Howard Richards

Letter to Barack 21: The Need for Fundamental Paradigm and Culture Shifts

2010-03-09T14:05:00.000-08:00

Dear President Obama,

Hopefully the failure of the Obama Administration will make it easier to communicate the need for fundamental paradigm and culture shifts.

Your failure is especially instructive because you have done everything right, or at least almost everything right. You have been a rational president. You have based policy on facts and not on unsupported opinions. You have sought the informed advice of acknowledged experts and by and large followed it. You have invited all parties to come to the table to share ideas for solving problems. You have not rushed to judgment, but have carefully weighed pros and cons and the views of others before arriving at a decision.

If you had been a crackpot, it would have been harder to see that rationality in its dominant forms is inherently unworkable.

A major qualification must be made to the thesis that you have done virtually everything right. You have intelligently administered the status quo, but you have not attempted to deliver the change you promised. In your campaign you spoke of “changing the rules of the game” and “change from the bottom up.” In your books you write of your anthropologist mother and of your visits with relatives in Kenya who practice different basic rules. You were moderately credible as a leader who might actually initiate change in America.

Although you disappointed us, it remains an encouraging fact that your message touched hearts and minds. People gave you money. They voted for you. Your campaign provided evidence that there are many people who realize that fundamental change is needed.

Today you are desperately trying to trim the deficit. You are keenly aware –although there are some liberal savants who deny it—that the nation cannot continue to go deeper and deeper into debt. A few months ago I heard you say on television that the point of your policy was to spend more money. Then you were desperately trying to revive a sagging economy. Today unemployment is not going away. Turning off the cash spigot can only make it worse. Turning on the cash spigot can only make the deficit worse.

You are checkmated. The problem has no solution under the rules of the game as it is currently played.

Further, even if you could do the impossible; even if you could get the economy onto a path of steady growth with declining debt and declining joblessness at the same time, you would still be checkmated. Sure we can support green technology to some extent without a paradigm shift, but to really get humanity off its collision course with nature we must get off the growth dynamic that has driven capitalism for the past 400 years. (See for example Ted Trainer, Towards a Sustainable Economy, the need for fundamental change. Oxford: Oxford University Press, 1996.) Now you are desperately trying to get the USA on the growth dynamic.

I am not the only one proposing paradigm shifts today. (See for example any issue of Resurgence magazine.) There are many books with concrete proposals, some of which I have written. There are many on-the-ground experiences, some of which I have participated in and/or evaluated.

Let me close with just one point about culture change. (See my and Joanna Swanger´s chapter on this topic in Handbook for Building Cultures of Peace. NY: Springer, 2008.)
Culture shifts do not come out of thin air. They come out of potential transformations of existing cultures.

Applying this principle to the USA here and now suggests renewed emphasis on volunteering, a practice that is already widespread. Bypass the economy. Mobilize resources to meet needs directly. You could start in your own neighborhood, in the slums near the White House, and you could take a few tips from The Church of the Savior, which is just down the street from you.

A renewed emphasis on volunteering is not just an emergency push to house the homeless and to provide useful and dignified activities for the unemployed during a short period until the recession is over. It is a strategy for beginning a sustainable future now.

Letter to Barack #20: Slouching Towards Bethlehem

2010-01-07T13:20:00.000-08:00

Dear President Obama,

Now we have celebrated yet another Christmas with millions on the outside looking in. They are outsiders excluded from our annual fête de la prosperité. They are selling knick-knacks on the sidewalks, washing the windshields of cars stopped at intersections hoping for a tip, panhandling, stealing, cooling their heals in prisons, surviving on pittances in dilapidated apartments, working long hours for pay so low that they are poor in spite of being employed, telling complicated lies to con somebody out of a few simple dollars, and so on and so forth.Meanwhile hundreds of think tanks and university departments and international organizations are grinding out more professional literature than anybody has time to read about how to end poverty. At a world level it is about how to achieve “development.”

It is the New Year, the first day of the new decade. It is a time to renew our minds.

“Be not conformed to this world, but be renewed by the transformation of your mind,” wrote Christianity’s first intellectual in his letter to the Romans.

What Saint Paul called “transformation” we epigones of Thomas Kuhn today call “paradigm shift.” (Read shifts, the singular always including the plural.)

You may remember President Obama that a year ago I predicted in a letter to you that your own experience would demonstrate the need for a paradigm shift. If you as a very popular president, advised by the leading lights of the mainstream economics profession, supported by majorities in the House and the Senate, could not get the economy humming along smoothly and successfully within a year, your frustration would demonstrate that there is something wrong with mainstream thinking. The year is up. The demonstration is, however, redundant. Even without current frustrations there are many anomalies that demonstrate the need to be transformed by the renewing of our minds.

Bucky Fuller wrote, “What they do not want you to know is that there is enough for everybody. There is enough to meet the needs of 100% of humanity without ecological damage.” Bucky spoke as a scientist, as one of the many scientists who know that appropriate technologies equitably applied could meet the needs of all the world’s people, although probably not the needs of the larger populations that would result from unchecked population growth.

Unfortunately, what Bucky Fuller attests is physically possible is not at this point in time socially possible. Accumulated anomalies that call for a paradigm shift are embedded in the curricula of the universities, in the minds of the experts, in the minds of the general public, and in our institutions.

Except for a few pioneers such as Genevieve Vaughan (none of whom were invited to your Jobs Summit) minds are not moving. Nevertheless reality is moving. Without consciously intending to do so, society is slouching toward a paradigm shift.

Evidence to prove my point: Millions of Americans are now newly on the government payroll, living from check to check as Congress passes successive extensions of unemployment benefits. The benefits are extended not because the reigning economic paradigm calls for them but because reality calls for them.

Crime rates have fallen in the USA as millions are less tempted to steal because the government gives them money, because houses formerly vacant during the day are now occupied by their unemployed owners, and probably also because law enforcement authorities have improved their techniques.

I believe we are slouching toward the realizations that unemployment is permanent; that millions more would be unemployed if they were not warehoused in jails, schools, and barracks; and that other millions more would be unemployed were they not employed in the security business keeping down the unrest partly caused by unemployment in the inner cities and in the outer periphery. Unemployment patent and disguised is structural. (Not just “structural” in the narrow sense of the economists, but also in the broader sense of the sociologists.)
Every day we realize more and more that for-profit employers will offer the millions just mentioned jobs only when the fifth derivative intersects the sixth integral in n-space. In other words, never. Every day we realize more and more that those millions should be doing something useful while waiting for that non-event to un-happen. And …

….for example, they could be planting trees. Here I have to congratulate you President Obama because you are taking a step in the right direction putting many people to work installing green technologies …

…and, to finish my thought with questions: Are we getting to the point where we will put our money where our mouth is by treating human beings as ends not as means? As the very purpose of the economic apparatus? Not just as human resources? If so, then all those millions could be supported not just to be useful, but to develop their own personalities. They could, for example, be in school studying massage or poetry or bass guitar or pole vaulting or astronomy or religion, or philosophy, or the history of algebra, or organic gardening, or whatever fulfills their dreams. We would always factor in also going back to school periodically to keep up with the skills required by the job market. Retooling is part but not all of lifelong learning.

Signs already point toward a silent transformation and paradigm shift in education. Throughout the world enrollments in tertiary education and in adult education mushroom. Public policy in every nation endorses the UNESCO goal of lifelong learning for all.

Another question: Are we backing our way into fulfilling the prophecy of Karl Marx that at some point in time pre-history (the epoch of domination of human beings by the economy) would end, and the history of humanity (the epoch of the full and free development of all) would begin ?

In practice if not in theory we are breaking the sales barrier. Even though if you listen to people talk, or if you listen to the justifications for micro-lending programs or for job training programs, you will hear that most people still believe the fish story (“Give a man a fish, and …”), in practice more and more people are able to achieve a livelihood without producing anything for sale. The market is losing its grip, becoming more docile, acting more like a servant and less like a master.

There is a catch.We are funding the greening of America; the groceries of the unemployed; ever greater military, police, and private security expenditures; and highly subsidized education for more and more students of all ages by borrowing ever more astronomical sums of money. The national debt, state and local debt, corporate debt, family debt, and individual debt are tending on the whole to go higher and higher without limit. World society is ever more polarized into a rentier class of lenders and a déclassé multitude of borrowers. The masses and the taxpayers owe the rentier class periodic payments from now to eternity.

Laboring under a steadily-mounting burden of public and private debt, with employment opportunities scarce and often low-paying, the majority somehow gets by. The majority works some of the time, goes to school some of the time, sometimes neither works nor goes to school, and sometimes manages to get by while simultaneously both working and studying. Living from check to check, bill to bill, stress to stress, in their ripe old age the majority finally finds economic security as the government picks up the tab for elder care. Life for the rentiers is sweet, while life for the majority is stressful but tolerable. But can a system based on steadily-mounting debt last?

There are ways to continue the present positive trends toward a society that is ever greener, ever more inclusive, and ever more highly educated. I will not list the negative trends that must be discontinued since I have already mentioned some of them and everybody knows what the others are. I will assert, echoing Bucky Fuller, that in principle they can be discontinued.

It can be done. We and our descendants can enjoy future Christmases without millions selling knick-knacks on the sidewalks, washing the windshields of cars stopped at intersections hoping for a tip, panhandling, stealing, cooling their heals in prisons, surviving on pittances in dilapidated apartments, working long hours for pay so low that they are poor in spite of being employed, and telling complicated lies to con somebody out of a few simple dollars, and so on and so forth. Christmases in the future can be fêtes de la liberté, de l´égalité, et de la fraternité.

Obviously the paradigm shift needed to keep the good trends going and erase the bad ones does not consist of prolonging indefinitely the present practice of going ever more deeply into greater and greater debt until finally the creditors realize that they will never be paid and the bubbles burst.

I will not give details of the needed theoretical and practical transformations here. Anybody who wants them can easily find my other writings, those of Pierre Calame, those of Charles K. Wilber, those of José Luis Coraggio, those of Marcel Mauss and Karl Polanyi, and those of feminist economists.

Peace and all good,

Howard R.

Letter to Barack # 17: A Life and Death Question of Methodology

2009-04-30T19:07:00.000-07:00

A Life and Death Question of Methodology (Obama 17)

Dear President Obama,

The physical facts imply that it is necessary to reform our institutions. There is a threatening fact: The present relationship of our species to the biosphere is unsustainable. Buckminster Fuller and other scientists have affirmed a corresponding encouraging fact: There would be enough for everybody indefinitely if we (we humans) could learn to cooperate, to share and to use appropriate technologies. We need to learn to live simply. (See www.davidhilfiker.com). We need to learn to share. (“Poverty will end when we learn to share with the poor.” —Mother Teresa). We need to use ecological criteria when we invent and choose technologies.

