Humanising the Economy

‘If I have seen further than most it is because I’ve stood on the shoulders of giants’ Isaac Newton

Let’s face it, unlike Isaac Newton most of us are not going to make a discovery as profound as the laws of gravity or calculus while working from home. However, there is the opportunity to explore and meditate on new ideas and how they might influence the new world which will emerge post-Covid 19.

My must-read recommendation is ‘Humanizing the Economy’ by @John Restakis, a Canadian professor and activist. It is a tour de force which uncovers the rich history of the cooperative movement and provides a robust and challenging critique of the limitations of corporate capitalism and hope for a more just and equitable future. 

The deficiencies of our current system have been cruelly exposed by the pandemic but there is a real risk that, rather than stimulating new models of cooperation and inclusive economics, it merely accelerates the current trends.  Power continues to concentrate in cash-rich, monopolistic enterprises like Amazon (who has seen a surge in sales and hired an additional 100,000 employees). Meanwhile governments remain subservient to ever-more-powerful corporate interests rather than their citizens. (Some of Trump’s press briefings are more like infomercials than reassuring the citizens of the United States). 

Bowling Alone

We, the ordinary people, have become recipients of economic and political power but not participants. ‘Life, liberty and the pursuit of happiness’ can be consumed as individuals, or an apt Buddist term is ‘hungry ghosts’, rather than as inalienable rights to be created, nurtured and experienced in community. This dynamic has led to the current discontent and malaise as expressed in the rise of populism of Brexit and Trump across the West. 

In this scenario, it is inevitable that the social capital of our societies becomes depleted through the atomisation and commodification of the individual and the disengagement and the under-investment in the institutions (clubs, churches, unions etc) that bind us together. In our modern societies (and certainly in the economic profession), social capital is most often seen as a ‘nice but not necessary’ component. However, as Robert Putnam demonstrated in his defining book ‘Bowling Alone’, there is a strong correlation between a vibrant social capital and a thriving economy.

The Power of Reciprocity

The central thesis of this book is that the principle of reciprocity needs to be integrated into political and economic models and policies if we are to democratise power and humanize economies.

‘Fully functional societies incorporate a number of economic principles. Efficiency, which minimises waste of resources; equity, which is the basis for economic and social justice; and reciprocity, which is the basis for human solidarity. In turn each of these principles has found its expression in very different economic forms. Efficiency is most embodied in the conventional capitalist enterprise; equity is embodied in the policies and institutions of government; and reciprocity has found its most developed expression in co-operatives and other social economic organisations. But there is nothing to dictate that one or another must dominate over the rest. What is needed today is a paradigm that achieves a balance between all three principles. The development and realisation of reciprocity is essential to this.’

Reciprocity in practice is explored through the history of the cooperative movement - from the pioneering weavers of Rochdale, UK who joined together to challenge the devastation wrought by the Industrial Revolution; the health cooperatives of Japan who serve over 3 million members with care; to the sophisticated multi-billion euro social economy of Emilia Romagna in Northern Italy. Prior to reading this book, my understanding of cooperatives was limited to the relatively small-scale, unsophisticated agricultural enterprises in Africa . One of the few limitations of this book is that it doesn't explore other models of reciprocity and cooperation such as credit unions, partnerships or the implications of new technologies like blockchain.

A Hope and a Future

This is an idealistic book but mostly avoids the dogma of ideology. It not only provides a robust critique of capitalism and statism but also recognises their value and addresses the some of the limitations of the cooperative model. As the writer states; ‘This book provides a new way of understanding and reconciling the interplay between economic and social systems and the interconnectedness of humanity in a new paradigm for a global age.’ My hope is that as we emerge from our current crisis, the green shoots of inclusive economic growth will begin to thrive.