How are we to respond?

Tim Crabtree, Senior Lecturer, Economics for Transition, Schumacher College

If we take the time to investigate, then it is clear that both human society, and the earth of which we
are part, are on a distressing trajectory1. We can see growing inequality of income and wealth, social
injustice including poverty and exploitation, and environmental degradation due to resource
depletion and pollution2.

Schumacher College asks how we should respond to this growing crisis – what, in other words is our
“respons-ability”? E.F. Schumacher, after whom the college was named, questioned the orthodox
answers provided by mainstream economists (and politicians in thrall to their ideas). Essentially the
argument is that if we “free up” the wealth creators – individual entrepreneurs and corporations –
then this will result in the optimal level of well-being for all.

However, it has become clear that the theoretical basis for this argument is deeply flawed, while the
empirical evidence that it is not working has been steadily building up over the last 30 years. It is
proposed that the market is an equilibrium system, where prices reflect the rational decisions of
consumers, investors and producers. If “distortions” such as government interference and labour
unions are minimised so as to create a “free market”, then all resources will be allocated as
efficiently as possible, production will be maximised, consumers will be satisfied and workers will be
employed.

The financial crisis of 2008 demonstrated conclusively that the economy is not an equilibrium system
akin to a rocking horse (which if hit by external disturbances will soon come back to a stable
position), but, as Andrew Haldane of the Bank of England suggests3, more like a herd of wild horses
(hit one horse and you have no idea where the herd will go, nor where it will come to rest)4. The
economy is actually a complex evolving system containing a wide range of actors whose behaviour
influences each other in a non-linear way. Four critical influences ensure that we are now moving
away from equilibrium at a greater pace: the massive influx of carbon into a closed system (the
atmosphere); the distorting “financialisation”5 of the economy, with financial transactions massively
exceeding those in real goods and services by an order of at least 50; the fact that the wealthy
benefit from positive feedback loops (the rich are getting richer) while those relying on incomes
have seen real wages stagnate6; and the impact of new information technology, on jobs and industry
structure (through increasing returns to scale – another positive feedback loop).7

This is a daunting list of challenges, and can lead us to feeling unclear as to how we might respond.
So we need to go back to basics: what is the economy for, and what can we personally do in
response, in order to help shift the economy in a more benign direction?

1 See for example: http://www.theguardian.com/environment/earth-insight/2014/mar/14/nasa-civilisation-irreversible-

collapse-study-scientists
2 See for example: http://www.stockholmresilience.org/21/research/research-programmes/planetary-boundaries.html ;

and http://www.kateraworth.com/doughnut/
3
http://www.slideshare.net/tutor2u/andy-haldane-keynes-society
4 See: http://www.mckinsey.com/insights/corporate_social_responsibility/redefining_capitalism
5 http://www.neweconomics.org/publications/entry/inequality-and-financialisation
6 http://piketty.pse.ens.fr/fr/
7http://tuvalu.santafe.edu/~wbarthur/ and https://www.youtube.com/watch?v=WQ6ppznYl-Q
I would suggest that the purpose of the economy is to increase the well-being of all, and that this
does not imply a simplistic attempt to maximise production and consumption (as measured by gross
national product). According to the Chilean economist Manfred Max-Neef, increasing well-being
means meeting a set of basic needs - subsistence, protection, affection, understanding,
participation, idleness, creation, identity and freedom. These needs are then satisfied in various
ways, including through the production of economic goods and services.

Key “satisfiers” are food, energy, housing, health and social care services, cultural activities and
communication technologies. This then provides one way of approaching our “respons-ability” in the
economic sphere, as we can ask whether we might be able to act in one of these key sectors. For
example, I have been drawn to working in the fields of food8; renewable energy9; and affordable
housing10. In addition, we will need to address access to key resources – including land, workspace
and knowledge (which can be seen as “the commons”), as well as finance – and these may be areas
that people are drawn to work in. There is also a crucial role to be undertaken in the building of
democratic ownership and the localising of the economy. These have been summarised by Mike
Lewis and Pat Conaty in their book “The Resilience Imperative”11, and in the following diagram:

The next step, I believe, is to identify a set of influences that give us some guidance for the response
we choose to make. There are three that I think are crucial:
- Learning from ecology
- Learning from systemic thinking and complexity theory
- Learning from the world’s wisdom traditions

I will deal with these three very briefly.

