Nov 232015
 

Tentative Title: Economic Theory and Community Development:

Introduction

In this Introduction we will do three things. First we will comment on its relationship to the earlier book to which it is a sequel. Second, we will make some remarks comparing our views with some key claims of Jürgen Habermas. Since Habermas’ philosophy is well known and since his project can be construed as bearing some similarity to ours — also offering a critique of the role of economic theory in the world and a foundation for an ethics of solidarity — the comparison of his well-known views with our nearly-unknown views may make it easier for the reader to understand the latter. Third, we will provide an outline of this book’s eight chapters.

1. The Relationship of this Book to the Earlier Book to which it is a Sequel

The earlier book was not about Paulo Freire. We begin with Freire because he provides a bridge (Freire would say a “hinge”) for introducing what it was about. Freire identifies the central problem of our age as “dehumanization.” To solve it, i.e. to humanize or to re-humanize, he proposed and practiced consciousness-raising (or concientizacion). Clodomir Santos de Morais, a constant friend, sometime prison cell-mate, and frequent collaborator of Freire in north-east Brazil in the 1960s proposed and practiced going beyond “consciousness-raising” to foster “organizational consciousness.” If the excluded are going to be included, if the dehumanized are going to claim their humanity successfully, they must learn to organize. They must become capable of forming and joining “enterprises.”

De Morais pioneered the development of an educational methodology for learning to organize that has come to be known in English as the “Organization Workshop.” (OW) In de Morais’ own thinking (especially in his 1987 doctoral dissertation in sociology at the University of Rostock) and still more so in the thinking of his followers the Chilean psychologists Isabel and Ivan Labra, OW practice has been improved and given theoretical coherence using concepts borrowed from Cultural-Historical Activity Theory (CHAT).

In an OW (Organization Workshop) a large number of participants, perhaps 400 typically drawn from the ranks of the marginalized and excluded, manage a common resource pool to do practical work (fencing, welding, remodelling or constructing buildings, developing a farm, planting trees, digging irrigation canals…) for about six hours a day and attend classes on the theory of organization for about two hours a day. They are paid for their practical work if and when they succeed in organizing themselves to negotiate contracts, to assign tasks and control performance, and properly invoice the work done.

The object of CHAT has been briefly described as understanding the unity of consciousness and activity. CHAT can also be described as doing social psychology taking activity systems as the units of analysis. It is commonly thought of as now being in its third generation. Its founder and the leader of its first generation was the Soviet-era Russian psychologist Lev Vygotsky (1896-1934). Alexei N. Leontiev (1903-1979), who became Dean of the Faculty of Psychology at Moscow State University, and who directly influenced de Morais and the Labras, is identified with a second generation. A leading figure in third generation CHAT is Yrjo Engeström, Professor of Adult Education and Director of the Centre for Research on Activity, Development and Learning (CRADLE) at the University of Helsinki.

In the 1980s Gavin Andersson was a social development practitioner in rural Botswana helping country people to organize production cooperatives and in the process to achieve some dignity and some power. Meanwhile, Isabel and Ivan Labra, having been driven from their native Chile by its military dictatorship, were invited to neighbouring Zimbabwe to run OWs. From the Labras Andersson first learned about OWs and about Leontief’s insights. Later he himself directed many organization workshops in Botswana and in South Africa. He wrote a doctoral dissertation on popular development organization for the Open University in the UK, in which he drew on CHAT. Out of his experience and reading grew the central ideas of the book to which the present book is a sequel, Unbounded Organization: Embracing the Societal Enterprise.

Drawing on de Morais’ broad concept of “enterprise” Andersson coined the notion of “two enterprise planes.” Every enterprise exists on two planes. On one plane it has its own specific objectives. On another plane it contributes to achieving the overall objectives of society. The “societal enterprise” can be defined as “the overall activity system whose object is the nurturance of everybody.”