Economics, and the set of institutions it studies and tends to justify, collides with the physical facts. It tends to tell us that we need to get back on the road to growth, that we need to restore consumer confidence so that consumers will buy more, and that we need to restore profitability so that investors will create more jobs. (I am paraphrasing your speeches, and I assume that in your speeches you paraphrase the advice your economics team gives you.) Economics tends to tell us that it is necessary to increase social inequality (for example formerly by means of the Bush tax cuts for people in upper income brackets, and today through reluctance to reverse them). Now more than ever, economics tends to say, at a time of economic crisis, it is necessary to reward the investing class because their expectations of profit are the sine qua non of growth, which is, in turn the sine qua non for at least trying to create that will-of-the-wisp full employment. It tells us that we need to make our automobile industry more competitive by dismissing the employees of unprofitable operations and cutting wages. From an ecological point of view, we really should be shutting the automobile industry down completely. From a human point of view, we should seek adequate incomes for all. As a half way measure we should at least be allowing only automobiles with technologies so green that they will reduce global warming. Economics tells us this even this half way measure is not now feasible because the green cars cannot be produced at affordable prices soon enough to create the mass buying needed to restart the economy.

In short, our actions are mainly driven by a logic that characterizes both the science of economics and the institutions it studies. What we should do to adjust to the physical reality we face, and what we should do to assure that every member of the human family is cared for, is overwhelmed by what we must to make our economy function. In this letter, I offer a few reflections on the present and past of economics. I am looking for ways to change it from a voice that clothes the imperatives implicit in our present institutions in the garb of science, to a voice for change.

Alan Krueger, a brilliant economist whom you recently appointed to an important post in the Treasury Department has written, “Early work in economics was primarily deductive” while the current trend is to work inductively. Today’s economists emphasize the importance of detailed empirical studies of facts. They are aware that an economic theory “is a model of reality, not reality itself.” The model is to be justified, if it is to be justified at all, by its usefulness in organizing facts. (See Krueger in Journal of Economics Education, volume 32)

Other members of your economics team, including Christina Romer and Larry Summers, have expressed similar views on methodology. Your team tends to agree with Krueger that new economics is better than old economics because it (today’s economics) is more inductive and less deductive. Krueger himself and his co-authors have shown that while deductions from the theory of supply and demand imply that raising the minimum wage will increase unemployment, inductive empirical studies show that a moderate increase of the minimum wage has no significant effect on the rate of unemployment.

We should be grateful to contemporary trends in economics for saving us from the sorts of confusion of mathematical models with real-world human behavior that led, for example, Leon Walras to write over and over again (and to put in italics) that under pure competition the satisfaction of every participant in the market is maximized. This sort of talk is tautology with no empirical content; it must be true because of the definitions used by the theorist and therefore it tells us nothing one way or the other about what happens in fact. Nevertheless, contemporary economists tend in practice, however aware they may be of the historical relativity of our institutions in principle, to naturalize our institutions and therefore to naturalize the logic that makes us an unsustainable species. They follow the bad example of John Stuart Mill by treating our socially created realities as if they were simply logical extensions of natural realities. (See the opening chapters of Mill’s Principles.) Consequently, they clothe the imperatives implicit in our present institutions in the garb of science more than they design constructive paradigm shifts.

The dichotomy “deductive vs. inductive,” or arbitrary model vs. insight into reality, or any dichotomy whatever, tends to blind us to multiple options, different interpretations, different ways of slicing reality into categories. Although all dichotomies reflect an unfortunate bias of the human brain in favor of dualities, deduction vs. induction is an especially fuzzy way to slice economic research into two categories, since—as logicians will tell you—there is not much difference between the two. Induction is deduction for which the premises are facts.

Nevertheless, Krueger’s meaning is roughly clear. He reflects a tendency among economists toward praising their current research practices as better than older ones because they are more parsimonious (i.e. recognize fewer entities) and more rigorous (i.e. more mathematical). Without using the word “inductive” we can use related although not identical terms and say that today economics is more empirical, or more econometric, or more positivistic. In the sense in which Paul Samuelson thought he was improving Alfred Marshall’s economic principles by restating them in mathematical terms in his Harvard doctoral dissertation, today’s research can be praised as more capable of stating hypotheses precisely and therefore more capable of testing them.

Any research methodology requires a series of choices. Whether the point is phrased in terms of one or another dichotomy, or even if it is phrased in a way that succeeds in categorizing the rivers of economic research flowing from universities and think tanks in non-dualistic terms, there are many alternatives to currently prestigious approaches. I do not propose to replace a tendency among your advisers and among mainstream economists generally to believe they have made the right methodological choices, with another equally overconfident tendency. But there is nonetheless one particular neo-institutionalist and critical realist alternative I do want to propose. It can be called a cultural structures approach.

I want to rescue some of the voluminous literature of the old-fashioned economics that was “mainly deductive.” Certain older theories legitimately claim to have insight into “reality,” as distinct from being “models” that make it a point “not to be reality.” An example is Marx’s theory of relations (Verhältnisse) of production, which is not a model but an economic theory resting on sociological and juridical foundations; that is to say, in the terms I propose, on cultural structures.

The approach I am recommending takes as first premises the constitutive rules that define the type of society we have, which Charles Taylor has characterized as a bargaining society –most notably the rules that constitute property and contracts. Vandana Shiva illustrates the fundamental character of constitutive rules dramatically when she describes how multinational companies in India promote the legal constituting of property rights in water, air, forests, traditional medical practices, and genetic codes in order to make it possible to sell them.

Unlike the older economics, which Krueger and others regard as surpassed by today’s superior parsimony and rigor, the cultural structures approach does not postulate non-physical entities (“metaphysical” entities in positivist nomenclature). For example, unlike Smith, Ricardo, and Marx it does not postulate that there is something called “value” that stands behind and causes prices. So far, we agree with the contemporary mainstream. However, unlike Milton Friedman and his followers it does not say that models used –to continue with the same example—to explain prices requires no insight into reality. Instead, like Ludwig von Mises, we think it very important to notice that a price is a contract. A price is an agreement between a buyer and a seller. Its historical conditions of possibility (to borrow a phrase from Michel Foucault) include the constitutive rules of property and contract.

A model may not be “reality itself,” but if it is a good model, or a good approach, it will not be a free-floating imaginary construction à la Friedman either. It will draw on insight into reality à la Lonergan, namely the insight that economic behavior is human behavior. In Wittgensteinian terms human behavior consists of language games. Alternatively, one can drop the idea of model altogether –since the very idea of model may connote an arbitrary construction—and begin with the premise that economic behavior is a subset of the human behavior studied by sociologists, anthropologists, and other scholars.

Contrary to what David Hume and his followers would have us believe, science advances when it achieves realistic insight into the causal powers that produce the phenomena under study. (Harré, Principles of Scientific Thinking). To continue with the same example, the study of prices advances when we observe that a price is a contract governed by ethical and legal norms. Similarly, chemistry advanced with Dalton and biology advanced with Darwin –not by running data through significance tests but by gaining insight into the causal powers of the mechanisms that produce the phenomena (mechanisms which correspond in economics to cultural structures, as I have shown in my book Understanding the Global Economy). Much of the “scientific method” studied in high schools and much of the “inferential statistics” studied in colleges reflects a superficial understanding of the natural sciences as if they were essentially about finding statistical regularities in the phenomena observed. (Compare, for example, the monetary histories of Friedman and Schwartz). On the basis of a superficial understanding social scientists are trained to do not what natural scientists historically have actually done to achieve insight into reality, but rather what a neo-Humean imagination imagines them to have done. (Harré.) Economics has been one of the fields most damaged by procedures that treat, for example, multiple regression analysis as a substitute for studies of human behavior. (Here “studies of human behavior” is meant as a generic term referring to several paradigms in social science I and other critical realists regard as more realistic than running datasets through multiple regressions, including Margaret Mead´s “customs,” Bourdieu´s “logic of practice,” Foucault´s “archaeologies” and “genealogies,” Glaser and Strauss´ “grounded theory,” Wallerstein´s world-systems approach, Goffman and Garfinkel´s micro-sociology, Patomaki´s version of post-international relations theory, Catherine Hopper´s “culturally determined behavior,” and Harré´s own anthropomorphic method. Among the more realistic mavericks in economics itself one would have to mention the German historical school, Veblen, Commons, Mitchell, Cyert and March, Drucker, Sen, feminist economists, and most Marxists.)

To the extent that economics simply accepts institutions here and now as natural and inevitable, then regardless of its mathematical sophistication and regardless of the sheer quantity of detailed empirical studies it produces, it is a “science” only in the sense that there is a “science of real estate finance,” a “science of tax return preparation,” “a science of life insurance” and a “science of banking.”

Grounding economics less ethnocentrically and more fundamentally in the basic social rules that constitute bargaining rescues some “mainly deductive” passages in older texts: Their general discussions of the human condition are not always the vague approximations of pioneers, waiting for their Samuelson to restate them in rigorous terms so that they can be empirically tested. They are often interpretations of cultural structures in historical evolution. When Adam Smith, for example, goes on and on about what is and is not natural, he is not a metaphysical essentialist; he is a liberal ethicist. Smith´s “natural justice” is precisely security of property and enforcement of contracts. Smith is quite clear that the political economy he describes is made possible by “civilization.” “Civilization” is the reign of the civil law protecting the rich against the poor that makes accumulation possible. The civil law was developed in early modern Europe drawing mainly on Roman jurisprudence, although Smith considered that China too was civilized in its own way. Smith always implicitly and frequently explicitly identifies the historical conditions of possibility of economics with the historical emergence of modern western institutions.

Now in 2009 when sustainability and social cohesion are at stake, and the odds are against them, humanity cannot afford to reject even illusions if the illusions will help to get it off the endangered species list. But dissolving what has hitherto been known as economics or political economy into the general study of human behavior requires no such pragmatic dishonesty. Realism is practical. In practice, we need realism. We need to adjust our behavior to reality. Our behavior is determined mainly by our institutions. Therefore, we need to change our institutions.

A neo-institututionalist reconfiguration of what is now known as economics, bringing it into closer touch with its own history, with the other social sciences, with law, with theology and its history, and with the humanities, would help us to change our institutions. It would help because it would be studying the logic of our institutions, and, by implication, the alternative logics we desperately need.

Peace and all good,

Howard R.

