This book provides an eyewitness account of South Africa’s unsuccessful efforts to end mass unemployment and mass poverty.
Economic Theory and Community Development
By Howard Richards, with the assistance of Gavin Andersson BUY NOW
Introduction / Overview of the Book
A Call to Practice an Ethic of Care by Sharing Surplus
Given the institutions that today´s dominant economic science and today´s prevailing common sense assume, sustainable good jobs for everybody, paid for by the wage funds created by the sale of products the employees contribute to making, will never happen. There will never come a day when there are enough employers finding it profitable to hire workers and pay them well to create sustainable good jobs for everyone who needs one.
Consequently, in tomorrow´s functional world now being built from materials available in today´s dysfunctional world –speaking in terms of the flows of income identified by Adam Smith– satisfying basic needs and freeing people to pursue Maslow´s higher needs
can only be completed (it can be taken part way by salaries paid from wage funds) by relying on the non-wage flows of income Smith called profits and rents. Property income. Property income, as distinct from labour income, is still today typically profits and rents. Such income is a typical location where surplus, defined as discretionary income eligible to be transferred from where it is not needed to where it is needed, is often found. Whether or not some part of profit or rent is surplus, and how to use it, are matters for ethical deliberation.
The deliberation has just begun, and is far from ending, when a given sum is classified as profit or rent. But since mere mortals cannot stand so much uncertainty and hard thinking, human cultures cut it short by practicing authoritative customs –determining for example which kin get which piece of meat when a hunter kills a deer. Modern societies (
), organized principally by contracts and property rights,
are customary too, but customary in a different way. They are basically organized by the property and contract rights (the institutional frame) that made possible Smith´s neat three-part division of income flows into wages, profits, and rents. One can add to profits and rents twenty first century sources of surplus that Smith in the eighteenth century did not think of. One is the astronomical surpluses paid to powerful executives in a position to inflate their own compensation packages
. Another source is the small surpluses of middle- class people who retire on good pensions. There are many more, even though, as anyone who has reviewed her or his personal or family budget finds, there are no cut and dried simple rules defining what is and is not surplus available to be shared. Taking a larger view, leaving the sphere of the science Smith founded altogether, one can consider all the ways a human being depends on other human beings (and on nature) for need-satisfaction, starting with the newborn´s first urge to suckle its mother´s milk. It also follows from Smith´s worldview that some people lose. They have no profits or rent because they own no income-producing property. They earn no wages because nobody hires them. Mini businesses started with mini credits are never sufficient to turn all losers into winners because of lack of customers. And so on.
The existence of losers that is a consequence of basic social structure has been going on for so long that it has come to be considered natural. I find it morally intolerable not to aim for the inclusion of everybody in the benefits of social cooperation by means of sustainable good jobs for everybody or in some other way. It hardens hearts and poisons and minds to take it for granted as a fact that there will be losers in the game of life. It implies not caring. It legitimates not caring as a moral norm. That in life some win, and some lose was and is a “fact” unknown to indigenous peoples whose social structures were and are organized by kinship
. It is a “fact” that was unknown in matristic societies before the rise of patriarchy.
It was a “fact” that temporarily disappeared in Sweden and in Austria after World War II until globalization demoted social democracy from the status of humanity´s future to the status of a holding action slowing down the dismantling of yesterday´s welfare state in order to lower wages and taxes to levels compatible with being competitive in global markets.
That some must lose is a “fact” created by the constitutive rules of market society, summarized by Darcia Narvaez as “competitive detachment”
and by André Orléan as séparation marchande
Too many economists treat high growth, low inflation, and low unemployment as three measures of economic success, not always compatible with each other, so that it is necessary to accept less of one to get more of another. Too many economists settle for policies that deliberately create some unemployment because full employment would be inflationary, and because it would discourage growth by raising wages hence weakening the inducement to invest. It might also be said that all
economists teach that it is a fact that there are and must be losers in life, because any scholar who does not accept what Joseph Schumpeter called the institutional frame of economics –within which it can never be the case that there are enough employers who find it profitable to offer everybody who needs it steady employment at good wages-– is by definition not an economist. This way of seeing the matter would place dissidents who study economics but do not believe it outside the camp of the economists. As long as we talk this way, they would not be true economists at all, because true economists believe the concepts that define their discipline. But we do not need to talk this way all the time. “Economist” would be far from being the only word that it is convenient to use in different senses in different contexts. Sharing surplus, defined as moving resources from where they are not needed to where they are needed, is not a new idea. For Saint Thomas Aquinas writing in the thirteenth century –and echoed today by the teachings of Catholic and mainline Protestant churches—whatever you or I may own does not belong only to ourselves. It also belongs to whomever we are able to help with our surplus.
Nor is it a forgotten idea. As we speak millions of people around the world are sharing –sharing money, time, expertise, food, clothing, and whatever they have and can spare—to help others.
Today, in 2021, I want to suggest that calling for renewed emphasis on this old and well-remembered idea has new meanings in the light of at least five contemporary game-changers:
- Humankind´s number one existential challenge today is environmental, not social. If our species fails to reinvent itself to adapt to physical reality, the game will be over.
- But environment and social justice cannot be separated, while neither can be separated from the systemic imperatives implied by the dynamic of accumulation that moves the system. The self-interest of powerful people who want to make money by making profitable investments, even when those same investments make doomsday more certain and more proximate, does not fully explain why solemn agreements to respect mother nature shrivel into dead letters time and time again. People want jobs. People need jobs. The system needs investments to keep going, while its basic structure implies a chronic tendency for investments (and jobs) to be too few.
