The New Economics of Plentitude

 

The New Economics of Plentitude

by Juliet Schor
 

THIRTY-FIRST ANNUAL E. F. SCHUMACHER LECTURES
NOVEMBER 2011, NEW YORK CITY
EDITED BY HILDEGARDE HANNUM

 

OTHER VERSIONS:    VIDEO      PAMPHLET     KOBO E-BOOK     KINDLE E-BOOK    |    CONTACT SPEAKER


 

Introduction by Jessica Brackman
​MEMBER, BOARD OF DIRECTORS, NEW ECONOMICS INSTITUTE

Good morning. Welcome, everyone.

I first encountered this morning’s speaker some years ago through the organization she co-founded, Center for the New American Dream. I had a young child at the time, and I was just becoming aware of how obscenely consumer oriented our culture had become and of the insidious forces being directed—in subtle and not so subtle ways—toward children. My husband and I had managed thus far to keep our son away from television, but that was only part of it: the seduction of advertising was everywhere. I knew it was inevitably a losing battle, but I was determined to at least put up a good fight and to carve a place of sanity in the madness.

So I Googled something like “kids/commercialism/support,” and I came upon the Center for the New American Dream. Immediately I was taken with the organization’s mission “to help Americans reduce and shift their consumption to improve quality of life, protect the environment, and promote social justice” and was relieved to find information on themes like “consuming consciously” and resources like “Tips for Parenting in a Commercial Culture.” There was also a link to a book called Born To Buy: The Commercialized Child and the New Consumer Culture, which I promptly went out to buy. It was written by a woman named Juliet Schor. I was riveted and horrified by what I read and, fortunately, by the end somewhat hopeful as well. An excellent writer, she has an amazingly keen mind and an extraordinary ability to discern and describe the issues right in front of us. With piercing directness she shows us who we have become. Not necessarily a pretty picture, but understanding does give us power, and she offers models for action—from what the individual family can do to initiatives to put pressure on corporations. She even presents a Parents’ Bill of Rights and ways to help enact positive legislation. I came away empowered and encouraged—and a big fan of this Juliet Schor.

The author of several books, her latest is Plentitude: The New Economics of True Wealth, in which she presents an innovative vision for how to shape a new, sustainable, and ultimately more fulfilling economy. 

Currently Professor of Sociology at Boston College, Juliet is board co-chair of the Center for the New American Dream. She has served as consultant to the United Nations, has received a long list of distinguished awards, and has published, in addition to her books, numerous articles, book chapters, and papers. With the release of Plenitude she has gained national and international media coverage, including in The New York Times, on National Public Radio, 60 Minutes, and all the major morning shows, and she has put together an impressive five-minute animated video on the principles of Plentitude. I urge everyone to view it on her website. But now, let’s listen to the live version.

Please welcome Juliet Schor.

 


 

Who would have predicted six months ago, when this event was planned, a worldwide movement against the tyranny of finance, against captured government, corruption in the boardroom, the Koch Brothers and their Tea Party, and, most evocatively, the split between the wealthiest 1% and the remaining 99%? This week 70 students walked out of my former colleague Greg Mankiw’s introductory economics class (Ec 10) at Harvard, complaining that the course is biased, more an indoctrination than a genuine learning experience. What a difference an Occupation makes!

Back in April, when I was invited to speak here, one would have been rightly pessimistic and perplexed about the economic conversation. The Republicans had recently taken over Congress, and politics was becoming even uglier than usual. The unemployed were painted as parasites, unwilling to do an honest day’s work, and the Environmental Protection Agency was identified as the cause of economic stagnation. Scott Walker, John Kasich, and Rick Snyder had unleashed shock doctrine on the citizens of their states and on the unions. Deficit talk was heating up, and before long we were into the debacle of the summer’s standoff on the debt ceiling. The shift to the right felt as inexorable as it felt insane.

But if the history of economic discourse in times of distress teaches us anything, it is how volatile the conversation can be. The first six months after the economic collapse of 2008 provided another lesson in changeability. Fifty trillion dollars in wealth had just disappeared, literally overnight, and the orthodox model of rational and “free” markets was facing its most serious crisis of credibility since the 1930s. The system had failed, and spectacularly so. There was talk about the need to nationalize the too-big-to-fail banks, about massive infusions of public monies to stabilize output. The environmental movement was being given billions in subsidies for clean energy and green jobs. Within six months of the crash, only 53% of U.S. adults would agree that “capitalism is a better system” than socialism. Twenty percent preferred socialism, by which I think they meant a Western-European style, and 27% were not sure. Adults under 30 were about evenly divided between the two. But as conditions stabilized, the status quo re-asserted itself quickly, and the window of change slammed shut.

