In this episode of Collective Choices we talk about the BIG change that everything else depends on.
Dr. Jennifer Hinton is an ecological economist, sustainability researcher, educator and book author. She has worked with the Stockholm Resilience Centre, Lund University, Stockholm University and The Schumacher Institute. Her research focuses on the not-for-profit economic model.
We talk about:
- why we urgently need a new economic model as a way forward for society
- thinking outside the box when you're in the box
- the influence of the cold war trauma on the global economy
- capitalism vs communism, the false choice and the common mechanism
- why democracy is being rejected
- what to do with profit
- why are people locked in the current view, supporting a system that hurts them
- the myth of the free market
- the common economy and the elite economy
- Buddhist economics
- the role of fear
- the cost of wealth for the rest of us
- successful not-for-profit companies
- why growth is not that great and shrinking is good
- how to make the transition
- changing the meaning of success
- gaining value and meaningfulness
- will the young win this time?
- carbon coins
- the purpose economy
- limits to profit and pay gaps
Dr. Jennifer Hinton's website:
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You're listening to Collective Choices, hello and welcome! I am Doru Oprisan.
Today's topic is an essential one for a sustainable future: the economy.
So, this is kind of the episode about everything.
Dr. Jennifer Hinton is an ecological economist, sustainability researcher, educator and book author. She has worked with the Stockholm Resilience Centre, with Lund University, Stockholm University and The Schumacher Institute to name a few.
Hi and welcome!
Hi Doru! Thank you for having me!
My pleasure. Right now, the economy is like this virtual reality universe we are living in. We have our glasses on and we can't see the real world outside. We think this economic model that we have right now, this capitalist model is like a force of nature and it's been here since forever and we cannot do anything to change it. That's how we see things right now. Because we are, you know, in the middle of it. But it's not really true. We have only recently invented this system and I think we can do better than this. I think we should invent something better. And we should do this very soon because right now this model is destroying everything from nature to democracy and trust in our whole society. And society is so much more than economy. Economy is just like a small mechanism inside of society. Society means everything, the way we work together, this is like the basis of it: cooperation. It’s the most important thing and capitalism kind of destroys that, it is working against cooperation. So, I think that's one of the essential reasons to change this model and think about something new. So, that's the first question: Why aren't we inventing something better?
Oh, that's a good question. That's a big question. I mean, my short answer is: I am. And actually quite a few people are. An increasing number of people are working on developing new models, alternatives to capitalism and it's not just in theory. There are communities who are trying to, you know, experiment and practice. There’s ecovillages and other intentional communities that are sometimes out of the city in the countryside. But sometimes these communities even form within big cities. So for instance, when i lived in Athens, Greece, I helped start The Transition Town Athens, this transition initiative where we were trying to experiment with alternative forms of exchange. There were people doing time banks, which is where you exchange services or not just services but also goods. Maybe I've got a garden and I grow food and you're a masseuse and so we can like be part of this time bank and exchange our goods and services in the currency of time rather than with money. So there's all kinds of experiments happening all over the world right now. So that's sort of the hopeful part of it, but then, of course, all of this is happening on the fringes.
Yeah. And sort of outside of the mainstream and so, yeah, I think your question really taps into Why isn't the mainstream dealing with this? Why don't most people know about these experiments and these alternative models and theories that we've been developing? Part of it is like, what you say, this virtual reality. I like that metaphor. I often also refer to like the metaphor of us being fish and we don't see the water we swim in. We just take for franted that it's there. We don't really see it or understand it. And another layer there that i often talk about in my work is something I call Cold War Trauma. And it's the idea that there were a few generations that were brought up in the era of the Cold War here in the West. We were taught that, look, you get capitalism or you get Stalin and Mao and these horrible regimes, right? So, the only alternative to capitalism is like a really authoritarian dictatorship with a centrally planned state economy and so capitalism is obviously better than that. And that myth that there's only two ways of organizing the economy. I think it has really held us back collectively from exploring alternatives.
I've heard that so many times that: You don't like capitalism, so you want communism. That's really a limited view. I've been through communism - it's not pretty, we don't want that. Capitalism is not pretty either and it’s doing a lots of a bad things at the moment to our society and our planet. There has to be something else. I'm sure we can invent something else. And actually I've been thinking and realizing that capitalism and communism have some things in common. The most important thing they have in common is the accumulation of power. Through different means. In communism they accumulate power through, you know, the dictatorship kind of thing; with capitalism they accumulate power through wealth. But you end up in the same place: some rich people at the top end up controlling everybody else. So, what's the difference? I mean, there's not much difference, honestly, when you have so much inequality. Because the inequality was there in communism, and it's here in capitalism. So, what's another alternative?
