George Porter

The following commentary and proposals for reform are intended to set the scene for discussions on new economic policy directions from the local to the global. As the study and practice of economics cuts across so many other issues of human concern, many of the points made will also be covered in discussion on related issues, particularly those covering the distribution and use of natural resources.

This is presented as a consultative draft open for positive comment.

Economic trends are moving with increasing speed and little restraint, towards a single global economy based on commercial monetary transactions, speculation, take-overs, mergers and other practices to produce ever-growing profits for those in control. Financial transactions, having no relationship to corresponding substantive security have created an artificial high risk situation, placing the economy in a state of potential instability.

The recent rapid transfer of wealth and power from the lower and middle income groups representing 80-90 percent of the world’s people, to a small and diminishing elite of the excessively rich whose fortunes continue to mount, seems an unstoppable process in the absence of restraints on wealth accumulation.

At the centre of the new global economy are the transnational corporations (TNCs) and financial institutions that have become locked into a system dependent on growth and high-level profits, devoid of public responsibilities.

Recognition of this situation is vital to moving the global economy on to a path of sustainability and social responsibility.

As the human economy determines the use and distribution of natural resources and human created goods and services, its expert management is the key to the present and future human condition, as well the health and integrity of the natural world or ecosphere.

Management of the human economy by government on behalf of society at all levels, is necessary for the fair and efficient use of resources through the production and distribution process, and to ensure the sustainability of ecosystems. This process must become the overriding objective of economic management; indeed of government itself, for the collapse of the life-support systems of the ecosphere would be catastrophic. Such an outcome is inevitable if the reality of this issue is not taken with the gravity it demands.

Economic policy and directions, therefore, must serve human and environmental needs and those of the other life forms inhabiting the planet, so as to ensure a just and sustainable global society.

The following paragraphs set out the economic policy changes considered necessary to achieve a just and sustainable society. They should be read in conjunction with Economic Systems - Natural and Human.

As economic policy determines the allocation of resources and the degree of human well-being, it is a matter for determination at the highest level of government rather than financial and corporate institutions that benefit from such policies.

Economic policy at all levels must be determined and conditioned by ethical principles that enjoy universal acceptance. This requires a major universal paradigm shift within the next decade - a significant change of consciousness.

Before principles and values can be established as the basis for a new human economic regime, the deep conflicts between the basic assumptions underlying current market-driven neo-liberal economic policy on the one hand, and the reality of approaching physical limits to economic growth on the other hand, must be recognised and resolved.

Equally significant are the social issues of equity and justice. Despite United Nations declarations and conventions defining human rights, human society is moving rapidly away from civil democracy, justice and equity as mega-business consolidates control over the world economy.

Note: An appropriate code of ethical conduct suitable for a basis of such a general policy is set out in The Ethical Imperative. This document was assembled from a wide variety of declarations, codes, studies and writings to represent a broad consensus of contemporary thinking.

The following guidelines are proposed for the formulation and operation of a new human economic regime to meet human and biological needs.

1. Respect for the integrity of the natural world as the source and sustainer of all life.
2. Recognition that the human economy, being dependent on the resources of the biosphere, is a sub-set of the natural economy of the biosphere.
3. Recognition that the biosphere is a closed system, the components of which form a finely structured complex of interdependent parts held together in delicate balance.
4. Acceptance that the human economy must operate on the basis of finite resources and closed ecosystems.
5. Recognition that present economic directions based on promotion of sustained economic growth are incompatible with the attainment of sustainable development and will inevitably lead, sooner or later, to collapse of life-support systems and extinction of most forms of life.

Key principles and values together with a set of rights and responsibilities should include recognition that:

1. Land, including natural resources, provides the foundation for all life. It is the common inheritance of humankind, passed down by previous generations. The exercise of both common and individual rights to land is essential to a society based on justice. But the rights of individuals are limited by the rights of the community. Those who begin by denying the existence of common rights in land end by creating a condition of society wherein the exercise of individual rights becomes impossible. As members of the dominant species, each of us has a primary responsibility to respect and nurture the land to ensure it will continue to provide a sufficient level of life support.
2. Current land values and profit levels are not a measure of human contributions to society so much as reflecting the scarcity of resources, and of human demand. Accordingly, humans have no pre-ordained right to sequester and claim individual ownership of land and its resources and products. Rather, they should adopt a stewardship role; use no more than they themselves need; and restore to its natural state, any damage done to the environment.

