New Economies

Brenda Cooper @ 08-02-2012

Last month I pondered the extent to which the Arab Spring and Occupy Everything are socially-driven acts of creative destruction. Creative destruction is defined as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” The mutation, in this case, is reactionary responses to established interests, mostly driven by or assisted by social media. Governments and power structures are falling, but the replacements aren’t immediately ready in the wings.

Creative destruction implies something better rises out of the process (digital cameras instead of polaroid cameras). Yet it’s not always possible to clearly see the new thing being created. Planned change is driven by discrete goals, but creative destruction isn’t. For example, the shared angst of the Occupy movement is pretty clearly understood and most of us can relate to it in whole or in part. But the movement’s goals are fuzzy things like “fairness” that are not easily actionable.

There are a lot of reasons to start talking about what we’d like to form out of the other side of this set of changes/drivers. One thing to hope for is a new economy.

Our current economic model is not working for most people. Entrenched economic interests drive a death grip on oil — in spite of clear evidence that oil is a poison. The American election is largely funded by corporate interests. The Euro-zone is unstable and keeping the rest of the world on edge. Corporate profits are way up in some industries. Today’s economy works for the .001%, but not for the vanishing middle class.

The 2012 Davos Forum was called “The Great Transformation: Shaping New Models.” As the UN gears up for its 2012 signature conference, Rio +20, the main website says the focus of conversation at the conference will be “The implementation of a sustainable new economy, on a global scale, to achieve well-being and social equity.” The Nation website is running a whole emphasis section on “Re-imagining Capitalism.”

So what might we get? What forces might shape a new economy?

We would like to draw up our blue print for a sustainable new model economy with a view to the future needs of our globe, social and environmental concerns, woven into food, water and energy needs.” – Aung San Suu Kyi, a Nobel Peace Price winner, as she addresses Davos in 2012 (speaking about Burma).

A lot of people are asking for a similar framework: an economic model that links the cost of commerce to its affect on the environment. I suspect that as climate change has more and more real impact, we’ll see this linkage get stronger and more global, and go beyond cap and trade. A fresh example is the new fee that European airports are charging all airlines for carbon offset.

Linkage between environment costs and revenue are the part of the new economy that people are attempting to plan. There are other forces in play:

  • Transparency is rising, and transparency begets accountability. Today’s digital tools, high-speed communication, and generally adopted model of openness are forcing more and more deals and decisions into the light of scrutiny. The Komen / Planned Parenthood controversy in the US this week is just one example.
  • Power is shifting. A globally depressed economy is better for business than for governments. It would be much harder to find a government that has grown in power or budget over the last few years than to find a multinational company with record profits.
  • Things happen faster. The accelerating rate of change means that the days of deliberative processes working well are behind us. Frameworks and rules might help encourage change to move in particular directions, but decisions need to be made faster than they used to be by governments, corporations, and citizens alike.
  • In spite of the recession, we’re living in an insanely creative time. In most of the world, people can transact business via hand-held devices. The iPad has changed portable computing. Faster wireless networks are making sophisticated amounts of data available on street-corners in major cities. At the same time, all of this new capability is driving efficiency more than jobs, and the world population is rising.

These are just some of the trends I see. They are related – transparency is driving accountability into corporations, who are funding governments, and social movements are driving change in governments and corporations. This is making for some weird linkages, although I’m not sure they are all bad.

Whatever the biggest forces for economic change are, they’ll surprise us like the Internet or social media surprised us. Let’s just hope the next new economy is a good one.

If you want to read more:

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Brenda Cooper’s latest science fiction novel, Mayan December, is out now from Prime Books. For more information, see her website!

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6 Responses to “New Economies”

  1. Sam X says:

    Great article.

    I agree with the sense of your article: things are changing (doing so quickly) and we live in an incredibly creative time. Personally, I think a couple additional factors are deserving of attention within this discussion–

    a) For my money, there are further economic shocks to come, probably in 2012 but maybe 2013. Most information coming out of China points to a significant slowdown, if not “hard landing,” and that will impact Europe and the US. There’s significant economic turbulence ahead that will impact a lot of the conservation and reformation discussions.

    b) I would also argue that the conversation about art and its relationship to money is in the early stages. We are seeing hard proof that selling a ton of books for super cheap on Amazon can in fact lead to modest (or beyond) success–but what does that mean for the medium? Relevance in the digital age, sure, but questions about quality and creation and sorting all remain.

    At large, money is being reevaluated–its presence in our lives, in our politics, in our art. We accepted the ideology that everything had a value, but the entirety of human society can’t rest on that philosophy. Politics certainly doesn’t work best when influenced by excess money, and neither does art.

  2. Will says:

    1 very significant trend that wasn’t mentioned in the piece is the evolving – perhaps devolving – character of American labor. The long term trend is the gradual replacement of well paid manufacturing jobs held by union members by relatively low paying service sector jobs held by non-unionized labor. Some well paying jobs, both in manufacturing & in the service sector, have been eliminated by automation, others exported. Nothing new or original, but it does raise 2 issues. 1st, how can an economy based on consumer spending succeed when the long term trend is for those consumers to have less money to spend because they work at jobs that pay less than jobs paid in the past. The 2nd issue is an eventual global labor surplus because so many jobs will have been eliminated by automation.

  3. Brenda Cooper says:

    Hi Will,

    Yes…it is significant, and I didn’t mention it. I’m glad you did. I think the idea of an economy based on ever-increasing consumption has to fail at some point.

  4. gmoke says:

    Over the last few days, I received announcements for these two events:

    “Occupy Commons strategy workshop: reclaiming the Commons as a social theory of collective action” at Making Worlds: an OWS Forum on the Commons in NYC and online, in New York, Feb 18, 2012 AND online at The Future of Occupy site Feb 14-23. Here is the link…
    http://thefutureofoccupy.org/strategy-and-commons-workshop/
    and
    From March 30th-April 1st 2012, Economy Futures is hosting the Transition to a New Economy conference at Harvard University.
    Applications are now open. To join the dialogue and build the movement to create a new economy that puts people and planet above profit click here.

    Apply online and find out more at http://www.economyfutures.org/
    Early application deadline: Feb 15
    Final application deadline: Feb 21

    I wonder if they’re talking to each other.

  5. rocketpjs says:

    A consumption based economy doesn’t have to fail, if the unit costs of consumption do not increase, and if the inputs are not finite.

    So an economy that is based on ever more trees or reams of silk or cars has an upper limit where supply will shrink to the point that nobody can afford anything and the economy collapses. This is especially the case in an economy where spending and decision making power is concentrated in a few individuals.

    An economy is very different where some things are very limited, like food and water, while others such as information goods are essentially infinitely reproducible. Much of the current copyright wars have to do with large scale providers trying to turn an infinite (and therefore hard to control) market into a limited market.

    A new economy will have to find a way to ascribe value to the new, infinite goods, while still distributing all of the essential but finite goods. How many apples for an Apple?

  6. iktomi says:

    Good morning, thank you Brenda for all your insight into these concerns we all have. I am retired so depend on a pension for existence since I am alone. Also, my kids help me as they can, but fotunately I am able to help them, too. I love your books and am rereading Silver Ship and the Sea. Also Reading the Wind…so great..I have not tired from either book. Anyway we will always have consuemrs and providers…that is what the economy is about, however the abilities to consume and produce are very much strained. Yes, technology has lessened the need for workers while at the same improved the consumer goods. It is getting top heavy with produced goods. Better thinking has to come of how to increase consumers and that is what is sadly lacking…even education and expertise is taking a hit..from K-12 to colleges. Is there a fix?… too late to put it together?

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