Civil Economy

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= general concept and specific book

Description

1.

"A thriving civil economy mirrors a thriving democracy. Constitutional and accountable political institutions supported by political parties, an independent judiciary, a free press, impartial law, civic bodies, and an involved citizenry sustain democracy in a civil society. The parallel institutions of a civil economy can be understood to be constitutional and accountable corporations supported by engaged shareowners and their accountable representatives, independent monitors, credible standards, and vigilant and active civil society associations participating in the marketplace." (source: http://p2pfoundation.net/Inquiry_into_the_Future_of_Civil_Society)


2.

Adrian Pabst:

"The tradition of ‘civil economy’ builds on older notions of human beings as ‘political animals’ who are in search for mutual social recognition through the exercise of virtues that are embodied in practices and the exchange of gifts, as Karl Polanyi suggested in his seminal book The Great Transformation (whose contemporary relevance I have addressed elsewhere). In the wake of Marcel Mauss’ work on the gift, this model emerged as a legitimate way of rethinking economics: humans are naturally social animals with dispositions to cooperate in the quest for the common good in which all can partake.

Moreover, some of the most innovative research in contemporary economics repudiates the modern, liberal separation of private and public goods in favour of ‘relational goods’ and a renewed emphasis on the reciprocal bonds of sympathy that always already tie individuals together – as shown in the ground-breaking book Civil Economy by the Italian economists Luigino Bruni and Stefano Zamagni. ‘Civil economy’ shifts the primacy from rights and contracts to the social bonds and civic ties upon which vibrant democracies and market economies depend.

...

Building on Polanyi and G. D. H. Cole’s guild socialism, one can suggest that an embedded model means that elected governments have the duty to create the civic space in which workers, businesses and communities can regulate economic activity and direct the ‘free flow’ of globally mobile capital to productive activities that benefit the many, not the few.

Instead of free-market fundamentalism or bureaucratic statism, it is the individual and corporate members of civil society who collectively determine the norms and institutions governing production and exchange. Politics and business serve the needs of society better when they allow worker representation in firms and involve free, democratically self-governing groups and associations in the governance of the polity and the economy (via national parliaments, regional assemblies or city halls in conjunction with a renewed guild structure)." (http://www.opendemocracy.net/ourkingdom/adrian-pabst/building-civil-economy-0)


Characteristics

"There are a number of characteristics of a more civil economy:

• It is open and pluralist, welcoming entrepreneurship and innovation, whether financial or social, through traditional company or other structures, including mutuals and social enterprise.

• Economic actors are clear about their responsibilities and accountable to their owners, but have due regard for other stakeholders, including communities and workers, and for the environment.

• Institutional owners, such as pension funds, are accountable to their savers and push corporations towards sustainable prosperity through responsible management.

• Information standards and flows allow for independent scrutiny on the part of individuals, civil society and the media.

• The success of the economy is not measured in terms of short-term economic growth or financial gains, but in terms of the sustainable well-being of current and future generations." (source: http://p2pfoundation.net/Inquiry_into_the_Future_of_Civil_Society)


Source

This draws on the work of Davis, S., Lukomnik, J. and Pitt-Watson, D. (2006), The New Capitalists: How Citizen Investors are Reshaping the Corporate Agenda (Boston: Harvard Business School Press)


Discussion

'Civil' Finance

Adrian Pabst:

"At present global finance capitalism pervades the entire real economy. Here it is crucial to distinguish market economies from capitalism. Since its inception, following the dissolution of the monasteries and the ‘enclosure’ movement in the 16th century, capitalism can be described in terms of a series of layers built on top of the everyday market economy: agriculture, manufacturing and light industry. These layers – local, regional, national and global – are marked by ever-greater abstraction. At the top sits disembodied finance, seeking returns anywhere, uncommitted to any particular place or industry, and subjecting anything and everything to commodification. That’s why an alternative political economy must reconnect finance to the real economy.

Today a renewed emphasis on the principles of reciprocity and mutuality can translate into policies that incentivise the creation of mutualised banks, local credit unions, and community-based investment trusts. The financial industry should eschew the dichotomy of public, nationalised and private, corporate models in favour of social sector solutions such as social investment banks, social grants or social impact bonds. The latter could encompass a wide range of areas such as restorative justice, local socio-economic regeneration, the environment, education or culture.

At national and supranational levels, caps on interest rates would help curb the predations of creditors upon debtors. Linked to such limits on financial domination are new incentives and rewards for channelling capital in productive, human and social activities.

One way to boost financial investment in strategic sectors (e.g. transport, energy, information and communication networks, education and R&D) is to create project bonds and use instruments such as risk-sharing finance facilities or loan guarantees. Project bonds will attract institutional investors such as pension funds, insurance companies and perhaps sovereign wealth funds because they reduce the risk for third-party investors who see long-term investment opportunities. In this way project bonds could help unlock the debt capital markets that remain blocked due to the sovereign and banking debt overhang.

