The sooner we open up the economy, the faster we simply recreate what got us into this mess. It’s time for a radical shift.
Everyone wants to know when we’re going to get the economy started up again, and just how many lives we’re willing to surrender before we do. We’ve all been made to understand the dilemma: The sooner we “open up” American and get back to our jobs, the more likely we spread Covid-19, further overwhelming hospitals and killing more people. Yet the longer we wait, the more people will suffer and die in other ways.
I think this is a false choice. Yes, it may be true that every 1% rise in unemployment leads to a corresponding 1% rise in suicides. And it’s true that an extended freeze of the economy could shorten the lifespan of 6.4 million Americans entering the job market by an average of about two years. But such metrics say less about the human cost of the downturn than they do about the dangerously absolute dependence of workers on traditional employment for basic sustenance — an artifact of an economy that has been intentionally rigged to favor big banks and passive shareholders over small and local businesses that actually provide goods and services in a sustainable way.
In reality, the sooner and more completely we restore the old economy, the faster we simply recreate the conditions that got us sick in the first place and rendered us incapable of mounting an effective response. The economy we’re committed to restoring is no more the victim of the Covid-19 crisis than it is the cause. We have to stop asking when will things get back to normal. They won’t. There is no going back. And that’s actually good news.
If we approach this moment of pause mindfully, the post-Covid economy we create could turn out to be a whole lot more resilient than the old one. Beyond exposing the brittle nature of global supply chains, top-down monetary policy, and a vanquished domestic manufacturing sector, the Covid crisis is also unleashing a powerful drive by local and networked communities to rebuild business from the bottom-up. The mechanisms so many of us are now inventing and retrieving under duress may just survive after this crisis is over, and augur a new era of sustainable commerce and much better distributed prosperity. Think local farms, worker-owned factories, and companies for whom the bottom line has more to do with selling products than selling shares of its stock. Their value created by such enterprises isn’t sucked up and out of communities (the way Amazon or mall stores do), but circulates again and again from one person or business to another.
The economy we’re committed to restoring is no more the victim of the Covid-19 crisis than it is the cause.
We can learn a lot from the relative success of today’s many efforts at economic recovery. What’s not working are traditional, top-down approaches to repair. “Ultimately the Fed doesn’t have the infrastructure to touch Main Street,” Vincent Reinhart, chief economist at Mellon, told Axios. The Fed can encourage banks to lend, but banks won’t take the capital unless they see a return. Meanwhile, small businesses can apply for grants and loans through the web, but many will have laid off their workforce or gone under themselves before such funding shows up. If it ever does.
Besides, that’s what Obama tried after the recession of 2007: forcing banks to take money so they can lend it to corporations, who then use it to build businesses and create jobs — jobs people don’t really enjoy, making crap that the rest of us have to be convinced by advertisers to buy. Such “solutions” are really just ways of restoring the original problem. They shore up the lending industries and the dominance of the corporate sector over small businesses. It’s not the way Joe’s Pizzeria is saved; it’s the way Joe ends up working for a branch of Domino’s, for less money with less security.
What’s working, instead, are a myriad of more lateral mechanisms for mutual aid and the exchange of value between people and real businesses — ones that may work so well, in fact, that they may just last beyond this crisis to define a new economic landscape. Throughout the U.S., medical supplies are being listed and dispersed through Google Docs and spreadsheets under the rules of the commons rather than those of the marketplace. In Taiwan, crude but functional public service platforms are being developed by hackers sharing information with one another and working in partnership with the government.
The innovations we’re seeing emerge are digital in spirit, but local in their execution. The temporary paralysis of globally scaled financial and business institutions is creating the need and room for alternatives to just-in-time global supply chains and centralized, debt-based monetary monopoly. The longer the crisis continues, the more experience, success, and faith people will gain in the possibility of the more locally balanced, bottom-up economics
Instead of figuring out how to extract money from the marketplace, which only increases its fragility, we must explore business practices that circulate money throughout the system. This was the original, distributive promise of a digital economy — and one we must embrace if we want to restore our collective economic immune response before the next shock to our system, whatever it may be.
As Adam Smith explained back in the 18th Century, when big corporations dominate an economic landscape, value ends up extracted from real people and places and delivered to shareholders, often very far away. Self-sufficiency becomes impossible. Instead, according to Smith, a healthy economy respects all three factors of production equally: land, labor, and capital. The people working in the businesses and the places where those businesses operate are respected as stakeholders in the enterprise. When no one speaks for the land, the topsoil gets depleted. When the workers have no vote, they are the first to be let go when the going gets rough.
As the stock market hits its nadir, the temptation for investors will be to buy stock again and double down on the winner-take-all climate of the pre-Covid landscape. Instead of buying stocks — however temptingly depressed the prices — they need to invest as partners in smaller, local enterprises that offer continuing, regenerative returns. These alternative business models are proving themselves more resilient in good times and bad. From neighborhood barter and local and crypto currencies to distributed open source apps and the doughnut economic model now being implemented in Amsterdam, these are business practices that optimize not for the extraction of capital but for the velocity of money — like the circulation of blood through an organism. They will never have IPOs, but that’s because such businesses are not built to be sold; they’re built to serve their stakeholders in an ongoing way. These are the sorts of businesses we need to support, any way we can.
Categories: The Muslim Times