Tuesday, December 13, 2011

Economic Alternatives

For many people, a major mental barrier to accepting economic change is the lack of a conceptual alternative. It’s not just enough for Leftists to criticize the current system: people can move past their accustomed patterns of thinking only when you offer them a new model to replace the old. The Left, however, has become really bad at getting new ideas heard, because its centrists constantly resist casting a vision in moral terms. And we need the world to start thinking now about change if we are going to be nimble enough in the coming decades to successfully face our many self-created crises.
I have been thinking about economic alternatives for a long time, so it is very easy for me now to imagine all kinds of different economic arrangements. Our current system calls itself a free market democracy, but it is really a consumerist corporate oligopoly, although it wasn't always so. There are many alternatives to consider that would be beneficial for people and the environment, and I will discuss some of them in future posts, but for now I’ll just list a few. These are just a start, and there are many more: 
  • Worker’s Cooperatives, such as Mondragon, in which workers own their enterprises and run them democratically
  • Parecon, or participatory economic councils where interested stakeholders like town and cities help organize economic activity
  • Strict anti-trust laws and enforcement to keep businesses small and subject to the discipline of both competition and rational government regulation
  • Intentional communities, such as cohousing and even self-sustainable ecovillages 
  • Permaculture and local agriculture
  • Dispersed renewable energy – not massive power plant or even giant wind farms, but smaller, networked generation
  • Local currencies
  • Public enterprises – nationalization or utilities – where appropriate, such as in the finance, energy, defense, and infrastructure sectors, and to some degree communications and transportation. 
  • A rational industrial policy, to promote diversification of the economy away from finance
  • Much greater public investment in research, infrastructure, and environmental renewal, through public research institutes and a revitalized Works Progress Administration and Civilian Conservation Corps. 
  • Remove basic goods, such as milk and bread, from market pricing altogether, an idea of Howard Zinn’s, who argued that we can surely do so with the incredibly productive economic engine we have
  • Free public education at all levels, even up through college. 
  • And the full scale of social insurance in health, retirement, unemployment, injury and disability, and parenting.  

State communism, the last major real-world challenger that attempted an alternative system to capitalism, died when the Berlin Wall fell. This also has discredited all attempts to explore alternative economic systems, for good or ill. Since communism offered the only alternative system to capitalism philosophically as well, the fall of the Soviet Union also left a vacuum of vision in economic philosophy.  Already by the 1950s and 1960s much of the Left, for example the Frankfurt school of critical Marxists, turned solely to social critique of capitalism and the culture it manufactured and declined to offer positive alternatives. Then, after 1989, many if not most on the American Left and center-Left accepted the market as the basis for the economy, if modestly restrained by an active government to blunt its edge, provide a safety net, and prevent pollution. Many accepted consumerism and growth as the purposes of economic activity, but just wanted to make sure they were widely spread. 
The Cold War thus imposed a simplistic economic dichotomy, presented as an existential death match between state and market, and the residuum of that dichotomy remains with us as a conceptual frame through which nearly all economic thinking is filtered. In the aftermath of the Cold War many people still instinctively fall into the conceptual trap of the either/or capitalism/communism binary. Much of that dichotomy was false in the first place: all economies are actually mixed economies, some combination of state and private activity: the pure market of naïve libertarian dreams is as much a fantasy as the pure planning of communist dreams. America has always had strong state “intervention” in the economy, and a large part of the Soviet economy consisted of black markets. 
As I’ve argued, we don’t have to be stuck in that dichotomy. The trick, given where we are starting, is partially about finding the right balance of state and market, and the US needs to learn many lessons from the more egalitarian Western European countries. But we also need to overhaul the cluster of economic institutions at lower levels to make them just, egalitarian, and sustainable. The solutions to our problems are not about the overarching system: an economy consists of real, concrete practices, institutions, and cultural habits, and these vary in different times and places. Change them and you can make great improvements: 
  • Property rights, which are always somewhat different for different kinds of goods, i.e. owning a car is subject to different rules than owning a cup or a crayon, and owning a factory to other different rules
  • Labor systems, whether slavery, serfdom, wage-labor, or cooperative firm
  • The basic economic unit: the feudal manor, slave plantation, yeoman farm, small business, large corporation, or cooperative firm
  • Production centers – factories, farms, offices
  • Warehouses and other wholesale facilities
  • Retail stores of various sizes
  • Zoning ordinances
  • Banking and finance – there are many ways of doing this that differ from our rapacious sociopathic Wall Street institutions, from small community or association banks to national banks to sovereign wealth funds
  • Currency – local or national? Is it a tender of price or of time? 
  • Physical infrastructure – roads, canals, seaports, airports, communication lines
  • Energy system - Renewable or petroleum-based? Centralized or decentralized?
  • Communication and information delivery systems – whether carrier pigeon, newspaper, telegraph, telephone, broadcasting, or the internet
  • The so-called “informal” economy of unpaid domestic labor (which has often had sexist undertones in economic theory)
  • This list is not exhaustive; there are many other smaller, sub-system components to an economy. Thinking about these smaller, concrete parts differently lets one imagine changes that go beyond the capitalism/communism binary. 