Note:

(i) The concept of ‘ownership’ of land is a relatively recent phenomenon in human history. The move for individual alienation came with the closure of the commons. We are now witnessing the completion of this process through destroying the habitat of the remaining indigenous people living in their traditional state, and by the present drive to privatise state assets.

(ii) Individual ownership of land and natural resources is the root cause of much of the major destruction of natural resources and ecosystems in countries that lack adequate control over resources. It also provides the means for acquiring excessive unearned wealth by individuals and companies that have exploited land without any corresponding contribution to society.

3. Though land should be in the common ownership of each nation state, the statee should make land available for productive use on a secure long-term leased basis, at suitable rentals and subject to acceptance of stewardship responsibilities for its care.
4. People’s labour, both physical, social, and intellectual, is their only valid contribution to society, and hence the only legitimate source of income.

Note:

This principle should not preclude income savings and investment, but precludes income and profits from speculation, fraud, and money made at the expense of others. Public ownership of land and natural resources will preclude private speculation from changing land and property values. There need be no impediment to private ownership of human created assets, including buildings.

5. Equity and justice demand that each person has access to sufficient resources and services for a reasonable standard of life - adequate housing, food, clothing, education, health care, community interaction and recreation.
6. Denial of access to land, a diminishing job market due to business restructuring, new technologies and pressure on employees, are causing unemployment, increased prices, idleness, deprivation and social disorder. The concept of a basic income (BI) needs serious public debate as the means of meeting many growing social problems as part of a wider package of social reforms.
7. Work opportunities should be created by public programmes through social and community initiatives, environmental restoration and enhancement, continuing education and recreation.
8. To reverse the rapidly growing trend of income and wealth redistribution favouring the small rich elite, restraints are needed to limit top incomes and excessive capital accumulation.

Note:

It is now common for US CEOs to be on salaries around US$500,000 a week plus equivalent bonuses.

9. The appropriate role of the market must be established so a balance between the private and public interests is achieved.

Note:

(i) The effects of an unfettered market, combined with unrestrained commercial activities in the new environment of instant electronic communications, have facilitated the globalisation of economic policy and the breaking down of national barriers. Within just a few years, this has created a crisis situation of social, economic, and environmental dislocation, now running out of control.

(ii) Generally, the market is a valuable and efficient means of distribution, but its control by cartels, monopolies and secret agreements, restrictive practices eliminating effective competition or loss of local control through centralisation of economic and corporate institutions, prevent the market from operating for the common good. Ethical practice codes are necessary to prevent undue privilege and corruption.

10. The principles of subsidiarity and diversity should be adopted as guiding policy for human interaction at all levels of decision-making. This would involve basic structural change to minimise global scale activity and maximise local based activity and decision-making.

Note:

(i) Subsidiarity is a basic democratic principle that decisions be made at the lowest level of society as is practical and consistent with the overall public good. No decision affecting the lives of others should be undertaken by government without mandate or by a corporation without authority by government granted by charter or legislation. (See [UNKNOWN REF] of this series.)

(ii) The PCDForum motto "Globalise consciousness; localise economies" encapsulates this principle.

11. The size, power and influence of corporations and financial and other institutions, TNCs in particular, must be contained as these latter institutions are rapidly gaining control of the world economy, with governments powerless to exercise control over their own economies and the health of their own people.

Note:

(i) Future development of this paper will offer suggestions as to how to approach this issue.

(ii) See also [UNKNOWN REFS] in this series on the rise of corporate power for specific discussion of this issue. It is particularly relevant to the principle of subsidiarity referred to in (j) above.

(iii) Control of the world’s finances will be covered in a future chapter.

12. A charter for corporations should require that they serve the long-term public interest in a specified range of responsibilities.
13. Prices for goods and services must be required to incorporate full social, health and environmental costs, including perceived intrinsic values of intact ecosystems, and present and future resource shortages.

Note:

(i) Human production processes are grossly inefficient in energy use. True costs and the value of energy used are heavily discounted and passed into the community at large as hidden costs..

(ii) Incentives are needed to encourage efficiency in resource use and to recognise the needs of future generations.

