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Is liberty compatible with capitalism?

Posted By Administration, Friday, March 22, 2019

Ruth Lewis a member of our Emerging Fellows program examines the compatibility of liberty with capitalism in her third blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

The current economic theory of the ‘free market economy’ and capitalism requires a world of scarce or finite resources, together with ‘infinite wants’ of the consumer, in order to work. Scarce resources drive consumer acquisition and increases the market value of the resources. This balances nicely with a key tenet of the liberal view: the freedom to acquire whatever you want, even (or especially) at the expense of others.

 

The free market economy with unconstrained and unrestricted growth at all cost is now impinging on the freedoms and livelihoods of others. This effect occurs within the market supply chains who manufacture and supply goods, services and natural resources. It occurs with those who do not have the means to afford current market value. This causes even greater scarcity in key earthly resources such as food, water, mineral deposits and energy. It also has a clear link to climate change.

 

We have the strange paradox of capitalist freedom of acquisition that leads to the undermining of liberty and human rights of others. This has been the pattern as long as the market economy has operated throughout history. Whilst the individual is encouraged to be competitive and individualistic, from a spiritual point of view consumerism proves to be an empty vessel that contains no nourishment. Capitalism promotes ‘happiness’ through acquisition of money and goods over community and individual spiritual prosperity and growth. It undermines the public ‘good’.

 

What other models can we consider going into the future that can promote liberty and freedom? It is interesting to explore some models that reverse the paradigms that we live within today and speculate on futures driven under different mental models for both liberty and economic good.

 

One model that we see today is the governance-driven capitalism model, where societal benefit is promoted alongside profit. This can be seen for example in the ‘B-CORP’ model, where capitalist endeavours can be nurtured spiritually by knowledge that they are promoting good in the world, or at least not causing harm.

 

Others observe that the future will evolve into a post-scarcity economy, where resources are abundant through greater utility and efficiency of innovation, and digitisation will provide both basic and greater needs of the world’s population. This is predicated upon greater information about the world we live in. However, when the commodity underpinning the economy is data or information, where will ownership lie?

 

Another model suggested is that of ‘Commoning’, where ownership and control of resources is participatory. Resources are protected from sale in the market and belong indefinitely to the community that created them or nurtured them - in the same way that a river might be maintained by communities along its banks, instead of being consumed or sold by a third party to outside interests. In such a model, data would be owned and consumed by those that generate it.

 

In all of these models, how will the desire of the individual to acquire at the expense of the community be balanced with the community good? One presumes in the manner that this has always been resolved, through some form of political governance, either provided internally by the community, or presided over by a benevolent external body. Benevolent governance seeks to balance the needs and wants of a community against the resources generated or available. It seeks to regulate the internal and external stakeholders’ interests against moral or ethical dilemmas.

 

Accountable benevolence, ethics, morality and human rights must be clearly defined in accordance to a normalised common good. This clarifies what the community finds tolerable for the welfare, safety, security and health of the community members. The result is the antithesis of capitalism, to which liberty is incompatible.

 

© Ruth Lewis 2019

Tags:  capitalism  economics  liberty 

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Is capitalism a danger to itself?

Posted By Administration, Tuesday, March 19, 2019

Felistus Mbole a member of our Emerging Fellows program warns about the survival of capitalism in her third blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Many believe that global inequality has been growing for decades. A month ago, the world’s elites - who comprise global political, business, advocacy, and activism leaders - gathered in Davos for the annual World Economic Forum.  Inequality was a key topic in their discussions. It seems the issue is finally getting their attention. Is capitalism becoming a danger to itself?

 

Inequality is likely to continue to grow into the foreseeable future based on the present trajectory. The growing inequality could lead to the classing of society into a small wealthy elite and the rest of the people. This could pose a danger to capitalism if markets are perceived as benefitting the owners of capital at the expense of workers and the consumers of the goods and services they provide.

 

For long, most people believed in the Washington Consensus that the market economy was the best way to deliver long-term prosperity. According to the consensus, wealth would somehow trickle down to the rest of society through employment and other forms of economic engagements with markets. This has not happened. Globally, people are less optimistic about the future than they were at the turn of this century. They are discontented about stagnating standards of living as the wealthy around them attain increasing levels of affluence.   