I’m all for anything that allows non-commercial economics, and thus non-commercial values, to flourish. So how do we start from here and create an environmentally sustainable economy that supports human flourishing? Throw the kitchen sink at it. Go full bore with any reform, large or small, that will end corporate oligarchy, democratize the economy, and solve the problem of inequality. Once we have done that, at the end we will look back and say that we have created a new economy, and may even be ready to take further steps in the future. The sum of the changes would end up being greater than each part. 


  1. Jeff,

    What you have written about the dichotomy of capitalism vs. communism makes sense. I think lots of people still are controlled by that and thus don't know how to think outside of the box without calling a non-capitalist ideal "socialism" or "communism".

    Do you see, in the next five or ten years, any of these economic alternatives becoming more publicized? I would think many Americans, even those right of centre, would be more open to changing their perspectives of capitalism, and seeking to find the right balance of state and market in an economy. If there is a time to get people thinking different, it is now.

  2. A major problem, Carl, is that the people who run capitalism also run capitalism's media, so it's very hard for alternatives to get a fair hearing - or any hearing at all. But I think more and more people are sick and tired of the way that things are, and they're scared of what the future holds, so new ideas can't be bottled up forever. Times are bad, and they're likely to stay that way, so I think we're going to see more people seeking out different ways of doing things because the current ways just aren't working.

    I have a great deal of hope and confidence in the long term, because social change is often generational, and, speaking from an American context, the baby boomer's kids are not saddled with this Cold War dichotomy as badly as their elders. I've taught college courses in political theory, and young people often show a really different attitude. When older generations hear the word "socialism" they think dictatorship; when younger generations hear it they think Sweden. Really: in most of my classes, when student defined that term they had a strong tendency to think of the social democracies of Europe, and they had a greater understanding that quality of life for regular people is actually better in Europe that in the US. And it's mainly the US that is blocking progress on all these issues. Given that a generational change in economic outlook is coming to the US, and that there are demographic changes afoot too, I'm very confident that after 2020 or so there will be a big shift leftward in the political outlook here. Hopefully that will be beneficial to only to us but to the rest of the globe as well.

  3. You want milk and bread taken out of market pricing. Why? How would that help anyone? Because can do something doesn't mean you should.

  4. The reason to use our immense productivity, Jeffrey H, to take basic staples out of market pricing is to make them freely available to those in poverty. If you can't see how that would help, imagine yourself in the shoes of a homeless person, or a single working parent with two or three kids, or a poor family trying to scrimp and save to put their kids through college. Having the basics available free of charge at the point of distribution would be a tremendous boon for such people, freeing up the money that they would have otherwise spent on those basics for other purposes like rent, medicine, school books, etc.

  5. To help those in poverty, instead of providing unlimited free milk and bread to everyone from the poorest to Bill Gates, I think it would make more sense to give them cash to spend as they please. Would seem more fair to those with lactose intolerance or gluten allergy. If you provide unlimited free milk and bread, people will greater quantities of these. Governments will have to put more and more labor resources into milk and bread production at the expense of production of other things; fruits and vegetables, housing, iphones. Maybe we'd better with fewer iphones. Would government bread include whole wheat and rye and white and pumpernickle options?

  6. I think you're missing some of the bigger picture: milk and bread aren't the issue per se, they are just examples. The idea, more generally, is to make the basic necessities of life available as "in kind" goods and free to all, not as commodities mediated by money. Ultimately making "milk and bread" (and a basket of other basic food staples, which would surely include some meats and fruits and vegetables) free would be part of it, but so would making basic clothing items and basic housing free, too. The specifics about what would or wouldn't be included would have to be worked out, of course, but that's an administrative issue that would have to be deliberated about; it's something that homeless shelters do all the time. The point is to both reduce poverty and show respect for life by de-commodifying basic food, clothing, and shelter, the necessities for survival. Combined with other reforms, this would help move our economy out of meeting the whims of the corporate oligarchy to and meeting human needs directly.

  7. There is no free lunch. The cost of providing milk and bread will have to be paid by someone. Someone will have to pay the dairy and wheat farmers and processors and distributors. If milk and bread consumers don't have to pay for what they consume, then it would have to be paid for by taxpayers. I believe you would improve people's welfare more if, rather than providing a very limited list of "basic necessities", you would improve people's welfare more by giving them the cash and allowing them more flexibility to spend it as they wish.