Alternatives to Growth-Centric Development Part 2

Other Critiques of Growth-Centrism There are a number of additional viewpoints that are focused on growth-centric alternatives both directly and indirectly. These include environmental justice, the solidarity economy, the green economy, feminist, and Buddhist economics. The environmental justice movement aims to address the fact that around the globe, communities of color are disproportionately exposed to pollution and environmental destruction and degradation. This type of unequal exposure is known as environmental racism. The movement has been headed by grassroots organizations lead by African-Americans, Latinos, Asians and Pacific Islanders, and Native Americans that organize against pollution and climate change while fighting against extractive industries.28 Similarly, the concept of the Solidarity Economy places people and the environment first, and aims to challenge the dominant capitalist system of promoting growth and profit above all else. The Green Economy is another similar theory with the goal of achieving a shared (socially just) and a lasting (environmentally sustainable) prosperity.29 Concepts from the field of Feminist Economics include valuing unpaid work, like caretaking, which are currently excluded from GDP accounting but can contribute to well-being and development are also relevant to growth alternative thinking. Buddhist Economics, a term first coined by E.F. Schumacher in the 1950s, focuses on differentiating production and consumption activities into beneficial and harmful activities, with a primary goal of minimizing suffering for all living or non-living things, rather than a goal of increasing profit or consumption. Concepts from these, along with a variety of other subfields are important in creating growth-centric alternatives that benefit all members of society and the environment. 4.2 Perspectives from the Global South While the various alternatives discussed above are primarily developed in, and focused on, economies in the Global North, the concepts are also relevant to the Global South. Although most developing countries do require economic growth to meet basic human needs, this does not mean that these societies should follow the same economic growth-centric path as their counterparts in the Global North. In fact some developing societies already do emphasize alternatives to growth-centric development, placing human well-being above GDP growth as their primary development goal. The two examples below show how growth centered alternative concepts that have been around for thousands of years are becoming more mainstream in parts of the Global South. Sumak Kawsay (Buen Vivir) in South America The term Sumak Kawsay is as a Quechua term loosely translated to “good life” or “full life” (“buen vivir” in Spanish). The Quechua people are an indigenous group native to the Andes region 28 29 Martinez-Alier, 2002. Victor and Jackson, 2016. of Peru, Bolivia, Chile, Columbia, and Ecuador, and their concept of Sumak Kawsay refers to living in harmony with your community, yourself, and your environment. This approach also emphasizes preserving resources and culture for future generations. The concept and term have been gaining mainstream popularity in recent years, and have even been incorporated into the Ecuadorian and Bolivian Constitutions. “Sumak Kawsay values people over profit. It is also a new way of viewing “developing nations” because it expresses a relationship with nature and surroundings that epitomizes the opposite of profit and commodification. A key piece is how development is defined: it calls for a decreased emphasis on economic and product development, and an increased focus on human development – not in population, but an enrichment of core values, spirituality, ethics, and a deepening of our own connection with Pachamama (mother earth).”30 The Quechua people along with other indigenous groups of South and Central America have faced a long history of discrimination and marginalization since Spanish colonization in the 16th century. With the implementation of neoliberal policies across Latin America in the 1980s and 90s, these groups were further harmed, as they were encouraged to shift from community-based ownership of resources and production for subsistence and local trade to privatization and an export oriented economy. Ecuador, for example, whose population is 40% indigenous, took out a number of loans from US based financial institutions in 1980s that with came with conditions that they must adopt neoliberal policies and implement austerity measures to reduce government spending. Ecuador focused on oil extraction and mining, which caused tremendous damage to their natural resources, while failing to provide economic benefits to the indigenous and poor segments of the population. With the election of President Rafael Correa in 2007 and the growth of indigenous activist groups, there was a renewed focus on the environment and indigenous rights. A constitutional assembly was created to include the concept of Sumak Kawsay into the Ecuadorian constitution, and articles were added to the constitution in 2008 stating that: • Nature, or “Pacha Mama” has the “right to integral respect for its existence and for the maintenance and regeneration of its life cycles, structure, functions and evolutionary processes.” • Nature has the right to be restored. This restoration shall be apart from the obligation of the State and natural persons or legal entities to compensate individuals and communities that depend on affected natural systems. • The State shall apply preventive and restrictive measures on activities that might lead to the extinction of species, the destruction of ecosystems and the permanent alteration of natural cycles. The introduction of organisms and organic and inorganic material that might definitively alter the nation’s genetic assets is forbidden. • Persons, communities, peoples, and nations shall have the right to benefit from the environment and the natural wealth enabling them to enjoy the good way of living. 