Letter to Barack #16: A Principle of Principles

2009-03-10T22:47:00.001-07:00

Letter to Barack #16: A Principle of Principles

Dear President Obama,

The hopes of many hang by the slender threads of the pragmatic and communitarian ideals you express in every speech. In a speech to Wall Street financiers early in your campaign you said that Americans have always viewed the economy not as an end in itself but as designed to serve a higher purpose. From time to time Americans have redesigned the economy to improve its service of its higher purpose. You identified the higher purpose by saying, “We are all in this together.” My favorite line from your Inaugural Address was, “We can choose our better history.” You reminded your listeners that history can be read in many ways. We can choose our identity by choosing what we say we have always been. We can project our chosen identity into the future. In your recent Presidential Address to a joint session of Congress, the line that moved my soul was, “Problems are to be solved.” It was a short phrase that is true by definition. It was an invitation to cooperate. It was an echo of the line, “We are not quitters,” penned by a young correspondent who wrote you a letter. A principle of principles.
“Problems are to be solved.” This principle implies a humanitarian solidarity you have often explicitly asserted. You have often said we are going to solve our problems “above all together.” The problem-solving intention is to solve the problems of Main Street, of the people, in short of everybody. We are going to transform America from the bottom up, not from the top down. To drive home the point that you are talking about transforming civil society, not just about reinventing government, you invited to the Presidential Address as special guests a man from Florida who shared his retirement bonus with his employees, and a young lady from South Carolina committed to improving her school. You praised a town in Kansas where the citizens are working together to green and to uplift their community. You made your point even more dramatically when you spent part of the day before your inauguration painting a DC school together with neighborhood volunteers.
Your repeated emphasis and your clarity were lost on the Governor of Louisiana who gave the Republican reply to your Presidential Address. You spoke of “we.” He spoke in terms of them and us, the former being the government and the latter the people. You were talking pragmatism. Problems are to be solved. If Plan A does not work, we go on to Plan B, and if it does not work either then to Plan C, and so on successively until the problem is solved. For the Governor we do not need successive approximations because we already know the correct answer to almost all questions. The correct answer is less government and lower taxes.
My own views concur with those who believe that at this point in time neither the Republican opposition, nor you as President, nor the Congress, nor the majority of academics, nor the majority of the public, is proposing any feasible and sustainable solution for any of today’s major problems. I concur with those who do not on the whole expect Plan A to work, and who do not expect Plan B or Plan C to work either, even though each succeeding plan will have some desirable features. Perhaps Plan P or Plan R will work. Therefore we want your pragmatism and communitarianism to be durable. If your humanitarian open-mindedness endures through seas of troubles, and continues to find broad support in public opinion, then a combination of rational critique by enlightened minorities and learning from experience by suffering majorities may eventually increase the influence of the paradigm-shifting approaches that really do solve problems.
You said in your Presidential Address that problems are to be solved. Our job is to solve the problems. We will pull together. We will take responsibility for our future. We love our country and want it to succeed. Many hopes hang by the slender threads of your words.
Peace and all good,
Howard R.

Letter to Barack #15: Better Science, Better Policy

2009-02-23T18:44:00.000-08:00

Dear President Obama,

The questionable epistemological status of mainstream economics is displayed daily in the press and on television as scholars trained in that discipline purport to derive explanations of the current crisis (and associated predictions and prescriptions) from a single prior case or period. For some everything went wrong with the deregulation of recent decades. For others today´s case is comparable to the recession of 1981 and 1982, or to the Great Depression of the 1930s, or to the crisis of 1873. The chairperson of your Council of Economic Advisors distinguished herself by studying monetary and fiscal policy in the 1930s, and she is on record as encouraging graduate students who wish to advance in the profession to do detailed empirical studies of particular historical cases similar to those she does herself.

If one accepts the two premises that (1) Observed phenomena do not reveal the causal powers that produce them, and (2) What is happening now, as we move from a chaotic present to an uncertain future, is not a repetition of any single pattern of past events; then we must conclude that comparisons with the Great Depression or any other period or case are not likely yield reliable guidance as we endeavor to select among the options available to us those present actions which will produce a better future.

To begin to dissolve economics into a broader socioeconomics that will be capable of explaining the phenomena we are experiencing, and of contributing to a more reliable guidance of social reconstruction, it helps to consider circumstances in which it is logically valid to draw general conclusions from a single case. When biologists study a single specimen, they have good reasons for believing that their findings will be true of all individuals of the same species. A beginning student who dissects a frog finds structures common to all frogs of the species dissected. A frog, unlike a Great Depression, is made of bones, tissues, and organs that repeat themselves over and over again in numerous similar cases.

Why? Because living beings are built according to instructions encoded in DNA. In a normal environment, a given seed will grow into a given plant or animal.

The ecohistorican Thomas Berry frequently remarks that the human species is biologically coded to be culturally coded. The same word used in speaking of DNA, the word ¨code,¨ can be employed to refer to cultural codes that organize behavior (norms, rules, customs, habitus). Up to a point the anthropologist can echo the biologist in generalizing from a single specimen, learning about a culture by interviewing and observing a single informant who has internalized its codes.

When applied to economics (or, rather, to dissolving economics into transdisciplinary social science) an approach that starts by detecting and articulating cultural structures built from codes (¨¨symbolic structures¨¨ in the terminology of Jürgen Habermas) calls for giving greater attention to what Joseph Schumpeter called ¨institutional framework¨, and for contextualizing what he called ¨¨analysis.¨ When Smith and Ricardo assumed that society divided into three classes of human beings: (1) the landowners, (2) the merchants and manufacturers, and (3) the laborers; they assumed what Schumpeter calls an institutional framework. When they took it to be the task of the science of political economy to explain the natural and proper division among the social classes of society´s annual produce (or, what for them was the same thing, its annual revenue), they were doing what Schumpeter calls analysis. They were proposing a theory of rent, a theory of profits, and a theory of wages.

In Schumpeter´s muddled mind it was possible to write a history of politically neutral economic analysis, devoted to explanation while rigorously avoiding prescription, while assigning to a separate discipline, sociology, the study of the constitutive rules of the institutions that created the phenomena observed. But we will not make much progress in improving the performance of our institutions until we reform our social sciences to bring the basic rules of institutional frameworks into focus; for they are the principal causes of the phenomena observed.

Dissolving economics into a transdisciplinary social science that studies the causal powers of cultural coding contributes to solving what Michel Foucault called the principal political problem of our times. Foucault remarked that the principal political problem of our times was lack of imagination. His remark describes the debates in the United States Senate and House of Representatives on the stimulus package, which were almost entirely about one or another proposal to get the economy moving again by restoring the confidence of the investors who invest, restoring the confidence of the consumers who buy, restoring the confidence of the bankers who lend, and restoring the confidence of the executives who manage firms.

Retiring economics from its splendid and disastrous isolation, connecting it with sociology and with history and all the arts and sciences, helps to free us in many ways. One of those ways is that it frees our imagination and therefore our vision. We see that basic cultural structures might change; we see that they have changed (“Always historicize!” wrote Fredric Jameson): we open our eyes and see that human behavior is in practice not nearly as dominated by profit-seeking as it has been in mainstream economic theory from Smith to Friedman.

We see the present crisis as an opportunity. It is an opportunity to wean ourselves from our excessive dependence on the for-profit subsector of the private sector. We see that the public sector and the non-profit sector can take up the slack when for-profit private business sags. Instead of chasing the will-of-the-wisp ¨confidence¨, which always depends (as Keynes taught us) not on any rational or objective standard whatever, but on people´s subjective perceptions of other people´s subjective perceptions, we can come down to earth and focus on the physical task before us: building sustainable cultures that mobilize resources to meet needs.

We can be thankful that just as global warming is getting out of control, while human population growth is continuing to spiral out of control, and –to generalize a series of ecological warning signs without naming each specifically—just as we are on the verge of destroying our habitat and therefore destroying our species; a financial crisis has come to save us. The financial crisis is slowing down the profit-driven machine that is destroying us. A better epistemology helps us to see the financial crisis as an opportunity to let the private for-profit economy slow down, as an opportunity to bring that machine under ethical and rational control, and as an opportunity to supplement it with other ways (public and non-profit) to mobilize resources to meet needs. The present crisis is our opportunity to become a sustainable species in a sustainable biosphere.

Peace and all good,

Howard R.

From One of Your Voters: Letter to Barack #1

2009-02-05T22:05:00.001-08:00

This is me speaking.

I am one of the 52 million people who voted for you, one of the 3 million in your database who contributed small amounts of money to your campaign.

Remember me?

I am writing to make sure I understand our deal. I watched your acceptance speech at Grant Park in Chicago. I watched many of your speeches.

You said together we are going to transform America and the world. Right? We are going to transform not from the top down but from the bottom up. Did I get that right? It is not you who are going to transform America but we. Is that the deal? You are calling for a spirit of service and sacrifice. That’s what I heard.

In a speech to financiers on Wall Street you said the economy has a higher purpose. The higher purpose is that we are all in this together. From time to time we change the rules of the economic game to make the economic machine serve its purpose better. (I read the speech on your website www.barackobama. com) Your Wall Street friends voted for you even though you told them you would raise their taxes. That sent a message.

So –here is my conclusion, my message: I am not supposed to be just watching TV waiting to see whom you will name to cabinet posts. I am supposed to be out on the street transforming my town and neighborhood. Right?

This afternoon I will donate twelve bottles of cooking oil to our neighborhood food pantry. I will talk up cooperation. I will also work on changing our irrigation system from spray to drip (Drip benefits the environment by producing more food with less water.)

I am copying this to lists of transformers. If I am missing something, or if I have misunderstood something, hopefully somebody will set me straight.

Howard R.

Nov. 6, 2008

To Barack from the South: Letter to Barack #2

2009-02-05T22:03:00.001-08:00

OK Barack, I sent out a thousand copies of my first letter to you. Several friends responded by correcting my number: You got nearly 65 million votes, not 52 million.

Nobody questioned my concept.

The concept is that together we are going to transform civil society.

In the campaign your opponent sang the rancid old Republican theme song: Get the government off our backs. He repeated the perennial liberal utopian ideology: He assumed there is nothing wrong with civil society. He said too much government is the problem, less government is the solution.

You put together phrases from Abraham Lincoln, Franklin Roosevelt, Martin Luther King Jr., John F. Kennedy, …. stirring old roots with Spring rain. You emphasized some relatively new dimensions: bottom up, service, transform, higher purpose, save the world.

Some people say you won our votes by appealing to our emotions, and then less than 24 hours after the polls closed confirmed that although your words expressed crowd-pleasing sentiments they referred to nothing concrete when you by appointed a no-nonsense conservative Democrat as your chief of staff. I say behind the emotion there is a concept: transform civil society.

People are as delirious about your victory in Asia and Africa as they are in Chicago and Los Angeles because you touched their hearts with a dream of CHANGE. Although you are legally the President-elect of the USA , and only in some people´s imagination the President-elect of the world, you are for billions the incarnation of HOPE. The world´s billions may harbour enthuasism without clarity, but what they feel in their hearts can be clarified. It can be put into practice.

