March, 1992
THE NEED FOR A THIRD WAY IN ECONOMICS
Maynard Kaufman
This proposal argues for a Third Way to economic security in addition
to jobs and welfare payments. Neither the private sector nor the public
sector can be trusted to offer well-being to people or care about the
sustainability of our ecological life-support system. This proposal
argues that the rediscovery of self-reliant activities in households
and communities will open a more dependable way to economic security
and lead to ecological sustainability.
The Third Way is needed for three inter-related reasons. First, to help
those who are impoverished by inequities in the present system, second,
to restore civil peace and revitalize local communities, and, third, to
help our society move toward a more sustainable or ecological
lifestyle. These projects reinforce each other in synergistic ways. But
their success depends on the homecoming of economics. For too long
economics has been “out there” serving the interests of
industry and government rather than the people.
We need to focus on economic possibilities because we live in an
econo-centric society. Economic considerations are the bottom line.
Because money mediates between production and consumption, it is
central in our plans, hopes and fears. In order to generate enough
money for everybody, and pay the interest on our growing national debt,
a growing economy is necessary. As long as the economy kept growing, so
that jobs and money were plentiful, most people were happy even though
some worried about the fact that such growth was consuming our capital
stock of natural resources and polluting our air, water, and land.
But now the economy is no longer growing and there are not enough jobs
or money to go around. Much money goes from the poor to the rich
because of political policies during the past ten years and also
because interest is being collected by those who have more money from
those who have less. So the rich accumulate more while many in the
middle class join the poorer classes in our society. Thus, even in
this, the richest country in the world, many people are suffering.
What can be done about this? Let’s consider some possibilities.
First, the market economy had been following cyclical patterns. Hard
times due to recession have been followed by economic recovery, and
efforts are indeed under way to jump—start the economy back into
growth. This does not seem to be working, and it is important to
remember that lower middle class folks were getting poorer even before
the current recession. In other words, economic growth had been
maintained on the backs of the poorer people in our country while the
Reagan policies subsidized the rich to keep the economy growing.
Economic recovery also depends on “consumer confidence” and
this seems to be at low ebb. Consumers lack confidence and the cash
needed to provide enough demand to stimulate growth. Our unfavorable
balance of trade adds to the national debt. One of every five Federal
dollars now spent is for interest. On economic grounds alone,
therefore, a genuine economic recovery may not be forthcoming.
Second, why can’t we tax the rich to help the poor and thus
redistribute the wealth? This should be possible in a democracy, but as
long as politicians in both parties need the rich to finance their
election campaigns it is not likely. Moreover, these politicians really
seem to believe that the rich need the capital to get the economy
moving so that some of the wealth can trickle down to the poor. Power
is structured in our society by a coalition of economic and political
forces, reinforcing each other as in the military-industrial complex.
This kind of structure protects itself and is not likely to give up
wealth and power for humanitarian reasons.
Third, why can’t we tap our natural resources to help the economy
recover so that the poor can be helped? The fact is that our resources
have already been exploited. Our fossil fuel resources are 90%
depleted, old growth forest is 95% cut, and loss of topsoil is
curtailing crop yields. Declining resources, along with ecological
degradation such as acid rain, means that economic recovery is not
likely to occur.
Fourth, why can’t the United States, now the world’s only
remaining superpower, simply extort the wealth from other countries? Of
course we already do this by lending money for
“development” but despite the dispossession and oppression
of many peasants in Third World countries, the loans are probably not
going to be repaid to U. S. banks and lending agencies. Moreover, these
policies of economic exploitation usually require reinforcement by a
military presence as in the Middle East or in Central America, and thus
the Pentagon uses up the dollars which might otherwise have helped the
poor. If American imperialism becomes more overtly aggressive we can
expect that counter-threats of nuclear terrorism will be evoked and the
arms race will continue.
