6 Dec 2015

Christian Felber : Change Everything - Creating an Economy for the Common Good

My thanks to my cousin Chris for pointing me to an interview on the Renegades website with Christian Felber, an Austrian alternative economist and university lecturer. He co-founded the NGO Attac Austria and initiated a movement callled "Economy for the Common Good".

I was very intrigued, and immediately rushed  to get a copy of Christian's book "Change Everything - Creating an Economy for the Common Good" which is actually the English Translation (published in June 2015) of a book originally published in German in 2012 under the title "Die Gemeinwohl-Okonomie. Aktualisierte und erweiterte Neuausgabe"

I've just finished reading it and I was very impressed. As Eric Maskin notes in the forewood, "Christian Felder thinks big. Not content with marginal change, he proposes a thorough overhaul of our capitalist system. In his world, companies still earn profits. But they are driven not be revenues and costs, but by their Common Good balance sheet, which evaluates them on how cooperative they are with other companies, whether their products and services satisfy human needs, and how humane their working conditions are. A company is awarded Common Good points accordingly, and its score is published, so that customers know whom they are dealing with. A good score also entitles the company to favourable government treatment: lower taxes, better borrowing terms and more public contracts. "`

Could this actually work? I think it could. One of the first striking points that Felber makes is that in many countries, the constitution specifically puts "the Common Good" as the central justification for everything.  And yet, businesses act as if the only criterion is financial profit.

Felber proposes that all businesses could be encouraged to generate a "Common Good Balance Sheet" that gives positive and negative points according to the way they function. Here is a simplified version of a recent iteration of the proposal that shows how you can score points for "good" behaviour, and lose a lot for "bad" ones.

The book demonstrates that while this may seem revolutionary, there are actually a large number of actors in the economy that already work in this sort of way. He gives a whole list of examples of cooperatives across the world that have been very successful, including perhaps the most famous one - Mondragon in Spain, that has an annual turnover of €15 billion.  He also points out that Non-profit Organisations (NPOs) currently employ around 31 million people, of whom 20 million are paid employees.  In the USA, the non-profit secotr contributed an estimated $887 billion to the economy in 2012, comprising 5.4% of the country's GDP, and accounts for 9.2% of all wages and salaries.

Is it so ridiculous to imagine that such structures, clearly aimed at the "common good" rather than maximising profits, could become the norm in the future?

Felber's proposals would not require banning companies that are only aimed at maximising profits for their shareholders. But, with suitably constructed rules, such companies would simply lose out in the longer term. I was indeed very much convinced that his proposals could really "Change Everything"!

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