These same ideas will be treated in a little more detail at various points later. In any event the earlier book speaks for itself. Anyone can read it. Let us turn now to the motivation for this its sequel.

In 2008 Gavin Andersson, together with Kate Philip, Oupa -Ramachela, and Sidwell Mokgothu formed the nucleus of a team that created South Africa’s Community Work Programme (CWP). It was and is an innovative programme designed to use public employment to catalyse community development. CWP solved a practical problem not solved by OW or by CHAT. Formerly marginalized and excluded people who achieved organizational consciousness while learning to weld or mend fences or keep accounts did not necessarily continue to have an income when the OW ended. The cooperative enterprises they formed among themselves did not necessarily find buyers willing and able to buy their goods and services; their marketable skills did not necessarily find markets. Now at several sites OW participants were able to move directly into CWP when their organization workshop ended. There they could continue to use their organizational and technical skills – indeed they could continue doing the same useful work: remodelling an old people’s home, building a pre-school, caring for AIDS victims, planting orchards and gardens….

Large group capacitation programmes like OW have an important role to play in starting with the excluded, accepting them as they are, and then moving them to a point where they are eligible to be participants in a modern society of organizations, a knowledge society. The question then arises how to pay for running programmes like OW on a large enough scale to add up to significant social change. If public employment doing community service as in CWP is an emblematic part of the answer to the question how to finish the job of including the excluded, then the question arises: how to pay for public employment? Similar questions arise concerning any other solutions to social and ecological problems that require moving money away from where there is a surplus of it toward where money is needed but lacking. These questions arise in an epoch characterized by a permanent fiscal crisis of the state; by increasing scepticism concerning any and all economic theories and models; and since 2008 by bizarre public policies like near zero or even negative interest rates, flooding the world with astronomical sums of newly printed money through quantitative easing and the like, and imposing austerity on the masses as if the punishment of the victims were the rational solution to the problem.

Hence our first book centred on management and psychology requires a sequel on economic theory and community development. The second book answers the first book’s question, how can humanizing and/or re-humanizing, which we now know how to do, escape the fate of all the socialisms, populisms, and welfare states that that foundered and sunk when they struck the rock of economic reality? Reciprocally, the approach of the first book, the approach we call unbounded organization, resolves – and indeed, we shall argue, dissolves – wicked and intractable social and ecological problems that seem not to have, and indeed, we shall argue, really do not have, solutions as long as our Epoch remains an Age of Economics; in other words as long as our Epoch remains an Age of Bounded Organization.

2. Jürgen Habermas Revisited

A first comparison with Habermas that may help the reader to understand where we are coming from turns on his employment of the word “emancipation.” That word plays a larger role in his vocabulary than it plays in ours. For example, he writes that the natural sciences derive from an interest in technical control; the disciplines he calls hermeneutic derive from an interest in understanding; while psychoanalysis and Marxism properly understood serve a third interest: emancipation.

We employ nutmeg, red pepper and “emancipation” sparingly. We can use its etymology as a bridge (or “hinge”) to introduce our reservations. Its root is the Latin mancipum, ownership, which in turn comes from manus, hand. From the point of view of early Roman law, although not necessarily from the point of view of religion and custom, the Roman pater familias was supreme and unfettered in his little kingdom. In the course of history, first older sons and then others came out from under the hand — out from under the ownership– of the all-powerful pater familias. There have been successive waves of emancipation: of men when they come of age, of slaves, of women etc. The downside of this upside has been that the substance of the freedom of the emancipated has tended to be assimilated to a tradition that began with the supreme and unfettered power (read irresponsibility) of the pater familias. This tendency was aggravated in early modern times by thinking like that of the fearsome duo Isaac Newton/Immanuel Kant. Everything in nature, including natural human inclinations, was conceived to work according to fixed mechanical laws. Freedom (and therefore emancipation) could then only be conceived, as Kant put it, as complete independence from the determining causes of the material world.

