Building an economy not for the bottom line, but for the common good
The list of people who have lost out in our state is too long for this space. The people of Flint, students in Detroit, even the Detroit Lions, all have been beaten by forces beyond their control.
Meanwhile, the state’s winners are few but powerful: Hank and Doug Meijer, Rich Devos, Mike Ilitch, and Dan Gilbert, among others, have each accumulated substantial personal fortunes. This growing disparity is not simply a state problem, it is national and global in its reach, and it is growing.
Not unrelated are the increasing threats to the ecological systems that have provided the basic necessities of life. The dominant thinking is that market-based solutions will overcome all these threats, but growing evidence and data point towards Thatcher/Reagan-era neoliberal fixes as a significant source of our current and future challenges.
Many economists, constrained by orthodox economic theory, recommend tweaks to the existing system.
However, Austrian economist Christian Felber suggests a significant overhaul.
In his recently translated Change Everything: Creating an Economy for the Common Good, Felber not only offers a compelling rationale for change, he also has gone to significant lengths to offer feasible ideas for the restructuring of our economy based upon what I read as two fundamental principles:
- The first priority of the economy is no longer maximizing profit but increasing the common good.
- The decision making has strong democratic control.
Two crucial questions pose themselves: what does the “common good” mean and who defines it? As a guiding concept, the Economy for the Common Good has no preconceived meaning except that it signifies how important the well-being of all human beings and the natural world is…the only immanent meaning of the common good concept is that everyone’s well-being counts. Otherwise the concept constitutes nothing more than an umbrella term in the sense of a constitutional goal which sums up the key values of democratic societies. The precise meaning of its individual components can and should be determined democratically. The “common good” is neither divinely handed down nor does it derive from the grace of any emperor.
At the heart of Felber’s big idea is the creation and use of a different kind of balance sheet for measuring the success of enterprises, be they for profit, nonprofit, or government based.
While Felber and his associates have developed one possibility for a Common Good Balance Sheet, he argues that it must be developed democratically in communities and regions, and be revisable by the citizens themselves:
Companies from all sectors and all sizes use the Common Good Balance Sheet to measure their contribution to the Common Good of a democratic society. It gives an account of the degree to which the company fulfills the five most important constitutional values of democratic states: human dignity, cooperation, sustainability, justice and democracy.
The model balance sheet offered by Felber and his associates has 17 indicators that integrate those five key values with the concerns of the most important stakeholders--suppliers, lenders, co-workers, customers and the wider society.
While this approach isn’t widely recognized yet, we have a somewhat parallel effort growing quickly here in the U.S. and abroad with the emergence of B-Corporations, sometimes referred to as social benefit corporations. There are now more than 1,600 certified B-Corporations with nine located here in Michigan. They have all scored high enough on a triple-bottom-line evaluation (social, environmental, economic) to become certified by a third party.
The B-corporation effort to redirect our economy is not steered by government. It is entirely driven by enterprises that want to show their commitment to the common good through a transparent review of their operations and practices.
I and my colleague Bill Stough, president of the Sustainable Research Group, completed a study for the MSU Center for Community and Economic Development last year that identified the multiple benefits of triple-bottom-line performers for economic development. The evidence is mounting that enterprises committed to responsible production and practices are more productive across triple-bottom-line performance measures and present less risk for investors.
Felber’s work, which I only recently stumbled upon, goes deeper and offers some intriguing examples of how such a change in orientation could shift us away from a system so tenaciously driven by competition for financial profit--with few winners and many losers--towards a more socially and environmentally beneficial one.
Felber suggests that we align incentives towards those enterprises committed to and performing at the highest levels of the Common Good Balance Sheet.
For example, he suggests:
- Lower tax rates as companies’ Common Good Balance Sheet scores go up
- Bank loans with better conditions, e.g., lower rates, longer terms
- Preference for government contracts and purchasing
- Research cooperation with public universities
There are many more complementary ideas in “Change Everything” that support a shift away from a sole focus on private financial profit towards an orientation for the public good.
If we look to our early pioneers here in Michigan and support their efforts, we’ll be following the sage advice of hockey great Wayne Gretsky. When asked to describe his remarkable success, Gretsky said that he didn’t skate to the puck, he skated to where the puck was going to be.
Felber hasn’t given us a bible to follow but rather an outline for our consideration, adaptation, and application as we look to where our future ought to be.
Terry Link is a former Clinton County commissioner and the founding director of the Office of Campus Sustainability at Michigan State University. He's currently the president of Starting Now, a sustainability consulting firm based in the Lansing area.