The idea that we need a “new
economy”—that the entire economic system must be radically restructured
if critical social and environmental goals are to be met—runs directly
counter to the American creed that capitalism as we know it is the best,
and only possible, option. Over the past few decades, however, a
deepening sense of the profound ecological challenges facing the planet
and growing despair at the inability of traditional politics to address
economic failings have fueled an extraordinary amount of experimentation
by activists, economists and socially minded business leaders. Most of
the projects, ideas and research efforts have gained traction slowly and
with little notice. But in the wake of the financial crisis, they have
proliferated and earned a surprising amount of support—and not only
among the usual suspects on the left. As the threat of a global climate
crisis grows increasingly dire and the nation sinks deeper into an
economic slump for which conventional wisdom offers no adequate
remedies, more and more Americans are coming to realize that it is time
to begin defining, demanding and organizing to build a new-economy
movement.
That the term “new economy” has begun to explode into public use in
diverse areas may be an indication that the movement has reached a
critical stage of development—and a sign that the domination of
traditional thinking may be starting to weaken. Although precisely what
“changing the system” means is a matter of considerable debate, certain
key points are clear: the movement seeks an economy that is increasingly
green and socially responsible, and one that is based on rethinking the
nature of ownership and the growth paradigm that guides conventional
policies.
This, in turn, leads to an emphasis on institutions whose priorities
are broader than those that typically flow from the corporate emphasis
on the bottom line. At the cutting edge of experimentation are the
growing number of egalitarian, and often green, worker-owned
cooperatives. Hundreds of “social enterprises” that use profits for
environmental, social or community-serving goals are also expanding
rapidly. In many communities urban agricultural efforts have made common
cause with groups concerned about healthy nonprocessed food. And all
this is to say nothing of 1.6 million nonprofit corporations that often
cross over into economic activity.
For-profits have developed alternatives as well. There are, for
example, more than 11,000 companies owned entirely or in significant
part by some 13.6 million employees. Most have adopted Employee Stock
Ownership Plans; these so-called ESOPs democratize ownership, though
only some of them involve participatory management. W.L. Gore, maker of
Gore-Tex and many other products, is a leading example: the company has
some 9,000 employee-owners at forty-five locations worldwide and
generates annual sales of $2.5 billion. Litecontrol, which manufactures
high-efficiency, high-performance architectural lighting fixtures,
operates as a less typical ESOP; the Massachusetts-based company is
entirely owned by roughly 200 employees and fully unionized with the
International Brotherhood of Electrical Workers.
A different large-scale corporation, Seventh Generation—the nation’s
leader in “green” detergents, dishwashing soap, baby wipes, tissues,
paper towels and other household products—has internal policies
requiring that no one be paid more than fourteen times the lowest base
pay or five times higher than the average employee.
In certain states, companies that want to brandish their new-economy
values can now also register as B Corporations. B Corp registration (the
“B” stands for “benefit”) allows a company to subordinate profits to
social and environmental goals. Without this legal authorization, a CEO
could in theory be sued by stockholders if profit-making is not his sole
objective. Such status ensures that specific goals are met by different
companies (manufacturers have different requirements from retail
stores). It also helps with social marketing and branding. Thus, King
Arthur Flour, a highly successful Vermont-based, 100 percent
employee-owned ESOP, can be explicit, stating that “making money in
itself is not our highest priority.” Four states—Maryland, Vermont, New
Jersey and Virginia—have passed legislation that permits B Corp
chartering, with many others likely to follow.
Cooperatives may not be a new idea—with at least 130 million members
(more than one in three Americans), co-ops have broad political and
cultural support—but they are becoming increasingly important in
new-economy efforts. A widely discussed strategy in Cleveland suggests a
possible next stage of development: the Evergreen Cooperatives are
linked through a nonprofit corporation, a revolving loan fund and the
common goal of rebuilding the economically devastated Greater University
Circle neighborhoods. A thoroughly green industrial-scale laundry, a
solar installation company and a soon-to-be-opened large-scale
commercial greenhouse (capable of producing about 5 million heads of
lettuce a year) make up the first of a group of linked co-ops projected
to expand in years to come. The effort is unique in that Evergreen is
building on the purchasing power of the area’s large hospital,
university and other anchor institutions, which buy some
$3 billion of
goods and services a year—virtually none of which, until recently, had
come from local business. Senator Sherrod Brown is expected to introduce
national legislation aimed at developing Evergreen-style models in
other cities. (Full disclosure: the Democracy Collaborative of the
University of Maryland, which I co-founded, has played an important role
in Evergreen’s development.)
* * *
Along with the rapid expansion of small and medium-size businesses
committed to building the new economy has come a sense of community and
shared mission. Staff, managers and owners at many of these companies
are finding more opportunities to share ideas and pool resources with
like-minded professionals. The American Sustainable Business Council, a
growing alliance of 150,000 business professionals and thirty business
organizations, has emerged as a leading venue for such activity. Most
members are “triple bottom line” companies and social enterprises
committed to the environment and social outcomes as well as profits.
