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Dr Howard Richards – Solidarity for Full Employment

Profile Dr Howard Richards LE Mag September 2018

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Solidarity for Full Employment by Dr Howard Richards

Dr Howard Richards (born June 10, 1938) is a philosopher of Social Science who has worked with the concepts of basic cultural structures and constitutive rules. He holds the title of Research Professor of Philosophy at Earlham College, a liberal arts college in Richmond, Indiana, USA, the Quaker School where he taught for thirty years. He officially retired from Earlham College, together with his wife Caroline Higgins in 2007, but retained the title of Research Professor of Philosophy.  A member of the Yale class of 1960, he holds a PhD in Philosophy from the University of California, Santa Barbara, a Juris Doctor (J.D.) from the Stanford Law School, an Advanced Certificate in Education (ACE) from Oxford University (UK) and a PhD in Educational Planning, with a specialization in applied psychology and moral education from the Ontario Institute for Studies in Education (OISE), University of Toronto, Canada. He has practiced law as a volunteer lawyer for Cesar Chavez’s National Farm Workers Association, and as a specialist in bankruptcy.   He now teaches philosophy of science in the Doctoral Program in Management Sciences at the University of Santiago, Chile, and co-teaches “Critical Conversations on Ethics, Macroeconomics and Organizations” in the Executive MBA program of the Graduate School of Business of the University of Cape Town, South Africa. He is founder of the Peace and Global Studies Program and co-founder of the Business and Nonprofit Management Program at Earlham. Dr Richards is a Catholic, a member of Holy Trinity (Santisima Trinidad) parish in Limache, Chile, and a member of the third order of St. Francis, S.F.O  https://en.wikipedia.org/wiki/Howard_Richards_(academic)


1. Analysis of the Bottleneck Problem
2. Examples (showing how to solve the bottleneck problem)
3. The Road from Here to There (generalizing from the examples)
4. The Imperative to Maximize Profits (blocks the road from here to there)
5. The Fiscal Crisis of the State (blocks the road from here to there)
6. Unbounded Organization (a way forward)


011. Analysis of the Bottleneck Problem

The problems of drug addiction, gangs, crime, ethnic nationalism, racism, sexism, chronic depression, immigration issues, poverty in old age, mental illness, war, inner city schools, taking necessary measures to save the biosphere that cost jobs, and many others will not be reduced to manageable proportions, much less solved, until human life is reorganized so that most people who need decent employment are able to find it.  Would you agree?  I call employment a bottleneck problem.  If it is not solved, many other problems will not be solved either.

To solve it, I advocate more non-market employment.   More non-market employment can be made possible by those of us who have more than we need.  We can make it possible by sharing more than we do now with those of us who have less than they need, either voluntarily or involuntarily.   One might also add a third category of “semi-voluntary” sharing (sharing is known to economists as “transfers”).  The third category would cover transfers where decent employment is made possible by moving resources in ways that are neither voluntary (as is donating to a symphony orchestra, helping it to pay musicians) nor involuntary (as is paying taxes, helping  governments to comply with Article 23 of the Universal Declaration of Human Rights, establishing the right of everyone to employment with just and favourable remuneration) but somewhere in between (like funding a charitable foundation that subsidizes asset based community development,[1] which in turn creates livelihoods where there were none, in order to get favourable publicity and a tax exemption).

Although “decent” implies raising wages and freedom from debt slavery, I will save emphasis on raising wages and easing the burdens of debt for other days and concentrate here on inclusion.

The non-market alternative may be purebred, as in the case of a research scientist whose salary is paid entirely by the Rockefeller Foundation; or hybrid, i.e. partly non-market and partly market, as in the case of the coach of a football-4-youth programme whose salary is funded partly by the city government and partly by sales of tickets to games. Whatever the non-market alternative may be in a given case, purebred or hybrid, I want to make it as crystal clear as I possibly can that sales in markets alone cannot solve this bottleneck problem.

Market employment depends on sales.  In the standard case, workers contribute to producing goods and services that are sold at a profit.  If they cannot be sold at a profit, they are not produced, and therefore no workers are hired.   The workers are paid their salaries out of the revenue from the sales of the products.   Business owners, tax collectors, landlords, executives, bankers, suppliers, advertisers, as well as several other classes of people are also in line to collect their slices of the revenue-from-sales pie.   Unless they too take their cuts, the business is a no-go, and once again no workers are hired.  Do you see what I am driving at?   I am saying that whether there will be market employment is iffy.  There is no guarantee whatever that there will be a job, much less a decent one, for everybody who needs one.  There is no guarantee whatever that every child born will have solvent parents who can afford to buy diapers, baby food, a crib and a baby buggy.

The picture is somewhat different if the firm is non-standard, like a coop, or a firm owned by its employees, or is owned by its customers (like a mutual insurance or water company); or is a non-profit cemetery or hospital or school; or is an autonomous parastatal like the New York Port Authority or is owned by one or another level of government like the State Bank of North Dakota; or if we are talking about self-employment.  Employment in non-standard forms may also be purebred (non-market) or hybrid (partly market and partly non-market).  I am saying that to the extent that employment depends on sales to generate the fund from which salaries are paid, we are talking about a market solution to the problem and therefore it is iffy.[2]

The probability that market solutions will reliably provide decent employment for all of the human beings on this planet who need decent employment is the same as the probability of a snowball in hell.  Would you agree?  Let me explain why that probability is precisely zero, and not some slightly larger number like .01.

The reason is structural.  It is a consequence of the rules of the game, not just a conclusion derived by induction from the empirical observation of many labour markets.  The basic social structure, also known the basic cultural structure, of modern society is the market.   Theodor Adorno calls it the Tauschprinzip, the principle of exchange.  He finds that in our times a Tauschprinzip mentality, which tends to see everything and everybody as a commodity for sale, affects and infects all of human life.  While some cultures live by fishing and fishing sets the tone for everything else, some by raising corn, some by pastoralism, some by slash and burn agriculture, some by hunting and gathering, and some in other ways, the basic rules of our game (the cultural rules that constitute the material relations of our basic social structure[3]) are those of buying and selling.

The buying and selling game is a game with losers. That is why the probability of reliable decent employment for everyone provided by markets alone with no help from other institutions is zero and not .01.  The losers are those who do not sell enough at a high enough price to make a living.  There have to be losers.   Every player aims to have accounts receivable greater than accounts payable.  Similarly, everyone wants to take in more money than they pay out.  They want to save some.  In John Maynard Keynes terminology, everyone has a liquidity preference; people want the freedom that comes from keeping some liquid cash in their pockets or in the bank without spending it.[4]

But one person’s receivable is another person’s payable.  If some people take in more than they pay out, some people must pay out more than they take in.  The sum of receivables and payables must be equal.