Yeah. And just to like, add a little bit of clarification there. One of the things that I've learned in studying these topics is to be really clear, because there are a lot of Marxist scholars who still talk about communism. But they say, you know, those regimes that tried to enact communism in for instance, the Soviet Union and China, weren't actually communism. The you know, these were essentially state planned economies and that's not the only form of communism or that's not real communism. So, I just wanted to be clear there. But I think there are so many different alternatives on this spectrum of how we organize the economy. So, it can be really distributed in markets. But then in the capitalist economy which I call the for-profit economy, because it's mostly made up of for-profit firms that are all... the reason that they're set up, their key purpose, which is embedded in their legal form, is to make money for their investors. And so in theory, capitalism is supposed to be this distributed market and the competition between all these private interests benefits everybody, right? Because then we all get the services and goods we want, everybody gets a job, everything's ok, the investors get rich, so everybody's happy and healthy, right? We have money to invest in our environmental problems, so that's sort of the myth that keeps capitalism propped up. But what really happens is this profit motive, that's driving all of these companies, you know. They're set up to make money for their investors, and the best way to do that is to gain advantages through exploiting workers, exploiting the environment. That's a lot cheaper and easier than doing things efficiently. And so we end up in a situation where, yeah, the market is captured by just a handful of companies, because the bigger you are the more profit you can make, so you start buying up and merging with other companies and like you mentioned earlier, this incredible concentration of wealth and power. But that's not the only kind of market we can have. That doesn't mean that markets themselves are bad, that means that the for-profit market economy doesn't work. But there are other kinds of businesses. So, in my work I've been looking at not-for-profit businesses. And these are businesses that sell goods and services just like any business, but there are no private owners to receive the surplus or the profit. So, the main purpose is to benefit society, whether that's through helping people who are facing homelessness or protecting a local river or forest, whatever that social purpose is, all of the profit or the extra money they make in the year goes into that social benefit purpose, rather than making a handful of private investors rich. That's sounds like a great business model, right? And I've found so many examples of these businesses that are already operating around the world today. For instance a cinema that's owned by an association, a hotel that's owned by a foundation that helps people facing poverty. So, all of these sorts of businesses. If we can imagine an entire market made up of only not-for-profit businesses, were all of the surplus gets recirculated back to the people and the places that need it most, then we could have a really balanced healthy, socially, beneficial market economy, and that's a great alternative to capitalism and the state planned economy.
Sounds really obvious. Why aren't we doing that already?
Yeah, It's a good question and I'm so happy that it sounds so obvious. Actually I get that reaction a lot when I present my work. Like that's just common sense, that seems so obvious. Why haven't we ended up there already? And I think, you know, that's sort of... then you have to go look at the history of how capitalism sort of took over the world and that mythology. I think one of the main reasons that we haven't moved on from capitalism yet is this mythology. That even though it doesn't pan out in the actual evidence of what's happening in the world, you know, we have increasing rates of inequality, economic growth only makes the rich richer and leaves the poor in poverty and our environmental problems are just getting worse, so that myth that I talked about earlier, where we generate so much wealth through the market and we can invest it in environmental solutions, that's clearly not happening. Yet we're still very much collectively attached to that myth. And because of the cold war trauma, so many people are afraid to jump out of capitalism, fearing that the only alternative is much worse.
But I do think that at the same time right now we are seeing a clear move away from democracy. It's an intentional move, it seems. Because people are all over the world are voting for populists, for wanna be dictators and things like that because they are disappointed with the democratic system. But not the democracy itself, rather the inequality that came packaged with it, in the form of capitalism, free market and everything else.
Yeah. And I wonder if there's even that much thought that goes into it. I think a lot of it is just more and more people are getting pushed out of their comfort zone because our economy just doesn't working for them anymore. In fact it's working against them right now. Wages have stagnated, now we have this inflation crisis, the cost of living crisis, so people are getting pushed out of their comfort zone, out of the middle class into lower and lower income brackets. Um, and they know that we need radical change. Most people recognize this, right? But they don't know what kind of change and on the political spectrum, most political parties aren't offering the kind of systemic change that we need for a healthy sustainable society. So the ones that are offering the most radical change tend to be the far right populists, sort of leaning towards authoritarianism and dictatorship and they are offering a narrative of radical change. And so, a lot of people just hear that narrative. Like, oh great, that's the most change we're going to get, we're going to vote for them. So that's my analysis. I have no research on this, I have to say that. This is just me sitting, you know, watching the news and talking to people.
I would want to go back for a short while to your example with the not-for-profit concept because it really resembles what you said in the beginning with a time bank, with the type of economy that actually we used to have long before capitalism. So we had that, we lost it and now we have to reinvent it on a much bigger scale to have that functioning in a modern society with money traveling all over the world. How do we do that?
