As the climate crisis intensifies and global inequality deepens, thinkers and activists are increasingly calling for alternatives to replace capitalism.
Thanks for sharing these alternate visions Roar! Very compelling. The question I am concerned with in terms of figuring out a new economic model is- "How do you determine a fair allocation of resources?"
The planetary boundaries and minimum standard of living for everyone (say basic access to education, housing, healthcare and food) form the boundaries. But within this, how do you ensure people get a fair compensation for what they do and how do you avoid the problem of free loading?
The free market (in theory, since the market is anything but free) at least provides a way to address those questions through a negotiated exchange. Can you share any other mechanisms you might be aware of? Or is there some kind of a different orientation that we need altogether that eliminates the need of asking this question of fair allocation?
Hi Akhil, these are great questions. In the current market economy, I think the Northern Europeans have done the best job in achieving fair compensation through strong union participation (70-80 percent) and their negotiating power. Hence salaries are high, but so are taxes, including for the rich. So, that is the way it is done in a so-called mixed capitalist economy. Salaries between the richest and the poorest in these countries are about 10-1. In the US, salaries are over 300 to 1. Unions are weak, taxes are low or none for the rich, salaries are low for workers, especially in the service industry. In Norway, a server in a restaurant makes $25 an hour, in the US many basically live off the tips they receive. However, an even better system would be to restructure the economy itself through economic democracy where workers become part owners of the business through coops. In the Mondragon coop system salaries are between 6-8 to 1 between the highest and the lowest, I believe. Universal basic income has some advantages but can also stifle incentives to work, so I believe a constitutional job guarantee is better, so that people will have to work and are guaranteed a job or government support until one is provided. Such a system will make sure that there is an incentive to work. In the Prout economic system, the economy is divided in three tiers, government industries (such as infrastructure, energy grid, aspects of education and health care, etc) worker owned coops instead of corporations and small scale private enterprises. In such a system, the economy itself will ensure fair distribution as it is not driven by profit maximization as in a purely capitalist economy but rather based on welfare and wellbeing maximization. Much more could be said about this, but these are some basic ideas.
Thanks Roar. These are great directions. I have a few more questions and will be grateful if you can answer them too. If the literature on PROUT already answers them- then just please redirect me to that instead.
1. In this system of economic democracy, would we also have full cost accounting? If not, how else will this system be geared towards holistic well-being?
2. Would large private enterprises be banned by law? How would these restrictions be imposed? What rationale do we give someone who feels their current right to free commerce is being taken away?
3. How do we stop competition between different cooperatives leading to the same destructive zero-sum, race to the bottom games we see today?
4. Full cost accounting depends on actually understanding all the costs- many of which are fuzzy at the moment. This is especially challenging in times of fast evolving technology where costs might not be visible until much later. How do we solve this information problem and ensure we react fast enough to new challenges?
5. Regardless of which model we go for- an open question for me is how many people can the planet actually support and at what level of lifestyles. Apart from the spiritual shift, does PROUT literature also talk about the mechanics of how we can shift to lower energy and material footprint?
6. If the system is indeed going to do full cost accounting, then how does it compete with today's systems which do not do full cost accounting? Is the idea to prove the pilots in a few places and have the alternative be ready when some sort of collapse increases appetite to shift regulation and economic organization?
