The economy for the common good ( Gemeinwohl-Ökonomie according to the original German concept) has constituted, since its appearance in 2010, the suggestion, first timid and then firm, about a possible economic order that seeks a different path from the previously known proposals.
Its creator, the eclectic Austrian Christian Felber, writer, dancer, sociologist and economist in equal parts, has tried to find a business system that sustains the autonomous production capacity of companies in general while injecting them with the ethical values that our culture considers basic. .
Like a good dancer, Felber dances in his theories right between the most traditional market capitalism and the state-planned economy typical of socialist systems. His approach lies in seeking a central path that largely solves a fundamental contradiction that exists between the ethics expressed in the different constitutions around the world and the logic of competitive profit typical of large companies.
The values of human dignity, democracy, ecological sustainability, solidarity or social justice have been respected, according to their perception, as notions in most human institutions, except in business economics, based solely on competition for the profit.
These values must be instilled into the financial world through strong incentives to bring about significant qualitative changes in our contemporary world. This could shift the corporate objective from the ambition to amass fortunes at any cost to the goal of contributing to the common good.
Although the Economy for the Common Good, according to its popular name in English, began to spread only from Austria, Germany and Switzerland, its influence has soon spread throughout the European Union, all of America, Asia and Africa. Many organizations, universities and cities have adopted the ideals of the financial common good in their territories and hundreds of companies have begun to integrate their methods and principles. We will explain some of them below.
If you have a particular interest in everything related to social responsibility within the business world, you might also find it helpful to visit this other article on our website dedicated to corporate social responsibility and its meaning. Follow the link!
Principles and methods
All economic activity serves the common good. This is stated in the Bavarian Constitution and is one of the legal articles that Felber has used to critique the values that drive the modern business market.
Companies have come to see money as the very objective of their activity instead of seeing it as the means of their task for the common good, even when the very legal texts of most of the world indicate otherwise. This is so to the point that companies measure their performance exclusively through financial profit. Countries, equivalently at the macro level, also measure their status in terms of GDP (Gross Domestic Product).
The problem is that not many things are reflected in this ethical examination. The miserable status of workers in the developing world is silenced, human rights violations by a government regime are not exposed, and ecological disasters are buried. That is why this new model proposes the establishment of a parallel balance sheet, a balance sheet for the common good. This measurement incorporates all the elements silenced in the profit balance sheet: the company's level of commitment to ecological sustainability, social justice, solidarity with various social causes, and the democratic spirit in the way company decisions are conducted.
Of course, this balance theoretically has a lot to do with economic incentives, which are crucial for these new measures to be truly implemented. It is argued that companies that apply the balance of the common good and can obtain a good score from the reviews by an ideally independent body, will have important benefits in terms of reduced taxes, fewer tariffs, greater opportunity for public contracting, credits at lower cost and privileged positions in purchases.
Companies that, on the other hand, do not apply the ethical balance or get a fairly low score in all their items, will be negatively rewarded with more tariffs, more taxes and fewer opportunities for purchases, credit and hiring.
In this way, the conditions are created so that only companies aware of their social and ecological impact can reach the peak of success, reducing the movement capacity of companies with customs or dirty or very improvable energy systems, forcing them to change or disappear on the market.
Other proposals and consequences
Felber's model also proposes a management of surpluses different from the usual, without using them for hostile purchases from other organizations, financing of political parties or undeserved bonuses to people outside the company.
Surpluses will be used only for social and/or ecological investments, repayment of credits, the granting of credits to other companies or special bonuses for workers, receiving as a reward the end of the corporate benefit tax.
Another proposal is to set a ceiling, established by economic assemblies, on excessive income and wealth, redirecting the surplus to form a financial fund for future generations, thus helping to erode initial economic inequality in businesses. Economic inequality is a relevant topic in many contemporary discussions.
The establishment of a global currency for international trade, the use of land directed for ecological reasons, reduction of working hours to about 30 hours per week and the granting of a paid sabbatical year for every ten years of work are among the other controversial suggestions of this system.
It is assumed that several of these measures applied together will have the effect of ending the obsession with growth and voraciously devouring the competition, creating a future of many small companies based on mutual cooperation in terms of technology and knowledge. A more peaceful and fair scenario, at least in theory.
In the following video, Christian Felber himself explains his basic proposal in a TED Talk in Spain, with far more eloquence than we could possibly muster in this brief article. This concludes our discussion on the economy for the common good , a proposal the world will undoubtedly have to consider. Until next time.
