CONCLUSION

FROM AN EXTRACTIVE TO A DEMOCRATIC ECONOMY

Thoughts on next steps for the pathway ahead

“We’re in a systemic crisis, and no one is dealing head- on with it,” Gar said to the board of trustees of The Democracy Collaborative who were seated around the conference table in our Washington, DC, office. The meeting was our first after the 2018 US mid- term elections, and the board was discussing what the shift in control of the US House of Representatives could mean. “This is not just about more policies,” Gar reminded us. “I don’t think this is a question of how you assemble allies. How do we clarify what a moral system is which includes everybody?”

“We need policies,” Gar continued. But the crisis is at the level of the system, the deep tectonic level of institutional designs that keep the status quo functioning, the unquestioned assumptions that make troubling outcomes seem normal. “Our work,” he said, “is to help people see, here are the things that we can build now, in the real world, that point toward a different system.”

What Gar was talking about came up in a slightly different form when the two of us, Marjorie and Ted, spoke to a group of fellow travelers doing economic change work. An audience member asked, “What’s the benefit if we see ourselves as a unified group?” Implicit was a sense that, well, we’ll all still get up tomorrow and advance our separate battles. How can it matter if we see ourselves as all working for a next system?

In her famous essay on “Leverage Points: Places to Intervene in a System,” systems theorist Donella Meadows observed that there are many ways to shift system behavior—creating taxes, regulating bad behavior, adding incentives, bringing lawsuits, designing new structures, shifting who holds power. Yet the most effective place to intervene, she wrote, is at the level of mindset. The “great big unstated assumptions,” she wrote, “constitute that society’s paradigm, or deepest set of beliefs about how the world works.” The paradigm is the source of the system.¹

The system arises from our “shared social agreements about the nature of reality,” Meadows said.² We all know today’s economic reality: Investors are owners and employees are hired hands. The corporation is an object that can be owned and sold. Financial wealth is the scarcest commodity and therefore the most precious. Its growth is ideally limitless. Fiduciary duty to investors is the most important moral duty in the investing and corporate world. GDP and balance sheets count everything that counts. Income to labor is an expense to be reduced. There’s no such thing as too much profit or too much wealth. People are poor because it’s their own fault.

A different paradigm doesn’t start with capital as the center of the universe. It starts from the point of view of life. And reality looks something like this: there’s only one system, the earth, which is precious beyond measure. The economy and everything in it are subsets of this one system. There are limits to growth. Companies are human communities, living systems, and workers are naturally members. Wise stewardship of our common assets, our common well-being, is the aim of the economy, its institutions, and activities. We’re in this together and all have a right to human dignity. Everyone deserves the opportunity to thrive, with extra assistance owed to those long excluded, on whose backs the old system was built.

When we see with moral clarity, it becomes blindingly obvious that a democracy is about the pursuit of happiness for everyone. Democracy in the polity and democracy in the economy are the left and right hands of the good society.

THE MORAL FORCE OF LEGITIMACY

Seeing this is much like seeing that people of color are human beings equal in dignity to whites, that women are human beings not subordinate to men, or that there’s no such thing as the divine right of kings. These are world- changing insights. They’re simple truths that are self-evident. When we see such truths, old institutions built on archaic assumptions begin to crumble. They lose legitimacy. And without legitimacy, no system long endures, regardless of how much power it seems to possess.

Apartheid fell in South Africa. The monarchy is a shadow of its former self. The #MeToo movement has brought down countless men of power. When we the people withdraw legitimacy, we undermine the ground of cultural acceptance that biased behavior relies upon. We exercise not brute force but moral force.

Moral power comes from moral unity. Women became a unified force in recognizing sex bias. Economic actors will become a unified force when we recognize capital bias. Common seeing creates power. As linguist George Lakoff has put it, effective naming isn’t about clever wordsmithing; it’s about seeing reality clearly.³

If legitimacy is one potent tool we possess, a second tool is imagination. This is the work of imaginative excellence so critical at a time when old institutions, old ways, are creating crises. We see this in the imaginative development of concepts like the anchor mission, impact investing, social justice in economic development, community wealth building, employee ownership, B Corporations, social determinants of health, public banking, and more. This is the pattern language of a democratic economy in formation. The more of us who use these terms and approaches, the more powerful they become. We’re stronger together. In an appendix, we offer a starting list of organizations to consider partnering with.

VOICES FOR DEEP CHANGE

In all of this, expressing moral intent can be as important as action. When the Rockefeller Brothers Fund and the Rockefeller Family Fund—heirs to the original oil fortune of John D. Rockefeller—announced plans to divest from fossil fuel companies, they gave both moral and financial reasons for doing so.⁴ In the process, they helped others shift the underlying erroneous assumption that morality has no role in investing.

