The Economy of Communion: A project for a happy and sustainable socioeconomic future.

Speech delivered during the International Conference "Patterns of Unity: An Interdisciplinary Dialogue on the Thought of Chiara Lubich (1920-2008)"

by Luigino Bruni

Taipei, Fu Jen Catholic University, April 13, 2013

1. Introduction

130413 Taipei 02 ridI’m delighted to introduce the Economy of Communion to you at this university. I’ve been to Asia and, though I have never been here personally, I know Taipei from its famous and dynamic civil and economic life. Therefore, consider this presentation on the EoC and its messages a sign of my high-esteem for your great culture and economy.

Let’s begin with some numbers.

1.1.    The world's new center of gravity.

The first diagrams are regarding the world's long-term international geopolitical evolution.

Taipe1 grafico 1

Taipe1 grafico 2

 Taipei grafico 3

From these graphs one can infer the following important facts:
-  Western economic hegemony has only been a two century interlude in Asia's world leadership. Asia's power will soon be back.
-  The world’s political and economic arrangements are quickly changing and new categorizations are necessary to understand and manage them.

1.2.    Inequality

The following data concerns inequality. The image below compares income concentration rates (inequality) between countries. The higher the index (closer to 1), the greater the inequality: As you can see the average rates of countries in Asia, such as China and India, are just slightly lower than in the USA and South America:

Taipei grafico 4

Income distribution is core to our discussion since:

-    Global inequality grew between 1988 and 1993 (from 0.84 to 0.87) before decreasing to 0.82 in 2000. Two contrasting tendencies determined this outcome: the wealth gap between countries (from 78% to 67%) is decreasing while within nations it is increasing.

-    People in more equal and just countries enjoy a happier life.

-    There’s a much higher correlation between inequality and quality of life indicators (lifespan, health, happiness) than income (GDP) and quality of life.

In capitalist economies growing of inequality is the major obstacle to socioeconomic development. The wealth which we produce through vicious processes (mainly in the Western world) increases inequality of opportunity, rights, and freedom and does not create jobs or foster true development. In fact, only labor creates jobs and they cannot be created any other way.

One notices the seriousness of inequality in the market economy when analyzing the economy's evolution since the industrial revolution. In the 20th century, capitalism successfully managed to reduce inequality in western economies as they transitioned from social and economic feudal systems to market economies, which were much more dynamic than feudalism. In the past decades, however, inequality has almost returned to the level it was previously.

In the USA, the 20 richest hedge funds managers together earn more than the top 500 managers, who each make an average of 10 million dollars a year. Furthermore, the level of internal inequality in the USA today is close to that of nations now overcoming feudal social structures. Thus, as far as inequality is concerned, late capitalism is very similar to late feudalism; two centuries of economic and legal development were worth very little or nothing at all.

The lack of markets once produced detrimental outcomes, which are now produced by an excess of markets. This serious and critical fact contradicts reformists utopian belief in the market that is the foundation of the modern political economy. In fact, philosophers of the Enlightenment believed that by developing the market, society would finally overcome feudalism and slowly head to democracy. It was this they so much craved, the development they believed would allow people to live freely and equally. However, 4/5 of the so called absolute poor (living on less than 2 dollars per day) live in medium and high income countries and not in “poor nations”; the dividing line between rich and poor is no longer geographic (North-South) but rather within countries. The new and disturbing fact (which we will soon see in the video) is that globalization changed global poverty profoundly.

GDP and well-being indicators aren't as connected to each other as we believed. We are unable to discover much from comparing the relationship between GDP and fundamental human development indicators such as lifespan, children's health, mental disorders, obesity, crime, youth academic achievements, and social mobility. Data from average and high income countries regarding these issues is very similar. If instead of GDP we choose to look at inequality (like the Gini index), the outcome is quite different: fundamental indicators vary significantly within each of the same countries.

In other words, as far as lifespan, health, human resources, or capabilities (according to Amartya Sen) are concerned, the difference between a British employee and an uneducated Caribbean descended single-mother, who has an unstable job and lives in a poor neighborhood in London, is much greater than between that British employee and a Peruvian worker. This difference is even less significant between a high level British and a South American manager. The entire population suffers from inequality. In fact, it's a serious public problem affecting the rich as well, since, according to recent statistics, inequality causes greater social resentment, status competition, insecurity, and wretchedness for all.

Therefore, if one works for economic renewal and is truly committed to the common good, they shouldn't worry so much about the GDP but instead should want less inequality.

The following video helps us to visualize the evolution of world's economy:

1.3.    The paradox of happiness

The “paradox of happiness” is an indicator which also triggers one to reflect on capitalism.

Taipei grafico 5

Taipei grafico 6

This graph illustrates three important things:

a) income growth produces well-being and happiness for poor people and (low income) poor countries (see steep red line);

b) after a certain threshold (which industrialized countries have already surpassed) income growth does no longer produce happiness. Rather it deteriorates quality of life (as excessive economic growth reduces and “pollutes” important resources such as the environment, social relations, spiritual life...).

c) All of us would be better off if income from the right side of the graph (the rich and unhappier countries) were shared with the countries on the left side (in that case all nations would move towards the center, where well-being reaches its peak). Unfortunately, we know from history that, besides being very complex to implement, income redistribution hasn't happened often in the past. Besides, poor countries don't need to receive income; rather, they need the conditions to produce it with equity (through common and public goods such as schools, roads, hospitals, public services...).

One may conclude that, according to the inverse relationship between wealth and happiness, beyond a certain threshold, income growth matters very little, while income distribution and other things, such as relational goods, the environment, communities and social well being, are crucial.