 

In wealthier economies, globalisation is becoming a chief agenda item for western populists. The opponents of globalisation dislike it for its power to potentially destabilise their status and sense of community economically and socially.  Economically, it is perceived to cause economic losses through the loss of jobs and the imports of goods and services from other economies. Globalisation was effectively slowed down between the two world wars. This is unlikely to happen in future given the advancement in technology. Rather than fight globalisation, business owners and global leaders should ensure that it works for everyone.  

 

Given prevailing rapid globalisation, it not surprising that there is a growing wave of populism especially in parts of America and Europe. Populists purport to speak for the average people - whom they position as different from those in authority - and as disadvantaged. They present themselves as having a solution to the problem and advocate for a change in the status quo.  Populism is disruptive to society and to capitalism in particular.

 

This state of affairs is not sustainable. If the wealthy are seen as the elite within society who are driving a political agenda which is divergent from the will of the people, this can lead to populism. As inequality increases, the proportion of those feeling left behind is likely to increase. This could endanger capitalism. Rather than being a zero-sum game where the wealthy are perceived to take it all, capitalism could be made a win-win game for everybody. How could capitalism be transformed into a responsible system that benefits society as a whole?

 

© Felistus Mbole 2019

Tags:  capitalism  economics  politics 

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Could social entrepreneurs do better than capitalists?

Posted By Administration, Sunday, February 24, 2019
Updated: Wednesday, February 27, 2019

Esmee Wilcox has published her second blog post in our Emerging Fellows program. She believes social entrepreneurs are succeeding where they understand how to make use of the creative capital. The views expressed are those of the author and not necessarily those of the APF or its other members. 


It’s easy to think of social entrepreneurs as providing the antidote to modern capitalism. Seen from this perspective, social entrepreneurs are likely to remain at the margins of unreformed capitalism in the latter half of this century. The production of social value out of balance with the primacy of the economy. But hidden within the creative means of producing social goods lie the opportunities to tackle complex global challenges. So where are there hints of these new social norms that could displace how we value economic capital? How might this help us transition towards a world rich in creative capital?

Looking back, there are examples of nineteenth and twentieth-century capitalism that shifted the organising model towards greater social benefits. The Co-operative movement is well known. Public enterprise perhaps less so, but particularly influential in the USA in shifting popular perceptions of what was important for society at large. From the distribution of ice for food safety in rapidly growing municipalities in the early twentieth-century, to the building of ships to keep supply lines open during the second world war. They required a level of social co-operation to displace private gain.

They were distinct from charitable activity that is dependent on philanthropy and separate from the means of economic production. Not only did these co-operative enterprises challenge the imbalance of economic and social value. What they also did through a co-operative model was to demonstrate a more creative means of enterprise.

The social values that were necessary to engage workers in producing social benefits, were what enabled the production of economically valuable goods to be more efficient and innovative. It’s the same empathy, generosity and inclusivity that enables us to work across disciplines and organisational siloes in our modern creative enterprises. We need these organising principles to be widespread to tackle the complex, interconnected issues of our times. We live with hyper-connectivity in our age of the internet. The social, political and environmental challenges we face exist within complex systems.

Co-operative enterprises are more akin to self-organising systems, which we know are capable of co-evolving with changes in the external, operating environment. This self-organising model challenges the existing economic order that links power and status with capital and hierarchies. We no longer need ‘rent-seeking’ managers that disconnect those thinking about the problem from those experiencing the problem. People are able to think and solve problems in dynamic systems themselves. Human capability and ingenuity is released in unexpected places.

Communities that are poor in capital and consumptive power threaten those that steadfastly hold onto it. Government institutions need to stop seeing socially inclusive enterprises as replacements for welfare programmes. Government Innovation Prizes could hint at a shift in practice, making it easier for new social enterprises to find a way in to organising around a myriad of complex societal issues. But it’s Social Innovation Incubators that are countering the institutional bias against people from poor places, who have been held back from accessing their own creative capital. Acknowledging and bridging the gap between those that know the rules of the game and those that want to create new ones.

Vested interests will give up economic power where the alternative is more compelling in the present. However much we may foresee the redundancy of capitalism as it stands, social enterprise will only displace it where it can also be resonant now.

Social entrepreneurs are succeeding where they understand how to make use of the creative capital that is more evenly distributed amongst us. The economic capital we have now won’t be meaningful in the age of scarcity at the end of the twenty-first century. What will matter is how we self-organise around the complex challenges of our times. Empathetic, inclusive, and generous social entrepreneurs can show us how to make this transition.

