Core Economy

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=" As far back as Aristotle, philosophers have understood that the critical family and community relationships were a second economy, originally called oekonomika. Economists have since demoted it by calling it the non-market economy. The environmental economist Neva Goodwin reversed the hierarchy by calling it the core economy. Co-production points to ways in which we can rebuild and reinvigorate this core economy and realise its potential." [1]


1. Mira Luna:

"The Core Economy is not Wall Street or Main Street; it is the economy of family, neighborhood, kith and kin. Recently more and more economists acknowledge that something like 40-50% of productive economic activity takes place outside of the market and is not measured by traditional indicators. But even those percentages do not begin to convey either the scale or significance of an economic system that is pervasively ignored. Futurist Alvin Toffler captured the implications of what economists overlook with a question he puts to CEO’s of Fortune 500 companies: “How productive do you think your work force would be if it was not toilet trained?” That’s a useful if disconcerting starting point for re-assessing what we value and measure as “productive labor.” (

2. NEF:

"An important part of the Great Transition will be building a well-being system – rather than a welfare system – that is fit for the twenty-first century. That system will aim to achieve sustainable social justice and wellbeing for all. How will it do that? What resources and mechanisms should it deploy? And what policies will be required to enable it to achieve its goals? The Great Transition rests on the assumption that the money economy will not grow, but continue in a state of ‘dynamic equilibrium’. As far as public spending is concerned, a twenty-first century well-being system will have to make do with less than we have now and little prospect of more in future. As for the natural economy, the aim must be to safeguard limited resources, to help prevent further decline, and to rebuild degraded resources as possible.

The best hope of growth lies in what has been described as the ‘core’ economy: the human resources that comprise and sustain social life.

These resources are embedded in the everyday lives of every individual (time, wisdom, experience, energy, knowledge, skills) and in the relationships among them (love, empathy, responsibility, care, reciprocity, teaching, and learning). They are ‘core’ because they are central and essential to society. They underpin the market economy by raising children, caring for people who are ill, frail, and disabled, feeding families, maintaining households, and building and sustaining intimacies, friendships, social networks, and civil society. They have a key role, too, in safeguarding the natural economy, since everyday human behaviours and lifestyles strongly influence the way we use environmental resources. If we get it right, a thriving core economy will provide essential resources for a well-being system that is fit for the future.

The human assets and relationships that make up the core economy are largely uncommodified, unpriced, and unpaid, routinely ignored and often exploited. Yet they have value and are exchanged. The core economy, which involves the production and distribution of human resources, can flourish and expand, or weaken and decline, depending on the circumstances and conditions within which it operates. It can ‘grow’ if it is recognised, valued, nurtured, and supported. For the Great Transition, we want to be able to grow the core economy in ways that are consistent with and help to achieve sustainable social justice and well-being for all. If that is to happen we must make sure we understand how it works and what will help it to thrive.

While the core economy is rooted in families and households, it extends well beyond the domestic sphere, operating through extended families, wider social networks, neighbourhoods, and communities of interest and place. It includes all the unpriced and unpaid activities that are carried out by friends looking out for one another, grandparents sharing childcare and helping out, parents being school governors, volunteers cleaning up local parks or visiting people who are housebound, neighbours doing each others’ shopping or keeping each others’ keys, or exchanging gossip and advice. It provides the essential social functions that keep people connected with one another. Some of these activities are formally organised – for example, through national charities or local authorities.

Most arise organically from close social relationships.

The core economy underpins and gives shape to social and economic life. But it does not float freely beyond the reach of public life and paid employment. Nor is it inherently good or right. It is profoundly influenced by the rules, protocols, and power relations that emanate from the state and the market. It shapes and sustains social and economic life. It also reflects and reproduces social and economic divisions and inequalities.

Most of its transactions involve women working without wages – a pattern that generates lasting inequalities in job opportunities, income and power between women and men. These are often compounded by age, race, ethnicity, and disability.

