WG).

These and other such initiatives attest to the ongoing search for a convergence around core principles, values and/or norms that may help define and, perhaps ultimately, bind disparate movements ranging from the globally expanding “Occupy Wall Street” movement to India’s Hazare Movement.

The NEN wrestled with the question of scope: Should its effort be aimed at the economy alone or at the broader human-ecological-economic system of which the economy is but one component? The decision, with some reservation, was to pursue the former, but to do so with an eye toward harmonization with kindred initiatives that have adopted a more integrated approach. 

A second, equally important, question centered on content and format: Should Principles for a New Economy stress succinctness and memorability or should they err on the side of greater explication and annotation to enhance accessibility and comprehension among diverse audiences? In other words, should we strive for a Bill of Rights, a Ten Commandments or the ILO Core Labor Standards or, alternatively, something more constitutional in length and articulation? Here again diverse views emerged, eventually leading to a decision to stress brevity in the short-term while retaining the option of a lengthier document to follow.

The result of WG's efforts are below. In follow-up commentaries, I'll explore both the content of the principles and their connection to the multiple citizen and civil society movements that, with a keen sense of the historic moment, have emerged since the WG began its work.

PRINCIPLES FOR A NEW ECONOMY

Preamble

The purpose of an economic system is to help organize human activities in ways that create healthy and resilient human communities and ecosystems for both present and future generations.

To achieve these purposes, deep system-wide change is urgently needed to reverse conditions typical of contemporary global, regional, national and local economies that exhibit one or more of the following serious flaws. They are:

  • Unsustainable: They over-consume and degrade the resources upon which their long-term prosperity depends.
  • Unfair: They multiply financial advantages to those already advantaged at the expense of those most in need.
  • Unstable: They lack resilience in a time of growing volatility and rapid social, political and technological change.
  • Undemocratic: They operate with inadequate democratic control and accountability on the part of their most powerful economic organizations—corporations, financial institutions and governments.

At the root of these conditions is an implicit, dominant theory of economic purpose: namely to achieve continuous economic growth, as measured principally by GDP, by relying on "free markets," without regard to the impact on overall human and ecological well-being. At the core of a New Economy is the need to decouple the achievement of well-being from limitless economic growth, by structuring economies that:

  • Fully realize individual potential through the advancement of human rights, including the right to thriving livelihoods, freedom from unjust persecution, quality education, effective social safety nets, affordable nutritious food, clean water, secure health care and adequate shelter.
  • Protect and nurture the richness of the natural world in ways that confront and rectify intensifying threats to humans and other species, including those associated with climate change, biodiversity loss, eco-system degradation, and polluted air and water.

Principles

  1. Measuring progress – Economic progress shall be measured in terms of the wellbeing of all living species and ecosystems.
  2. Respecting natural limits – The economy shall draw from, and inject into, ecosystems only what is compatible with maintaining a sustainable healthy and resilient natural world.
  3. Democratizing the economy – All institutions that manage, regulate and execute economic activity, including private corporations, shall be democratically controlled in order to serve long-term societal goals.
  4. Ensuring economic progress – Governments shall work to ensure prosperous and resilient economic outcomes by making adequate investments in research, education, physical infrastructure and technology, whenever markets fail to do so.
  5. Localizing control – Economic policy shall favor subsidiarity, i.e., the localization of economic decision-making and control to the greatest extent possible consistent with democracy, equity and efficiency.
  6. Taming finance – All monetary systems and financial institutions shall be regulated as essential public utilities for the benefit of society as a whole.
  7. Reducing inequality – Increasing economic inequality shall be understood to be inherently and profoundly antithetical to achieving human and ecological well-being, and shall be rapidly reversed.
  8. Providing adequate livelihoods – Individuals shall be ensured of opportunities for decent paid work, employee ownership and the right to organize, and accorded recognition for work performed outside the formal wage economy that is fundamental to enriching community and family well-being.
  9. Re-defining globalization – International economic relations that impinge upon human and ecological well-being shall rest upon the same principles as those applicable to economic activities within nations so that economic justice becomes enshrined in such relations.
  10. Fostering new values – Economic values shall be diverted, by all fair and reasonable means, away from the materialism fostered by promoters of a consumer society, and shifted toward values that prioritize flourishing communities, individual happiness, and a healthy and resilient natural world.

The editors of the Principles for a New Economy are Neva Goodwin, Richard Rosen and Allen White. Principles for a New Economy was co-authored by the Core Principles Working Group, with the support of the New Economy Network. The members of the Working Group are: Gar Alperovitz, David Brodwin, Peter Brown, John Cavanagh, John Fullerton, Neva Godwin, Richard Heinberg, David Korten, Asher Miller, Noel Ortega, Richard Rosen, Gus Speth, Sarah Stranahan, Stewart Wallis, Allen White and Susan Witt.

About Allen White, Ph.D.

Dr. Allen L. White is Vice President and Senior Fellow, Tellus Institute, Boston, USA, and directs the institute’s Program on Corporate Redesign. In 1997, he co-founded the Global Reporting Initiative (www.globalreporting.org) and served as its Acting CEO until 2002. In 2004, he co-founded and is now Director of Corporation 20/20 (www.corporation2020.org), an initiative focused on designing future corporations to create and sustain social mission. Since 2005, Dr. White has served as Senior Advisor to Business for Social Responsibility and to CERES in the years following launch of the new organization. He is co-author of Corporate Environmentalism in a Global Economy and has published and spoken widely on corporate sustainability, accountability and governance.

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