14. Taxation systems should reward individual contributions to society and initiatives of social value, and penalise activities harmful to the environment, or human health and welfare. This would require the replacement of income tax, both individual and corporate by resource taxes, including land tax. There is a range of options.
15. New indicators of national productivity and material wealth and human well-being should replace current indicators that reflect only the income that is measured in the formal economy.
16. The community at large, also often bears the costs of inflation caused by the issue of currency without substantial security. This allows financial institutions to gain profits at the people’s expense, nearly always the poor and middle income earners.
17. The current moves to globalisation of the economy and private control of economic policy need to be reversed in accordance with the principle of subsidiarity - in this case by a deliberate global policy of moving control of decisions affecting peoples’ lives to a local level, and in particular, to building up the movement for sustainable livelihoods, local economies and local initiatives. At the same time, large corporations and financial institutions should be divided up into smaller units, and their activities confined to those authorised in their charters which need to be restricted to clear cut functions.
18. Monopolies and other mechanisms to minimise competition must be banned and the current trend towards profit-making at any cost as an end in itself must be reversed.
19. All companies must make a positive contribution to society as their primary objective. The new General Agreement on Tariffs and Trade (GATT) administered by the World Trade Authority, has been a major step in consolidating the move to remove restrictions on the flow of goods, money and services between nations. It advances the movement towards economic centralisation and places real power in the hands of fewer and fewer major private corporations, institutions and those that control them. The negative effects on the environment and the efficient use of natural resources will be substantial in promoting increased production and the consumption of transport fuel at a time when energy and other natural resources need to be carefully nurtured in the interests of a sustainable future. World trade policy should be to make nations self-sufficient to the maximum extent possible and to support exports of goods for which nations have special advantages or skills, are able to produce more efficiently than others, or are surplus to local needs.
20. Environmentally and socially harmful activities should be phased out or contained within acceptable limits - for example international tourism, now the world’s biggest financial sector, which is causing critical damage to pristine ecosystems and massive air pollution from aircraft, must be contained well below current volumes. Logging of primary forest should be stopped as a matter of high priority. Energy use, particularly of fossil fuels, must be substantially reduced as well as long-term life threatening toxic chemicals and other substances and technologies.
21. Mega-development projects must cease and be replaced by local, small-scale developments initiated and supported by local communities in line with enlightened people-based national strategies. See An Ethical and Philosophical Basis for Human Conduct.
22. High priority is needed to protect long-term human health by placing less dependence on proprietary drugs and therapies, and more on ensuring health through continuing health monitoring and education, elimination of toxic substances in the environment and processed food, non-organic fertiliser, growth promotants, chemical pesticides and other potentially harmful substances. In particular, food production needs to be freed from the current growing trend to artificial and processed food, industrialisation, standardisation and centralisation - processes driven by economic considerations of profit maximisation and cost minimisation regardless of long-term human health and massive hidden subsidies that fall indirectly on consumers.

Note:

Toxic substances in the environment are also a threat to animal and insect life and other bio-organisms necessary for soil health and essential to maintenance of the natural food chain.

23. A universal ban on research and development not directed to improving the human condition or restoring damaged ecosystems through natural restorative processes. In particular, bans should be placed on developing technology based on genetic modification, substituting natural functions by artificial techniques or otherwise substituting the processes of nature by artificial means.
24. Research priority to be given to seeking new, renewable energy sources. Further research into non-renewable and nuclear energy to be abandoned.
25. A ban on all anti-human and anti-environmental activity such as manufacture of weapons and systems for the conduct of war; and conflict and other acts of aggression; and conversion of armaments industries to peaceful purposes. All sales of armaments should be banned.
26. Controlling the growth of cities and urban reconstruction must be high on the list of economic priorities, particularly in view of the increasing drift from rural areas:- a problem related to rural poverty, land alienation in favour of large corporations and industrial food production.

Finally, a quote from the book Farming in Nature’s Image:

It is absolutely essential for long-term survival that humankind devise a new economic order that rewards activities that add to the credits (resource conservation, recycling and maintenance of resource pools, enhancement of stabilising processes, minimisation of waste) and discourages activities that add to the debits (pollution, resource depletion, and disruption of stabilising processes).