There was a promise in your campaign that John McCain did not understand. You are not the tax and spend Democrat he was attacking. Amitai Etzioni is right to call you a communitarian. blog.amitaietzioni.org/2008/01/a-communitarian.html

CHANGE and HOPE have an operational meaning above and beyond Rooseveltian social democracy: above and beyond stronger government; above and beyond defending the economic interests of the middle and working classes; above and beyond reversing the dismantling of the welfare state. They mean a groundswell of social responsibility in the private sector; they mean a culture shift. Without the second the first is not feasible.

Without the transformation of civil society CHANGE and HOPE will deflate to gasless plastic balloons.

I appreciate the difficulty of keeping track of your 64 million electors and your 3 million contributors, even though you have promised to listen carefully to what we have to say. I imagine myself as number 32,641,211 among the electors and number 1,025,986 among the contributors. If you look up number 1,025,986 on your database you will find a California address, but actually I am an expat. I live on the Continent of Hope ( South America ), and vote by absentee ballot. I do not usually vote for Democrats. I made an exception in your case because I thought that because of your background as a community organizer you would know in practical terms what it would take to give concrete meaning to your words. I thought that someone who had imbibed anthropology with his mother´s milk, and who had lived as a child in Indonesia , would be capable of rising above the ethnocentrism of his father´s profession. I thought that you could facilitate turning the culture shift the masses vaguely dream and desire into an operational reality. I thought the other world that is happening at thousands of sites around the planet would find in Barack Obama a leader who symbolized it and understood it because of his personal history.

Today I went to a meeting. You know about meetings. “Participation” sounds good but meetings are …….. well ……. er ………….. ah………………….. ..…………..indispensable. If you cannot endure the boredom and/or petty quarrels that typify the average meeting you cannot change the world. You are like a soldier who flunked boot camp.

Today´s meeting was better than average. It was at the office of our communal union of neighbourhood councils. Our little town of 40,000 people is divided into 52 neighborhoods, each with its council. On the pretext of preparing for the impact of the world financial crisis, and taking advantage of the opportunities created by our recent success in electing a new mayor with new ideas (who happens to be a gay man who won handily in spite of homophobic propaganda against him) we are doing what we should be doing even without the crisis and even without the new mayor. Every neighbourhood will have a community food pantry run by volunteers, through which anybody who is unemployed can earn food by community service. We are not giving anything away. Those who do not succeed in selling their labor in the labor market work for the local community and the local community pools resources to make sure they get by. We have already organized food security in one neighbourhood, and now we are extending the practice to other neighbourhoods.

Next time you are in Argentina you might consider visiting Cordoba or any of several other cities to see ABC (Abastecimiento Basico Comunitario). It is a project of the National Institute of Industrial Technology headed by my friend Enrique Martinez. Enrique´s proposal is that every Argentine have assured at the neighbourhood level adequate nutrition, primary health care (at the neighbourhood clinic), and housing. Then let the storms brew as they may at the level of the national economy and the global economy. (See www.inti.gov.ar)

More later. I aim to contribute to the transformation of civil society in the North by making better known some of the seeds of transformation that are already germinating in the South.

Howard R.

8 November 2008

p.s. Scholars will notice that my use of the term “civil society” blends its classic sense (that of Hegel´s bürgerliche Gesellschaft ) with its more recent senses popularized by the World Bank and others.

ABC & ABCD: Letter to Barack #3

2009-02-05T21:56:00.001-08:00

OK Barack, this is me again.

Here is a question I wanted to ask you: When you were a community organizer in Chicago did you ever run across John McKnight and Jody Kretzmann? They are at Northwestern University. (www.sesp.northweste rn.edu/abcd/) According to the media you learned some of Saul Alinsky´s organizing methods (as did I via Cesar Chavez, who was trained by Fred Ross, who was trained by Saul Alinsky) but I wanted to ask whether you ever became familiar with the less confrontational and more communitarian approach of John and Jody.

The reason the topic came up is that my last letter sparked interest among readers in Enrique Martinez´s vision of food security, primary health care, and housing assured for every Argentine at the neighborhood level, known as ABC (Abastecimiento Básico Comunitario) .

People asked me where they could learn more about ABC.

Unfortunately very little is written about ABC. There is a chapter on it in a book published in 2007 by the Faculty of Agronomy of the University of Buenos Aires (Hacia un Nuevo Pacto Social en el Agro). There is a note on ABC on the INTI website, where there is also a Spanish translation of my paper “Vision of a World without Poverty or Economic Insecurity,” which was earlier published in English in Acorn, the Journal of the Gandhi-King Society and included as an appendix to my book Undersanding the Global Economy (Peace Education Books 2004) I think my paper expresses INTI´s ideas as well as mine since they took the trouble to translate it and upload it to their site. (www.inti.gov. ar) My refrence to Enrique´s idea of assuring in every barrio food, primary health care, and shelter was not based on any text at all, but rather on what he said at a seminar we did on methodology for social change at the home of our friend Hugo Arce who teaches economics at U. of Buenos Aires.

John and Jody (and hundreds of collaborators) have invented ABCD. It is similar to ABC and is extensively documented in English. You can buy their book Building Communities from the Inside Out: Finding and Mobilizing a Community´s Assets from ATLA publishers in Chicago. Their book comes with videotapes. You can sign up for trainings led by their collaborator Mike Green. ( www.mike-green. org ) Several Earlham graduates are using ABCD as we speak.

ABCD stands for Asset Based Community Development.

It was invented in Chicago as a response to globalization. Industry had moved to low wage sites in the third world. Most of Chicago had become what is known in the USA as an “inner city.” As Earlham economics professor Jonathan Diskin once said, an inner city is a place where there is little or no investment. The standard game of civil society has been lost. That is to say, there are no moves left in the standard game of attracting investors to create jobs. The city is checkmated. The residents are left with making a living selling personal services to each other, welfare, retail sales to fewer and fewer customers, government employment, missions and agencies, jail (at least they feed you there), rehab (at least they feed you there), joining the military (ditto), a variety of illegal and semi-legal rackets, and new careers in security and law enforcement spawned by the need to protect everybody from everybody else.

In a Chicago decimated by globalization the members of an inner city church met to deliberate on the questions, Shall we close the church and move to the suburbs? Or shall we stay here and resurrect our neighborhood? They answered the first question NO and the second question YES. ABCD was born.

ABCD starts with taking an inventory of (or “mapping”) a community´s assets. In the adaptation of ABCD we used in the Roman Catholic archdiocese of Los Angeles we called the assets “gifts.” We said, “Building community is connecting gifts.” Everybody has gifts. Busy professionals who have no time usually have money to give. There are gifts of the heart (like enjoying cooking, enjoying weeding and pruning, enjoying caring for the elderly, enjoying working with children.... ), gifts of the hands (like repairing TV sets, playing the guitar, fixing roofs....) and gifts of the head (languages, accounting, engineering, law....) Institutions have underutilized assets, like a church building that is vacant every day but Sunday, or a vacant lot belonging to a hospital that could be a community garden.....

Sending the Boy Scouts or the Girl Scouts out to map a community´s assets may not seem like a method for changing the world. However, a little reflection will show that it opens the way to a constructive and open-minded rethinking of the basic rules of the economic game. ABCD is different.

ABCD is not what Fernand Braudel called traditional material life. It is not extended peasant families who raise animals and crops and ocasionally sell a pig at the fair and immediately use the proceeds to buy goods they do not produce themselves.

It is not a money-based exchange society where money is required to obtain the necessities of life, where everybody has to sell goods or services in order to survive. (The type of civil society whose limitations led Hegel to postulate the need for a higher ethic in a public sphere.)

ABCD is not what (following Karl Marx) is called an “extended” exchange society in which decisions to initiate production depend on the investors´ confidence that the products can be sold at cost-covering prices plus a profit. Meeting human needs, if it happens at all, is a by-product of turning money into more money. This type of society is today called “the economy.” Governments are now throwing huge sums of money at “the economy” desperately attempting to restore confidence. (The “confidence” analysis is a twist due to Keynes, not Marx.)

The philosophy of ABCD is not that of a typical welfare state in which there is a needs assessment (showing a need for clean and adequate water, for low cost housing, for safe streets .... ) followed by public policies, plans, programs, projects, and missions designed to meet the needs of the target population.

It is not a centrally planned command economy.

ABCD represents a higher form of pragmatism. It is persons-in-communit y mobilizing resources to meet needs, employing elements of 1 to 5 above, and also elements of 6 to .... n not shown, employing what works, discarding what does not work. As John and Jody say, institutions should be employed to serve communities.

Could all of this have started in Chicago, in the same Chicago where Milton Friedman was teaching his theories of free market utopia at another university a few miles to the south of Northwestern, while a young community organizer, a worshiper in a socially conscious congregation, a law professor, a state representative, and a Senator from the State of Illinois knew nothing about it ? It did not seem likely to me. That was why I wanted to ask you whether you had ever come across John McKnight and Jody Kretzmann. But notice that I put my question in the past tense. I now no longer have a need to ask the question because I have learned from a little sleuthing on the internet that you did know John and Jody, John McKnight wrote a letter of recommendation for you when you applied for admission to Harvard Law School. Small world.

Howard R.

Short Term and Long Term: Letter to Barack #4

2009-02-05T21:54:00.001-08:00

OK Barack, I admit that I am one of the millions of people who wish they knew how to read your mind, and I admit that my brother Ken is probably not as good at it as your wife Michelle, but I nevertheless think he has an inside track so instead of guessing myself I will adopt his guess. Ken has some professional political experience and some high-up contacts and I believe he can assess what you are probably thinking more accurately than average persons, with the possible exceptions of average persons who happen to live in Illinois or Hawaii . Yesterday my brother expressed the opinion that your mind is probably preoccupied by two questions:

One: How to save people’s 401(k) plans and other retirement assets that are invested in stocks and lose value when stocks lose value.

Two: How to save the American automobile industry.

One might say –I know people who do say—that until these and other short term issues that make up the current economic crisis are resolved, the Obama administration will not be able to turn its attention to the long term.

Indeed you did say –I watched you say it on television—that before implementing some major parts of your program we need to “get past” the current crisis.

The same day, yesterday, the day my brother expressed an informed opinion concerning what is on your mind, the Secretary of the Treasury, Henry Paulson, reported on what his office is doing to restore confidence in the economy.

Paulson’s office is doing two sorts of things:

1) It is providing cash to banks and other credit-granting institutions. For example it has bought preferred (non-voting) stock in banks. The bank gets the cash and the government gets a right to dividend payments in the future.

2) It is guaranteeing loans.

The rationale is that if credit-granting institutions have more money and/or run less risk they are more likely to make loans. Then people can borrow more easily to meet payroll, to buy an automobile, or for any business or consumer purpose.

The Congress has already:

3) Put more money into the pockets of consumers with tax rebates and tax cuts.