Today’s annual E. F. Schumacher Lectures, a gathering that honors the father of “new economics,” Fritz Schumacher, is particularly apt. Our ability to make gains through the opening created by the Occupy movement, as well as future openings, will depend on articulating an alternative to the business-as-usual economy. I believe that Schumacher’s vision—in broad outline, if not its details—offers the best possible guide.

I will review only briefly the situation in which we find ourselves, for its contours are well known to this audience. First, in much of the global North, capitalism has become grossly dysfunctional. Income and wealth are concentrated not just at the top but at the very, very top; finance runs amok; employment has collapsed; and particularly in the United States elites are abandoning the national economy. In 2010 U.S. corporations created 2.5 million jobs, but 1.5 million of them were outside the nation’s borders. The housing and labor markets are in a deflationary embrace, each contributing to the other’s woes. Without a major shift in either policy or practice—i.e., by continuing with business as usual—the United States is likely facing years of stagnation, high unemployment, worsening inequality, and rising poverty.

The engine of recovery for the past three decades, the consumer, is no longer capable or willing to play her accustomed role. Consumers have responded to the downturn by making major adjustments in their attitudes toward spending, debt, and lifestyle. They’ve had “goodbye homo economicus” epiphanies and are articulating a shift from a spending culture of “me” to a culture of “we,” from making status-oriented purchases to re-engaging with the difference between needs and wants, a distinction that nearly disappeared during the spending binge preceding the crash. People are saving more, spending less, and saying that the American way of life is not sustainable, either financially or ecologically.

The standard progressive response has been Keynesian: Prime the pump with government spending to spur demand and create jobs, the faster the better. While Keynesianism is unpopular among elites, it is mainly opposition to government deficits that fuels its adversaries. But there’s another, more powerful critique of Keynesianism from the left, which is that it, like macroeconomics in general, is wrong to advocate indiscriminate outlays. Keynes’s famous example of burying bottles filled with banknotes and paying people to dig them out shows the absurdity of spending for spending’s sake. Keynes did not advocate bottle burying, of course, but that’s effectively what we’re doing, with the largest of those bottles being missiles and bombs, i.e., military spending, which is not only wasteful but deeply destructive.

At a time when we have multiple urgent human and ecological needs, we should not be wasting resources, even those that are not being used, on activities that fail to enhance human and planetary well-being in significant ways. This bankruptcy of macroeconomics is, I believe, well appreciated by the public, with whom the progressive Keynesian message has failed to resonate. New Deal 2.0, favored by progressive economists, feels anachronistic. While Keynesianism is certainly better than neo-liberalism, it’s a far cry from the new economics. This is partly because it fails to address the unequal distribution of property. Concentrated property not only produces unfair distributions of income but also yields captured government. As we radical economists of the 1960s and 1970s stressed, we need both a democratic political system and a democratic economy. The fact that we have neither is at the core of our contemporary dysfunction.

The most compelling reason why we cannot afford indiscriminate growth is that humans now face enormous costs of ecological restoration. We must reverse the dangerous, indeed terrifying path of climate destabilization, ecosystem degradation, and biodiversity collapse on which we now find ourselves. We are facing a future of food shortages, water scarcity, and extreme weather. Reversing our present course is a monumental task, made even harder by the likely rise of population from 7 to 9 billion, with most of that increase in the global South. One hopes these additional 2 billion people will be consuming energy, food, and manufactured goods at higher rates than their national counterparts. With more than half the global population living on $2.50 a day or less, and more than one billion without adequate food, the solutions put forward by new economics must be compatible with considerable increases in the ecological space afforded to low-income populations of the global South. Yet, on a planetary level we are already overusing ecological resources.

Historically, environmental legislation has been viewed as a luxury good. The economic downturn makes it more difficult to enact environmental legislation or adopt new technologies. Progress on a climate agreement has been ominously stalled; however, we cannot afford to wait for people to feel rich again. That is unlikely to happen in either the United States or Western Europe, at least in the medium term. That is why we require a trifecta that simultaneously addresses three challenges: a dramatic reduction in planetary eco- and carbon footprints, a solution to the economic problems of the global North, and an increase in the standards of living in the global South.