The prospects for a recovery of economic growth are dismal. But this is
also good news because reduced industrial production means reduced
energy use and reduced environmental impact. It is also good news
because as a culture we suffer from a surfeit of goods and services
which we have been programmed to consume in order to profit the
corporations that produce them. As Alfredo de Romana suggested,
“we do not need an ‘economic recovery’ as much as a
cultural renewal.” Perceptive people are beginning to see that
the materialistic assumptions which undergird the quest for economic
growth are dysfunctional in both environmental and social contexts. The
paramount question in our time is this: How can citizens live with
economic recession and still maintain a sense of well-being?
We know that economic recession is necessary to preserve environmental
quality and to restore global equity. We Americans, 5% of the
world’s population, consume over 25% of the world’s
resources and generate more greenhouse gases such as carbon dioxide
than any other country on a per capita basis. But we can learn to
affirm economic recession only if we rediscover the Third Path to
economic security. As long as people are dependent on commodities, as
long as the materialistic values in our consumer-oriented society
prevail, people will feel cheated when they have less money to spend.
When unlimited desires are frustrated by limited means the result is
civil discontent and more violence in our streets. One can say that
people have been misled by rising expectations, but in fact
alternatives to the money economy have been destroyed and new
opportunities along the Third Way have yet to be promoted.
The social deterioration resulting from high levels of consumption in
our urban—industrial society is also a reason to change our way
of life. Certainly some sort of socio-economic reorientation is
necessary to counter the anomie and alienation which is manifest in
high levels of crime, drug use, child neglect and abuse, along with
other similar problems. The United States, the richest nation in the
world, holds a higher percentage of its citizens in prison, and for
longer terms, than any other nation. Something is seriously wrong here!
Too many people in our society are without jobs or meaningful work.
They have lost dignity and self-respect. Only .17 of one percent of the
work done in our society is done with human muscle. We need to use less
fossil fuel energy. We need more meaningful work, and production for
use in the household and community would help people gain self-respect
and help to revitalize communities.
Will people want to go “back” to raising their own food and
“return” to a lifestyle that demands more physical effort
and personal initiative? This will certainly sound retrogressive to
many people. But many others, as we can see from the movements of the
1970s, (voluntary simplicity, appropriate technology, communal living
and homesteading) had chosen these possibilities even though they were
not promoted by government or community Leaders. We need to open
up this Third Way, provide opportunities and explain the joys and
satisfactions that more self-reliance and personal independence can
bring. These are the carrots. Of course the stick of economic necessity
may also help to move people toward a lifestyle more in harmony with
the ecosystem and its natural energy flows.
Finally, it is extremely important to recognize that there has been
virtually no advocate for non-monetized economic activity such as the
production of goods and services for use in households and local
communities. Since the market economy emerged, with the industrial
revolution, it has everywhere been promoted and aided by the state.
Both government and business promote a shift from the household economy
to the money economy, the one for tax revenue and the other for profit.
It is up to citizens on the grassroots level and community
organizations such as Michigan Land Trustees to initiate this
socio-economic reorientation.
Michigan Land Trustees was organized in 1976 to facilitate homesteading
courses. The organization now promotes “Permaculture” as a
more explicitly ecological mode of household food production. In this
proposal we return to the concerns with which MLT began——
except that now these concerns must be expressed in the context of the
Hard Times that are upon us. In this context a sustainable kind of
economic development must walk on two legs: (1), the formal, job—
providing money economy and (2) the informal, non-monetized sector of
production for use in households and communities.
I would like to prepare a separate brochure to promote this effort and
identify it as “A Project of Michigan Land Trustees.” The
name of this new spin-off organization might be “Self-Reliant
Households and Communities” or “The Economic Homecoming
Association” or . . . what? Its purposes can be summarized in the
following list.
1. Promote awareness of economic opportunities in the
non-monetized or informal economy and help people recognize that they
can do productive work even though they are unemployed.
2. Empower people by helping them recognize that they
have skills and abilities that they can trade or use outside of the
money economy so that they can move toward self-reliance on the
household and community levels.