The rationale is that the consumers will spend their money buying products, thus making it profitable to produce them.

If I may elaborate a little on what my brother guessed was on your mind yesterday, I suspect that you are thinking of three other ways to stimulate the economy:

4) Subsidies for the automobile, green technology, and perhaps other industries.

5) Incentives to produce in America rather than overseas.

6) Massive public works, for example hiring the unemployed to plant trees.

Behind all of these measures is the assumption that the economy runs on profits. When business stops being profitable it stops running. The government then takes measures to restore profitability, in order to restart the economy. Even (6) is about restoring profitability insofar as it expects the workers employed on public works to stimulate business by spending their pay.

Let the above serve as an executive summary of the sorts of measures that are generally expected to “get us past the crisis.” An element missing in the public debate about these measures is the need for a paradigm shift.

Anybody who does not believe the following should check it out for herself or himself: Postings on anti-Bush websites and listserves and eloquent print prose pieces in Nation magazine, articulate many arguments in favor of putting money into the pockets of ordinary people and rescheduling their debts to save their homes. They condemn spending billions to bail out the wealthy. It is argued that people-oriented stimulus packages are fairer and more effective. But there is no questioning of the paradigm. It is taken for granted that the objective is to generate economic activity by making it profitable.

My humble suggestion is to walk on two feet. One foot moves to restart the economic machine by restoring confidence (not because it is an ideal economic machine, but because it is the one we have). The other foot moves to diversify the economy, freeing us from our excessive dependence on expectations of profit to motivate production and distribution.

Don’t wait. Don’t wait to get past the crisis to get started on the transformational agenda. If we wait for stimulus packages to restore investor confidence (if they ever do); if we wait for gradually rising rates of employment to re-integrate society, we will wait too long. We need to pick up the slack ASAP with civil society efforts and with public efforts and with private-public partnerships. A world full of loafers and part-timers (and of people a bit better off who fear crime and despise the loafers and part-timers) is a world that will generate strange and violent ideas. Before government policies bring about economic recovery (if they ever do), the culture war will be lost. People will hang on to every word Rush Limbaugh speaks. They will be attracted to the worldview of Fox News. On a best case scenario their arms will be tattooed with images of Sarah Palin; in the worst case the image will be a swastika.

These considerations lead to a renewed appreciation for the work community activists do, not just because they achieve material goals such as decent housing and food security, but also because they engage people in constructive activities. Organizing, as Cesar Chavez frequently said, means giving people something to do. A disorganized unemployed population passively waiting month after month for someone to bring them employment is a dangerous population.

Howard R.

November 13, 2008

Obama and the New Paradigm: Letter to Barack #5

2009-02-05T21:51:00.000-08:00

Dear President-elect Obama,

In your speech today you said that in times of crisis like these, ““We have acted boldly, bravely, and above all, together." You went on, "That is the chance our new beginning now offers us, and that is the challenge we must rise to in the days to come.”

The phrase “above all together” expresses the reason why I voted for you.

Your frequent use of ubuntu rhetoric keeps alive my hope that you are open to the required new paradigm.

New paradigm. What makes it new is that (in contrast to economics) it works with human nature as it has been discovered by biology and by anthropology. Economics is the old paradigm. In the new paradigm economics is not forgotten; it is included as Newton ’s physics is included in Einstein’s.

What makes it a paradigm is that it governs the nominal level of measurement, defining the objects to which mathematical calculations are applied.

Required. What makes it required is that turning back the calendar to the progressive policies of FDR, Harry Truman, and Jimmy Carter; or ditching today’s neoliberal economics and returning to the centrist economics associated with such names as Paul Samuelson, Joseph Stiglitz, and John Maynard Keynes; will not work.

There was a reason why free market fundamentalism triumphed in 1980 and stayed in vogue until November 4, 2008. In the late 1970s Jimmy Carter’s policies were not working, nor were similar policies in other places. Centrist economics was not working.

Instead of solving the unsolved problems that tanked progressive politics in 1980, the world returned to old-fashioned free market fundamentalism. Everybody with any sense knew that inevitably free market fundamentalism would fail. It failed in 1873. It failed in 1929. It would fail again.

Today’s question is not, how to get past the crisis and bring capitalism back to normal? Today’s real question is, how to make feasible the good intentions of the Jimmy Carters of the world? In other words, the question is how to overcome the structural obstacles that made West European social democracy and its analogues elsewhere stop in its tracks, reverse engines, and decline?

We do not answer today’s real question by demonstrating the errors of free market fundamentalism. We do not answer it by advocating the standard progressive politics and centrist economics of the past. We do answer it in practice by transforming the structures that create the obstacles that brought social democracy to grief.

In other words, we answer it by transforming civil society.

(Readers who find the preceding paragraphs mysterious may wish to look up on the Internet ubuntu, nominal level of measurement, Thomas Kuhn, Dilemmas of Social Democracies. Amartya Sen’s “socioeconomics”)

I spent today trying to cooperate with what I take to be your best thinking. I made an exception to my vegetarian principles by donating chickens to a chicken-dinner fundraiser for a local corps of hospital volunteers known as “the ladies in white.” I believe that today’s immediate priorities include keeping the hospitals running; they also include making sure everyone has at least one square meal a day, a place to live, and something to do.

Yours truly,

Howard R.

Creating J.O.B.S: Letter to Barack #6

2009-02-05T15:23:00.000-08:00

Dear President-elect Obama,

In contrast to what the media portray as an overwhelming urge to take prompt and bold action to restart the economy of the United States , even in the absence of rational grounds for believing that the actions taken will lead to the results desired, here we are systematically going about creating five kinds of jobs. They are: (1) Employment in for-profit Business. (2) The People’s Economy. (3) Public sector work. (4) Working for non-profits. (5) Community service jobs. We are aiming for zero unemployment.

History and anthropology teach us to believe that there must be a 6^th, a 7^th, an 8^th and an ……. n^th kind of job. Here and now we are concentrating on the five just listed. “Here” in a narrow sense refers to a town in Chile with a newly elected mayor and city council. They have been studying the social innovations that are so plentiful in South America . I will be drawing examples to illustrate our thinking especially from Argentina . “We” includes both them and your faithful correspondent, who is one of their academic advisors. “Now” officially begins on December 6, 2008, when the new city officers will be sworn in for four year terms.

(1) Employment in for-profit business.

In our new paradigm town we will concentrate on small businesses because they generate the bulk of employment. (I will write letters later about big business and about the social functions of profit.) We will back entrepreneurs. Like Joseph Schumpeter and the early utopian socialist Saint-Simon we regard the entrepreneur as a member of the productive classes. We add a fifth factor, “organization” (contributed by the entrepreneur) to the classic trio of factors of production, “land, labor, and capital,” and to the fourth factor added later: “knowledge.”

An excellent example of local government supporting for-profit business (and thus creating jobs) is provided by the Municipal Bank of Rosario, Argentina . That bank’s Mission Statement and Charter provide that the bank’s function is to serve small business and micro business in the local area. (www.bmros.com.ar)

The Municipal Bank of Rosario does not manage footloose money endlessly roaming the globe in quest of the fastest way to make itself fattest. It manages money tied to a place.

When the Argentine economy collapsed in 2001, the Rosario branches of foreign commercial banks closed. They were there for one reason: profit. When there were no profits to be made, they had no reason for being in Rosario or in Argentina . They left.

The Municipal Bank was there for another reason. It stayed open. It bent every rule in the books to make bridge loans so that its small business clients could meet payroll, save jobs, and survive.

In addition to standing by its small business clients in times of crisis, the Municipal Bank backs entrepreneurs (and through them creates jobs) in many other ways. In its auditorium and meeting rooms it runs business seminars. Entrepreneurs and potential entrepreneurs learn of new opportunities, of new legislation, and of new research findings. Hands-on classes teach them skills.

The Municipal Bank uses the information technology expertise it acquired managing the accounts of the city government to help its small business clients calculate payroll deductions, fill out tax returns, prepare balance sheets, and track progress with management information systems. Entrepreneurs are freed to lead their businesses because the bank’s computers do the routine paperwork for them. They can pay their employees with a single deposit or transfer. The employees can withdraw their pay from one of the Municipal Bank’s ATMs.

The profits of the bank go to the Municipal Bank Foundation. The Foundation gives grants to local musicians and artists. This recycling of profits creates employment in the arts. The Foundation also supports studies on solid waste disposal, housing needs, air quality, public transportation, and other topics of local interest. To some extent the funds granted by the Foundation to do studies create jobs for scientists, but for the most part the grants only cover costs while the scientists voluntarily donate their time to public service.

(2) The People’s Economy.

The people’s economy creates jobs that do not exist in the for-profit economy. It is defined by the Argentine socioeonomist Jose Luis Coraggio (holder of a doctorate from the Wharton School and director of the Graduate Program in Social Economics at General Sarmiento University in Buenos Aires ) as an economy where the principal resource is labor and the principal objective is to make a living. Coraggio contrasts it with the larger scale more heavily capitalized and more technologically advanced economy where the principal resource is capital and the principal objective is profit. (www.coraggioeconomia.org)

The workers in the people’s economy are self-employed, whether as individuals, as partners, as members of cooperatives, or as associates in micro-enterprises. We calculate that about 26% of the jobs in Chile are in the people’s economy. Many of them are in mom and pop tiny businesses that barely generate the equivalent of a wage and never generate anything that could be called a return on capital.

In Argentina today there are some 300 enterprises that used to be in the for-profit sector, and are now in the people’s sector. They failed to survive as profit-making businesses, but their workers keep them going anyway. They generate enough income to make it possible for the worker-owners to get by.

We believe the people’s economy deserves the support of the for-profit economy. It sometimes gets it. For example, at the premises of the Chamber of Commerce in Rosario major corporations provide training and equipment for women starting self-help micro-enterprises.

We believe the people’s economy deserves the support of government. In Chile the national government has a program that favors making government purchases from the tiny firms we and Corragio place in the people’s economy category. (www.chilecompra.cl)

We believe the people’s economy deserves the support of volunteers. I doubt that any of the 300 new worker cooperatives in Argentina could have survived without the volunteer help they received from engineers, lawyers, and accountants (many of whom were associated with universities, political parties, and/or churches).

Many retired business people around the world regularly lend a helping hand to people who are struggling to get started in the people’s economy and/or in small business.

Among the plans we have for supporting the people’s economy in our town are deliberate support for traditional family businesses now on the wane. For example, there are some beleaguered ones that have been making fruit jams and/or raising chickens for generations, which we believe could thrive in today’s environment with support from a sympathetic municipality and its associated citizens movement. We have a plan for city certification of the purity and authenticity of traditional herbal medicines. The herbal medicines are produced (and more could be produced) on small plots within the town’s limits. ( Chile is divided into towns as Connecticut is, in such a way that even rural areas are in towns.)

