Sustainable Economics PDF Print E-mail
Economics
Written by Ravi Logan   

The economic downturn has made everybody sit up and contemplate on the alternatives to Capitalism or make it more people-oriented and not just individual and profit-centric. The need of the hour is economic democracy which promotes human welfare and development of the planet as a whole.

Can a socially and environmentally responsible capitalism provide solutions that deliver us from the profound problems that beset humanity? Paul Hawken, author of Natural Capitalism, claims that, “Business is the only mechanism on the planet today, powerful enough to produce the changes necessary to reverse global environmental and social degradation.” Whatever good socially responsible businesses may have to offer — and there is much — they will not be our deliverer.

The capitalist economy functions within a range of possibilities that is defined by its fundamental principles. The basic assumptions that define the capitalist paradigm, which give coherence to its economic system, limit the scope for modifying that system. The more incompatible any proposed reforms are to the fundamental principles of capitalism, the more difficult they become to actualise.

The constraints inherent in the fundamental nature of capitalism eventually limit its capacity to resolve the difficult problems facing humanity. What is this fundamental nature? P. R. Sarkar observed that capitalism is based on “an individual-oriented, profit-motivated psychology,” and that the natural outgrowth of this psychology is for “wealth to accumulate for the benefit of a few, rather than for the welfare of all”.

This inherent contradiction of capitalism— between the wealth accumulated by the few and the welfare of the many — contributes to most of the imbalances afflicting societies, individuals, and biosphere.

Humanity has come to a juncture in which it must either adopt a model of development that works for the planet as a whole, or else continue down the path of chaos and collapse. If our path is to be one of renewal, then sustainability, equity, universal prosperity, and holistic fulfillment of human needs must flow out of a new model of development — rather than be the forced result of a complex mix of green taxes, green consumerism, responsible investing, and external cost accountability. These will prove to be valiant but futile efforts to constrain the greed inherent in a profit-driven economy.

Features of an Alternative Economic Paradigm

Business philosopher (and former priest), Michael Novak, in his effort to articulate a “theology of capitalism”, takes a view of capitalism much like the view that Winston Churchill took towards democracy: that it is a terrible form of economy except in comparison to the alternatives. Novak’s assumption that humanity is stuck with capitalism as the best alternative available is prevalent throughout the reform movements struggling to deal with the social and environmental impacts of the capitalist economy.

But, there are others who have not been so willing to accept the inevitability of capitalism. E.F. Schumacher, for example, aspired for “an economy where people mattered” and championed for a decentralised economy. The Progressive Utilisation Theory (PROUT) also envisions a new economic system. If humanity must go beyond the capitalist paradigm to survive and prosper, what would an economic model look like that optimally meets human needs? Here are some core features of a new economic paradigm.

Cosmic inheritance

Capitalism’s principle of individual ownership rests on a materialist concept of wealth. This must be replaced with a spiritual concept. As Sarkar explains this conception, “This universe is created in the imagination of the Supreme Entity, so the ownership of this universe does not belong to any particular individual; everything is the patrimony of us all. Every living being can utilise their rightful share of this property. This whole animate world is a large joint family in which nature has not assigned any property to any particular individual.” In this concept of wealth, individual ownership of wealth cannot be accepted as absolute. Everyone has the right to use the wealth created by the Cosmos, but none can claim ultimate ownership. This view of the ownership is consistent with the values of most indigenous people and wisdom traditions.

Economic decentralisation

Economic decentralisation must be a central objective of a new, humanistic economy. Hawken's natural capitalism speaks of the need to “replace nationally and internationally produced items with products created locally and regionally.” But, it does not seem to appreciate how problematic this is within a capitalist economy, which has the natural tendency to expand markets and concentrate capital. A capitalist economy will irrevocably move towards globalisation. A human- and earth-centered economy, by contrast, will tend towards localisation.

