After months of planning, we had a showing of the Swedish documentary Outgrow the System, followed by a panel discussion of local people and organizations doing the work of creating agricultural and worker coops, building housing, and providing finance in a way that benefits people and the planet, not focused on profit.
I’ve learned a lot from the film.
It starts with the premise that should be obvious — this economic system is utterly mismanaging our planetary home, destroying the life support systems on the only living planet in the universe. We need to transform our economy so we can all belong and thrive.
Perhaps you’ve heard the phrase, ‘change the system, not the climate.’ The effects of climate change and biodiversity loss are becoming more severe. Mainstream economics thinks of the environment as an ‘externality.’ The fact that economists can talk about the destruction of the earth as an externality is proof enough that this framework does not work for our time.
According to the film, many would have us believe that there are just two choices — communist vs. capitalist. But this is a false choice.
As degrowth economist Timothee Parrique says, “There is no ‘one theory to rule them all.’” We need to foster interdisciplinary thinking.
Doughnut Economics
Kate Raworth, author of Doughnut Economics, had an epiphany when she saw climate scientist Johan Rockstrom’s chart showing planetary boundaries. It gave her the visual to develop the idea that not only do we not want to go beyond outer boundaries of resource consumption, we also want to stay within inner boundaries where needs are being met. Hence, the doughnut.
As an activist, I have repeatedly seen the economic argument trump whatever we are trying to protect. If we say we want to protect forests, we’re told to think about the economy. End polluting mega-cruises? The economy!
“We are repeatedly finding ourselves subordinating the social, the cultural, the political, and especially the ecological to the economic,” says Raworth. Protecting ‘the economy’ is so often a reason to block change.
The Myth of Green Growth
One way of keeping to ‘business as usual’ is the concept of green growth. Some economists say we can disconnect growth from emissions. They call it decoupling. Like trickledown economics, this is the myth that keeps on being repeated. According to Timothee Parrique, “all scientific evidence has shown it does not exist.”
Green growth tries to skirt the mammoth problem of our dependence on continual growth. We can’t maintain growth any more. We can’t maintain this system any more. On one level, people seem to understand this but on another we revert to business as usual and say we can’t change the system right now. We’ll do it later.
Degrowth
The concept of degrowth criticizes the current system’s need for constant growth. It emphasizes our need to prioritize social and ecological well-being over corporate profits, overproduction, and excess consumption.
A degrowth economy would free up time and allow one to participate more fully in one’s community. Parrique suggests one could find time to, “Start a sport association, teach badminton to kids in your neighborhood, you will be able to be more active in local politics which would enrich democracy, volunteer with and NGO, spend more time with neighbors.” Increasing trust systems in our communities would be beneficial on many levels, lowering loneliness, raising the sense of agency and connection and improving our health and well-being.
In a degrowth world, the economy doesn’t stop, it shifts. The citizens themselves should ask themselves: What do we want to produce? And how? What do we value? What do we really need?
Outgrowing the system forces us to think about the connection between government and the economy. In a democracy today, who is actually governing the economy? Unfortunately, multinational corporations control our global economic systems. Governments compete against one another to attract or appease these giants. According to Amanda Janoo of the Well Being Alliance, “Every sector of the world is now controlled by less than a handful of corporations.”
Jennifer Hinton, Ecological Economist and Sustainability Researcher,
“The incentive in the current system is for these companies to continue to grow. The bigger a company becomes, the more profit it can get. Unfortunately, there’s a built-in incentive for companies to become large and powerful and also a built-in incentive to use that wealth and power to influence policy to protect the profits of the company. All over the world, companies are investing in lobbying politicians in order to get subsidies or fight regulations and taxes that would take away from their profits. This is called ‘political capture.”
A most distressing example of this is the Investor-State Dispute Settlement system. It is a clause that is written into trade agreements and bilateral investment agreements that allows multinational corporations to sue governments for the right to impose any policy that might infringe on their profits. Ecuador, for example, got sued for the right to not drill in the Amazon and they had to pay the equivalent of their entire health budget for the right not to do that because they had signed on to these agreements. “This global economic architecture that could and should be used to hold corporations accountable is instead working in service of multinational corporations,” said Amanda Janoo.