Yeah. And so what you're talking about is is often referred to as sort of the gift economy that, you know, traditionally most communities, and, you know, if you go back a long time ago, all communities were sort of based on, this gift economy and like, mutual exchange, but that also can only happen in in communities that are small enough to hold everybody accountable. Like, oh, Doru still owes me some eggs and I can hold him accountable for that in our little community. Now that things have gotten so much bigger and we have become so dependent on money and markets, like i mentioned earlier, there are some communities that are sort of going back to more gift economy exchanges, so like these eco villages and stuff, but what do the rest of us do? And how do we transition from here to more of that gift economy and non-market exchange, what happens to the market? And that's where my research really focuses, is that this not for profit market economy idea provides sort of a stepping stone or a bridge to where, you know, we can today start transitioning, our for-profit economy, in a not-for-profit direction, helping for-profit economies change their legal structure and their ownership, helping seed fund new, not-for-profit enterprises, and there's a lot that can happen there to make this transition happen. And then as we make that transition, we can also start to shrink our market activity, which is very necessary for dealing with our environmental crisis. Now, we are over consuming on a global level and, of course, richer communities are doing more of that over consumption and there are still some very poor communities who need to increase their consumption. So on a global level, we are over consuming, so the global economy has to shrink and rich economies, rich communities economies have to shrink. And that not-for-profit transition would allow for that. Because all of the surplus keeps getting back to where it's needed most, rather than getting captured in the hands of a few rich people who don't need it, right? So that would allow us to sort of shrink the size of the market in terms of GDP and all of that. But also in our daily lives. The market is sort of taken over our lives, like you say. Now, if I want food, I have to go buy it everywhere. There's nobody in my little community who's just going to give me food here in Stockholm, you know. By shrinking the size of the economy in this not-for-profit transition, we can also make room for more of that gift economy stuff, which is not only nice because you don't have to depend on money so much, but it also builds community connection, community resilience, which is something we really need given the crises that we're going through now and that are only going to get worse in the coming years and decades.
I think we're not actually going to shrink the economy, we're going to grow it by opting for this non-profit framework because, let me extend my idea, there's a lot of money that goes out of the economy right now and goes into the pockets of a few, and by giving away this idea of profit, that amount of money will go back to the economy. That's the whole idea. So they will have to use it for something, give it to charity, do some ecological projects, do something else. So, in a way, we'll have more money than we have now, available to us ordinary people in the ordinary society.
Yeah, and okay, a couple of points here. The first one is that when I say we need to shrink the economy, I'm talking about overall production on the global level, we're just producing and consuming too much. So that has to go down because all of that production and consumption requires energy and resources and the planet just can't handle that anymore. So we have to shrink the overall evels of consumption and production, but within that sort of global economy you're picking up on something really important. And in my first book that i co-authored, it's called How On Earth: Flourishing In A Not-For-Profit World By 2050, we sort of talk about how within that global economy, there's kind of two different economies. There's the common economy that we're all part of and then there's this elite economy that has formed over time. That is, you know, where all of the profit of the common economy gets siphoned out to the hands of just a few rich investors who don't, again, need that extra money and that's formed sort of a whole new elite economy with luxury hotels and yachts, super yachts, multiple mansions. And so it's not that that money has just been sucked out and it's not in the economy anymore, it's created this whole new elite economy that you and I can't even access, you know, people there have their whole security teams and limousines. They're sort of separate from our society now. And, like you say, bringing that elite economy, sort of dissipating it, sucking all of that wealth back into the common economy, where it's very much needed, is necessary, but we have to do that while we're also shrinking overall production and consumption. So it's a challenge. But it also, if you think about it, if we stop producing all of those yachts and private jets, and all of that, that takes a lot of the consumption out. I mean, it's a big step in the right direction, right?
I think that, from what you describe, this not-for-profit economy would be actually the most simple form of change we could implement right now. Because as you mentioned, the economy still functions the same as it does today, you only take away the profit. But that doesn't mean that people don't get paid. People still have jobs, there are companies, things get produced and bought, so you get your salary and it's not a bad salary, because there's no reason for it to be bad if there's no greedy man at the top, you know. So everything would still work basically like today, except for the people at the very, very top. That's the only difference. So it seems easy to implement, right?
Yeah, and it would actually be better for most of us than today because like you say there's no reason for wage stagnation or for exploitation of workers and exploitation of local communities, you know, that's happening now, when a big corporation, for instance, goes to a small town or a village and just starts taking our all of their water, and all of these sorts of things, there's no reason for that to happen. There's no built-in incentive in a not-for-profit economy for that to happen like there is in the for-profit economy. So it would just be so much healthier and more balanced. And again, I mean, because it's a market, it keeps things distributed and decentralized, which comes back to your first question about, you know, how both capitalism and the state planned economy tend to concentrate power in the hands of a few and that's sort of why I don't want to go to a state planned economy. I would prefer a market where things stay distributed and decentralized and we can sort of build trust in that system in a way that's not really possible in the other two systems.
I think this would be a good moment to address the myth of the self-regulating free market: so they will tell you that there is no need for such radical change now, because we have a free market and it self regulates. Well, it doesn't seem to self regulate in a way that is helping us.