© Esmee Wilcox 2019

Tags:  capitalism  economics  entrepreneurship 

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What is the future of capitalism?

Posted By Administration, Thursday, January 17, 2019
Updated: Wednesday, February 27, 2019

Felistus Mbole a member of our Emerging Fellows program envisions the future of capitalism in her first blog post in 2019. The views expressed are those of the author and not necessarily those of the APF or its other members.

Capitalism has the capacity to excite both love and hate in equal measure, depending on which side of the divide one stands. I will look at capitalism as it exists today and then explore these two questions: Is capitalism a good or bad thing for society? What is the future of capitalism?

Capitalism is a social phenomenon where the market players or owners of capital set prices based on demand and supply. The market eliminates inefficiencies with the aim to maximise profits. In the absence of competition or where it is minimal, monopolies and oligopolies result. There is a willingness among market players to adapt to change for greater efficiencies and more profits. This adaptability is typified by an ever-growing dynamism fuelled by technology and innovation. There is a constant search for new ways of doing things and new products. In capitalism, self-interest pays. The more capital one has, the more profits one is likely to make which further adds to what one has. Capitalism is self-reinforcing. Capitalists become wealthier as the providers of labour in society become poorer.

This classical capitalism is a free market economic system founded on the private ownership of the factors of production such as land, labour, capital, and entrepreneurship. In such an economy, there is minimal interference by the state and individuals have free will to make decisions regarding their property and labour – without infringing on the rights of others.

Capitalism in its pure form is almost non-existent. There are no free markets as such. The state intervenes through tax policies and by regulating markets to ensure that there is no manipulation. Left to their own devices, the owners of capital would oppress the providers of labour through dismal wages and poor working conditions. This is especially the case in situations of excess semi-skilled labour supply such as in Asia and Africa today.

Where there is strong competition, capitalism delivers value to the whole society. The contrary is true in monopolistic and oligopolistic situations where the benefits largely accrue to the owners of capital. The growing use of technology, especially automation, and the need to remain competitive has led to consolidation and concentration in many sectors. Deloitte cites technology as the number one driver of acquisitions and mergers in 2018. A lot of the wealth of companies today relates to economic rents from copyrights and patents related to technology and other soft forms of property. This is making competition a lot harder to achieve than in past decades. Globalisation has presented opportunities for capitalists to further their profits by expanding to markets previously beyond reach.

Despite all the fears and criticism, capitalism has delivered value to society.Globally, the last few decades have seen a greater decrease in inequality than in past centuries. However, there is growing inequality both across and within countries. There are segments of the population, even in progressive economies, being left behind which could lead to discontent and unhappiness. The increased use of technology has led to more demand for specialist skills and less use of unskilled labour.

The situation can only worsen with the prospect of immense automation in the second half of this century. This will be further exacerbated by the anticipated aging of society due to higher life expectancy in the next 50 years. The youth bulge in Africa and Asia will be no more. These two factors will result in high dependency ratios. Yet the need for human inputs to sustain the dynamism of markets through innovation, the essence of capitalism, will remain. The more educated who have cognitive skills that are valued by this capitalist economy will continue to be in demand. This will drive inequality between the skilled and unskilled segments of society further. A situation that is not sustainable.

Capitalism does not exist in isolation but in the bigger planetary system whose resources are bounded. Natural resources are dwindling and the need for humanity to live in harmony with nature for sustainability is escalating. The future of capitalism depends on the sustainability of the planet. Businesses thus need to abide by the nine planetary boundaries. Capitalists have great influence over society and are a key driver of the sustainability of the planet. It is the business of business to safeguard the planetary resources for itself and future generations.

What does all this mean for the future of capitalism? Capitalism in its current state is unsustainable. Capitalism needs to transform into a more responsible form. Mixed economies where capitalists address the inequalities in the societies by subsidising the incomes of those at the bottom are inevitable. Simultaneously, governments will need to ensure that everybody is given an opportunity to engage with and contribute to the economy. Governments can realise this by providing public goods such as education and healthcare which would in turn support capitalism. Both outcomes can be realised through progressive tax policies. States will also need to effectively regulate markets by establishing frameworks for property and contract rights, and planetary boundaries, and to provide a level playing for all market players.