To diversify and rebalance the economy, governments and parliaments could promote cooperation between non-profit organisations, social entrepreneurs and government agencies. Beyond current attempts to channel financial into social capital, the key is to link investment to ‘charity’ (and thereby bind contract to ‘gift’). Rather than viewing charitable activities and social action as mere add-ons that play a compensatory role for finance capitalism, each financial investment can from the outset include new assets for non-commercial purposes.

Moreover, a share of the profits could automatically be reinvested in social enterprise. Such an ‘organic’ connection between investment and ‘charity’ would transform the very way global finance operates. The trillions of pounds which the now retiring generation of baby-boomers have to invest can be tapped into as a source of capital.

If the declared aim is to preserve the dignity of natural and human life, then all participants in the public realm have a duty to promote human relationships and associations that nurture the social bonds of trust and reciprocal help upon which both democracy and the economy rely." (http://www.opendemocracy.net/ourkingdom/adrian-pabst/building-civil-economy-0)


'Civil' Welfare

Adrian Pabst:

"At best, centralised statist welfare plays a compensatory role in relation to laissez-faire economics. At worst, it is secretly complicit with the extension of the market into hitherto largely self-regulating areas of the economy and society.

The centralised and corporatised welfare state merely regulates the conflict between capital owners and wage labourers without fundamentally altering relations between capital and labour. Whilst it does provide some much-needed minimum standards, bureaucratic-managerial welfare subsidises the affluent middle classes and undermines (traditional or new) networks of mutual assistance and reciprocal help amongst workers and within local economies.

Indeed, guild socialists like Polanyi and Cole warned against a welfare model that traps the poor in dependency and redistributes income to the wealthy. At the hands of Thatcher, Blair-Brown and the Con-Lib coalition, successive governments have rationalised welfare and deployed benefits to fashion the freely-choosing, risk-taking individual removed from the relational constraints of nature, family, and tradition. With central targets and corporate outsourcing, welfare combines the worst of state collectivism with the worst of market individualism.

Thus, the link between different actors and levels is a series of abstract, formal rights and entitlements or monetised, market relations (or again both at once). As such, welfare beneficiaries are reduced to merely passive recipients of a ‘one-size-fits-all’, top-down service. State paternalism and private contract delivery cost more to deliver less, and they lock people either into demoralising dependency on the central state or financially unaffordable dependency on outsourced, private contractors.

At a time of fiscal austerity, ageing populations and the ballooning deficits of social security and pension systems, both the left and the right must look beyond redistributive policies to asset-based welfare and decentralised models that foster human relationships of communal care and mutual help.

There are systems that combine universal entitlement with localised and personalised provision, e.g. by fostering and extending grassroots’ initiatives like ‘Get Together’ or ‘Southwark Circle’ in London that blend individual, group and state action. Both initiatives reject old schemes such as ‘befriending’ or uniform benefits in favour of citizens’ activity and community-organising supported by local council, centred on human relationships of mutuality and reciprocity.

Citizens join welfare schemes like social care as active members who shape the service they become part of. Southwark Circle works on the principle that people’s knowledge of their neighbourhood, community, and locality is key to designing the provision and delivery of welfare. Services are delivered involving civic participation, social enterprise (such as Participle), and the local council.

The reason why civic participation and mutualism costs less and delivers more is because it cuts out the ‘middle man’ – the growing layers of gatekeepers, such as managers and bureaucrats, who assess people’s eligibility and enforce centrally determined standards. By bringing together providers and beneficiaries, a ‘civil’ welfare model provides services that assist genuine individual needs and foster human relationships.

But since such models require upfront state investment and continuous involvement of the local council, government is neither eliminated nor simply retrenched. Rather, the vision of civic participation and mutualism is inextricably linked to the decentralisation of the state in accordance with the twin principles of solidarity and subsidiarity (action at the most appropriate level to protect and promote human dignity and flourishing)." (http://www.opendemocracy.net/ourkingdom/adrian-pabst/building-civil-economy-0)


The Book

* Book: Civil Economy: Efficiency, Equity, Public Happiness. By Luigino Bruni, Stefano Zamagni. Peter Lang, 2007.

"This volume has a double purpose. First of all, it follows an Italian tradition of thought that began in the 15th and 16th centuries as Civic Humanism and continued up until the golden period of Italian Enlightenment as represented by the Schools of Milan and Naples. Its main contribution to the history of economic thought is its conception of the market as a place centered on the principle of reciprocity and civil virtues. This book explains why the civil approach to economics disappeared from cultural debates, scientific enquiries and the public arena at the end of the 18th century, only to surface again in more recent times. Secondly, the book draws attention to a new reading of the whole of economic reality. Indeed, the civil economy in one sense is mainly a cultural perspective from which it is possible to interpret the entire economic discourse. If a theory is considered as substantially a point of view on reality, then this cultural perspective can also set the basis for a diverse economic theory. Where does the key element of such diversity lie? It lies in the attempt to integrate within the economic system the three basic principles of any social order: the principle of exchange of equivalents, the principle of redistribution and the principle of reciprocity. Though this book draws on the history of economic ideas, it focuses on the present day from an ancient perspective in order to find convincing answers to the new questions arising in the era of globalization." (publisher)


More Information

  1. Civil Society
  2. Civilizing the Economy