Just economics: It’s not about a piece of the cake, it’s about the whole bakery
11 Mar 2023
"Alternatives to competition economics". This is the topic Dr. Thomas Dürmeier1 discussed at the latest "Understand economics" event from Goliathwatch2. About social, ecological and democratic economics.
What is just economics?
Just economics needs two things:
- Human rights, like the right to education.3
- Doughnut economics4: The doughnut of planetary boundaries and social boundaries defines a safe and just space for humanity to thrive in.
In just economics, nobody is starving or homeless. Just economics is not about a piece of the cake, it's about the whole bakery5. It's not about income distribution, it's about the structure of the economics.
The system of competition economics is failing. Trickle-down economics does not exist: Tax breaks and benefits for corporations and the wealthy will not trickle down and eventually benefit everyone, they just add to the growing income inequality.6 Thomas Piketty warns about growing inequalities with his formula r>g. "Translated from economics-speak, it means returns on capital (r) will grow faster than the economy (g)".7
Inequality is a big problem: Wilkinson and Pickett showed that in their study "The Spirit Level: Why More Equal Societies Almost Always Do Better". They argue that there are "pernicious effects that inequality has on societies: eroding trust, increasing anxiety and illness, (and) encouraging excessive consumption".8
Economics that kill
In a New York Times interview Warren Buffett said: “There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning.”10 Not that he is planning to do anything against it.
Labourers are more and more working poor. They have no options for action, like investing in a university degree to achieve a higher salary. If they don't inherit anything, they are disadvantaged even more. It's not a fair competition. It's not humanely. "Such an economy kills" says Pope Francis.11
What to do about power concentration?
We have a power concentration: Political elites, multinational companies and the super rich are ruling the world. Is it just, is it democratic that they meet up at G20 summits and decide what's good for all of us?
Competition between locations limits possibilities for intervention and regulation. Something needs to happen against this competition between locations. Proposals have been made, for example the UN's "Declaration on the Establishment of a New International Economic Order"14 from 1974 and the International Labour Organization's article "A Fair Globalization: Creating Opportunities for All".15 But nothing ever happens.
Which alternatives to competition economics exist already?
There are some existing alternatives to competition economics:
- Economy for the Common Good: "ECG is an economic model, which makes the Common Good, a good life for everyone on a healthy planet, its primary goal and purpose. At the heart of this concept lies the idea that values-driven businesses are mindful of and committed to: Human Dignity, Solidarity and Social Justice, Environmental Sustainability, Transparency and Co-Determination"16
- Commons: Resources accessible to all members of a society. Examples are Wikipedia and the programming language R.
- Buen vivir: A decision to "build a new form of public coexistence, in diversity and in harmony with nature, to achieve the good way of living."17
- Solidarity economy (which is not actually a complete economic system): Economic activities that aim to prioritize social profitability instead of purely financial profits. One example is the Mondragon Corporation.18 This is a corporation and federation of worker cooperatives based in Spain. In 2009, the USW (United Steelworkers) announced its collaboration with Mondragon to develop unionized, worker-owned cooperative businesses (“union co-ops”) in the U.S. and Canada.19
Just economics is social, ecological and democratic. We are not living in just economics. Economic growth can only be a secondary condition - it's nice, if the cake grows, but it should only grow within these three boundaries.
The latest "Understand economics" event from Goliathwatch took place March 6, 2023.
The speaker: Dr. Thomas Dürmeier: https://twitter.com/tdurmeier