Editor’s Note: In an effort to center New Economic Thinking in the discussion of the COVID-19 crisis, we’ve curated a list of Evonomics articles relevant to this moment—including this one. Check out the full list here.
30 January 2016
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.
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.