Worker-managed economy

The three most effective production incentives are profit-sharing, equity, and participation in decision-making. The form of enterprise in which all three of these production incentive approaches are maximised is the worker-owned and managed co-operative. Co-operatives are best suited to elicit the productive potentiality of workers, and should be the predominant form of enterprise. Co-operatives also minimise worker alienation, promote equitable distribution of wealth, and foster decentralisation.

Consumption-motivated economy

Capitalism is a profit-motivated economy. Making profit cannot be ignored, as occurred in Soviet style state-run enterprises, but neither should it serve as the central rationale of economic activity. The central purpose of economic activity should be to meet the needs of people. Such an economy would increase the availability of consumer goods, and at prices that are affordable. It would also work to increase people’s purchasing capacity and see that none are without the earning power needed to acquire their basic necessities.

Economic democracy

Concentration of economic power and wealth perverts the political process. Moneyed interests finance campaigns, influence legislation, and corrupt regulatory agencies. And, the moguls of capital, maintain the ultimate veto power of capital flight, so that if government enacts policies, which threaten their financial interests, they can move their capital out of the local or national economy, leaving behind economic ruin. For democratic governance to be of the people, by the people, and for the people, economic power must be dispersed. Said another way, democracy must be extended beyond the political sphere to include popular participation in the control of capital and the control of economic decisions.

Self-determined regional economies

People can best co-ordinate social and economic development when they share certain unifying factors, such as a common culture, shared economic potentials and problems, similar geography, and a common sentiment about their heritage. Such factors organically define regional socio-economic units. Social and economic development undertaken within such regional units can be easily adjusted with local conditions, and so development can be better geared to satisfy human needs. For locally sensitive development to take place, regional economies need to have control of their resources and capital and to be free from domination by outside economic forces.

Balance

Balance is essential to all living systems, and balance needs to be restored to human society. Nowhere is this more true than in economics. As detailed in the report of the World Commission on Environment and Development, Our Common Future, most of the destruction of the ecosystem is driven by imbalanced economic forces. An ideal economy should exhibit the stability of process that is found in natural systems, not the disruptive growth processes found in cancer cells.

Neo-humanistic values

The philosophy of humanism uses human welfare as the measure of social good. But, our world is home not only to humans, but to all of Earth's life forms. PROUT’s neo-humanist value system recognises the existential rights of all living beings. Economic activity would not be allowed to violate the right to existence and expression of other species. It is not sufficient to want “an economics for which people matter”, as E. F. Schumacher called for. What is required is an economics as if living beings matter. The neo-humanistic outlook recognises that humanity exists within the larger web of life, so that any harm we do to the web will ultimately affect us as well.

Spirituality-based concept of progress

Generally absent from the discussion about how best to conceive and pursue sustainable development is consideration of the purpose of development. If the purpose of development is only to increase material amenities, then sustainable development will result in little more than maintaining our materialistic lifestyle without destroying the environment. But it will not help us attain inner fulfillment. For this, we must re-orient our idea of progress from a narrow focus upon material increase to the inclusion of movement towards self-realisation. As people cannot pursue spiritual growth without a supportive material environment, a spirituality-based conception of progress should include recognition of the need for material development. The purpose of development then helps in our search for inner meaning, and not just to fill our lives with things that give no meaning to our existence.

A More Powerful Vision

Movements to reform capitalism are well-intended responses to the critical need to deal with the detrimental effects of capitalist investment, production, and consumption. Green consumerism, socially responsible investing, and ethical businesses deserve popular support. Progressive-minded people should embrace new ways of consuming, investing, producing — of building up new behaviors and new institutions, and of bringing change from within the old economy.

But, if we stop here the problems that beset humanity will only worsen. More fundamental solutions must be entertained and implemented. No matter how much scope there may be within the capitalist, free market economy to humanise production, protect the environment, support social justice, and vitalise local communities, this system is simply unsuited for fulfilling human needs on a universal basis. We should embrace the progressive reforms of the green capitalists, but we should not embrace the limiting and defective premises of capitalism, for humanity is in need of a more powerful vision — one which can embrace the fullness of our spirit and the greatness of our human potentiality.