Exactly. And the self-regulating market self-regulates itself to do exactly what it set up to do, right? The self regulating for-profit market tends to produce the outcomes that we see with the handful private owners taking almost all of the wealth and using that wealth, then, to change policies and tax regulations in the direction that causes them to be even more wealthy, right? So then we see this phenomenal called political capture where they're actually lobbying against taxes that would be costly for them, lobbying for subsidies, that will give them more money from government, you know, public money. Yeah, taxpayers money basically. So that's how that self-regulation works in a for-profit market. And then I just also wanted to be clear that in a not-for-profit economy, in sort of this ideal sustainable not-for-profit market economy that I'm talking about that, there would be a high level of regulation from the government. It has to be democratic, so there has to be a lot of checks and balances on. We want to make sure that it's environmentally sustainable. So there will be caps on using resources and that sort of thing. So those are where regulations are are very important for constraining the market
And costs for using those resources, because right now nobody pays for using a resource like water or like, I don't know, so many of the researches they are using in the economy are not paid for.
I wanted to mention something that I think helps in keeping the system going: it's the fact that you have the elite and you have the rest of us and you have the very poor and the very poor dream of becoming rich, instead of dreaming of obliterating the system that is keeping them poor. Them dreaming of becoming rich keeps the system going.
Yeah. Which is another part of that myth, right? Is that if you work hard enough, you can become like Elon Musk or Jeff Bezos or any of these guys. Bill Gates, he built a computer in his garage or whatever, right? So if he can do it, you can do it, I can do it. Which I think is a really destructive myth on so many levels. One is for the reason that you say, that it keeps capitalism very much entrenched, because everybody sort of keeps pursuing that myth of I'm going to get rich one day or even if I can't be like Jeff Bezos, at least I can get richer. I can work my way up in this middle class layer of the cake, let's say.
But the other very destructive side of that myth, is that it blames poor people for being poor, right? It's like, if you're rich, then it's because you're so smart and hard-working, if you're poor, it's because you're not smart enough and you're not hard working enough, you're lazy. And I think that is also very evident in society, the way that we treat poor people and and people facing homelessness. It's very sad.
It's not even a competition here. Because, you know, once you have a capital, once you have money, you make more money so much easier. And when you don't have, it's so much harder, no matter how hard you work. There are people who work 10 times more than Elon Musk and they will not get anywhere.
Way more, way more. And Elon Musk inherited a lot of money. Trump inherited a lot of money. They weren't the ones who created this wealth. And a lot of the people who were like at the beginning of quote unquote, creating that wealth, did it on the backs of people who were working for them. So there's almost always a lot of exploitation of labor, exploitation of nature involved in that creation of wealth.
And unfair advantages of all kinds.
Then exactly, then that creates unfair advantages. Like you say money makes more money. So if you already have money, it's so much easier to make more money and then that comes at the cost of everybody else around us. And now that we're on a very full and finite planet with limited, like increasingly limited resources, every bit of wealth that gets accumulated by these rich people pushes everybody else down even more.
And you know, the greater this inequality gets, we get pushed towards conflicts. It's absolutely logical.
Exactly. Which is what we're seeing now, we're seeing a lot of the, you know, hens have come home to roost, as we say. All of this wealth accumulation in the hands of a few and like you say, the power that comes with that is starting to really create social unrest and we're seeing that in sort of demonstrations and riots all around the place. And I think we're just going to keep seeing more of that as inequality increases and people feel powerless.
We need to talk also a bit about sufficiency, because there are no people who can be happy with what they have currently. We all want more, we are designed to want more and maybe that was helpful, you know, in the Stone Age. But now that's creating a lot of problems because we are in this endless race against one another and we are in this constant state of competition. Even if we are comfortably in the middle class today, we still strive for more, because, I believe, we don't have any kind of guarantee that will stay there. And that we will not be outpaced by the others or by some bad luck we'll become poor he next day. So that fear pushes us to to keep wanting more and that pushes everything else, this competition all over the world. How do we get out of that?