30 Pachamama Alliance, 2019. In the decade following the election of Correa and the revised constitution, Ecuador substantially increased spending on education and healthcare, and saw a 38% reduction in poverty and a 47% reduction in extreme poverty, with a significant reduction in inequality.31 Bolivia followed Ecuador’s lead in 2009, recognizing Buen Vivir (the Spanish translation of Sumak Kawsay) in their constitution as a principle to guide state action. Eco-Swaraj and Radical Economic Democracy in India Similar to Buen Vivir, the Concept of Eco-Swaraj is a grassroots framework developed in India that respects the limits of the earth and the rights of other species, while pursuing the core values of social justice and equity.32 “Swaraj” translates loosely to self-rule—the concept is inspired by the ancient Indian practice of involving people in decision making through local assemblies.33 As with Sumak Kawsay in Latin America, much of the renewed interest in Eco-Swaraj in India comes in response to harmful neoliberal policies put in place in India in the early 1990s. Since the early 1990s income inequality in India has doubled, and their improvements in the Multidimensional Poverty Index (a weighted measure of 10 indicators related to health, education, and living standards) have fallen behind those of other South Asian countries. In the past few years, a structured version of eco-swaraj known as Radical Economic Democracy (RED) has emerged in India that is gaining widespread notice. RED is comprised of the five themes listed below, which can be visualized as the diagram in Figure 13.34 1. Ecological wisdom and resilience: Reviving or strengthening the foundational belief in humanity being part of nature, and the intrinsic right of the rest of nature to thrive in all its diversity and complexity. 2. Social well-being and justice: Moving towards lives that are fulfilling and satisfactory physically, socially, culturally, and spiritually; with equity in socio-economic and political entitlements, benefits, rights and responsibilities across gender, class, caste, age, ethnicities, “able”ities, sexualities, and other current divisions. 3. Direct or radical political democracy: Establishing processes of decision-making power at the smallest unit of human settlement (rural or urban), such that every human has the right, capacity and opportunity to take part. Political decision-making at larger levels is taken by ecoregional or biocultural regional institutions, which respect ecological and cultural linkages and boundaries (and therefore challenge current political boundaries, including those of nation-states). 4. Economic democracy: Establishing or strengthening processes in which local communities including producers and consumers—often combined in one word as “prosumers”—have control over the means of production, distribution, exchange, and markets. Larger trade and exchange, if and where necessary, is built on—and safeguards—this local self-reliance. Nature, natural resources and other important elements that feed into the economy, are governed as the commons. Private property is minimized or disappears, non-monetized 31 Weisbrot, Johnston, and Merling, 2017. Kothari, Acosta, and Demaria, 2015. 33 Kothari et al., 2018. 34 Ibid. 32 relations of caring and sharing regain their central importance and indicators are predominantly qualitative, focusing on basic needs and well-being. 5. Cultural and knowledge plurality: Promoting processes in which diversity is a key principle; knowledge and its generation, use and transmission is part of the public domain or commons. Figure 13: Visualization of the spheres of Radical Economic Democracy Source: Kothari et al, 2018. 5. GETTING BEYOND GROWTH In order to move away from a growth-centric economy, a number of major structural changes to the economy need to occur. As shown in the case studies below, many of the principles behind the growth alternative economy are already in use on a smaller scale across the globe. For each of the five principles presented below, case studies from both the Global South and Global North are presented to show what growth alternative economies can look like. 5.1 Measure success differently Alternative measures and indicators of the well-being of nations have the potential to replace GDP as the primary indicator of a nation’s success. GDP has the advantage of being relatively easy to measure, but fails is significant ways as a measure of well-being. Some of the shortcomings of GDP are that it does not account for volunteer work or unpaid household production (such as childcare and housekeeping) nor for informal economic activity. On the other hand, it counts “defensive expenditures” such as military spending, increased costs of policing, and costs of pollution cleanup as a positive, while ignoring the costs of damage to the environment including climate change. It also does not consider the loss of leisure time that often comes with a rise in GDP. Finally, GDP does not take into account the distribution of income or wealth within a country. To address this, a variety of alternative macroeconomic indicators have been developed and used to varying degrees.35 The simplest of these start with GDP, and make monetary adjustments to account for environmental and social factors. Since GDP fails to account for the resource depletion and environmental degradation associated with economic production, Green GDP estimates these damages in monetary units, and then deduct this amount from GDP. Another approach that starts with a traditional national accounting metric and makes adjustments to account for the environment is the Adjusted Net Saving (ANS) measure developed by the World Bank. The objective of ANS is to “measure the true rate of savings in an economy after taking into account investment in human capital, depletion of natural resources, and damage caused by pollution.” ANS is typically presented as a percent of a country’s Gross National Income, or GNI (a measure of a nations GDP plus the income it earns from overseas). A country with a consistently negative rate of ANS would thus be considered on an unsustainable path. The Genuine Progress Indicator (GPI) is another alternative metric of economic growth that attempts to account for well-being and the environment. GPI uses personal consumption as its starting point, based on the rationale that it is consumption that directly contributes to current welfare. Next, personal consumption is adjusted to reflect the degree of economic inequality in a society. Then monetary estimates of goods and services that contribute to social well-being are added. These positive factors include: the value of unpaid household labor; the external benefits society receives from higher education; the service value of public infrastructure such as highways and the value of volunteer work. Finally, the GPI deducts the monetary value of factors that reduce social welfare, including: the value of commuting and lost leisure time; damages from crime, climate change and pollution; and the depletion of natural resources. There are also alternative indicators that shift away from using monetary values, focusing instead on measuring well-being and sustainability. The Better Life Index (BLI) considers well-being to be a function of 11 dimensions, including income, housing conditions, health status, work-life balance, education, environmental quality, and subjective well-being. For each dimension, one or more statistical indicators provide empirical information about a country’s performance on that dimension. The results for each dimension are standardized across countries resulting in a score For a more in-depth discussion of various GDP alternatives, see GDAE’s module on Macroeconomics and the Environment. 