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The Foundational Economy for a Good Life

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“People only accept change when they are faced with necessity and only recognize necessity when a crisis is upon them” – Jean Monnet, Memoirs, 1978

The crisis has shown the importance of certain economic activities. It has also demonstrated the limits of a radical market economy, throwing into sharp relief the advantages of universal, collective service provision via a public health system compared to systems in which the fulfilment of basic needs is conditional upon the ability to pay.

In this way, the pandemic has offered new ways of seeing the economy, work, and contribution. A return to “business as usual”, as we did after 2008, would be a mistake. Valuable lessons from the “pandemic economy” could transform post-pandemic economies and make them more sustainable. However, learning these lessons requires two things: first, a good understanding of market liberalism, which provided the ideological underpinning for liberalisation, privatisation, and financialisation. And second, a vision of a different economic order and strategies for responding to future crises in an effective and socially just manner. This vision can be found in strengthening the “foundational economy”, the everyday economy, which includes large sections of public services and utilities.

The narrowing of the economy

The neoliberal triumph of the 1980s radically changed ways of thinking and acting. It was particularly visible in three areas. First, an outward-looking orientation dimmed the focus on the domestic economy. New markets were created and existing ones liberalised, including various markets for basic services. The guiding principles were the creation of attractive conditions for international capital, as well as efficiency, optimisation, and high corporate returns. Second, a mixed system was replaced by a market-economy system, reducing diverse economies to uniform (global) market economies. Third, macrosocial objectives were replaced by individualised wants and preferences, the common good by self-interest.

Consequently, human rights from healthcare to education to housing became marketable goods and services. These goods and services are produced by private enterprises and purchased by individual consumers on the market. Individual responsibility now meant “emancipation” from collective security systems, for example through private pensions and health insurance, home ownership, and investment in personal “human capital”.

This narrow understanding became not only widespread in the economic sciences but triumphantly advanced into ever-new fields of human coexistence. Gary S. Becker and Guity Nashat Becker pushed this thought to its logical conclusion in their 1996 book, The Economics of Life.

A one-sided emphasis on individual optimisation, however, undermines social cohesion, solidarity, and resilience. Of course it makes sense to identify savings opportunities – for example in the healthcare system. But an unbalanced focus on efficiency in basic services has deeply problematic consequences, particularly when unforeseen events arise. The Austrian Court of Audit’s long-standing demand to reduce “inefficient” overcapacity in intensive care beds was revised at the beginning of the Covid-19 pandemic in recognition of this.

The fact that the “economy” – understood as companies operating on the global market – is doing well says little about the wellbeing of all people in society.

The experience of Covid-19 has underlined the shortcomings of these assumptions. It shows that the market can solve some but not all problems, that economies are more than market economies, that social security cannot be viewed solely from the perspective of microeconomic efficiency, and that a rigidly outward-looking orientation can undermine social cohesion. The raison d’être of economic activity is ensuring that a population’s basic needs – as opposed to individual wants and preferences – are met by the effective management and distribution of resources. Sustainable economic activity stabilises solidarity-based communities, guarantees the free development of its members, and safeguards natural resources and ecosystems. Optimisation is unquestionably helpful, but only if it serves these goals.

To ensure that basic needs are met, even when the unexpected happens, reserve capacity and buffers are essential. This is the polar opposite of a “just-in-time” philosophy.

There is therefore an urgent need for a different, more comprehensive understanding of economics. After all, the fact that the “economy” – understood as companies operating on the global market – is doing well (as measured by increasing growth and trade volumes) says little about the wellbeing of all people in society. It is also a poor indicator of whether societies are crisis-proof, let alone future-proof, and of the planet’s ability to sustain life in the face of climate change.

The foundational economy for survival

Not all economic activities are equal. While many sectors were shut down during the crisis, this did not apply to those classified as “systemically important”. This “foundational economy” ensures human survival by providing that which sustains our daily lives such as food, healthcare, water and energy, waste collection, and housing. In simple terms, the foundational economy encompasses the activities that are needed on a daily basis, including in times of crisis.[1] These include the collective provision of basic services, i.e. the economic activities of caring – for each other and with each other.

