“The ultimate, hidden truth of the world is that it is something that we make, and could just as easily make differently.” – David Graeber
What is the new economy?
We’re headed for ecological collapse, and the current economy is driving us towards it, by:
- stimulating overconsumption, via ubiquitious advertising and a drive to maximise returns for shareholders and lenders;
- depleting communities by sucking money out of them via the corporate branches that are embedded in them;
- concentrating that money in the tax haven accounts of very few people, and using that concentrated wealth (which includes ownership of the media) to influence the political process and public opinion, to ensure that system change (and democracy) is prevented.
However, a new economy is being built that reverses these processes. It can help push back the crash, mitigate its effects and catch people when it happens. This new economy is decentralised, community-based and not controlled by the state or corporations, but by ordinary people in communities.
See here for the component parts of the new economy, including:
- co-operatives of all kinds, including platform co-ops, housing co-ops, credit unions and the Phone Co-op
- community land trusts
- community-embedded schemes such as community-supported agriculture, community energy and cohousing projects
- ‘commons’ elements such as free/open source software and wikis
- sole traders
- mutuals such as building societies
- mutual credit
Community-based: the new economy is embedded in community and is based on timeless principles – providing goods and services for an exchange medium that is used to buy goods and services provided by other people, rather than on the parasitic principles of just trying to make more and more money from investments, speculation and lending money at interest.
Small-scale: large co-operative organisations are at risk of being bought out by ‘old economy’ institutions – for example the Co-op Bank and Co-op Energy, which stumbled and were swallowed by the corporate sector, leaving gaping holes in the co-operative movement that wouldn’t have happened with a network of community-embedded institutions.
Decentralised: networking local institutions rather than consolidation into giant ones. Mondragon is a network of small- and medium-sized co-ops in Spain, encompassing manufacturing, education, software and distribution. It produces high-tech electrical goods, amongst other things, and employs over 75,000 people in small, co-operative businesses. It’s not perfect by any means, but it’s an example that shows that the co-operative sector can scale up by federating rather than centralising.
Implementable: there are many ideas about how society might be organised, but with no corresponding implementation plan. We’re wasting time if we’re discussing ideas that have no implementation plan. The new economy is being built already. It doesn’t require anything to be ‘overthrown’, and it doesn’t require politicians to to the right thing. It just requires enough people, including you, to switch to new economy institutions in the ways outlined below, so that the new economy can grow to transcend the current economy in the same way that the current economy grew to transcend feudalism.
What are the benefits of the new economy?
- Production and consumption aren’t constantly stimulated to expand to satisfy shareholders.
- Food (and everything else) miles are reduced.
- Wealth doesn’t concentrate and overflow into the political system (via political donations, jobs for politicians, the lobby industry etc.). So we could have an uncorrupted, democratic political system that doesn’t protect the status quo.
- We could have a money system that doesn’t involve interest or require banks.
The Preston Model. The local authority in Preston employed CLES to help build a network of local ‘anchor institutions’, such as hospitals, university and the police, to redirect their spending to local businesses, including the council food budget, which prioritised food provided by Lancashire farmers. There’s a new Preston Co-operative Network, and new co-ops and food hubs are developing. The local authority is now looking at setting up a local bank to fund local businesses, and becoming a municipal energy supplier to provide an alternative to the giant energy corporations. Preston was voted the best town to live in in the North-west, and other local authorities around the country are taking an interest in the model.
- All towns won’t have to look the same, with the same corporate branches and supermarkets.
- Keeps money in communities, rather than allowing the corporate sector to suck wealth out.
- More meaningful, creative work; more personal autonomy; more human interaction; more input into the decisions that affect your job. All these things are beneficial to mental health.
- More (and more interesting) jobs, rather than corporate ‘bullshit jobs’.
- Trading with each other (especially in mutual credit) builds trust.
- Personal freedom is only fully appreciated when it’s threatened. Centralised power in the state or the corporate sector always runs the risk of its being seized by people who really shouldn’t have it. This has happened repeatedly in all eras and in all geographical areas.
- Building more trusting communities means less crime and less risk to personal safety.
- More fun.
- These ideas are not ‘left’ or ‘right’, and don’t need to divide us. The new economy isn’t associated with any -isms, which are always opposed by those who support different -isms. The new economy is neither planned nor extractive, and it doesn’t just exist in theory – it’s already being built.
- This may seem unrealistic to you. You may be right, but we think it’s worth a shot – it feels much more realistic than a) carrying on as if nothing is wrong; b) attempting to overthrow the current system, with its enormous military power; or c) trying to reform a system that perpetually concentrates wealth and power; reform can seem a bit like serving organic food on the Titanic – it appears sustainable until you step back and see the bigger picture.