Employment in for-profit business tops out when it hits the profit barrier. No profits, no jobs. You will only be hired in a for-profit business if the cost of hiring you is less than the value of the product you produce. However much good will and social responsibility an entrepreneur may have, she or he still needs to make a return on the capital invested.

The people’s economy breaks the profit barrier. It creates jobs where there are no profits (although revenue still has to be sufficient to purchase inputs other than labor and to amortize equipment). But the people’s economy tops out when it hits the market barrier. No market, no jobs. If the product or service cannot be sold, then nobody can make a living producing it.

The third, fourth, and fifth kinds of job creation break both the profit barrier and the market barrier. I will discuss them in another letter.

Peace and all good,

Howard R.

More on Creating J.O.B.S: Letter to Barack #7

2009-02-05T15:21:00.000-08:00

Dear President-elect Obama,

I resume my optimistic suggestions regarding how all of us working together can transform America and the world with the topic

3. Government work.

Two basic questions need to be asked regarding jobs created by public funding:

(1) What kinds of work should the workers do?

(2) Where ought the money to pay them come from?

One might add a third question: (3) What institutional forms should be supported or assisted by public funding? Asking this third question suggests that institutions ought to be diverse and hybrid (public sector/private sector partnerships) rather than monolithic. I will defer discussion of this first question to another letter.

My (our) answers to the first two questions are:

(1) The workers paid from the public purse should do work that ought to be done, but which is normally not accomplished relying on the motivations that drive for-profit business and the people’s (self-employed) economy. The government should break the profit barrier to job creation. The government should break the market barrier to job creation.

For example, the biosphere ought to be preserved for the benefit of generations yet unborn. The unborn are not at this point customers with purchasing power in any market. Further, as Amory Lovins has remarked, the market quickly discounts the future value of natural resources to zero. I congratulate you for your plans to use public funds to green the economy. I add that evaluations of your programs should consider not just the green businesses that your green programs will generate, but also the long term consequences for the species and the planet.

For another example, it is easy to reach consensus (as in fact the city of Rosario did reach consensus through a highly participatory strategic planning process) that we want to live in an environment where music and the arts flourish. Yet when it comes to tearing ourselves away from our television sets to show up on Friday evening to pay money to listen to the local symphony orchestra, the amount of money collected is not enough for the musicians to live on. The people who derive economic benefit from financing the creation of a highly cultured environment are mostly the hotel and restaurant owners who cater to tourists and the owners of real estate, not the artists. Public funds ought to break the market barrier to improve quality of life for human beings, both by supporting people who have a passion to live creative lives in the arts and sciences; and by improving the moral, intellectual and esthetic atmosphere for everyone. Evaluators who do not know how to measure “atmospherics” should learn.

A third example and then I will stop although many more could be listed. Sports. The value of paying coaches and community youth organizers to run a basketball program for kids is not correctly measured just by what the kids or their parents will pay for it. It is also measured by health, by the growth of self-discipline, by social integration, by keeping kids off drugs, by crime prevention, and by the accomplishment (or failure to accomplish) of a series of goals not normally served by for-profit business or by the people’s economy.

Now let me add two conceptual nuances: The first is that job creation that breaks the profit barrier and the market barrier should be supported not only by public funding. It should also be supported by private funding. It should be supported by foundations and by large scale and small scale philanthropy.

The second conceptual nuance is that public sector performance in general should be measured by social efficiency, not by financial efficiency alone. I agree with Toye and Toye when they write in their intellectual history of the United Nations that the money spent by the OECD in the 1980s to fund studies designed to justify privatizing public sector enterprises could better have been spent studying how to improve the efficiency of the public sector, and how to measure its efficiency by appropriate criteria. Admirers of India’s economic miracle would do well to take note that after the reforms of 1991 poverty in India actually increased for a few years due to the unemployment generated by privatization, and when the gradual reduction of poverty in India resumed it was the resumption of a trend that began not with the 1991 reforms but in 1975 due to a new international division of labor which gave (and still gives) India a comparative advantage as a global supplier of low-priced high quality labor. Our (my but not only my) view is that public sector job creation should be counted as a plus, not as a minus. Providing employment is a benefit, not just a cost. If some workers of a public electric company are redundant in terms of the work that needs to be done to serve paying customers, instead of firing them and increasing unemployment management should consider putting them to work extending service to poor people in outlying areas, or putting them to work on alternative technologies whose benefits will accrue mainly to our children’s children.

(2) The money to pay for creating jobs paid for with public funds should come mainly from capturing the income generated (“rents”) by the sale of natural resources. It should come from public capture of unearned income, easing the burden on earned income.

In this respect North America has everything to learn from South America . The post-populist regimes of South America are learning how to capture rents from natural resources, and how to use the money to support the people’s economy and to support public sector social, health, and education programs.

The right-wing press and right-wing academics would have us believe that today’s regimes in Brazil , Venezuela , Ecuador , Bolivia , Paraguay , Argentina , Uruguay and perhaps Chile are just reruns of traditional Latin American populism. They are not. Traditional populist regimes ran up government deficits to fund their social programs. Unable to simultaneously to increase production and to raise wages, they followed inflationary monetary policies. In contrast, today’s post-populist regimes in South America are running budget surpluses. They have sound currencies. Contrast them with the United States with its astronomical government deficits, and with its beleaguered dollar.

Much of the secret of the nations that are today up-and-coming lies in the answer to the question, “Who owns the natural resources that are not the products of anybody’s labor, and not the products of anybody’s creative entrepreneurial skills, but are gifts of nature to the human species?”

Giving an ethical answer to this question provides one of the keys to putting money in the public purse, so that government can contribute its share toward reaching the goal of J.O.B.S. for all who seek and need employment.

Peace and all good,

Howard R.

December 1, 2008

Non-Profits: Letter to Barack #8

2009-02-05T15:18:00.000-08:00

Dear President-elect Obama,

Let me start my letter on working for nonprofits (the fourth of the five sectors in which we are creating jobs here in our town in Chile ) by defining two pure types: for-profit business and non-profit business. I provisionally omit the businesses that do not fit neatly into one or the other of these two categories.

The purpose of a for-profit business is profit. (Academics will notice that I am not distinguishing profit properly so-called from return on capital; I do not think this distinction is needed here.) The financial economy drives the real economy. Investment decisions are made by calculating probable yields taking risks into account.

Question: What goods and services will be provided?

Answer: Those that can profitably be sold.

Question: What determines whether the economy will go or stop?

Answer: Confidence.

Question: Confidence in what?

Answer: Confidence that consumers will spend, confidence that credit will be available; and in the end, in sum, in short, confidence that profits will be made.

You have now chosen an economic team (Paul Volcker, Tim Geithner, Lawrence Summers, Christina Romer and others) and a security team (Hillary Clinton, General Jim Jones, Robert Gates, Admiral Mike Mullen, Susan Rice, and others) whose overall objective is to restore confidence. I am suggesting that at least a major part of the nation’s military objective is the same as its economic objective. Confidence. In practice and in official declarations the military and its civilian chiefs seek a world in which business people will have confidence in the safety of their investments, in access to markets, in access to energy and other inputs, and in being able to count on the normal working of the international economy. (See www.dtic.mil. searching under “national interest”)

I would suggest that if your advisors were to give nonprofits due weight in their deliberations they might well improve the quality of their advice. Nonprofit business is the conceptual twin of for-profit business. The cart becomes the horse. The horse becomes the cart. First the social entrepreneurs (people who organize nonprofits) are motivated by perceiving a need. Then they raise funds to meet the need. The real economy drives the financial economy.

Coraggio and his colleagues at General Sarmiento University have studied nonprofits in Argentina using a concept of “hybrid financing” developed by Brazilian socioeconomists. The “club” is an emblematic Argentine nonprofit. “Clubs” began as mutual aid societies bringing together people of one or another common ethnic origin who immigrated to Argentina during the 19^th century. Clubs have proliferated, evolved, and metamorphosed so that today they do many things, but one thing virtually all of them do is play soccer. Diego Maradona got his start in a neighborhood club.

Coraggio studied how Argentine nonprofits piece together their budgets drawing on hybrid sources. Members pay dues. Fans pay for admission to games. Local governments provide subsidies. Tenants pay rent on buildings the nonprofit owns. For-profit businesses donate uniforms for the players. The club runs a restaurant open to the public. It runs a fundraising dinner dance. It auctions off prizes at a silent auction, or conducts a raffle. Decedents leave bequests to the nonprofit in their wills. Much of the work of the nonprofit is done by volunteers who do not need to be paid. Etc.

In Argentina and elsewhere nonprofits have shown themselves capable of doing everything for-profits do. They run schools and hospitals. They run banks and insurance companies. (e.g. the Caisses Desjardins of Quebec ) They farm. (e.g. the farms of the Mormons) They manufacture refrigerators. (e.g. Mondragon in Spain ) They build houses. (e.g. Habitat for Humanity)

Could we then have an economy with no for-profit business at all? Conceivably such an economy could come into existence if there were social entrepreneurs organizing nonprofits to meet every need. Our plan here in Chile is not so drastic. We think in terms of layered job creation. We support the creation of as many jobs as possible in the for-profit sector. We go on to support another layer of job creation in the people’s economy. A third layer of jobs is contributed by government work. A fourth layer by working for non-profits. Anyone who still wants and needs a job can participate in a fifth layer, community service.

(Correction: We do not precisely maximize the number of jobs in the for-profit sector because we insist on decent wages. Since firms unable to comply with labor legislation must cease to exist, employment in for-profit business falls short of its theoretical maximum. The other four sectors pick up the slack.)

I would like to suggest that the members of your economic team consider thinking in terms of layered job creation. At present they seem mainly to think in terms of stimulus packages trying to promote consumer spending, making the government the spender of last resort, loosening credit, and making the government the creditor of last resort. All of this aims to restore confidence in one sector of the economy, the for-profit sector; it aims to persuade investors and business people to advance funds and hire workers in the expectation that there are profits to be made. It may well be the case, as the historical studies of one of your advisors (Ms. Romer) show, that increasing the money supply (especially due to the inflow of gold from politically turbulent Europe) helped to restart the U.S. economy during the Great Depression even before World War II. Nevertheless, no monetary expansion policy is a substitute for a systematic effort to create jobs for everybody, while every monetary expansion policy brings with it the risk of inflation.

I would also suggest to your security team that the currently dominant economic paradigm is not a perfect paradigm. It assigns to the military the mission of protecting stability and order worldwide for the sake of establishing the confidence required by normal business as defined by the paradigm. But the paradigm which defines and limits current mainstream thinking may not –I would indeed say it clearly does not— frame a normal science capable of providing all the needed answers. It may have something civil to learn from the radicals who at this point in time have been designated as military enemies. (See www.dtic.mil searching under “radicalism.”)