Many good questions. I may not have time to adequately address them all. If interested, see my book Growing a New Economy on Amazon or other online outlets for more details on these questions. 1. Yes, full cost accounting, including accounting for nature's and society's services. 2. Yes, eventually we would have to legislate corporations out of business and let them morph into coops. What about the freedom of the poor and their right to a decent income? That needs to be the priority. The freedom to unlimited accumulation of wealth deprives millions of their basic rights to a decent life. 3. Through the restructuring of the economy and the end of GDP as an indicator and instead having purchasing power and wellbeing as indicators. More on that in my book. 4. That is a more complex issue and I don't have time to answer it here. 5. Complex issue but I do believe that once we have a balanced economy and we live within our ecological limits, population will also be in dynamic balance. Prout has many basic principles, many more than what Marx or Smith, Keynes, Riccardo or others offered, but many more details have to be worked out based on those principles, which I think align with both human and natural laws. 6. I think the change, as it generally does, will come through collapse (Wallerstein and others, as well as Sarkar, predicted as much) in addition to the evolving new ideas and systems thinking that has evolved. To me, Prout offers the most sophisticated and elegant economic model, and once science, and the humanities are guided by a deep ecological ethics, I think we will see radical change for the better. More on that in my book.
Thank you for the generous details Roar. I will read more on PROUT and look up your book. I will continue the conversation once I have learnt a little more!
It isn't the models we lack for; it's the will. All those models are really just one -- it's people who live in mutuality, where the profit motive isn't in play. Our creative energies now are needed to get humanity in a mindset to go this way.
Roar, thank you for such a complete and yet concise explanation of Economic Democracy and Prout.
I have cross referenced it in my morning posting to Robert Reich’s substack. I will copy my posting below:
Marc Nevas
Marc’s Substack
13 mins ago
·
edited 1 min ago
As I have said before on this Substack I am not looking just to re-empower the Democrats and attempt to put “guardrails on capitalism.” It is not a true and lasting solution. We will be dealing with a post “wrecking ball” destroyed economic, political and justice systems so we do not just rebuild what was so easily destroyed in the past, we build something new, more fair and more durable. We build an entirely new system.
I think on the situation of New Orleans after the devastating hurricane. Here was an opportunity to build a new New Orleans a bit north and well protected from the inevitable future destruction due to Climate Change and rising sea levels. But no, billions were spent to rebuild a city in the same vulnerable place sure to be destroyed again sometime in the future. Here is an example of lack of vision and fear of “thinking outside the box.”
Personally I see a future in a system most commonly known as “Economic Democracy” that exists to insure that economic prosperity is shared by all and the local economies are empowered to make their own decisions and not be at the mercy of ultra wealthy outside corporations like Walmart. My town, like many others, has had local businesses destroyed by the existence of a new Super Walmart. and all the profits that used to circulate in the local economy are now in the pockets of wealthy stockholders who could care less about the welfare of my town and its citizens. Is this the system we want to fix?
Thank you, Mark, for your kind comments and for making references to my article on Robert Reich's substack. I am new to this medium and am looking forward to further postings, comments and other engagements.
Your thoughtful exploration of the intersecting visions of Prout, degrowth, and Indigenous resistance is both timely and inspiring. These frameworks, though distinct in their origins and emphases, converge on the critical understanding that capitalism, in its current form, cannot sustain the planet or its people. The systemic inequities and environmental degradation it perpetuates demand bold alternatives, and the perspectives you’ve outlined offer compelling paths forward.
The shared principles—prioritizing ecological health, decentralizing power, guaranteeing basic needs, and fostering spiritual and ethical values—highlight the potential for a unified movement. By weaving together these diverse strands, we can craft a vision that is not only inclusive but also deeply rooted in justice and sustainability.
Your call to action is a reminder of the urgency of this work. Climate chaos and global inequality demand transformative solutions, not incremental adjustments. By drawing from these rich traditions, we have the opportunity to co-create a system that values life over profit, community over competition, and harmony over exploitation.
Thank you for presenting these powerful ideas and for inspiring collective reflection on how we might bridge divides to build a future that honors both people and the planet. The work ahead is indeed immense, but the convergence of these visions gives us hope that such a future is not only necessary but possible.
Thank you, Christy, for your insightful comments summarising both the essence of the connected frameworks presented in my article and the timely need for cross-fertilization and action.
Thanks for sharing these alternate visions Roar! Very compelling. The question I am concerned with in terms of figuring out a new economic model is- "How do you determine a fair allocation of resources?"