35 from 0-10. While the results for each of the 11 dimensions can remain disaggregated, they can also be combined to produce an overall well-being index. The Happy Planet Index (HPI), developed and calculated by the British New Economics Foundation, is perhaps the most novel attempt to devise an entirely new approach to measuring national welfare in the context of environmental sustainability. The Happy Planet Index is calculated on a national scale based on four factors: self-reported well-being (based on Gallup World Poll life satisfaction data); life expectancy; inequality of outcomes (based on the distribution in each country’s life expectancy and well-being data); and ecological footprint. When you look at country rankings using these alternative indicators (see examples in Table 1), you see that the countries with the highest GDP do not always score the highest when you factor in the environment and human well-being. For example, the Philippines, which has a per capita GDP of just under $3,000, ranks high in adjusted net savings and in the Happy Planet Index, and has a low ecological footprint which means that living standards there are ecologically sustainable. In contrast, the U.S. has a much larger per capita GDP at just under $60,000 per year, but ranks significantly lower than the Philippines in ANS and HPI, with a much higher (unsustainable) ecological footprint. Table 1: Various indexes and indicators of success for a selection of countries Per Capita GDP1 in USD (2017) 15,347 8,827 38,477 1,940 8,903 75,505 1,548 2,989 10,743 Happy Planet Index2 (2018) 31.7 25.7 30.4 29.2 40.7 36.8 31.5 35 18.7 Better Life Index3 (2018) 6.7 6.4 6.6 7.6 6 Ecological Footprint4 (resource use /capacity) (2014) 2.39 2.21 2.79 0.67 1.52 3.59 0.47 0.96 3.31 Adjusted Net Savings1 percent of GNI (2016) 5.1 22.4 7.1 15.5 12.5 15.8 14.7 28.4 6.7 Country Chile China France India Mexico Norway Pakistan Philippines Russia South Africa 6,161 15.9 4.8 2.03 1.5 Uganda 604 19.4 0.71 -10.8 United States 59,532 20.7 6.9 4.97 6.1 Sources: 1World Bank, World Development Indicators Database; 2New Economic Foundation’s Happy Planet Index; 3OECD Better Life Index; 4Global Footprint Network’s National Footprint and Biocapacity Accounts Economists have also created approaches that focus on human development and capabilities, and move away from monetary values. Indian economist Amartya Sen defines development as the process of expanding real freedoms that people enjoy. As opposed to identifying development with the typical measures such as growth of GDP, or industrialization, Sen believes that access to freedoms such as health care and education, and political and civil rights constitute the end goals of development. While Sen acknowledges that things like GDP growth can be a means of expanding these freedoms, he does not see them as an ends in themselves.36 (Sen, 2000). This is known as the capabilities approach. Sen also questions the commonly held notion in development that the present generation must suffer and save, keeping current living standards down in order to accumulate capital for the future, and that inequality in the short run is acceptable, as in the long run economic benefits will “trickle down.”37 Philosopher Martha Nussbaum makes a similar argument using the human capabilities approach which aims to provide “an account of basic constitutional principles that should be respected and implemented by the governments of all nations, as a bare minimum of what respect for human dignity requires.”38 Nussbaum lists 10 central capabilities that apply cross-culturally, including health, affiliation (i.e. family and community), control over one’s environment, and political control. She argues that the use of this common framework can provide an alternative to GDP for comparative analysis of life quality between nations, though this comparative feature is not the main focus of the approach. There is no one indicator that has surfaced yet as the “best” alternative to GDP, and there is still widespread debate as to the validity and interpretation of many of these alternative measures. Though most of these indicators have not been adopted on a wide scale, the two examples below show how an individual nation or region can use these indicators to measure their success and to create policies that promote more than economic growth alone. BOX 1: BHUTAN’S GROSS NATIONAL HAPPINESS INDICATOR Perhaps the best example of nationwide adoption of an alternative index as a primary well-being indicator comes from the country of Bhutan. Since 2008, the government has used Gross National Happiness (GNH) to measure their country’s success and to inform policy making. Development of the GNH index began in 2005 at the Center for Bhutan Studies, and is based on the four pillars of good governance, sustainable socioeconomic development, preservation and promotion of culture, and environmental conservation. The GNH Index is broken down into 9 equally weighted domains, each with several index values or indicators (see Figure 14 below). Information on these indicators is collected via an extensive survey including questions about work and leisure activities, drinking water quality, community vitality, cultural diversity, and ecological sustainability. In addition to providing a single index value, the data is also used to calculate GNH for different demographic groups (by age, gender, and occupation). To date, the study has been conducted in 2008, 2010, and 2015. 36 Sen, 2000. Sen, 1997. 38 Nussbaum, 2000. 37 To turn all of this collected data into happiness levels, survey results are analyzed to determine whether people have “sufficient” scores in each domain. For policy purposes ‘happiness’ means someone has sufficient scores in at least 66% (6 of the 9) domains. This is further broken down into four categories of happiness: ‘unhappy’ (less than 50% sufficiency), ‘narrowly happy’ (5065% sufficiency), ‘extensively happy’ (66-76% sufficiency), and ‘deeply’ happy (77% or more sufficiency). GNH data can be used to generate both an index value (a 0-1 statistic calculated based on what percentage of the population fall into the various happiness levels), and a head count (the percentage of Bhutanese people who are happy). For the most recent 2015 survey of over 7,000 people the results showed a GNH index value of 0.76. The headcount data show that 8% of the population is deeply happy, 35% are extensively happy, 48% are narrowly happy, and 9% are unhappy. These results can be compared to the 2010 data, which had an index value of 0.74, showing that overall people across the country are getting slightly happier. The results showed that this improvement over the 5 years period was a result in people’s improved material well-being (income, housing and assets) as well as increases in access to services (electricity, clean water, sanitation, and health care). Overall health and participation in cultural festivals were two other areas of improvement. There were decreases, however, in all of the psychological well-being indicators (spirituality, positive and negative emotions, satisfaction), and in the categories related to sense of belonging and etiquette.39 One weakness of GNH as an indicator is that it is not good for inter-country comparisons, as it was developed to be specific to Bhutan. Figure 14: Bhutan’s 9 domains and 33 index values Source: Ura et al., 2012. 