3. Facilitate community barter systems such as LETS,
Local Exchange and Trading System, so people can help themselves and
build community.
4.- Develop educational materials, workshops,
courses, and schools to help people learn self-reliant technologies
such as sewing, gardening, canning, home building and repair,
mechanical repair of tools and appliances, and energy-efficient
techniques.
5. Develop a “micro-enterprise” revolving
loan fund to help people acquire equipment needed for self-provisioning
activities and /or cottage industries.
6. Provide access to capital assets such as land
through community land trusts so that people can produce food for local
use.
7. Emphasize the importance of developing local
economic activities so that communities can retain and recycle their
wealth and not have it sucked out by large corporations.
8. Explore the feasibility of community-based mutual insurance.
9. Seek a better balance or synergy between what
people can produce for themselves and what can be produced by the
industrial system.
10. Promote understanding of the need for full
partnership between the sexes in household work so as to prevent more
sexual inequality.
11. Provide leadership for the full and responsible
exercise of political empowerment made possible by a greater degree of
economic independence.
ALTERNATIVE ECONOMICS BIBLIOGRAPHY
Compiled by Maynard Kaufman, January, 1992
This carefully-selected list of books includes only a few of the many
books in this area. Almost all are non-technical, easy to read and
readily accessible to the non-specialist. This list does not include
books which are merely critical of how economics is now structured,
whether critics are from the Left, the Right, or from a social or
psychological perspective such as Paul Wachtel in The Poverty of
Affluence. Also excluded were books about the decline of business
civilization (e.g. Robert Heilbronner) or about the coming great
depression (e.g. Ravi Batra).
Finally, a considerable literature on regional economic development,
such as The New City-States by David Morris, was not included here
because the focus of this bibliography is on post-industrial
possibilities——on economic contraction in the light of
ecological limitations rather than mere transfer of economic activity
from large centralized corporations to regional enterprises. A more
decentralized economics is important, and the books listed below
include references to it, but it was not a principle in making
selections. James Robertson has written about the need to coordinate
policies which decolonize the industrial market economy with
liberating, self-reliant activities on the grassroots level. It makes
no sense to dismantle the money and job economy as long as everyone is
dependent on it. Greens similarly emphasize the need to correlate
grassroots activity on the local level with electoral level policy
reform. The following readings are selected to help in clarifying this
two-fold task.
Berry, Wendell, The Gift of Good Land.
San Francisco: North Point Press, 1981. An excellent collection of
articles and essays on rural homesteading and small-scale farming by
our foremost agrarian philosopher, poet and essayist.
Burns, Scott, The Household Economy: It’s Shape, Origins and Future.
Boston: Beacon Hill Press, 1975. The first and still most comprehensive
survey of non-monetized economic activity in the household.
Daly, Herman E., Ed., Economics, Ecology, Ethics: Essays toward a Steady State Economy.
San Francisco: W. H. Freeman & Co., 1980. An excellent collection,
sometimes fairly technical, which includes articles on the entropy law
and economics by Nicholas Georgescu-Roegen.
Dauncey, Guy, After the Crash: The Emergence of the Rainbow Economy. London: Green Print of Merlin Press, 1988. Good on community building through local economic activity.
De Romana, Alfredo L., Post-Crisis Equilibrium From Growth to Harmony. Montreal:
Interculture, Issues 104 and 105 (Summer 1989 and Fall 1989). Available
from Monchanin Cross—Cultural Centre, 4917 rue St. Urbain,
Montreal, Quebec H2T 2W1. This is an excellent and systematic review of
the structure of informal and non-monetized activity in the context of
the formal economy by a Peruvian architect and economist. It
incorporates many insights from Ivan Illich in more meaningful
contexts. This author most clearly outlines the Third Way in economics
Dobson, Andrew, Ed., The Green Reader: Essays Toward a Sustainable Society. San
Francisco: Mercury House, 1991. Not really essays, these are short
selections very perceptively chosen from over 50 authors on green
topics. One of the five parts is on economics, but some other parts
also include selections on economics.
