How does the Economy for the Common Good look like?

Aug 8, 2017 by

by Katharina Salomon and Lea Hackl

What is the role of business in society? What should be the goal of the economy? On the 5th day of the AEMS ´17, Christian Felber addressed exactly those crucial questions. In the lecture, the political activist and alternative economist gave us an insight into the theory and practice of the “Economy for the Common Good” (ECG) – which he initiated with a dozen companies in 2010. It is a response to the fundamental problems of capitalism e.g. inequality, unemployment, poverty, exclusion, environmental degradation and tries to re-embed the economy into human societies and the ecosphere. The focus of the ECG is that the purpose of the economy should be meeting our human needs. To achieve this, organizations are being evaluated by the “Common Good Balance Sheet” which is based on their relationship with suppliers, investors, employees, customers society and the environment based on numerous factors ​​such as human dignity, solidarity or ecological sustainability. The outcome determines for example the level of government and consumer support investments etc.  Additional measures proposed are income caps, limitations on private wealth, the creation of the “Bank for the Common Good” and a shift from the material to an immaterial focus supported for instance by using the Common Good Index to measure national development.

Goals vs. Means

One key aspect of Felber’s criticism on the current economic system is the mix-up of goals and means, which he states is anti-liberal. The accumulation and maximization of money and profits (which are generally measured by the GDP) is the main goal of capitalism. However, according to Felber, money should be thought of as a means or a tool in order to achieve the “real goal” of society, which is general welfare. He emphasizes his statement by reading out parts of various constitutions and mentioning examples from South America where this goal plays a significant role, like in the Bavarian and Ecuadorian constitution.

In Ancient Greece, Aristotle already differentiated two types of economies, which he called oikonomia and chrematistika. Oikonomia describes an economy where money is a means to serve the goal of a common good. Chrematistika, on the other hand is a term used for an economy in which money is seen as an end in itself and therefore antinatural.

Cooperation vs. Competition

Another main factor is that our current system enforces greed and egoistic thinking. Competition is being thought of as necessary and the most effective method for businesses. In comparison, the Economy of the Common Good suggests cooperation as an alternative to motivate people and promotes positives values such as sustainability, justice, generosity, etc. However, I am wondering if wanting to have more than your neighbour, is also part of the human psyche and therefore naturally creating a dynamic of competition.

But is this model realistic or just wishful thinking? Is only the economic model of neoliberalism to blame for the mentioned problems?

Felber’s observations about the current state of the planet and the need of change of the economic system are clear and understandable. He illustrates the main negative aspects of the current system. However, his assumptions of the human psyche and behavior seem partly far-fetched.