39 Center for Bhutan Studies and GNH Research, 2016. BOX 2: VERMONT’S GENUINE PROGRESS INDICATOR In 2012 Vermont became the second state in the U.S. (Maryland being the first) to officially adopt the use of the Genuine Progress Indicator (GPI) as an economic performance indicator. As described above, GPI attempts to improve on GDP by accounting for a range of factors that both increase and decrease well-being. Researchers at the GUND Institute for Ecological Economics at the University of Vermont have calculated Vermont’s GPI for 2000 to 2015 (the year with the most recently available data). Figure 15 below shows how Vermont’s GPI compares to GSP (gross state product) over this 15-year period. GPI is about 2/3rds of GSP. Over the past 10 years, Vermont’s GSP grew by 8.7% but its GPI declined by 0.9%. One of the main factors contributing to the decrease in GPI is that income inequality has grown within the state during that period. Other factors bringing the GPI down include the growing environmental costs of water pollution, noise pollution, and climate change. Areas where Vermonters made progress (or GPI gains) include decreases in unemployment, increases in household activities and leisure time, increases in higher education, and decreasing costs of deforestation, non-renewable energy resource depletion, and ozone depletion. Figure 15: Vermont GSP and GPI in constant 2015 dollars (billions) Source: Zencey, 2018. 5.2 Reduce consumption and production In economic terms, consumption is defined as the process by which goods and services are put to final use by people. Neoclassical economics assumes that people make rational decisions and consume goods to maximize their utility, and that consumer preferences drive the production of goods and services. Consumption is such a big part of modern society that we consider consumerism, meaning a significant preoccupation with the purchase and use of consumer goods and services, as a natural human trait.40 However, this has not always been the case. In more traditional societies, it was mainly the elite class that was involved in mass consumption. Families that were able to meet their basic needs did not always turn to mass consumerism. Religious value systems taught people to live simply, clothing and home styles were based on tradition instead of trend, and there was a focus on spending that would benefit the community instead of the individual. With the Industrial Revolution and urbanization, people left many of these traditions behind and began to distinguish themselves through consumption. Advertising played a large role in this shift, encouraging people to buy more and more in order to keep up with the upper-class elite. At the same time people began to forgo leisure and family time in favor of longer work hours and higher earnings. With globalization and increased access to television and the internet, more people are exposed to advertising and the portrayal of the ways of life of the world’s wealthiest societies. As income levels rise across the globe, a global “middle class” increasingly models consumption behavior on patterns in the Global North, increasing purchases of individual vehicles, consumer electronics and domestic appliances, and shifting to a meat-based diet. Despite the continued drive for increased consumption, there is evidence that higher levels of consumption and material wealth do not always contribute to increased happiness. A variety of studies have found that increased income, which is correlated with increased consumption, only improves well-being up to a point (approximately $75,000 income), beyond which there are significantly diminishing returns to increased income in terms of self-described well-being, and no improvement in “emotional well-being”.41 The growing field of behavioral economics uses insights from various social and biological sciences to explore how people make decisions. Behavioral economics has been important in showing that people are not always rational consumers, and often do not behave as economic models predict. Many of the findings of this field point to the limited role of consumerism in wellbeing, highlighting instead the value of experiences and activities over goods, and citing the detrimental effects of always trying to keep up with neighbors and the upper class. Regardless of the relationship between consumption and well-being, all consumption activities have an impact on the environment, from the extraction of the materials, to manufacturing, packaging, transport, and finally disposal. The term green consumerism refers to making consumption decisions at least partly on the basis of environmental criteria. This movement is growing as people seek out reusable, environmentally-friendly, and organic products. Green consumerism can be further be broken down into two types: “shallow” green consumerism, which refers to purchasing ecofriendly alternatives without changing consumption levels, and “deep” green consumerism which refers to producing ecofriendly alternatives while also reducing overall consumption levels. For example, someone practicing shallow green consumerism might buy a new t-shirt made out of organic cotton, and an electric car; while someone practicing deep For a more in depth look at this topic, see GDAE’s module titled “Consumption and the Consumer Society,” available at http://www.bu.edu/eci/education-materials/teaching-modules/#consumption. 41 Kahneman and Deaton, 2010. 40 green consumerism might resist buying clothing that they do not need, and use a bicycle or take public transportation. Degrowth advocates argue that deep consumerism is required in the Global North to truly move away from a growth-centric economic system and allow for sustainable use of earth’s resources. Reducing consumption in the Global North would also free up resources for use by countries in the Global South, where an increase in consumption is actually needed to improve human well-being. Since production is tied to consumption (goods are only made if there is someone to buy them), reducing consumption implies reducing production. Reducing production does not necessarily mean nothing will get manufactured, and that jobs will be lost, but it does mean that the way work gets done and goods get made will need to change. For example, in many countries the 40-hour work week is the employment standard. However, some non-growth-centric economists suggest a shift to a shorter work week. The New Economics Foundation (NEF) proposes a shift to a 21-hour work week as the new norm.42 They cite three categories of benefits this shift would provide: 1. Safeguarding the natural resources of the planet: moving towards a much shorter working week would help break the habit of living to work, working to earn, and earning to consume. People may become less attached to carbon-intensive consumption and more attached to relationships, pastimes, and places that absorb less money and more time. 2. Social justice and well-being for all: a 21-hour ‘normal’ working week could help distribute paid work more evenly across the population, reducing ill-being associated with unemployment, long working hours and too little control over time. It would make it possible for paid and unpaid work to be distributed more equally between women and men; for parents to spend more time with their children—and to spend that time differently; for people to delay retirement if they wanted to, and to have more time to care for others, to participate in local activities and to do other things of their choosing. 