© Felistus Mbole 2019

Tags:  capitalism  economics  society 

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Do We Need to Own Things?

Posted By Administration, Friday, January 11, 2019
Updated: Wednesday, February 27, 2019

Tim Morgan publishes his first blog post in our Emerging Fellows program by revisiting the concept of ownership. The views expressed are those of the author and not necessarily those of the APF or its other members.

Immediately after the painting “Girl with Balloon” sold at auction for $1.4 million, the painting began slowly destroying itself. A malfunction caused it to stop half-way.

The anonymous artist known only as Banksy had secretly hidden an automated shredder inside the frame. The half-destroyed work is now considered a new piece of art, valued much higher than the original painting. The event is an unlikely but apt metaphor for how automation is redefining ownership.

The Eighteenth Century philosopher Adam Smith described capital as owned property used to produce an economic return. Capitalism’s central feature is that owned things are used to produce exchangeable value, be they a farmer’s vegetables or self-sabotaging paintings. Ownership from a capitalist perspective is control of something used to create enhanced value. In turn, exchanges of ownership are synonymous with exchanges of value. Each side gets something they value more than what they are willing to give in exchange. Centuries of worldwide progress and prosperity rest on ownership as capitalism’s bedrock social organizing principle.

Control determines who can create value from property. Capitalism assumes that control and ownership are inextricably intertwined. Yet Banksy’s auction stunt illustrates how automation is changing the current relationship between ownership and control. Traditionally if you own capital then you also directly or indirectly control it. Banksy subverted that control by using automation to go beyond “I don’t want my art sold” to embedded enforcement of “You can’t sell my art, even if you own it”. Automation enables embedding active governance rules into owned items themselves. Legal scholar Lawrence Lessig describes this as “Code is Law”. Banksy’s embedded painting shredder is analogous to copy protection of digital movies and music files. You own the ability to experience, but not the thing itself.

These embedded automation rules constitute an increasing level of external control over owned things. If ownership equals control, then those who are implementing the automation are increasingly the owners, no matter who holds the receipt. Existing legal frameworks have always considered use as a legal component of ownership, but those institutional frameworks are lagging the breakneck pace of automation. A user can own an AI-enabled smart-speaker appliance like Amazon Echo or Google Home, but those same items become expensive plastic bricks without their backend automated services.

But does this loss of control due to automation extend to productive capital? History shows a progression of ever more abstract relationships between owners and control of productive capital. We went from the concrete control of simple property such as farms and animals, to abstract control via corporate shares and investment funds. Even in the past few decades innovations like millisecond flash-trades and complex financial derivatives make it unclear who owns what at any given time. At each stage the use of capital to create value appears to become more tied to its control than to its ownership.

It is ironic that Banksy’s automated assertion of control over “Girl with Balloon” increased the piece’s value, rather than destroying it as intended. The work has been appropriately renamed “Love Is in the Bin”. The new owner adapted to Banksy’s attempt at automated control. By inadvertently relinquishing a bit of control to unknown automation, the new owner gained more value than they originally purchased.

Love may be in the bin, but for now capital still hangs on the wall.

© Tim Morgan 2019

Tags:  automation  capitalism  value 

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Has The Economy Failed Society?

Posted By Administration, Friday, January 4, 2019
Updated: Wednesday, February 27, 2019

Esmee Wilcox has published her first installment in our Emerging Fellows program. She recaptures socioeconomic theories in the light of realities being experienced in our modern age. The views expressed are those of the author and not necessarily those of the APF or its other members.

Societies have sleepwalked into an acceptance of the predominance of capital. We have gone far beyond Karl Marx’s theories of capital driving the ordering of society. We no longer question the consequence of this imbalance for our existence. We need to rebalance the needs of capital and society. Not simply as an end in itself, but primarily because we need new social norms to tackle future global issues. How has this imbalance come about?

Is Marx right that the ordering of society is necessarily driven by the needs of capital? If so, what does this mean for the assumptions we bring to our conception of society? What does this mean for the widely-held view that capitalism has triumphed other economic models?

The 1990s view of the ‘triumph of capitalism’ came out of the toppling of the old communist order in Eastern Europe and the Soviet Empire. Alongside this came a slow opening up of China to trade and privately run enterprise from the late 1970s. However, there is a flaw in the logic to present capitalism as the only alternative to communism. Without any credible alternative models on the table, it is easy to see why the ideology of capitalism took hold. 25 years on, with rising populism coupled with pervasive neo-liberal power, there are three interconnected trends that illuminate the contradictions and flaws in the predominance of the economy in our patterns of local and global behaviours.