These three problems—living in an ecological danger zone, stagnation and inequality in the North, global poverty—are linked in a number of ways. Perhaps the most important is that the conventional solution to the latter two exacerbates the first, namely the ecological overshoot that has led to climate destabilization. Unemployment and poverty are typically addressed by raising the rate of growth of the economy, but growth is at the core of ecological degradation. Indeed, the only countries that have managed large-scale de-carbonization are those of the Soviet bloc, whose economies collapsed in the 1990s.

The need to solve three problems simultaneously opens up a space for the new economics: when faced with a multitude of problems that are typically solved in contradictory ways, staying within the current system will fail because this system is structured so that each of these is a trade-off of the other. Therefore, it is essential to construct new economic relationships, new policies, and new cultures. People come to understand that new ways of doing things are necessary. What would those new ways be? I believe there is an alternative path for the global North that will reduce unemployment and ecological footprints without raising the rate of output growth. This path will also enhance well-being, the quality of daily life, and the health of communities. It is not primarily a technological solution, although green and clean technologies are indispensible components.

I want to shift what has been almost exclusively a conversation about technology to one that takes into account labor markets, consumer patterns, and growth. The central insight is that achieving sustainability requires new patterns of time use, which in turn alters the macroeconomic path of the economy. More specifically, a trajectory of reductions in working hours both slows the untenable expansion of the economy and facilitates a transition from activities that destroy planetary and personal well-being to those that enhance it. I reject the mainstream assumption of a trade-off between protecting the environment and generating well-being for people. By contrast, I argue for a new way of living that is rich in those elements that will yield true well-being: time affluence, higher levels of self-providing, and social capital.

 

What is the “new economics”? Perhaps it will be useful to begin by contrasting it with two alternative positions, which I will simplistically term optimistic and pessimistic. (I use these broad terms because I will place multiple schools of economic thought into each of these categories.) The optimists are most famously represented by mainstream economists who deny the severity of both ecological degradation and our current economic dysfunction, which means they tend not to see these as significant problems. To the extent that they do recognize problems, their view is that markets and technology will be sufficient to achieve the trifecta (solve the ecological problem, address unemployment in the global North, address poverty in the global South). They believe that natural-resource productivity will grow, perhaps dramatically, thereby leading to dematerialization (a reduction in the amount of materials flow for every dollar of GNP), decarbonization (a reduction in the amount of energy use associated with every dollar of economic output), and increased wealth.

This idea has also been popular in the design and engineering sectors of the sustainability community. Amory Lovins is the most well-known proponent of this position in the United States, where attempts to dematerialize and decarbonize are represented by approaches such as Factor 4, Factor 10, cradle to cradle, zero waste, and biomimicry. Sociologists who take this view call themselves ecological modernizers, given their belief in a business-led, profit-driven greening that they see as the foundation for the next major growth phase of capitalism. These eco-modernizers, mainstream economists, and engineers all argue that if we do it right, the growth process is what will lead us to an ecological solution. Along the way, more jobs will be created because as we grow, jobs trickle down.

I do not have the time for a lengthy discussion of the flaws in this approach, but I do want to note that dematerialization, decarbonization, and the delinking of ecological degradation from output growth in GDP have not been achieved except on a small scale. Some countries and some individual companies that have had significant dematerialization are making progress. The most successful region to date has been of course Western Europe, which according to conventional measures has had limited increases in materials use, particularly fossil-fuel use. In the 1970s a number of measures were initiated to reduce fossil-fuel use and increase efficiency; however, once we account for trade flows and the outsourcing of carbon use through importing carbon-intensive goods from China, the record—even for the vanguard area of ecological modernization—is modest. Dematerialization has not been achieved. There is lower material and energy-intensive use per dollar of output, but the growth in output has been sufficient to cancel this out so that total materials use continues to rise.

In North America, not surprisingly, we’ve done very poorly. Between 1980 and the mid 2000s total material flows increased by 70%, more than the global average. Rising materials use is largely a result of expanding fossil-fuel consumption and construction materials associated with the housing boom of the later part of that period. Given the enormous wealth of our region and our ability to install new technologies, this history is unacceptable. Globally, emissions are still accelerating, materials use continues to rise, and the delinking of materials and economic activity remains mostly an aspiration. Indeed, the energy intensity of the global economy—that is, energy use of GDP—actually grew in 2010. Material inflows increased about 45% over the past 25 years. That’s a disappointing development for people who believe that dematerialization is the answer.

