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Sustainable economies, sustainable economics and sustainable communities JOHN BARRY Email: j. [email protected] ac. uk
For Tweeters…. Me: @Cllr. John. Barry School of Politics: @HAPPat. QUB QPol : @QPol. At. Queens Also happy to email this presentation to anyone who would like a copy …. Your taxes at work!
Today’s talk based on this book And current book I’m working on What’s the story of economic growth? : our dominant social narrative as ideology, myth, meme and religious belief Any better title ideas please let me know! ; -)
And some quotes… ‘She uses statistics like a drunk uses a lamp-post…for support rather than illumination’ ‘Economists are asked to comment in the media not because what they say is true…but because they are asked’ ‘Economics is extremely useful as a form of employment for economists’, John Kenneth Galbraith ‘A national debt, if it is not excessive, will be to us a national blessing’ Alexander Hamilton “The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists. ” Joan Robinson Or …. knowledge is power…so arm yourself….
Economics…defintion/s Economy comes from the Ancient Greek οἰκονομία from οἶκος (oikos, ‘house’) and νόμος (nomos, ‘custom’ or ‘law’), hence ‘rules of the house hold for good management’. Ecology (from Greek: οἶκος, ‘house’, or ‘environment’; -λογία, ‘study of’) is the scientific analysis and study of interactions among organisms and their environment. We’ll come back to this connection later ….
The ‘Economic Problem’ Economics – how to organise human life between infinite wants and scarce means. Lionel Robbins, “Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses” An Essay on the Nature and Significance of Economic Science (London: Mac. Millan, 1932)
The centrality of scarcity to modern economics Scarcity requires all societies to answer the following questions: What is to be produced? How is to be produced? For whom will it be produced? Who is to produce and consume? How is what is produced to be distributed?
Solutions to the ‘economic problem’ as scarcity Note that the solution is ‘economic growth’ – not reduce wants, yet this is always an option – wants are not beyond changing … but more about economic growth later
Models, paradigms and values We can’t observe the economy from outside it So we invent a framework to interpret what we do see In other words, we create a model (or “paradigm”) that lets us explain at least some of what we have seen That lets us make predictions about the future Once they have a model, economists then describe how the model behaves—not how economic reality behaves because can’t observe it directly More of this later …. .
Assumptions in conventional economics – The model of ‘the economy’ All monetary exchanges – production of commodities and services, investments, currency exchanges, purchasing/selling of property, wages, rents etc.
What is the economy anyway? Forget the quarterly GDP statistics, the financial pages, and the daily updates we hear every day about stock markets and foreign exchange. That’s not the ‘economy’. The ‘economy’ is simply that four-letter word that we curse on Monday mornings: W–O–R–K The economy is the sum total of the work we must perform to produce the goods and services we need to survive and live. Without work (broadly defined as ‘productive human effort’), nothing happens in the economy.
Or this model…all productive work/activity
Or from current linear to a circular ecological economy ….
A sustainable economy –re-embedding economy within society and both within the environment
What is work/labour? Any productive human activity – from making music to making bombs. The only thing that adds value to the materials we harvest from nature. Comes in many forms, many social arrangements. Not just a means to an end, or a ‘necessary evil’ (‘Adams’ curse’ the Bible)… Work can also be a source of meaning, gratification, and social connection. But interestingly enough…. modern economics views it exclusively as ‘disutility’ something unpleasant we have to be paid to do
Work and Employment is just one form of work. Work performed for someone else, under their direction, in return for payment. A defining feature of capitalism: Employment (or “wage labour”) constitutes most of the work performed in the formal economy. Most people are wage labourers: They must find and keep employment in order to support themselves.