1. Learning from ecology. Ecological systems are generally open (primarily to the energy of the
sun), modular, diverse and networked. Transferring an understanding of ecological principles to
the economic sphere can mean understanding circular economy approaches, exploring how we
can achieve resilience through de-centralisation, diversity and self-organisation, and asking how
a particular sector could seek a transition pathway to a steady-state or de-growth mode.

8 http://www.localfoodlinks.org.uk/ ; http://www.sustainweb.org/publications/local_food_links_the_first_10_years/ ;
https://www.schumachercollege.org.uk/blog/the-new-economy-in-practice-3-from-small-seeds
9 https://www.dorsetcommunityenergy.org.uk/ ; https://www.schumachercollege.org.uk/blog/the-new-economy-in-

practice-part-1
10 http://www.wessexca.co.uk/projects/community-land-trusts ; https://www.schumachercollege.org.uk/blog/the-new-

economy-in-practice-2
11 Lewis, M. and Conaty, P. 2012. The resilience imperative: Co-operative transitions to a steady-state economy. Gabriola

Island, British Columbia: New Society Publishers.

2. Learning from complexity. As was touched on above, the economy is coming to be understood
as a complex evolving system. Insights from systems thinkers such as Donella Meadows12 or
complexity theorists such as W. Brian Arthur can be valuable in identifying how we might
intervene. It should be noted though that there is always a danger in focusing on re-
presentations of systems, rather than cultivating a sensitivity to the dynamics of complex
systems – here the work of Patricia Shaw, amongst others, has been important in focusing on
“complex responsive processes of relating”, rather than on computer models of systems13.
3. Learning from the world’s wisdom traditions. Mainstream economics suggest we should all
follow our own self-interest and compete with others, but such views are powerfully challenged
by traditions that emphasise altruism, compassion, co-operation and community.

These three ways of thinking and acting have been important influences in recent social movements,
including the new movements in economics. These include open source, peer-to-peer and commons
initiatives, the new wave of employee-owned businesses and co-operatives, de-growth and
transition initiatives, and the social finance movement.

Conclusion
We have a “respons-ability” to act in the world, to address the many social and environmental crises
we face, and there are many economic sectors where we can intervene. We have a set of influences
that can guide us – ecological principles, complexity theory and the wisdom traditions. We can also
draw inspiration from the new economic movements. However, in my experience this is not enough.
It can be a good starting point to create in our minds a framework – a “trellis” – which can guide our
work. Combining the work of Conaty and Lewis with the thoughts of Satish Kumar (one of the
founders of Schumacher College), who talks of the need to re-connect with ourselves, with the
environment and with other people, the trellis might look something like this:

Finance
Re-claiming

The
commons

Democracy
& local
autonomy

Self Soil Society

Re-connecting

We need to remember, though, that any initiative or enterprise we choose to work with is a living
entity, comprising multiple evolving relationships. A trellis can provide structure and support, but it
does not dictate where the plant grows. So we need to focus on the continual and on-going process
of “formacion” and “cultivation”. Everything starts with a seed, so we must ask how we can cultivate
this seed as it grows or evolves over time? How is form endlessly appearing and evolving, not just re-
presented in our plans and strategies? What space do we need to create, in order to allow the living
“system” to grow? How are we to take a lead, while acknowledging that everything in the future is
uncertain? What is the quality of mind which we need to cultivate in order to stay true to our initial
intentions? These are the questions that might guide us as we “respond” to the crises around us.

12https://en.wikipedia.org/wiki/Twelve_leverage_points
13See for example: https://odneurope.wordpress.com/2013/04/15/the-importance-of-changing-conversations-in-
organisations/