{"id":21630,"date":"2012-09-24T12:00:39","date_gmt":"2012-09-24T11:00:39","guid":{"rendered":"http:\/\/www.transcend.org\/tms\/?p=21630"},"modified":"2012-09-18T22:32:44","modified_gmt":"2012-09-18T21:32:44","slug":"three-principles-for-reconstructing-the-economy","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2012\/09\/three-principles-for-reconstructing-the-economy\/","title":{"rendered":"Three Principles for Reconstructing the Economy"},"content":{"rendered":"

(1)\u00a0\u00a0 First Principle.\u00a0 <\/strong><\/p>\n

The needs of those who need to sell something to live (to sell either their labor or some other saleable item) usually exceed effective demand. [1]<\/a>\u00a0 There are more sellers than buyers.<\/p>\n

Therefore, in a green, responsible, plural and caring (or \u201csolidarity\u201d) economy there must be work (or some other source of livelihood) that does not depend on sales.<\/p>\n

Roughly speaking, <\/em>work that does not depend on selling can be financed paying for social programs with money siphoned off from the extraction of natural resources (via severance taxes, public ownership, endowments of charities, or in some other way).[2]<\/a><\/p>\n

\u00a0(2)\u00a0\u00a0 Second Principle. <\/strong><\/p>\n

The main dynamic [3]<\/a> that now drives the production of goods and services is profit.\u00a0 In more technical and exact language it is the accumulation of capital.\u00a0\u00a0 For this reason little can be done that reduces profits (i.e. restricts the accumulation of capital) without also reducing production; [4]<\/a>\u00a0 that means reducing employment; it means reducing the supply of food, of medicine, of housing, of transportation etc.<\/p>\n

A green, responsible, plural, and caring economy must diversify<\/em> the dynamics and the logics that drive and orient production and distribution.\u00a0 Diversification is in principle unbounded. \u00a0\u00a0It refers to institutions that have not yet been invented.\u00a0 It also refers to institutions that have been invented, such as (for examples)\u00a0 publicly owned enterprises,\u00a0 mixed public\/private enterprises,\u00a0 cooperatives,\u00a0 parastatals,\u00a0 pension funds with social conscience, employee ownership \u00a0(\u201cempresas recuperadas\u201d in Argentina),\u00a0 all kinds of nonprofits,\u00a0 community currencies,\u00a0 municipal utilities (electricity, water), \u00a0swap meets, anchoring capital to a territory and assigning it a mission (e.g. with a municipal bank chartered to support small business), corporate social responsibility,\u00a0 micro business and micro lending schemes like the Grameen Bank, mom and pop shops (which make no profit but at most the equivalent of a wage), self-employment, professional partnerships, neighborhood solidarity, gift economy, friendship, \u00a0fair trade, economy of communion, community supported agriculture, L.E.T.S., voluntarism,\u00a0 flea markets, subsistence agriculture,\u00a0 hand-me-down clothing, families, permaculture (1. Love the land, 2. Love the people, 3. Share the surplus), production for use, eco villages, monasteries, motherhood, do-it-yourself home improvement, indigenous forms of cooperation and sharing, Habitat for Humanity, Medecins sans Fronti\u00e8res, and so on.<\/p>\n

To the extent that an economy becomes plural capitalism becomes governable. The \u201csystemic imperative\u201d [5]<\/a> to create optimal conditions for profit-making (and hence for producing) becomes less imperative. [6]<\/a><\/p>\n

This second principle articulates a common goal for diverse social movements.\u00a0 Many social movements in one way or another pursue a value that is not profit.\u00a0 Many tend to create dynamics and logics that get production and distribution accomplished in ways that are distinct from the accumulation of capital.\u00a0\u00a0\u00a0 To the extent that the sum of their efforts makes people\u2019s welfare less dependent on the confidence of investors (i.e. their confidence that investments will be profitable) they make capitalism governable.\u00a0\u00a0 Capitalism becomes governable because now if profit-making is restricted (for example by raising wages or by enforcing environmental laws) then other dynamics are in place to take up the slack so that old livelihoods lost are replaced by new livelihoods added.\u00a0[7]<\/a><\/p>\n

(3)\u00a0\u00a0 Third Principle.\u00a0 <\/strong><\/p>\n

The greatest threat to humanity is ecological.\u00a0 With the destruction of the fragile biosphere we inhabit, which now seems more likely than not, the life of our species and the lives of many other species will be over.<\/p>\n

The necessary transition to green technologies requires governability.<\/p>\n

Governability requires the First Principle and the Second Principle.<\/p>\n

Without the First Principle the world is ungovernable because of social conflicts.\u00a0\u00a0 For example, governments often do not dare enforce anti-pollution laws for fear of destroying jobs.\u00a0\u00a0 Precarious employment and unemployment, and associated evils like the implacable advance of narco-culture and narco-power, are already intolerable.\u00a0 Without the First Principle enforcing green laws threatens to make the intolerable worse.<\/p>\n