Divesting from fossil fuels and shifting to impact investing are steps many of us can take. Some $8 trillion has already been divested, including by the pension funds of the Republic of Ireland, London, and New York City, as well as churches and universities.⁵ As individuals, we can study the index funds we’re in for fossil fuel holdings. We can find funds and advisers focused on impact investing. Young MBAs and finance professionals can build the new vehicles needed to make impact investing more accessible.

With banking relationships, we can shift our money to locally owned banks, credit unions, and cooperative banks—and ask our institutions (churches, pension funds, local government) to do the same. Move Your Money is a group that can help.⁶

Charitable donations deserve the same scrutiny. We need to continue supporting food banks and other ways people excluded from the system survive. But we might carve out 5 to 10 percent or more for system-changing kinds of organizations.

Bolder philanthropic moves can be catalytic. Edgar Villanueva, in his book Decolonizing Wealth, suggests that philanthropy could enact a racial reparations project—with each foundation tithing 10 percent of assets to a trust fund, to which Native Americans and African Americans could apply for grants for asset- building projects.⁷

All this is what’s possible when we think seriously about how we invest and donate our money. And then imagine what happens when we all bring the same moral intent to how we design and build our businesses, how and from whom we purchase, how we let real estate be developed, how we ask our cities to support businesses, and so on. Armed with the knowledge that there are realistic alternatives, we can begin to make the kind of bold choices that put us on a path toward a more democratic economy.

AREAS OFF LIMITS TO EXTRACTION

In intellectual terms, large questions remain to be tackled, like what to do with major corporations. What’s needed is a concerted corporate redesign effort—perhaps including a government commission, a think tank project doing research and convening, and an academic network pursuing research. We at The Democracy Collaborative call this “next generation enterprise design,” and we’ve begun it via exploratory research and convening around employee- owned benefit corporations.⁸

We also need large rethinking about the economy overall—for example, which kinds of ownership and control are most appropriate for various sectors? We need bold ideas for limiting the reach of extraction—putting some areas of the economy off limits to profit maximization. An example is single-payer healthcare, which implicitly says healthcare is a human right too important to be left to control by extractive companies.

Publicly owned pharmaceutical companies are a related concept. A transformed, democratically controlled pharmaceutical industry working for the public good would be a powerful example (and important pillar) of a democratic economy focused on well-being, not profits.⁹ Even one major new model like public pharma could begin to shift the mindset that profit-maximizing corporations should control everything. Another large issue is the growth of technology and the new world coming where far less work will be needed. Who should own the robots? Since technology is mainly socially created knowledge, its fruits should be distributed socially to one and all, Gar says.¹⁰ How could that be done?

If long- term thinking is needed, we also need ideas that are actionable soon, with a movement to make them a reality. As Gar told the trustees that day, “There will be a moment when Trump is gone. How do we position ourselves to be ready?” System-changing issues are on the policy agenda today more than at any time in memory—and whether or not these pass immediately, they start conversations that need starting.

There are many other points of intervention. Echoing scientist Thomas Kuhn, the creator of the concept of paradigms, Donella Meadows talked about many ways to change a paradigm: pointing to the anomalies and failures in the old paradigm, bringing people with the new paradigm into positions of visibility and power, and modeling the next system.

RADICAL HOPE

What we’re doing is escaping from the grip of the long arm of finance and extraction—first of all in our minds. We can start in our own communities. In building community wealth, the locus is not an amorphous, global economy, but regular people in one geographic place. The aim is ownership locally rooted there, and broadly held. Instead of decision making by an absentee elite, power is brought back within the circle of community. Money recirculates, multiplying and enriching as it flows. People and organizations work collaboratively, not in isolation. The focus is on assets, not problems—on empowerment, not dependency. There’s sensitivity to place—what works in Preston may not be the same as in Cleveland—and to culture: the language that resonates with white Rust Belt factory workers will be different from what inspires Lakota young people on Pine Ridge. And different from what inspires a room of hospital purchasing directors, or a gathering of impact investors—even though the core message remains the same. Woven throughout is deliberate inclusion for those long excluded, the marginalized, now at the center. The seed of it is radical hope, formed in desperate circumstances. And even as we read or talk about all of this, or witness it in microcosm, it begins to take shape in the mind: a democratic economy, recognizably and coherently in formation.

It begins simply with seeing. “You could say paradigms are harder to change than anything else about a system,” Donella Meadows wrote. “But there’s nothing physical or expensive or even slow about paradigm change. In a single individual it can happen in a millisecond. All it takes is a click in the mind, a new way of seeing.”¹¹