A New Economic Orthodoxy Economics for Life


Since the civilization threatening issues of climate change and growing inequality have come to the fore, numerous observers, including the prestigious Club of Rome, have been calling for a change to the economic paradigm that dominates the world today. Today’s dominant economic paradigm is

neoliberalism. In many ways, it is today’s dominant value set even well beyond the economic realm. For example, a recent report from the Club of Rome argues that neoliberalism’s core tenets are part of the reason that the world is in the sorry state that it is today. Many crises—increasingly emergencies—ranging from the Covid-19 pandemic to the scientifically-documented climate emergency facing the world to inequality to the unsustainable development now plaguing many parts of the world can all be at least partly traced to beliefs and practices associated with neoliberalism. In the fall of 2020, fires raged up and down the west coast of the US, catastrophic flooding affected the US south, and well over 200,000 US citizens had already died from Covid19, and millions were out of work with few social supports to sustain them through the crisis. Yet the stock market was soaring. A disconnect between life and economics? Perhaps.
Arguably, these situations are a consequence of years of ignoring societal and ecological impacts of economic activities in the pursuit of endless economic growth—core tenets of neoliberalism. And of neoliberal economics’ belief that ecological impacts are simply ‘externalities’ or negative by-products of production that have to be tolerated in the interest of economic growth…despite the costs of those externalities being actually paid in what the English art critic John Ruskin called ‘illth’ (the opposite of wealth) in societies or by the natural environment. For as former UK Prime Minister Margaret Thatcher once declared, ‘There is no such thing as society’ in the neoliberal belief set—and the natural environment is seldom mentioned.
Such beliefs coexist with others saying that the only purpose of business is maximize profits. And that governments are inevitably problematic and hence their influence needs to be reduced. Forty years have passed since Thatcher uttered her belief that societies do not exist. She also stated that ‘There is no alternative’ to neoliberalism, or TINA. Today, those beliefs are deeply embedded in mainstream economic theory and business practice, which focuses only on monetary wealth to the exclusion of other values. Despite the presence of numerous oligopolies and monopolies, markets are presumed always ‘free’. Markets are presumed able to solve social problems (despite significant evidence to the contrary). Countries should give up self-sufficiency and take on debt in the interests of free trade. Further, despite evidence from evolutionary biology to the contrary, we humans are assumed to always be self-interested profit maximizers who have responsibility only for benefitting ourselves. Because, well, … there is no such thing as society—or alternative to this way of thinking. And, for that matter, the natural environment is only exists in neoliberal economics for us humans to exploit. These fundamentally flawed precepts have gotten us—collectively—into deep trouble.

there needs to be a new economic orthodoxy, one that supports life in all respects.

It is past time for change. It is not true that there are no alternatives to neoliberal economics. In the face of today’s manifold crises—some of which are existential—there needs to be a new economic orthodoxy, one that supports life in all respects. Not one, as I argued in an article published in the journal Sustainability, that has a modifier to distinguish it from the mainstream. In that paper, titled ‘Reframing and Transforming Economics around Life,’ I drew from a vast array of literature on alternative economics and understandings of life-giving properties in systems to synthesize six core tenets for a possible alternative and mainstream economics that fosters life in all respects. These tenets are similar to core precepts in neoliberal economics—only oriented towards life. They are what are known as memes, or core building blocks of culture. As memes, they constitute a potential foundation for numerous stories and narratives that could move economics towards supporting all of life—and not just wealth as measured in monetary terms.
‘Reframing Economics’ draws from many sources, including economic streams of thought typically labelled ‘heterodox’, such as ecological, environmental, doughnut, and behavioral economics. Importantly, the six tenets or precepts are consistent with and underpin these alternative framings of economics, providing a foundational set of values, or what I like to call memes, radically different from but akin to the ones in neoliberalism. Such memes are important because they are the basis out of which people construct the stories and narratives that help shape perspectives, attitudes, believes, and behaviors—or what systems thinker Donella Meadows called paradigms. These stories and narrative, when powerful and resonant, become what anthropologists call cultural mythologies—that help us humans find and understand our places in the world.
Here are the six core precepts potentially provide a foundational frame for a new economic orthodoxy:

  • Stewardship of the Whole: People and their institutions have shared responsibility—stewardship—for all beings and all of our planet.
  • Co-creating Collective Value: The purpose of businesses and economies is to optimize collective and co-created value for and wellbeing and dignity of all beings, human and non-human.
  • Governance through Cosmopolitan Localism: Governance needs to operate through networks of mutually supportive communities, reciprocally exchanging resources between local and global levels, with decisions and actions located as locally as feasible.
  • Regeneration, Reciprocity, and Circularity: Human activity needs to be in accord with nature’s ability to regenerate, emphasizing principles of reciprocity or sharing and circularity in which what is waste in one system is ‘food’ in another.
  • Relationship and Connectedness: Humans are inherently social beings who need connection, care, and relationship with others to thrive, and are interdependently connected to nature, relying on nature for all we need to survive.
  • Equitable Markets and Trade: Markets offer fair trade with fully costed products and services appropriate to their contexts in culturally and context-specific ways.

Obviously, these six precepts will not solve all of the world’s problems, but if they (or somethings like them) can be deeply integrated into mainstream economics, they could go a long way in that direction.
Sandra Waddock is the Councillor for the Forum’s Metanarrative Working Group, Galligan Chair of Strategy, Carroll School Scholar of Corporate Responsibility, and Professor of Management at Boston College’s Carroll School of Management, Chestnut Hill, MA USA. (waddock@bc.edu)

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A New Economic Orthodoxy Economics for Life


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