Sustainable Economic Practices/Principles Socialisation of consumption – ‘libraries, laundromats and light-rail’ Democratisation of work – autonomy and power within workplaces – alongside decent wages, conditions etc. Decentralisation of energy – as part of a ‘just transition’ from carbon to renewable energy Relocalisation of economic activity where possible Democratisation of state services via co-production, participatory budgeting, citizens audits From maximisation to sufficiency - enough ‘Enough and no waste is as good as a feast’
Democratisation of work: skills, autonomy and internal values of work “happiness does not appear to be related to the level of skill. The ILO report finds that a high level of skills security, measured by an index incorporating indicators of schooling and training, is actually inversely related to happiness. The report suggests that this is due to jobs being poorly attuned to the needs and aspirations of people, as they become more educated and acquire more competencies. Job quality and mobility need to adjust upwards. At present, too many people are finding that their skills and qualifications do not correspond to the jobs that they have to perform, resulting in what the report calls a “status frustration” effect”, International Labor Organization (2004), Economic Security for a better World. Challenges the orthodox economic view of work as ‘disutility’ and only done for instrument benefit of wages
Sustainable Economic Policies Basic income Worker cooperatives Social enterprises and valuing non-monetary economic activity Shift taxes from good things (jobs) to bad things (carbon/fossil fuel) Shorten the working week Solidarity finance – crowd-funding, democratising money creation, alternative local currencies Peer-to-peer production/creative commons More free/low cost public events, festivals
Sustainable Economic Procedures Shift from ‘economic growth’ and GDP measures to qualitative development, sustainable prosperity – meaningful free time not consumption ‘Jobless growth’ versus work-rich sustainable development ? Measure what matters – shift from GDP to qualitative indicators – health, human development index, sustainable development goals etc. , – a ‘dashboard of indicators’ to replace the power of a single number (GDP)
From economic growth to economic security “People in countries that provide their citizens with a high level of economic security have a higher level of happiness on average, measured by surveys on level of life-satisfaction and inequality in happiness within countries. The most important determinant of national happiness is not income level – there is a positive association but rising income seems to have little effect as wealthy countries grow wealthier. The most important factor is the extent of income security, measured in terms of income protection and a low degree of income inequality”. International Labor Organization (2004), Economic Security for a Better World A new set of objectives for progressives – especially trades unions and the labour movement Basis of alliance with green movement/environmentalism
“Basic economic security should be a human right, and this should be defined in terms of advancing real freedom”, ILO, (2004) Economic Security for a better World. http: //www. ilo. org/global/publications/books/WCMS_069 016/lang--en/index. htm Sustainable economics and economies – real freedom for all, not more stuff for all via carbon-fuelled consumer capitalism and economic growth which is unsustainable, unequal and undermines freedom and flourishing…. .
Meeting the needs of all versus unnecessary wants Consumerism Asset-backed economics – land, resources, people Democratisation all the way down Based on what the community decide – no ‘one size fits’ all sustainable economy
Co-production: what is it? “Co-production means delivering public services in an equal and reciprocal relationship between professionals, people using services, their families and their neighbours. Where activities are co-produced in this way, both services and neighbourhoods become far more effective agents of change. ” new economics foundation “The involvement of citizens in the delivery of public services to achieve outcomes, which depend at least partly on their own behaviour and the assets and resources they bring” (Boviard, 2012)
Asset backed community development and empowerment Every person and every community is of value and has something to contribute. The task for statutory agencies is to work with people and communities to identify and build on the assets they have, helping them to set their goals and aspirations and assisting them to achieve them. Genuine democratised partnership working
Economics is a political subject. It’s the interactions and relationships between people that make the economy go around. Debates over economic issues are not technical debates where expertise alone settles the day. They are deeply political debates.
Expertise, economics and economists A society in which ordinary people know more about economics, and recognize the often conflicting interests at stake in the economy, is a society in which more people will feel confident deciding for themselves what’s best – instead of trusting the ‘experts’. It will be a more democratic society. Experts should always be ‘on tap, not on top’ There will always be hard choices to make, always need for some expert input, but this should be open and transparent Hence the need for basic economic literacy and more than that…serious public debate about economics
The power of language ‘Entrepreneur’ /’wealth creator’ – viewed positively, promoted in schools, universities, popular culture ‘Tax’/’government’ – regulation, drag on the economy, at best a ‘necessary evil’ Do we want ‘work’ (which may be unpaid) or ‘employment’? What is the balance between work, employment and leisure? Why is work viewed in economics as ‘disutility’? Why don’t we think about solving the unemployment problem by having more people working less, than less people working more?