If economists, engineers, eco-modernizers, and sustainability advocates have been overly optimistic about our ability to dematerialize, Marxists have been too pessimistic. They believe in a “treadmill of production” model that says there are inherent dynamics within a market system that make environmental protection almost impossible. These include the imperative of growth and the ability of corporations to capture the state to prevent significant environmental regulation. We could be forgiven at the current moment for thinking that between these two camps the eco-Marxists have it more right than the neoclassicists. This is particularly true from the perspective of the United States. The successes of some small European countries, however, as well as some industries and companies in moving to clean energy and in slowing material flows show that extensive, increased growth in materials and natural resources is not a necessary condition for successful business activity. And Germany may soon prove that even a large country can make this transition. We must wait and see.

According to a second pessimistic paradigm based on neuropsychology, which is newly popular especially in climate circles, humans are hard-wired to avoid responding to risks such as climate change: we can’t cope with abstract formulations; we bracket out risk; we can focus on only one problem at a time. I find this position an unfortunate distraction that is at odds with the great variation in responses to ecological threats across countries, times, and cultures. The British climate-change law of 2007 (which enacted binding targets such as 60% reductions in climate-change emissions by 2050), German feed-in tariffs, Denmark’s windmill sector, the Australian climate law of 2011, and California’s landmark climate-change legislation all suggest that humans’ ability to respond to climate change is affected more by political economy than inherent limitations in our thinking. One hardly need invoke brain science to explain opposition to climate legislation in the United States. A look at the political influence of the fossil-fuel energy sector is sufficient.

In contrast to both the optimists and the pessimists, the new-economy position, although cognizant of the enormity of ecological threats and failures of social justice, is that motivated humans can take on these challenges. New economics sits between the two positions, acknowledging both the pessimism of the Marxists and the optimism of the economists and designers.

In the United States, the new-economy movement is made up of sustainability activists, ethical or “conscious” consumers, low-income inner-city residents whose communities have been delinking from the formal economy over decades, the newly unemployed, and young people involved in consumption sharing and a commons philosophy. It includes groups such as Bioneers (biological pioneers), Transition Towns, the New Economics Institute and its local currency efforts, the Business Alliance for Local Living Economies (BALLE), urban food growing, much of the alternative food movement, the Do-It-Yourself (colloquially called DIY) community, and economic justice groups. It also includes a segment of the information-technology world, which merges sustainability and a commitment to open-source practices in a movement called open-source hardware (the analog to open-source software), which is involved in permaculture, construction, energy generation, and small-scale manufacturing.

There is a parallel set of activities on the consumption side: local and internet-enabled sharing or exchange of clothing, toys, appliances, and other consumer goods. It also includes car and ride sharing, couch surfing, supper and soup collectives, community gardens, landshares, and community supported agriculture (CSA). There is tremendous social innovation around concepts of sharing, commons, barter, informal exchange, neighborhood exchange, re-use, and resale. The E. F. Schumacher Society—now the New Economics Institute—was at the forefront of these activities long before the rest of the country jumped on the bandwagon. Prevailing economic conditions are aiding this transition. People are relatively cash poor in comparison to the boom years, and they are also relatively time rich because unemployment and underemployment are so high. This situation is conducive to the growth of all the practices I mentioned, which tend to be more time consuming than the buy-everything-new-at-the-mall model of goods procurement. Most in this movement share a commitment to local, small-scale, low-impact production and consumption, to expanded motivation for economic activity beyond making money, to enhancing social capital and community, and finally to a rejection of the dominant consumer culture.

 

An economic model for a post-growth society

I will turn now to two key components of how the new economy could function. The first involves a withdrawal of labor from the formal economy and a resulting decline in average annual hours of work per employee. The second is an expansion of the local economy—this is a more widely known approach—including both a Do-It-Yourself production sector and growth in small-scale entrepreneurial activity.

Before the economic downturn the United States had been on a trajectory of rising work hours, with average annual work time per employee increasing 204 hours between 1973 and 2006. That works out to roughly five additional weeks of work per person per year, assuming a 40-hour work week. On a family basis the increase was much larger—between 300 and 500 hours, depending on the ages of the family members—because there was also an increase in the number of earners per family. Longer work schedules propelled growth in GDP but also in carbon emissions and ecological degradation. Overwork created stress, impaired family life, undermined community, and reduced political as well as civic engagement. These are all trends that have provided some of the most widely reported stories about the U.S. economy and the experiences of the population over the past forty years.