- Existential crises call for objective reasoning and cooperation, and frequently crises call for self-sacrifice for the sake of the common good. But today, as in the 1930s, existential crises coincide with rising tides of unreasoning anger, shameless liars and manipulators, mass desperation, violence, and political insanity. So far, the recent political insanity that most threatens humanity´s future is in the United States. Mass desperation surfaces in behaviour like that of the economic migrants who crowd into leaky boats to cross illegally from North Africa to Italy, and in the behaviour of economic migrants who walk on foot from Honduras to the Mexico-United States border.
- We have –or at least I would propose for discussion the thesis that we have—reached a point in history where nothing would better serve the objective interests of the rich than an end to poverty. Richard Wilkinson and Kate Pickett, both epidemiologists, have assembled statistical data in support of a related thesis: high income people benefit from living in societies where wealth is relatively equally shared when such societies are compared to others where the gaps between haves and have-nots are extreme. How to end poverty, in one form or another, is regularly at the top of the agenda of the annual meetings of the World Economic Forum at Davos. Nevertheless, the dynamics of the system in place continue to call for government policies (like tax exemptions and subsidies …etc.) guaranteeing high profits that exacerbate inequality, in order to attract capital and in order to avoid capital flight. They call for keeping wages low (and often for more violent forms of repression of labour) in order to keep the selling price of exports competitive in global markets (and also as part of keeping profits high, etc). In the past it has often been a no-brainer to conclude that the system favours the rich and oppresses the poor. Getting used to the idea that at this point in history the apparent winners are in the last analysis losers too, requires escaping from mental models that fitted the past better than they fit the present. What the dynamics of competitive capital accumulation tend to force entrepreneurs and governments to do –we just saw an example in point two above, regarding environment vs. profits and jobs– does not equal what it is objectively in anybody´s best interest to do. This reflection leads to seeing educational and organizational paths to change that avoid drawing a certain common pessimistic conclusion. That pessimistic conclusion is: A modification of the system fundamental enough to make sustainable dignified livelihoods for all possible, and to make escaping ecological catastrophe possible, could only be achieved by violent revolutions; but violent revolutions with such aims are no longer possible; and if they were possible they would not be desirable.
- The Covid-19 pandemic has highlighted fundamental problems. A post-Covid-19 world may be a world where greater awareness of fundamental problems catalyses greater ability to solve them. One has already been mentioned. It is the insecurity of the rich caused by the continued existence of the poor, manifest for examples in criminal violence and in the spread of contagious diseases. A second is the insecurity of the poor, manifested in lack of access to medical care and lack of resources to fall back on when lockdowns stop normal economic activity. A third is a central issue for the future: Will the new technologies that multiply productivity beyond anything known in the past be the intellectual property of a few billionaires, entitled by law to live in luxury while ignoring the vital needs of everyone else? Or will the benefits of what used to be called ““universal labour” (advances in knowledge) be truly universal? These questions have been brought to a head by the conflict between the legal right of pharmaceutical companies to withhold vaccine from those who cannot pay, and their moral duty to use their surplus to help those in need. A fourth fundamental problem has been caused by the bogus neoliberal twin concepts of economic efficiency and free trade. When Covid-19 struck, the peoples of the world discovered to their dismay that they had lost self-sufficiency and resilience. Efficiency” and “free trade” had made virtually every country in the world dependent on China for antibiotics, and on a few suppliers for computer chips. And so on. To meet many vital needs, the peoples of the world depended on long and complex supply chains over which they had no control. Covid-19 made it a priority to study the ways of life of indigenous ancestors who knew how to live on the land where they were located, and who were bonded one with another in kinship groups jointly responsible for each other´s welfare.
Where do we go from here?Book Review by Heikki Patomaki and Gillian Marcelle
This is a book for those who are seeking political economy alternatives both in academia and in wider communities. While providing a scholarly discussion of many heterodox (and orthodox) theories, Howard Richards shows that several already existing alternatives can work. They worked for a while in various countries such as Sweden during the social democratic era, and also today there are illuminating examples such as the Community Work Programme in South Africa. The book sets community against economy, especially as the latter is currently understood by mainstream economics. Richards argues not only that theory and practice must be consistent, but also that local community experiments can become the method of changing the ‘basic social structure.’ While Economic Theory and Community Development stresses the role of globalization, it sees the future of human survival and flourishing in terms of developing communities that respect and meet the needs of everyone in a generalizable manner. This book is a noteworthy contribution to the ongoing discussions about what will come after neoliberalism and what will make our global civilization sustainable. – Heikki Patomaki, Professor of World Politics, University of Helsinki
Strategies for economic development, besides being grounded in the varied realities that exist around the world, ought to have an ethical basis. This book with its underlying philosophy of unbounded organization provides guidance in the form of mental models, tools, and experiments. This is sorely needed at a time when the world needs to activate all available resources and optimize adaptive responses. Facing a global pandemic, wrestling with the climate crisis, and undoing the ravages of late-stage capitalism require that we widen the pool from which we draw knowledge. I highly recommend the perspectives of Richards and Andersson as an invaluable part of our conceptual exploration and purposeful change journey. – Gillian Marcelle, economist, CEO of Resilience Capital Ventures LLC