What Might A Different Economic System Look Like?

(Warning, this is a long read, with lots of links and references. I’ll also keep linking to more articles and sources over time to bake in more perspective, data and arguments, as my own understanding improves or changes.)

Lots are recognising the need to change the economic system, to try and put the brakes on the madness in the current one — for the ecology, for worsening inequality and more.

Something’s gotta change

How is the big one.

There’s been a lot of thought and some experiments in this direction. No clear answers have yet emerged. What we do know is that the current methods aren’t working, and causing more harm than good.

Why do we need to think of this, especially in India? And what will the change look like? Here’s some observations, insights, triggers and drivers for this that got me thinking.

1. Perceived, anecdotally observed, and read bits and pieces of evidence that despite growing economies and GDPs, more and more were losing access to many of the basics. Pretty much everyone’s lost access to clean air, and largely to clean water. The same is true for other ecosystem services. For many it’s true for leisure and community. And in large swathes such as India, most do not have access to organised healthcare, education, legal recourse etc, while the traditional ways have more or less completely been lost by now. Even in developed economies, the purchasing power of wages has been falling, and with climate change hitting, the acceleration to this kind of loss is growing.
2. Economic growth has largely happened without a proportional growth in employment. And, as Mekin researched and argued very compellingly, we just CANNOT provide jobs for everyone, and the best way for economic independence at an individual level is entrepreneurship — not just of the fancy VC funded kinds. To facilitate this Mekin went on to create Udhyam which is doing some amazing work in creating entrepreneurship skills amongst the less-haves, where the problem is the most critical.
3. Inequality, and the benefit of the privilege of position and power, has grown like crazy. Economic mobility has suffered. These may be a pretty bad vicious cycle too, within the current economic system’s methods.
4. At least in India, the cities have sucked out resources, both natural and of skill and human capital, and of the arts/crafts etc, from the countryside. This has made the gap wider and most of the country worse ecologically, socially, and in terms of skills and ability as well as access to decent levels of the basics.
5. Despite outliers and many great success stories, most individuals are less able to work around/over the lack of privilege and access to the basics, and it gets worse. Co-operatives have worked better where done smartly.
6. The cost of not being in the top X% (shrinking all the time, and if I were to hazard a guess, maybe 5–6% today in the context of the big metros) is sharply higher in terms of the quality of life and access to basics.
7. Large scale production and distribution is inherently, intrinsically inefficient, even though we believe otherwise. There is a massive inefficiency that centralized design and “knowledge” bring, at the same time creating products and solutions that are not contextually sensible or even relevant in many places.
8. Moving the entire economy, all transactions etc to the formal sector makes it tough for both small producers and consumers, and eventually makes — along with other reasons — the economy less vibrant.
9. There may be an existing term for this (I’m no economist, and am just thinking aloud and connecting the dots across a lot of thoughts I’ve had in the recent years) but I think that more than per capita GDP — the vibrancy of an economy — defined by the number of actors that participated (preferably above a certain threshold, at least collectively) in a transaction, or per million, or some such, matters a lot more to the real value we derive from an economy.
10. Money is a means, not an end.
11. Derivative thoughts : access to many of the basics can remove the worst impacts of wealth inequality (what I’ve started to define as wretchedness) and improve mobility without access to monetary, social or political privilege or muscle.
12. Finally, read this amazing thought a while ago that put a lot of things in perspective : “private sufficiency, public luxury” that George Monbiot often talks about. This is powerful — our quality of life really comes from public luxury, and in fact the luxury of the commons and ecosystem services available to everyone. Else we’re trapped — as Bangalore is a telling example of — inside our little gated islands with a complete breakdown of sanity, access and commons everywhere.

(Phew!) So -

What will it take? What will it look like? This isn’t a “solution”. In fact I don’t think there’s a one shot, sure shot solution to this. This is directional. These are thoughts that should go into policy, IMO.

Each Village an Entrepreneur?

For starters, we need more widespread production of needed goods and services. It’ll spread money around more, tackle joblessness, reduce cost and footprint of logistics, create more pockets of value creation and innovation, and also make more contextually relevant and diverse products available in the vicinity everywhere.

There used to be (and I’m sure still exists, in pockets) a lot of skills and traditional know-how across India. There was unique produce, methods and products in various places. There were also models of cooperation and mutual self interest that enabled people to take some basics for granted in the village (even shared effort for the commons, harvesting repairing one’s roof and so on).

Employment for all at an individual level and isn’t likely to happen ever, even with schemes such as MNREGA. Individual farmers with small holdings find the going tough, and change almost impossible.

Entrepreneurship is tough, and not everyone can or will be able to deal with the uncertainty and the challenges of all aspects of it at an individual level. Financially and otherwise, cooperative groups fill a lot of gaps wrt funding, skills, as an insurance against setbacks, failure and uncertainty.

Given all this, it makes a lot of sense to think of communities as entrepreneurs. Cooperatives have been a mixed bag, and FPOs are being experimented with, but aren’t true “communities” beyond the economic motivation. A village is a natural community, has some level of political and administrative organization already, and if a few specific products/services it could focus on are recognized and encouraged, could become a fairly robust, consistent and competitive economic engine as well much better than an individual entrepreneur might. Of course, villages in the same region or that share the same product-lines and competencies could collaborate as well.