Work time is relevant to the new economy because many of its practitioners have only marginal attachment to the formal labor market. They may be downshifters, homesteaders, small-business people, voluntary simplifiers, early retirees, or late entrants into the labor force. The key point is that they are altering patterns of time use, and particularly work time, to reduce their dependence on formal jobs. A rebalancing between hours of work inside and outside the formal sector is necessary for a number of reasons. The magnitude of the unemployment challenge in the United States is such that labor market equilibrium cannot be restored solely by growth in GDP. Growth has become a far less efficient generator of domestic jobs because of outsourcing (when we spend stimulus dollars, the leakage to outside the economy is much greater today than it was in the past), because of a strong propensity to import, and because of labor-displacing technical change.

There’s a good deal of this rebalancing going on in the economy, and we can expect much more as labor-saving technical change diffuses from information technologies into new sectors. This potential is enormous, and it creates a tremendous challenge from the point of view of employment. If productivity growth is increasing rapidly, how can full employment be maintained? It can’t be done by growth alone. We’ve seen that historically. From the last quarter of the nineteenth century to the last quarter of the twentieth century, with the exception of the Depression years, very high levels of employment were achieved in virtually all the industrialized countries. This was on account of both substantial growth in the economy and shorter average hours of work, which went from about 3000 per year to almost half that number.

In my view, the current jobs crisis has been developing over a number of years and is deeper and more structural than one might imagine from an analysis centered only on the financial sector. I think this is a crucial point, and it’s why only regulating banks or fixing the financial sector will not re-establish the unemployment levels of the early 2000s. The United States needs to create roughly 11 million jobs in order to return to the pre-downturn labor situation, a challenge that even an overly optimistic 4% growth rate will not meet. It will take an unacceptable amount of time to generate enough jobs solely via the mechanism of GNP growth. By contrast, re-structuring of the labor market by using work sharing to avoid additional layoffs, hiring new workers on four-day work weeks, instituting voluntary programs to trade income for time in the case of higher-income workers, job sharing, and early retirement can re-balance the labor market. These changes will yield shorter average hours per employee. The alternative is to keep people in the labor market for more years, a counterproductive idea in a time of mass unemployment.

Shorter hours of work also reduce the ecological impact of the economy because time-rich households shift to lower impact forms of transport and consumption. I have just completed new research with Gene Rosa and Kyle Knight of Washington State University using a combination of data across countries and over time. We have included all of the countries of the Organization for Economic Co-operation and Development (OECD) from 1970 to the present. Holding constant a number of other variables, we find that countries with longer working hours have larger ecological and carbon footprints. Countries with shorter average hours of work have smaller eco- and carbon footprints. There are two reasons that shorter hours reduce eco-impact: one is that households shift their consumption patterns when family members work fewer hours and are less time-stressed; the other is that less of our productivity growth is taken as increases in output. The latter, the “scale” effect, is more powerful, but both contribute to lower emissions and less degradation.

An important aspect of the path I’m proposing is that most people are not being asked to give up income they already have unless they prefer to do so. As a rule people hate giving up income involuntarily. We know this from a variety of behavioral economics experiments, and data from new surveys of public sector workers who were furloughed after the downturn confirm this finding; however, with the policies I am proposing, there is no involuntary reduction in incomes. Consider the proposal to hire new employees on a four-day workweek. They would start at lower salaries than they might earn if they worked a five-day workweek. Furthermore, if we build in the principle of using productivity growth to fund reductions in work time (rather than to finance bankers’ lavish lifestyles, which is where a very large portion of national productivity growth has been going over the past couple of decades), workers will experience stable incomes with rising leisure time. There is now good evidence from behavioral economics as well as studies of happiness that people are far less attached to income they haven’t yet gotten than to income they already have, so policies that give time off rather than more income will be more popular. In addition, happiness studies find that for those outside of poverty additional time off the job yields more well-being than additional income.

The second important consequence of shorter hours is that people can use the time freed up from formal jobs to meet needs through self-providing (or making and doing). DIY (Do-it-yourself) allows people to increase their consumption, reduce dependence on cash income, become more self-reliant, build skills, and exercise creativity. Following the philosopher Frithjof Bergmann, I use his term “high tech self-providing” for this kind of activity.