Given that it takes expectations of profit to motivate producing and hiring; in other words, an expectation that more will come in than goes out; and given that some such expectations must be mistaken, because not everybody can have receivables greater than payables, and given that business cannot run along forever on illusory expectations that are not true, there will be some investments not made and some people not hired.[5]

Some of us religious and/or ethical types believe there is a moral duty to work.  Such a duty seems to us to follow from the commandment to love your neighbour as yourself.  You should use your talents to serve others in some way. Thomas Piketty’s data suggests that today most wealthy people agree with us.  Today people who do not have to work because they have independent incomes, usually do work.[6]   Apparently, they work because contributing to society by producing goods or services of some kind is the right thing to do, according to prevailing social expectations, and according to their own consciences.

On the other hand, there can be no moral duty to be employed.   An employment contract is a sale.  A sale requires a buyer as well as a seller.   The ideal of liberty expressed in the rule of law implies that there is no duty to buy.  The social realities constituted by the basic cultural rules imply that it would be self-defeating for business owners and managers to hire people when the products of their labour cannot profitably be sold.[7]   Therefore, willingness to sell one’s labour is no guarantee that there exists a willing buyer ready and able to buy it.  Some people will fail to comply with making the contributions to society and to supporting a family that religion and social norms expect and will be structurally humiliated.

History confirms this analysis of the implications of the rules of the buying and selling game. What the social structure makes inevitable is what is observed. As John Maynard Keynes writes in his General Theory[8], the historical record shows that full employment, or even approximately full employment, has rarely occurred, and when it has occurred it has been temporary. Keynes could have added that there are also times when full employment’s alleged occurrence, in addition to being temporary, is also bogus. Full employment can be and sometimes is defined as fewer than 5% jobless, and then announced as a statistical fact even when everybody can see the homeless people on the sidewalks.  For example, the fraction of workers who are unemployed is calculated inflating the numerator by counting beggars trying to sell handicrafts as self-employed, and deflating the denominator by disregarding all who are not at the present time known to be trying to sell themselves in the labour market.

All of the above was true even before today’s apparently irreversible trend of technology – exemplified by Toyota manufacturing automobiles with robots instead of workers and Tesco running supermarkets with automated check-outs instead of clerks — started making most human work redundant. Work is indeed becoming redundant as a means for producing goods and services to sell. But it is not becoming redundant as a means for making a living, bringing up children, achieving self-esteem, and achieving self-realization. Worldwide, economies are requiring fewer workers; but workers are not requiring fewer jobs.

It follows that now, and even more in the future, and even when sales in markets and investments in the expectation of sales are doing as well as can reasonably be expected in generating employment; it will still be necessary to rely on non-market employment in order to meet the needs of all our sisters and brothers in the human family. My brothers and sisters stuff here is solidarity-talk, of course; not Economics 101- talk. We need more solidarity talk.

“Solidarity” is the word chosen here to play the role of name for the cure for unemployment.  Runner-up candidates for the part were “unbounded organization,” “dharmic living,” “stewardship,” “servant leadership” or “servanthood,” and “community.”  Among the candidates who did not make the short list were “planning,” “development,” “growth,” “productivity,” “tax cuts,” “flexible wages,” “technical education,” “international competitiveness,” “business-friendly governments,” “infrastructure investment,” “incubating start-ups” and “competency-based education partnering with internships in industry to produce the profiles employers are looking for.”   In a given situation one or more of these also-rans might be useful or it might be counter-productive, but in principle none of them could possibly be the cure.  The cure must be something that undoes the cause.  The cause is structural.  The cure must be structural.  The cause, the fundamental cause, is that markets generate losers as well as winners.   The cure has to turn win/lose into win/win.

The choice of “solidarity” sets us on the path toward building cultures where everybody is a winner and nobody is a loser.  Even so, the choice of the term was not unanimous.   Some members of the jury voted against “solidarity” because there are parts of the world people have good reasons for never wanting to hear it again. Solidarity has been the rhetoric of unworkable schemes that existed only on paper, while the reality has been inefficient bureaucracies, corruption, the silencing of dissent, and terror.   When I am conversing with people for whom “solidarity” brings back a nightmare that has shattered their nerves, I never use the word.  Let me explain why I do use it here.

The word began its career as a player in the discourse of modernity as solidarité.  It was a watchword and an ideal of the French working class in the mid nineteenth century.[9]   The French delegation brought it into the first socialist international, the International Workingman’s Association, founded in London in 1861, and through it into the world’s main languages.   Its main meanings were two: Stand Together United, and Mutual Aid.  In its early days, it was used especially in raising funds for international aid sent to comrades in distress in other countries.   Pope Paul VI (1963-1978) did more than anyone else to integrate “solidarity’ into the social doctrine of the Catholic Church.   For the Judaeo-Christian tradition the word was new but the idea was not.[10]  On April 3, 1987, speaking at the headquarters of the UN Economic Commission for Latin America in Santiago, Pope John Paul II could say: “My call, then, takes the form of a moral imperative:  Practice solidarity above all!  Whatever may be your function in the fabric of economic and social life, construct in the region an economy of solidarity!  With these words I propose for your consideration what in my recent message for the World Day of Peace I called a new type of relation:  the social solidarity of all.”[11]

Solidarity is a word historically associated with questioning the systemIt is associated with questioners coming from a socialist point of view.  It is also associated with questioners coming from a pre-modern religious point of view.  It is a word that puts structural change on the agenda by proposing –and often the proposals are made by people who practice what they preach— living by the rules of a different basic social structure.

032. Examples

Before I consider in general terms the path from a dysfunctional present to a functional future, I will give a specific example of how to dignify the structurally humiliated, and then a specific example of how to generate surplus to be used for that purpose.