Ekins, Paul, Ed., The Living Economy: A New Economics in the Making.
London and New York: Routledge and Kegan Paul, 1986. A collection of
essays and papers from TOES (The Other Economic Summit) conferences by
British and American authors.
Henderson, Hazel, Creating Alternative Futures: The End of Economics. New York:
Berkeley Windhover Books, 1978. The earlier of Ms. Henderson’s two great books, clearer on the emerging counter-economy.
Illich, Ivan, Gender. New York: Pantheon Books, 1982.
Illich, Ivan, Shadow Work.
Salem NH: Marion Boyars, Inc., 1981. Illich is the most scholarly,
original, insightful and abrasive critic of the industrial economy and
its way of life. His writings always point to the possibility of a
better balance or synergy between subsistence or mon-monetized
“vernacular” activities and industrial modes of production.
Meeker-Lowry, Susan, Economics as if the Earth Really Mattered. Philadelphia and Santa
Cruz: New Society Publishers, 1988. The best
reference book for alternative economic organizations, enterprises,
resources, newsletters and possibilities for socially-conscious
investing.
Nicholls, William M. and Dyson, William A., The Informal Economy: Where People are the Bottom Line.
Ottawa: The Vanier Institute of the Family, 1983. A Canadian survey
with many anecdotes to illustrate both household and cooperative
community efforts to move beyond dependence on the money economy.
Polanyi, Karl, The Great Transformation.
Boston: Beacon Press, 1957. This great economic historian here explains
how the market economy came to dominance and obscured other forms of
economic activity.
Robertson, James, Future Work: Jobs, Self—Employment and Leisure after the Industrial Age. New York: Universe Books,1985.
Robertson, James, Future Wealth: A New Economics for the 21st Century. New York:
Bootstrap Press, 1990. Robertson, a founder of TOES and the New
Economics Foundation, is probably the most influential and explicitly
green writer on alternative economics. Green activists cannot afford to
ignore a thinker who makes the conservation of resources and the
empowerment of people basic to his proposals.
Sale, Kirkpatrick, Human Scale.
New York: G. P. Putnam’s Sons Perigee Books, 1980. While the
organizing principle here is decentralization and the virtues of
smallness over bigness, there is a lengthy part on “Economics on
a Human Scale.” Sale clearly shows that such an economics is
reembedded into a human community.
Schumacher, E. F., Small is Beautiful: Economics as if People Mattered. New York:
Harper Torchbooks, 1973. By common consent Schumacher is the pioneer
thinker whose writings and actions helped to shape an appropriate
technology movement and a rethinking of economics in the light of
ecological considerations.
Toffler, Alvin, The Third Wave.
New York: Bantam Books, 1981. By focusing on the “prosumer”
as a key factor of Third Wave economic life Toffler seems to be moving
toward a more ecological and humane alternative to the market economy
of “indust-reality.”
Michigan Land Trustees Newsletter, March, 1992
NOTICES
The Women’s Corner at the
Bangor Branch Library was recently dedicated in memory of Sally
Kaufman. In addition to being a farmer, teacher, activist, friend and
mother, Sally was a respected community leader. She established
the Friends of the Library, helped create the Bangor Area Art and
Crafts Council and Bangor Band, and she worked to organize airs,
community events and a multitude of educational activities for the
people in her ccmmunity. Sally was diligent and inspiring.
The next MLT meeting is on Sunday, March 8, 1992, at the Land Trust
Farm, County Road 681-a mile and a half north of the blinking light in
Bangor. The meeting begins at 3 pm, with a potluck following at 5pm. As
always, all are welcome.
Look for another newsletter in a couple of months. Your thoughts and
comments are always welcome as are submissions for the newsletter. Does
anybody out there write their own poetry anymore?
--Michael Phillips, editor