Another problem with our current system is we have companies that are ruled hierarchically. Boards send down directives to managers, who send them down to the middle managers, and further down. Those at the bottom have no ability to influence upward. This structure is not good for democracy. The ‘threat to democracy’ lies in people not being used to or allowed to take part in decision making in their everyday lives.
We need our systems to become more democratic, and I’m not just talking about voting. We need to be thinking about where and by whom should decisions be made? What resources should we use and for what? Today these decisions are often made in boardrooms of large companies with little or no influence from the general public. Outgrowing the system would involve decisions being made democratically by the people who are affected by them.
Economic Democracy
One of these systems discussed in the film is economic democracy, a concept that proposes to shift decision making power from corporate managers and shareholders to a larger group that includes workers, customers, and the broader public.
Many who are disturbed by the rise in wealth inequality and corporate power are working toward the promotion of cooperatives of employee-owned companies with shared decision making.
Employee Ownership
“One thing that has been observed is maybe contrary to popular belief, employee-owned companies are actually more productive than comparable conventional companies,” says Patrik Witkowsky, cofounder of the Swedish Center for Employee Ownership. “The employees are more motivated and many monitoring middle managers aren’t necessary. The employees have a direct incentive to care about their own company. Also, it makes a difference if company is owned by people living nearby or by people living 5,000 km away. Community members will think twice before, say, polluting a local lake, where they take their kids to swim, with toxins.”
Employee-owned companies tend to be more long sighted, not just looking at the next quarter. They tend to have lower wage differences between bosses and workers. In the famous Mondragon cooperative in Spain, the CEO is not allowed to make more than 6 times more than the lowest earning person. Another benefit of an employee owned company is the dividends don’t disappear away to other countries, but stay in the local area.
Battling Inequality
Another aspect that is key when redesigning a system is equality. Our current system has created the largest inequality in human history. In this globalized world we have deep and imbedded structures of inequality that came about from historical processes such as colonialism, and are perpetuated today through our economic system.
“There’s a recent Oxfam report that came out that shows that ten men, ten billionaires doubled their wealth during the pandemic while 99 percent of humanity was worse off. This is also shows that this is not an ‘oh, we’re all growing and some people are accumulating more’ situation, some people are making more at the expense of everyone else,” said Amanda Janoo.
The Not-for-Profit World
One way to outgrow the system is to take out the profit motive and replace it with a social benefit purpose.
In the for-profit way of organizing the economy, economic institutions like businesses, banks, and financial institutions seek financial gain for private investors and owners. That’s one of the key purposes embedded in these institutions. A not-for-profit market economy has the key purpose of social benefit, meeting people’s needs, and even meeting environmental needs. Not-for-profit businesses, sometimes called social enterprises, are based on existing types of businesses and are companies that have a social benefit purpose as their driving force. All of the surplus goes toward this mission.
We have a long way to go before we reach a truly sustainable economy. We need governments to incentivize, encourage and enable companies to be purpose driven, to make it possible for them to be incorporated in ways that are owned more socially and in community, like a cooperative, an employee-owned company or a socially purposed enterprise. We need finance that does not serve itself but instead serves the real economy. We need to reinvent the financial structures to make it possible for businesses to bring humanity into the equation.
A new economic system is not something that will be built from above. We need a social movement with different initiatives that create a sustainable economy in one place after another, one sector after another.
There are a myriad of economic models and concepts popping up right now: the not-for-profit world, economic democracy, doughnut economics, degrowth, participatory economy, collaborative economy, solidarity economy, regenerative economy, community wealth building, positive money, economy for the common good. These practices, today a minority, “are happening in the cracks of capitalism,” says Parrique. “They represent the seeds of a radically different economy. We need to give them space and resources and to tend to them so they can become the main way of organizing the economy.”
Whatever model we choose, we do so with the understanding that our impact is through our collective engagement, each piece of the puzzle coming together.
Once we’ve opened people’s minds to consider what the economy is or can be, we can start to advocate for a different version of it. We should spread the information, raise awareness, have these discussions, and create social momentum because the more social momentum we have, the more we can pressure economic actors and policymakers to move in the right direction.
Andrea
Previously Published on Medium
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