The Economy for the Common Good: A Progressive Countermovement Against the Marketization of Society and Nature?

Friday, June 24, 2016: 4:15 PM-5:45 PM
205 South Hall (South Hall)
Bernd Sommer, European-University Flensburg, Flensburg, Germany
In The Great Transformation, Karl Polanyi (2001 [1944]) describes how a previously socially embedded economy emancipated itself from cultural, political and moral constraints. The consequences of this development were disastrous, especially for “fictitious commodities” such as labor and land (ibid. 137). Polanyi regards the idea of a self-regulating market as a “stark utopia”, which “could not exist for any length of time without annihilating the human and natural substance of society” (ibid. 3). Therefore phases of economic liberalism are always accompanied by a social response, functioning as a “self-protection of society” (ibid. 136). After the horrors of World War II and fascism in Europe, the development of the welfare state led to a re-embedment of the market. However, from a historical perspective, this era of “democratic capitalism” (Streeck 2014) was comparatively short. Free market orthodoxy gained new momentum, and since the late 1960s, various Western countries adopted policies undermining the institutions of the Fordist welfare regime, leading to increased marketization, financialization and the rise of global capitalism. Just as Polanyi’s theory suggests, today, one can witness a self-endangering destruction of vital ecosystems on a global scale (Rockström et al. 2009) as well as the (re)emergence of working conditions that systematically fall below established social and human right standards. In response, diverse movements have arisen, which aim at protecting societies and the natural environment from the devastating effects of a dis-embedded market economy. A current grassroots movement challenging the free market orthodoxy is the Economy for the Common Good (ECG). This contribution discusses the ECG as a progressive countermovement against the status quo of market capitalism.

The ECG’s core idea is that monetary profits should not be the purpose of economic activity. Instead, profits should serve as a means to contribute to the ultimate purpose: the ‘common good’ (Felber 2015). Companies participating in the ECG movement compile so-called common good balance sheets, which give an account of the degree to which they act corresponding to certain societal “core values” – human dignity, cooperation and solidarity, ecological sustainability, social justice, democracy and transparency –, in relation to central stakeholders and the “social environment” (referring to civil society, but also to future generations and nature). While the process of compiling the balance sheet is voluntary at present, in the long term the movement aims to achieve a legal obligation to do so. The higher the score of the common good balance, the more legal advantages a company shall receive in the future (including lower taxes, better borrowing terms from public banks, and more public contracts). The goal is to reverse the incentive structure within the economic system to offset higher costs resulting from ethical, social and ecological activities. This political ambition is a categorical difference from Corporate Social Responsibility (CSR) approaches, which are characterised by voluntariness. Additionally, its participative nature distinguishes the ECG from conventional CSR: The common good balance sheet is continually developed building upon feedback, and the future design of the model shall be discussed in a democratic process. Since 2010, more than 2,000 companies in 25 countries have joined the movement, along with associations, universities, municipalities, and several thousand individuals. The ECG movement has also gained considerable attention in the political arena: For instance, the Economic and Social Committee of the European Parliament adopted an official opinion on the ECG, considering it as a model towards "a more ethical economy". Though, so far, the movement’s activities are geographically concentrated in Austria, Germany and Switzerland, local chapters of the movement can be found in many European countries as well as in both Americas.

On a conceptual level this contribution seeks to show that the ECG is a social movement, which aims at embedding economic activity within democratic values and to align it with social and ecological concerns. Corresponding to Polanyi’s historical analysis, which shows that „the countermove consisted in checking the action of the market in respect to the factors of production, labor, and land “ (Polanyi 2001 [1944]: 137), the mode of production, working conditions as well as the protection of the natural environment also lie at the heart of the ECG’s concerns. Additionally, the movement calls for the reduction of income inequalities and the limitation to financial speculation. In the words of Eric Maskin (2015), the ECG approach aims at a “thorough overhaul of our capitalist system”. However, the ECG does not call for the abolishment of the market economy altogether; instead it “strives towards an ethical market economy” (ECG 2016). Polanyi recognizes that different countermoves are possible at any historical moment, since markets can be embedded in many different ways (Block 2001). Protective countermovements can manifest themselves in reactionary or even fascist shapes, but also in more progressive forms. The notion of the ‘common good’ is similarly ambivalent. Adam Smith described the market as an order under which individuals, by following their selfish interests, contribute to the ‚general good’. Law in national-socialist Germany referred to the “common interest” in order to promote inhuman policies (Fischer/Münkler 1999). Many democratic constitutions refer to republican notions, such as the German Basic Law: “Property entails obligations. Its use shall also serve the public good.“ The ECG movement explicitly draws on such constitutional norms, as well as on considerations from moral philosophy (for instance, John Rawls’ Theory of Justice).

Empirically, the paper draws on qualitative interviews with representatives from enterprises engaged in the ECG movement. The sample covers all major economic sectors: Community Supported Agriculture, food makers, production companies, but also a nursing home for the elderly and a national newspaper. In compliance with the ECG concept, most companies do not see profitmaking as their main business objective. In order to guarantee decent working conditions and prevent environmental degradation, all interviewed organizations apply increased social and/or environmental standards in their production and management practices. Some companies even more fundamentally try to emancipate themselves from dominant market mechanisms and dependencies, e.g., by sourcing directly from local farmers and agreeing on prices in round tables.