The Foundational Economy Collective, an association of (mainly) European researchers, released a manifesto for the post-pandemic period in March 2020, just as the lockdown was beginning. Building on years of research, the collective argues for the renewal of the foundational economy with a ten-point programme. This includes, among other things, stronger public healthcare (including prevention), reformed and increased progressive taxation, and greater public participation in the design of basic services.

The key demand is the improved collective provision of a sustainable, socio-ecological infrastructure instead of a return to pre-crisis levels of individual consumption. What we need is not reconstruction, but transformation: of the crisis-prone pre-Covid-19 economy into a sustainable economy. This is the only way to improve our resilience and be prepared for new crises.

The extent to which the foundational economy’s essential goods and services can be organised along market lines is limited. A particular problem is that, in the area of basic services, business models established in the wake of privatisation and liberalisation allowed private companies to access public financing to maximise short-term profits without making the necessary long-term investments.

Basic services, however, are essential to guarantee the provision of basic supplies, comprising those economic activities that function differently from the global market economy for tradeable goods and services. The long-term safeguarding is therefore of particular importance. Sustainable economies require long-term economic thinking, planning, cooperation, and an approach to decision-making that incorporates criteria such as consistency, sufficiency, and resilience. These criteria are fundamentally different from those that currently prevail: short-term profit maximisation and microeconomic competition.

“Bread and roses” for a good life

Since the manifesto was written, further insights into a sustainable “economy of everyday life” have become clear. During the lockdown we experienced not only what we need for our survival, but also what had been missing from our lives; after all, a good life implies more than just survival. A broader understanding of the foundational economy goes beyond the provision of necessities. The contribution of feminist economics is here key to broadening our horizons. The anthem “Bread and Roses”, a song written by James Oppenheimer to celebrate the women’s rights movement that later became associated with the Lawrence textile strike of 1912, sums it up:

As we go marching, marching

Unnumbered women dead

Go crying through our singing

Their ancient call for bread

Small art and love and beauty

Their trudging spirits knew

Yes, it is bread we fight for

But we fight for roses, too.

A good life requires not only guaranteeing survival (bread), but also decent working and living conditions (roses). This principle was recognised by the ancient Greeks, whose eudaimonia can be translated as “the condition of human flourishing or of living well”. Amartya Sen and Martha Nussbaum used it to develop their theory of the good life, in which individuals are enabled to live well by setting the right framework conditions.

Although not essential for survival, cultural and social institutions, bars, restaurants, hair salons, and green spaces are central to basic human needs. Nevertheless, their classification is more difficult, since the definition of the good life is more porous than that of pure survival. It is contextually different, rests on value judgements, and requires public involvement in decision-making. New forms of participation are essential to identify the conditions, infrastructures, and institutions which are the linchpins of “the good life”. This infrastructure tends to be organised locally or regionally and produces value and well-being “in situ”.

Rethinking value in societies

The definition of what is needed to live well, and what form this should take, cannot be imposed from above. Neither can it be delegated to the market. The question of what kind of economy we want and what purpose it should serve is deeply interwoven with the question of which activities are socially valuable, essential, and critical for survival, prosperity and the good life, but also which activities undermine these aspirations.

The rethink provoked by the Covid-19 crisis has shaken the neoclassical theory of value to the core. According to the price theory of value, which replaced that of classical economics from Smith to Marx, individual consumer preferences determine demand and, consequently, price. According to this theory, it is (market-)fair that a nurse receives a fraction of the earnings of an investment banker, while purchasing a third car is no different from buying food. In short, it is (market-)unfair to make moral distinctions between necessity, comfort, and luxury. Any activity that attracts individual purchasing power is said to be productive and valuable, regardless of its social value or destructive power.

The definition of what is needed to live well, and what form this should take, cannot be imposed from above. Neither can it be delegated to the market.

To crisis-proof the foundational economy, however, value distinctions are necessary. They allow the conditions for a good life for all to be negotiated democratically. For example, during the Covid-19 crisis, governments published lists of systemically important sectors whose workers are entitled to emergency childcare, thus making value distinctions. These include healthcare and emergency services, retail banking, farming, food retail, utilities, and education.

