Markets

It’s Time to Replace the Economics of “Me” with the Economics of “We”

Beyond the market vs. state framework

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By Jonathan Rowe and David Bollier

For more than two hundred years, mainstream thinking has regarded the market as the primary source of material “progress.” And indeed, to a large extent that’s been true. But yesterday is not forever. Today the market is approaching a point of diminishing returns – systemic diminishing returns. It is yielding less well-being per unit of output by practically any measure, and more problems instead: obesity instead of good health, congestion instead of mobility , time deficits instead of leisure, depression and stress instead of a sense of well-being, social fracture rather than cohesion, environmental degradation rather than improvement.

In place of wealth, the economic machinery increasingly turns out what John Ruskin, the 19th Century essayist on art and economics, called “illth,” which is accumulation that fosters ill results rather than towards weal, or well-being.This is not just a matter of distribution, which is the traditional concern of the Left. Inequitable distribution is a major problem, to be sure, and becoming more so. But to redistribute illth is not necessarily to do anyone a great favor.

The destructive tendencies of the modern corporate market are much noted, in a scattered and fragmentary way. The environmental movement, “smart growth” advocates, Wal-Mart critics, opponents of the corporate cooption of university research, and of patents on genes – each has a piece of the story. Each speaks from an awareness that the market is going too far.

Yet there is no contemporary master narrative that unifies such movements; nor a challenge to market fundamentalism that does not carry echoes of old, discredited ideology. The economic problem is not markets per se. To the contrary, markets can be spontaneous and flexible; and can provide an outlet for enterprise and creativity. Most of us would not want to live without them, in some form. The problem is that the modern corporate market—which is very different from small scale local ones — has exceeded the boundaries of its own usefulness. Much of what is called “growth” today actually is a form of cannibalization, in which the market consumes that which ultimately sustains us all.

The Economic “We” replaces “Me”

Over the past two centuries, a central challenge of humanity has been to fill the void of material scarcity, and we have succeeded to some extent;. There is now enough food and other products to meet most human needs if they were distributed more adequately. That’s the challenge of the current century; and it’s not just a question of rejiggering the market. It also means reconstructing of the commons, both natural and social, which is the fundamental source of sustenance and well-being. The air, water and sunshine; libraries and language and the legacies of science – without these and much else like them, there will be scarcity and collapse no matter how hard the market churns.

The commons exists outside the typical definitions of the market and the state. It is not simply a negative to the market’s positive; it is a parallel economy that does real work—often the most important work. Without clean air to breathe, for example, or a common fund of knowledge to serve as feedstock for invention and the arts, human society would grind to a halt, as would life itself. Yet the commons is functionally invisible today. Economists disparage it as a relic of benighted times, and extol private property rights as the key to human progress. The media pretty much ignores the commons, except for bits and pieces, and politicians do as well.

The reigning mental map looks something like this: a prolific market on one side, a repressive – though sometimes necessary – government on the other, families off in a corner someplace, and little of significance around or between. The conventional economic indicators, such as the Gross Domestic Product, or GDP, actually portray the destruction of the commons as economic growth and gain. The more we turn forests into timber, the atmosphere into a dump, quiet into noise and childhood into a marketing free-fire zone, the better the “economy” is doing, according to the GDP and the belief system it embodies.

In this economic script, the commons has been assigned the role of housekeeper. It does the unglamorous but essential work, and gets little recognition or support. Consigned to this conceptual netherworld, it is constantly subject to expropriation, despoliation and abuse. As with low-paid factory workers in developing countries, the supply supposedly is inexhaustible. No matter how much the commons gets cannibalized, there always will be more, or so the thinking goes. The conventional economic mind simply cannot acknowledge that there is more to life – more to an economy – than the market; and that the growth of the market might mean the diminution of something else.

So long as the only choice is between a voracious market and a regulatory state, we will be stuck in a demoralizing downward spiral. We need to open the windows and let in some fresh air. In particular we need an economics that embodies the “we” side of human nature, as a counterweight to the market’s unrelenting “me.”

This is not a utopian romance. It’s happening already, all around us. Intuitively, without outward orchestration, people are turning to the commons on a wide range of issues, to do what the corporate market and state can’t.

Reinventing Economics

The commons is much more than a polemical framing device. It is a social dynamic that – like the market concept — helps to explain how the world works. In particular, the commons sheds light on a crucial element of both natural systems and human society that have been shunted to the periphery – namely the capacity of individuals to cooperate, which the conventional economic models systematically ignore. The structure of online software networks, the dynamics of natural ecological systems, the social dimensions of creativity – these operate in ways that are counter to the so-called “laws” of economics. To talk about the commons, in other words, is to talk about a different kind of economics – one that both underlies the market and an alternative way of meeting human needs.