Our realist view sees the institutional and intellectual rules of the games of ancient Rome, medieval Europe, early modern Europe, and –agreeing with Immanuel Wallerstein that the modern world-system in an expansion of the European world-system– today’s global economy, as part and parcel of particular culturally and historically constructed activity systems, when not as outright hocus pocus. We see cultures as patterns of story, art, technique, norm, and ceremony that evolve historically with resources provided by nature and within limits set by nature (i.e. by physics, chemistry, and biology). We applaud although with nuances Habermas’s critiques of positivism and his exposés of the twisting of science into pseudo-science to veil the exploitation of the many by the few. But we dissolve into a larger vision Habermas’ proposal to see science as a three-part enterprise driven by the three drivers of technical control, understanding, and emancipation. We see science –and along with science the rest of culture– as an infinitely varied and always changing set of tools for organizing collective responses to the challenges and opportunities of life.

To cope with today’s fast-changing realities –including but not limited to robotizacion, unpayable debt, and the rapid replacement of fossil fuels by new technologies that are the intellectual property of a tiny elite—we need organizational flexibility that sees beyond rigidities bequeathed to us by history, including the rigidities bequeathed by Roman Law and Enlightment ideals. For this reason among others we must add nuances when we applaud Habermas’s commitments to “emancipation,” to “dignity,” and to “reason.”

Where we pivot on “culture” Habermas pivots on “social formation.” He suggests classifying social formations into four types, of which the fourth is the one that mainly interests him: late capitalism:

First come the social formations Emile Durkheim called “archaic.” Their organizational principle is the division of labour by age and sex. Their institutional nucleus is the kinship system, the family, the clan, the tribe.

Second come the traditional societies. Their principle of organization is hierarchy, class. Politics was the art of government in a social formation consisting of governors and governed.

The third social formation is liberal capitalism. Its organizational principle is the relation between wage labour and capital established by its civil law. Social decisions about investment, production, and the distribution of goods are made by autonomous private owners. They conduct business routinely without the intervention of the state. Nevertheless it is only within the state’s territory and through its sanctions that it is possible to constitute the markets for merchandise, for labour, and for capital. Habermas speaks here of “de-politizacion.” Class power becomes anonymous. The state becomes a “tax state.” The state is a secondary institution complementing the primary institution, the self-regulating market.

The remark we make here is not so much about this particular triple classification –archaic, traditional, and liberal—as it is about classification in general. Although classification has its place, the practical task of prospecting for cultural resources we might be able to use to organize cooperation to feed the hungry and heal the sick is often better served by paying close attention to individual cases. We cite the endless variety of the institutions humans have created as evidence of the social creativity of our species and as a treasure-trove of ideas that might turn out to be useful. We fortify our reluctance to over-classify by remembering that Ludwig Wittgenstein in his youth devoted himself to making explicit the single necessary logical structure of any possible science, and then when he became older and wiser devoted him to seeing clearly the multiplicity of the language-games people play. Adding this plea for diversity, we echo in a slightly different key Habermas’s point that because we are a learning species we can improve our institutions.

Habermas’s fourth type of social formation he calls “late capitalism” (Spätkapitalismus), and also sometimes “organized capitalism,” or “capitalism of organizations,” or “capitalism regulated by the state.”

Late capitalism is defined both by (1) the concentration of economic power, including that of the great multinationals and transnationals, which brings with it the “organization” of the markets for goods and services, labour, and capital; which means the end of competitive capitalism, and by (2) the intervention of the state to correct the failures of the market, which means the end of liberal capitalism.

In late capitalism Habermas finds three main sectors, approximately equal in size:

1. A sector that is still competitive, still regulated by the market. Profits are low and little capital is accumulated. Relative to the other two sectors it employs more workers but pays them less.
2. A sector governed by the market strategies of the great oligopolies. It is capital-intensive and knowledge-intensive. This is the most dynamic sector, the one with the greatest capacity for innovation, the greatest wealth, the highest level of globalization, and the strongest trade unions.
3. A public sector that includes organizations directly controlled by the state, but also all private firms that depend on government subsidies and/or contracts, including the arms and space industries, much of agriculture, much nominally private education and health care, and much research and development.

