THE ECONOMICS OF CHANGE
THE PURPOSE-LED ECONOMY
A societal sector of the economy serves the best interests of customers and wider society, through ethically focused activity. The good it achieves through its activity and the social use of its profit measures its success. The purposeful economy exists, we just need to recognise it as a systemic driver of change and develop it!
AN ECONOMY GENERATING ACTIVITY AND WEALTH FOR ALL
The State redistributes wealth to maintain societal cohesion and achieve a degree of fairness, through taxation, borrowing and spending. But, what of the distributive economy, and for whose benefit the economy works in the first place. The private sector adheres shareholder interest to the economy. Which sector adheres the general population’s and wider stakeholder interest to the market economy, if not a societal one!
AFFORDABILITY AND FAIRNESS
Poverty and unacceptable levels of inequality have persisted for over two hundred years. Food, energy, housing and the essentials of living need to be affordable. Society bears the burden of debt, unmet social need, austerity and adverse health, well-being and environmental outcomes. A societal economy IS a solution!
ECONOMIC DEMOCRACY BUILDS HUMAN DEMOCRACY
If it could, our economy would have delivered what we are told it should. Our economy generates wealth, but too many of us do not share in it sufficiently to meet our essential needs. The mixed economy needs to be plural. Competition, challenging for whose benefit the market economy operates, democratises it. Markets are simply the train tracks along which our economy travels, the purpose and ethics of organisations serving it defines their function. A societal economy is a democratic one, unifying consumer and producer interest.
PURPOSE DEFINES PROFIT – Sufficiency and Sustainability
Profit in a societal sector need only be sufficient to sustain a company’s operation and fund its purpose. The sector stretches from ‘not-for-profit’ enterprise at one end of its broad spectrum, to the point where shareholder interest determines purpose and outcome. The private sector, operating for shareholder interest, exists at the end of the spectrum furthest removed from social need; the systemic root of unfairness in the economy.
All sustainable enterprises generate profit, with income sufficient to cover their costs. The label “not-for-profit” diminishes our expectation of the role of purpose-led activity in improving lives. What defines them as “not-for-profit”, is how surplus income is used, whether it is distributable to shareholders or used for other purposes. Profit can be reduced to give better deals to consumers or increased to maximise funds available for purpose-led activity. The market economy determines economic well-being and societal impact. Consumers can have their essential needs met through companies purposed to improve their well-being and deliver essentials and other services at best prices, targeting those most in need. This is the power of shared-purpose. Profit can be deemed either societal or private, either purpose-driven or shareholder determined.
The societal economy builds a fairer economy.
HOW?
PURPOSE TO BENEFIT THE GENERAL POPULATION
Societally purposed, steward owned enterprise, neither shareholder or state owned, operates within an ethical framework. It is purposed to directly benefit customers and other stakeholders, using profit to fund societal need
Customers buying from societal companies whose purposes they believe in, financed by social finance, breaks the link between pre-existing wealth and outcome. Power is passed to customers and wider society, through rights of choice and the power of consumers buying from companies whose purposes benefit them and they believe in.
- Energy and essentials can be cheaper through companies purposed to provide best deals, like Motkraft, a self-declared resistance providing energy, fighting for their customers by keeping prices down
- Profit can be used to impact collective need. Patagonia, the clothing company do just this, “going purpose”, using profit to protect the environment
Purpose is measured by the well-being activity achieves, not simply the wealth it generates
SUFFICIENCY AND SUSTAINABILITY
Profit, like the economy it drives, need be only sufficient to sustain a societal company’s operations and fund its societal purposes; a pathway to a sufficient and sustainable economy
COLLECTIVE ECONOMIC RIGHTS
Society gains access to 100% of the endeavour of a company through its activity, purpose and profit, not just a tax-take
Our public services, including the NHS, can be supplied by companies at low prices near cost, with profits from other commercial sales used to fund social need
Even small organic steps towards a societal economy will change people’s lives in meaningful ways to them
THE CAPITAL EXISTS TO FUND IT
The financial capital exists to develop the societal sector. Drivers of change include philanthropic and impact assessed funding, commercial, retail and private investment and government sponsoring funding. Pension fund investment aligns their own purpose and resources with their members’ broader financial and social needs, to improve their members’ well-being. The sector can deliver stable and secure returns serving wider stakeholder values.
PERSONAL AND COLLECTIVE SELF-INTEREST CONVERGES
A societal economy is focused on the convergence of personal and collective self-interest to meet shared, common needs, rather than being based on competing personal and collective claims over the economy.
TOGETHER WE HAVE A CHOICE
Together, we have a CHOICE: to accept an economy we know from experience fails us in too many ways, or institute change. We will all benefit from a societal economy inherently serving our best interests. One designed to meet our common needs. One recognising our personal diversity, of self-interest and outlook.
“If we could do the right thing while making enough to pay the bills, we could influence customers and other businesses, and maybe change the system along the way”
Yvon Chouinard (Founder – Patagonia)