Designing the Future Economy
By Marvin Brown
Issue 10 Winter 2012
Executive Summary
Can we design an economy that provides for everyone? In contrast to the current economic design that is limited to recording exchanges among property owners and therefore excludes the misery of people and the degradation of the planet, this article proposes a civic economics of provision that is inclusive and respectful of both. In a provisionary economy, money would flow toward those systems of provision that are critical for human well being and sustainability.
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Economics of Provision
Since the economic crisis of 2007, we have been trying to deal with loans, debts, and credit as though economics was all about controlling money. Perhaps our lack of success in moving toward recovery is that we have been asking the wrong questions. Why do we have lots of work that needs to be done, but high unemployment? Why do the few continue to profit at the expense of the many? How do we include those without property in an economy based on ownership? Instead of designing financial instruments, what would happen if we returned to the original meaning of economics as household management and designed an economics that provided for everyone: an economics of provision?
It may be unusual to think of an economy as a design project. Modern economies are shaped by many factors beyond the direct control of governments or individuals. But economies also do not simply come into being. They are in part designed into being and these designs are, like all designs, influenced by the spirit of the time. Many key features of the current economy were designed at a different time for a different time.
A new design would need to take into account the needs of the present and the role of the economy in shaping a future for an increasingly interdependent world.
If we were to design an economy for the future where would we start? We would have to start at the right place or we would never get to where we want to go. Also, we would need to know where we want to go in order to know where we should begin. We would need to be strategic and design to get to where we want to be.
Not everyone agrees that our current economy should be re-designed. Some believe that the economy will self correct—that an “invisible hand” guides the market and all its movements. This belief in a guiding mechanism that cannot be seen and that will somehow, in the most enlightened way, guide us to prosperity, is exactly that, a belief. It is not a fact. It is not even a scientific theory. But, like many beliefs, it is deeply held and hotly defended.
Good design begins with a process of discovery. Let us look at where this deeply held belief comes from. Although there are several sources, probably none is more influential than the writings of Adam Smith. In The Wealth of Nations (1776), Smith began his economic design with a four-stage conjectural story of human evolution. The first human nation was a nation of hunters, which then evolved into a nation of shepherds and farmers, and later a nation of traders, or what he called a commercial nation. This fourth stage was civilized society for Smith, where governments protected people’s property, and where the “invisible hand” transformed individual self-interest into a benefit for all. I think he thought that if we could design an economy where individuals could follow their self-interest, it would actually bring about a wealthy nation.
The real economy of Smith’s time, in contrast to his economic theory, was based on a social system of privilege and power that included slavery. Smith does not make this explicit, but it is quite real. His design for a commercial nation, a nation of property owners, that could bring about a wealthy nation was financially dependent on the slavery of over 11 million Africans—Africans who were kidnapped, chained, transported in barbarous fashion to the Americas, and forced to work in the sugar and tobacco plantations in the colonies that produced the wealth that Smith and others with power and privilege enjoyed. His “civilized society,” depended on the slavery of “savages,” as he called them. Their suffering, of course, could not be a part of his design. Smith designed an economy for property owners, omitting that the property that many owned were human beings. This world was guided not by an “invisible hand” but by an overseer paid to protect the privilege of the few even if it enslaved the many.
We continue to use this Smithian economic design. And, it continues to protect power and privilege. Like Smith, popular economic narratives do not refer to those who live in slave-like conditions whose labor provides us with our expected standard of living at a rock bottom cost. These narratives rarely show the exhaustion of this low-cost labor or the exhaustion of the biosphere on which they and we depend. The invisible hand seems to know how to use an eraser. But, to design anew, we need to discover the conditions of the real and to see how people actually live. Smith’s design for wealth creation is flawed because it does not do that. It suffers from what I would call the pathology of dissociation. It has split off market dynamics and consciousness from the suffering of the real providers of wealth.
Like Adam Smith, popular economic narratives do not refer to those who live in slave-like conditions whose labor provides us with our expected standard of living at a rock bottom cost
This Smithian economics rests on two significant fallacies. First, it rests on the idea that the market is separate from society rather than embedded in it. Second, it treats the economy as though it were a physical system subject to the laws of nature, instead of a social system subject to the ambiguities of human interaction. In fact, the market is a social, not a physical system. It is influenced by and influences social divisions of class, gender, race, religion, sexual orientation, and nationality. Furthermore, all markets exist within social structures of privilege and power. It is important to locate design in the facts and in the realities of people’s real lives.
Most current economic thinking follows Smith’s lead in leaving out the actual providers of wealth—our so-called social and natural capital. These are not included in optimistic notions or mathematical formulas. We need a new economic design; one based on the real rather than on denial and dissociation.
If we start to design an economy embedded in social and natural systems, we can then ask how we should understand the economy’s function in these systems. I want to propose that the function of an economy is to provide us with the material provisions we need to live a good life. If we accept that as the function of an economy, then we require an economics of provision.
Designing an Economics of Provision
How do we design an economics of provision? In Civilizing the Economy, I offer some ideas. Specifically, I propose that all human communities must do three things: provide for one another, protect one another, and assist each other in finding social meaning. At a minimum, we will need to use markets to organize systems of provision that are both just and sustainable. I offer a design process for moving toward this by suggesting a discovery process that engages citizens, not financiers, in civic conversations about how they want to live together. This process of discovery will enable us to examine the reality of everyday life and the interrelations among people and with our world.