In many ways the council operates like any advocacy group attempting
to lobby, educate and promote legislation and strategies. Thirty-five
leaders recently met with Labor Secretary Hilda Solis, for instance, to
make clear that the US Chamber of Commerce does not speak for all
American business, to seek her help with specific projects and issues,
and to fill her in on a range of environmentally and socially concerned
economic efforts that definitely do not do business as usual. The names
of some of the council’s constituent organizations offer a sense of what
this means: Green America, Business for Shared Prosperity, Social
Enterprise Alliance, Count Me In for Women’s Economic Independence,
California Association for Microenterprise Opportunity. Although
ecological concerns are at the top, the council’s agenda is highly
supportive of other progressive social and economic goals. A recent blog
by Jeffrey Hollender, chair of the council’s advisory board (and former
CEO of Seventh Generation), attacked the US Chamber of Commerce for
“fighting democracy and destroying America’s economic future.”
The Business Alliance for Local Living Economies (BALLE), made up of
more than 22,000 small businesses, is another rapidly growing
organization that works to strengthen new-economy networks. BALLE brings
together locally owned efforts dedicated to building ecologically
sustainable “living economies,” with the ambitious long-term goal of
developing a global system of interconnected local communities that
function in harmony with their ecosystems. The group’s Mid-Atlantic
Regional Hub, the Sustainable Business Network of Greater Philadelphia,
recognizes area businesses that “demonstrate a strong social and
environmental impact while also making a profit.” A recent example is
GreenLine Paper, a company that produces green products and works to
preserve forests and prevent climate change. By participating in the
network, GreenLine Paper gains brand recognition and promotion, as well
as marketing, policy support, technical assistance and access to a
like-minded coalition of businesses.
Sarah Stranahan, a longtime board member at the Needmor Fund, recalls
having a sense in late 2009 that large numbers of Americans were
beginning to understand that something is profoundly wrong with the
economy. Bearing this in mind, with a small group of other activists she
brought leaders of diverse organizations together in early September of
that year to explore ways to build a larger movement. The New Economy
Network (NEN), a loosely organized umbrella effort comprising roughly
200 to 250 new-economy leaders and organizations, was the low-budget
product of their meeting. NEN acts primarily as a clearinghouse for
information and research produced by member organizations. “However, our
most important role,” says Stranahan, who serves as the network
coordinator, “has been to help create a larger sense of shared common
direction in a time of crisis—a sense that the new-economy movement is
much greater than the sum of its diverse parts.”
* * *
Several initiatives have begun to deal systematically with
fundamental problems of vision, theory and longer-term strategy. The New
Economics Institute (NEI), which is in formation, is a joint venture
that brings together the former E.F. Schumacher Society and the New
Economics Foundation, in Britain. Among the environmentalists and
economists involved are Gus Speth, David Orr, Richard Norgaard, Bill
McKibben, Neva Goodwin, John Fullerton and Peter Victor.
“For the most part, advocates for change have worked within the
current system of political economy,” says Speth, a former adviser to
Presidents Carter and Clinton, onetime administrator of the United
Nations Development Programme and the recently retired dean of the Yale
School of Forestry and Environmental Studies, who has emerged as one of
the new-economy movement’s leading figures. “But in the end,” Speth
declares, “this approach will not succeed when what is needed is
transformative change in the system itself.”
NEI is teaming up with other organizations, like the progressive
think tank Demos, on several projects. One shared effort is attempting
to develop detailed indicators of sustainable economic activity. As many
scholars have demonstrated, the gross national product indicator is
profoundly misleading: for instance, both work that generates pollution
and work that cleans it up are registered as positive in the GNP,
although the net real-world economic gain is zero, and there is a huge
waste of labor on both sides of the effort. Precisely how to develop a
“dashboard” of indicators that measure genuine economic gain,
environmental destruction, even human happiness is one of NEI’s high
priorities. Another is a detailed econometric model of how a very large
economic system can move away from growth as its central objective.
Related to both are earlier and ongoing Great Transition studies by the
Tellus Institute, a think tank concerned with sustainability.
* * *
A less academic effort concerned with vision and long-term
institutional and policy reform is the New Economy Working Group, a
joint venture of the Institute for Policy Studies (IPS) and YES! Magazine.
Among other things, the working group (which includes people, like
Speth, who are concurrently involved in other initiatives) is attempting
to create detailed designs for state and local banks in support of
new-economy institutional development. (The longstanding Bank of North
Dakota is one important precedent.) The larger goal of the Working Group
is to advance a coherent vision of an economy organized around
sustainable local community economies. John Cavanagh, on leave as
director of IPS, and his wife, Robin Broad, a professor of international
development at American University, emphasize the importance to
developing nations of communities that provide economic, social and
environmental “rootedness” in an “age of vulnerability.” David Korten,
board chair of YES! Magazine and author of Agenda for a New Economy,
stresses a radically decentralized domestic market-based vision of
“self-organizing” communities that rely almost entirely on local
resources. He envisions a trajectory of cultural change that could not
only reduce conventionally defined economic growth but even reverse
it—in part to make up for past ecological and resource destruction, and
also to deal with global warming.