The planetary boundaries and minimum standard of living for everyone (say basic access to education, housing, healthcare and food) form the boundaries. But within this, how do you ensure people get a fair compensation for what they do and how do you avoid the problem of free loading?
The free market (in theory, since the market is anything but free) at least provides a way to address those questions through a negotiated exchange. Can you share any other mechanisms you might be aware of? Or is there some kind of a different orientation that we need altogether that eliminates the need of asking this question of fair allocation?
Hi Akhil, these are great questions. In the current market economy, I think the Northern Europeans have done the best job in achieving fair compensation through strong union participation (70-80 percent) and their negotiating power. Hence salaries are high, but so are taxes, including for the rich. So, that is the way it is done in a so-called mixed capitalist economy. Salaries between the richest and the poorest in these countries are about 10-1. In the US, salaries are over 300 to 1. Unions are weak, taxes are low or none for the rich, salaries are low for workers, especially in the service industry. In Norway, a server in a restaurant makes $25 an hour, in the US many basically live off the tips they receive. However, an even better system would be to restructure the economy itself through economic democracy where workers become part owners of the business through coops. In the Mondragon coop system salaries are between 6-8 to 1 between the highest and the lowest, I believe. Universal basic income has some advantages but can also stifle incentives to work, so I believe a constitutional job guarantee is better, so that people will have to work and are guaranteed a job or government support until one is provided. Such a system will make sure that there is an incentive to work. In the Prout economic system, the economy is divided in three tiers, government industries (such as infrastructure, energy grid, aspects of education and health care, etc) worker owned coops instead of corporations and small scale private enterprises. In such a system, the economy itself will ensure fair distribution as it is not driven by profit maximization as in a purely capitalist economy but rather based on welfare and wellbeing maximization. Much more could be said about this, but these are some basic ideas.
Thanks Roar. These are great directions. I have a few more questions and will be grateful if you can answer them too. If the literature on PROUT already answers them- then just please redirect me to that instead.
1. In this system of economic democracy, would we also have full cost accounting? If not, how else will this system be geared towards holistic well-being?
2. Would large private enterprises be banned by law? How would these restrictions be imposed? What rationale do we give someone who feels their current right to free commerce is being taken away?
3. How do we stop competition between different cooperatives leading to the same destructive zero-sum, race to the bottom games we see today?
4. Full cost accounting depends on actually understanding all the costs- many of which are fuzzy at the moment. This is especially challenging in times of fast evolving technology where costs might not be visible until much later. How do we solve this information problem and ensure we react fast enough to new challenges?
5. Regardless of which model we go for- an open question for me is how many people can the planet actually support and at what level of lifestyles. Apart from the spiritual shift, does PROUT literature also talk about the mechanics of how we can shift to lower energy and material footprint?
6. If the system is indeed going to do full cost accounting, then how does it compete with today's systems which do not do full cost accounting? Is the idea to prove the pilots in a few places and have the alternative be ready when some sort of collapse increases appetite to shift regulation and economic organization?
Thank you for sharing your wisdom!
Many good questions. I may not have time to adequately address them all. If interested, see my book Growing a New Economy on Amazon or other online outlets for more details on these questions. 1. Yes, full cost accounting, including accounting for nature's and society's services. 2. Yes, eventually we would have to legislate corporations out of business and let them morph into coops. What about the freedom of the poor and their right to a decent income? That needs to be the priority. The freedom to unlimited accumulation of wealth deprives millions of their basic rights to a decent life. 3. Through the restructuring of the economy and the end of GDP as an indicator and instead having purchasing power and wellbeing as indicators. More on that in my book. 4. That is a more complex issue and I don't have time to answer it here. 5. Complex issue but I do believe that once we have a balanced economy and we live within our ecological limits, population will also be in dynamic balance. Prout has many basic principles, many more than what Marx or Smith, Keynes, Riccardo or others offered, but many more details have to be worked out based on those principles, which I think align with both human and natural laws. 6. I think the change, as it generally does, will come through collapse (Wallerstein and others, as well as Sarkar, predicted as much) in addition to the evolving new ideas and systems thinking that has evolved. To me, Prout offers the most sophisticated and elegant economic model, and once science, and the humanities are guided by a deep ecological ethics, I think we will see radical change for the better. More on that in my book.