Alexandra, affectionately known by its diminutive “Alex,” is a poor district of Johannesburg, South Africa. As is unfortunately also the case in too many other locations on this planet, the majority of the young people are unemployed and unhappy.  Many sink into drugs, into indiscriminate sex leading to AIDS and to gender-based violence, into hustling suckers and mugging those who resist; and if they are female roaming the streets looking for a man who will give them money for favours.  But if you visit a certain old church building on the main avenue of Alex on a weekday afternoon you will find twelve young people who are employed and happy.[12]

They are practicing their song and dance routines: like Black Motion by Imali and Babes Wodumo by Wololo; as well as oldies like Cat Daddy and Bird Walk.  They had to audition to get into the troupe.   Once they are in, they need discipline and self-discipline to learn their steps and their lines and to do them right; as well as the self-discipline required to show up for work, to be on time, to arrive sober, and to stay clean in more senses than one.   Expressing general agreement with Aristotle’s theory of virtue (arete) in his Nichomachean Ethics, although I have no hard evidence about the dancers of Alex, I believe their discipline leads them to virtue, and that virtue leads them to happiness.

Expressing general agreement with Abraham Maslow, I suggest that their performances in public spaces, mostly schools, satisfy their needs for recognition and their needs for self-esteem.[13]  Their pay checks give them the dignity denied to the millions who are structurally humiliated because they are rejected by labour markets where for the structural reasons just discussed supply perpetually exceeds demand.  And at the base of Maslow’s pyramid, a little money in the pocket gives them food, drink and raiment they do not have to beg, borrow, or steal for.

The services the dancers provide for the school children who are their main audiences are more than entertainment.   They provide role models of drug-free youth who are having fun. They keep alive the hope that perhaps, after all, employment might be a real possibility for the children in the audience when they grow older.

A main reason why I call the song and dance troupe practicing in the old church on the main avenue of Alex an example of non-market employment made possible by solidarity is that it is paid for by sharing the surplus.  Money and other resources are moved from where they are not needed to where they are needed.   Thanks to public and private donors, it is possible for non-market employment to step into the breach and save the day when market employment fizzles.  Sharing the surplus is working for twelve formerly unemployed youth in one building on one street in Alex; and then it spreads its benefits around the city as the dancers fan out to entertain the kids in the schools.  Although numbers are small compared to the 12 million who need decent jobs and do not have them in South Africa,[14] it is a pilot that demonstrates a principle.   It helps me –does it help you? —to imagine new civilizations in a future when robots will do the heavy lifting and artificial intelligence will do all the thinking for which there is an algorithm.  Labour will not be as large a factor of production as it is now.  But –compared to now– the percentage of people finding decent employment will increase, not decrease because surplus will be shared and wisely used.

The ethical principle of sharing the surplus is not new.   In the 13th century St Thomas Aquinas wrote that your property was not yours alone.[15]  It also belonged to the people you could aid with your surplus.  Today Pope Francis incessantly repeats the same message.  In the 13th century sharing the surplus was already an old idea.   It had already been practiced for hundreds of years from the villages of Africa to the igloos of the Arctic and everywhere in between.  If our ancestors had not practiced group loyalty and mutual aid, they would not have survived and we would not have been born.

I need another example.  The singing dancers of Alex illustrate surplus wisely used.  I need another example to illustrate where surplus comes from in the first place, and how it is generated by benefactors of humanity who create it not to hoard it but to share it.[16]  I have found no better example than Paul, history’s most famous tent-maker.

I will be asking Paul to work two shifts.  Here I will ask him to serve as an illustration of basic Christian ethics.  Later, not in this paper but in a sequel, I will ask him to work overtime to illustrate the broader norms of reciprocity[17] and redistribution that social scientists find to be busy at work functioning to meet human needs[18] in many different cultures past and present, East and West, North and South. Hear Paul in chapter 20, verses 33 to 38 of The Acts of the Apostles:

33 I have not coveted anyone’s silver or gold or clothing. 34 You yourselves know that these hands of mine have supplied my own needs and the needs of my companions. 35 In everything I did, I showed you that by this kind of hard work we must help the weak, remembering the words the Lord Jesus himself said: ‘It is more blessed to give than to receive.’”

36 When Paul had finished speaking, he knelt down with all of them and prayed. 37 They all wept as they embraced him and kissed him. 38 What grieved them most was his statement that they would never see his face again. Then they accompanied him to the ship.[19]

The lessons I draw from this text are three:  Paul was not interested in accumulating wealth.  He made tents to meet his needs, and the needs of his companions.  After he had made enough tents to meet immediate needs, he went on making more tents for the purpose of generating a surplus so he could help others. 

Following Paul’s example, the generic principle of creating a surplus for the purpose of sharing it, can be articulated as: make more tents. 

043. The Road from Here to There

The problems of drug addiction, gangs, crime, ethnic nationalism, racism, sexism, chronic depression, immigration issues, poverty in old age, mental illness, war, inner city schools, taking necessary measures to save the biosphere that cost jobs, and many others will not be reduced to manageable proportions, much less solved, until human life is reorganized so that most people who need decent employment are able to find it.   If this bottleneck problem is going to be solved at all, it will be solved by transferring resources from somewhere.  It cannot be solved just by paying people the market value of their labour, out of funds generated by the sale of the products they contribute to making.

Many will fear –indeed for many it is an automatic kneejerk reaction to fear– that the road from here to there will be closed because the one percent will close it.  People whose labour-power still does have a high market value might successfully resist any effort to persuade or compel them to make more tents and hand over the proceeds from selling the tents to people who sing and dance and put on free shows for schoolchildren for a living.  The same might be true in spades for rentiers.

Indeed, as a matter of history high income people have tended to back free market ideologies that oppose government intervention to transfer wealth from where it is not needed to where it is needed.[20]  According to such ideologies, everything would be peachy keen in a pure free market world: price signals alone will determine who gets what; competition will move prices and therefore demand and supply to equilibrium; everything demanded will be supplied and everything supplied will be demanded; everyone who wants to work will find work; prices (including wages, the price of labour) will be exactly what they should be  — where what they should be is determined by relative scarcities interacting with the free choices of individuals to buy what they want and not buy what they do not want.  In technical jargon: the first theorem of welfare economics is that general equilibrium is a Pareto optimum.

History as it has happened has been different.  When they are applied, free market policies inspired by orthodox-but-false[21] theories invariably fail to prevent or contribute to creating the growth of a class of have-nots prone to crime, prone to substance abuse, prone to organizing and expanding demi-mondes ruled by violence and by big dirty money, prone to extremism, to terrorism, and to rebellion.   The same people who make the free choices of buyers and sellers the ethical foundation of their economic theories, when compelled to cope in practice with the demons that applying their theories generates, invariably call for more power for the police and the military, tougher judges, and more awful punishments.[22]

History suggests that my proposal to follow the example of Paul of Tarsus may not appeal to prosperous conservatives.  They may think creating more surplus and using it wisely support dignity for the humiliated (and therefore dangerous) classes is too high a price to pay for social peace.  Or too unrealistic to work.  Historically, they have usually preferred crackdowns.  In today’s circumstances, the crackdowns would have to become progressively more severe as structural unemployment becomes progressively more severe.   They would fit the pattern of reliance on force to keep power that Arnold Toynbee in his study of history identified with the terminal illnesses of civilizations.

