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The Next Economy

By Dongwoo Lee, Director of EcoCiv Korea

This article has been translated from Korean. View the original article here

I remember the shock I had when, having attended only classes of professors belonging to the Keynesian school during my undergraduate years, I then attended the labor economics class—the only one taught at my school. At that time, I was thrilled like a child who found a treasure to learn that the economic system is a human invention. It can change, and we can create an entirely different system depending on the point of view. EcoCiv’s “The Next Economy” webinar brought back that feeling to me. It was a time to hear from world-class scholars and economic activists about an alternative economic system, which has long been a principal focus of EcoCiv. In the COVID-19 era, in particular, we are not only aware of the fragility and ease of collapse of the current economic system, but also the direct impact that it has on our lives. The neoliberal economic system, which began in the 20th century and has become the central axis of 21st-century economics, clearly reveals its weaknesses before our eyes. What does an economic system after COVID-19 look like?

The system we are currently relying on is faltering  it is not working as before. At this time, humanity has a chance to realize what we really live for as a group of interconnected people. The economic system of humankind has a long history, and especially in the 21st century, we have already experienced several crises. Through these crises, we realized that everything was interconnected. It’s time for the economy to work in this way, as an interconnected entity. Alternative economic systems are connected to everything that surrounds humans. It is time to come up with a new sustainable system that considers the environment and does not exploit it. In the face of COVID-19, the current economic system has two great challenges. The first is the shutdown of all systems. In a pandemic situation, the world economy was almost paralyzed. The second is the next step, the question of how to revive a stopped system. This second step can be an amazing opportunity to create a new economic system. The new system we are talking about is not aimed at reconnecting the former economic flow. It is about creating a new model with a new standard for value. From the planning stages of local business and big companies, to local and national governments, everything must be considered with fresh eyes.

Our connected human experiences are leading us to a whole new economic system. We see the possibility that the orientation of this fundamental frame, which is the basis of the global economic system — such as financial markets and international funds — can be changed. Where are we going? To answer this, we must first remember that we are living creatures and were born on the Earth that embraces us. We enjoy the gift of life as a community, and must acknowledge this. All institutions created by humankind are closely connected. In the new economic system, we must see money as a tool and not a purpose. In traditional economics, we learned that the purpose of an economy is to make a profit. However, in the new economic system, economic activity is not intended to make a profit, but to help all members of the community enjoy their lives. In fact, these changes are based on fundamental philosophical changes. We must take advantage of these opportunities to create new economic systems for humanity. COVID-19 gives us that opportunity.

Korea, in particular, has successfully controlled COVID-19 at the local, regional, and national levels. However, it is questionable whether the existing global system, on which the Korean economic system is based, will change dramatically with this experience. People’s values and thoughts are harder to change. The black swan theory suggests that even in a new era, we are likely to repeat the same mistakes. A lot of people are talking about change, but it takes a lot of effort to transform the existing system. As we live under the influence of gravity, we tend to return to our point of origin. However, history has taught us that groundbreaking systems change is possible. New events can be new opportunities. And opportunities are what can join forces. Through this opportunity, we need to discover the will to change at the community level and transform it into power. By doing so, we can bring together the ideas of ​​alternative needs and cohesive power. New narratives are needed for such a process to gain momentum, and to allow humanity to imagine the economic system from a new perspective. Based on such a gathering of power, it is possible to create small partnerships locally, and new ones on an international scale.

To transition to a new system, our system of values also ​​must change. In economics, we’ve only seen graphs of constantly rising GDP. However, we must realize that this should not be the only indicator for success. Imagine that we are on an airplane and that the only instrument on that plane is a speedometer. A number of different indicators are required to ensure a safe flight, so a speedometer alone is not too safe. Such a plane may not be able to set the altitude, so it could sink into the mountains or fall into the sea. When considering the economy, we need a variety of indicators to balance wellbeing, not just one. A new system must be created by gathering all the wisdom of humankind. The system must support all living beings, not just humans. We need to build a new economic system that allows humanity to thrive without destroying the environment. The doughnut economy, rather than a linear one, reflects this view. It is not easy to create a blueprint for a new economic system, but I think it is possible to do so gradually. We must focus on the public sector and the regenerated economy, which are not as valued in the current economic system. Also, we have to formulate a healthy way to redistribute the wealth monopolized by 1% of humanity. We need an economic system that uses different metrics. In addition, we have to think about who owns it. The neoliberal economy has been eroded by giants. Local economies have not been able to shine properly in the pursuit of breakthrough profits by large companies. 

At this point, the word “wellbeing” is needed. It is an economic indicator with a broader meaning than the existing type of wellbeing to which we’ve become acclimated. The wellbeing economy is already conceptualized, and some countries and cities have already adopted and applied a new system using wellbeing indicators. However, local governments and entrepreneurs are so accustomed to the existing system that they have perceived the happiness index and wellbeing index as competing entities. The one-line GDP we use is also a very familiar and powerful index. Therefore, we need a method of parallelizing existing and new systems. The goal for a new indicator is not merely to make a series of small changes — we must believe in a breakthrough change. We need to seize the opportunity to change.

Through this experience, we can see that the problems created by the neoliberal economic system based on numbers — not the real economy — are problems created by humans and do not take natural systems into account. This predicament is due to designing the system incorrectly. So far, our world associates the market with the economy. It was the framework of the neoliberal economic system that gave the market unlimited trust and power. However, we know that this does not encompass all human economic activity; human economic life means more than the prices and supply and demand. However, the neoliberal economic system does not talk about aspects other than price. The 20th-century economy was obsessed with growth in numbers, but not the concept of growth in wellbeing. Healthy communities and environmental values ​​were not included in those growth metrics. From an economics point of view, the notion of non-local and globalized homes, businesses, and common goods as the central axis of the economy is what has become important. 

It may sound radical at this point, but a new focus on basic incomes and small local businesses can yield a new model. Basic income can be said to be necessary to meet fundamental human needs. One important aspect of talking about basic income is the consideration of human labor. It is necessary to consider the value of human labor, which should be valuable to oneself, without being inferiorized by a larger system. This leads to the matter of value. Every human has an intrinsic value just from being themselves, not just by doing something valuable.

Global and local relationships are also critical to the new economic system. The current economic system has little infrastructure for investing in the local communities. Ironically, our money is held in a local bank, which is invested in global hedge funds, but not in local businesses. It is not used in food banking projects to develop communities or to help people who are hungry. Our common needs are the foundation of a community. We need to decolonize to escape the values ​​of the existing system. We must deviate from how we think about the economy, the entrepreneurial mindset, and the Wall Street mindset to create a circulating, local system. Food, energy, services, and community banking systems need to be created in new ways. The COVID-19 crisis has broken down market operations, and the soundness of sustainable, self-sufficient local economies has become important. Deglobalize but relocalize has become a very important concept.

However, international organizations that create relationships and communities among people must build more global relationships and connections. In a global community centered around our humanity, we need to share each other’s ideas and balance economic activities at the local level. After all, our lives are made up of community. That’s why organizing at the local community level is very important. Power must have roots locally. We must think deeply about how the local level is where real people live. The new economic system needs to be considered from the community level. It is very important to reorganize resources that are based locally and not to depend on large companies like Amazon.

It is not impossible to change the economic system. The experience of COVID-19 gave us an unfiltered look at the imperfect aspects of our current system. It is up to all of us to come up with a new system of values and realize that we are connected to each other — to unite our powers and create new movements. This is the spirit and the values of EcoCiv.

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