What’s the Economy For Anyway?

I hosted a discussion a few months back after a film called “the Ascent of Money” and posed the question, “what is the economy for?” This question threw people off. They had come thinking we would discuss the nuts and bolts of how to reform the economy and rescue it from itself. But how can we know how we should change the economy if we don’t consider what the economy is for and what we want it to look like? A roadmap is useless without some sense of direction or destination.

A few days ago I saw a film called, “What is the Economy for Anyway?” The film went into great detail about what the US economy currently doesn’t do for us. The facts presented were startling. The US spends more on healthcare than any other country, but we are now 50th in longevity and 47 million people in the US are without health insurance. More Americans declare bankruptcy than graduate from college. There are 2 million nonviolent offenders in jail, likely due in large part to crimes related to economic stress like theft and drug dealing. CEOs make 400 times what the average worker makes. The top 1% wealthiest Americans make more than the bottom 50% in the economic pyramid. Twenty-nine percent of us have no paid time off at all and fifty percent have less than one week off. We are the only industrialized nation without a paid vacation law. The US is only one of four countries – Swaziland, Papua New Guinea, and Liberia – that doesn’t offer new mothers paid time off. The infant mortality rate in the US ranked 27th in the world in 2000 and has been dropping since. 3.5 million people, 39% of them children, currently experience homelessness every year and 30% of American are on the edge of poverty. 36.2 million people lived in households considered to be food insecure. Of these 36.2 million, 23.8 million are adults (10.6 percent of all adults) and 12.4 million are children (16.9 percent of all children). We are clearly going in the wrong direction.

So what IS the economy for? It is certainly not even meeting everyone’s most basic needs. At least the economy should make sure that everyone has food, shelter and healthcare. But what else do we value that the economy is not supporting? It is fostering community, protecting our environment, facilitating good governance or creating happiness? Without trying to quantify indicators of whether our economy supports those values, I think it is quite clear that it does not support these values either. How do we create an economy that does? Decentralization to the extent possible, I believe is key. The US economy is too big to be transparent, to have adequate feedback mechanisms, or to regulate or reconstruct the economy based on progressive values. The scale and centralization of our economy enables corruption and doesn't facilitate the consideration of context and relationship that should guide good economic development and policy. Of course some economic functions probably need to remain at a national level, but these should be minimized and greatly reformed. Venezuela, a work in progress, is one model. They are trying to redistribute and decentralize wealth and power and meet the people’s basic needs. The other part of the equation is rebuilding the grassroots economy. This can be done through a variety of initiatives that are already underway but need greater support and synergy: community currencies, worker cooperatives, credit unions, land trusts, urban food production, municipal participatory budgeting, local investment strategies, recuperation of closed businesses, affordable housing cooperatives, preferential purchasing, decentralized energy sources, gift economies and mutual aid projects…

The solutions exist. We need only to take a step back to see the big picture. What kind of economy do we want? An economy where people serve the needs of the economy and the profit motive or many economies that create happiness, health, sustainability, equality, freedom, care, and connection. This is what we should be working towards, not tinkering with the worst aspects of a highly dysfunctional, centralized and corrupt capitalist economy. It won’t work. It needs fundamental change and now is the time.