Economics as if People and Planet Mattered by the New Economics Foundation

“Do good lives have to cost the earth ? It’s the biggest question facing humanity and a new type of economics is the answer: economics as if people and the planet mattered.”

Man and His Gold – Economics and Life

“A man, laden with 200 pounds of gold, on his way home from the great Gold Rush in California in the 1850s, was loathe to abandon his hard-won wealth when the ship he was on floundered on the Pacific. Lost at sea, he became the subject of a cautionary tale by the great Victorian critic, John Ruskin. He strapped as much gold as he could to himself, and jumped over the side. Once in the sea, the gold dragged him down to the bottom. Now, as he was sinking” asked Ruskin rhetorically, “had he the gold, or had the gold him?”

For Ruskin, it was an economic parable as much as a spiritual one. Quite deliberately, he put it at the heart of his controversial 1860 essay series on economics in the Pall Mall Gazette, commissioned by the editor, novelist William Makepeace Thackeray. Ruskin launched this polemic with an attack on the people who were supposed to be experts – in this case, the economists who believed that scarcity was the basis of humanity.

No, says Ruskin to Malthus and Ricardo: “The real science of political economy, which has yet to be distinguished from the bastard science, as medicine from witchcraft, and astronomy from astrology,” he wrote, “is that which teaches nations to desire and labour for the things that lead to life: and which teaches them to scorn and destroy the things that lead to destruction.”

There is No Wealth But Life – the New Economics

Ruskin was never invited to write about economics again. But when the essays were collected and published as Unto This Last, it had the most enormous influence on the next two generations. Gandhi read it from cover to cover on his journey from London to South Africa and it inspired his political struggle. It also inspired E F Schumacher, a postwar economist working for the National Coal Board, to develop his concept of Buddhist economics. That tradition – economics as if people mattered, economics that recognises that money can also be a hindrance – is the basis of what has become ‘new economics’.

It is an economics that has E. F. Schumacher as its father, and John Ruskin as its grandfather. It has a broader remit than conventional economics, and draws inspiration from the spirituality of William Blake, the radical self-sufficiency of William Cobbett, and the localism of G. K. Chesterton and Jane Jacobs. It draws from the Toryism of Ruskin (or so he put it), the socialism of Morris, the liberalism of Jefferson, and the visions of peaceful co-existence of Gandhi and Kropotkin.

What all these thinkers have in common is an approach to economics which is sceptical about money for money’s sake; which understands that human happiness and well-being are not measured very well in terms of money wealth; and that just as money is subservient to morality, spirituality and humanity, so economics is part of a wholly owned subsidiary of a wider ecosystem that explains, limits, and makes it real. It is an economics that broadens our definitions of wealth, rather than narrows them down to an abstraction that may or may not relate to human fulfilment.

It is an economic tradition that has a long history, but until recently lay outside the mainstream. When John Maynard Keynes made his famous distinction between art and ideas, which should be international, and goods, which should be largely local, he was setting out a truth which new economists have been developing ever since.

When Sir William Beveridge urged that voluntary action was a vital ingredient of the new welfare state, he was providing a glimpse of the ideas about social capital that would be central to new economics. But it was Schumacher’s ground-breaking Small is Beautiful in 1973, at the height of the oil crisis, that was the most important articulation of new economics. It was followed by other pioneering books like James Robertson’s The Sane Alternative, George McRobie’s Small is Possible and Herman Daly and John Cobb’s For the Common Good. Later, Marilyn Waring highlighted the unacknowledged dependence of the economy on the unpaid work of women in If Women Counted.

Later, Marilyn Waring highlighted the unacknowledged dependence of the economy on the unpaid work of women in If Women Counted. When the G7 summit came to London in 1984, Robertson, McRobie and other new economists launched a parallel summit called TOES (the Other Economic Summit) which challenged the right of the leaders of seven countries to dictate the economic future of the planet and kick-started a global movement. TOES meetings shadowed the G7 and then the G8 wherever it met around the world. The message was simple: conventional economics was in crisis, and a new economics was emerging that could take its place. nef (the new economics foundation) was set-up to develop this in 1986.

Since then, the early new economic solutions proposed by TOES – green taxation, ethical investment, social auditing, parallel currencies, community banking, and alternative economic indicators of success – have become mainstream. nef has been joined across the world by a range of similar new economic organisations.

New economics has also been informed by a range of successful initiatives that put the ideas into practice – like the pioneering Grameen Bank micro-credit operation, or the massive Seikatsu consumer co-op in Japan. There are now also a sizeable and growing number of people who act along new economic lines in their everyday lives, and a sector to support them, providing green energy, ethical investment, community-supported agriculture and organic food.

New economics recognises that although the present system is far from fair, it will ultimately have to become so because only a fair economy works sustainably. There are hidden resources among people to be revealed and in impoverished communities that can provide solutions. The old, discredited idea that wealth trickles down to the poor is extraordinarily inefficient and can never put people and planet first in the way that new economics does. Setting out these principles a century and a half ago, Ruskin distinguished between wealth and what he called ‘illth’ – ruined, dehumanised lives. Now we understand that real wealth means well-being.