Looking beyond the pandemic, there is a need for public debate on what makes a good life. We need to identify which economic activities and sectors are crucial, how these can be made available to all, and who will carry out these activities. It is an expression of social appreciation to strengthen these areas and ensure that those who work in them are appropriately remunerated. It is unacceptable that those who are currently fêted as “key workers” and do the lion’s share of the work within the foundational economy – predominantly women – are also the ones particularly affected by unequal opportunities, precarious work, and low pay.

Welfare in the face of future crises

What lessons have we learned during the Covid-19 crisis to help us realign economic policies to deliver a good life for all? It is crucial to recognise the value of the predominantly domestic foundational economy, producing as it does the essential goods and services that ensure quality of life and sustainability.

Renewing and transforming the foundations of our economy means paying attention to those who “keep the shop running” (to quote Angela Merkel). The economic and social value of basic services must not be reduced to their exchange value. Instead, sustainable well-being, and thus use value, must become the focus of negotiations and decision-making processes within societies.

To bring about this change, new and broad alliances are needed: between progressive parties, trade unions, and civil society movements, but also with those Conservatives and Liberals who recognise the importance of collective basic service provision. In Germany, Switzerland, and Austria in particular, the local provision of essential services by public utilities, cooperatives, or inter-municipal partnerships enjoys a high degree of legitimacy, providing numerous points of departure. In this way, a new balance could emerge between a competitive economy geared to the world market and a supply- and welfare-oriented foundational economy. This would both strengthen social cohesion and make it possible for other crises – most critically the climate crisis – to be tackled with the same sense of responsibility, expertise, and solidarity.

 

This article was first published in Makronom and is reproduced with the authors’ consent.

FOOTNOTES

1    Davide Arcidiacono et al. (2017). Foundational Economy: The infrastructure of everyday life. Manchester: Manchester University Press.

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Right to Repair Bill Introduced in Congress

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Hot on the heels of last week’s victory in the New York state senate, the fight for Right to Repair comes to the US Congress. Today, Congressman Joe Morelle (D-NY) introduced the first broad federal Right to Repair bill: the Fair Repair Act.

“As electronics become integrated into more and more products in our lives, Right to Repair is increasingly important to all Americans,” said Kyle Wiens, iFixit CEO. Lawmakers everywhere are realizing the need to protect our Right to Repair—along with progress in the EU and Australia, 27 US states introduced Right to Repair legislation this year, a record number.

“Every year I’ve worked on Right to Repair, it’s gotten bigger, as more and more people want to see independent repair protected,” said Gay Gordon-Byrne, Executive Director of Repair.org. Rep. Joe Morelle has been a champion for much of that journey, sponsoring legislation while in the Statehouse in Albany starting in 2015. Everywhere you go, people just want to be able to choose for themselves how to fix their stuff. You’d think manufacturers would wise up.”

Congressman Joe Morelle’s federal bill would require manufacturers to provide device owners and independent repair businesses with access to the parts, tools, and information they need to fix electronic devices.

“For too long, large corporations have hindered the progress of small business owners and everyday Americans by preventing them from the right to repair their own equipment,” said Congressman Morelle. “It’s long past time to level the playing field, which is why I’m so proud to introduce the Fair Repair Act and put the power back in the hands of consumers. This common-sense legislation will help make technology repairs more accessible and affordable for items from cell phones to laptops to farm equipment, finally giving individuals the autonomy they deserve.”

“Right to Repair just makes sense,” said Nathan Proctor, U.S. PIRG Senior Right to Repair Campaign Director. “It saves money and it keeps electronics in use and off the scrap heap. It helps farmers keep equipment in the field and out of the dealership. No matter how many lobbyists Apple, Microsoft or John Deere and the rest of the manufacturers throw at us, Right to Repair keeps pushing ahead, thanks to champions like Rep. Joe Morelle.”

“At iFixit, we believe that big tech companies shouldn’t get to dictate how we use the things we own or keep us from fixing our stuff.” said iFixit’s US Policy Lead, Kerry Maeve Sheehan. “We applaud Congressman Morelle for taking the fight for Right to Repair to Congress and standing up for farmers, independent repair shops, and consumers nationwide.”

We’re pleased to see Congress taking these problems seriously. In addition to supporting Congressman Morelle’s Fair Repair Act, we urge Congress to pass much-needed reforms to Section 1201 of the Copyright Act, to clarify that circumventing software locks to repair devices is always legal, and to expressly support the Federal Trade Commission’s authority to tackle unfair, deceptive, and anti-competitive repair restrictions.