The voice of reason whispers that history is likely to repeat itself. Nevertheless, all things considered, I do not believe that this time around there is no escape from the conclusion that what has usually happened in the past will happen again. Straws in the wind[23] tell me that today’s rich and powerful (like certain minorities among yesterday’s) realize that they could be more safe in a world where they were less privileged. They see that the ship is sinking, that keeping the poor down by force cannot prevent it from sinking, and that when it goes down the first-class passengers will end up with everybody else at the bottom of the ocean.

I believe the main obstacles to change today are to be found elsewhere.      Let me close this paper with a three-item list of what I do think are two of the main obstacles to redistributing the surplus of the haves to create dignity for the have-nots, and one item I do think can be one of the main catalysts for change, namely: (A) the imperative to maximize the accumulation of profit,(B)  the fiscal crisis of the state, and (C) unbounded organization (UO).

154. The Imperative to Maximize the Accumulation of Profit

It is a main obstacle to change that the system has powerful structural tendencies to reward the accumulation of surplus and to punish the sharing of surplus.  When I make this first point I assume as part of its background an important point made by Jürgen Habermas in The Legitimation Crisis.[24]  In our times, markets are the primary social reality.  Governments are a secondary social reality.  Governments operate within markets.  Governments must adjust to market forces they do not control.

When I write of structural tendencies to reward accumulation and punish sharing, I am not yet asking to what extent governments (the secondary reality) can compel people to share surplus they do not need.  I am still at level one.  I am talking about the primary social reality.  I am asking whether the market would or could allow the voluntary massive sharing of surplus in many different voluntary ways at a scale that would sum up to full employment by bringing joy in the form of money into the lives of thousands of people who would flock to take advantage of opportunities (if there were more such opportunities) to be paid dancers, philosophers, body-builders, installers of green technologies, translators of ancient texts in dead languages, beekeepers and urban farmers who make a little money selling honey and cauliflowers but not enough to live on, sunbeams who bring light into the lives of lonely orphans, sunbeams who bring light into the lives of old people who otherwise would be lying abandoned in rows of beds in dimly lit rooms, speakers fluent in two languages who would love a scholarship to study a third, mountain-climbers, athletes and musicians of all kinds, community psychologists who provide free therapy, astronomers, helpers in zoos, and, everybody eager to do something that has human value with the support of a human economy.

The classic negative answer to my question was given in 1867 by Karl Marx in the preface to the first German edition of Capital in the following words: “I paint the capitalist and the landlord in no sense couleur de rose. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them.”[25]  Milton Friedman, who rarely agreed with Marx, agreed with him on this point.  Capitalists who do not maximize profits, avoiding every expenditure that would diminish to any degree the bottom line, will not stay in business for long.  They have no choice.[26]  Therefore, the voluntary funding of dignity for the masses humiliated by the labour market is not possible.

On such a view, business-people, who are conceived as the owners of most of society’s wealth,[27] never have a surplus.  No matter how much money they have, it is never more than they need.   The reason they need as much as they can get is that they are in competition with other capitalists.  Nice guys lose because tough guys accumulate more weaponry in the form of money to fight them with.  For example, Mars fought Hershey by paying retailers to put Snickers and its other products front and centre in plain sight and Hershey Bars on back shelves where customers would not see them.  Hershey did not have enough money to counter with a sweeter offer to retailers, and it lost market share.  Others in similar situations have closed.[28] In Marx’s terms, every capitalist is the enemy of every other capitalist.  Father Time has decreed that as time goes on the bulk of production will be carried out by firms that are fewer and larger, as the losers drop out of the race and the winners expand.[29]

There are many reasons for not seeing as always and necessarily entirely true the Marx/Friedman thesis that individual ethical convictions do nothing to free people in business from bondage to social structures (social structures are “relations” in Marx’s terminology, and also in the terminology of Pope John Paul II cited above.)  Some reframe the social structures from which the ineffectiveness of personal good will is deduced.[30] Many empirical studies and many theoretical perspectives show that people in business do have options.   Surplus can and does exist.  Some firms stay in business for a long time paying their own staffs and stakeholders enough to sustain the motivation of everybody who has to be motivated to keep the business going,  while not maximizing a war chest to fight competitors, but instead choosing to use the revenues that remain after all costs of production are paid in other ways.[31]  Firms can escape the rigors of competition by forming cartels where it is legal, by differentiating their products,  through tacit understandings not to spoil the market for all players in the industry by aggressive price-cutting, by controlling a scarce resource nobody else has, and in other ways.[32] Contributions to the common good often  increase –not decrease– the prospects for long run survival of a business.[33]    But this is not the place to review those studies.

Here I just want to make two points: (A) Economies are open systems.   In open systems there are no strict causal laws.  There are only tendencies.  The tendencies manifest causal powers that are at work in historical contexts where other causal powers are also at work.[34] (B) When all is said and done, Marx and Friedman and those who agree with them make an important point. The basic structure of the system does tend to punish sharing and to reward accumulation.  We need to know this in order to be effective in supporting other causal powers that tend to augment the flow of resources from where they are not needed to where they are needed.  (In the past it has been the case that the accumulation of capital was itself among society’s needs, because without more accumulation necessary large investments could not be made.  Still today this is part of official economics, and part of specious rationales for no end of bogus public policies favouring the financial services industries and the 1%.   My view is that today there is much more capital already accumulated than can profitably be invested in the real economy.  A sea-change in thinking is needed to catch up with a sea-change in reality. [35])

165. The Fiscal Crisis of the State

A second structural obstacle to change is the fiscal crisis of the state.  Now I move on to the second level, asking whether public employment, or civil society initiatives subsidized by public funds, can pick up the slack when the private sector –whatever its good intentions may or may not be—rejects millions of people who need to get a good job to make a living and support a family.

My first chief overall point here is that the main problem is not greed.  If it were greed the psychology of moral development could teach us how to solve it.[36]  The second chief overall point here is that it is not dishonest politicians either.  It is not that, as a popular saying in contemporary Africa has it, “the government is like a violin: you pick it up with your left hand, and you play it with your right hand.”  The main problems are the basic structure of the market (the Tauschprinzip)[37] and the basic structure of the modern nation-state (its fundamental legal norms).

