Economy for the Common Good – Definition, what it is and concept

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The Economy for the Common Good (ECG) is an economic, social and political model based on the values ​​of human dignity, social justice, environmental sustainability and democracy.

In 2010, Christian Felber and colleagues began in Austria the “Economy for the Common Good” movement as an economic and social model built through dialogue and democracy.

This movement is presented as an alternative of the “third way” type between capitalism and the socialism. Although based on guiding principles, the model is open to theoretical debate and practical strategies to implement a different economy.

What problems does the ECG identify?

The main problems that identify the economy of the common good in the current economic system are:

  1. Contradiction of values ​​between the economy and society The current paradigm in economics is fierce fighting, wild competition and greedy selfishness.
  2. The economy is not oriented to the common good, as it appears explicitly in the constitutions of the countries.
  3. The economic success of companies is measured in their Financial balance and that of the countries in the gross domestic product (GDP). However, these two indicators are monetary: the medium matters (the money), but not the end of the economy (social welfare).
  4. Those companies or countries that are committed to the common good (that make a contribution to human rights, to sustainable development, to cultural diversity) have difficulties in national and international competition because betting on the common good is more expensive.
  5. Serious economic inequalities, both in income and wealth, which generates precariousness in the satisfaction of basic needs of the most disadvantaged.
  6. The financial market – especially the banking sector- accumulates great power, because they obtain large profit margins by charging high interest rates for loans and paying low rates for deposits.
  7. Global monetary problem: financial instability due to excessive speculation, shocks in capital flows, problems of balance of trade and balance of payments.
  8. Some companies and entire countries have achieved and remain competitive based on their low salaries, minimum environmental regulations and job insecurity. The debate is not so much between liberalize or not trade, but between ethical and unethical trade.
  9. The environment is increasingly damaged. It is estimated that, if they do not make the necessary efforts to stop and counteract the environmental catastrophe, in 2100 the global temperature will have increased by 4 ° C.
  10. Democracy is in crisis, because only representative democracy has been implemented. And in recent years, people do not feel identified or represented by those who govern them. That is one of the causes that allows the rise of populists from both left and right.

How to Propose a Solution or reduce them?

The economy of the common good not only criticizes these negative situations, but proposes alternatives to solve them:

  1. The ECG is based on the same values ​​that make social relations flourish: trust, cooperation, appreciation, solidarity and sharing.
  2. The ECG aims to make the constitutional mandate of the common good come true.
  3. Economic success must go from being a monetary indicator to a social indicator. The product of the common good of a national economy and the balance of the common good of a company replace the GDP and to the financial statements, as indicators of success. An indicator that is already being implemented is the Social Progress Index.
  4. Companies with good balances of the common good and countries with good results in the product of the common good will enjoy advantages. Unlike the barriers that will be found by those who do not respect human rights or destroy the environment.
  5. Income and property inequalities will be limited: the maximum income may not be more than a certain multiple of the minimum income and inheritance will be taxed. The exact margins must be defined democratically.
  6. A key democratic good is the democratic bank. Democratic because it will offer free checking accounts, keep deposits safe and interest rates will encourage economic activity.
  7. Following the proposal of John Maynard Keynes of 1944, a global monetary cooperation will be established, through a Clearing Union.
  8. Society must recover the principles of community and bet on ethical trade, not as an end but as a tool to achieve higher goals: human rights, sustainable development, social cohesion or justice.
  9. A new objective will be the reduction of the ecological footprint from homes and businesses, to a globally sustainable and fair level.
  10. Representative democracy will be complemented by direct democracy and participatory democracy. The sovereign people have the right to correct their representatives, initiate laws and control key areas of the economy.

Key lines of application

The Economy for the Common Good is a concrete and realizable alternative for private and public organizations of different sizes and legal forms that seek business success through the values ​​of the common good.

The movement of the Economy for the Common Good is an initiative that calls for the peaceful transformation of the current system from individual and collective actions throughout the world.

Disadvantages of Economy for the Common Good

The concept of “common good” is very problematic because each person has a different definition of “good” and it is impossible to reach an agreement to coincide in all that it means. According to the same principles, the ECG would define the “common good” depending on what democracy decides, that is, the majorities. Thus becoming a teleocratic model that imposes on its members what they should look for and do.

In addition, it does not propose alternative economic indicators that are generalizable to all companies and countries in the short term. This model is related to the economy of the decrease, which goes against the basic postulates of the economic growth: the accumulation and the productivity.

Finally, it should be noted that the tragedy of the commons It is a phenomenon observed in multiple scenarios. And it is concluded that if there are no rights to private property clearly defined, the good (such as a river, a forest, a park, a bank) will be at the mercy of everyone who wants to use it and will tend to over-exploitation.