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For a healthier planet, management must change

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Our environment sustains all life. Both human and wildlife. When habitat degrades, the lives of all that depend on it also deteriorate: poor land = poor people and social breakdown.By Sarah Savory, Zimbabwe

In Zimbabwe (like many other countries in arid areas with seasonal rainfall) we are facing the many symptoms and signs of our country’s advancing desertification: ever-increasing droughts, floods, wildfires, poverty, poaching, social breakdown, violence, mass emigration to cities, biodiversity loss and climate change. No economy can survive if we destroy our soil – the only economy that can ultimately sustain any community, or nation, is based on the photosynthetic process — green plants growing on regenerating soil.


So, if we wanted to find out the optimum way to manage our wildlife, people and economy, logically, shouldn’t we be looking at our National Parks for the best examples of what we can do for our environment? Because in national parks, we not only have the best management the world knows, we don’t have any of the issues that are normally blamed for causing desertification: ignorance, greed, corruption, corporations, livestock, coal, oil, etc. Let’s do that now…the following are all photos taken in our national parks (the first 3 were taken in May right after the rainy season when they should still be looking their best!)

As you can see from those photos, some of the worst biodiversity loss and land degradation we have in Zimbabwe is occurring IN our National Parks. But, as I pointed out, those have been run using the best management known to us and have been protected and conserved for decades. We’ve clearly been missing something…

The above 8 pictures are a mixture of National Parks and Communal Land…can you tell which is which?

We are seeing this land degradation both inside and out of our Parks because there is an over-arching and common cause of desertification that nobody has understood, or been able to successfully address, until recently.

We spend our lives blaming resources for causing the damage (coal, oil, livestock, elephants, etc) but resources are natural, so how could they possibly be to blame? Only our management of them can be causing the problem.

ALL tool using animals (including humans) automatically use a genetically embedded management framework…and every single management decision made is in order to meet an objective, a need, or to address a problem. And those decisions are made with exactly the same framework, or thought process and for exactly the same reasons, whether it is an animal or a human.

For example, a hungry otter has an objective: he wants to break open a clamshell because he needs to eat. He uses a simple tool (technology, in the form of a stone) to do so. He does this based on past experience or what he learned from his mother.

Or, the president of the United States has an objective: to put a man on the moon within a decade. He and his team use the same tool (technology, but various and more sophisticated forms of it) and base their choices on past experience, research, expert advice, and so on. It’s the same process, or framework, in both cases, only the degree of sophistication has varied.

A screen shot taken from a short video clip we took with a film crew last month, of 4 different areas, all near to each other: you will clearly see the terrible desertification in both National Parks and nearby Communal Land. In comparison, you will see a vast difference on Dibangombe, the Africa Centre For Holistic Management (our learning centre, which is only 30km from Victoria Falls.) This habitat is being regenerated for all life by simply managing holistically. Every year on this land, despite the worsening droughts, the biodiversity increases and the land and wildlife flourish.
All this footage was taken in the same area, at the same time, with the same climate, the same soils, the same wildlife and the same humans.
But different management.

To this day, this decision making process works just fine for the otter. But imagine that one day, the otter invents a machine that can crack open 1,000 clam shells a day and that all the other otters suddenly stop doing what otters are designed to do and just come to him to get their clams. They still use the decision making process but everything else has changed…that tiny advance in technology would have inadvertently set off a complex chain reaction through the whole ecosystem and there would soon be catastrophic environmental knock-on effects because the balance of the ecosystem has been upset. The ecosystem will keep trying to adjust to this change but eventually it will start to collapse. Imagine the otter started charging for the clams. Now, with every decision the otters make, in order to make sure their ecosystem didn’t collapse, they would need to be simultaneously addressing the social, environmental and economic aspects of their actions. Their management would have to evolve with the change.

This is exactly what happened to humans…As soon as our technology advanced, our management should have evolved to accommodate for it. But it didn’t.

Our natural world is rapidly collapsing all around us and we have ended up constantly chasing our tails and dealing with the symptoms and complications we’ve created. While there have been thousands of books written over the years on different types of management, if you dig a little deeper and ‘peel the onion’ the same genetically embedded framework is still inadvertently being used.