The modern nation-state was born crippled.  The first one, Holland, whose year of birth is reckoned as 1648, was from its beginnings a subordinate part of an international trading system whose rules it did not make and could not alter.  Further, the point and purpose of being a Republic, and not a Monarchy, was first and foremost to set in stone what the government could not do.  Forty some years later, when William and Mary ascended to the throne of England, at the invitation of Parliament, on terms dictated by Parliament, the first of the terms was that their government would depend for its funding on taxes voted by Parliament.   It was to be what Joseph Schumpeter would later call a Steuerstaat, a tax-state.[38]  A milestone in the centuries long social construction of modernity (what Karl Polanyi called the transformation to a market economy[39]) was the formation of the Bank of England in June of 1694.[40]  It was a private bank with a royal charter entitling it to issue legal tender.  It was to extend credit to finance war with Louis XIV of France, and also to consolidate the government’s previously existing debt. It all became one big loan to the King from the Bank, at the high rate of interest of 8%.   Long gone were the days when the monarch could summon his nobles to do their feudal duty by following him into battle, and to bring with them their knights on horseback and their vassals on foot.

From the first, in modern nation-states the power to create money has mainly been taken over by private banks.[41]  Private banks create money by extending credit and by discounting notes.  As late as the sixteenth century and the first half of the seventeenth, control of money was an integral part of the trade, plunder, and piracy from which the monarchs of England siphoned off money to finance their wars and their governments. They sent the foreign gold and silver they amassed to the Royal Mint to be coined and then kept it for themselves.  Not infrequently they raised additional major sums by compelling their subjects to accept legal tender at a face value greater than the market value of the precious metal it was made of.[42]  The rising commercial classes of early modernity were determined to put an end to all of that.  They wanted the government on a short leash.  They got what they wanted.  They bequeathed it to us.

The process of subordinating European governments to the economy and its owners began several hundred years before the beginnings of democracy epitomized by the French Revolution of 1789.  Much earlier the monarchs dubbed “enlightened” collaborated with the bourgeoisie (literally “the city dwellers”) in curbing the abuses of the nobility and in promoting commerce. In principle and in fact the enlightened monarchs owed their legitimacy to honouring the civil law, adapted mainly from Roman Law.[43]   The civil law (also known as private law) separated the wealth of the country from the government of the country.[44] Law filled in the content of the social contract.  Basic jurisprudence, with or without a myth attributing the founding of society to a contract, provided that the ruler, to be a legitimate ruler, must respect the rights of the ruled— certainly a good idea in general, but when you get into the specifics of what it means in practice, it means specifically that wealth is protected by principles the nation-state cannot change and must obey.  One of the enlightened monarchs, Catherine the Great, Empress of Russia, remarked that there were two sets of laws in her Empire.  There were her decrees, implemented by her ministers, and there were the civil laws of commerce interpreted and enforced by judges.  The latter were eternal and universal.  Fast-forwarding to the 21st century, Thomas Piketty recently found that in the countries he studied private accumulated wealth summed to around six times a country’s GNP, while net public wealth was approximately zero because the total of public assets roughly equalled the total of public debts. There is not much governments can do about it. The fundamental legal norms of modernity give the owners of private accumulated wealth an easy out when they do not like a government. They move.

In today’s world built on 17th and 18th century European foundations, the key measure of the success or failure of a government is the rate of economic growth; it is whether GNP is growing rapidly or slowly or (this is failure) declining.  To succeed, governments devote themselves to wooing investors. Wooing investors is not an easy game to win.  There are 195 other governments playing it too.  It means keeping taxes low but at the same time providing high quality infrastructure and security; it means  offering a skilled work force that does not demand high wages; it means  making it easy to take profits out of the country, tax exemptions, and often subsidies.[45]  Although a consequence of the fiscal crisis of the state is that most governments –and today increasingly all governments—fall short of complying with human rights to health care, pensions, housing and employment, the cause of the fiscal crisis of the state is chiefly the expense and the income forgone to attract investment and –on the flip side of the same coin– to prevent disinvestment and capital flight.[46]   The answer to the question whether the public purse of a modern nation-state can provide enough money to fund dignity for the millions rejected by the labour market is: not bloody likely!

Nobody has summed up today’s limits on national sovereignty better than Tshepiso Moahloli.  She was a student this year in a course Gavin Andersson and I co-teach in the Executive MBA programme at the University of Cape Town.  After earning a degree in economics and mathematics, she had a career as a manager in the private sector before starting her present job as a manager in the public sector.  In a paper for our course she asserted that the “…system is entrenched and even threatens the sovereignty of countries. I work for the government and there is no single day one does not hear warning bells of driving away investment when looking out for the 99%.  Workers are paid low wages, and in some cases paid with alcohol (dop system).  Any legislation to raise the wages of workers (minimum wages) or improvement of labour laws will drive away investment.  This is on the back of shareholders and executives earning supernormal profits.  Any transformative efforts to get shared ownership of the land (mining industry, land appropriation) will drive away investment.  Taxation of large corporates will drive away investment, so individuals must be taxed instead.  Something is clearly amiss with the economic system.  What is next?  The principles of Roman Law make it impossible for democracies to compel the 1% who own most of the wealth to share it.  These principles are so entrenched that any threat to them raises eyebrows.”

In sum, the power is in the structures.  Although greed and corruption exist, neither of them is the main reason why there is money to pay astronomical salaries to bankers, but no money to pay the unemployed to reforest denuded hills.  The main reason is that the system works that way.  Historically, it evolved to work that way.

If humanity has painted itself into a corner where neither the private sector nor the public sector can reliably move resources from where they are not needed to where they are needed –not even if they want to—then how can the system be changed so that it will stop producing results nobody wants like global warming and the eventual death of the biosphere, and so that it will start producing results everybody wants like more equal and less violent societies?  Answer: Rethink the system from the ground up, but do it with ideas rooted in practical experience, like Gavin’s idea of “unbounded organization.”

176. Unbounded Organization. (UO)

“What we mean by unbounded organisation is, as a first approximation, inter-sectoral collaboration, individuals linking among their own organisations, coalition building, cross-cultural activities and involvement by all segments of society.  Organisations see themselves as part of a family of organisations and interlinked.[47]

UO echoes Pope John Paul II’s call quoted earlier: “Whatever may be your function in the fabric of economic and social life, construct in the region an economy of solidarity!”[48]  UO echoes Evelin Lindner’s call to make inside ethics into outside ethics.  What she means by that is: project the love and loyalty to insiders practiced in traditional extended kinship systems to the level of universal human rights.[49]  As Martin Luther King Jr. put it, we are one Human Family living in one World House.[50]  Once these attitudes are established: do what works.

