Although most economies are driven by the pursuit money, financial incentives are not always best for the well-being of society. In his book, Change Everything: Creating an Economy for the Common Good, Christian Felber speaks to this misalignment of priorities and explains the shift in value systems that is necessary to promote a higher quality of life. World Policy Journal spoke with Felber about the benefits of an economy for the common good and whether or not an economic value shift is possible.
WORLD POLICY JOURNAL: An economy for the common good, as you describe it in your book, is motivated by relationship and constitutional values, as opposed to the current selfish, profitability values. How do you incentivize individuals and companies to shift their value systems to align with an economy for the common good, when it might not initially be best for their bottom dollar?
CHRISTIAN FELBER: There are two points. The first is that the current economy is based on money—entrepreneurs and employees are paid for what they do. The same monetary incentive is part of the economy for the common good. The difference is that in an economy for the common good there is much more moderation of income. Minimum wages are higher and there are no excessively high incomes. Science tells us it’s a myth that extremely high incomes add incentive for people to achieve more. In an economy for the common good, the monetary incentive would be an income that is sufficient for a decent life.
The second point is that science supports the claim that good relationships, acknowledgement, and especially meaningful work are much greater incentives than more money when one already earns a lot of money. As far as we know from psychology, sociology, and neurobiology, relationships based on cooperation motivate human beings to a greater degree than competition, and make them achieve more. An economy for the common good emphasizes these values, which lead to a higher achieving and happier society.
WPJ: What long-term, large-scale benefits do you foresee as the result of an economy for the common good?
CF: There is a broad range of benefits. Social relationships would improve, people will be healthier and more strongly motivated, and society would have a lower degree of inequality. Societies with a lower degree of inequality are better off on many fronts including crime, violence, and security in public spaces and private homes. Democracy will function better because there will not be as much corruption. The environment will be sounder because companies will not be able to be profitable if their business models are not structured in an environmentally friendly way. People will have more time for their loved ones and personal lives because earning money will not consume all of their time. Quality of life will improve all around.
WPJ: You state that the fundamental values that should drive this economic model are human dignity, cooperation and solidarity, ecological sustainability, social justice, and democratic co-determination and transparency. What led you to these values as the driving force of the model?
CF: These values are often found in the constitutions of democratic countries. From a scientific approach, they are values that make human relationships flourish. Social psychology, as well as neurobiology, teaches us that fulfilling human relationships are the strongest foundation of human happiness. There is a very strong double base of science and values that we find in democratic constitutions that supports the values of the common good model.
WPJ: In your book you state, “Two crucial questions pose themselves: what does the ‘common good’ mean and who defines it?” You go on to say that “The precise meaning of its individual components can and should be determined democratically.” Can you elaborate on how to democratically determine this?
CF: Like with any other value, there is the question of defining the common good. We solve this problem by identifying and addressing its aspects. One aspect, for instance, is inequality. We can set a limit on inequality such that the highest incomes shall not exceed 10 or 20 times the lowest incomes.
The only place where you need a concrete definition of the whole concept of the common good is when measuring the success of the economy to evaluate how companies, investments, and a national economy can contribute to or achieve the common good. To do this, the sovereign people who govern a body in a democracy could gather in their communities and decide on the 20 most important components of the common good, or comprehensive well-being, and collectively, those 20 components are the common good.
The U.N. just went through a similar process to establish their sustainable development goals. They had asked themselves for years how to measure the progress of humanity. Until recently, they evaluated it based on the growth of GDP. They then determined GDP didn’t tell them anything about the state of the environment, well-being, the crime rate, or any other aspect of the quality of life in society, so they came up with 17 components by which to measure progress toward their sustainable development goals.
WPJ: B-corporations, or social benefit corporations, are for-profit companies that “meet rigorous standards of social and environmental performance, accountability, and transparency.” Do you think that shifting all corporations to B-corporations would be a step in the right direction?
CF: Kind of, yes, but there are several differences between B-corporations and an economy for the common good. Profit is necessary for a company to survive, but the big difference is that in an economy for the common good, profit is not the bottom line of the company. This is a very important distinction. If a company’s highest purpose is to make money, we call it capitalism—Aristotle called it the art of making money. Economy, which in Greek means “the management of the house,” is about the well-being of members of the household. In an economy, money is good, but it’s just the means to achieve the goals of improving society, supporting a healthy environment, reducing inequality, strengthening democracy, respecting the dignity of everyone, and creating a structure of cooperation as opposed to one of competition. These values determine how much profit is made and how the profit is used. Economies have completely forgotten what economy means and what the goal of an economy is, which is to promote the common good. So “common good economy” is actually a redundant term.
Our proposal is that all companies will service the common good. They will still make profit, but use of the profit will be regulated more strictly, so there is no use of profits that is contradictory to the common good.
WPJ: In addition to financial balance sheet, the common good economic model uses common good balance sheets. How is a common good balance sheet set up, and how does it evaluate a company’s contribution to the common good?
CF: We measure a company’s contribution to the common good by having companies describe how they fulfill constitutional values such as dignity, solidarity, sustainability, justice, or democracy. The same way that we audit financial performance indicators, we propose to audit these ethical performance indicators. Common good balance sheets have been used for five years, and now there are already 400 companies that evaluate their ethics in common good points, which can already serve as a base for lawmakers to make determinations on the taxes.
WPJ: Do you think that an economy completely motivated by the common good is a goal that could ever be reached, and, if so, how long do you think it would take to get there?
CF: On the first day of 2010, 25 companies volunteered to implement the common good balance sheet, and on that day a tiny part of the world’s economy switched to a common good orientation. Now five years have passed and that shift has spread to 50 nations so far, including the United States. In dozens of cases, towns have decided that they want to become a common good municipality. Most recently in Seville, Spain, the mayor signed a treaty with the original association for the enhancement of the economy for the common good, promising to become a role model common good town for all of Europe. In addition, regional parliaments in Germany, Austria, Italy, and Spain have included in their government programs initiatives to advance an economy for the common good and implement a common good balance sheet for companies that are in public property.
We can’t say today if there will be implementations of new legal or constitutional frameworks that align with an economy of the common good, but in the next 10-20 years we will have a clear picture of the final potential of this economic alternative. The change will be a major one—we’ll have to keep working, not only with companies, but also with regional parliaments and the U.N. It will take time to see whether the people and their democratic representatives are ready to tackle this major reform.
This interview has been edited and condensed for clarity.
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[Interview conducted by Kirsi Goldynia]
[Photo courtesy of Robert Gortana]