In the formulations of both left and right, the market is the central focus. The right wants to protect and expand it; the left wants to regulate and adjust it. But for all their differences they agree over the centrality of the thing itself. The commons is the third force that unsettles that view. The role of government becomes not just to regulate the market and provide services the market doesn’t; but to also support this third realm much as it does the market itself .

This changes the economic calculus in a fundamental way. A market-based society channels us into the roles of “owners,” “workers,” or “consumers,” and the media follows suit. Either we make stuff or we buy it – that’s the extent of our permitted economic function. The commons, by contrast, gives expression to a side of our natures that is not limited to selling and buying.

Conventional economists dismiss the commons as inherently “tragic” and prone to overuse. That was the argument of Garrett Hardin a biologist, in an influential essay published in Science magazine in 1968. Yet Hardin hadn’t actually studied commons; and his “tragedy thesis” was largely wrong, as he himself conceded late in his life. In fact, commons have worked wonderfully where there have been formal rules or an informal social structure to govern access and use. In our times, it is the corporate market that increasingly fits the definition of tragic. It has a fatal character flaw – namely, an incapacity to stop growing. No matter how much it grew yesterday it must continue to do so tomorrow, and then some; or else the machinery will collapse.

There is no sufficiency principle, no ability to say “enough.” Every last scrap of material, every last inch of earth, every last iota of human attention and experience, must become a commodity in order to feed the market maw. There is no other option. A system that supposedly embodies “choice” in the end doesn’t give us any. The mechanism grinds on, out of synch with both the natural systems that sustain it and the needs of the humans who comprise it. “Prosperity” becomes another word for ecological and social dysfunction, and a staggering increase in illth.

This dysfunction is a daily experience for most of us. Yet for most economists it does not exist. In their view an increase of expenditure is by definition an increase in well-being, so there is no need to inquire further. To the contrary, problems make the GDP go up. Cancer begets costly cancer treatments; stress leads to the consumption of prescription drugs, and on and on.

Is Everything for Sale?

One of the signal failures of market culture is the inability to declare what is not for sale. On the whole, as a society we reject the idea that babies, votes, or body parts should be bought and sold like soybeans. But these are aberrations from the general rule that everything is legitimately for sale One principle of a commons-based society, by contrast, is that certain things are off limits to the market — the air we breathe, the languages we speak, and the genetic information of which our bodies are composed, to name a few.

As the market continues its relentless creep, a host of new devices have arisen to reestablish boundaries. The Creative Commons licenses for music, film, and other creative works allow for the free sharing and distribution of content without legal rigmarole. In effect they turn copyright on its head: you can use so long as you agree to share. In a similar manner, the General Public License in software development has prevented companies from “taking private” software code intended by its inventors to be available to everyone. In the realm of physical space, land trusts have provided a way to protect land from developers, and to make it available as parks and open space instead.

We cannot flourish without relationships insulated from the demands of money, contracts and ownership. Yet for many years, the reigning Western view has assumed that human happiness is to be found through precisely those things. It has seen the production of stuff – called, revealingly, “goods” – as a sort of escalator that conveys people to ever-greater heights of fulfillment and well-being.

Ample new research, however, has demonstrated what most of us know from experience: beyond a certain threshold of material comfort, more stuff just doesn’t provide much enjoyment. These studies – which draw on the work of psychologists, sociologists, and economists, among others — also show that the happiest people tend to be those who are most engaged in the lives of others. The commons is the economic realm that promotes relationships rather than stuff.

This is true as much for the impoverished as for the affluent. Apologists for the corporate market often accuse critics of being elitists who want to deny the world’s poor the comforts and conveniences that they themselves enjoy. This misses the point. The gap between the very rich and everyone else is increasing rapidly under the market monoculture. The commons serves as an equalizer – a source of sustenance and support for those the market leaves behind. Those without financial means are more exposed to polluted air and water than wealthy people are. They are more likely to use the commons for sustenance activities, such as hunting and fishing; and they depend more upon the help of neighbors, and upon libraries and parks.

Who creates wealth?

In 2004, a reserve first baseman for the Boston Red Sox sullied the sweet moment of the team’s first World Series victory in 85 years, when he claimed ownership of the ball he used to make the last out. It was a sad commentary on a grabby age; and it raised a couple of crucial questions: Who exactly created the monetary value of that ball (which could fetch millions), and why should the person who just happened to be holding it at the end of the game be entitled to all its value?

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These questions are highly inconvenient to the reigning economic thinking. Yet they need to be asked. The value of a business, resource, historic baseball or whatever does not reside solely in the thing. Nor does it arise from the efforts of an entrepreneur alone. Value is, rather, a co-production between an individual, society and nature; and the latter two often play the larger part. Land values, for example, are almost entirely a social product. That’s why two acres near an urban freeway exchange or subway stop can fetch more than does an equal amount of land in the middle of a desert.