In the last 400 years, our technology has advanced faster than in all of the two hundred thousand or so years of modern human existence. Over those same few centuries, you can now see why the health of our planet has entered a breathtaking decline.  We now have the knowledge to change that…

No matter what we are managing, we cannot ever escape an inevitable web of social, economic and environmental complexity, so, in order to truly address any issue, the people and the finances have to be addressed simultaneously, not just the land itself. Isolating one particular part of the problem, or singling out a species and trying to manage it successfully, is no different from trying to isolate and manage the hydrogen in water.

With this knowledge, the Holistic Management Framework was developed. And, incredibly, it all started here in Zimbabwe, by my father, Allan Savory, an independent Zimbabwean scientist. This new decision making process ensures that no matter what we are managing, we focus on the root cause of any problem. It also makes sure that all our decisions are socially or culturally sound, economically viable and ecologically regenerative by using 7 simple filtering checks. And, it introduces us to a new, biological tool: animal impact and movement, that can be used to help us reverse desertification and regenerate our land and rivers.

This framework has received world-wide acclaim and is now being mirrored in forty three Holistic Management hubs on six continents, including the first university-led hub in the USA.

Now we can begin to understand that most of the problems we are facing in Zimbabwe today are simply symptoms of reductionist management.

Imagine that one day, someone starts to beat you really hard over the head, once a day, every day, with a cricket bat. It really hurts, and instead of trying to take the bat away from them, you just take a dispirin to deal with the headache it’s caused and carry on.

After a week, the pain will be getting much worse and the dispirin will no longer be strong enough, so you’d need a new painkiller. The stopain comes out. After a while, stopain won’t be enough, so you turn to Brufen. And so it goes on. Yet the blows continue.

Eventually, your organs will be struggling from all the medication and you’ll end up in hospital with very serious complications. The best doctors and specialists in the world are called in at great expense and they rush around treating all your worsening, and now life-threatening, symptoms. None of them can understand why you aren’t getting better – they’ve used the best medicines and procedures known. It’s because everyone is so focused on your symptoms, that nobody has looked up and seen the person standing behind you with the cricket bat.

It sounds silly when I put it like that, doesn’t it? But that is exactly what we are doing.

Our planet is in that hospital with life threatening complications, with Governments, Organisations and individuals doing their best, spending millions of dollars, often using expert advice, to find out how to treat the patient, but nobody has realised that they are only treating symptoms. Nobody has noticed the guy standing there with the bat.

The holistic management framework stops the blows to the head. As soon as we do that and the cause is being treated, all the symptoms will automatically begin to heal and fall away.

I am going to show you a screen shot taken from a short video clip we took with a film crew last month, of 4 different areas, all near to each other: you will clearly see the terrible desertification in both National Parks and nearby Communal Land. In comparison, you will see a vast difference on Dibangombe, the Africa Centre For Holistic Management (our learning centre, which is only 30km from Victoria Falls.) This habitat is being regenerated for all life by simply managing holistically. Every year on this land, despite the worsening droughts, the biodiversity increases and the land and wildlife flourish.

All this footage was taken in the same area, at the same time, with the same climate, the same soils, the same wildlife and the same humans.

But different management.

These pictures were taken on the same day on land only 30km apart in February 2018, The 2 photos on the left are Zambezi National Park and the photo on the right is Africa Centre for Holistic Management (Dibangombe)

The great news is that we can turn it all around and we don’t have the thousands of different problems we all think we do. We only have to adjust one thing. Our management.

It’s time for us to evolve from using our outdated, reductionist management framework. We need to adapt to a new way of thinking and  apply this paradigm-shifting decision  making framework so that we can all work together towards regenerating our Zimbabwe.

Culturally. Socially. Economically. Environmentally. For for our people and for our wildlife.

Let’s start by stopping the blows to the head!

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Free to Download Fight the Fire: Green New Deals and Global Climate Jobs

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Fight the Fire

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OUT NOW!

“The most compelling and concise guide to averting climate breakdown.” – Brendan Montague, editor, The Ecologist.

Download Jonathan Neale’s Fight the Fire from The Ecologist for free now.

The Ecologist has published Fight the Fire for free so that it is accessible to all.

We would like to thank our readers for donating £1,000 to cover some of the costs of publishing and promoting this book.

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