Purpose: This class reveals the origins of our current system that came from the avaricious minds of London stockbrokers at the height of the British Empire. It then shows the damage this system has wrought on people and the planet and suggests alternative economic solutions that would help build a healthy future for all.

 

Materials

Readings: Justice Rising, Fall 2007, Moving from Corporate Extraction to the Grassroots Restoration Economy; Fall 2010, Building an Economy for People and Nature

Handouts:  Questions & Article Rankings, Talking Points

 

 

Paradigm: Classical economic theory says that we are all small producers with little power over the market, which will drive us to do the right thing for each other and the planet. The reality is that we live in a world of oligopolistic capitalism, where a tiny number of huge multi-national corporations manipulate markets, public policy, and income distribution for their own good, ignoring policies that would promote the common good.

 

Context: At the height of the British Empire in the early 1800s, London stockbrokers like David Ricardo and James Mills — father of renowned economist John Stuart Mills — developed classical economic theory from the biased assumptions of moneychangers. Corporations use those biased theories as the basis for their operations. For two hundred years, corporatist economists have held to those false assumptions to convince the public that the neo-liberal, corporate, free-trade agenda is in tune with human nature and the laws of the universe.  They are not.

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Here are three fallacious assumptions of classical and neo-classical economics that are causing our biggest problems on the earth today. They are only the beginning of the false assumptions.

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False assumption 1: Our natural resources will go on forever and are replaceable:
Leads to:

• Resource depletion

• Species extinction

Causing:

• Wars

• Mass migrations

• Social and cultural destruction

False assumption 2: Nature and natural systems have no inherent value

Leads to:

• Climate change

• Ocean acidification

• Top soil depletion

Causing:

• Threats to human survival

• Death of ocean life

• Starvation for terrestrial life

False assumption 3: The invisible hand of the market will allocate economic resources, human activity, and nature for the maximum benefit of all humanity

Leads to:

• Extreme wealth inequality

• Poisoning of the plant

• Domestic slavery

Causing:

• Destruction of our democracy

• Poverty and human despair

• Epidemic spread of deadly diseases

• Oppression of women

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As Martin Luther King pointed out decades ago about societies that accept this fate: “People find themselves oppressed by increasing frustration, alienation, insecurity and so forth…When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered.”

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As the fallaciousness of these assumptions becomes increasingly evident, more and more people are realizing that we must envision and implement a new economy that:

• Works for everyone

• Serves the common good

• Promotes a healthy planet, healthy products and healthy people

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Economists like E.F. Schumacher and Herman Daly began working on these problems years ago. Schumacher wrote the seminal books Small Is Beautiful: A Study of Economics As If People Mattered and A Guide for the Perplexed in the 1970s. He came up with what he called Buddhist Economics by which everyone has meaningful work, "production from local resources for local needs is the most rational way of economic life," and technology should be appropriate to local resources as well as ecologically suitable to the size of the community.

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Herman Daly served as editor of Toward a Steady-state Economy in the 1970s and as senior environmental economist at the World Bank in the ‘80s and ‘90s. In the same period he developed the Index of Sustainable Economic Welfare to replace Gross National Product accounting and co-wrote the seminal book For the Common Good: Redirecting the Economy toward Community, the Environment, and a Sustainable Future. From there he moved on to develop Ecological Economics. That system posits economics as a subset of the larger global environmental system where preservation of natural capital is the primary goal. This movement has become global through the International Society of Ecological Economics. See http://www.isecoeco.org/  

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Since the late 1990s there has also been a growing international movement focused on the idea of Social Solidarity Economy (SSE), “…an ethical and values-based approach to economic development that prioritizes the welfare of people and planet over profits and blind growth. In an SSE, ordinary people play an active role in shaping all of the dimensions of human life: economic, social, cultural, political, and environmental. SSE has the ability to take the best practices that exist in our present system and transform them to serve the welfare of the community, based on common good values and goals.”

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The Intercontinental Network for the Promotion of Social Solidarity Economy operates across five continents and has working chapters in dozens of countries. It presents a very successful model of what the global economy could look like in the future using institutions that exist today. More information is available at http://www.ripess.org/ or https://ussen.org/.

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There are also many other groups that are working to create a new economy. They include the Next System Project (http://thenextsystem.org/), The New Economy Coalition (http://neweconomy.net/), and Evonomics: The Next Evolution of Economics (http://evonomics.com).

 

Activities: Start the class with an overview as presented above and then move into the PowerPoint Economics: Dismal Science or Prescription for Happiness which examines the origins of our insidious economic system from the thinking of London stockbroker David Ricardo, and discusses solutions that can save the planet. You can download the PDF of our PowerPoint and notes for the PowerPoint here. When you open the PowerPoint, it should show a file of the slides and notes for each slide. Print this out as a script for the PowerPoint. Then go to the “slide show” pull down menu and go to “view slide show” to show the PowerPoint. You can also modify the PowerPoint to better reflect your local economy and circumstances. Let us know if you want any help with this or have any questions about the PowerPoint. At the end of the PowerPoint you should have a question and answer period so people can talk about what they have just seen.

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If you have time, you can also show the class a video from the list of videos. They include:

• Richard Heinberg on the limits to growth;

• One that explains the new designation of B Corporations, whereby corporate managers include environmental impacts and social responsibility in the corporation's bottom line;

• Four videos on the Solidarity Economy. Those featuring Nancy Neamtan and Daniel Tygel and the UN meeting on the Solidarity Economy are particularly good.

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            It is important that you help everyone understand all the economic alternatives being talked about. You can highlight the Social Solidarity Economy and show the developing map of the US Solidarity economy at http://solidarityeconomy.us/.  We are working on mapping all the solidarity economy enterprises in our county. But that is a different course. Let us know if you want more information about this mapping project.

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After the break, move on to the questions. Notes on the answers for the questions are here. Remember to mention the fine collection of books that deal with classical economics and creating an economy for the future. You will find them listed here.

Before class is over, remember to hand out the questions and rankings and talking points for the next class, Banking Failure of 2008 & Public Control of the Money Supply.

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The day after the class, email the talking points, questions and rankings for the next class to everyone and include a current article on our failing economic policies.

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The day before the next class, send a reminder email that the class is coming up and attach the talking points, questions and reading priority, and maybe a piece on the power of Wall Street.