Yeah, and I think those are a couple of the reasons why we can't achieve sufficiency, which we need to achieve for environmental sustainability, to address the climate crisis, and all of these things, we have to get back to a level of sufficiency, like material sufficiency. I have enough material stuff. The ways I want to grow in my life are to learn more, you know, get better at playing music and these other things, right, to become a better person. But to have that sufficiency, that ethic of sufficiency in the for-profit economy or the capitalist economy is basically impossible for the reasons that you're saying. I see it even in myself and those around me who have an internal ethic of sufficiency, but it's like the ruthlessness and the fear involved with living in a for-profit economy, where you can easily slip through the cracks just like you said, you don't know what's going to happen tomorrow and so there's this feeling like the need to create a buffer for yourself to accumulate so that you feel safe. What's interesting about it is, and then there's also this dimension of comparing yourself to your peers. So the higher up you go in the layers of the cake, from middle class to upper middle income to high income, right, once you're in that high income, you're surrounded by other high income people and that's who you're comparing yourself to. And you might even see yourself as poor compared to your peers, even if you're a millionaire. There was an interesting survey. I think it was conducted by Credit Swiss maybe like 10 years ago. And they did a survey of millionaires, I think in the U.S., people who were making 25 million dollars a year, or they had more than 25 million dollars, I can't remember. Anyways, multi-millionaires. And asked them: Do you feel financially secure? And overwhelmingly, they said No. You would think there's no way that multi-millionaires in the US feel insecure, but they do and they said, you know, Yeah, the people around me make even more than me, so it's always a matter of Can I keep up with them? Also, they have bought themselves into an ever more expensive lifestyle, you know. So you might be making 25 million dollars a year, but if you have to maintain five homes and two yachts and a private jet, that's maybe not enough, you know. So that's another thing and then they always felt as well, that something might happen tomorrow and wipe them out.
I feel there's a certain violence in the current economic model and everybody feels that, even the millionaires, when actually we should talk about the happiness curve. Once you reach sufficiency, you kind of reached the maximum level of happiness. Maybe a bit above sufficiency. There have have been some papers that show that people are happy when they are there. If you increase wealth above that, there's no increase in happiness anymore. And going back to what we were talking earlier, maybe we should strive for that sufficiency, because if we look around, there are plenty of resources for everybody on Earth to have a comfortable life, a sufficient life. We have the resources to do that if we distribute things evenly and if we look after one another. Something that the current system doesn't do.
Yes, and doesn't even allow for. It pushes us to do the exact opposite. Like we just mentioned, right, to start accumulating for ourselves, to try to protect ourselves, because it's such a ruthless system that we're stuck in. So, that's definitely, you asked earlier, how can we get to sufficiency? I mean, we have, in my mind, from my research, we have to get away from the for-profit economy. And like I said before, that's my synonym for capitalism, so that's the exact same thing. So we have to get away from the for-profit economy. And how do we do that? Then this not-for-profit economy offers this transition pathway, I think better than any other model. I'm biased because I helped develop it, right? But better than any other model that that I've seen. And not to say that other models can't be mixed in there, like gift based communities can definitely be part of a not-for-profit economy or coexist alongside. That's the other thing: the for-profit economy, sort of pushes, all of those out, you know, it's pushed away indigenous economies. It's tried to eat those up because it has this expansionary tendency to make more profit you constantly have to be expanding into quote unquote, new markets.
Exactly. It has this unrealistic view of always producing more profit and anytime that stops happening, Oh, we have an economic crisis.
It's a crisis! Yeah, Exactly.
Who designed this system so poorly?
And all of the workers and everybody at the bottom are the ones who have to pay for it. The billionaires are making more money than ever right now, while the rest of us are facing a cost of living crisis. So yeah, this expansionary tendency, all of these other, they're just built in tendencies of the for-profit economy, that do not let us achieve that and do not allow for these other experiments to exist very easily. So this not-for-profit transition doesn't mean that everything has to be part of a not-for-profit economy. It also allows for all kinds of other experiments to happen, which I think is also really important, right, to have that diversity allow for different approaches to be happening simultaneously.
I want to talk about some experiments in just a second, but I want to mention that while I was doing the research for this interview, I read about a book by Ernest Frederick Schumacher: "Small Is Beautiful. Economics As If People Matter". It's a book written in 1973 and it introduces the concept of Buddhist economics. When I read that, Wow, Buddhist economics, okay, what is that? So, basically, it revolves around simplicity and non-violence. And a Buddhist economist would consider this approach of consuming more and defining the man that consumes more as a successful man, so a Buddhist economist would consider this irrational, because consumption is merely a means to human well-being, so the aim should be to obtain the maximum of well-being with the minimum of consumption. That's written somewhere in the description about this book and why isn't this our goal? To have the maximum of conditions for a good life with the minimum of resources?
I actually think that a lot of people would like it to be that way, maybe even most people. Because like you mentioned before, that's sort of common sense, that's sort of the obvious way to organize things and that was more the way that we organized things as humans for most of our history. So it's, as you mentioned before, this capitalist era of the for-profit economy is just a small and very strange blip, an anomaly in the entire history of humanity. So I think that it's more a question of, you know, why are we going through this blip and how can we get out of it? I think earlier you might have said that it's built into us to want more. There's a common belief that, you know, as humans we always want more. It's natural, it's human nature. But um, I question that, you know, I think that one of the things that's built into us is to want to belong. And to be accepted by our peers in the for-profit, capitalist economy, to do that, you have to make money, you have to accumulate, right? And so it's not necessarily built into us, but it taps into that belonging and then in the for-profit economy to belong, you have to wear the newest clothes, you have to have money, all of that. But in previous smaller communities, if you look at more like agrarian communities, indigenous communities, they still have this need to feel accepted and a need to belong in their communities, but maybe status is gained more by what you contribute to the community, rather than how much you accumulate as an individual. And I think that also is part of this not-for-profit, transition: is changing what the meaning of success is. And that also then changes how we belong in society, like, in a healthy sustainable, not-for-profit economy, I imagine that status and belonging is gained by contribution rather than accumulation. And so, it just flips everything on its head.
