The banks have failed, the world is in recession - Neil Hudson reports on a new book, co-authored by a Leeds academic, which argues it’s time for capitalism to change.
The police have called a press conference to inform residents that activity in their area is up a whopping 43 per cent. Is this good or bad? The chief constable seems to be saying it’s a good thing - he says there are more police patrols, more police arrests and more convictions.
However, after some intrepid reporters pry a little beneath the shiny veneer of this to-all-intents-and-purposes ‘good news story’, it is revealed that part of the ‘activity’ involves a spike in anti-social behaviour, burglaries and muggings.
It turns out that an increase in police activity is not all it’s cracked up to be.
This is the analogy Dan O’Neill uses to explain the validity of the way we currently measure our economy - we use something called GDP (Gross Domestic Product), a measure of all the economic activity in a particular country over a certain period.
Mr O’Neill, a Canadian by birth who now lectures at the University of Leeds, is co-author of a new book, Enough is Enough, which maps out an alternative form of capitalism, one which does not require our economy to keep constantly growing.
Speaking to the Yorkshire Evening Post, he said: “This is not about buying more energy efficient light bulbs, we’re talking about an alternative to growth.
“Now most people will just look at that statement and say it can’t happen but part of the problem is that people like MPs and economists just aren’t aware of it.
“The argument is a well made one, it has some strong supporters.”
Not least of whom is the controversial political commentator Naom Chomsky, who contributed to the foreword of the book.
The book champions something called the steady state economy - a form of capitalism which still enables people to own property and even make lots of money but at the same time does not require us as a society to constantly consume more products.
Mr O’Neill explained: “Well, we are in a place now where people can see how the system has broken down. There are a number of causes of the Credit Crunch but one of the main reasons was the banking system and this is one area where we think we need to change the way we do things.
“At the moment, we have something called ‘fractional reserve lending’. This means that when you go to the bank for a mortgage and the bank lends you money, they are effectively making that money up out of thin air. When you pay them the money back, everything cancels itself out, except they are left with the interest.
“The banks are allowed to lend money they don’t have. It’s a great system... for the banks. That’s why they are so reluctant to let it go. I think at the moment they are allowed to borrow something like 50 or 60 times what they have in reserves and that was the problem behind the Credit Crunch because it became clear that the people they had lent to just weren’t going to be able to repay it.
“In the book, we argue for a gradual move to something called full reserve banking, which means, effectively that the banks cannot lend on money they have not got.”
In the book, Mr O’Neill has some straightforward advice on how to make the transition to a world which puts equality and personal well-being in front of profit and an endless need to consume. The world he describes sounds more like a utopia than a rat-race. While people are not necessarily saturated in wealth, that no longer becomes the driving factor for individuals and the idea is that by sacrificing the need to go out and work harder to generate more money, people will end up with more free time.
He says: “Well, instead of continually accumulating more things, we would have to be content with what we have - we would be encouraged to ﬁx things instead of buying new, to grow our own vegetables or buy locally produced ones. There would be a limit to the amount you could earn (it has been suggested the maximum wage be 200 times the minimum wage).
“Providing jobs for people, solving unemployment, would be a priority for the steady state economy. As a city, Leeds could set an example for other cities by adopting some of the principles of the steady state economy.”
He added: “There are a lot of people out there who are aware of the idea of moving to a steady state economy - when we held a conference to discuss these ideas in 2010, we had something like 25,000 people download the document in the first six months after that, which was really encouraging indeed and that’s something we want to build on.
“What needs to happen now is for people like MPs to be made aware of it and that means people writing to them and lobbying them - that’s where ordinary people can get involved.
“The reason we wrote the book was that there have been a lot of other books written about this particular problem but the majority of those spend 90 per cent of their time analysing the problem and 10 per cent about solutions. We wanted ours to be the other way around, so we have a few chapters on the problem and the rest is all about how we can solve it.
“In terms of how we move away from our present economic model, it’s things like abandoning the GDP as a measure of how we are doing, because all GDP does is tell you how much economic activity went on in a certain period, it doesn’t differentiate between good and bad and that’s something you would want to know, just as you would want to know the specifics if the police turned up and told you ‘activity’ was up in your neighbourhood.
“Steady state economics is all about living within our limits and reducing inequality, we still want to use markets and it would still be based on capitalism but it would focus on things like quality of life and environmental impact instead of the creation of more money.
“Part of the problem with our current system is the treadmill effect. Your neighbour gets a new car or phone or whatever and all of a sudden, you want one, more resources are used and all for the sake of keeping up with the Joneses.”
Enough Is Enough: Building a Sustainable Economy in a World of Finite Resources by Rob Dietz and Dan O’Neill (Routledge) is priced £12.99 (ISBN 978-0-415-82095-0). In Leeds the book is available from Blackwell (opposite the university) and Radish Books (in Chapel Allerton).