It’s also easier for the government to deal with, provide help for, help organize a much smaller number of villages dealing with a few market facing products and ideas, when compared to an infinite set of individuals trying to be micro-entrepreneurs and largely failing, without any viable support systems or mechanisms to fail gracefully. India has 650k villages — that seems a lot more manageable than 1.3 billion individuals, from a governance and policy delivery perspective.

Imagine if villages across India, individually or in clusters, owned and created a few products/brands each — unique to them and created using produce from there. Imagine they made this accessible to other villages and towns around. Imagine some of these went on to become successful brands across the country.

Outside of economic vibrancy, better distribution of wealth, innovation and populations, this would also make ecological sense through reduced logistics and because one typically doesn’t pollute one’s own house incessantly and without limits.

Reduce the Rural-Urban Access Divide and the Cost of Less Success

Being less rich, or poor cannot have the non-linear impact of the access to, or quality of, some basics. Being in a village shouldn’t either. Healthcare, education, connectivity, legal recourse are some basics each village just has to have access to at a minimum defined level. Can we as a country define what these basics are that must be accessible at a village/taluk level, as a right?

There can be numerous paths and solutions to how to get there (and many outside creating a “market” in it as the default approach). But a common understanding on what we consider the basics for all our citizens, everywhere, with the parameters defined provisionally and improved over time or adjusted for local context.

Local, “Informal”, Traditional

The village haat had very little real estate cost or overheads. The traders had customers everyday since they went to different villages with a designated shandy” day, and each village had access to the new and different one day of the week. Efficient, no hyper-consumerism or need to push folks into buying all the time, and cheaper.

The knowledge of local herbs everywhere did help in create some level of a healthcare system. Of course it wasn’t perfect, but it did take care of a lot of issues. Instead of understanding the strengths and adding to it to fill gaps, we’ve taken a stand that has helped obliterate it and local knowledge has vanished, while organized healthcare hasn’t made it to most places.

Similar issues with legal systems. It’s hardly like we’re delivering reliable justice to all, and now even the closure is gone as things drag on forever.

Ditto for education, leisure and so much more.

Strengthening the local, informal creates access to a lot of the basics everywhere. It is often more contextual and relevant than one-size-fits-all solutions, and reduces the load on the central structures to deliver everything.

Rich Commons

This is an extension of the access to the basics both for the urban and rural commons (like I argued earlier, the gap has to reduce). If, irrespective of what my economic status is, I breathe clean air, have access to clean water, green spaces for leisure and sport, good walkability and cheap or even free public transport within the context I regularly interact with on a daily basis (How do you define a city?), the quality of how I experience life improves a lot. Add to this libraries, performance & community spaces, cycling paths etc and suddenly one is looking at a rich life not dependent on one’s riches. Many cities are even starting to create with food in the public commons — fruit trees all over town for anyone to pluck, and community vegetable gardens for all. Creating abundance reduces the need to solve scarcity!

Resilient Ecosystem Services

A lot of the basics, most of our economic activity and core needs depend on and assume the availability of infinite resources, energy and services and stability that the ecosystem provides to us. Water, good soil, stable weather, renewable resources are taken for granted (indeed other resources were too, till recently), but are proving to be fragile as the planet changes. A lot of the destruction we’ve caused without understanding this has taken away the shock absorbers. The impact of this is already being felt by those with the least share of wealth that arose from the conversion of these resources into our currencies, but it’s only a matter of time before which the real impacts the mythical, across economic strata. Working on making our ecosystem resilient is one of the most critical commitments that needs to be made by the entire species, for any of the solutions including the possibilities discussed above.

It will certainly mean a re-calibration of many needs and default assumptions we start with today. But there cannot be an economy if the underlying ecology collapses. A resilient ecosystem everywhere also provides for a lot of the basics everywhere. If we reimagine and rebuild our economic system atop the idea of a net-positive ecosystem, we might automatically move towards a fairer, more distributed and a far more efficient one than the one we desperately need to recover from.

[ Even as this was being written, I came across this story about a village in Manipur being revived using their traditional skills and improvement and management of the commons. ]

[ Chandra Vikash believes in the idea of the local and circular, as well as the indigenous, as the basis of the economic system as well. I still need to read his paper in detail — do read. ]

[ One awesome experiment I’ve been following and intend to learn more from for creating smarter, more vibrant villages is ProtoVillage. Do check it out. ]

[ And then there’s Cuba where, thanks to the breakup of the Soviet Union and the dwindling of oil supply, the country was forced to adopt a more local, farm based economy. Read more about how agriculture there is climate smart and resilient. ]

[ Apr 23rd : came across this brilliant example of a small, simple enhancement in capabilities at the village/farm level : https://www.deccanherald.com/state/top-karnataka-stories/tomato-finds-new-use-in-times-of-lockdown-828247.html.

“Each family has processed 10 kg of tomatoes maintaining hygiene all through. Tomatoes are cleaned, sliced, sun dried with a pinch of salt and turmeric sprinkled over them. After three days, the flakes are stored in airtight containers. Along with individual families, over 10 youngsters from the village work in a community space experimenting with different value-added products.” ]