First, the enduring power of the interests of capital at the heart of government. Politically-centrist governments have gained and retained power with policies that appeal to lower-income communities. They appeal to the interests of capital because they have done so without transferring political influence.

At the same time, the interests of capital have subtly influenced the organising of public and social value to be more ‘commercial’. It has confused being responsive to citizens needs with being economically driven. The ‘McKinsey effect’ on public policy-making should not be underestimated. In more recent years there has been some recognition of the need to rebalance social with economic value within UK local government: the 2012 Social Value Act created a space for public policy-makers to utilise its purchasing power to balance economic efficiencies with social benefits. However, it hasn’t challenged the underlying economic model whereby one’s life expectancy and life chances can be predicted by one’s mother’s educational status and the extent of your vocabulary at age two.

Second, our attachment to material possessions – aptly described as ‘affluenza’ – at the heart of our economic growth model, placates the reality of our diminishing ability to influence capital power. Credit is freely available, we can buy our housing association property, but we can’t persuade governments to pay for sufficient modern housing stock to have a home and a family life. This consumerist economic model drives income generation over friendships and developing community capital. Coupled with business interests creating a more precarious working environment, we are increasingly squeezing out time to care.

Third, the status anxiety that comes from our awareness of our social position in any social interaction. We’re so worried about people who have more income. More luxurious experiences than us. Retaining our rung on the ladder. Our status dominates our social interactions and reduces the joy in them. As social encounters become harder to have, we shy away from them and become lonelier and more isolated.

This is why it’s interesting to consider alternatives to the predominance of economic drivers on our society. It doesn’t just affect people at the bottom of income distribution, but the powerful interests of capital. Society can’t be divided into economically self-supporting strata when social phenomena exist as a response to the whole. We can no longer ignore these feedback mechanisms.

Marx’s theories were conceived of in far less connected societies. They have remained intact as we have become more globally connected. However, they are not a guide to our future that is more complex, interconnected and unpredictable. We know that self-organised, adaptive and resilient communities are more able to respond to changes in the external environment. This requires high levels of co-operation and collaboration, the antithesis of atomised economic self-supporting behaviours. These are a clue to the social norms that have to be in abundance if we are to tackle global late 21st Century issues.

The triumph of capitalism is a binary argument suited to the interests of 20th century phenomena. It has taken hold because we have become seduced by its simplicity and its immediate rewards. It is much more difficult, and yet more compelling, to seek out the 21st Century socio-economic norms that will help us face up to scarce physical resources. It will be disruptive but offers hope for future generations.

© Esmee Wilcox 2019

Tags:  capitalism  economics  power 

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Ticket to the Future

Posted By Administration, Wednesday, December 19, 2018
Updated: Wednesday, February 27, 2019

Polina Silakova, a member of our Emerging Fellows program accomplishes her blogging mission successfully in 2018 by publishing an interesting post. The views expressed are those of the author and not necessarily those of the APF or its other members.

People introduced tickets as a mechanism to control access to limited goods and services. We are surrounded by tickets. A ticket on a plane reserves us a seat in a machine which will take us to new horizons. A visa allows us to stay in a place that is usually attractive enough to create an artificial contest for the right to be there. A membership provides you with services not available to others. You invest – you get access to an opportunity. If we are in a lucky position, we can choose the ticket and the destination. If we overlay this concept with the idea of a variety of possible futures awaiting us ahead, a ticket to which future do we want to get?

Over the past 12 months, we discussed this by looking at potential pathways for the post-capitalist economy. We were especially keen to know whether the universal moral values or the capitalistic cult for possessions will guide our future. The search for the answer took us to different corners of the planet where people’s responses to the side-effects of capitalism are sparking hope that we might be heading towards a better future.

We saw young entrepreneurs jumping off the big and clumsy steam train of global corporations (successful if measured by their share price), because these people could not agree with the direction that they were heading towards. In the smog from ever increasing unsustainable production, they could not see the purpose to align with. We applauded to the municipalists movement in Barcelona, who understood that improved equality and long-term sustainability will make citizens happier than infinite growth benefiting a few. Not only they challenged the current understanding of democracy, but could demonstrate already in the first couple of years that their approach is working. We even joined a hearing in a US courtroom, where boys and girls from iMatter, already at a young age have become disillusioned with their government’s ability to protect their needs and those of future generations. They refused to accept tickets to the future valid only till the end of the government’s election term.

