Tuesday, May 31, 2011

The New-Economy Movement

Long-time activist Gar Alperovitz has an interesting article in The Nation about the emerging structure of "The New-Economy Movement.," a mostly uncoordinated group of non-profits companies and foundations, and citizen co-operatives, that have explicitly rejected the central tenet of modern Anglo-American capitalism that the profit motive reigns supreme. These are new, and some old, "institutions whose priorities are broader than those that typically flow from the corporate emphasis on the bottom line."

Among groups mentioned are the The American Sustainable Business Council, an alliance of 150,000 business professionals and thirty business organizations, whose "members are “triple bottom line” companies and social enterprises committed to the environment and social outcomes as well as profits"; the Business Alliance for Local Living Economies (BALLE); and Mondragon, one of the largest and most successful cooperative enterprises in the world, based in the Basque region of Spain, with almost 100,000 workers.

Alperovitz notes that these types of organizations are signs of a growing realization that our current economic system is not sustainable. The financial and economic crisis of the past three years has forced more and more people to question the basic principles of Anglo-American capitalism and its over-weening emphasis on profit.

Unfortunately, Alperovitz does not discuss the ample precedents in American history for these new organizations - such as the cooperatives established by the Farmers Alliances in Texas and other states in the 1870s and 1880s. He does mention the State Bank of North Dakota, but fails to mention the Non-Partisan League, the political organization that seized control of North Dakota in the 1910s and established the Bank.

It used to be widely understood a century and more ago, that corporations had other functions besides mere profit making. In fact, at the beginning of the United States, and up until the Civil War, corporate charters were issued for very specific purposes -- such as to build roads, canals, bridges, ports, railroads -- and sometimes the purposes had to be accomplished in very specific time frames or the charter of incorporation would lapse and the corporation would cease having a legal existence. Up until the 1860s, it was not unusual for a state to revoke a corporate charter if the corporation did not fulfill the purpose for which it was incorporated. For example, the Sunbury and Erie Railroad, chartered by Pennsylvania in 1837, was never able to actually begin construction, and after the state had given it an extension of time, the company was dissolved by state government fiat and its property given to the Pennsylvania Railroad. (Sunbury is located near the confluence of the north and west branches of the Susquehanna River.)

In 1832, the Franklin Railroad received an unusual dual charter from Maryland and Pennsylvania, to construct a railroad from Chambersburg 27 miles south to Hagerstown. It failed soon after it opened, but was operated by the bankruptcy receiver until 1852, when the Commonwealth of Pennsylvania determined that the thin-flat, bar-rail on which the horse-drawn cars rode had become unsafe to operate on, and ordered that the company either disband, or relay the road with heavy T-rail to allow the running of steam locomotives. In other words, corporate charters were issued to achieve some specific purpose that would advance the general good. Limits on what corporations could do were common.

Importantly, Alperovitz notes that many leading U.S. environmental organizations have become unwilling to seek real, systemic change.
A third and very different challenge is presented by traditional environmental organizations. Speth, a board member of the Natural Resources Defense Council, has found very little willingness among his fellow board members to discuss system-changing strategies, even if understood as long-term developmental efforts.
Gus Speth is a former adviser to Presidents Carter and Clinton, and recently retired dean of the Yale School of Forestry and Environmental Studies. Alperovitz quotes Speth on the need for real systemic change: “For the most part, advocates for change have worked within the current system of political economy . . . But in the end, this approach will not succeed when what is needed is transformative change in the system itself.”

Among the problems Alperovitz notes are "What to do about the power of large private or public corporations in the long term is an unresolved question facing all parties," and the debate over whether or not "conventionally defined economic growth must be slowed or even reversed. In theory an economic model that redistributes employment, consumption and investment in a zero- or reduced-growth system is feasible, but it is a very hard sell in times of unemployment, and it is a direct challenge to the central operating principle of the economic system. It is also a challenge to the priorities of most elements of the progressive coalition that has long based its economic hopes on Keynesian strategies aimed at increasing growth."

The New-Economy Movement
by Gar Alperovitz
May 25, 2011

The idea that we need a “new economy”—that the entire economic system must be radically restructured if critical social and environmental goals are to be met—runs directly counter to the American creed that capitalism as we know it is the best, and only possible, option. Over the past few decades, however, a deepening sense of the profound ecological challenges facing the planet and growing despair at the inability of traditional politics to address economic failings have fueled an extraordinary amount of experimentation by activists, economists and socially minded business leaders. Most of the projects, ideas and research efforts have gained traction slowly and with little notice. But in the wake of the financial crisis, they have proliferated and earned a surprising amount of support—and not only among the usual suspects on the left. As the threat of a global climate crisis grows increasingly dire and the nation sinks deeper into an economic slump for which conventional wisdom offers no adequate remedies, more and more Americans are coming to realize that it is time to begin defining, demanding and organizing to build a new-economy movement.

That the term “new economy” has begun to explode into public use in diverse areas may be an indication that the movement has reached a critical stage of development—and a sign that the domination of traditional thinking may be starting to weaken. Although precisely what “changing the system” means is a matter of considerable debate, certain key points are clear: the movement seeks an economy that is increasingly green and socially responsible, and one that is based on rethinking the nature of ownership and the growth paradigm that guides conventional policies.

This, in turn, leads to an emphasis on institutions whose priorities are broader than those that typically flow from the corporate emphasis on the bottom line.

Read more.

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