Economy of the common good
The economy of the common good (EBC) is an economic, political and social model that is based on respect for human dignity, solidarity, democracy and environmental sustainability.
In 2010, Christian Felber and colleagues started the “economy for the common good” movement in Austria as an economic and social model built through dialogue and democracy.
This movement presents itself as a "third way" alternative between capitalism and socialism. Although part of some guiding principles, the model is open to theoretical debate and practical strategies to implement a different economy.
What problems does the CBE identify?
The main problems that the economy of the common good identifies in the current economic system are:
- Contradiction of values between the economy and society. The current paradigm in economics is one of fierce fighting, savage competition, and greedy selfishness.
- The economy is not oriented to the common good, as it appears explicitly in the constitutions of the countries.
- The economic success of companies is measured in their financial balance and that of countries in gross domestic product (GDP). However, these two indicators are monetary: the means (money) matters, but not the end of the economy (social welfare).
- Those companies or countries that are committed to the common good (defending human rights, cultural diversity, sustainable development) have difficulties in national and international competition because betting for the common good is more expensive.
- Serious economic inequalities, both in income and wealth, which generates precariousness in the satisfaction of basic needs of the most disadvantaged.
- The financial market - especially the banking sector - accumulates great power, since they obtain large profit margins by charging high interest rates on loans and paying low rates on deposits.
- World monetary problems: financial instability due to excessive speculation, capital flow shocks, trade balance and balance of payments problems.
- Some companies and entire countries have achieved and maintain their competitiveness based on their low wages, minimal environmental regulations and job insecurity. The debate is not so much between liberalizing trade or not, but between ethical and unethical trade.
- The environment is increasingly damaged.It is estimated that, if they do not make the necessary efforts to stop and counteract the environmental catastrophe, by 2100 the global temperature will have increased by 4 ° C.
- Democracy is in crisis, because only representative democracy has been implemented. And in recent years, people do not feel identified or represented by those who govern them. That is one of the causes that enables the rise of populists from both the left and the right.
What do you propose to solve or reduce them?
The economy of the common good not only criticizes these negative situations, but also proposes alternatives to solve them:
- CBE is based on the same values that make social relationships flourish: trust, solidarity, harmony, cooperation.
- The EBC aims to make the constitutional mandate of the common good come true.
- Economic success must go from being a monetary indicator to being a social indicator. It must move from GDP to the product of the common good, at the macroeconomic level (national economy) and move from the financial statements to the balance of the common good, at the microeconomic level. An indicator that is already being implemented is the Social Progress Index.
- The companies that obtain better scores on their balance sheets for the common good and the countries with the best results in the product of the common good should have advantages. On the contrary, those who do not respect human rights or destroy the environment will face greater difficulties.
- Inequality in income and wealth will be limited. The maximum income may not be more than a certain multiple of the minimum income and inheritances will be taxed. The exact percentages will be defined in democratic community assemblies.
- A key democratic asset is the democratic bank. Democratic because it will offer free checking accounts, keep deposits safe, and interest rates will boost economic activity.
- In accordance with the proposal of John Maynard Keynes, a monetary and commercial cooperation will be established at a global level, through a Clearing Union.
- It will bet on ethical trade. The debate is not between putting or removing tariffs, but whether trade is an effective instrument to achieve higher goals, such as the defense of human rights and the transition to sustainable production.
- Businesses and households will have the new objective of reducing their ecological footprint, in order to safeguard the survival of our planet Earth.
- Direct democracy will complement representative democracy. In most constitutions it is established that sovereignty resides in the people. By asserting this right, citizens will be able to control and monitor key areas of the economy and politics.
Key lines of application
The economy of the common good is a concrete and viable alternative for private and public organizations of different sizes and legal forms that seek business success through the values of the common good.
The movement of the economy of the common good is an initiative that calls for the peaceful transformation of the current system based on individual and collective actions throughout the world.
Disadvantages of EBC
The concept of "common good" is very problematic because each person has a different definition of "good" and it is impossible to reach an agreement to agree on everything that this means. According to its same principles, the EBC would define the "common good" depending on what democracy decides, that is, the majorities. Thus becoming a teleocratic model that imposes on its members what they should seek and do.
Furthermore, it does not propose alternative economic indicators that are generalizable to all companies and countries in the short term. This model is related to the economics of degrowth, which goes against the basic postulates of economic growth: accumulation and productivity.
Finally, it should be noted that the tragedy of the commons is a phenomenon observed in multiple settings. And it is concluded that if there are no clearly defined private property rights, the good (such as a river, a forest, a park, a bank) will be at the mercy of everyone who wants to use it and will tend to over-exploitation.
Felber, C. The economy of the common good. Barcelona: Deusto.