What is the answer to a failing economic system?

Contributed by Joe Montero

Andy Beckett suggests (The Guardian 25 June 2019) that some left wing economists are building a practical alternative to neoliberalism, which aims to transform capitalism.

Although the focus of the article in on the United Kingdom, and secondly on the United States, and refers to experiences and proponents of a new economics in these two countries, it remains highly relevant to Australia.

There is much in what is said, despite being confined to the narrowness of left versus right. When the reality of life start going belly up, almost all are the hurt in some way. In the search for an answer, there tends to be a gravitation towards left and right. But under it all. The aspirations of most are similar.

It would be much better to move away from the labels and focus on the issues. Doing this is much more likely to strike a broader consensus than providing ammunition for the forces now in control, to manipulate and turn some in the opposite direction.

There is that world view, believing that everything concerned with an economy is a matter of freedom of individual choice. Whatever serves personal interest must always be put in top place, and those who miss out, do so through their own fault.

Countering this, is the world view that considers a fair distribution of the wealth created in the economy is the most important need. This is often tied up with a belief in the welfare state and government intervention to ensure this comes about.

These may be very broad brushes. Even so, they are accurate enough to show two diverging world views, providing different answers to what must be done.

From this point, the discussion centres on the second world view.

Years of experience, if we choose to notice it, shows a skirting around a fundamental issue. it is, who should have the power to make the economic decisions affecting us all? This has been a serious weakness.

To come to grips with this, it is important to have a clear definition of what an economy is, at its most basic level.

An economy is how human beings get together to provide for their needs, by establishing a set of social relationships, enabling them to transform what nature provides, into more usable forms.

This sum of social relationships involves collective decision making, as well as agreement on how each participates, and this transforms into political power. It is how politics and economics intertwine.

Andy Beckett awards the fairness world view credit for exposing“ “capitalism’s cruelties,” and at the same time criticises it, for not being able to “change fundamentally how wealth and work function in society.” He attributes this weakness to a lack of an economic policy, and suggests a need for an economic policy.  

He argues that the opposition has had an economic policy in the form of “privatisation, deregulation, lower taxes for business and the rich, more power for employers and shareholders, less power for workers.”

Those who stand against this have been too reactive, he suggests. This important insight deserves to be taken seriously. Merely campaigning against what has been done is not good enough. A clear alternative is necessary, and this means much more than addressing perceived past wrongs.

Whether this is precisely what he means or not, Beckett comes out implying, that a big part of the problem is adherence to Marxist or Keynesian positions, which are not suitable to the current environment.

This is not the problem. But he is right to say that there is a general inability to put forward answers that resonate with people. There is a gulf between deeply held beliefs and practical reality, and only through understanding why these problems exist in the first place, will it be possible to move forward.

The alternative world view has its own problems. The application of neoliberilsm and rising corporatism were supposed to be its answer. The consequences have proved to be the opposite. Those who sold the package knew that it would not meet the aspirations of most of those who had been mesmerised by it. Now they have to deal with it.

As the truth becomes increasingly clear, old beliefs are starting to break down, and this is fueling a shift towards increasing reliance on a more authoritarian form of government, as the tool to hammer the situation into shape.

All is not bad. Bubbling to the surface is an emerging recognition, that creating a fairer society is not merely a matter of redistribution of wealth.

Andy Beckett quotes some of the contemporary proponents of this view.

It can be taken further.

Economic power can be seen in terms of economic democracy. And economic democracy cannot be separated from the broader concept of political democracy. It is all about political power and whose hands it’s in.

Human history has been a road towards a downward shift of this political power. At each turn, it has taken this down another tier. We haven’t reached the bottom yet.

Power remains in the hands of a minority. The neglect of this reality has been the source of the impotency of those who battle for a fairer society, rather than the lack of an economic policy.

It is bound up in pleading for more, in Oliver Twist style. For Oliver, when he says he wants more, the real issue is not the food. It’s the power of the headmaster and his lack of it. So it is for us today.

Any economic policy working towards the future must be based on a conscious shifting this power downwards. Without this, all attempts to bring about change are reactive, limited to the terrain chosen by the other side, doomed to be absorbed and made impotent. A few minor improvements might be won, and more often than not, lost again a little way down the track.

Lasting success requires being proactive, heading towards a vision, and doing this on your own terrain, building the capacity to make it happen.

Appealing for more handouts within the status quo on its own, gets nowhere in the end. It delegitimises those who pursue this strategy, breeds disillusionment and disengagement.

Beckett’s answer? The power relationship can be altered through measures like, employees having part ownership of enterprises, local councils doing business for ethical companies, and the growth of cooperatives. These can certainly be part of the mix. But there is much more to it.

The bottom line is the need to build a democratic economy. Democratic decision making must come into enterprises, and this must be extended to cover democratic participation at the macro economic level.

A major problem, is that the existing political institutions stand in the way. Despite the existence of the vote, they are ingrained in administering the political power of the minority. Their operation depends on a closely knit network, which has created the political unity of the corporations and the state. Little is going to change by relying on these institutions.

Failing to recognise and take this on board, is the main reason for the failure to connect deep seated beliefs to contemporary reality, and the impotency that this gives birth to.

Shifting political power downwards, requires the birth of new political institutions generating inclusion, social participation in decision making and doing. This is democracy from the ground up. And this is the foundation rock for a democratic economy.

It tackles another past error. This is an excessive faith in centralisation of control in the hands of government and its departments. No one wants to be subjected to the the power of the bean counters. The answer is to transfer the power to society.

None of this can be achieved without the rise of a collective economy, based at the local level, but also having broader linkages. It is impossible without all taking part in the decision making, and having a willingness to work together for mutual benefit.

Let’s call this a social economy.

Increasing the urgency for such a change, is the reality of the climate crisis. It cannot be dealt with without the same radical change.

It is not surprising that a lot of new ideas about how to generate change are springing up from the movement taking up this issue.

There is general agreement about the need for a sustainability. Achieving this is closely bound to achieving a fairer economy.

Through acceptance of the need for the emergence of political and economic power from below, a social economy that sets the standards, combined with specific measures to ensure that the wealth is distributed fairly, we are well on the way to an economic policy that meets the needs of the day.

Be the first to comment on "What is the answer to a failing economic system?"

Leave a comment

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.