There is a considerable literature available for those who want to learn more about UO.[51]  Here I only want to make three points.

First, although no quantitative projections or studies, have yet been done, an unbounded approach should deliver dignity at a money cost much lower than straight government grants or straight government employment.  Simply spending government money to give everyone an income would be very expensive.  For example, if there are 12 million jobless people in South Africa, and it costs USD 15,000 to raise just one of their lives to a level one could call decent and dignified, the cost for all of them would be USD 180,000,000,000 per annum.

In contrast, Alcoholics Anonymous improves the lives of drinkers at a cost that approaches zero, although it never arrives at zero.  In AA a little money goes a long way.  Somewhat similarly, when a man (or a woman) “gets religion” there is an inexpensive rise in the standard of living of the person and the family because the saved soul stops spending money on liquor, drugs and chasing women (or men).  Evangelical churches frequently have unpaid or barely paid preachers, and it is common everywhere for religions to inspire voluntary participation in choirs, cooking for church dinners, teaching Sunday School or its equivalent in other denominations, and other work that would have to be paid for if they were market-based institutions; and often also to pay Zakat or in other religions other donations to improve the lives of needy people outside the church or mosque or synagogue or whatever.[52]

Mother Teresa often said that what people want most is somebody to pay loving attention to them, and that is something money cannot buy.  But she was not quite right.  Perhaps true love cannot be bought, but it is possible to pay skilled community organizers, preachers, group therapists, service club[53] executives, union organizers, political activists and others who can do a great deal to bring people out of isolation and anomie, and into the many benefits of bonding and bridging.  Small amounts of money, and large amounts of volunteer time and other resources, wisely used, can make a big difference in quality of life.

In community development, family, church, school, local government and the somewhat amorphous residual category called civil society organizations blend seamlessly into economics.  It is worth noting in this connection, especially since I have stressed that markets cannot be the whole answer and that the sharing of surplus is indispensable, that markets are also indispensable.  Specifically, it should be noted than Jean-Baptiste Say while he was not entirely right was also not entirely wrong.  It is really true, as Say wrote in 1803, that if, in a given economically undeveloped locality,  formerly unproductive people acquire skills and tools and produce useful products, they can raise each other’s standards of living by providing markets for each other.[54]   This is especially true (fast-forwarding to now) if public policy boosts local economic development by helping small local producers defend themselves against the economic firepower of high-capital high-tech products brought in from outside. A good example is (or was in 1978) the Farmers Market in Syracuse, New York.[55]  People in many other places have also heard E.F. Schumacher’s message that the small can be beautiful –and small can provide more jobs for more people.[56]

My general thesis here, which could be supported by many more details, is that if we take a UO approach, starting from the bottom, by the time we get to the top, i.e. by the time we get to the national government, there are comparatively few problems left for the national government to solve.   On a UO philosophy everybody, not just the government, is working on dignifying the humiliated.  Everybody’s resources, not just the government’s, are being mobilized to that end. From the government’s point of view, there should be more benefit at less cost.

A corollary of this thesis is that government money is often –not always– better spent on discreetly catalysing community development than on making direct grants to the needy.  Indeed, if the objective is dignity, the direct grant of a cash subsidy to the indigent might sometimes be counterproductive.   A grant just for being, not for doing, might be interpreted as a booby prize for losers, and spent on drowning shame in alcohol.   It might be far better for a person rejected by the labour market to enrol in an urban agriculture programme discreetly supported by the whole community in ways that help thousands of people to become successfully self-employed.[57]  It might be far better to win in competitive auditions to be paid to dance the salsa or the tango; first winning in the auditions with an unerring sense of rhythm and an inimitable style, and then winning again by being half of the winning couple taking first place, or second place or third place or even honourable mention in a regional dance jamboree.

My second point about UO is that it makes the nation-state, and with it human rights, come out winning on both ends.  It gives the state both less to do and more means to do it with.  Bottom line: it gets done.  On one end human rights win because honouring them is everybody’s business.   At the other end, they win because the fiscal crisis of the state is swept into the dustbin of history.  While cutting government down to size was the primary objective of the winners of the Glorious Revolution of 1688, it is not the primary objective of any sane person in our age of exponentially accelerating obsolescence of the human being as a factor of production. Today the government has the responsibility of assuring that somebody is meeting people’s needs for employment, health care, education, housing, pensions and other human rights established in international and national treaties, constitutions and laws.  And the duty to do the job itself if nobody else is doing it.

UO comes to the rescue.  Like its twin, solidarity economics, UO makes an epistemological break that lets us think outside the entrenched categories of the European Enlightenment that still rule most of our minds most of the time.   And that allows our minds to venture outside the Steuerstaat, back to the years before 1688 (in the case of the UK) when kings and queens and emperors and empresses often financed themselves by owning land, by issuing money[58], by monopolizing some easy businesses that can be lucrative (like selling salt), by owning mines and plantations, and in many other ways now forbidden and forgotten.[59]  And UO allows our minds to venture forward to a future when there is some kind (or kinds) of social ownership and/or supervised trusteeship of the marvellous new technologies coming on line that will make it possible to do more with less, creating the technical potential to make all of our lives easier and greener.  UO is a name for the good will and the mental flexibility we will need to realize the upside potential of new technologies.

My third and last point about UO is that the possible steps we take today, working around the system, doing what we can within the constraints the system imposes on us, can transform the system.  What does it mean to “transform” the system?  How would we know when, at last, the system was “transformed?”

Remember Tshepiso’s point that she as a government official is hamstrung when she tries to serve the interests of the 99% because almost anything she tries to do sounds an alarm bell warning that it will frighten away investors.   There is a bottleneck in the bottleneck.   How to achieve full employment is a bottleneck problem that must be solved before many other problems can be solved.  The bottleneck in the bottleneck is that whether there will be full employment depends on investor confidence.   (That is to say, on their confidence that investing will multiply their money, turning it into more money.)