Without the Second Principle the world is ungovernable because of the systemic imperative to create favorable conditions for the accumulation of capital (and therefore for production) cost what it may.\u00a0\u00a0\u00a0 For example, the summits at Rio de Janeiro and other well-publicized meetings on environmental issues usually fail because governments do not dare make commitments that would lower profits. \u00a0The perennial clash between civil society environmentalists and the governments of the industrialized countries is not caused simply by wealthy people controlling the politicians whose campaigns they pay for.\u00a0\u00a0 \u00a0\u00a0\u00a0 The deeper cause is that the system requires profit, always more profit and never less profit.\u00a0\u00a0 Profit is a necessary condition for the operation of the system\u2019s mechanisms for producing everybody\u2019s daily bread.<\/p>\n

To save mother earth it is necessary to learn from the teachings of our colleagues in the natural sciences.\u00a0\u00a0 It is necessary to commit to acting in the light of what they teach us.\u00a0 But no amount of scientific knowledge and no amount of commitment will save mother earth without structural changes like those called for by the First Principle and the Second Principle.<\/p>\n

NOTES:<\/strong><\/p>\n

[1]<\/a> \u201cThe celebrated optimism<\/em> of traditional economic theory, which has led to economists being looked upon as\u00a0Candides, who, having left this world for the cultivation of their gardens, teach that all is for the best in this best of all possible worlds provided we will let well enough alone, is also to be traced, I think, to their having neglected to take account of the drag on prosperity which can be exercised by an insufficiency of effective demand.\u201d\u00a0\u00a0 J.M. Keynes, General Theory<\/span> p. 33.<\/p>\n

[2]<\/a>\u00a0 This does not mean that all the rents that pay for work without sales have to pass through the public treasury.\u00a0\u00a0\u00a0 In the European Middle Ages for example rents from agricultural land were channeled to \u201chospitals\u201d (in those times general houses of hospitality for people in need, ill or not) through the church and religious orders. \u00a0 Today private foundations sponsor art and science.\u00a0 (For example the Guggenheim Foundation with wealth historically derived from Chilean copper.)\u00a0 They provide employment that does not depend on sales for artists and scientists.<\/p>\n

[3]<\/a> \u201cMain\u201d does not mean \u201conly.\u201d\u00a0 It also does not necessarily mean that hiring workers in business-for-profit is the source of the majority of employment.<\/p>\n

[4]<\/a> \u00a0\u00a0The regulationist school of economists associated with the University of Grenoble holds that there must be a \u201cregime of accumulation.\u201d\u00a0\u00a0 Politics, culture, religion, education, in fact all of social life, must function to provide guarantees that the conditions necessary for capital accumulation will be established and preserved.<\/p>\n

[5]<\/a> The phrase \u201csystemic imperative\u201d is from Ellen Wood\u2019s Empire of Capital.<\/span><\/p>\n

[6]<\/a> \u00a0It must be added that even extreme measures that are pro-capital and anti-labor will fail in the long run to keep profits high enough to motivate enough production and distribution to establish general prosperity.\u00a0\u00a0 Sooner or later a system overly dependent on capital accumulation to keep it going will lead to stagnation like that we see today in Japan, the USA, and the European Union.\u00a0\u00a0 On this point the arguments advanced by Rosa Luxembourg almost a century ago in her Accumulation of Capital <\/span>(1913) have stood the test of time.\u00a0\u00a0 See also Keynes\u2019 General Theory<\/span> chapter 24. (1936)\u00a0 Regarding the inevitable failure also of the so-called \u201cKeynesian\u201d strategy of keeping profits up by creating an affluent middle class and working class with the purchasing power to buy the products of industry see Howard Richards and Joanna Swanger The Dilemmas of Social Democracies.<\/span> (2006)<\/p>\n

[7]<\/a>\u00a0 For example in 1971 in the first few months of the Salvador Allende government in Chile private new investment fell to zero, but total new investment did not decline because public investment increased.\u00a0\u00a0 Although this example is instructive, the solution of humanity\u2019s problems requires something more.\u00a0 It requires de-growth in which loss of old livelihoods is replaced by ecologically sustainable new livelihoods rather than by a different form of ecologically unsustainable industrialization.<\/p>\n","protected":false},"excerpt":{"rendered":"

First Principle: The needs of those who need to sell something to live (to sell either their labor or some other saleable item) usually exceed effective demand. There are more sellers than buyers. Therefore, in a green, responsible, plural and caring (or \u201csolidarity\u201d) economy there must be work (or some other source of livelihood) that does not depend on sales.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[40],"tags":[],"class_list":["post-21630","post","type-post","status-publish","format-standard","hentry","category-transcend-members"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/21630","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=21630"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/21630\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=21630"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=21630"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=21630"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}