Tuesday, May 27, 2008

Local Economies

David Korten, board member of The Business Alliance for Local Living Economies, and Yes! Magazine, author of “When Corporations Rule the World”, and “The Great Turning” addressed our economics class at BGI a few weeks ago. Given that I am attending a business school that is dedicated to “changing business for good”, I figured I already know what he was going to talk about. I was both right and wrong. The following is my (truncated) interpretation of his visit (somewhat cheesy image from www.2b1charity.org).

He started by defining and critiquing capitalism as it stands today, a system that favors the possessors of financial capital and, in its current state of execution, threatens us with environmental, social, and even financial decay. It is a system based upon economic thought that places the interest of the Firm ahead of that of the Household. Imagine he seemed to say, what our society would look like if a 180 degree shift in this thinking had taken place one hundred years ago. As it stands, we are taught, and macroeconomic policy is geared toward, the maintenance of low costs (wages affecting households) and high profits (for businesses).
The five tenets of neoclassical economics he identified were:

  1. Economic growth is a measure of progress
  2. Free (unregulated) markets are the ideal arbiter of all choices
  3. Private property rights are absolute
  4. Individual greed maximizes the well-being of society
  5. Governments’ roles are to secure property rights ands enforce contracts
Based upon these tenets, capitalism drives us to monopolistic outcomes, the people that possess the capital, have the ability to create or amass more capital, and the cycle continues. These folks generally have access to the people in policy making circles and work to create systems that support the cycle of wealth accrual. The government is not here to redistribute wealth or provide a social safety net for citizens. This would be socialist; that’s not what we are all about, correct? Does the choice really have to be one or the other?

I am not going to dwell on the problems (too much power in too few places, increasing inequality, environmental degradation, etc.), but relay some of the new ways of thinking about “the economy” he encourages us to take on.

What kind of an economy are we trying to build? Would most people say that the one we have, with climate change, poverty, and basic access to food a severe challenge for the few billion people we share the planet with is the best? What I heard him say was that we are entering a new way of thinking about our economy, a new movement (so to speak) toward a more equitable definition of what we are all striving for. As he reminded us, both Adam Smith and Karl Marx believed that a worker should own their own means or production; that sounds pretty darn close to employee ownership or at the very least, small and locally owned businesses. Where does capitalism mesh with this? The Darwinian model of competition may not be the ultimate level of our thinking when it comes to societies. Nature is a beautiful example of cooperation at an astoundingly complex level. Certainly, there is competition for scarce resources and species coexist in a complex web of feeding and being eaten…all to maintain the overall system that supports everything. What would an economy of small, locally focused businesses dedicated to creating strong communities full of healthy people look like? Would we still have the ability to stay connected virtually, to have the access to far off lands that we want (forget for a moment the energy use ties up in server farms)? Would we even want that?

The last little nugget I took from the 1.5 hours we spent with Dr. Korten was redefining what GDP is. If we are to use it to measure of the well-being of our society, then we are bound to redefine it. Perhaps, as he recommended, we are trying to create happiness, with the least possible costs. Therefore, we are bound to find the measures of happiness (the UN Human Development Index, the Genuine Progress Indicator?) and count up how much money we spent to achieve that level of happiness. Therefore, we’d want to reduce its value.

Of course, we’d have to agree on how to measure Happiness. Does Bhutan have it figured out, Bhutan's Gross National Happiness?

To be clear, I did not interpret his tone to be “doom and gloom”, but one of academic curiosity and a desire to share the knowledge he has accrued over the years and challenge us to think about what it is we are working to create as we march ahead.

I found myself wandering back about five years to my initial involvement with the Responsible Business Association of Greater Boston (a part of BALLE) and connections became apparent that I had missed over the past few years of “big picture” thinking. I believed I needed to understand and try to influence corporations on a global scale, to say to them, “sustainability matters to you because….” This is important, and I am newly re-energized about the power of local impact, and plan to reconnect with the people at the SBN and see how I can help.

Here’s to continual learning.

1 comment:

Unknown said...

Good stuff, Wayne. I enjoyed reading your piece on Korten because I wasn't overly present during that class. The sun kept calling me outside!

I too have been rethinking local economies a la BALLE. It strikes me that orgs like BALLE are the ones tasked with promoting sustainability on the vital smaller scale of local business...whereas my dear friend Net Impact may be more focused on the big guys with multinational holdings.

There is a place for both. I'll keep doing what I can to advocate for Net Impact at BGI.