Dossier, Volume 14 #5

An Economy of Care: Two Views

In March, the Laidlaw Foundation in collaboration with Citizens for Public Justice sponsored a roundtable discussion of themes from the recent book Beyond Poverty and Affluence: Towards a Canadian Economy of Care by Bob Goudzwaard and Harry de Lange (Toronto: University of Toronto Press, 1995). The centrepiece of the roundtable was an exchange between Dr. Goudzwaard, economist and former member of the Dutch parliament, and David Olive, editor of Report on Business Magazine in the Toronto Globe and Mail. The following is an edited version of that exchange.

The term sustainability usually refers only to the pressure that economic expansion puts on natural resources and energy, together with the negative consequences that production and consumption have on the environment. But the issue of sustainability runs deeper than environmental concerns. Commentators have speculated that society will not be able to sustain the high social costs of rising unemployment, while the growing commercialization of society has spawned discussion over the "erosion" or "colonization" of human culture.

Moreover, as Harry de Lange and I have described in our book Beyond Poverty and Affluence, a series of baffling paradoxes are increasingly permeating industrialized societies. They illustrate in real life the mistaken outcomes of numerous economic calculations made over the past two centuries about how to create unending material progress. Paradoxically, precisely at a time of unprecedented wealth, we experience a rising sense of scarcity, recurring budget deficits and less and less ability to practise care. We also experience ongoing unmet needs for labour even as unemployment rises, more and more pressure on our time, and the increasing persistence of various forms of poverty, not only in the poorest countries but also in our own cities and rural communities. These paradoxes originate in the implementation of classical and neoclassical economic calculations, equations that have put all their eggs in the basket of a progressively expanding economy and a rising standard of living. But these calculations no longer appear to add up.

In western culture, we prefer to think about "sustainable development" rather than the "development of sustainability." Pursuing sustainability as an adjunct to continuous linear development suits us well. But sustainability becomes problematic if it requires a form of development based on finiteness and material saturation. Yet that is precisely what sustainability requires in our time. Today's tunnel economy, built on the linear premises of endlessly continuing streams of economic traffic racing towards the assumed light at the end, must be transformed into a fruit tree economy, which "dams up" the one-dimensional rush to expand in size to make possible the bearing of fruit.

In a living organism such as a tree or plant, a transition takes place that moves the maturation process away from growing in size and towards bearing fruit. Biology textbooks teach us at least three lessons about this transformation.

First, at least some of the organism's vital elements are needed as reserves to bring the transition about. These organic elements must be withdrawn from the effort to expand in size and freed up for new objectives. To make an analogy with the economic process, we cannot expect conversion to occur without restraint happening somewhere in the economy, which will then permit the creation of a reserve for use elsewhere. In this scenario the economy still has net production outputs, as before, but society no longer automatically directs them to its spending or consumption side. Instead, society channels them to new and more important objectives, so that the economic process begins to serve the preservation of social and human capital, instead of having social, human and natural capital merely serve the economic process.

There is a second lesson we may glean from plants. Biology textbooks say that as each cell pursues the same objective (the preservation of life), living growth occurs only when decomposition and new growth go hand in hand. Here too the analogy with economic life is clear. It is not enough to pursue only the decomposition of certain processes--the processes that threaten sustainability. Simultaneously, and closely linked to the process of decay, a different form of growth must take place. In other words, a new economic sector must be formed in society that is geared to the bearing of fruit. In every transformation, decomposition and new growth must go hand in hand. The appropriate organizational forms must be found to support the linkages between these forces.

Paradoxically, precisely at a time of unprecedented wealth, we experience a rising sense of scarcity, recurring budget deficits and less and less ability to practise care.

The need for such linkages brings us to our third organic lesson: in every real transformation, not only are a number of specific cells active, but all cells are utilized. This lesson suggests that all people must be addressed in an economy of transformation. They must participate in it culturally. Of course, we cannot expect that people will accept a decrease in income growth, for example, if they cannot see the purpose behind it. They will not accept moderation in income if they do not experience it as a form of actively participating in shaping their own future, and as an investment in the future of their children. People must be presented with a compelling plan--or better, an appealing perspective--describing the benefits of new growth, including the creation of sufficient employment, before they will participate as cells do, however unconsciously, in preserving life.

Issues at the local, national and global levels are becoming more and more intertwined. Can we find initiatives that point to actual transformation at one or more of these levels?