3. A robust and prosperous economy: shorter working hours could help to adapt the economy to the needs of society and the environment, rather than subjugating society and environment to the needs of the economy. Business would benefit from more women entering the workforce; from men leading more rounded, balanced lives; and from reductions in work-place stress associated with juggling paid employment and home-based responsibilities. Proponents of this concept recognize that a transition to a shorter working week would have to happen slowly over time, and would have to be accompanied by an increase in minimum wages and a progressive taxation structure that reduces inequality. Finally, a shift in perspectives would be needed to get individuals to buy in to this system, and change their expectations of their standards of living. In addition to standardizing the shorter work week, expanding the use of reciprocity, or the non-market exchange of goods and labor, can also improve well-being without economic growth. The following two examples—one from Quechua societies in the Andes region in south America and one from the United States—show how the use of a local informal economy43 and reciprocal labor can be used to reduce production and consumption activities while still meeting human needs. 42 NEF, 2010. While the term formal economy refers to economic activities that are recorded as part of GDP, the informal economy refers to activities that are not monitored by the government or taxed, and are often non-monetary. 43 BOX 3: QUECHUA USE OF RECIPROCAL LABOR Indigenous groups have been domesticating crops and raising animals in the Andes region of South America for approximately 4,500 years. Today, like many indigenous groups, the Quechua are more integrated within the formal economic system, though agricultural work is still the primary labor activity, and many still maintain cultural traditions and community governance methods. Within Quechua communities, complex systems of reciprocity have been created and evolved over time to allow households to use communal labor to carry out labor intensive tasks. Activities like building a new home, digging an irrigation channel, planting fields, and harvesting crops are all often done by the community instead of the individual or hired workers. The Quechua word Anyi (or Anye) is loosely translated to mean reciprocity and refers to the system of cooperation used in a community, while Minka (or Minga) means communal work.44 These types of arrangements allow households to accomplish labor intensive tasks quickly, and without the need for modern machinery or equipment. They also make tasks that can be mundane more enjoyable. Even with increased integration into the formal economy, these types of reciprocal labor arrangements are still prevalent in many Andean communities. Reciprocity is challenged to some degree as more and more people in this region, especially young people, migrate to urban areas to look for paid employment as climate change and a changing economy make agriculture less profitable. Without the young labor force available to participate in community labor, the system can break down. In addition to reciprocity, Quechua communities also use barter markets, especially for crops, where direct exchanges of goods and services are used in place of currency. Participation in these markets allow households to meet their needs without participating in the formal economy.45 These activities are also important for the environment, as they allow farmers to continue to grow a wide variety of crops without the use of chemical pesticides since size and quality regulations required for commercial sales do not apply in the barter market. Though barter and reciprocity activities do not make any contribution to money income or GDP, they allow communities to improve well-being of individuals and the community while maintaining their cultural identity, and protecting their environment. 44 45 Bétrisey and Mager, 2014. Argumedo and Pimbert, 2010. BOX 4: TIME BANKING IN US COMMUNITIES Like the Quechua concepts of Minka and Anyi, the concept of time banking is a system of reciprocity involving a network of community members who give hours of service in order to receive a time credit to later be redeemed to receive another service without the use of currency. An example might be one individual spending 3 hours offering legal advice to another time bank member and in exchange receiving 2 hours of child care from one member, and one hour of Spanish lessons from another. Although the formal economy values legal advice more highly than childcare or language tutors (the average lawyer earns much more than the average daycare provider or educator) the time bank exchange values everyone’s time equally. Since timebanks often occur outside of tight knit community groups, like those present in Quechua communities, a more formal tracking system is typically used to track credits. As of 2018, there were around 120 formally established timebanks across the United States. One example is Our Time Bank, serving the West Los Angeles, California region. In addition to the hours of exchange, this time bank organization also offers a Repair Café, where members can bring broken or damaged objects to get help repairing them, and learn how to repair things by themselves. The organization also sponsors a “sharing economy” of specialty tools and equipment that members can borrow, to reduce unnecessary purchases of equipment by individuals. 