There’s a lot of talk about the new economy – including on this media site. But what does the term really mean? And what should this new economy we are creating look like? Sometimes it’s useful to poke our heads up and ponder the big questions. Megan Stanek reports on one such discussion from New Economy Week.
New Economy advocates tend to agree upon the kind of economic system they would like to see—one that is democratic, sustainable, inclusive and fair. Yet they often differ on how exactly to achieve such a system, or even what to call it. At the heart of the philosophical debate is a fundamental question: Can capitalism be reformed, or do we need a new economic system?
That was the topic of a recent online panel discussion hosted by the New Economy Coalition. Part of New Economy Week, an annual series of public events and conversations, the discussion brought together New Economy leaders including Gar Alperovitz from Next System Project, Sohnie Black from the Fund for Democratic Communities, John Fullerton of Capital Institute and Julie Matthaei, a professor at Wellesley College.
Moderated by Keith Harrington of YES! Magazine, the discussion highlighted the increasingly fraught nature and simmering semantic debate around what organizers called “the c-word.”
Capitalism: The good, the bad and the ugly
Free enterprise in itself is not a bad thing. Individual entrepreneurship spurs creativity and gives people freedom to choose their occupation, along with other positive benefits, as Fullerton reminded the audience. And free enterprise can also be directed toward socially beneficial goals, as Matthaei noted, although she said more innovation was needed in this area.
However, the panelists agreed that the current economic system—whether you call it capitalism or corporate capitalism—is not working for the vast majority of citizens.
“The new economy will build from the bottom up, city by city, neighborhood by neighborhood, co-op by co-op”
Capitalism tends to breed concentration of economic and political power, expansion over ecology, competition, and exploitation, panelists said, pointing to the huge and growing wealth gap today in the U.S., where 400 individuals have more wealth than the bottom 186 million. In addition, they said, the system embodies racial and gender inequalities.
“It’s built into the machinery,” said Alperovitz, the author of America Beyond Capitalism. “The question then becomes, how do you change the machinery?”
Can the current system be reformed?
Some well-known economists like Robert Reich believe that capitalism can be fixed. They suggest that we just need to focus on what we did right during the good times, and return to those kinds of policies.
Fullerton is among this camp, arguing that capitalism can be reformed and adapted rather than replaced with a wholly new economic system. He argued that there has actually been substantial progress toward regulation in the past five years, and that not all forms of capitalism are necessarily extremely competitive. For example, some of the largest economic entities, such as pension funds, already have a kind of social mandate in their charters, and it could have a big impact if they were redirected to prioritize that stewardship element.
The other three panelists seemed to disagree, asserting that there are certain problems inherent in capitalism that cannot be fixed through regulation or different policies. Alperovitz in particular stated that regulation is no longer as feasible as it once was, due to the decline in labor unions and the concentration of political power in large corporate entities. “At one point, you sort of could regulate because you had political power to regulate on some issues,” he said. But with the demise of the unions, he said, “that’s really over.”
Is socialism the answer?
The s-word has surfaced recently in presidential debates, as the self-professed democratic socialist candidate Bernie Sanders has lauded the socialist-leaning systems of Scandinavian countries. So how do those countries measure up to New Economy standards?
The consensus seemed to be that while countries like Sweden and Denmark have policies that embody strong liberalism, they are still capitalist and therefore run into the same problems as other capitalist systems. In fact, these countries are feeling competitive pressure from the global economy, panelists pointed out, and some of their progressive achievements are already being undone.
New public institutions, such as public banks, at local and regional levels could help balance private enterprises
A bigger problem may be that the term ‘socialism’ has even greater baggage than ‘capitalism.’ Many people are afraid of the term socialism and the idea that it might lead to an infringement on certain freedoms. Black, of the Fund for Democratic Communities, suggested that some of this is just fear of the unknown, and that whatever comes next should not be an extreme on either end of the spectrum.
While it’s good to bring democratic socialism into the conversation, Alperovitz noted, it is an economic experiment that has also failed. “State socialism doesn’t work and the New Economy is going to have to build a new system that deals with all these problems, beyond state socialism, beyond corporate capitalism.”
It’s about values
So when does an economic system stop being capitalism? Is it when you get rid of markets? Growth? Competition? Rather than quibble about definitions, the panelist preferred to focus on values.
The core values of capitalism—such as profit primacy, materialistic self-interest and the idea that more is always better—are what need to be challenged and replaced, they said.
Black challenged one additional value: the notion of meritocracy, which she called a myth. “People equate wealth with merit, so if you’re wealthy, you’re smarter, you’re more innovative,” she said. “As a matter of fact, a lot of the wealth that has been accumulated in this country has been stolen wealth. It has not been earned.”
Matthaei spoke about the “solidarity economy,” an alternative set of values that places a priority on wellbeing for everybody and basic human rights. This kind of economy would focus not on consumption but on connection, meaning and contribution.
Moving Forward: Empowering Communities
A common theme and agreement throughout the discussion was the imperative of beginning at the local or regional level. Real change, the experts agreed, must put control over resources back in the hands of communities.
“The new economy will build from the bottom up, city by city, neighborhood by neighborhood, co-op by co-op, to the state and ultimately regional level,” said Alperovitz.
Throughout the hour and a half conversation, there were many hopeful examples of local experiments that are working: Fully publicly owned utilities in Nebraska. A community owned cooperative in North Carolina where the profits go directly back into the community. A supermarket chain that decided to give 15% ownership to its workers.
Panelists also shared new ideas that have yet to manifest. Fullerton asked how we might use the structure of living systems as a model for the economy. He suggested giving small banks a broader scope of purpose and larger banks a narrow scope with more regulation. Alperovitz called for creating new public institutions, such as public banks, at local and regional levels to help balance private enterprises.
In the end, there is no single fail-safe method for moving toward a more fair and just New Economy. And maybe we’re not ready to stick a label on what this future system should look like. But by empowering communities to align their economies with common values and goals, something positive is bound to emerge.
Megan Stanek has a background in ecology and sustainability and grew up as the daughter of small business owners. She became interested in New Economy models while earning an M.A. from the University of California, Santa Barbara in Global and International Studies. She currently lives in Germany.