Time is a key resource in the core economy. Everyone has the same amount of time but some people have a lot more control over how they use their time than others. Some people – mainly women – have low-paid jobs as well as caring responsibilities, so they are poor in terms of time as well as income. Notably, around half of lone parents can’t earn enough money to stay out of poverty while making sure their children are looked after (by themselves or someone else), however long or hard they work. How paid and unpaid time is distributed between men and women and across different social groups will help to narrow or widen inequalities.15,16 For this and other reasons, transactions in the core economy can privilege some people over others (for example, where better-off parents share a car pool to ferry children to improving after-school activities). Individuals and groups may be excluded or disempowered because of how much discretionary time they have, where they come from, where they live, or their state of health. Some neighbourhoods seem to be awash with activities that enrich and strengthen social connections, while some appear beset by divisions or distrust, or have less opportunity for social exchange, because there are no meeting places, or populations are transient, or fear of violence keeps people indoors. In many places, these positive and negative tendencies exist side by side. Some ethnic and cultural groups have stronger traditions than others of self-help and mutual aid, although these may go hand-in hand with values and customs that perpetuate inequalities (such as class-based snobbery, racial prejudice, or discrimination against women).

It therefore matters a great deal how the core economy develops. We are arguing for human resources and relationships to be brought into the centre of policy-making, strengthened and enabled to flourish. We want to move from an economy based on scarcity of economic resources to one based on an abundance of human resources. We also want to move beyond a deficit model of need where we simply pay attention to problems that require fixing, to a more rounded and positive approach, where we consider what we need to lead a good and satisfying life – not only what makes life possible, but also what makes life delightful.

How this is done will affect not only the prospects for a twenty-first century well-being system, but also the quality of people’s daily lives, the power and resources they have at their command, the relationships between them, their physical and mental health and their future opportunities. Such changes can either exacerbate social divisions and inequalities, or help to promote sustainable social justice and well-being for all." (nef: The Great Transition: social justice and the core economy)


Estimating the value and importance of the core economy

Mira Luna:

"When an economist undertook to quantify the replacement value of just one function of this Core Economy, he found that the unpaid work done by family, friends, neighbors and kinfolk to keep seniors out of nursing homes totaled $196 billion in 1997. By 2000, when he updated his computation, it had risen to $257 billion. The value of just the informal care giving portion of the labor produced by the Core Economy was six times greater than the money spent in the market economy to purchase formal home health care services for the elderly; it is over twice what the federal government spends on nursing home care. Consider the monetary implications of even a small drop in the productivity of the Core Economy if we were obliged to buy those services at market prices with increased private insurance or increased taxes for Medicare and Medicaid

In recent decades, highly respected economists have undertaken to include the value of unpaid household labor that does not get included in the GDP or other standard economic measures of productivity. Rigorous estimates of the value of household labor have ranged from one-quarter to one-third of the GDP.

Feminine economists have tended to focus on Caring Labor as an essential component of productive labor missing from official economic indicators. But there are at other kinds of labor that are equally essential and equally absent: Civic Labor, Social Justice Labor, and Environmental Labor. And then there is another kind of labor that goes into Knowledge Acquisition that might be called Learning Labor. Interesting theoretically. But so what? Who cares? And what difference does it make? Rebuilding the Core Economy means that non-profits will have to partner in a new way with the very communities they serve. Clients will have to be viewed through a lens that defines them as assets with untapped capacity; client contribution will have to be honored and rewarded as work; services provided will have to become catalytic interventions that enable clients to give back by helping others; and individual clients will have to become part of the “village” in ways that transcend traditional agency client boundaries. That’s what it will take to rebuild a Core Economy depleted by disinvestment and loss of its most energetic, upwardly mobile human resources.