The question is less what the owner did, than what others did around him, individually and through government. So, too, with music, inventions – just about everything. These accomplishment draw on what was done before, and depends on the sustaining presence of society as a whole. Even stocks would have little value without stock markets through which to sell them, and without governments to police – to some degree – those markets These are social creations all.

Once we acknowledge the social component of economic value, then discussion of financial return and social policy take a new turn. Taxation, for example, no longer is a matter of “redistributing” someone else’s income, or wealth, but rather of restoring a portion of it to the rightful owners. The acknowledgment of social co-production also dissolves the myth of the heroic individual businessman or woman. Individuals do great things; but as Warren Buffet – who knows something about making money – has pointed out, none do it alone.

Current beliefs about economic freedom emerged in the West during the 17th and 18th centuries, when entrepreneurs were challenging the remnants of feudalism, and private property stood as a symbol of freedom against arrogant royal rule. But as often happens, yesterday’s answer became today’s problem. Today it is private property, as embodied in the corporation, that has become arrogant. The solution is not an all-encompassing state – the authoritarian “we” that has been the reactive refuge of the Left. Regulation there must be; but there must also be a different kind of property – common property – that exists alongside the market, providing a buffer against its excesses and producing what the corporate market can’t.

As market culture intrudes ever-deeper into daily life—from public spaces to the inner lives of kids— there is a yearning for space that is beyond the reach of of buying and selling. People might not use the word “commons;” but they seek increasingly what it represents – community, freedom, and the integrity of natural and social processes.

Originally published here.

30 January 2016


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  • Hardin’s doomsday Neomalthusian view did much to set modern civilization back. Imagine if his erroneous unsubstantiated claims had never been uttered. Imagine if instead of blindly following Adam Smith or Thomas Hobbs and their polarized views of the society, we instead assumed unselfish cooperation was not only possible – but preferred.

    And imagine if we espoused the views of David Hume and believed societal equilibrium will establish itself without hierarchical factions and controls. In other words … maybe people aren’t really that bad after all.

    • Duncan Cairncross

      Don’t badmouth Adam Smith – If you read his books you will discover that he was totally aware of the bad effects of business

  • I agree with aspects of what you say, and not others.

    You stated “The economic problem is not markets per se.” which is both true and false, depending on context.

    As Hayek and others clearly established, markets are very powerful tools in dealing with scarce resources. The signals available from profit and price (in free markets), can provide a degree of coordination of specialist knowledge that is logically impossible to achieve via any sort of central control. That much is clear, and obvious, and not in any sort of dispute. (And it is now possible to use non-market technologies and near instantaneous communication through distributed networks to achieve the same outcome.)

    And as many others have noted, even Adam Smith was clearly aware of the limitations of markets alone, their tendency to monopolies, and the need to balance those tendencies to achieve any sort of justice.
    Thorstein Veblen clearly defined many limitations of the logic of markets over a hundred years ago, and as we all do, he built on the work of many of those who came before him.

    I am very much in the classical liberal camp, alongside Hayek on many issues.
    I see and understand the power of distributed cognition, distributed signalling, and distributed freedom of action and choice. Those things are fundamental, and my confidence in them comes from 50 years of studying evolutionary processes (from the biochemical through to logical and mathematical and strategic levels), and 40 years involvement in business and politics and computer systems design and development.

    What very few people seem to comprehend at present is what is clear to me as the central problem of markets, the fact that the value measure they deliver is based in scarcity. The more of something there is, the less it is worth, the less of it there is, the more it is worth.
    In the case of things that are naturally scarce, and compete for human labour in development, that is a perfectly sensible system.
    The critical issue of our age is automation.
    The doubling time on our computational ability is under a year.
    Economists are used to thinking in terms of growth around 2% per year, not 120% per year (and growing).

    Oxygen in the air is arguably the single most important thing to any human being, yet it has no market value.
    Why is that important?
    Because it is an example of a limiting case.
    In logic, in mathematical induction, limiting cases are important.
    It clearly demonstrates that there is not, nor can there be, any market value in delivering universal abundance.
    Why is that an issue?
    It is an issue because every human being needs to have enough air, water, food, housing, education, sanitation, healthcare, transport and communication to do whatever it is they responsibly choose to do. And that simple list (the base of Abraham Maslow’s pyramid of human needs) needs to be universally abundant if we are any of us, ever, to have a reasonable chance of living a very long time.
    None of those things are things which go to infinite demand. They are all quite finite quantities, quite easily deliverable. The demand curves have the form they do, and it doesn’t take very much matter or energy to meet them, universally.
    Delivering universal abundance of those things is not a technically difficult issue.
    It is, however, an impossible thing for markets.
    The reason it is impossible, is because universal abundance has zero market value – as we have already established in the case of air.