5.3 Provide social safety nets and redistribute wealth The term social safety net refers to the collection of services provided by institutions to help the poor or disadvantaged. This could include things like unemployment benefits, low income housing credits, food stamps, free health care, homeless shelters, and cash transfer programs. These programs cost money to implement, and funding typically comes from taxing members of society. In general, most countries use some form of a progressive tax structure, which means the tax rate (tax as a percentage of your income) paid to the government increases as income levels increase. So while an individual making $30,000 a year may pay a 10% tax rate ($3,000), someone making $150,000 a year might pay a 30% tax rate ($45,000). How big the social safety net should be, and how taxes are structured, are major topics of political debate. Many degrowth proponents promote a strongly progressive tax structure as a method of reducing inequality. Some proponents of degrowth even go as far as recommending an income ceiling (also called a wage ceiling, or a maximum wage), which is effectively a 100% tax rate beyond a certain amount. This would discourage individuals from seeking out never-ending salary increases, and could reduce the consumption of luxury goods. The concept of universal basic income, or guaranteed income has also gained support in recent years as people worry that automation will replace the need for human workers, increasing unemployment. Though specifics vary widely, the general concept is that government funding is used to provide all individuals with regular payments. In the modern, developed world it is almost impossible to meet basic needs without money, so a program like this would ensure that everyone was able to maintain a certain basic standard of living. The main challenge of instituting universal basic income is high costs, though proponents argue that if done correctly it can be more efficient that the various complex social welfare programs already in place. Another progressive concept for redistributing wealth is the idea of paying reparations, meaning monetary compensation, to groups that have been mistreated in the past. For example, black Americans unwillingly contributed 250 years of unpaid slave labor, making the US the economic leader it is today and benefiting white slave owners and their descendants. The National Coalition of Blacks for Reparations in America defines reparations as: “A process of repairing, healing and restoring a people injured because of their group identity and in violation of their fundamental human rights by governments, corporations, institutions and families. Those groups that have been injured have the right to obtain from the government, corporation, institution or family responsible for the injuries that which they need to repair and heal themselves. In addition to being a demand for justice, it is a principle of international human rights law.”46 Reparations for slavery in the United States would involve paying individuals who are descendants of slaves and identify as African American for these injustices, as well as changing existing institutions that continue racial oppression. Ideas about how much should be paid, who would qualify and how these payments would be redistributed vary greatly, and the topic is politically controversial. Ultimately a combination of social welfare programs, combined with a change in mindset, is likely to be needed to make a significant impact on inequality. The examples below show how Brazil has addressed income inequality with a generous social welfare program, and how Finland is testing a universal basic income program on a small scale to observe the impacts and determine if a larger scale program would be feasible and desirable. BOX 5: BRAZIL’S BOLSA FAMILIA Bolsa Familia is a social welfare program implemented in Brazil starting in 2003 that provides a monthly stipend to low income households on the conditions that their children remain in school without too many absences, and are vaccinated. This type of program is called a conditional cash transfer program. Bolsa Familia was introduced with the goals of reducing income inequality and breaking the cycle of poverty by ensuring that children from low income households are educated and have access to 46 M4BL, 2019. health care. Today, it is the largest program of its type, serving approximately 14 million households (around 50 million people), and is widely considered to be a success. Brazil is one of the few countries that has seen a decrease in intra-country inequality since the 1980s, with a decreasing share of the total national income held by the top 10%. The country’s Gini coefficient has moved from 0.63 in 1989 to 0.53 in 2017.47 The program is credited with cutting the number of Brazilians living in extreme poverty in half during its first 10 years while reducing hunger, increasing health care utilization,48 and increasing the number of girls in school.49 Additionally, since these transfers are made to female heads of households whenever possible, the program has improved the decision making power of women in poor households.50 Opponents of social welfare programs often cite high costs as their primary argument against them, but Bolsa Familia costs the government less than 0.6% of their total GDP. Bolsa Familia remains popular among both liberal and conservative parties, and serves as an example of a successful program for reducing inequality. BOX 6: FINLAND’S UNIVERSAL BASIC INCOME TRIAL Finland and other Nordic countries (Denmark, Sweden, Iceland, Norway) are known for having relatively low levels of economic inequality and high levels of wealth and well bring for their residents due to extensive government social safety nets. Residents receive government provided healthcare, free university education, free childcare for low income families, generous paid paternity leave, and support for unemployed, sick, and injured workers, and disabled and elderly individuals. The United Nations rated Finland as the happiest country in their 2019 world happiness report. In 2016, Finland began conducting a two-year trial of a universal basic income program. For the trial, 2,000 unemployed residents were randomly selected to receive a monthly no-strings-attached payment equivalent to US$685 from the government. Full results from the trial are not yet available, but preliminary results show that though the program did not increase unemployment rates, it did affect other measures of well-being including health, stress levels, and mood. Participants receiving UBI benefits were happier than when they had received unemployment benefits. Participants also described feeling free to pursue their own interests and seek out employment that interested them, or start their own businesses, without the fear of losing their benefits once they gained employment.51 It is currently unclear whether the government will implement a UBI plan on a larger scale, though they have decided not to continue the trial at this point. 47 World Bank, World Development Indicators database. 2019. Shei et al., 2014. 49 de Brauw et al, 2014. 50 de Brauw et al, 2013. 51 “Finland’s basic income test boosts happiness but not employment,” New York Times (Reuters) February 9, 2019. 