Consider this: the Core Economy is under assault - partly from material values that erode basic moral values – and partly from progress that has removed the hidden subsidy supplied by the subordination of women, the economic dependency of the elderly, and the exploitation of ethnic minorities, immigrants and children. How does that labor get replaced as we embrace equality and opportunity and independent living? How do the critical functions of the Core Economy get discharged? It is the failure to properly understand the significance of the Core Economy and the labor it takes to for it to function and to regain vitality that lies at the heart of the crisis facing the non-profit world. When the Core Economy is either undervalued or overlooked, the problems that come from its erosion are dumped on the non-profit world. And somehow, the non-profit world is then blamed if it can’t fix those problems with whatever crumbs are left on the table by the “truly productive” members of society: those who are busy making money and whose activities are officially recognized and measured by monetary transactions. The prevailing discussion of economy misses this point.

Now, increasingly, non-profits are being told they must learn to launch businesses and create money-making social ventures. A social venture seems to mean anything that makes money for a non-profit and does not peddle something that is morally or environmentally repugnant. As a result, non-profits are trying to compete in a world where they are amateurs. Priorities shift to proving they can launch a break-even business – and the more they equate their organization’s credibility to funders with their entrepreneurial zeal, the more all their creative juices and energy get diverted into competing in an arena where they are least competent.

The message that non-profits need to get is: “It’s the Core Economy and that’s not stupid.” That’s the economy they need to rebuild; that’s the economy they need to partner with. That’s the economy which, if healthy, will dictate priorities to funders that translate into quality of life gains and real learning aboutreducing externalities. Rebuilding the Core Economy is going to involve a real shift in how non-profits think and act. We believe it is going to take a different kind of currency – because exclusive reliance on money imposes unnecessary limits on what is possible now. Markets driven by monetary exchanges cannot put supply and demand together to rebuild the Core Economy because of the way that market price defines value. If quantity is scarce compared to demand, then market value is high. The opposite applies: if supply is abundant, then value goes down. We say something is dirt cheap or worthless if it is abundant.

That definition of value devalues those very universal capacities that enabled our species to survive and evolve: our ability to care for each other, to come to each others' rescue, to learn from each other, to stand up for what’s right and to oppose what is wrong. In market terms, those capacities, if abundant, are worthless. In terms of rebuilding the Core Economy, those values are literally price-less. We take them for granted – in roughly the same way we took clean air and clean water and the ozone layer for granted – until the toxicity we unleashed jeopardized our health and survival. Much the same is true for those very social problems that non-profits are charged with addressing. Like clean air and water, we have always taken families and neighborhoods and community for granted. After all, families are supposed to function; children are supposed to be resilient; trust is supposed to be present whenever intentions are good; people do what they are supposed to do. Collectively self-interest can be counted on to advance public well-being. And altruism like the ozone layer will always shield us from destructive selfishness. Public policy constructed on logic in defiance of reality is not going to restore the moral and social ecology we require. The Core Economy is our species’ habitat. And a monetary definition of value that devalues our intrinsic, universal capacities cannot generate transactions on the scale needed to address the range or depth of social problems that programs and non-profits are supposed to remedy. We need to grasp what a different perception of value would make possible." (

Conditions to restore the core economy

Mira Luna:

"We need to grasp what a different perception of value would make possible.

First, we are going to have to start looking at those human beings now defined as problems and liabilities through a lens that sees them as assets. When a senior tells me: “I have nothing left to give – but love,” we need to say: You have what we most need. Instead, we see seniors as fiscal liabilities. All we can say is: Can you co-pay for your prescriptions and how can we possibly cope with seniors’ disabilities on the scale that baby boomers will present? There are women coming out of prison paying for their therapy by teaching teen-age females about HIV, AIDS and violence. There are fifth graders labeled Special Education and Attention Deficit students who are teaching math and reading to first and second graders. There are juveniles delinquents who are staffing the juries of a youth court that has reduced recidivism far more effectively than judges, prosecutors, police and probation officers ever did. There are high school students charged with truancy who are now becoming learners by being sentenced to tutor in elementary schools. All it takes is looking through a different lens to see at-risk problem human beings as a vast source of wealth, capacity, talent, energy, love, caring, experience and common sense.