We remark that these three sectors may constitute what Louis Althusser would call a structure in dominance, but they certainly do not constitute all of society. We quote from a recent white paper of the Government of Spain: “In our country the cooperatives and worker-owned enterprises provide employment directly for almost 335,000 people. The Special Employment Centres and the Insertion Enterprises employ more than 75,000 workers. To these one must add, besides, those employed in other forms of social economy, such as, for example, the foundations, the associations, the mutual benefit corporations, or the fraternities of fishermen.” Unbounded Organization is about alignment across sectors for the common good. In principle there is no limit to the number of sectors.

In late capitalism public administration assumes tasks it did not have in liberal capitalism. Its primary task is not administering a welfare state. Its primary task is to improve conditions for business. The welfare state comes second. Public administration must first promote economic growth (read capital accumulation); it must fortify the nation’s competitiveness in international markets. Only if the state succeeds in guiding the economy toward greater productivity and greater profitability can there be a surplus large enough to pay the expenses of the state itself and then enough left over to fund a welfare state.

In Habermas’ analytic scheme there is an economic system and a politico-administrative system, and then also a third system, a cultural system otherwise known as a legitimation system. The coupling of the economic system with the politico-administrative system repoliticizes the relations of production that liberal capitalism had depoliticized. The upshot is a heavier burden for the legitimation system –but at a time when the cultural norms that constitute the legitimation system are rapidly losing credibility. The conditions of life in late capitalist society shred the ethical fabric of everyday life that Habermas, following Kant, calls “practical reason.”

There is a legitimation crisis on two planes: On the economic plane the regulation of the system that is expected to steer the state toward economic growth and social welfare at the same time proves to be impossible, or at most only sporadically possible. The economic system is in the hands of private property owners who do what they choose to do. They can only be indirectly motivated to choose do what public policy aims to guide them toward doing. For example, public policy may aim for lower rates of unemployment and higher wages, but these aims do not lead to taking action to directly produce those results. They lead at most to modifying the few variables that the government can modify, following advice based on one or another economic theory. The hope is that pushing or pulling the policy levers available to government will tend to produce more employment and higher wages. Expectations are routinely disappointed. On the political plane, the government faces an electorate that increasingly demands its economic and political rights (rights which Habermas calls “generalizable interests.”) Since the legal framework effectively separates those who make the promises the electorate wants to hear–the politicians—from the power to keep the promises, expectations are disappointed.

Although the public may think that the performance of the economy is determined by public policies, the truth is that economic performance is mainly driven by private decisions. The state’s power has narrow limits. The state cannot attempt redistribution of great accumulated fortunes for fear of provoking an investment strike that would paralyze the country, or a wave of capital flight that would have the same effect. It cannot prevent the downward swings of the business cycle. Its efforts to mitigate pain and suffering when the economy slows down, as it regularly does, lead to inflation and/or deficits that in turn lead to debts.

Intense international competition to attract the investments of the major corporate players compels the state to spend ever more money on infrastructure, training, R & D, subsidies and many other kinds of inducements. Even local capital must be granted expensive favours because even though it is local in origin it can always leave, just as foreign capital can always decline to come. The favours include lower taxes. Meanwhile the steady growth of ever-more-efficient and ever-less-labour-intensive technologies raises the amounts the state is compelled to spend on the unemployed, the criminals, the police, workers who retire earlier and live longer, jails, students who spend ever more years at school, unwed mothers on welfare, the insane, the addicted and others who do not earn a wage.

The result is a permanent, and permanently deepening, fiscal crisis of the state.

