Local Stable Economy

A Stable Economy and Localisation – Towards a Deep Prosperity

The savagery of the war for maximizing profits and growing single entity private ownership, inflicts significant collateral damage and regresses our society.
Anonymous – Maleny circa 2014

A school of economists and social scientists who advocate for the development of a stable-state economy exists today. And, they are active and seriously credible in their research endeavours. The main purpose of the stable-state economy is to avoid the consequences of the dominant limitless-growth economic model. Which is currently spiralling towards ecological disaster boundaries.

From our study of non-linear dynamic systems we know that as boundaries and limits are  approached, erratic behaviour within the system can occur. Such behaviour in our economy could be contributing to some of the economic market failures, we see everyday, though observable symptoms such as; poverty, business cycles, widening wealth gap, depletion of ecosystem services and reducing social amenity. Signs of major erratic behaviours include global financial crises, global warming, and war.

Marjorie Kelly in her book Owning our Future identifies, examines and speaks about extractive economies and generative economies. She describes extractive ownership as having a financial purpose, that being to extract maximum profit. Generative ownership is described as having a living purpose, this being the creation of conditions for sustaining life. Local ownership, in particular social enterprises and cooperatives, offer greater participation in ownership for pursuing living purposes.

A mathematical method for modelling and testing cooperation, and conversely contests, is called Game Theory. One of the model patterns used is based on the story of the Stage Hunt. The story is that members of a tribe go off to hunt a stag, the more hunters cooperating the better the probability of success. A stag can provide ample food for the tribe.

The challenge of a successful hunt is to not lose members who randomly chose to chase individual temptations such as leaving to hunt a nearby hare, as opposed to individual sacrifice of continuing to cooperate to achieve the greater collective goal. So, in our local communities how much prosperity can we achieve as a cooperative group, as opposed to individuals defecting to chase personal trophies?

Maslow’s hierarchy of human needs, identifies causes of motivation. Besides the lower level needs of survival, including water and food, higher level needs include belonging. Hence, we gain a better understanding of how the effect of relative payoffs of contests (Games) can determine the propensity to cooperate or defect! Though these insights we are better able to test complex scenarios.

Tim Jackson, in his book Prosperity Without Growth has three key suggestions to contribute towards achieving a stable and sustainable economy. Firstly, reduce materials throughput by shifting to significantly increased trading with service-based activities. Of course, many services will be from local providers, such as, having your house cleaned, being massaged, vocational and recreational lessons, listening to local live music or live theatre, etc.

Secondly, Jackson suggests shifting investment to ecological assets; these could include soil health, biodiversity, self-maintaining waterways, fish breeding habitats, renewable energy, etc. And thirdly, use working time policy as a stabilizing mechanism for maximizing employment. Interestingly, a concept of near full-employment is described and proposed by the Centre of Full Employment and Equity (CofFEE) at the University of Newcastle. This proposal uses flexible methods of employment as the main mechanism.

If we can develop a stable localised and deeply prosperous economy, which does not rely on an ever expanding GDP as a driver of polar prosperity (averaged pseudo well-being), then we are likely to be immersed in a civil, fair, cooperative and progressive society. Much of the solution for enabling this shift can be developed by maximizing local ownership of economic enterprises with generative living purpose.

Jackson, T. (2009) Prosperity Without Growth: Economics for a Finite Planet, Earthscan, London
Kelly, M. (2012) Owning Our Future: The Emerging Ownership Revolution, Berrett-Koehler, San Francisco

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