Actually, this meaningfulness is very important to human happiness. It might be more important than than money, of course, if the society would be organized differently. And I think that a not-for-profit world would look like, in a sense, people would have more meaningful careers, will do more meaningful work because you're not, you know, pushing papers for some somebody at the top to make some profit. You would only do work that is necessary to society and once you do something that's helpful to others, you gain meaning.
Yes, that's a big part of it. And in the book, I think we have like a whole sub chapter just dedicated to more purpose in our everyday lives. Because as workers, yeah, we would all be working at a place that we know is benefiting society. And how different is that from, like you say, waking up and knowing that I'm going to go to the office and make more money for somebody who doesn't need it. Like it gives you so much more of a sense of purpose. And also, even as consumers, right, when I buy something from a not-for-profit company, I also know that any profit that they're getting, that's going back to help the community. Rather than, I mean I feel bad buying stuff from for-profit companies, now that I've thought so much about this. It's like, I really don't want to be making a rich person even richer with my consumption. Um, of course, sometimes I have to, but yeah. So there's just like, the whole economy would become imbued with meaning, in a way that is totally missing today in our economic activities.
I was reading that there are reports about young people searching for more meaningful jobs in recent years. That's a trend we are seeing. They can see that need in themselves. And I want to talk about young people a bit, because they are obviously very important and essential to how things will work in the future. Will they want something different?
Yeah, I think, definitely! And I think that's also part of why we are seeing more and more not-for-profit companies, more and more social entrepreneurs, who want to use business to do good for society. And then many of those end up using not-for-profit structures to start their business with. It's because they want to have a sense of purpose in their everyday life. You know, we spend so much of our time working, so much of our lives working, that it's, it's painful for that not to have a deeper sense of purpose. And I think young people have really learned from the mistakes of previous generations. And also in this era of severe crises that, you know...
Crisis after crisis for the young generation.
Yeah, exactly. And they're crisis for us, too, but these young people have grown up hearing about these crisis since they were very small. So, I think it's really resonant for them that we have to use our lives energy to help address this stuff.
Let me rephrase that question: will young people's desire be strong enough to change things? Or will they cave in, like previous generations, and you know, they'll get a job to make money to support their families and they would say, Well, I tried. Or that was the best i could do.
Yeah, it's a really good question.
Because, you know, in the 70s there was another generation that really looked differently at things, but in the end, they disappeared in the system because they had to make money.
I think that there's a couple of things that come to mind in response to that for me. One is that often we talk about... And I've talked to, you know, some older hippies from the 60s and 70s, they're like Oh, we failed, we let you down, you know, our generation, we went to Wall Street in the 80s.
Yeah, it's kind of true.
But I also think that they didn't fail, because so much of our environmental movements and our social justice movements today are built on the work that they started back then. So it wasn't a failure. It was creating a foundation for something that we could build on now. And then the other thing that comes to mind is how different the context is. You know, those hippies, let's call them that, ended up going into Wall Street and like jobs because it was a time of optimism. It seemed that everything could work out with capitalism. Then the Berlin Wall came down and the Soviet Union collapsed and you know all of these huge changes happened and it was the end of history, right? Capitalism won and it's all going to be good. The context is very different today, right? Like, all of these crises have come up and it's very clear how much these are connected to our economic system, because we're facing the cost of living crisis and all of this. Much of the way that we feel these crisis is through the economy. So I think there's not the same opportunity to look away or to ignore it that they had in the 80s. So I think it's a very different context. And basically what I'm saying is that the for-profit economy is caving in on itself. It's a snake that's eating its own tail. That means that we have to move on, one way or another. Now, this comes back to the earlier question you had: Is it going to be through dictatorships and sort of tighter control or a healthier transition like this not-for-profit transition I'm talking about.
So now is a good time to talk about possible ideas, possible experiments. I've been reading this book, The Ministry For The Future, by Kim Stanley Robinson lately, and it's an amazing book. I really recommend it. And there are plenty of good ideas for trying out in the future there. One of them is the carbon coin. I know that there have been some discussions about that, because his idea is actually based on a real paper by Delton Chen, a scientist. He proposed, in the real world, a digital global currency used to pay global carbon rewards. Basically, it would pay people and companies who take out carbon from the atmosphere, one way or the other. And you also get the benefit of inventing a totally new currency, a very stable one backed by all of the countries. And going forward, you could change the economy thoroughly, because you would also outlaw, let's say, all of the black market money. Offshores and everything else would kind of disappear. It's a long-term vision of course, to replace all the currencies on the planet. But what are your thoughts on this type of possibility?