We remark that the events of the past forty years have confirmed that the legitimation crisis Habermas sketched in 1975 is real. The fiscal crisis of the state is indeed deepening, especially in Europe, Japan, and the United States, but also in Brazil, Russia, India, China, and South Africa. It is indeed proving to be impossible to fund a high wage welfare state and simultaneously compete with 195 other sovereign states to attract and keep capital. Legitimacy is indeed eroding.

Bounded Organization, characterized by rigid institutions and a naïve ethic that expects an invisible hand to transmute selfishness into the common good with no help from education or psychology, is indeed unsustainable. Habermas stated the conditions of the problem. Hic Rhodus, hic Salta!

We have emphasized the fiscal crisis of the state in outlining Habermas’s account of today’s civilizational crisis. We add that at a more profound level the fiscal crisis can be seen as a manifestation of an ethical crisis. We add that the solution to the ethical crisis cannot lie in the direction of rejecting modernity’s ethics of autonomy. The solution to the economic crisis cannot lie in the direction of a centrally planned command economy. The solution to the juridical crisis cannot lie in the direction of a totalitarian state where, as Hannah Arendt says, “anything can happen.” On these three points we think we are agreeing with Habermas.

Habermas devoted the latter part of his book on the legitimation crisis and much of the rest of his academic career to foundational issues in social ethics –believing, or at least we believe he believed– that ethics was a good place to start. He echoes from distant Germany on the other side of the Atlantic Ocean Lawrence Kohlberg’s concern with moral development conceived as achieving ever-higher stages in the understanding of justice. He echoes from the Global North the concerns of Paulo Freire and Clodomir Santos de Morais with the struggle of the oppressed conceived as reclaiming what it means to be human. He contributes to building an ethics of moral and political responsibility beyond autonomy. He moves from autonomy to autonomy-with- responsibility. He moves from autonomy-with-responsibility to autonomy-with-responsibility-with nurturance.

For Habermas and for us the locus of the reconstruction of ethics and of humanity is in the lived-world of persons. Too often the lived-world of persons tends to be bypassed and undermined by technocratic systems of governance like those Habermas’s favourite intellectual enemy Niklas Luhmann tends to condone. They attempt to solve the problems of the people without including the people in the problem-solving process. They are pseudo-scientific and tragically ineffective. They are not capable of integrating human motivation with the tasks that must be performed to operate today’s complex societies. These are Habermasian themes we take up in the present book as we seek to integrate community development with economics and economics with community development, and as we celebrate ways South Africa’s Community Work Programme is already integrating them.

3. An Outline of this Book’s Eight Chapters

Chapter One (no title yet)

The first chapter begins with riots in South Africa and ends with a call to re-examine economic theory. The progression from this beginning to that end is the following.

The poor are indignant. Their riots express both material demands and moral outrage. Twenty years of democracy have been twenty years of broken promises. The poor also have a glorious tradition of righteous struggle against apartheid. They demand fulfilment of those struggle´s economic promises.

The chapter then moves on to consider South Africa´s National Development Plan (NDP). The NDP is not a dry-as-dust document. It is solid content packaged in lyrical poetry calling on all South Africans to come together and work together for the common good. It pleads with the people to resist the demagoguery of populist politicians. It offers instead the moral high ground of patriotic cooperation. It offers scientific economics. It offers participation. It is a widely-owned document. The process that produced it consulted all sectors and thousands of individuals.

In particular, the document asks the people not to torpedo the NDP by frightening investors away from South Africa.

Our Chapter One points out that the NDP´s promises cannot be better than its science. Its science is mainstream liberal economics, give or take a few nuances. The nuances include distancing itself from the anti-state excesses of recent neoliberalism. The NDP´s ethical appeal rests on theoretical claims about causes and effects. If the nation follows the plan (the causes) then cet. par. absolute poverty will be eliminated by 2030 etc. etc. (The effects).