These steps towards the increased consciousness plant seeds of hope that the next iteration of economic system will be more sustainable and just. And yet, the embodiment of this hope to a greater extent depends on the choices that powerful global businesses will make. Many quoted this year’s annual letter from the CEO of BlackRock – one of the most influential global investment firms. It stated that following new expectations from customers and community, they are now evaluating companies based on their response to “broader societal challenges” and whether they “serve a social purpose.” The New York Times called the letter “a watershed moment on Wall Street” raising “questions about the very nature of capitalism”.

The question remains though: what is driving the companies to make this shift? Does it happen out of fear to lose customer trust or investors’ support, with profit remaining the underlying motive? If so, how significant can this social impact be? Does it become just another marketing tool for the same old endgame: more sales, more growth, more money?

Even then – we could hope – this shift could take us a little closer towards a more positive version of the future. Remember the coffee-cup example from our previous posts? Initially driven by a bunch of innovators, reusable coffee cups are now conquering the world, helping it to become a tiny bit more sustainable. Similarly, the new generation of businessmen growing up in the environment where creating positive social impact is becoming a norm might nurture values quite different to those ruling the capitalistic economy. In the face of increasingly challenging global issues, these values will help them to genuinely engage in revisiting unsustainable business models.

To what type of future humanity is heading depends on the tickets that each of us will choose. These tickets are a combination of choices that we make every day. These are our “investments”, each associated with a specific type of future. Can I give an example? Here you go.

We started this series just after last Christmas and as we finish it, the new Christmas season is approaching. If you are wondering what choices you could still make this year to contribute to a “good future destination” ticket, think of your Christmas presents. Consider not buying new stuff. Give your loved ones experiences. Give surprise visits to people you haven’t seen for a long time. Give them your time and take them for a walk in a forest. Give them a ticket to joyful moments of life – they will never end up in landfill.

 
© Polina Silakova 2018

Tags:  capitalism  economics  United States 

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Economics lessons from wild nature

Posted By Administration, Wednesday, July 25, 2018
Updated: Monday, February 25, 2019

Polina Silakova‘s sixth post in our Emerging Fellows program explores some economics lessons to be learned from nature. The views expressed are those of the author and not necessarily those of the APF or its other members.

If we try to apply Darwin’s theory of evolution to economic systems, would we conclude that capitalism “better suits to the environment” (better suits us) than communism? After all, most of the ex-communist countries shifted to capitalism and the majority of the few remaining are now transitioning to free market economies. Have we naturally selected the better way? Apparently, only a half of us would agree. According to a recent online survey of twenty thousand people in 28 countries run by the research company Ipsos, half of respondents around the globe think that now, in the XXI century, “socialist ideals are of great value for societal progress”.

What exactly are these ideals? Here are some stats:
•9 in 10 believe that education should be free and that free healthcare is a human right
•7 in 10 think that everyone should have the right to an unconditional basic income (UBI).
•Interestingly, about the same number (7 in 10) also agree that it is right for people who are talented to earn more than those who are less gifted, and that free-market competition brings out the best in people.
It seems that although the benefits of free markets in fostering progress are valued when it comes to the essential aspects of life – health, welfare, education – many of us are craving for a more egalitarian system; the one alleviating the polarizing inequality that capitalism has created.

With so many innovations fostering humanity’s progress being inspired by nature, we are curious: what examples of democratic distribution of resources exist in the wild world? One study particularly attracted our attention. A Belgian-French group of scientists studied self-organised collective decision-making by animals when it comes to choosing between alternative resources.

They ran an experiment where 50 cockroaches (Blattella germanica) were presented with three shelters, each with a capacity to hold 40 individuals. For cockroaches, who prefer dark to light, such a shelter is a resource, and they quickly filled them in. But instead of doing this in a chaotic manner, the cockroaches split into two equal groups of 25 occupying two shelters and leaving the third one empty. While in a scenario with larger shelters – each big enough for the whole group – only one of the shelters got occupied. The researchers were astonished by how cockroaches maximise the benefit of limited resources, trading off being together and access to shelter resources and finding a balance between collaboration and competition. “Without elaborate communication, global information, and explicit comparison of available opportunities, […] the collective decision emerges from the interactions between equal individuals, initially possessing little information about their environment. It is remarkable, then, that these rules should produce a collective pattern that maximizes individual fitness.”