Second, we are going to have to redefine work to include whatever labor we need to build strong families, safe communities, to care for the frail and elderly, to hold officials accountable, to make democracy work, and to fight for social justice. That means we are going to have to abandon the binary code that says: you are either paid staff or a volunteer. Money imposes a false dichotomy, unjustified status hierarchies and impossible restrictions on the labor that is available and needed to rebuild the Core Economy. No society has the money to buy, at market prices, what it takes to raise children, make a neighborhood safe, care for the elderly, make democracy work or address systemic injustices. We pay foster care families ten to times what we used to provide mothers on welfare – and all too often, we still see child abuse – and extensive, predictable human tragedies once the foster care is terminated at 18. The only way that the non-profit world is going to address the social problems that are dumped on it is by enlisting the very people who are now classified as clients and consumers and converting them into coworkers,partners, and rebuilders of the Core Economy.

If money can not do the job of enlisting that workforce, what can? Utilizing a tax-exempt barter currency called Time Dollars, we have demonstrated one way in which non-profits can provide a form of compensation that enables people to get what they need by helping to rebuild the Core Economy. Every hour spent helping another earns one Time Dollar and that enables non-profits to provide a reward forclient contribution. Habitat for Humanity figured out how to mobilize an army of homebuilders: they require that every homeowner help build homes for others. The Brazilian government figured out how to convert mothers into “attendance officers” to see that their truant children actually got to school and actually studied and did their homework. Different experiments have proven how “patients” can be enlisted as partners in coping with asthma, diabetes, hypertension, depression and obesity.

Redefining Work might even entail a new kind of tithing: earmarking funds and resources for rewards for this workforce that every non-profit truly needs. The return on that investment will be the creation of a genuine constituency for the work, for the program, for the agency – and a new leverage in securing critically needed funds. In every context, the bottom line in redefining work is: mobilize and enlist the labor you need by recording it, acknowledging it, validating it and rewarding it. Add respect for what that consumer workforce can tell you as co-workers. Their perspective -- about staff or practices that are unproductive, condescending, paternalistic, and culturally insensitive – is solid gold. Without those feedback loops, nonprofits will end up isolated – unappreciated and unfunded.

Third, reciprocity needs to replace unilateral beneficence. If non-profits are going to turn their clientele from consumers into partners and co-producers, the most compelling way to do that may seem most unthinkable: calling upon those they serve to contribute in return by helping others. All too often, lip service is paid to client participation – but exclusive focus on trying to meet client needs often precludes genuine mutuality. If non-profits embrace the mantra: It’s the Core Economy Stupid, then every client can pay back by doing something to rebuild that Core Economy. There are teenage females who may need all kinds of services – but who can provide shampoo and hairdressing for seniors who have a hard time lifting their arthritic arms to wash and set their own hair. There are seniors who can provide telephone companionship to bed-ridden seniors, guidance and support for latchkey children, and counseling and affection for teenage mothers. If paying back by helping someone else can turn every helping transaction into a catalyst that triggers contribution by the recipient, then the non-profit world will be able to quash the indictment that it perpetuates dependency. But so long as it simply provides help to those in need without asking for anything back in return, it is sending two fatal messages to those it helps. It is saying: “I have something you need – but you have nothing I need or want or value.” And it is also saying: “The way to get more help is by coming back with more problems. And the worse those problems are, the more help you will get.”

For those who have become accustomed to one way giving, the change to reciprocity may be traumatic. But home, family, and community can thrive only when the pitching-in is mutual. The bottom line remains: It’s the Core Economy.

Fourth and finally, rebuilding a healthy Core Economy necessarily means setting forces in motion that one does not control. A healthy Core Economy does not mean keeping client families alone, isolated, separate and unconnected based on the constraints of a professional-client relationship. It means investing in ways to bring people together so that their interaction can help to rebuild the village. And yes, there will be things happening in a healthy village that simply do not fall within the stated mission or the outcomes which agencies are traditionally funded to produce. That’s the Core Economy that the nonprofit world has to rebuild." (