Group exercise What should be the balance between ‘work’ and ‘leisure’? What does ‘rebalancing the economy’ mean in Northern Ireland ? Have you heard or can you come up with arguments against lowering corporation tax rates in Northern Ireland? What are the arguments we can advance for ‘the joy of tax’?
Power of conventional economics First, it tells you what you want to believe – we all like the comfort of the familiar and conventional Second it over-simplifies a complex reality - ‘frames’ it in a simple, understandable way Example – the ‘framing’ of the economic crisis and austerity story in the UK
‘We’ve been framed’: the austerity story in the UK…and Ireland…and Greece…and Portugal….
new economics foundation analysis of the austerity framing 1. Dangerous debt – the most important economic issue the UK faces is the size of public sector debt, caused by excessive public spending. 2. Britain is broke – the UK’s public finances are like an individual household, which has spent all its money. 3. Austerity is a necessary evil – there is no economic alternative to spending cuts. 4. Big bad government – the bloated, inefficient and controlling government is getting in the way of progress, interfering in people’s lives and rewarding the undeserving. 5. Welfare is a drug – like drug addiction, state support is tempting, but ultimately dangerous; benefit claimants are weak, reckless, undeserving and addicted to hand-outs. 6. ‘Strivers and skivers’ – there are two kinds of people in Britain: hardworking strivers and lazy skivers, we each choose which to be. 7. Labour’s mess – all the faults of our economy can be pinned on the previous (Labour) Government and their out of control spending
Problems with modern economics Externalising costs – lowering prices/costs by shifting (‘externalising) them to other people in other parts of the world, the nonhuman world, or the future That is, the prices we pay for goods often do not include the ‘full cost’ we pay Example – subsidising of fossil fuel energy
“Energy subsidies are projected at US$5. 3 trillion in 2015, or 6. 5 percent of global GDP, according to a recent IMF study. Most of this arises from countries setting energy taxes below levels that fully reflect the environmental damage associated with energy consumption” IMF, 2015 Mainly due to the environmental, climate change , health impacts of fossil fuel use not included in the final price, and also because of direct and indirect state subsidies to carbon energy
Never mind the ‘hidden subsidies’ from wars, occupations and military spending
Myths, magic tricks and modern economics Myth# 1: Orthodox, undifferentiated economic growth as a permanent feature of the human economy Magic Trick #1: The 2008 crisis of banking in the private sector becomes politically transformed into a crisis of public debt under the new ‘regime of austerity’ and welfare cuts. Magic Trick #2: ‘Securitising debt’ and thereby transforming ‘debt’ into an ‘asset’ on a massive scale is surely the modern equivalent of turning dross into gold.
Economics as /and politics There is no such thing as a non-political economics ALL forms of economics as political ALL forms of economics are ethical, value based Which means talk of ‘entrepreneur’ ‘rebalancing the economy’ is all political…. and ideological (based on a set of value positions and a view of how the economy and society ought to be…not an objective account of how the economy is) That is, all economic policies (and forms of economics) are NOT objective, value-free and certainly not politically neutral All forms of economics/economic thinking are forms of ‘political economy’
Political economy – the historical roots of modern ‘economics’
The depoliticisation of economics and its emergence as a ‘science’ Modern economics (neoclassical economics) – the political economy of capitalism But never named as such…. too ‘political’!. . . too ‘ideological’! Thus capitalism ‘hides in plain sight’ as it were – its simply viewed and understood as ‘the economy’ Which of course gives it great power – naturalises this one form of economic order as ‘natural’ and indeed the only one possible (this is separate from normative debates about it being ‘good’ or ‘bad’)
Public silence about economics. . . One of the main achievements of the dominance of neo -classical/capitalist economics is public silence (and hence compliance, lack of debate) about economics Economics is reduced to a ‘technical’ exercise in which only ‘economic experts’ can participate Best seen in the movement of departments of economics into ‘management schools’ in our universities.
