Expanding what we can actually do
My last blog on ‘affordability’ raised a difficult question. How to ride two different horses at the same time? How to survive within the constraints that are imposed upon you while also finding a way to lift these constraints?
As that blog showed, this is now an urgent and important question in relation to financial affordability.
As Keynes pointed out in a similar debate during World War II, money isn’t a real economic resource. You can’t build houses with pound notes. You can’t eat pound notes either. For example, to eat something you need food — a material thing, not a financial thing — and that involves dealing with the realities of material processes. To have food we need to grow it and growing food takes time, from planting to harvesting. It also takes energy and material resources like land and tractors and trucks to grow it, process and move it. That is what the real economy is about: People, Time, Energy, Resources.
In our society right now, we as families, organisations and Governments are wrestling with the fact that we only have so much money. Less than we used to. This means that if we only do what we can afford to do, we have to do less and less with the people, time, energy and resources that we have available — or that could be made available. It places us on an accelerating spiral of decline.
A battle for power
But if we want to adopt the alternative approach of expanding what we can actually do, we have to confront the institutional realities of our day: that those who hold financial power have no intention of letting us do what we can actually do. That’s because, as far as they are concerned, the only things worth investing in are those that maximise returns to them (and not to anybody else).
Therefore, to expand what we can actually do we face a power struggle. Somehow we have to get round, overcome or otherwise escape the forces of financial extraction … and with that, the issue just gets a whole lot bigger.
One way of winning power struggles is to amass more of whatever it is that makes the opposition powerful — to defeat them in some sort of head-to-head confrontation. When it comes to the forces of financial extraction that’s not an option. We need a Plan B.
Another way to win a power struggle is to wield sources of power that the other side either cannot or do not want to wield. To render them powerless, in other words.
Is it possible to do this? The answer is Yes. It’s been done many times before, including in recent history. Drawing on this history, here are some ways of doing it.
Think mutual self help
In countless situations humans achieve far more if they cooperate and work together instead of simply acting alone. It’s much easier for two people to push a broken down car than one. Even easier if it’s three.
Back in the day, before this country had a welfare state and before Governments and states grew big and powerful, people had all sorts of needs that weren’t being met. Governments of the day would not or could not do anything to help them, so they had to learn how to help themselves.
That’s what the labour movement did for example. It learned how to help itself. It gathered people together to share resources and to use these resources to help each other help themselves. People did this in many different ways. Mutual friendly societies, mutual building societies, burial societies, producer cooperatives, consumer cooperatives, trade unions — they all had two things in common. They embodied the principles of mutual self-help and they focused on ‘what we can actually do’, not ‘we can only do what we can afford’.
In the face of Governmental and institutional inertia and failure, our forebears produced a flowering of institutional creativity, building completely new institutions from the ground up, designed to fit the circumstances they found themselves in. The welfare state — social security benefits, state pensions, the NHS and so on — were just further examples of a long and deep history of mutual institutional innovation.
Now, as Governments once again start saying there are things that they cannot or will not do, perhaps it is time to cherish and revisit that legacy. Perhaps, we as a society and citizenry need to look less to the state — looking upwards with a begging bowl — and start looking to each other again, to ask a different question: “OK. So what can we as many different types of community actually do with the resources we have got? ”
These may be financial resources, but very often they are not. They may be made up of peoples’ time, know-how and knowledge, data or information, or physical assets that they already own or have access to — anything where some process of sharing, however organised, makes it possible to expand what we can actually do.
Think ‘clubs’ and communities, not just ‘markets’ and ‘states’
Back in the mid-sixties a young economist called James Buchanan wrote an article called ‘An Economic Theory of Clubs’. In it, he noticed that when we look at real-world economic activities very few of them fit the mould of either ‘market’ or ‘state’.
In reality, he noted, most economic activities fit somewhere in the middle, in what he called clubs. These, he argued, provide a ‘missing link’ between “purely private or individualised activity on the one hand and purely public or collectivised activity on the other”.
In economic clubs, a number of members contribute to creating a resource and making it available. And, having made this contribution, they share access to this resource according to rules that they as members have agreed to.
Buchanan provided the example of a swimming pool. “If a single person is required to meet the full cost, he will not be able to enjoy the benefits of the good. Any enjoyment of the facility requires the organisation of some co-operative-collective sharing arrangement.” If, in other words, a single person focuses on what only he or she can afford, they never get to swim. But if they focus on what we can actually do, they do get to swim.
Traditional co-ops obviously fit this definition. But Buchanan’s point was that it reaches much, much further. Most traditional firms could also fit the definition for example — anywhere where people come together under their own steam to contribute towards the provision of a collective need or want. Where citizen agency, rather than dependency, comes to the fore, in other words.
When Buchanan wrote his article, the Cold War was raging. What he had to say fitted neither side of the left/right ‘markets versus states’ divide, so it was pretty much ignored. But today, as state provision of services retreats in the face of ‘we can only do what we can afford’ perhaps it is time to look for new, different ways of expanding ‘what we can actually do’.
Think institutional innovation
Economic clubs and mutual self help institutions are both examples of institutional innovation. Institutions create and enforce the ‘rules of the road’ by which we humans get together to do things.
