“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” So begins a significant new report by the New Economics Foundation in the U.K., quoting economist Kenneth Boulding. “The most pressing problem facing humanity now,” says the report, The Great Transition, “is how to share scarce planetary resources in ways that are just, sustainable and support the well-being of us all.”
The “Great Transition” is meant to echo the phrase used by Karl Polanyi, The Great Transformation, the title of Polanyi’s important 1944 book describing the shift from the world of the commons to that of the total market order. Polanyi argued that the coming of the market order swept aside all sorts of social arrangements that had prevailed for millennia of human history: the role of family, kinship, community and religion, the importance of moral order and other non-market principles.
Polanyi is a great friend of the commons because he sought to find a new middle ground between the market and the commons, and between the individual and the community. He intimately plotted the ascendance of the market realm and its eclipse of the commons; now the Great Transition seeks to develop decentralized, effective means to reverse the Great Transformation, and re-inscribe the market into a set of coherent and constructive social relationships.
In a way, the report aims to re-invent the very framing of economics. As the report puts in a chapter called the “Great Revaluing”:
[B]uilding social and environmental value should be the central goal of policy-making. We also argue that this needs to be true for private as well as for public decision-making, with market prices reflecting real social and environmental costs and benefits. We need to make ‘good’ things cheap and ‘bad’ things very expensive – too often this is the opposite of what we have today. As long as the achievement of good outcomes is separate from the real business of business, we will not see these outcomes achieved. Similarly, public policy cannot hope to create the best possible social and environmental outcomes unless this is at the heart of policy-making. In both cases, building real value requires us to accurately measure these outcomes and to build these measures into the core of public and private decision-making.
Other chapters explore the implications of the Great Revaluing. These chapters are called the Great Redistribution, the Great Rebalancing, the Great Localization, the Great Reskilling, the Great Economic Irrigation, and the Great Interdependence.
The Great Redistribution proposes a redistribution of both income and wealth as a way to create value. Among the ideas: the creation of Citizens’ Endowments of up to £25,000 for all people on reaching the age of 21 to enable them to invest in their future, as well as Community Endowments to provide commonly owned assets to invest in our local neighborhoods. Both would be funded by a proposed increase in inheritance tax on all estates to 67%.
The Great Rebalancing proposes a revamping of market structures so that “prices reflect true social and environmental costs and benefits” and so that the market sphere is “rebalanced alongside the public sphere and the ‘core economy’ – our ability to care, teach, learn, empathise, protest and the social networks these capacities create.”
The Great Localisation chapter argues for “an expanded concept of ‘subsidiarity’ – the idea that decisions are best taken at as local a scale as possible.” This means a devolution of power from the center to the edges, and a redefinition of market efficiency to encompass local, social and ecological impacts. If the economy is going to become more localized, this in turn will require many people at the local level to relearn skills that have been forgotten as markets became more concentrated and abstracted from local communities. This is the Great Reskilling, a trend that would enable a greater autonomy of communities and a return to appropriate-scale technologies.
These transformations imply other changes: “Decision-making based on active participation will be most effective when people are well informed about what makes their local economy tick and what makes public services able to achieve the best outcomes. Achieving consensus requires as full an understanding of these issues as possible.
A chapter on the Great Economic Irrigation outlines how finance could facilitate many of the changes proposed. “We argue for a shift from taxing ‘goods’ such as work, to taxing environmental and social ‘bads’ such as pollution, consumption and short-term speculation,” the Report states. “We argue for new variable consumption taxes, replacing income tax for the majority of the population, reflecting the social and environmental costs of goods. For private finance we again distinguish between national and local, arguing that large-scale projects such as building a green energy and transport infrastructure should be funded through national level environmental and ‘land’ taxes and the creation of public money where appropriate. This would be channeled through a national ‘Green Investment Bank’.”
Finally, a chapter on the Great Interdependence examines global inequalities from both a development and an environmental perspective. It paints a picture of global cooperation in dealing with carbon emissions and much else.
The Great Transition report is visionary and intelligent in a refreshing way. It does not argue from ideology but rather from values, democratic principles and practical realities. It proposes grand, barely imagined innovations – yet is not unmindful of the significant political and cultural change that each would entail. While the report bravely risks sounding utopian, it quickly becomes clear that its authors are utterly hard-nosed and realistic in its assessment of the failed economics of neoliberalism—which is more than can be said for governments around the world.
When it comes to recognizing the ecological limits of the planet, too, the report shows that the real dewy-eyed naifs are Wall Street and its political allies. They are too desperate to salvage a failed economic paradigm that sustains their private prosperity and political power to acknowledge the ugly truths that are bearing down on us every day – that we are consuming the Earth’s finite capital, and that a reckoning will be due, one way or another. What’s more “realistic” – to deny this fact or to begin to think through the options?
Bravo to the New Economics Foundation for its thoughtful, provocative and visionary report!