Okay, I think that new currencies are interesting and they can be really useful in terms of creating resilience through diversity. So that, you know, when a crisis hits, it's better to have multiple forms of trade and exchange happening and currencies can be part of that. So that like, if the for instance Euro gets hit, but a community in France has its own currency that they can exchange in, then they won't be hit as hard, maybe by that collapse of the Euro. So I think different currencies can play a role. And I haven't read The Ministry For The Future, but I've heard about it, but I haven't heard about this carbon coin thing so much. The thing that first comes to mind for me is that it's seems like a solution that's trying to fit within capitalism or reform capitalism somehow, reform the for-profit economy by using the profit motive, right? That's the first thing that came to me, it's like, oh, okay, they're using the profit motive. Like, if you're going to capture carbon, you're going to make more money. So I find that dangerous. Because I think, you know, we have to get away from the profit motive. There's been so many attempts over the last 40, 50, 60 years, to use the profit motive to help benefits society in the environment, and it never works. Because it's so much easier to make profit from exploitation than to do it by capturing carbon. It's much easier to just pump oil out of the ground and make profit that way, then to capture a carbon. And then it always comes down to like, should those companies and their owners be accumulating even more wealth? Because that's part of the problem we're talking about here, right, is inequality. So for me that doesn't address the problems that we need to address in a realistic or systemic way, but that's not to say that these kinds of currencies couldn't be part of a transition. It's hard for me to think of right off the top of my head how the carbon coin could be useful in the not-for-profit transition, but I'm sure that we could come up with a way that it could be useful, but not via the profit motive.
Until we get to the not-for-profit mode of working, could we limit profit?
Yes, and there are models. There's even a movement working in that direction, some social enterprise models, for instance, put a cap on profit distribution. And just to be clear, not-for-profit businesses can make profit, they can make a surplus. It's just what happens with the surplus that it's different, right? So the profit has to go back into a social benefit mission, for not-for-profits, whereas for-profits can distribute it to private owners. So then the sort of intermediate step is putting a cap on the amount of profit that can be distributed to private owners. So for instance, the social cooperative models in Italy and Greece are legal forms, but they put a cap on, so only 30 percent of annual profit can be distributed to the owners. So like worker cooperatives, but only 30 percent of the, the cooperatives profit can go to the workers, the other 70 percent has to be reinvested, or given to a social benefit cause, used for social benefit. So, that's sort of an intermediary step. There's also an interesting initiative, I think that started in Germany, but it's now spread around Europe and even into North America and the world, called the purpose economy. And they promote something called steward ownership. And steward ownership is sometimes they take it all the way in the not-for-profit direction, but what they're trying to do is help for profit companies transition away from the profit motive and away from private distribution of profit. It moves in a not-for-profit direction, but it doesn't always go fully not-for-profit. Sometimes they say, okay, you get all of the voting shares as a private owner, and you can take 20 percent of the profit, something like that. So that's an intermediary step as well. But I'm really excited about the steward ownership model because it does move in the right direction. You know, it is a concrete step in the right direction. It doesn't go far enough in my opinion, but as long as we're moving in the right direction, I'm happy.
First of all, you need to have the company, you know, having that desire to give up some of the profit. How do you get that?
Well, it's already happening. So if you think about last year, Patagonia, this huge clothing company, they did that sort of steward ownership.
That's an exception, I would say.
It is, it is, but the fact that such a huge visible company made that move shows that it's possible, and I think it has made a lot of other companies take it seriously. And so this steward ownership movement, the purpose economy movement is actually, they're doing consulting with companies and they are actually moving companies in the not-for-profit direction. So this is happening already.
I'm looking at my watch and expecting tomorrow that I will see Apple and Microsoft and everybody doing that.
No, I wouldn't wait for those. And the other question there, those kinds of companies raise the question of do we need them to transition? Can they transition or is it better for the world if they just sort of shut down and we break them up because they're too big for their own good? So I think that's a question that needs to be brought up for more democratic debate. I don't have a solid answer for that. But some companies like, for instance, Coca-Cola, you know, they've really done a great job of marketing themselves as like, the happy company, but they have gone to villages in India and decimated their water supplies with giving them any compensation. I mean, they're a horrible company. They contribute to plastic bottle pollution all over the world. They don't clean it up or seem to care.
There are loads of companies like that.
They're contributing to obesity. Yes. So, do we need that kind of company in a not-for-profit economy, you know? Does it have a role in a sustainable healthy economy? Maybe not, maybe we're going to lose companies like that, and that's okay.
One other thing that is absolutely horrible in the current system is this pay gap. Could we have maybe a way to enforce salary ratios, let's say a ratio of 1 to 5, or 1 to 10? Because right now you have, you know, a worker paid base level and the CEO gets maybe hundreds of times that, and it's not natural. It's not a natural difference between humans.