Peace and all good,

Howard R.

Community Service: Letter to Barack #9

2009-02-05T15:17:00.000-08:00

Dear President-elect Obama,

Since I started writing you letters about how we can all work together to solve our problems, the economic collapse of the United States has become more complete. Opinions differ concerning its causes and concerning whether it is permanent or temporary.

Meanwhile, in our town here in Chile we continue to practice a philosophy of social integration. The aim is for everyone to be included in constructive and affectionate (cariñosas) relationships whether employed in “the economy” or not. We are going about accomplishing this aim rather quietly, in order to avoid immigration to our town from elsewhere. We know that without a bounded territory achieving our aim will be impossible.

For us community service is not a government program. It does not rely on public funds. To some extent it does not rely on funds at all. We organize our neighborhood somewhat as you organized neighborhoods in Chicago , finding out who has a problem and then looking for ways to solve it with whatever resources can be found or shared.

You may remember that Martin Luther King Jr. believed that quite apart from business confidence that profits can be made by hiring employees; at a human level there is no shortage of demand for labor. Any number of workers can be useful in the field of human services, in caring for the young, the old, and the infirm. Mother Teresa in her writings expresses the complementary insight that to a considerable extent the young, the old, and the infirm yearn not so much for specialized services as for a human being to be there with them.

At most places in the world if one just looks around and sees what is before one’s eyes, one sees that there is no shortage of basic goods either. There is plenty of food, housing, clothes, etc. The challenge is to put labor and livelihood together. It is to create opportunities to serve others that are simultaneously ways to make a living. It is to include everybody in a supportive community that will assure that its members are cared for. It is to replace basic stress with what Erik Erikson called basic trust.

Whatever one’s opinion may be regarding the causes of the collapse, it is fair to say that nobody knows how long a cure will take. Some of us believe that the system cannot be cured at all. That is to say, it cannot be cured in the sense of being made to work once again as it used to work (although badly) prior to its collapse.

In our town we think of layered job creation; (1) for-profit business, (2) the people’s economy, (3) government work, (4) non-profits, (5) community service. Neighborhood and family self-reliance in the form of community service is the last of five layers. It is the guarantee that nobody will be forgotten or abandoned.

There are many ways to accomplish what we are accomplishing. History and anthropology show that. See www.gift-economy. com I will try to attach some eyewitness accounts of the ways some Argentines accomplished meeting basic needs during their crash in 2001. If the attachment does not go through, readers who want it can ask me for it and I will send it to them directly.

As the collapse of the American economy continues, it becomes increasingly clear that in the foreseeable future for-profit business will employ only a fraction of the work force. Consequently, the social integration of the rest must be accomplished in other ways.

Peace and all good,

Howard R.

The Needed Paradigm Shift: Letter to Barack #10

2009-02-05T15:14:00.000-08:00

Dear President-elect Obama,

The shift from an economics paradigm to an anthropology (or anthropology/ecology, or transdisciplinary) paradigm is not complicated or hard to understand. It is a matter of enlarging the field of human practices studied.
When designing policies it is a matter of considering more possibilities, more options. And more actors.

At the present time efforts to revive the American economy concentrate on creating conditions under which producers can sell their products at cost-covering prices. For the most part the efforts are even narrower than that: They concentrate on stimulating demand and cheapening credit in order to make it profitable for employers to hire employees. The fact that human beings lived on this planet for two hundred thousand years without capitalism is ignored. As is the fact that millions still do.

The needed shift consists of taking a broader viewpoint; it consists of doing socioeconomics as Jose Luis Coraggio, Amartya Sen, and others recommend; and even in going beyond their recommendations to study basic cultural structures and to develop methodologies for social transformation grounded in such studies. (As I have explained elsewhere, my recommended broader viewpoint is a “paradigm shift” with respect to some of the ways Kuhn employs the concept of “paradigm” although not with respect to all of them.)

Thomas Kuhn’s studies in the history of science tend to show that paradigms are not abandoned because facts demonstrate their inadequacies. There are ways to adjust theory to data to save the paradigm even when an accumulation of anomalies strongly suggests that the paradigm is out of touch with reality. For example: when the economy of Indonesia unexpectedly collapsed in 1998, mainstream economists did not question economics. Experts at Harvard, at Oxford, and at the World Bank had been praising Indonesia as an example of correct macroeconomic policy. When reality flatly contradicted what they had been saying, instead of admitting that their science is one that is incapable of accurately predicting future phenomena, and incapable of providing policy advice that works, they attributed the anomaly to “crony capitalism.” Instead of questioning the basic ethics and dynamics of capitalism they employed the adjective “crony” to explain after-the-fact why the collapse observed in Indonesia differed from the stable growth that before-the-fact they had anticipated. As you will remember from your debates with him, John McCain somewhat similarly used “greed” as an explanation of the debacle that was unfolding as he spoke. Thus an imaginary ideal survives by attributing its real world failures to flukes. These examples came too late to be included in Kuhn’s books, but he could have cited them if they had happened earlier and if he had undertaken to include the history of economic thought within the scope of his studies.

Although Kuhn’s findings tend toward the conclusion that a paradigm is never refuted by a crucial experiment, it appears that we have a paradigm-testing crucial experiment, or something very like one, underway at the present time.

You have selected a highly competent economics team, backed up by colleagues in the profession who will feed your team even more expertise than they themselves already have. Nobody knows the details of past recessions and the details of past Federal Reserve and government policies as well as your advisors. I think it is fair to say that if they cannot give you good advice, then mainstream economics cannot give you good advice.

You are approaching the inauguration with nearly a 75% approval rating. You have Democratic majorities in the House and Senate. You have solid friends on Wall Street and in organized labor. If ever there were a United States President positioned to get good expert advice and to implement it, you are he.

If December 2009 finds the United States economy worse instead of better, then we should be able to rule out professional incompetence and political impotence as causes of the phenomena observed. After a year (or perhaps less than a year, or perhaps more than a year) of floundering and sinking in spite of well-advised and capable leadership, the country may be ready to consider the dominant paradigm tested and refuted. More people may come to agree with Anthony Quinn (author of Ishmael) that what we need are not new policies but new paradigms.

If, on the other hand, December of 2009 finds the American economy humming along nicely, producing appropriate goods and services and distributing them equitably, then we should be able to conclude that the paradigm we already have is in synch with reality. We should be prepared to acknowledge the validity of the worldviews of the Paul Samuelsons and the Paul Krugmans and the Joseph Stiglitzes who find the centrist economics of the bulk of the profession to be sound, and attribute the downfall of the economy to the bizarre ideologies of the likes of George W. Bush and his radical conservative clique. Normal science will be vindicated. Professional economists will have been shown to be not only well read in their chosen field of study, but also (because their research paradigms tap the causal powers that produce the phenomena observed) experts on how the world works.

Meanwhile, even before the rest of the country is ready to see beyond the dominant paradigm, those of us who are already convinced that trying to make for-profit business profitable again is too narrow a focus will continue to support the people’s economy, public sector employment, non-profits, community service, and usable parts of the many other alternative forms of livelihood practiced throughout history and around the globe. We will support the Rotarians and the American Friends Service Committee, the Salvation Army and Catholic Charities, and whomever organizes emergency relief; expecting that as it gradually dawns on people that the emergency is permanent, the relief will become permanent. “Relief” here is a word that refers not just to keeping the food pantries restocked. It refers to social integration--to dignity, discipline, meaning, and useful employment. At an academic level, we will continue to dissolve economics into transdisciplinary social and natural science.

Peace and all good,

Howard R.

Michelle Obama's Christmas Letter: Letter to Barack #11

2009-02-05T15:11:00.000-08:00

Dear President-elect Obama,

It is a tradition among many peoples at the time of the winter solstice to remind themselves that they ought to be acting as responsible members of a cohesive community. Yes, we could be good. Sisterhood and brotherhood are possible.

In the depths of wintertime we want the sun to return, to bring warmth, growth, and harvests. Our ancestors perhaps doubted more than we do the regularity of the seasons, and feared more than we do that the sun might die or disappear altogether, leaving us permanently cold, hungry, and ultimately lifeless. Midwinter was a time to plead with the gods for mercy and to make promises to them. We promise, if the sun comes back, to be obedient and grateful. If our tradition happens to be Judeo-Christian promising to be obedient means promising to love our neighbors as ourselves.

Nothing is less outdated or more timely than the ancient wisdom of Christmastime. Indeed, if we would but cooperate and share throughout the year, we could solve all our social problems.

The first-lady elect made us a very timely and practical request in her Christmas Letter: she asked us to donate food to our local Food Pantry. Please let her know that I did what she asked me to do. I gave twelve one-pound packages of noodles, ten packets of dried soup, ten cans of tuna fish, twelve packages of rice and twelve of sugar each weighing two pounds each, a case containing twelve bottles of cooking oil, and a one hundred pound sack of flour.

Many of our institutions are ambiguous because it is not clear whether the spirit of Christmas or the every day spirit of possessive individualism is supposed to govern them. During your campaign for the presidency you resolved in your speeches an important ambiguity regarding our free market economy. For several centuries the free market economy has been a set of institutions with an unstable image, now a duck now a rabbit depending on how you look at it. The duck is Christmas. As a duck the market is a remarkable human invention which we have constructed to meet our needs. The rabbit is every day life. As a rabbit the market is simply natural reality which we have to adjust to whether we like it or not.

You resolved the ambiguity in favor of the duck by reframing our history. According to your interpretation the American economy has always been designed to serve a higher purpose. It has been re-designed from time to time to make it serve its higher purpose better.

The higher purpose is --if I may borrow a phrase from Martin Luther King Jr. to express a communitarian and pragmatic concept embedded in your speeches and in Michelle’s Christmas Letter-- the building of a “beloved community.” In simpler terms: we share the noodles. If there are too few noodles, or if some people are left out and do not get any, then we change the rules to fix the problem. You did not ask the voters for a mandate to change the system. You offered them an ethical interpretation of what the system has always been.

As you probably already know, there are many good ideas for building a beloved community in Martin Luther King Jr.’s book Where do we go from here: chaos or community? There are more in Riane Eisler’s recent book The real wealth of nations.

Let me mention a few from our local Food Pantry. We do not give any food away. People in our neighborhood do not apply for food stamps. They do not apply for relief. Nor have we fallen into the “workfare” trap that Bill Clinton fell into: we do not try to wedge masses of unemployed poor people into the tiny supply of existing jobs. Here people apply for community service. We create the jobs, finding useful things for them to do (for more on how to find useful thing for people to do see the books by King and Eisler). In our neighborhood unemployment does not exist. Or, to the put the matter another way, even the unemployed are working.

Concerning your more recent speeches, let me congratulate you on your plans for creating more government jobs, especially the ones that get things done that the free market economy does not get done enough (like reforesting the hillsides).