The historical context calls for re-examining economic theory. If economic theory can be improved, then the path to social transformation can be smoothed. The plea to the people to refrain from violence can be made more credible and more effective.

But economic theory has already been re-examined, not once but many times. This book contributes to a vast and exponentially growing literature in three ways. First, it advocates a new approach, a new worldview, unbounded organization. (UO). UO is more than an economic theory. It could be said that UO dissolves economic theory into management (organization science) and into social psychology. Second, this book is an empirical study of a South African programme mandated to use public employment to catalyse community development. It proposes a theory-approach-worldview that already has is feet on the ground in practice. Third, it takes seriously John Maynard Keynes´ remark: “The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.” Hence its proclivity to go everywhere and comment on everything.

Chapter Two: How to Make the Economy Work for the Poor

In the second chapter we go back not all the way to the beginnings of mainstream liberal economics but as far back as Adam Smith. We develop a limited, or pure, concept of “the economy.” The economy in this limited sense corresponds approximately to what Smith observed, and precisely to what he said he would observe under conditions of free competition governed by natural liberty. The economy in this limited sense does not work for the poor. It tends to drive wages down. There is no guarantee that everyone who needs to sell something (labour power or something else) to make a living will find buyers for what she or he has to sell. It is characterized by two Staggering Facts: (1) Production depends on investment for the sake of making something to sell (accumulation). (2) Not everyone who needs a buyer finds one (chronic insufficiency of effective demand).

When in history and in the future the society’s institutions do work for the poor it is not because a pure market economy alone (although it does tend to generate productivity that makes it not completely off-the-map for Smith to claim that even the poorest person in a modern society lives better than a king among the savages), but, generically speaking, because of what Gunnar Myrdal called, in deliberate contrast to Smith’s natural liberty “created harmony.” Such a harmony is created by regulating and supplementing markets with many material practices. When we regard their number as in principle unlimited, and when we regard it as a psychological possibility that humans can align across sectors for the good of all, creating combinations of practices that sum to solve problems, we arrive at the rudiments of unbounded organization.

It is sometimes convenient to think of “community” as what the economy as not, as its necessary complement and foundation, as Gemeinschaft as distinct from (and/or as Max Weber would have it as a prerequisite for) Gesllschaft, or as what today is sometimes called social capital. South Africa is currently complementing private-investment-to-produce-for-sale-for-profit with public-investment-to-meet-needs-without-sales-not-for-profit, and with community development, in its Community Work Programme (CWP).

Chapter Three: Origins of the Community Work Programme (CWP)

South Africa’s experience in fighting poverty provides empirical support for the ideas we express in chapter two as Staggering Fact one and two. Government programmes that can only reach their goals if markets pick up the baton after the government has run the initial lap by paying start-up or incubation costs (for example a government-funded data bank to match unemployed youth with available jobs) have accomplished little or nothing. Where public sector resources have played a larger role (as in housing, where large injections of public funds complemented a people’s housing self-help movement and private bank lending) something substantial was accomplished. It is indeed unlikely (some of us would say impossible) that employment in the private sector making products-to –be-sold-at-cost-covering prices with a margin left over for profit will ever solve the unemployment problem in South Africa. Imminent advances in robotics and information technology make it unlikely (some of us would say impossible) that a pure market economy will in the future ever solve the unemployment problem in any country.

CWP brings hope that chronic structural unemployment can be overcome without going down the Roman Decadence path of simply giving people bread and circuses, and without going down the Orwellian path of grey faceless bureaucracy. In the origins of CWP this communitarian hope came from the inspiration provided by prior experience in South Africa with Organization Workshops (OW). Organization workshops began in Brazil, spread to three continents, and preceded CWP at two of its three pilot sites. With a theoretical basis in the social psychology of Cultural Historical Activity Theory, OWs in South Africa showed how to design CWP to be community-driven public employment.