Economic democracy observed in behaviour of cockroaches presents some of the features where capitalism and representative democracy did not quite succeed: egalitarian distribution of resource and decision-making benefiting all (or at least the majority of) individuals. It might seem too simplistic to directly compare the economic problems faced by Blattella germanica and those of Homo sapiens. But if we think of some emerging movements – collaborative mobile democracy, participatory budgeting, commons-based economic governance – are they not technologically empowered forms of truly collective decision-making, replicating those observed in nature? With new technologies making us more interconnected, we now have a unique opportunity to access the knowledge and opinions of all interested citizens and reshape the way we, as a society, take decisions and distribute value.

Following nature’s principle of evolution, only a better system, distributive by design and maximising the fitness of more individuals, will be able to replace capitalism by making it obsolete. Mother nature offers us many lessons, and the lesson of balancing collaboration and competition has been one of the hardest to comprehend. It requires both individual engagement and strong leadership ability to connect knowledge and talents from the community and to facilitate the best ideas evolving in something new.

As American sociologist Erik Olin Wright suggests, we cannot smash or escape capitalism, but we can tame or erode it. By slowly introducing new elements, inspired by nature and enabled by technology, we might start shifting the focus from maximising financial value and growth to real value creation and more equality. And then who knows… maybe one day this will make capitalism in its classical form obsolete.

© Polina Silakova 2018

Tags:  capitalism  economics  governance 

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Get Real

Posted By Administration, Friday, February 2, 2018
Updated: Sunday, February 24, 2019

Adam Cowart is one of our Emerging Fellows, and this is his second article written for the program. In it, he explores the real economy and asks a few questions along the way.

Our current economic system and all the social and political systems tied to it require perpetual growth. Growth not only underpins the financial economy but the real economy as well, which requires new goods and services (or more demand for the same) to expand. The end of growth would mean the collapse of financial markets and stagnation in the real economy. It would also lead to social and political upheaval due to financial inequality. The socio-political perspective that underlies our obsession with growth is the presumption that lower and middle-class citizens will accept massive inequality as long as their lives (and wages) get incrementally better, year after year. We would all love to have that private yacht, but are content as long as our annual salary increase allows us to take that Alaskan cruise. And this incremental improvement does not come from increased economic equality or financial redistribution; it is a result of growth.

Another long standing economic assumption is that, as jobs are automated, new forms of work will emerge. While some estimates follow a historically consistent trend of 10% job displacement in the foreseeable future, other estimates predict an acceleration of displacement, up to 50%. If job displacement does enter the 50% range, the creation of as-yet-unknown jobs, at such significantly high numbers in a relatively short period of time, seems unlikely. Even minor displacement can have a significant disruptive effect on political and social cohesion. But there is another option for continual growth in the real economy: instead of creating new jobs, simply commoditize things that people are currently doing for free.

Paul Mason alludes to this in his book “Post-Capitalism” when he suggests that in order to make this a scalable economic area of growth, “would require the mass commercialization of ordinary human life.” Late capitalism appears to be stealing a few plays from the feminist economics playbook. While media attention has largely been focused on pay equity between genders, some of the foundational work in feminist economics has focused on care work and intra-household bargaining. It is not much of a stretch to interpret Mason’s “ordinary human life” as the traditional perspective of unpaid “women’s work”.

If one is looking for a macro-trend in the real economy, one need look no further than the colonization of social interaction by the economy. This is evident in the more ubiquitous forms of social media but is also increasingly prevalent in more innocuous forms. Consider the cuddle party, a social media coordinated interaction where strangers come together out of a desire to cuddle (and watch a movie). Organizations such as “Nurse Next Door” look after the elderly, Christmas dinner can be ordered online, and Chore apps convince kids to (continue) to do work around the house “for free”. The company “Do My Stuff” has succinctly defined the overall trend with their slogan “Outsource your life”.

Anyone considering a new business could start with the question “What are people doing today for free, that I can get them to pay for tomorrow?” Of course, the question now must be asked, if every tiny component of our existence becomes commoditized and outsourced, are we even real anymore?



© Adam Cowart 2018

Tags:  capitalism  economics  work 

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