48 5.4 Change ownership structures In capitalist society, private ownership of resources (meaning one individual or small group of individuals owns a building, business, land, etc.) is the standard ownership structure. This structure tends to create an owner class and a worker class, resulting in economic inequality and a drive for never ending growth as workers strive to make it to the owner class. The concept of cooperative ownership challenges that standard, instead allowing a group to own and democratically operate resources. Cooperative and community-based ownership structures can be used for business, for agriculture, energy production and distribution, and for housing. Interest in worker owned cooperatives is growing as the pay divide between average workers and top executives continues to increase. The U.S. company Amazon is a prime example of this discrepancy, with owner Jeff Bezos, the world’s richest man, earning an estimated $8.96 million per hour, while many of his workers make $15 an hour operating under stressful working conditions.52 At this rate, an Amazon employee would have to work approximately 287 years fulltime to make what the CEO makes in a single hour. Cooperatives challenge this model, allowing worker-owners to share the profits made by their business. A worker owned cooperative has two key principles: 1. workers own the business and they participate in its financial success on the basis of their labor contribution to the cooperative, and 2. workers have representation on and vote for the board of directors, adhering to the principle of one worker, one vote.53 Cooperatives have a lower ratio of highest to lowest paid salaries when compared to conventional businesses, higher worker productivity and lower layoff rates, and a better 5-year survival rate for new businesses.54 An additional benefit is that with more money going to workers, instead of to upper-level managers and CEOs, more money stays in the local economy. Like worker-owned cooperative businesses, agricultural cooperatives are farmer-owned enterprises that allow the owners to pool their resources to produce and/or sell their products. The two main forms of agricultural cooperatives are: production cooperatives, where farmers jointly own and work the land and machinery; and service cooperatives, where members farm individually but are provided with inputs like access to seeds, fertilizers, fuel, and machinery, or with services related to the sale of the product like packaging, marketing and distribution. These cooperatives allow small farmers to work to compete against large industrial producers. Service cooperatives are more common in the Global North, while production cooperatives are found mainly in the Global South. Finally, the standard model of privately owned housing can be changed with community land trusts. These are non-profits that allow for community land stewardship, often focusing on providing affordable housing and revitalizing abandon buildings and lots. Instead of a private home owner, the trust acquires land and maintains ownership. Residents take on a long-term 52 Hoffower, 2019. Democracy at Work Institute, 2019. 54 Pérotin, 2017. 53 renewable lease instead of purchasing the home outright. When they leave (sell) the home they get a portion of increased value, and the rest goes back into the trust. These trusts improving community well-being by: • • • • providing low- and moderate-income people with the opportunity to build equity through homeownership and ensure these residents are not displaced due to land speculation and gentrification. protecting owners from downturns; foreclosure rates for land trusts have been as much as 90% less than conventional home mortgages. allowing for the possibility of direct, grassroots participation in decision-making and community control of local assets. providing a range of community-focused initiatives including homeownership education programs, commercial development projects, and community greening efforts.55 The two examples below show how cooperative ownership models have been implemented to help marginalized groups around the globe. The first, in Nicaragua, shows how agricultural cooperatives can benefit small farmers, while the second describes how immigrant women in New York City created their own cooperative cleaning business. BOX 7: NICARAGUA’S AGRICULTURAL COOPERATIVES Over half of the national income in Nicaragua comes from a combination of cooperatives and small family farms, referred to collectively as the popular economy. One example of a cooperative that has provided a number of non-monetary benefits to its member owners is The Gloria Quintanilla peasant cooperative, run by 22 women and consisting of 79 member families. This cooperative is on land formerly owned by the Somoza family (dictatorial rulers of Nicaragua from 1936 to 1979) that was once used to produce coffee with chemical pesticides and fertilizers. Today the cooperative uses agroecological practices to grow traditional crops like bananas, plantains, cassava, yams, and maize in addition to coffee, without the use of chemical inputs. Cooperative members process, package, and sell their coffee themselves, cutting out middle-men who would take a large share of the profits, and allowing them to collectively bargain for better prices. The women receive both technical and finance training, and profits are used to fund community education. The cooperative improves member’s self-sufficiency while also increasing food sovereignty in the region.56 The cooperative is supported by the Asociación de Trabajadores del Campo (ATC, or Rural Workers Association), an organization that defends rural workers and peoples of Nicaragua. The ATC is also part of the international movement and organization called La Vía Campesina, or the international peasant’s movement, that is active across the Global South and works to defend peasant agriculture for food sovereignty, and to promote social justice and dignity while opposing corporate agricultural that destroys social relations and nature. 55 56 communitywealth.org, 2019. Via Campesina, 2018. BOX 8: WOMEN OWNED GREEN CLEANING COOPERATIVE IN NEW YORK CITY In the United States, and especially in New York City, the house cleaning industry has been dominated by women, and more specifically by women of color and immigrants, groups who are frequently underpaid and subject to discrimination. Studies of paid care workers in New York City (which include home care aids, nannies, and house cleaners) have found that that these workers are likely to be subject to long and fluctuating working hours, have high levels of exposure to chemical cleaning products, lack benefits, and often experience minimum wage and overtime violations.57 To address this, several worker-owned cleaning cooperatives have formed in the city. One example is Si Se Puede Women’s Cooperative in Brooklyn, which focuses on using environmentally friendly cleaning products and ensuring that its worker owners are paid a living wage. The cooperative was formed in 2006 by 14 women, and now has over 100 member owners, who are all female immigrants. The name Si Se Puede (“We can do it”) was chosen by the original