UO comes to the rescue again.  What I just wrote is only part of the picture.  There are also many other ways to create employment.  There are co-operatives, worker owned enterprises where labour employs capital instead of capital employing labour, small businesses that support a family but do not accumulate, self-employment,  public sectors at every level of government, non-profits, social entrepreneurs who are mission-driven and not profit-driven, indigenous knowledge systems and material practices that cannot be accurately described in modern European languages, monasteries, mutual insurance companies owned by their customers, families that run motels together, churches that run farms, universities with endowments, subsistence farming supplemented by seasonal labour elsewhere and by government subsidies, there are all of the ways we have talking about to channel surplus to pay people to do things that have human value even when they cannot be sold for a profit,  and so on and on.  The list is in principle infinite.  There is no limit to the cultural creativity of homo sapiens when it comes to inventing material practices to meet human needs in harmony with nature.  UO and solidarity economics are about strengthening the innumerable alternatives to capital accumulation.   They are about working together and sharing resources to liberate humanity from what the Grenoble school of economics calls “regimes of accumulation.”[60] A regime of accumulation is a way of life where everything we do, and even the unconscious mind, is shaped by the overriding necessity of attracting investors and not frightening them away.

We will know that transformation has happened when Tshepiso comes to her office one morning and finds that nobody worries anymore about frightening away investors.  Leaders have become servants.[61]  The economy is resilient and plural.  Surplus is shared.  Capital is in the loving hands of a variety of ethical and democratic institutions, all of which are mission-driven.[62]


Foot Notes

[1] Cormac Russell (2015) Asset Based Community Development: Looking Back to Look Forward.  Dublin, Nurture Development.  Where I refer to something and do not provide a footnote, further information can usually be easily found on the Internet.

[2] See Susan Woodward (1995) Socialist Unemployment: The Political Economy of Yugoslavia, 1945-1990.  Princeton: Princeton University Press.

[3] Douglas Porpora (1993) Cultural Rules and Material Relations.  Social Theory. Vol. 11 pp. 212-229 (hereafter cited as Porpora footnote 3); Howard Richards (2018) On the Intransitive Objects of the Social (or Human) Sciences.  Journal of Critical Realism.  Vol 17 (pp. 1-18. (hereafter cited as JCR footnote 3) Jürgen Habermas makes the point that the market is late modernity’s primary institution, and the nation-state secondary in The Legitimation Crisis.  Boston: Beacon Press, 1975.

[4] Keynes, Book III.

[5] Over the years liberals and neoliberals have had made specious replies to all of these points, to which their critics have in turn replied back.  For a more complete version of my own case against orthodox liberal economics and in favour of heterodoxy see Howard Richards (2018) Economic Theory and Community Development.  Lake Oswego OR: World Dignity University Press. (hereafter referred to as ETCD footnote 4) Paul Krugman (2009) argues that the crisis of 2008 and a series of crises preceding it prove conclusively at a theoretical level that the neoliberals (and all those Joseph Schumpeter (1954) in his History of Economic Analysis New York, Oxford University Press, calls “hitchless” economists) have definitely lost the argument (and “hitch” economists like Keynes have won).  There really is a chronic, persistent and structural insufficiency of effective demand.  Krugman, The Return of Depression Economics.  New York, Norton.

[6]   Thomas Piketty (2014).  Capital in the Twenty First Century.  Cambridge MA, Harvard University Press.  Further references to Piketty refer to this book.

[7] See Porpora footnote 3.

[8] John Maynard Keynes (1936) General Theory of Employment, Interest and Money.  London: Macmillan, 1936.  Pp. 249-50 (Hereafter cited as Keynes.)  At p. 304 and elsewhere Keynes notes that for similar reasons there is also a chronic and structural insufficiency of investment.

[9] Andy Blunden (2012).   Selected Writings on the Semiotics of Modernity.  Kettering OH, Erythros Press.  Available on Kindle.

[10] Pablo Guerra (2018), Economía de la Solidaridad: Doctrina Social de la Iglesia y Practicas Pastorales en América Latina, in Raúl González (editor).  Ensayos Sobre Economía Cooperativa, Solidaria y Autogestionaria.  Santiago, Editorial Forja.

[11] Search Google for DISCURSO DEL SANTO PADRE JUAN PABLO II A LOS DELEGADOS DE LA COMISIÓN ECONÓMICA PARA AMÉRICA LATINA Y EL CARIBE (CEPALC). The translation above is mine.

[12] The non-market employment at Alex is part of South Africa’s Community Work Programme.  It and also public employment programmes in India and in Sweden are examined in ETCD footnote 4.

[13] Abraham Maslow (1943). A Theory of Human Motivation.  Psychological Review.  Volume 50, pp. 370-96.  This article concludes recommending that human institutions be organized for the purpose of meeting human needs.

[14] See ETCD footnote 4, chapter 3.

[15] Saint Thomas Aquinas Summa Theologiae.  II – II Question 32, Article 5, Reply to Objection 2.

[16] A similar idea has recently been made famous in business circles by Harvard professor Michael Porter.  He and a growing number of others promote the idea that the purpose of business is not profit per se, much less accumulation for the sake of accumulation; it is creating value in order to share value.              Michael Porter and Mark Kramer (2011) Creating Shared Value.  Harvard Business Review.  February 2011, pp. 62-77.

[17] Alvin Gouldner (1960), The Norm of Reciprocity: A Preliminary Statement.  American Sociological Review.  Volume 25, pp. 161-178.

[18] Bronislaw Malinowski (1944) argued that whatever else the norms of a culture do, if the culture is to exist at all, its norms must function to meet basic human needs.  A Scientific Theory of Culture and Other Essays.  Chapel Hill, University of North Carolina Press.  Marx and Engels (1845-46) made a similar point in The German Ideology.  The first fact of the social sciences is that human beings exist, and for them to exist the physical organization of the means that make their existence possible must exist too.

[19] New International Version.

[20] The points made here are documented by, among others, Bernard Harcourt (2012) The Illusion of Free Markets: Punishment and the Myth of Natural Order.  Cambridge MA, Harvard University Press.

[21] That orthodox economics remains orthodox not because of any scientific merit but because of the social and economic power of its backers is persuasively argued in Frederic Lee (2009), A History of Heterodox Economics: Challenging the Mainstream in the Twentieth Century.  London, Routledge.

[22]  See Harcourt, op. cit. note 14.

[23] One such straw in the wind is the typical agenda of a World Economic Forum meeting at Davos.  Extreme inequality and poverty are regarded as problems to be solved.

[24] Boston: Beacon Press, 1975.

[25] Translated by Samuel Moore and Edward Aveling.

[26] Milton Friedman (1953).  Essays in Positive Economics.  Chicago, University of Chicago Press.  Chapter One.  See also Porpora footnote 3.