Money is an institution. It creates rules of the road by which the only way to access (and therefore deploy) real world resources is to pay for them with money. It creates rules of the road that dictate that ‘we can only do what we can afford’.
Yet virtually all of the real economy exists outside of this institution. Human beings with their needs and wants are not made up of dollars and cents or pounds and pence. Nor are the real-world resources that we use to meet these needs and wants e.g. the food we eat and the houses we live in.
Money is just one of many possible institutional means of connecting human needs and wants to available real-world resources. As an institutional overlay, money and the resulting constraints of financial affordability work well when they deploy and allocate available human and material resources to meet human needs.
But if and when they stop doing this job — if they create a barrier between deploying available resources to meet human needs — then they are no longer fit for purpose. Instead, they have become a constraint that we need to lift.
The institutionalised monopoly of money over the allocation of resources — the allocation of power to those who hold the purse strings — needs to be broken. New institutions need to be developed — ones that enable people to expand what they can actually do, that enable resources to be allocated in different ways on different grounds.
Think demonetisation
For many decades now, most policy initiatives have focused on marketisation: where there is a human need it should have a price placed on it and money should be exchanged about it. In a world where there is less money about, this means less money can be exchanged, so fewer needs can be met.
It’s time to move in the opposite direction: to loosen this stranglehold by finding ways to demonetise exchanges of value. When we focus on what we can actually do rather than what we can ‘afford’ in narrow money terms, we can look to real world assets such as peoples’ time and energy and to resources, both material and intangible (e.g. knowledge, know-how, information, trust). We might even consider using local ‘alternative’ currencies or tokens.
Demonetisation also opens the door to other forms of non-market exchange. Not everything has to be sold for a price. Things can also be shared, given, borrowed and lent. Deepening and extending what we can actually do includes deepening and extending what we exchange, and how.
Think Fair Process
A Fair Process is a process for making and implementing decisions that treats those involved and affected with respect: giving them a voice, being impartial when assessing what they have to say, and making decisions in their interests (rather than listening to some people more than others, and biassing decisions in favour of particular vested interests). In short, Fair Process is a human rights approach to whatever we are trying to do.
It may sound obvious that Fair Process is a good idea. But very often it’s not what happens. For example, ‘leaving the market to decide’ is an unfair process, by definition. Because markets are organised around the spending of money, letting markets decide means letting those with the money decide — while those without money get ignored.
According to the latest research, the world’s 2,640 billionaires collectively own significantly over twice the wealth of the bottom 2.8 billion. In markets where money is the only ‘vote’ that counts, a few thousand billionaires have more say over what happens than 2.8 billion other people. That is not a fair process.
Fair processes aren’t just about fairness. They are about the quality of the decisions that get made. Fair processes tend to produce the best decisions because all voices get heard and respected rather than those of just a select few, so a fully rounded picture of the situation is created.
They also make it much easier to implement these decisions, because they earn buy-in from those involved. So Fair Processes are better all round.
So now we have a choice. If we accept that ‘we can only do what we can afford’, then we also accept that the only people that matter are those in a position to decide what is affordable. Those with the money.
But If we decide to focus on ‘we can afford what we can actually do’ then our attention switches to what we can do. When our attention switches in such a way, Fair Process moves centre stage, helping to bring people together to create a ‘we’ in the first place, and enabling them to work together in ways that ensures mutual benefit and therefore mutual commitment.
Reframing the debate
You may have noticed that there is a certain irony here. At first sight, advocates of a ‘small state’ seem to be saying something similar to the above. They talk about ‘community support’ as a euphemism for cuts to basic health services, for example. But their agenda is entirely different. Their agenda is one of totalitarian social engineering: of forcing every individual to ‘take responsibility for themselves’ by becoming little atoms of entrepreneurship. The goal to stop people being ‘entitled’ and expecting everything to be provided by ‘the nanny state’.
If there is a connection between what I say above and this destructive totalitarian agenda, it is this. We need to turn this agenda back on its perpetrators by building a new, independent moral, intellectual, social and political movement that sweeps them aside by focusing on what we can actually do at every level — from the family to the State.
The answer to not having enough money is not to simply start spending money as if there is no tomorrow. It’s not a choice between ‘fiscal responsibility’ and ‘fiscal irresponsibility’. It’s not a choice between a ‘small state’ and a ‘big state’, or between ‘the market’ versus ‘the state’ either. As soon as we frame the debate in these terms we have lost the plot.
The really important dividing line is between those who insist we can only do what we can afford and those who see the liberating potential of ‘we can afford what we can actually do’. This liberating potential is relevant at every level from family, community and organisation up to, and including, the state. In contrast, those who see the world only through the money lens of financial ‘affordability’ have mentally capitulated to the forces of financial parasitism even before they pass ‘Go’. In doing so, they are suffocating potential.
Conclusion
Throughout their history humans have wrestled with the paradox of having to work within constraints they are confronted with and cannot avoid while also working out ways to lift these constraints. Today, the harsh constraints of ‘we can only do what we can afford’ are getting harsher by the day.
But that can only mean one thing. The quest to lift those constraints — of focusing on and expanding what we can actually do — is also becoming more important by the day.
For everyone in a position of responsibility — whether it’s in a family, a community, organisation, institution or Government — finding new ways to open up and expand ‘what we can actually do’ is fast becoming the biggest and most important challenge … and opportunity.