But let me dissent from the “stimulus” packages. Here the rabbit has blinded the majority of Americans so that they cannot see the duck.

America’s situation is one that gives new meaning to the word “absurd.” There is plenty of food. There is plenty of housing. There is plenty of clothing. There is plenty of almost everything and too much of many things.

The economic problems that frustrate America are entirely about legal fictions. We are frustrated because people do not have money. Because people are in debt. Because the values of homes and stock market investments have fallen. Because people do not have employment. Because they do not have incomes or because the incomes they have are insufficient to enable them to buy what they need.

When physically we have no problems at all, we nevertheless tie ourselves in knots because the economy has ceased generating legal entitlements to participate in the stock of physical goods that is already in existence.

We are so blinded by our own ideology that we think the only desirable way to get money to the poor is for them to find jobs, and the only way to create jobs is to make it profitable for employers to hire, and the only way to make it profitable for employers to hire is for employers to find more paying customers. So we grant huge tax breaks to millions of people whom we fondly hope will be customers of American firms, while borrowing money from China to pay the government’s bills.

Time will show, I am sure, that we would have been better off with more imagination, more ancient wisdom, more listening to women, more character education and moral education, more neighborhood cooperation, and more private sector charity; we would be better off with an anthropological paradigm instead of an economic paradigm.

I do not mean to imply in these letters that big business and the profit motive are irrelevant. I plan to discuss them later.

Meanwhile, I want to congratulate Michelle for her fine Christmas letter and you for your fine reframing of American history. They are the duck-stuff of which beloved community is made.

Howard R.

Cause and Effect: Letter to Barack #12

2009-02-05T15:08:00.001-08:00

Dear President-elect Obama,

I was not disappointed when you said that your foreign policy would be similar to that of previous administrations. Although I was unhappy, I was not disappointed because what you said was what I expected. I do not believe you can make big changes in foreign policy.

But when I (no doubt along with three million others) received from you a personal invitation to participate in turning our campaign organization into a social movement I was really happy. We are going to join you in organizing for change in every corner of America.

Domestic change might work, and if it does work, we might make it possible to move the reality of foreign policy closer into line with the democratic and progressive ideals Franklin Roosevelt expressed, and which all presidents have expressed to some extent.

Deepak Chopra is another volunteer advisor who has been giving you free advice lately. In a recent letter to you he pointed out that for over half a century the USA has been functioning as a military economy. Being a specialist in mind/body relationships he has observed that although at the level of mind American foreign policy is about peace, democracy, and rights; at the level of body it is about how the global economy works, how the USA fits into it, and how the sub-sector of the global economy known as the US economy works.

America has to change before the main features of its relationships to the rest of the world will change.

Cause and effect. The main cause of what America does is what America is. Deepak Chopra was quite right to base his letter to you on the premise that our role in the world will not substantially change until we cease to be dependent on the military-industrial complex for our daily bread.

It just might happen. The collapse of our war economy is an opportunity to create a peace economy. I do not believe you yet realize how serious the “economic” problem is, nor do you yet realize that it is not in the last analysis an “economic” problem at all but a paradigm problem. Nevertheless, you are on the right track in moving in the direction of converting big business into public-private partnerships planned for ecological and social responsibility.

You are also on the right track in repeating frequently that government alone cannot solve our problems. The real power to change America is in civil society, not in government.

You were on the right track in running your campaign as a grassroots citizens movement, and on the right track in proposing to keep the momentum of that movement going to organize for change.

Cause and effect. If we want to rewrite America ’s script in the global tragic farce that Noam Chomsky, Stephen Zunes and others have documented in great detail, we need to begin where you began as a young community organizer in Chicago. We need to begin with the ethical reconstruction of neighborhoods.

Peace and all good,

Howard R.

p.s. I have posted a document whose relevance the wise will immediately see. It is located on my main website, http://www.howardrichards.org It is an account of how ordinary citizens in Argentina worked together to meet each other’s basic needs when the Argentine economy collapsed in 2001.

A Comment on Your Inauguration Speech: Letter to Barack #13

2009-02-05T15:05:00.000-08:00

Dear President Obama,

The main problem with the economy can be simply stated: We depend too much on selling. We depend too much for our daily of bread on selling something or other to get money to pay for it. Since there is nearly always a shortage of buyers, it is nearly always hard to sell. It is nearly always hard to sell ourselves; that is to say, it is hard to get a job. In other words, as John Maynard Keynes pointed out, if the market is left ungoverned full employment will occur rarely and when it does occur it will be temporary. As the same John Maynard Keynes eloquently explained, the market system depends on people having confidence that at some point their investments will pay off in cash. As we know from recent experience, very strange and convoluted behavior sometimes results from efforts to produce in investors confidence that what they are being asked to buy will sell for more than they paid for it.

For many reasons we need to become less dependent on the sales way of life --even though for many reasons we should not abandon the sales way of life altogether.

Simple as it is, our political leaders, our economists, and the public in general seem not to understand the problem of excessive dependence on sales. They continue to think that the solution to a slow economy is to create more buyers. They think in terms of stimulus and confidence-building, trying to crank up a system in which employment depends on sales and sales depend on customers.

Solving the main problem requires a different approach. It requires reducing our dependence on selling.

Some of the measures you are proposing are right on right track. As you said in your inaugural speech, the question is not whether government is too big or too small; it is whether the government works. Most people are now on board with you in acknowledging that there is no way to make the economy work without an expanded public role. This goes part way toward solving the simple problem I have defined as the main problem. Insofar as public services do not require market demand, the chronic shortage of buyers is not a barrier limiting either production or employment.

Further, as the experiences of sensible social democracies have shown, a strong public sector properly managed produces a strong private sector. Insofar as the private for-profit sector can accomplish the goal of creating jobs for all, it can do so much better when it partners with a strong public sector.

But still more is needed. The still more that is needed was the unifying theme of your inauguration speech. We need a positive attitude toward contributing to the common good; we need good will, responsibility, willingness to sacrifice for the benefit of others, a spirit of service, unity, patriotism in a constructive sense of the word, and all the wonderful communitarian values you talk about in most of your speeches. In their pastoral letters on economic and social issues the Catholic Bishops of the United States have rightly said that overcoming poverty requires not two sectors but three: the private sector, the public sector, and the voluntary sector. The voluntary sector is not a matter of selling things. It is a matter of giving.

On Wednesday the 21st when you meet with your economic advisors, I hope you remember what you said on Tuesday the 20^th. I hope you will not fall back into the paradigm that is currently in meltdown, the one that treats profit-making as if it were the central and perhaps even sole human motivation. That is not what history shows, nor what anthropology shows, nor what psychology shows, nor what neuroscience shows, as you have learned by now if you have followed my advice and read Riane Eisler’s The Real Wealth of Nations, and as you probably knew already even before reading her book.

Peace and all good,

Howard R.

In Place of Folly: Letter to Barack #14

2009-02-05T14:56:00.001-08:00

Dear President Obama,

You know that I do not expect any substantial improvements in foreign policy until there are substantial and constructive changes in the structure of the economy. Here --with breathtaking simplification—is a nine point outline of a plan for achieving substantial and constructive changes in the economy.

First, let the for-profit private sector shrink. Rely on the standard rational responses to the signals the market is sending when it determines that a business is no longer profitable: bankruptcy, downsizing, layoffs.

2. Rewrite the reorganization chapters of the Bankruptcy Code to make it easier to downsize without going out of business completely. Repeal the dogmatic requirements for prompt and full payment of administrative, secured and priority creditors. They too frequently make reorganization impossible.

3. A general (“Scandinavian”) principle: No flesh-and-blood human being should suffer from the demise of a legal fiction. The sunset business entity (the legal fiction) ceases to exist after it shuts down operations and files its last tax return. But the flesh-and-blood people who worked for it should still be regarded as members of what Martin Luther King Jr. (following Josiah Royce) called “the beloved community.” They should be, for example, funded to go back to school while they are between jobs. (Lifelong learning.)

4. Compensate as much as possible for the loss of jobs in the for-profit private sector by increasing employment in the public sector and in the “third” sectors (variously defined). Job creation to compensate for job loss includes the greening programs you are already proposing, the human services programs Martin Luther King Jr. regarded as an inexhaustible source of employment opportunity, self-employment, micro-credit, nonprofits including schools and hospitals, thrift shops, recycling centers, community supported agriculture, cooperatives, employee-owned businesses….and others.

5. Build inclusive local communities that provide basic security for their members while depending less on sales, less on money-based ties, less on market relationships. See www. gift-economy.com. This category includes many kinds of self-help, do-it-yourself projects, and do-it-with-friends projects; it includes faith-based cooperation, and neighborhood (territory-based) cooperation, e.g. in housing, in growing and distributing food, in child care, in care of the elderly. You learned all about this in your early Chicago years before you went to law school.

6. Nationalize the Federal Reserve Bank and the biggest private banks.

7. Define corporations as social institutions with social responsibilities, whose incomes should be used for socially legitimate purposes (cf. Keynes´ “euthanasia of the rentier class”) The corporate mission statement should define creating employment as achieving a corporate goal, not only as a cost.

8. Fund government (and charitable foundations) with rents from natural resources and other rent-yielding assets, collected as severance taxes, as other taxes, as royalties, or as revenue from outright ownership. Income from taxes on wages and profits is declining; printing money is inflationary; borrowing cannot go on forever; therefore the public purse must be filled to an increasing extent with income from rents.

9. Dissolve the World Trade Organization. In general reclaim American sovereignty and help other nations to reclaim their sovereignties, so that people can decide how they want to live instead of being compelled to live as the global economy dictates.

Compared to the currently prevailing mad rush to make ailing private for-profit businesses profitable at any cost, the nine point plan briefly outlined above has the following six advantages:

1. It will work.

2. It will lead toward a mixed economy, which is where we should be going in any case.

3. It will tend to make democracy real by moving toward liberating the governance process from the overwhelming systemic imperatives to establish a regime of profit accumulation and to compete in the global economy at all costs.

4. It will tend to make a peace economy possible by making the military-industrial complex and the global projection of military power unnecessary.

5. From an academic point of view, it relies on an intellectually defensible transdisciplinary social science, wider in scope than the prevailing mainstream economics that has been for many years discredited by the critiques of logicians and philosophers of science.

6. Parts of it can be implemented by civil society and local governments without waiting for the federal executive and congress to see the light.

One more point: in your daily conversations about the economy with Larry Summers please talk to him as well as listening to him. Repeat what you said when you spoke to Warren Buffet and his Wall Street friends. Tell him about the higher purpose. Tell him about revising the rules of the game from time to time to make them better serve the higher purpose. Tell him about your experiences with Asset Based Community Development when you were a community organizer in Chicago.

peace and all good,

Howard R.