Thank you for the generous details Roar. I will read more on PROUT and look up your book. I will continue the conversation once I have learnt a little more!
I think this might resonate with you - progress and intelligence ain't always where we see them...
https://open.substack.com/pub/heyslick/p/think-like-a-jaguar-speak-like-a
It isn't the models we lack for; it's the will. All those models are really just one -- it's people who live in mutuality, where the profit motive isn't in play. Our creative energies now are needed to get humanity in a mindset to go this way.
Roar, thank you for such a complete and yet concise explanation of Economic Democracy and Prout.
I have cross referenced it in my morning posting to Robert Reich’s substack. I will copy my posting below:
Marc Nevas
Marc’s Substack
13 mins ago
·
edited 1 min ago
As I have said before on this Substack I am not looking just to re-empower the Democrats and attempt to put “guardrails on capitalism.” It is not a true and lasting solution. We will be dealing with a post “wrecking ball” destroyed economic, political and justice systems so we do not just rebuild what was so easily destroyed in the past, we build something new, more fair and more durable. We build an entirely new system.
I think on the situation of New Orleans after the devastating hurricane. Here was an opportunity to build a new New Orleans a bit north and well protected from the inevitable future destruction due to Climate Change and rising sea levels. But no, billions were spent to rebuild a city in the same vulnerable place sure to be destroyed again sometime in the future. Here is an example of lack of vision and fear of “thinking outside the box.”
Personally I see a future in a system most commonly known as “Economic Democracy” that exists to insure that economic prosperity is shared by all and the local economies are empowered to make their own decisions and not be at the mercy of ultra wealthy outside corporations like Walmart. My town, like many others, has had local businesses destroyed by the existence of a new Super Walmart. and all the profits that used to circulate in the local economy are now in the pockets of wealthy stockholders who could care less about the welfare of my town and its citizens. Is this the system we want to fix?
For an in-depth exploration of equitable systems of economic and political functioniing check out the following “Crisis and Transition A Common Way Forward" Substack: https://crisistransition.substack.com/p/post-capitalist-compatibility-degrowth
Thank you, Mark, for your kind comments and for making references to my article on Robert Reich's substack. I am new to this medium and am looking forward to further postings, comments and other engagements.
Your thoughtful exploration of the intersecting visions of Prout, degrowth, and Indigenous resistance is both timely and inspiring. These frameworks, though distinct in their origins and emphases, converge on the critical understanding that capitalism, in its current form, cannot sustain the planet or its people. The systemic inequities and environmental degradation it perpetuates demand bold alternatives, and the perspectives you’ve outlined offer compelling paths forward.
The shared principles—prioritizing ecological health, decentralizing power, guaranteeing basic needs, and fostering spiritual and ethical values—highlight the potential for a unified movement. By weaving together these diverse strands, we can craft a vision that is not only inclusive but also deeply rooted in justice and sustainability.
Your call to action is a reminder of the urgency of this work. Climate chaos and global inequality demand transformative solutions, not incremental adjustments. By drawing from these rich traditions, we have the opportunity to co-create a system that values life over profit, community over competition, and harmony over exploitation.
Thank you for presenting these powerful ideas and for inspiring collective reflection on how we might bridge divides to build a future that honors both people and the planet. The work ahead is indeed immense, but the convergence of these visions gives us hope that such a future is not only necessary but possible.
Thank you, Christy, for your insightful comments summarising both the essence of the connected frameworks presented in my article and the timely need for cross-fertilization and action.