- Alternatively, it may not seem enough for you – it’s still based on a market, for example. Some would like to see an economy based on love, rather than exchange. Maybe one day we’ll transition to that – when we’re more enlightened. But there doesn’t seem to be a way of making that transition in one step from where we are now. We can build utopia later – right now we have to build an economy that allows us to survive whilst avoiding fascism.
What can I do?
Read, research locally, watch our interviews with people building (or facilitating the building of) the new economy.
Downshift – don’t fall for the consumerist hype.
Shift your consumption to the new economy.
Beware a couple of things that pretend to be non-extractive and democratic. First, ‘corporate social responsibility’ – corporations employ an army of graduates to work out ways to give a tiny portion of their profit to charitable causes, or install renewable energy on their properties, whilst trying to disguise the fact that corporations are centralised, undemocratic entities that suck money out of communities. The real aim of corporate social responsibility is to maintain corporate market share. Second, the ‘sharing economy’ – a misnomer that includes Über, Airbnb and other companies that not only suck wealth out of communities, but don’t even provide or maintain the tools / infrastructure required.
Glen Wyvis, in Dingwall, Scotland, is the world’s first community-owned distillery.
Reskill (if required), to be able to provide useful things for yourself and for your community.
Your prices will be higher than the corporate alternatives, but that’s because you won’t be able to avoid taxes, employ virtual slave labour overseas or bribe politicians. But if you consistently support other new economy businesses, and they support you in return, we can give each other a good living in a sustainable economy.
We mustn’t let the corporate sector take over our assets, as they did with a lot of building societies – those that survived had ‘asset locks’ in their founding documents that prevent members from benefiting from the sale of the organisation. Make sure your chosen organisation has an asset lock.
Purchase community shares to become part-owner of community-based enterprises. The aim is to allow people with a little capital to invest in enterprises that are valuable to their community, but are different in that they can’t be traded, they don’t increase in value and it’s one person, one vote.
Investigate the potential for community wealth building, a local economic forum, the Preston Model or a co-operative grocery in your community. The more you investigate, the more potential you’ll discover.
Mutual credit is the exchange mechanism for the new economy. It’s an exchange medium that isn’t a store of value, so can’t be extracted from ordinary people to create billionaires. It works in places with no money, so it’s a cure for poverty; plus there’s no interest, and it removes the need for banks.
We’re going to need to organise to grow the new economy without consolidating into giant institutions – scale needs to be achieved by keeping the units small, but collaborating, networking and federating. Challenges to centralised power have always been suppressed. Now that we have the internet, that might be more difficult.
Join organisations committed to building a federated new economy (including Lowimpact.org); attend conferences around the theme of new economy networking; blog, comment, share, debate, read, learn, organise. Meet like-minded people and help plan the development of a new, decentralised, networked economy that doesn’t destroy nature, democracy and communities.
The specialist(s) below will respond to queries on this topic. Please comment in the box at the bottom of the page.
Dave Darby is the founder of Lowimpact.org. ‘Specialist’ is definitely the wrong word, as this is a huge topic, with many component parts. If you post queries on specific topics in the ‘economy’ section, we’ll try to get specialists to answer them for you. This page is for general comments and queries, and discussing how we collaborate and network to build the new economy.
The views expressed here are those of the author and not necessarily lowimpact.org's
1foster goodwill January 7th, 2019
Glad to come across your site. will pass it on to my local Bioneers study group.
2foster goodwill January 7th, 2019
Forgot to mention I am in Boulder, Co. USA
3Dave Darby January 7th, 2019
foster goodwill – thanks; (we’re hoping to launch in the States at some point).
4homeminderuk January 4th, 2021
Forgive my ignorance – or perhaps naiviety – but does the lowimpact/mutual credit philosophy resonate with the ‘austrian school of economics’?
Insomuch as the latter advocates a natural economic cycle of production and consumption driven purely by the producer and consumer, leaving whatever governmental interference as an ‘interested observer’ only. The illustration used was as a football game, with the 2 sides on a level playing field and the refereee interfering as little as possible. Both can be irreparably damaged by top heavy, short-sighted, over-bearing involvement.
5Dave Darby January 11th, 2021
The Austrian school favours individualism, whereas the mutual credit idea is more of a mutualist approach – like the Austrians, nothing to do with the state (I’m not in favour of a planned economy any more than they are), but more concerned with building trust in communities – irrelevant to the Austrians, I think. Battles between the Austrians and mutualists regarding labour theory of value too. The Austrians / marginalists tried everything to distract people from the fact that, apart from in very few situations, if something of value is produced, then someone did some work to produce it. Sure, value is subjective, but I prefer to look at it from the other side of the coin – i.e. whatever is paid for something, I’d prefer it if only those who did useful work to produce it were rewarded. So reward people who do work, rather than people with money, who do nothing useful except own stuff.
This is just me though – generally, no-one working in mutual credit is really thinking about this. It’s more about building a non-ideological tool to help communities and small businesses to thrive in a time when there’s very little money.