In the United States high tech self-providing has recently become popular, especially since the 2008 economic collapse. Examples include growing food, raising livestock and poultry, beekeeping, small-scale off-the-grid energy generation, eco-friendly home construction, and the manufacture of clothing, arts, crafts, and small household items. What are the economics of this type of small-scale household activity?

Mainstream economists have traditionally argued that people should specialize in one activity in the market, earn money from it, and purchase what they need and want. This will allow them to do what they are best at. That’s the theory of comparative advantage, which you may have heard about in the context of international trade, applied to households. (We owe that theory to Gary Becker.) I believe that we have reached the point at which further specialization does not make sense and that diversification of activities and income streams is the wiser way to go for many households. If you happen to be a person like me, who is a tenured professor, or Becker, for that matter, specialization may still be optimal because we are specialized but have no job uncertainty. For most people, however, the labor market has become a more uncertain place, and the likelihood of losing one’s job or having one’s pay reduced or working conditions degraded is much greater now than it was 30 or 40 years ago. That’s why diversification makes sense in a time such as the one we are living through. Not only is the future more uncertain, there’s also a high likelihood of catastrophic events that can wreak havoc on highly centralized, single-purpose systems or lifestyles. The instability of both the climate and the economy means that reliance on the market is increasingly risky. Being able to meet one’s needs, even in the event of market collapse and climate catastrophes, is a smart strategy. Doing so on a community level is even smarter than on an individual level. Initiatives such as Transition Towns are directed to this type of self-reliance.

In addition to its insurance function, there are other reasons to think that a rebalancing between the market and the self-providing, or informal, sector makes sense. One is that the productivity potential of hours worked outside the market has increased dramatically. This is not entirely your grandmother’s DIY, or at least most of it isn’t. If self-providing meant going back to the technologies and ways of doing things from the nineteenth century, mainstream economists would be right. But self-providing now avails itself of new labor-and-resource-saving technologies.

The idea of high tech self-providing was developed by Frithjof Bergman, an assistant professor of philosophy at Princeton and a great devoté of Henry David Thoreau. Wanting to replicate what Thoreau had done, he took a two-year leave of absence from Princeton and moved into a cabin in southern New Hampshire. He split his own wood and lived as self-reliantly as he could. But nature wasn’t kind, and Bergman was forced to endure a horrible, cold winter. It turned out to be a backbreaking, mind-numbing, terrible experience for him. He left before the two years were over, and the lesson he learned is that self-providing is great but only in ways that minimize the human labor of drudgery.

This is where technology fits in. Self-reliance doesn’t mean advocating going back to chopping one’s own wood, unless one enjoys chopping wood. Bergman went on to discover and develop a series of new products and technologies that allow people to meet their basic needs with minimal human labor. He worked with engineers and designers to come up with small-scale alternatives in the areas of food, energy, and transport. What he and others recognized is that newly available technology, knowledge, and web-based innovations are enhancing the productivity of labor at a household and community level. These innovations include living wall gardens, hypercars, micro-generators, and permaculture. This is the second stage of a revolution that began in the realms of information, software, and culture. There is already a vibrant peer-production model that has developed high-value products such as Wikipedia, Linux, Firefox, and other open-source software programs and products through this informal, extra-market process. Importantly, none of these were developed in the market for profit. Self-production in music, video, advertising, and writing has exploded. There’s a whole new world of online production. People are learning new skills, they’re enjoying the opportunity to be creative, and they’re producing real value to be used and shared by others.

This model is interesting, not just for efficiency reasons but because it is built on what I believe will be foundational characteristics of the new economy—collaboration and cooperation. Peer production, also called collaborative production, does not rely mainly on self-interest, at least in any narrow understanding of the word. People are not motivated to contribute to Wikipedia or Linux or Firefox solely to make money—in many cases there’s no money involved. They contribute for a variety of reasons, including to feel useful, to build their reputation, to be creative, and to be connected with others. This new production paradigm, propelled by other-directed and collaborative activity, is outcompeting private initiatives in the world of software and information. The Department of Defense is using it to build software. It has rapidly spread across the world of information and software. I believe it will increasingly outdo private production in the off-line world as well. Financial self-interest as a primary motivator of production will come to be seen as anachronistic and destructive.