At the global level, in the Tobin tax proposal, James Tobin has proposed damming up speculative, short-term capital streams by subjecting all exchanges in foreign currency to a small proportional tax. Further, in its 1992 Human Development Report, the United Nations Development Program argued for a system of "international taxation for sustainable development" involving a global income tax of up to 0.1% of the GNP of each country and a "fossil fuel consumption tax" of US$1 per barrel of oil. In addition, as early as 1970 Robert Triffin proposed to renew the international monetary system by expanding the role of Special Drawing Rights in world currency creation to establish a link between money creation and the development needs of the poorest developing countries.

These proposals are noteworthy because they all contain the theme of a certain moderation of income growth in the North. However, the lessons gleaned from the process of organic transformation suggest that even if all of these proposals are implemented, they will not be enough. Some form of collaboration involving all of the cells--that is, all of the nations of the world--will be needed. A form of international order or organization will need to oversee the linkage between decomposition and new growth in the pursuit of sustainability. The new International Green Cross, with an impassioned Mikhail Gorbachev as chair, may act as a precursor. Gorbachev, who has called the ecological crisis a "crisis of the spirit," concludes that our only hope lies in embracing the apostle Paul's words to be "transformed by the renewing of your minds." Gorbachev's appeal is indeed powerful. But will he be heard?

Moving from the global to the local level is appropriate. For here we find initiatives that show signs of the linkage between decomposition and new growth that we so sorely lack at the global level. As my primary example, I have chosen the Mondragon project in the Basque region of Spain. A whole network of organizations has sprung up in that region, including more than 100 cooperatives in the industrial, agricultural, service, waste management and housing sectors. This has taken place with a total of 28,000 working people.

Mondragon may properly be called an economic transformation, and strict adherence to two simple rules has made the transformation a reality. First, every labourer, as a member of a cooperative, must bear coresponsibility for the decisions made about the form and direction of production. Second, the emphasis may not lie on securing continuously higher salaries and benefits. Where necessary, income growth is stabilized to achieve broader development. We immediately recognize in these rules the organic lesson of utilizing all cells.

Other noteworthy examples include the hundreds of Dutch MEMO companies, which withhold demands for increased salaries and profits to pursue energy conservation, environmental protection and the creation of meaningful work; Anita Roderick's Body Shop chain, which uses natural ingredients in products, packages products frugally and earmarks profits for projects geared towards environmental protection and the "economy of enough"; Ben and Jerry's ice cream chain, which hires troubled youth throughout the United States and then channels profits towards community-based "wrap around" projects for troubled youth and their families; and the highly successful Ecumenical Development Cooperative Society, which encourages investments in the poor and has, ironically, been called "the poor man's World Bank." While the quality of these and many other initiatives may vary, they are building blocks, initiatives towards an economy of transformation, that we may legitimately consider and use.

But will these initiatives actually arrive at the decision-making table, where decisions are made that affect us all? To answer this question, we need to explore initiatives at the national level, which at least for now still offers the best opportunity for creating an effective policy of transformation.

To make words like enough and saturation genuinely operative in society, an economic substitute must emerge, a new sector in the economy that will organically and effectively offset what has been curtailed and lost elsewhere in the economy.

Most western countries have begun to link the prices of certain products and natural resources to their harmful influence on the environment. This may have the effect of a loss of employment in certain sectors, but it also creates incentive to convert production. Occasionally--and here we see something of the new economic sector emerging--the linkage made provides the impetus to manufacture substitute or completely new products that are energy-saving and environmentally healthy. For example, in a number of European countries the production of wind and water energy began precisely at the point that energy prices were raised. Various countries, such as Sweden, have begun to apply reduction and recycling requirements to the producers of batteries, automobiles, refrigerators and other goods that seriously harm the environment.

However important these steps may be, their implementation will still not bring us to the full transformation required at the national level. These proposals still relate too exclusively to environmental sustainability; they do not yet usher in sustainability in the broader sense of the word, which involves slackening the pressure for continuous material growth and making words like enough and saturation genuinely operative in society. To achieve this, an economic substitute must emerge, a new sector in the economy that will organically and effectively offset what has been curtailed and lost elsewhere in the economy.

Many such concrete proposals and positive changes in the economy will be feasible only if thorough discussion takes place with all of the interested parties ahead of time--the utilization of all of the cells. In this connection, it is striking that Canada appears to have underutilized the role of public consultation and consensus-building. As a system, the Canadian economic order may well benefit from correcting this apparent deficit.