[27] Somewhat mistakenly.  Piketty finds that the bulk of the world’s wealth is not owned by people actively engaged in running businesses, but by people who have inherited fortunes.

[28] A.G. Lafley and Roger Martin (2013). Playing to Win.  Boston, Harvard Business Review Press.

[29] More recent Marxists have analysed how the scenario Marx envisioned has played out, e.g. Paul Baran and Paul Sweezy (1966), Monopoly Capital. New York, Monthly Review Press.

[30] A more detailed and historical, and less schematic, view of the social structures of the modern world emerges from the Annales historians and the series of books on the formation of the European World System and its expansion to form the Modern World-System by Immanuel Wallerstein.  Also, sociological and anthropological studies of the evolution of modernity out of earlier basic cultural structures relativize and destabilize the legal and moral framework that political economy and the critique of political economy assume, e.g. the studies of Georg Simmel, Ferdinand Tönnies, Karl Polanyi and Marcel Mauss.  My conclusion: The way things are is not the way things have to be.

[31] E.g. Richard Cyert and James March (1992). A Behavioural Theory of the Firm.  Hoboken NJ: Wiley-Blackwell.

[32] E.g. Michael Porter (2008).  Competitive Strategy.  New York, Simon and Schuster. The phrase “not spoil the market” was used by Alfred Marshall in describing tacit understandings to refrain from cutthroat price competition.

[33] E.g. Archie Carroll and Kareem Shabama (2010).  The Business Case for Corporate Social Responsibility.  Hoboken NJ: Wiley-Blackwell.

[34] See JCR footnote 3.

[35] Already in 1873, Walter Bagehot wrote in his classic account of how the money market works, Lombard Street, “we have entirely lost the idea that any undertaking likely to pay, and seen to be likely, can perish for want of money.”  Walter Bagehot, Lombard Street.  London: Henry S. King, 1873. p. 2.

[36] E.g. Martin Hoffman (2001), Empathy and Moral Development.  Cambridge: Cambridge University Press.

[37] Theodor Adorno (2003).   Negative Dialectics. London, Routledge.   The translator chose “principle of bargaining” to translate Tauschprinzip.

[38] Joseph Schumpeter (1918), Die Krise des Steuerstaats.  Leipzig, Leuschner und Lubensky.

[39] Karl Polanyi (2001) The Great Transformation; The Political and Economic Origins of our Time.  Boston, Beacon Press

[40] Glyn Davies (2002), A History of Money.  Cardiff, University of Wales Press. Pp. 256-271.

[41] In the UK today, 97% of circulating money is bank-created, and only 3% government created.  The Bank of England was nationalized in 1946, and then in 1997 –like many other central banks– given an autonomous status independent of the elected government.  To learn more about all of this, just ask Google

[42] Glyn Davies, op. cit.  210, 240-41 and passim.

[43] Michel Foucault (2003) Society Must be Defended.  New York, Picador.  Especially the later lectures given in March of 1976.

[44] Karl Renner (1949).  The Institutions of Private Law and their Social Functions.  London, Routledge and Kegan Paul.

[45] Most items on this list figure in One Economics, Many Recipes (2006) Princeton, Princeton University Press, where Dani Rodrik and his co-authors give advice to governments on how to “get investors excited” about investing in their countries.

[46] James O’Connor (1979).  The Fiscal Crisis of the State.  New Brunswick NJ, Transaction Publishers.

[47] Gavin Andersson and Howard Richards (2013).  Unbounded Organizing in Community. Lake Oswego OR, World Dignity University Press, p. 2.

[48] I make a case that solidarity economics, born in Latin America, and UO, born in Africa, translated to Spanish as organización ilimitada, are equivalent in the chapter I contributed to Raúl González (2018) footnote 10.

[49] Evelin Lindner (2006), Humiliation and International Conflict.  Westport CT, Praeger Publishers. P. 66

[50] Martin Luther King Jr. (1967).  Where do we Go from Here? Chaos or Community.  Boston: Beacon Press.

[51] The concept of UO was coined by Gavin Andersson in his 2004 doctoral dissertation for the Open University in the UK titled Unbounded Governance: A Study of Popular Development Organizations.   The dissertation has recently been published:  Gavin Andersson (2018). Unbounded Governance. Darmstadt, Scholar’s Press.  See also Howard Richards (2013) Unbounded Organisation and the Future of Socialism.  Education as Change. Volume 17 pp. 229-242; Gavin Andersson and Howard Richards (2012); Bounded and Unbounded Organization, Africanus Volume 42 (2012), pp 98-119; Gavin Andersson (2003) Looking Back to the Future: Conversations on Unbounded Organization.  Cape Town, Islandla Institute;  www.unboundedorganization.org.

[52] The evolutionary biologist D.S. Wilson (2002), studying a random sample of 25 religions, makes a systematic case showing that religions provide material benefits for their members, deploying numerous and varied means for doing so.  Darwin’s Cathedral.  Chicago, University of Chicago Press

[53] For example, Rotary International.

[54] I discuss Say at greater length in ETCD footnote 4. Chapter 8.

[55] Vernie Lee Davis (1978).  Small Farmers and their Markets: Relic of the Past or Option for the Future.  Unpublished doctoral dissertation, Syracuse University.

[56] See any issue of Resurgence and Ecologist magazine edited at Rocksea Farmhouse, Cornwall, UK

[57] For example, check out agricultura urbana in Rosario, Argentina on the Internet.

[58] See Ellen Brown (2013) The Public Bank Solution. Baton Rouge LA, Third Millennium Publishers. And the “new economic perspectives” being developed at the University of Missouri at Kansas City and the Levy Institute at Bard College.

[59] Adam Smith in Book Five Chapter Two of The Wealth of Nations (1776) reviews the ways in which governments historically financed themselves prior to his time.  He finds that the most common way was by ownership of land.

Leon Walras believed that the government should own all the land and natural resources, and that its income from rents would be so high that it would not need to impose any taxes. Renato Cirillo (1980).  The “Socialism” of Leon Walras and his Economic Thinking.  The American Journal of Economics and Sociology. Volume 39, pp. 295-303.

[60] On regimes of accumulation see David Harvey (1987), The Condition of Postmodernity.  Oxford, Blackwell.

[61] Robert Greenleaf (1977).  Servant Leadership.  New York, Paulist Press.

[62] There are many examples today of mission-driven institutions administering capital for the common good.  One of them is NABARD, the National Bank for Agriculture and Rural Development of India.


© Dr Howard Richards

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