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“The current economic system produces a never-ending string of collateral damage”

A conversation with Christian Felber about the Economy for the Common Good

A conversation with Christian Felber about the Economy for the Common Good

If the Austrian author and speaker Christian Felber is to be believed, we need a new economic system that focuses on the common good. Felber, a founding member of Attac in Austria, is one of the best-known pioneers of the so-called Economy for the Common Good (ECG), which has set itself the goal of establishing a new economic order. Here’s what he had to say.

Mr Felber, you are one of the best-known masterminds of the Economy for the Common Good (ECG). What does the term mean?

It’s about a completely new economic order, an alternative to capitalism and communism, one which is built on universal values. The goal is the common good; money and capital are merely the means to an end. Economic success is measured by the achievement of the goal and not, as today, by the means. For this reason, gross domestic product (GDP), financial profit and return on equity will be replaced by common good product, common good balance sheet and common good added value as the primary key performance indicators. The greater the demonstrated ethical achievements of a company, the greater the regulatory incentives it receives: on taxes, duty, interest and public contracts. Sustainable products will therefore be more reasonably priced than unethical ones and only responsible companies will survive.

What do you think is going wrong in our present economic system? Why do we need an alternative?

We confuse time and resources; that is the error of the central system. The goal of doing business should actually be the common good. This is stated in the constitutions of all democratic states that have something to say about economic activity. For example, the Bavarian constitution says: “All economic activity serves the common good.” The basic law prescribes that “property entails responsibility” and “its use should also serve the common good”. Even Aristotle made a distinction between the “oikonomia”, in which money is merely a resource, and “chrematistike” – the art of acquiring money, in which it becomes the purpose. With this, he anticipated the difference between an economy for the common good and capitalism. If the means becomes the purpose, the goals and values recede into the background and become damaged. That’s why the present economic system produces a never-ending string of collateral damage, such as unemployment, poverty, inequality, futility, value decline, corruption, the dismantling of democracy and environmental destruction.

The common good product would measure the coverage of basic needs, meaningful work, fair distribution, prosperity of time, education, democratic participation or peace

 

You criticise the way Western economic systems focus on growth. Many people connect growth with jobs and prosperity. Why do you see things differently?

That’s exactly the point: GDP is not valued in itself but because it is associated with positive values such as jobs or the fulfilment of basic needs. Upon closer inspection, however, in no single instance is the relationship between rising GDP and the achievement of social goals and values assured. That’s why we propose that social goals should be defined and their achievement measured directly – instead of using the uncertain and unwieldy detour of GDP. The mere fact that a science so very bent on efficiency does not measure the achievement of goals directly but instead proceeds via the detour of monetary indicators, i.e. extreme inefficiency, shows that it is more of a faith community than a serious discipline. The common good product would, for example, directly measure the coverage of basic needs, meaningful work, fair distribution, prosperity of time, education, democratic participation or peace. When the common good product rises, things are reliably better for us.

Christian Felber, Economy for the Common GoodThe ECG turns five years old this year. What has it done in this time?

To begin with, a dozen supporting companies has grown to more than 2000, with almost 400 having prepared a common good balance sheet. Three banks have done so, as well as three senior schools, and the first university is in the process of doing so (Barcelona). The University of Barcelona has also established a professorship in Economy for the Common Good at UNESCO. The University of Applied Sciences Burgenland is planning a masters course in ECG. Dozens of municipalities have signed up or are on the way to becoming municipalities for the common good. Around the world, 150 local groups have formed, 30 of them in Germany alone. Nineteen associations have been established from Austria to Chile, the international movement is growing. The Economy for the Common Good has made it into the government programmes of Salzburg and Baden-Württemberg. The biggest political success to date: The European Economic and Social Committee drafted a 10-page opinion on ECG and accepted it with 86% of the vote: the EU Commission may incorporate ECG into EU law.

ECG should be a “liveable, truly implementable alternative” for companies on an economic level. Can you explain that in more detail?

The instrument of the common good balance sheet is an ethical compass which is already being used by 400 companies – they can get involved right away without having to wait for a change of system, although that is the goal. The common good balance sheet is also an organisational development tool, which helps to reflect all activities in depth: not simply “how do we do it?” but also “why do we actually do it?” Additionally, the common good balance sheet restructures all relationships with the environment: public bodies use the common good balance sheet result to take decision on their purchases; banks on the issuing of loans and their terms and conditions; other companies are incentivised to purchase from ethical suppliers, to strive for their optimal size and to cooperate systemically. Both investors and consumers are rewarded when they buy from ethical companies, the market economy experiences a “thrust reversal” from cost minimisation and profit maximisation to increasing the common good and focusing on values.

Interested in a bank that already thinks differently about the economy? Then please click here.

Photo credit: Title image by www.uschioswald.at Portrait photo by Robert Gortana

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