The collaborative initiatives in the consumer realm that I discussed earlier (e.g., couch-surfing, ride-sharing) are examples of the expansion of this peer-production part of the new economy, from the internet to the material, or consumption, sector. The high tech self-providing path extends the model to the production side—to making food, building shelter, creating power, making clothing, building small manufactured goods. This has been called the “open-source hardware” movement. The point is that the model that originally emerged in information technology and culture is no longer confined to those sectors. What is important about the new self-providing is that it has high productivity because it is knowledge intensive, employing high levels of know-how, mainly in computers and understanding of ecological systems. By increasing the knowledge and digital components of these practices, the productivity of human labor increases dramatically.

This brings us back to Bergman’s critique: self-providing does not rely on the low-productivity labor of splitting wood but rather on the high-productivity labor of using smart machines to create houses or bicycles. Examples include the use of permaculture principles in food provisioning—such as the installation of living wall gardens, which Bergman utilized in poor neighborhoods in Detroit and New York—and small-scale energy generation. While some might wonder if Schumacher would have approved of the high-tech aspect of this vision, I believe the answer is yes. After all, his concern was appropriate technology, and the digital revolution has changed what that means in exhilarating and liberating ways.

There’s another reason Schumacher would be pleased. The model of retrieving labor time from the market and putting it to work at the household and community levels to self-provide also makes sense because the economics of scale have changed. What computerization and the development of the web have done is make small-scale production much more efficient, particularly if it is heavily networked. The rise of information technology has transformed micro-enterprise from a romantic throwback into a smart twenty-first century institutional form. Indeed, the massive command and control entities that we call corporations no longer possess the economic advantages they once did. Small companies are where the dynamism and employment growth are located. If we extend this insight further, we can see that there are new possibilities at the household and local levels for engaging in high-productivity economic activity—namely, a synthesis of the pre-modern household form and modern technology. By the former I have in mind peasant households. Peasants did not work for others; they had diverse skills, activities, and income streams; and they actively managed risk through that diversity. Because they were poor, people don’t like the association, but it’s historically accurate. Today we have a kind of postindustrial peasant model of a small enterprise economy.

A key advantage of self-providing activities is that they generally have low footprints and therefore are central contributors to reducing ecological impact.  Furthermore, as people learn how to make things, they develop skills and affinities for particular pursuits and products, which they then turn into businesses and careers. Self-providing becomes one mechanism for expanding a sector of green businesses, with a variety of ownership forms—cooperatives, partnerships, B-corps—which become the basis of a new, sustainable economy. High tech self-providing is a transitional strategy for an exit from the highly destructive capitalist firms that now dominate the economy. Of course, this is a complex process with a difficult politics. I have offered its economic outlines and the first steps of a transition that can lead us to the new economy and put in place the conditions that will allow us to solve the three challenges of the trifecta with which I began: restore the earth, provide work and livelihood, and give ecological space to the nations of the global South.

What I find most exciting about this transition is that far from being mainly a paper blueprint, it is a living, breathing, expanding, successful movement of people who are forging a new economy from the ground up. And this brings us back to Occupy, which is the latest, most spectacular, and most magnetic example of the new economics we have today. By insisting on deep democracy, ecological practice, and radical egalitarianism, this movement is modeling key features of what the new economy can, and I believe will, be. Occupy has catapulted us out of the spiral of corruption and despair that has been dragging the country down. For this we are grateful, hopeful, and excited about its role in propelling us forward to the new economy.

 

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Note: Nearly all sources for this lecture can be found in Plenitude: The New Economics of True Wealth (The Penguin Press, 2010).

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Juliet Schor studies trends in working time and leisure, consumerism, the relationship between work and family, women's issues, and economic justice. She received her undergraduate degree from Wesleyan University and her Ph.D. in Economics from the University of Massachusetts, Amherst, and has taught at Williams College, Barnard, Harvard (where she was Assistant Professor of Economics for seventeen years), and currently Boston College, where she is Professor of Sociology. In 2006 she was awarded the Leontief Prize by the Global Development and Environment Institute.

Schor is the author of The Overworked American: The Unexpected Decline of Leisure (1993); The Overspent American: Why We Want What We Don't Need (1999); Born to Buy: The Commercialized Child and the New Consumer Culture (2005); and Plenitude: The New Economics of True Wealth (2010).

She is co-editor or co-author of The Golden Age of Capitalism: Reinterpreting the Postwar Experience (1992); Do Americans Shop Too Much? (2000); The Consumer Society Reader (2000); and Sustainable Planet: Solutions for the 21st Century (2003).

 

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Schumacher Center for a New Economics and Juliet Schor