Such a process of discovery can help us define how best to shift from a property-based economic design to design based on social relations – a civic-based design. The process of discovery will make it easier to see and to understand the difference between ecological and economic systems and to realize that natural systems need protection. We can then begin to design how human providers transform natural provisions to provide for ourselves, our families, and our communities.
Delivering Systems of Provision: Experiments in Process
A system is composed of parts that interact in such a way that the system itself functions as a whole. In our case, the whole is a social system and the parts are individuals, groups, and institutions. Being part of this system is not based on ownership, as Smith proposed, but on membership. We are all part of the systems that provide us food, clothing, housing, security, and other basic goods. And we are all part of the delivery of provisions. Our current systems of provision do not fully recognize this. But we are already beginning to redesign our markets, the way our provisions flow and how we allocate our capital.
We are beginning to design an economics of everyday life. People in cities are designing and funding urban gardens and supporting community-based agriculture. We are setting up alternative systems to trade produce, share cars, and build community-based housing. In places as diverse as San Francisco and Cairo, we are already seeing emerging designs for more inclusive systems of provision that do not shut out the many while securing the interests of the few.
But we cannot forget that most provisions—from water to a healthy atmosphere—become available to us through regional and global systems. If we remain only on the local level, the most we can accomplish is a new form of feudalism, where the peasants take care of each other, subject to the dictates of the lords and ladies who receive most of the global wealth. Global wealth creation is still largely the work of larger economic systems–“the market”–controlled by financial institutions, investors, and speculators.
We are beginning to design an economics of everyday life.
Still, these institutions have only limited control. While they do control the money flow which impacts the flow of provisions critical for human well-being, they do not necessarily control the legal system or law enforcement. Governments do. To the degree that financial institutions rule the world, we have allowed this to happen. We do have a choice here. We can continue to allow the commercial to dominate the civic or we can create a civic platform that serves as a foundation for the commercial. If we do not question the role of money in our economy, the best that we will design will be some form of feudalism that serves the privileged and powerful. If we see money as a means for providing for one another, which makes sense from a civic perspective, then we can move toward an economy that serves everyone. To do this, we will all need to work together to civilize money.
Money is more than a commodity that we buy and sell. It is a means for enhancing our life together—of providing for one another. Money needs to flow to systems critical to human well-being such as education and health care. It needs to flow to where the social and physical infrastructure of our shared lives needs repair. Consumers need money in order to acquire what they have reason to value and that cannot be acquired through barter or sharing. Businesses need money to collect resources that will allow them to produce the products and services that are necessary for their successful participation in particular systems of provision. Governments need money as a way for citizens to pay taxes and therefore have the means to provide public goods, such as a healthy environment, that cannot be achieved by other institutions. Bankers ideally steward money to help assure its use as a provider for human well-being.
In our current design, however, our financial institutions “own” money. They can curtail flow and direct its use. We will need to design in stewardship rather than ownership of money if we are to best serve the function of provisioning life. Experiments in civilizing money are beginning. We are beginning to channel flows of money into institutions that will help develop community capital and we are experimenting with trading community dollars. We are beginning to encourage local communities to turn ideas into project proposals and to fund these through budget initiatives that will distribute money to parks and bike lanes and other public goods and services. These initiatives are being driven by ordinary people who are moving across the boundaries of their particular areas of expertise to design a world that is less volatile and more viable.
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CATALYST INSIGHT:
– Like all designs, an economy is influenced by the spirit of the time in which it is designed.
– In order to design an economy that is embedded in social and natural systems, we must first understand the economy’s function within these systems.
– All human communities must do three things: provide for one another, protect one another, and assist each other in finding social meaning.
STRATEGIES IN ACTION:
Engage citizens, not financiers, in civic conversations about how they want to live together.
Organize systems of provision that are both just and sustainable, using current economic markets.
Design how human providers transform natural provisions to provide for ourselves, our families, and our communities.
Design in stewardship rather than ownership of money in order to best serve the function of provisioning life.
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About the Author:
Marvin Brown is an intellectual activist, engaged in conversations about redesigning the economy, restoring the commons, and creating civic communities. He brings his 30 years of experience in teaching, consulting, and writing in business ethics and organizational design to the efforts of fostering a civic economy that provides for all. In 2007, he received the College Service Award from the University of San Francisco for his excellence in teaching. He has served as an ethics consultant for such companies as Levi Strauss and Company and the California State Automobile Association. Marvin has authored numerous books, including Corporate Integrity (2005) and Civilizing the Economy (2010), both published by Cambridge University Press. His books and essays have been translated into Spanish, Portuguese, German, Polish, Italian, Chinese, and Korean. Marvin has a Ph.D. in theology and rhetoric, which continues to inform his commitment to issues of social justice, human diversity and a sustainable future.
Further References
> civilizingtheeconomy.com
> Civilizing the Economy by Marvin Brown, Cambridge University Press (2005)
> Corporate Integrity by Marvin Brown, Cambridge University Press (2005)