Chapter Four: India’s Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

CWP is regarded by some as a prototype and a laying down of infrastructure for a true employment guarantee. MGNREGA already is an employment guarantee although it applies only in rural areas and has other limitations. MGNREGA’s proponents sold it to the public and to parliament as a way to comply with the right to employment enacted in the Constitution of India and in international conventions on economic and social human rights signed by India.

Courts have held that economic and social human rights even though they are in some sense law are not enforceable. Governments when sued can allege that they lack sufficient resources. They can plead that the treaties were signed and the constitutions were ratified subject to the proviso that the rights guaranteed on paper would be implemented in practice only if and when governments could afford to implement them. Unbounded organization replies to this legal argument. It calls for changing the status of rights by moving the boundary that separates the possible from the impossible. UO suggests that livelihoods for all usually can be achieved with existing resources.

In an atmosphere charged with mainstream liberal economics, MGNREGA could only win approval in parliament by making labouring in it so unattractive that nobody would prefer it to working in the private sector. For this reason among others working for MGNREGA is more miserable and more poorly paid than it needs to be. Nevertheless because MGNREGA pays the minimum wage, it raises wages in the countryside by putting pressure on employers who pay less than the minimum allowed by law.

Rural India’s anomalies are the stuff Kuhn’s paradigm shifts are made of. Huge quantities of grains are purchased by the government, put in warehouses, and left there. The purpose is to keep farmers in business by keeping prices above the cost of production. Meanwhile millions go hungry. At the prevailing prices they cannot buy enough food. Farmers are driven to suicide by debt bondage while their workers rightly complain that they are not paid enough to live on. Unhappy and inefficient farms are preserved because no better way to create livelihoods for the farmers, their families, and their workers is perceived.

Chapter Five: The Swedish Model

Chapter five begins with a précis of the personal experiences that led Gavin Andersson to formulate the concept of unbounded organization. Then it turns to the decline of the Swedish Model.

The lesson to be drawn from the decline of the Swedish Model is that within the basic rules of the game of the global economy –which are those of Smith’s natural liberty— it is impossible –except under unusual circumstances like those prevailing in Sweden immediately after World War II— to sustain full employment with good wages and social security. Sweden lost the race to the bottom because its wages were too high. Its taxes were too high. Capital fled. Volvo itself fled to Brazil. But Brazilian workers did not win what Swedish workers lost. The Brazilian economist Paul Singer wrote, “The effect of neoliberal globalization is to level wages downward in all countries.”

The balance of the chapter is devoted to how to make the global economy governable for humanity’s sake and for the biosphere’s sake. A first step is to free minds from pies. The pie image –the image that tells us that first we must grow GDP before the poor can get a bigger slice of it—is what Ludwig Wittgenstein would call a picture that holds us captive. A second step is to make the importation of goods produced in labour conditions that violate human rights illegal like fencing stolen goods is illegal. A third step is to tie capital to a social purpose and to a territory. These three steps –which of course are only a beginning— are sufficient to show that with a UO paradigm even the most fundamental laws of capitalist accumulation –including those that tanked the Swedish Model– can be changed.

Chapter Six: The Imaginary World that Holds the Real World Captive

Mainstream liberal economics prescribes exactly the opposite. It holds that the global economy should not be governed, or what amounts to the same thing that it should be governed by natural liberty. Chapter six is devoted to details of economic theory. It does some detective work to solve the mystery of how an imaginary world (epitomized but not exhausted by the theory of Walrasian general equilibrium) came to be (for example in the rules of the World Trade Organization) a normative standard with the force of law in the real world. It connects with CWP by criticizing an OECD proposal to evaluate CWP not according to how well it uses public employment to catalyse community development but according to how well it prepares the unemployed for employment in the private sector.