Economic growth “The predominant frame is simply that growth is good. Most news stories take this for granted and reinforce it with the language they use. Growth attracts positive words like strong, buoyant and good; in its absence look for weak, stagnant and bad. When a frame becomes universally accepted and constantly reinforced, it can be hard to see it. Growth framing is now so inbuilt that, for many people, questioning it has become unthinkable and doing so seems misguided, unrealistic or even deranged”. Matthews and Matthews, 2015; emphasis added But surely we need to know a) growth of what? and b) is more growth always ‘good’ or ‘better’?
Economic Growth: What Are We Measuring? �GDP: Total expenditure on all goods and services produced within a country �Adds to GDP: �Also adds to GDP: �Not included in GDP:
The Northern Ireland conundrum “People in Northern Ireland gave higher average ratings for personal well-being for all measures except anxiety compared to the other 3 UK countries (based on figures before rounding). This has been the case in every year since data were first collected” Office for National Statistics (2015) Measuring National Well-being: Personal Wellbeing in the UK, 2014 to 2015
And yet…. Figuring out and supporting how to increase wellbeing is not at the heart of government thinking and policy Rather it is ‘economic growth’, ‘foreign direct investment’, ‘competitiveness’ ‘boosting the knowledge economy’ etc. Government in NI is focused on lowering corporation tax rates, ‘rebalancing the economy’
Why not orientate economic and public policy towards increasing wellbeing not (at best) the proxy of economic growth? Or why is not ‘full employment’ rather than ‘economic growth’ not the aim Which is better ‘jobless growth’ (finance based) or ‘work full postgrowth/no growth’? Very heterodox position but one that has merit and evidence to back it up…and at least merits discussion and debate A very different political economic order – but unlike the economic status quo, this is one that is explicitly and publicly debated,
“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist”, Kenneth Boulding
Economy and Ecology Management of the household and laws of the household back together? Human economy is a sub-system of the ecosystem So…if the larger system is not growing …how can the sub-system continually grow?
The earth in 1970
The earth in 2016…. Notice the difference?
The biophysical and ecological impossibility of infinite economic growth Standard assumption for growth of the economy - 3% GDP growth per year. This means the economy will double every 25 years
Economic growth is a substitute for equality Economic growth under capitalism reproduces and requires inequality “Economic growth, for so long the great engine of progress, has, in the rich countries, largely finished its work. Not only have measures of wellbeing and happiness ceased to rise with economic growth but, as affluent societies have grown richer, there have been longterm rises in rates of anxiety, depression and numerous other social problems. The populations of rich countries have got to the end of a long historical journey”. (Wilkinson and Pickett, 2009: 5 -6)
Conclusions: The return to political economy ‘Fixing’ economics must begin from accepting the ideological/value and political character of ALL forms of ‘economics’ Values matter and need to made explicit not smuggled in as axioms which become ‘facts’ ‘the truth’ as is the case with neo-classical economics There is no ‘value-free’, objective, neutral account of economics. . Pluralism and debate about what sort of economy and economics we/the demos/people want for the type/s of societies we wish to live in. We live in societies with economies, not economies with societies
Conclusions Don’t believe all you hear…. Always be sceptical of ‘experts’, especially economists Economics is always political economy, i. e. ethical, value based We need diversity and pluralism in how we think about the economy There is no one ‘right’ way of organising the economy and how we organise it can be changed “Follow those who seek the truth Doubt those who say they have found it”
5 simple propositions for 21 st century economics More on realism, less on mathematical rigour; 2. More on equity, less on efficiency and productivity; 3. More on humility less on hubris; 4. Reintegrating the ‘economy’ within ‘ecology’; 1. 5. And move beyond a simplistic and now dangerously myopic focus on ‘endless economic growth as a permanent objective of the economy’
“The most alarming sign of the state of our society now is that our leaders have the courage to sacrifice the lives of young people in war, but have not the courage to tell us that we must be less greedy and less wasteful. ” Wendell Berry, 1993