    So it is clear, in logic, and in practice, that market equilibrium, and human needs, are two very different things.

    In the past, when production of most things required human labour, it made sense to ignore this problem, because it wasn’t a practical one at the time. Marx saw it, and wrote about it, but few people picked up on it (their focus was on other aspects).

    What we have today, is exponential expansion of our ability to automate any process of production and delivery of goods and services.
    Left to its own tendencies, that will drive market values to zero.

    Having seen that, and in an attempt to counter it, corporate strategic interests have formulated a counter strategy and are creating barriers to abundance, artificial scarcity – we call them “intellectual property laws”. That is, in logic, all that they are.

    In today’s digital world, the cost of copying anything is pennies per gigabyte.
    It takes years to read a gigabyte of text.

    When I was diagnosed terminal cancer a few years ago, and I wanted access to all research papers, I found that the abstracts did not give me enough information to eliminate papers from my search in about 95% of cases. So on the best prices I could get on subscription databases, it was going to cost me hundreds of dollars to get find each useful paper. I couldn’t afford that (not with tens of thousands of papers invovled). I managed to find enough information to find a cure, but did so in spite of the market system, not because of it.
    The market system of IP laws was clearly, in that case, a barrier to knowledge transfer, not an enabler. {If anyone is interested, what I found effectively boils down to, the rate limiting step in immune system function is in most people availability of vitamin C. When fighting disease, most people can make effective use of quantities up to about 100g per day (and in rare cases up to double that). Many cancer cells have a high preference for sugar, so eliminating added sugar from diet buys time. The immune system is involved in removing protein fragments resulting from partial digestion from the bloodstream, so eating proteins as different as possible from our own (plant based rather than animal based foods) increases the probability of the immune system retaining the ability to detect and remove cancer. In the event – going vegan, eliminating added sugar and alcohol, worked for me. I take 2 x 9g doses of vitamin C every day, and have been 5 years clear of tumours since sticking rigidly to that regime.}

    Back to markets, and the systemic incentive structures present.

    Markets are complex systems, and have evolved very complex functions, and they have some quite simple strategies at their core.

    Markets can be very useful tools where things are genuinely scarce, but fail when full automation becomes available.

    Human beings need universal abundance of some sets of goods and services.
    Markets will never universally satisfy those needs.
    We can as a society choose to put sufficient resources in to fully automating the production and distribution of those goods and services. I go further and make the assertion that we have both a moral responsibility, and a personal self interest (in terms of our personal long term security) in doing so.
    It will never make sense, in terms of measures of monetary value, to do so.

    It is time that all people became clear that market measures of value (money) and human values, are not the same thing, and never can be.

    Human beings will always value some things (like air, and natural beauty) that are universally abundant, and therefore have no market value. And actually – there is potentially, an infinite set of such things.

    One thing about people is, that the more secure they are, the less energy and material goods they really need. Universal abundance, and universal security, makes good ecological sense, it reduces our total demands on the environment.
    Universal delivery of automated tools to act as the two servants needed by all people to allow prosperity for all, is actually a near term realistic deliverable. And making it so will require thinking outside the “box” of market values.

  • John M Legge

    Clay Forsberg misrepresents Adam Smith. The real Smith advocated publicly provided infrastructure and education, both school and adult. Smith described the economic sphere as a subset of and subordinate to the social one. See Kennedy, Gavin (2010) Adam Smith, Basingstoke, Palgrave Macmillan. Rowe and Bollier in this article assume that contemporary economics has an internal coherence which it actually lacks. Much contemporary economics is no more than ideological preaching in defence of privilege. It is the voice of eighteenth century English vicars dressed up in pseudo-scientific terminology.

  • Pingback: Evonomics – Markets – again removed. | Ted Howard NZ's Blog()

  • Pingback: Why the Economics Of “Me” Can’t Replace the Economics Of “We” – commonsparty()

  • What commons? The money game continues. It buys up property and resources to control and extract as much profit as possible. There is a private equity firm that owns 60% of the housing in Detroit, how is that good for the community? Housing, food, water, energy, internet, and education should all be free for everyone. What we need is a new story, to transition from a competition and corporate model to an open, collaborative, cooperative enterprises model, wherein people are free to participate in their community and society for the good of all, rather than for merely selfish pleasure. Change is coming, and it will be fast.

  • StarryTelling

    Excellent. Thank you.

  • Bruno

    Oh my god, a genius that will lead us to a better world! We are too rich, how couldn’t we see it before? Please, show everyone the truth and impose your ideas even if they disagree.