It is possible, even likely, that the explosion and ongoing
development of institutional forms, along with new and more aggressive
advocacy, will continue to gather substantial momentum as economic and
ecological conditions worsen. It is by no means obvious, however, how
even a very expansive vision of such trends would lead to “systemic” or
“transformative” change. Moreover, different new-economy advocates are
clearly divided on matters of vision and strategy. Speth, for instance,
sees far-reaching change as essential if the massive threat posed by
climate change is ever to be dealt with; he views the various
experiments as one vector of development that may help lay groundwork
for more profound systemic change that challenges fundamental corporate
priorities. Others, like David Levine, executive director of the
American Sustainable Business Council, emphasize more immediate reforms
and stress the need for a progressive business voice in near-term policy
battles. What to do about the power of large private or public
corporations in the long term is an unresolved question facing all
parties.
* * *
Obviously, any movement that urges changing the system faces major
challenges. Apart from the central issue of how political power might be
built over time, three in particular are clearly daunting: first, many
new-economy advocates concerned about global warming and resource limits
hold that conventionally defined economic growth must be slowed or even
reversed. In theory an economic model that redistributes employment,
consumption and investment in a zero- or reduced-growth system is
feasible, but it is a very hard sell in times of unemployment, and it is
a direct challenge to the central operating principle of the economic
system. It is also a challenge to the priorities of most elements of the
progressive coalition that has long based its economic hopes on
Keynesian strategies aimed at increasing growth.
A related problem concerns the labor movement. Many new-economy
advocates hold progressive views on most issues of concern to labor. In a
recent letter supporting progressives in Wisconsin, for instance, the
American Sustainable Business Council wrote that “eliminating collective
bargaining is misguided, unsustainable and the wrong approach to
solving deeper, more systemic economic issues”—hardly the standard
Chamber of Commerce point of view! Still, the ultimate goal of reducing
growth is incompatible with the interests of most labor leaders.
Although there have been tentative off-the-record explorations of how
to narrow differences among groups, no direction for agreement has
emerged. That some cooperation is possible is clear, however, from
common efforts in support of “green jobs,” such as the Apollo Alliance
(which aims to create 5 million “high-quality, green-collar jobs” over
the coming ten years) and the BlueGreen Alliance, a partnership of major
labor and environmental groups dedicated to expanding the quality and
availability of green jobs. IPS director Cavanagh is working with a
small group of theorists and activists on a plan for green jobs that
attempts to integrate new-economy concerns with those of labor and other
progressive groups, and to link the expanding local efforts with
traditional national strategies.
A further line of possible long-term convergence is new interest by
the United Steelworkers in alternative forms of economic enterprise—and,
importantly, larger-scale efforts. The Steelworkers signed an agreement
with the Mondragon Corporation in 2009 to collaborate in establishing
unionized cooperatives based on the Mondragon model in manufacturing
here and in Canada. (Mondragon, based in the Basque region of Spain, has
nearly 100,000 workers and is one of the largest and most successful
cooperative enterprises in the world.)
A third and very different challenge is presented by traditional
environmental organizations. Speth, a board member of the Natural
Resources Defense Council, has found very little willingness among his
fellow board members to discuss system-changing strategies, even if
understood as long-term developmental efforts. The traditional
organizations spend most of their time trying to put out fires in
Washington, he notes, and have little capacity to stand back and
consider deeper strategic issues—particularly if they involve movement
building and challenges to the current orthodoxy.
* * *
For all the difficulties and despite the challenges facing
progressive politics, there are reasons to think that new-economy
efforts have the capacity to gather momentum as time goes on. The first
is obvious: as citizen uprisings from Tunisia to Madison, Wisconsin,
remind us, judgments that serious change cannot take place often miss
the quiet buildup of potentially explosive underlying forces of change.
Nor were the eruptions of many other powerful movements—from
late-nineteenth-century populism to civil rights to feminism and gay
rights—predicted by those who viewed politics only through the narrow
prism of the current moment.
Many years ago, I was legislative director to Senator Gaylord Nelson,
known today as the founder of Earth Day. No one in the months and years
leading up to Earth Day predicted the extraordinary wave of
environmental activism that would follow—especially since environmental
demands are largely focused on morally informed, society-wide concerns,
unlike those of the labor, civil rights and feminist movements, all of
which involve specific gains important to specific people.
In my judgment, new-economy efforts will ultimately pose much more
radical systemic challenges than many have contemplated. Nonetheless,
new-economy advocates are beginning to tap into sources of moral concern
similar to those of the early environmental movement. As the economy
continues to falter, the possibility that these advocates—along with
many other Americans who share their broader concerns—will help define a
viable path toward long-term systemic change is not to be easily
dismissed. In fact, it would be in keeping with many earlier chapters of
this nation’s history.