members since it is a common phrase used in political and social change movements in Latin America. All members vote equally in decisions, and meet bi-weekly for support and ongoing training. The group worked with the Center for Family Life in Brooklyn, which has a cooperative development program that helps local immigrants and low-income workers to start and run cooperatives. In addition to Si Se Puede, the center has helped to support the formation of 15 local cooperative owned businesses in the fields of elder care, cleaning, child care and tutoring, catering, and pet care. The number of cooperative businesses in NYC has been growing in recent years due to the Worker Cooperative Business Development Initiative (WCBDI) launched by Mayor Bill DeBlasio in 2015. As part of this initiative, $1.2 million in funding was distributed to 10 partner organizations and small business services to “share information with prospective entrepreneurs, support existing worker cooperatives, spur the creation of new worker cooperatives and help small businesses transition their business into the worker cooperative model.”58 As of the end of 2018, 132 worker cooperatives had been launched under this initiative, and the budget for the initiative had been increased to around $3 million per year. In addition to helping cooperatives form, the initiative also provides businesses and prospective businesses with free services including business plan development, financial planning, accounting, web development and tech support, and legal advice. 5.5 Use communal management of natural resources In addition to transferring control of businesses and housing to community members, transferring control of natural resources to the community is a strategy for promoting a growth-centric 57 58 NYC Consumer Affairs, 2018. WCBDI, 2015. alternative economy. In economic terms, natural resources that are rival in use (one person’s use diminishes the ability of others to use it) and non-excludable (people cannot be prevented from using them) are known as common pool resources. Examples of this type of resource include grazing land, fishing grounds, water used for irrigation, and forests. These resources can be subject to the tragedy of the commons, where they are overused by individuals behaving in a selfinterested manner. Possible solutions to this problem involve government management or licensing of the resources, or privatization, involving individual or corporate ownership. A third option, however, is to have community members maintain control of the resources and develop their own rules to prevent overuse. In 2009, political economist Elinor Ostrom received a Nobel Prize in economics for her work related to community governance of the commons.59 Through her research on water basin management in California, irrigation systems in Spain and Nepal, highland villages in Switzerland and Japan, and fisheries in Maine and Indonesia, Ostrom identified eight design principles that allow for common pool resources to be successfully managed with local governance. They are: 1. Clearly defined boundaries: To identify both the group and resources. 2. Proportional equivalence between benefits and costs: System must fairly reward members for their contributions. 3. Collective-choice arrangements: Creation of rules and decision making must be done by group consensus. 4. Monitoring: To prevent free riding and exploitation. 5. Graduated sanctions, with fair punishments that reflect the severity of the transgression. 6. Conflict resolution mechanisms. 7. Recognition of rights to organize, to ensure that groups are independent and create rules from within, as opposed to being subject to externally applied rules. 8. For groups that are part of larger social systems, there must be appropriate coordination among relevant groups. By utilizing these principles, many communities have managed to avoid the “tragedy of the commons”. The two examples below show how a long-maintained tradition of water system management in Nepal is still in place today, and how a similarly structured irrigation system management program in New Mexico is working to protect scarce water resources. BOX 9: NEPAL’S COMMUNITY MAINTAINED WATER SYSTEMS Managing water used to irrigate crops can be difficult, as upstream use and contamination affects all users downstream. In Nepal, rural farmers have historically worked together to construct and maintain their own small irrigation canal systems. As early as 500-800 AD, farmers in Kathmandu Valley were constructing drinking water systems. These complex systems were designed to operate in the unique climate, soils, topography, and social structure of each location. Systems were adjusted to seasonal weather patterns and relied on indigenous knowledge passed down through generations. 59 Elinor Ostrom was the first female (and as of 2019 still only one of two females) to win this prize in economics. These systems have evolved over time to adapt to the changing environment and the needs of the farming community. They typically consist of a dam to contain water and a system of channels to direct water to farmland (Figure 17). Farmers who receive water from these systems contribute their labor for maintenance and repairs, or in some cases pay fees to cover these costs. Each water system has a defined boundary and water allocation within it is agreed upon by members, taking into account land size and irrigation needs. In many cases farmers can transfer water rights to another member if they do not need their full allocation. Groups use monetary and social sanctions to punish individuals who intentionally divert more than their share of water to their lands.60 Beginning in the late 1960’s, Nepal received funding from the World Bank and Asian Development Bank to build larger state owned and maintained irrigation systems, with the goal of increasing agricultural production and generating economic development. These larger systems were designed, constructed and maintained by the government, without insight from local stakeholders. Despite high levels of initial investment, these larger irrigation products did not produce any substantial improvements in agriculture. Since the 1990s the Nepalese government has been working to reverse this transition, reinvolving local farmers in the management of their water resources. Several studies comparing water resources in Nepal managed by a central agency compared to those managed by farmers have found that the farmer managed systems were superior in agricultural productivity, water distribution, fee collection rates, and the overall maintenance of the system.61 Though farmers in the highlands of Nepal are expected to be hard hit by climate change, the fact that their irrigation systems have a long history of evolving to changing conditions and user needs means that farmers are well suited to continually adapt them to the additional challenges they face.62 60 ISET-Nepal. Dhakal et al., 2018. 62 ISET-Nepal. 61