Humanity faces existential crises. But, argues Peter Ellis this could be the chance we need to challenge an economy that degrades our world, and build a ‘societal economy’, with fairer shares of wealth, opportunity and fulfilment for all.
Humanity faces existential challenges, battling the twin threats of Covid and climate change. But crises can be a catalyst for positive change, encouraging the pursuit of universal values, common interest, sustainability and sufficiency. We are a global fellowship of reformers seeking change, yet often face an economy that diminishes our society through unequal shares of wealth, opportunity and outcome.
But our economy is driven by legacy, not the needs of a modern society. While society has evolved, our economy has not. To build an inclusive, well-being economy, with prosperity shared fairly and power in the hands of everyone, we need a democratic economic system, one working for the collective good.
But what will it look like, and how did we end up where we are now?
Private sector capitalism, rooted in hierarchy, patriarchy, control and ownership, developed at a time of no universal franchise, no race or gender equality. Economic rights were held by a male, property-owning minority. Force, military power and colonisation were the tools of private acquisition overseas. Little wonder Marxism (and the socialism that derived from it) demanded ownership pass to the workers and the state.
Perhaps our notion of enterprise and economy would have changed with society but for the trauma of the Cold War. The late Dr Naomi Fisher wrote on behavioural genetics and psychology. She observed that our DNA makes us who we are, so attempts at change are always limited by our personal experience and genes, and she observed that our genes and environment act in myriad, interconnected, heritable ways. Our economy is no different, as we accept a framework based on beliefs rooted in the past. Meanwhile our daily transactions affect our consciousness and understanding of the economy in a behavioural and systemic loop.
Just like an individual who fails to healthily adapt to adulthood because of earlier trauma, it may be that our economy has failed to adapt because of the trauma of the Cold War, with its existential conflict between two protagonists: one capitalist, one socialist. Our views become polarised, and we find it hard to imagine a for-profit enterprise economy, other than as a private sector one, shareholder-owned.
We are on a spectrum constrained by our bodies, brain size and lifespan. Having similar abilities, aptitudes and outlooks helps us live together in a society. Fluctuations too far from the average can cause distress and danger (with climate existentially so) but also provoke ingenuity and change.
However, our economy elevates exceptionalism, rewarding people who possess skills and enjoy opportunities many of us do not. Our society progresses through individual ambition, and benefits accrue to exceptional individuals. But our economy can be designed to promote the best outcomes for the majority too.
This is the missing link, which joins societal need and purpose with how our economy functions, instigating change where evolution has failed by creating a societal, enterprise economy which co-exists and competes against the private sector.
A societised free-market, enterprise economy would be served by companies independent of shareholders or state; trust companies generating sufficient profit to sustain the business but not returning excess profit to shareholders, instead using it for defined societal purpose or to lower prices. Profit would not necessarily be maximised but determined uniquely for each enterprise. A societal food retailer might increase profits to fund non-profit purposes, helping charities eradicate child food poverty. Or it might reduce profits to offer consumers in deprived areas lower food prices.
A societal economy exhibits anti-inflationary characteristics when consumers are offered lower prices as part of a societal purpose and will therefore reduce the cost of living. It could provide cheaper food for those suffering food poverty, energy, pool insurance risk more effectively or supply the NHS, giving better value for money. This is particularly important where commercial activities are a cost to society.
The emerging market for cannabis is one example. Societised production would give the NHS a supply for medicinal use at low prices, and profits from other legal sales could be used to counter the social costs of drug addiction. In this economy, society can take all the profits from an enterprise, rather than just a tax-take. Such an economy could address our imperfect housing market and the shortage of affordable tenancies. Our existing housing stock is a societal asset which could provide social market tenancies. Government expenditure, particularly public investment, could be directed through societal enterprise rather than gifted to the private sector. Further, without the need to redistribute profit to shareholders, re-investment may be higher in a societal sector and increase long term rates of productivity and growth.
Values-driven consumerism would be attached to societally purposed enterprise and be funded by social equity. This would comprise personal savers who can earn stable but significantly higher rates of interest than currently, alongside free-market or government-sponsored loan capital. This would extend competitive choice.
This in turn creates a framework for systemic change, building a well-being economy through market societism. Consumer choice determines economic outcomes not profit maximisation. This is particularly important because equality, good mental health, the quality of our lived experience and societal life – indeed almost every aspect of our well-being – is affected by our economy and the society it creates and influences.
Societisation will benefit everyone, but particularly those marginalised from mainstream economic activity and those disadvantaged by social class, intergenerational, gender and race discrimination.
Capitalism does not deliver a well-being economy, its competitive flaws make it imperfect, yet the private sector enjoys a systemic monopoly. Meanwhile socialism is impotent because the modern market economy is antithetical to its beliefs. The universal, humane, common values at the bedrock of societism and its economic counterpart, market societism, are a path to a just and fair economy, promoting the well-being of society without sacrificing the significance of the individual.
See the full article on the RSA website here.
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