“There is no wealth but life,” he wrote, setting down the central idea of new economics: “life, including all its powers of love, of joy, and of admiration. that country is the richest which nourishes the greatest number of noble and happy human beings; that man is richest who, having perfected the functions of his own life to the utmost, has also the widest helpful influence.” John Ruskin (1819 – 1900)

Figments on the New Economy

“Man talks of a battle with nature, forgetting that if he won the battle, he would find himself on the losing side.” E. F. Schumacher, Small is Beautiful

“In the current system, the only way for poor people to get a little less poor is for rich people to get very much richer, wrecking the environment on which everything else depends.” David Woodward, head of new global economies at nef

“When the capital development of a country becomes a by-product of a casino, the job is likely to be ill-done.” John Maynard Keynes

“The way we view economic success in the UK has become a fossil-fuelled fantasy. No accounting system with a hint of common sense would view profiting from the liquidation of a never-to-be-repeated natural asset as a good thing – even less so when it leads to climate chaos.” Andrew Simms, nef policy director

“Sidewalk contacts are the small change from which a city’s wealth of public life may grow.” Jane Jacobs

“At the heart of community-based development is the identification and optimal use of an area’s assets – the skills, culture, environment, buildings, networks and relationships.” Paul Sander-Jackson nef thriving communities director

“In future the question will not be ‘are people creditworthy’, but rather, ‘are banks people worthy’.” Mohammed Yunus, founder of Grameen Bank

“The argument that big retail is good because it provides us with choice is ironic because in the end it leaves us with no choice at all.” Andrew Simms, nef policy director

“Our experience has shown that in any community, however disadvantaged, there are passionate people who have ideas for enterprises that develop their local economy; what has been missing is a way to effectively support them.” Elizabeth Cox, nef head of connected economies

“There is no wealth but life.” John Ruskin

“Every society clings to a myth by which it lives; ours is the myth of economic progress.” Nic Marks, nef Centre forWell-being.

“The United States leads the world in mental illness rates, with one in four Americans suffering from a mental disorder.” Richard Layard lectures

“The great breakthrough of the twenty first century will be to begin to assess success and failure in life other then merely through financial indicators. Your happy planet report reads like the first step in a whole new science of measuring what matters and what doesn’t.” Alain de Botton, author

“Governments the world over have been concentrating on the wrong targets for too long. If you have the wrong map, you are unlikely to reach your destination.” Nic Marks, head of nef’s centre for well-being.

“The economy of the future is based on relationships rather than possession.” John Perry Barlow

“Not everything that counts can be counted. And not everything that can be counted, counts.” Albert Einstein

“Once we allow ourselves to be disobedient to the test of an accountant’s profit, we have begun to change our civilisation.” John Maynard Keynes, 1933

“What gets measured gets valued – and in many cases, we’re simply measuring the wrong things.” Lisa Sanfilippo, nef head of measurement and evaluation

“A healthy thriving democracy is only possible when people are actively engaged and involved in public life. We take a radical look at democratic participation to see how we can give people back faith in their ability to influence decision-making.” Perry Walker, Democracy and Participation, nef

“The only thing money cannot buy is meaning.” Jacob Needleman

A Different Kind of Future

New economics is not just an alternative to the status quo. Nor is it simply a critique that explains why mainstream economics is failing. It is an outline of the new economic systems that are emerging.

We can assert that the blindness of conventional economics – the way prices fail to recognise or measure the real costs and assets around us – is dangerously wasteful. We can set out the wasteful dependency when whole regions of the world are excluded from the economy. But new economics goes further.

This will be an economics that will measure the difference accurately between what is creative and what is destructive, rather than lumping all economic activity together and calling it progress. And nef’s centre for well-being is already at the forefront of measuring real progress.

It will be an economics that will use its waste as raw materials, creating an efficient virtuous circle, rather than assuming that both of these appear and disappear magically and inexhaustibly into the economic system. And nef’s centre for thriving communities is already studying the attributes of successful and sustainable local economies.

It will be an economics that re-shapes public service organisations as engines of neighbourhood renewal, instead of silos of exhausted professionals ministering to passive supplicants. And nef’s centre for future economies is developing new models for this to happen.

It will also be an economics that puts people and the planet back at its heart, where they belong, and no longer pretends that ethics are an irrelevance to meaningless models of self-interest. And nef’s centre for global interdependence is paving the way.

All this sounds utopian, but it is beginning to happen already. These shifts carry with them the same downsides, contradictions and frustrations that change always brings.

That is the way change happens, paradoxically and amidst the most confusing complexity. And change is our business.

StewartWallis -nef’s executive director

Read the full report (in PDF)

~ From “Are You Happy? New Economics: Past, Present and Future” by the New Economics Foundation (NEF)

Keywords : ecosocial crisis, capitalism, socialism, money as servant, wealth is life, peaceful co-existence, self-sufficiency, waste equals food, less is more, new economics, economics as if people and planet mattered, life-sustaining economics, life-sustaining civilization design
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