Forum Post: The “New Economy”

The “New Economy” moniker is bubbling around lately, with a meaning recast far from President Bill Clinton’s neoliberal usage 20 years ago. The venerable Washington DC-based Institute for Policy Studies has its New Economy Working Group, a partnership with Yes! magazine and the 22,000-member Business Alliance for Local Living Economies (BALLE). At the core of the call for a New Economy is an effort to come up with practical alternatives that democratize the control of the economy—including workplaces, finance, and the structure of the firm—in ways that are ecologically sustainable.

The focus on finance—on shrinking a dangerously unstable, extractive banking sector and nurturing an alternative one—is powered by such people as John Fullerton, the former JPMorgan managing director who launched Capital Institute to promote the idea of finance “not as master but as servant” and sees a role for “social impact” investing in the New Economy.

It is in the New Economy movement that you’ll hear people talk about how to build a “no-growth” economy that shares more and taxes the earth less, a view promoted in the United States most notably by Boston College professor Juliet Schor. On the board of the new NEI are thinkers like Peter Victor of York University in Toronto, author of 2008’s Managing Without Growth: Smaller by Design Not Disaster, and Stewart Wallis, head of London’s New Economics Foundation, which has been popularizing the no-growth idea for years.

“Even if everybody was to rediscover Keynes, that’s not the answer,” Wallis told the NEI crowd, referring to the British economist who popularized government investment in the economy during downturns, even if it means running deficits, in order to boost demand and employment. “We can have an economy with high well-being, high social justice” that destroys the planet. “We need a new model, an economy that runs on very different metrics, maximizing returns to scarce ecological resources, maximizing returns [to] human well-being, good jobs.”

“We have to move from talking about ourselves as consumers to [regarding ourselves as] stewards.” But the New Economy movement is a big tent, and for some growth isn’t the question. For Marjorie Kelly, author of Owning Our Future: The Emerging Ownership Revolution, and a fellow of the Tellus Institute, the Boston-based think tank focused on sustainability, growth isn’t the focus. In a chat at the conference “bookstore,” she said,

The problem is not growth but too much finance. You have the overlap of debt, unemployment, lack of jobs for youth. ... We can’t have capital markets run the economy. It has a destructive focus. It’s starting to fall apart. That’s terrifying. You hold on desperately to what you have as it collapses. But no, you have an alternative. You have the Right, cutting taxes, deregulating. No serious thinker believes that those are the solutions. ...There’s an inevitable sorting process. There’s some loony ideas and we haven’t sorted that out yet. But they said that about democracy.

Following the NEF and Schumacher, the New Economy umbrella also covers those promoting more realistic economic indicators that measure people’s well-being and ecological costs, including the Green GDP. It considers which business forms—not just worker-owned companies but also so-called B-Corporations that consider social impact—might be compatible with a just, sustainable economy. It covers those challenging the decontextualized, value-free world of neoclassical economics because, as Massie said, “our current theories have blinded us.” In late June, this was the agenda of Juliet Schor’s week-long Summer Institute in New Economics at Boston College, where graduate students sat at the feet of Gar Alperovitz of the University of Maryland, James Boyce of the University of Massachusetts-Amherst, Duncan Foley of the New School, and others.

It’s a big tent, and feels a bit like the Progressive Movement of the early 20th century, when many elites and middle-class people began questioning and even challenging how capitalism was organized. Partly because of its high price tag, the Bard gathering was almost entirely white and highly educated, deploring poverty but not necessarily touched by it, yet highly motivated to build a more communal, cooperative economy. How these middle-class reformers will share leadership with low-income immigrants, progressive unions, and co-ops—key social bases for the movement—is a bit of a mystery. It’s no mystery, however, that any massive change in the U.S. political economy needs all these sectors pulling toward change.