The chapter shows that major currents of economic thinking do not describe the real world. They do not describe even a possible world because in general equilibrium profits go to zero and it is impossible for the global economy to function with zero profits. Instead, business strategy achieves sustainable profits by making use of Michael Porter’s five forces: maximizing bargaining power Vis à Vis suppliers, maximizing bargaining power vis à vis customers, erecting barriers to entry to keep competitors out of the industry, working together with other players in the industry against substitute products, and gentlemen’s agreements not to compete too aggressively on price.

The real world practices of business guarantee that the theoretical ideal of maximum consumer satisfaction will never happen. They make corporate social responsibility a more realizable ideal than any neoliberal free market utopia. The fundamental theorem of welfare economics (that general equilibrium is a Pareto optimum), in addition to prescribing a world that does not and cannot exist, is not a defensible ethic. It is an unethical distraction from the physical welfare of people and planet.

Chapter Seven: (no title yet)

The seventh chapter goes into detail on exactly how CWP uses public employment to catalyse community development with an in-depth case study of CWP at a single site, the district known as Orange Farm on the south side of Johannesburg. It begins and ends by sandwiching life as it is lived on the ground on the south side of Joburg between discussions of a key issue in the global economy, the issue of debt.

On a UO worldview cancelling or restructuring debt, as the ancient Hebrews did periodically according to the Old Testament, is just one more way to adjust culture to its physical functions. But to make what would be sensible doable in the neoliberal world that has been socially constructed in the last several decades, debtor communities must become resilient to resist the inevitable consequences –such as bank runs and capital flight—of pressure from rapacious creditors. The pressure comes, in the last analysis, not from creditors as people but from the systemic imperatives of the system itself –a system which must either re-organize itself or continue to produce one dysfunctional result after another.

Chapter seven shows the nitty-gritty of how a government programmes administered through non-profits can build resilient communities. It shows communities mobilizing resources to meet needs in practical ways that do not depend either on the price signals of markets or on top-down planning. The point is not to rid the world of the price signals provided by markets, nor to rid the world of governments, but to complement both in an unbounded approach to organizing the exchange of matter and energy with the environment that is the metabolism of society. The chapter provides empirical support for UO by showing how it is a psychological and sociological possibility for human beings to work together in diverse and creative ways to meet needs. The necessity for building community to cope with structural flaws of the global economy revealed by a series of debt crises at the global and national levels is connected with a case study demonstrating the possibility of UO.

Chapter Eight: How to Pay for Social Programmes

Mainstream thinking is trapped in a mindset where economic growth as measured by GDP is regarded as a prerequisite for opening up fiscal space to pay for social programmes. This mindset is not just thinking. It is thinking that reflects, that builds, and that sets in stone existing institutions. Nevertheless, freeing our minds to embrace UO at the level of thought –which activity theory tells us can best be done learning organizing by organizing—is a necessary part of necessary institutional reform.

Chapter eight finds steps toward UO in the Bachelet Commission report to the ILO suggesting numerous creative ways to open up fiscal space to pay for social programmes. It finds more in Thomas Piketty’s research suggesting that rentier wealth might be taxed to make the global economy governable, to reduce inequality, and to pay for social programmes with little or no damage to production. And still more in Alfred Marshall’s classic formulations and Joseph Stiglitz’s updates of the economic theory of rent. The chapter includes a critique of Say’s Law (a law that implies that if only we had perfect markets every seller, including every seller of labour-power, would find a buyer) that complements chapter six.

The initial question, how to pay for social programmes, and specifically how to pay for expanding CWP to make it a true employment guarantee, becomes the general question how to recycle wealth from where it is not needed in order to use it intelligently where it is needed. This then leads to the question how to make redistribution compatible with the social functions now performed (not always well) by inequality. Profits have social functions. Prices have social functions. Interest rates have social functions. Saving has social functions. Accumulated wealth has social functions. At the curtain call, when all the actors in the play make their bows, unbounded organization appears as a theory-approach-worldview-paradigm suitable for solving problems (like making redistribution compatible with production) that cannot be solved by rigid (read neurotic) adherence to inflexible patterns of thought and action.