17/12/2012

The Common Welfare Economy

The Common Welfare Economy is an economic system based on values that favour social welfare. These values are already covered in the large majority of national constitutions and guaranteed by law (justice, equal opportunities, etc) so really what is actually being proposed is just putting them into practice. It is a real alternative (many companies have been following its principles since it was created in 2010) and a force for social, economic and political change.

According to a study by the Bertelsmann Foundation, 80% of Germans and 90% of Austrians expect a new economic order to appear. The economist and university professor Christian Felber, interviewed in the video, developed an alternative to current systems in his book ‘New values ​​for the economy’ (Deuticke, 2008), in order to escape the sterile dichotomy which holds that ‘who is against Capitalism, is for Communism’ and offer a specific and viable system for the future. Subsequently, these approaches were reviewed and refined by a group of entrepreneurs who, along with Felber himself inaugurated the movement with the publication of the book ‘Economics for the Common Welfare (Deuticke, 2010), which reflects its founding principles, and which can be summed up by the following 20 points:

1. The Economy of the Common Welfare is based on values ​​that make our personal relationships thrive: trust, cooperation, affection, democracy, solidarity… Numerous studies and research concur that achieving satisfying relationships is the main source of motivation and happiness in human beings.

2. The economic legal framework undergoes a radical shift, changing the equation ‘Profit + Competition’ to ‘Desire for public welfare + Cooperation’. Entrepreneurs with a spirit of cooperation are rewarded, and competitive behaviour is penalised.

3. Economic success is not measured by prioritizing the amount of money obtained, but with the Common Welfare Balance Sheet (CWBS, on a company level) and the Common Welfare Product (CWP, on a system level). The Common Good Balance becomes the principal balance of all companies and the more social, ecological, democratic and committed the activity, the better the results. Improving the results of the Common Welfare Balance Sheet of a country’s companies improves their Common Welfare Product.

4. Companies with healthy Common Welfare Balance Sheets enjoy legal advantages: reduced tax rates, advantageous tariffs, cheap loans, privileges in public procurement, concessions in research programs, etc. The entry into the market is therefore more favourable for ethical products and services than for those are not.

5. The balance sheet is secondary, changing from an end in itself into the way to increase the ‘new’ business purpose: contribution to the Common Welfare. Balance surpluses should be used to finance investments with social and ecological gains, loan payback, deposits in limited reserves or limited bonuses to employees, as well as interest free loans for cooperating companies. No surplus will be used as bonuses for people who do not work in the company, for hostile takeovers of other firms, investment in financial markets (which will cease to exist) or contributions to political parties.

6. As financial gain is now a means and not an end, companies can have and maintain their own optimum size. They do not need to be afraid of takeovers or feel forced to grow to be bigger, stronger or show greater profits. All companies are freed from the pressure of the growth or buy–outs.

7. With companies being able to grow to their optimum size without fear, there will be many small businesses in all sectors. With no pressure to grow, it will be easier for them to cooperate together. They can help each other with knowledge, technology, commissions, staff or interest–free loans. They will be rewarded with positive results in the Common Welfare Balance Sheet. Companies create a disinterested learning community and the economy becomes a win–win system.

8. Differences in income and assets will be regulated: the maximum income limited to 20 times the minimum wage; properties may not exceed a 10 million euro value; the right of transfer and inheritance will be up to €500,000 per person, and up to 10 million euros per child in family businesses. Any surplus generated beyond these limits will be distributed as ‘democratic endowment’ for future generations: equality in the initial capital means greater equality of opportunity (the exact margins must be defined democratically in an economic assembly).

9. In large companies, over a certain number of workers (e.g., over 250) the rights of decision and ownership move over partially and gradually to employees and citizens. The population can be represented directly through ‘regional economic parliaments’. The government has no right to intervene or make decisions in public companies.

10. This is equally true for the democratic commons, the third property category together with a majority of small and medium businesses and large mixed ownership firms. For democratic commons we understand public institutions in the fields of education, health, social welfare, transport, energy and communication: society’s basic infrastructures.

11. A major democratic commons is the democratic bank. It serves, like all companies, the Common Welfare and, like all of them, is controlled by the people and not by the government. Its services include guaranteed savings deposits, free checking accounts, reduced interest loans and social risk loans. Financial markets will no longer exist as we now know them.

12. Based on John Maynard Keynes’ proposal in 1944, a global monetary cooperation is established based on a unit of calculation (‘Globo’ or ‘Terra’) for international trade. Locally, regional currencies can complement the national currency. To protect against unfair competition, the EU becomes a fair trade zone (Common Welfare Area) with harmonized standards or where customs duties are linked to with the CGBS of the producing company. A long–term goal is a Common Welfare Area in the United Nations.

13. Nature is given its own value, and cannot be turned into private property. When somebody needs a piece of land to live, to cultivate or for business, they are given a limited amount for free or paying a usage fee. The use of the land is conditioned by ecological criteria and limited to its specific use. This will end building speculation, land-grabbing and large–scale individual land ownership. In consequence, taxation on land ownership will be eliminated.

14. Economic growth ceases to be an end in itself, improving the ecological footprint of people, companies and nations. Kant’s catagorical imperitive will be extended to the environmental dimension. Our freedom of to choose a specific lifestyle will be limited when it in itself limits the freedom of others to choose the same lifestyle or to live in dignity. People and companies will be encouraged to measure their ecological footprint and reduce it to a sustainable and fair global level.

15. The working week will be gradually reduced towards the figure (agreed upon by the majority) of 25–30 hours per week. Therefore there will be free time for other areas of highly important work: relationships, caregiving (of children, the sick and the elderly), personal growth (self–improvement, the arts, leisure activities) and political and public activity.

16. Every tenth year will be taken as a sabbatical that will be financed by a minimum wage with no obligations attached. People can do whatever they wish in this period. This measure will reduce the burden on the labour market and make European Community unemployment levels fall by 10%.

17. Representative democracy will be complemented by direct participatory democracy. The people must be able to control and correct their own representation, enact laws themselves, amend constitutions and manage supply infrastructures (railways, post office system, banks, etc). In a real democracy, the interests of the people and its representatives are identical. A basic requirement for this is for the people to have the freedom of collaboration and control.

18. All major points must mature through intense discussions on a broad popular base before becoming laws made by an directly elected economic assembly: the outcome will be voted democratically by the people. What is accepted will be introduced in the constitution and can only be modified once again by the people’s will. Apart from the Economic Assembly of the Common Welfare, there will be other assemblies to study democracy in depth: a education convention, a communication media convention and a convention for the creation of democratic goods.

19. To establish in children the values ​​of the Economy of the Common Welfare and provide them with tools so that they can learn, the following subjects will be introduced in educational programs: emotionology, ethics, communication, democratic education and the experience of nature.

20. Given that in the Common Welfare Economy the concept of business success means something quite different to its present day meaning, other forms of management shall be established: those individuals most responsible and competent, the most empathetic and sensitive, those who think and feel in an ecological and social manner, will be in higher demand and will become role model for society.