Yes. When it comes to not-for-profit companies, there's some data to suggest that there's already a natural inclination to have smaller pay ratios. So there was a study of hospitals in the U.S. For-profit hospitals, versus not-for-profit hospitals and their pay ratios. And the not-for-profit hospitals did have a smaller gap between the highest paid, like the CEO and like the person who cleans the floors. And it was sort of the CEO was willing to sacrifice, to receive a smaller salary than his for-profit peer, in order for the person who cleans the floors to get paid more. So there's some of the not-for-profit ethic in the right direction, but I wouldn't be opposed at all to also putting in some sort of regulation, mandate that, you know, companies can't exceed like a 1 to 10 ratio or 1 to 20. I mean I think 1 to 20 is kind of fair, but it's up for democratic debate. Like you said, now a lot of companies are like 1 to 400, 1 to even more than that. So, it's crazy.
How could that be implemented? Because I imagine politicians who, now, depend so much on the economic system and in their mind, that means economic growth, so we need to please the companies so they have economic growth, so we stay in power and everybody's happy, in this system nobody will force them to limit the CEO's pay in any way. So how can we get to that point?
Yes, I mean, I think this touches on, like, how do we make this not-for-profit transition happen in the first place? And I think it can't happen or I can't see it happening without a huge social movement, without huge social pressure to push the politicians to make the kind of regulations that we need to help support this transition. You know, taking away subsidies from the largest for-profit companies, giving subsidies to not-for-profit companies, incentivizing people to make the transition from for-profit to not-for-profit. But to get those kinds of policies, we're going to have to put a lot of pressure on them, because right now they're getting mostly pressured from the for-profit lobbyists. So there's a lot to work against there. But luckily, we're seeing the rise of more social movements and we're seeing more connection between social movements around these issues. So like racial justice and women's rights, and even environmental activists are starting to come together more. So I think that's possible. I see the most potential there.
That was one of my next questions. How do we give a helping hand to advancing this not-for-profit economy?
I think that's part of why I'm talking about this with you today. I think these sorts of things are really important. Just spreading the ideas, getting the ideas out there. Going full circle, back to our first question about why haven't we made these changes already and sort of the, how people don't see what kind of system we're stuck in and what kind of alternatives there are... we have to be out there talking about these alternatives.
Yeah, exactly. Like these not-for-profit businesses already exist. They're all around us, Kavli in Sweden, which is this huge company that makes like, salad dressing and mayonnaise and all kinds of these things, it's a not-for-profit company and people are blown away, because Swedish people have grown up with this company. And now, finally, they're marketing themselves as not-for-profit. So these sorts of things just raising awareness that this is a viable alternative. It already exists and we can move our consumption in that direction. We can pressure our politicians, we can start working for those kinds of companies, there are so many different things on so many different levels that we can all play a part in.
There's also the Mozilla Foundation with the Firefox browser, which still has a competitive product, it still pays salaries and so it's functioning. I just interviewed, a few weeks ago, somebody who started a Solar Bakery. And that's not the most amazing thing, but the fact that it was attached to a school somewhere in Africa and the profit from the bakery would go to paying the salaries for the teachers at the school. So they would not depend on the government or private companies or whatever. While not completely not for profit, still, there are so many good things you can try and we can move forward to.
And I did have one more question: is there such a thing as a not-for-profit bank?
Yeah, there are lots of not-for-profit banks. Great question. So, credit unions for instance in the U.S. Credit unions are huge and they're basically cooperative banks. So it's a consumer cooperative bank, where the bank is set up to benefit the consumer members and all of the profit has to be used to benefit that community of consumer members. And one in every three Americans is a member of a credit union. That was the last statistic I saw. So credit unions are huge. These are not-for-profit banks that have a huge consumer base in the U.S. And then here in Sweden, I'm not familiar with every country's not-for-profit banks, but if you look up savings and loans banks, those all tend to be not-for-profit credit unions. So here in Sweden there's also Jak Bank, which is an interest free members bank, there's Ekobanken, which is a credit union, there's the Sparbanken, as far as i know that's a savings and loan bank, so it's also not-for-profit and those are all over Sweden. If you look around there's not-for-profit businesses all over and we're not even aware of it.
I mean, if bankers, who love money, can do a not-for-profit business, a not-for-profit bank, I think it's a transition we should look very careful at.
Where can people find your books and where can they find out more about you?
My website is called relationship-to-profit.net. And there I upload all of my work, so there's my academic articles, my non-academic articles, the podcasts that I get onto, the books, everything's there.
Ok, perfect. Thank you so much for this interview. Thanks for listening, everyone! If you liked what you heard, sharing is helpful. Maybe we can contribute, you know, just a bit, by spreading the word, to a better economic system.
Thanks for listening and join me next time on Collective Choices.