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Economics for the Many, Not the Few: How Can We Build Wellbeing Together?

We all need housing, food, water and other essentials if we are to survive, let alone thrive. And in modern society, we are expected to acquire these essentials through the market. So, economics should concern us all.

Yet more and more people are questioning whether the ways we organise our economy are working. On the one hand, a very few seem to gain enormous wealth, while on the other hand, the wellbeing of many more is compromised by poverty, the need to work long hours for little reward or by growing insecurity. And all the while, human activity is harming the natural world, on which the wellbeing of us all ultimately depends.

So unsurprisingly, people who write books on economics are widely read. Some are even making it onto the best seller lists. In this post, our Director Roger Higman reviews two such books to see if they throw light on a critical question of our times – how can we build wellbeing together?

Post-Capitalism

Paul Mason’s “Post-capitalism: a guide to our future” is a Sunday Times best seller. Trainspotting-author, Irvine Welsh calls it “the most important book about our economy and society to be published in my lifetime”, and its title and its subtitle all compel one to open the cover.

But does the book live up to its billing? In part. Mason follows an explicitly Marxist approach. He sees the future as an evolution of the present. There’s no pie in the sky idealism here. He locates the driving force behind changes to the economy and society in changes to the way work is organised. In particular, he argues that information technology will massively reduce the labour required to produce goods and that increasingly they will be produced virtually for nothing. What’s already true for software or DVDs will become true for clothes, cars and everything else. But, rather than seeing this process as bringing in an age of abundance, Mason foresees a crisis; the new technology will enable a few to become dot.com billionaires but impoverish everyone else; as costs are driven down, goods will become virtually free, which will undermine profits and destroy incentives to invest. Capitalism will be over and a new system will take its place.

A Guide to Our Future?

Yet, Mason says very little about what he envisages happens next. Nor do his policy recommendations inspire confidence. He gives a nod to some fashionable ideas like a universal basic income and open source working, but has a lingering attachment to the planned economy (which he claims is now made possible by better, faster computers) and an arguably naïve faith in the benefits of “socialising” (read “nationalising”) key sectors of the economy, such as finance.

And questions abound over his analysis. As the cost of production falls, will we be starving for lack of jobs or “stuffocated” by an abundance of cheap tat? How long will this transformation take? What will happen to wellbeing in the meantime? And will the economy be transformed quickly enough to stave off climate change (which Mason recognises as fast-approaching disaster) or will investors seek haven by propping up industries that generate returns but prevent change?

I was left wondering whether the book is all a bit too theoretical. Technological progress doesn’t proceed at an equal pace everywhere and the future is likely to be a lot messier than Mason’s grandiose approach suggests. Perhaps a more detailed, less sweeping analysis could say more about what is likely to happen over the next few decades, during which climate change must be addressed, than his long view – even if one accepts his argument for the revolutionary effect of information technology.

Saving Capitalism: For the Many Not the Few

One such analysis is contained in Robert Reich’s “Saving capitalism: for the many not the few”. Like “Post-capitalism”, this book has a grand title and comes with some pretty, heavyweight endorsements, in this case from Nobel-laureate, Joseph Stiglitz, and the Princeton Professor of Economics, Paul Krugman.

Reich’s starting point is liberal, not Marxist. He recalls a time when “the income of a single schoolteacher or baker or salesman or mechanic was enough to buy a home, have two cars and raise a family” and asks why is that no longer the case? The answer, he says, in an analysis that focuses on America but which is equally applicable to the UK, lies in changes to the rules that underpin capitalism. He sees ongoing debates about “free markets” versus “government intervention” as a smokescreen which hides changes that have benefitted large corporations and their shareholders at the expense of small businesses and workers.

Put simply, he says that over the last forty years, the rules governing what can be owned (especially patents and copyrights) have been extended into new areas and for longer periods. Meanwhile competition laws haven’t been used, as they were in the past, to break up or regulate monopolies, whether they’ve arisen from market forces (e.g. Facebook) or Government regulation (e.g. train companies). Big companies have been allowed to impose contracts on both suppliers and customers that undermine traditional protections against malpractice. Bankruptcy laws have been applied differently; to allow corporations to free themselves from pension schemes on the one hand but, on the other, to prevent graduates from escaping from student debt. These changes have enriched shareholders and company bosses but impoverished millions. To cap it all, old restrictions on the use of private and corporate money for political purposes have been swept aside. The result, in the US especially, Reich argues, but also elsewhere, has been the corrosion of democracy with hordes of corporate lawyers now being employed to press for further freedoms for business and to stave off measures that would boost the wellbeing of ordinary people.

What is the Answer?

The answer, Reich argues, is “counterveiling power”. For capitalism to survive, the rules underlying it must be changed to give protection to workers and small businesses and to limit the rights and powers of corporations, their bosses and the tycoons that own them.

As with Paul Mason’s book, Robert Reich’s analysis of what’s wrong is extremely impressive. But like “Post-capitalism”, “Saving capitalism” is weakest when Reich says what he thinks ought to be done.   Reich seems to imply that if we simply reverse the changes that have taken place over the last forty years, all will be well. But many of these changes have arisen in tandem with new technologies that cannot simply be un-invented. And how can we address the market rules that give such great rewards to so few, when these rewards are being used to buy off legislators and entrench corporate power. Haven’t we gone too far?

My sense is that Reich, like Paul Mason, doesn’t really have a full answer. Perhaps that is because there isn’t an answer yet. Maybe, campaigns for a universal basic income alongside taxes on resource consumption; open source IT; locally-rooted community businesses and social enterprises; and individual and community-based approaches to foster wellbeing are all part of an answer that has still to be created.    

Perhaps it is up to us, collectively, to create that answer.

You're welcome to share your own ideas and reflections in the comments section below, and please share this post with your own networks too. 

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Images used in this post: (1) Money credited to Moyan Brenn, (2) cover of Postcapitalism: a guide to our future, by Paul Mason, (3) Robert Reich on Saving capitalism and (4) Share credited to Pierre (Riennes).

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