1.4. Enterprise social responsibility and shared value

Up to now we've spoken of macro (growth, inequality...) and individual variables (happiness). What can we say though about businesses? After all, a country's economy and people's jobs ultimately depend on them.

It's crystal clear that a country's welfare depends on the quality of companies (in the production, services, agriculture, trading … sectors) and their operation. In the past we have seen varying approaches to the interactions between business and society (Marx's socialism played an important role in this by revealing how capital exploits labor). Generally companies would operate in their sphere (the economy or the “market”), while the law mediated their interaction with the common good: if a company respected the law, it had no further social duty to respond to. Common good was only a political and civil issue, so companies helped promote it indirectly and unknowingly by following only their own interests (profit optimization) within the limits of law. In fact, according to the famous metaphor of the liberal traditional thought which continues from Adam Smith (1759) to Milton Friedman (1960s), the market's “invisible hand” makes entrepreneurs' private interests turn into national wealth.

130413 Taipei 01 In the past decades, however, civil society has demanded more from companies (particularly from large ones and multinationals) and has developed the business concept called CSR (Company Social Responsibility), a new idea that calls on companies to work voluntarily (not due to law enforcement) for social development. Companies began promoting and developing social programs (schools, hospitals, low-income residential blocks...), operating in fields that in the past belonged to others (e.g. the State and voluntary service). It's true that the market (companies) and society (the State, civil society) were still kept very separated, but the former began to trespass on the domain of the latter. For example, companies intentionally and voluntarily began to support projects for the protection of animals close to extinction, although this was still a “non-economic” activity by definition.

Now then, in 2006 CSR moved to a new level. In the influential Harvard Business Review, the American economists Porter and Kramer published a paper entitled “Shared Value”, a theoretical framework for the “social business” movement (of which M. Yunus's Grameen Bank in Bangladesh is a well-known example) and other social economic activities mainly in the USA.

What is new in “Shared Value”? In an effort to overcome the clear-cut divide between company and society, Porter and Kramer encouraged entrepreneurs to consider society's shortcomings (poverty, elderly care...) as business opportunities:

“Companies must take the lead in bringing business and society back together. The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core. The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking”.

From the first part of this presentation we can bring together two main ideas:

130413 Taipei 03 flip rida) Income growth doesn't increase people's well-being, particularly above a certain national threshold of wealth. Combatting inequality becomes crucial to the process of increasing well-being.

b) Companies' range of actions must expand to include social and community activities not due to legal ties (taxes, laws...), but as new opportunities for economic success (shared value).

We also pointed out that Asia, a continuously growing economy (led by its very talented peoples), still has time to avoid the trap of the paradox of happiness (and environment) into which exceptionally Japan and the Western countries (particularly the USA) have already fallen: decades of GDP growth and a loss in happiness and well-being.

Since economic growth is not the final goal, but a means to achieve a good social and individual life, I propose that Taiwan and Asia develop an alternative path to capitalism (or post-capitalism) in which economic growth, social values, equity and well-being are sustainably brought back together.

We believe that the Economy of Communion (EoC) of Chiara Lubich can help guiding Asia through this visionary transition.

2. The Economy of Communion

2.1. A short walk down memory lane   

The Economy of Communion (EoC) is still in its very begining nevertheless has already attracted the attention of many intellectuals, cultural personalities and the Social Doctrine of the Church (Caritas in Veritate, n. 46).

The EoC grew from Chiara Lubich's intuitive insights during one of her last trips to Sao Paulo, Brazil in May 1991. Shocked by the city's social problems and great inequality, she sought understanding in John Paul II's Centesimus annus encyclical (in which the market and business are positive things) and reflected on the fall of the Soviet communist system. It was a fruitful but painful visit as her spiritual and “charasmatic” view was influenced by hard evidence of a distorted socioeconomic system, one which allows skyscrapers (some she had already noticed from high above in the plane) to stand next to millions of starving impoverished people. To this Chiara reacted by launching a project which encouraged entrepreneurs to:

- contribute to a fair economic system by using their profits to promote development programs and by starting up companies with goals beyond profit-making. These companies should split their profit into three parts in order to: help the poor, create new jobs in the company, and promote the “culture of giving”.

- create jobs, foster productive inclusion, and support community development (poverty means above all exclusion from productivity, the community, and society).

- fight extreme poverty and promote a new culture, a “culture of giving”.

130412-13 Taipei Chiara Lubich LogoToday there are 860 EoC companies mainly in Europe and South America, followed by the USA, Asia, and Africa. In the past few years scholars and students have written over 300 papers about it. The funds raised from profit-sharing have financed over 1000 scholarships for youths, various development programs in the south hemisphere, and the Sophia University Institute. Though these are small numbers, they represent an influential experience, because one principle of a charismatic initiative is that, like salt and yeast, it can impact "masses".

 

2.2. What are the messages that the EoC reveals to the economy of today?

If the EoC messages are well formulated and people ready to listen, current European politics and economies can benefit a lot from them. Among these messages, the following two are particularly relevant in the context of today's crisis (“Together for Europe”).

a.    Healing poverty

Poverty, or rather extreme poverty and exclusion (I prefer not to define humanity's plague with the charismatic and evangelical word “poverty”), is once again spreading in Europe.
This topic requires further reflection.

Poverty isn't counted among words that are solely negative, such as deception, slavery, racism, and others. After St. Francis' life (i.e. after Christianity was consolidated) there was more than one type of poverty, which crossed a broad spectrum, from the victims of poverty to the blessing of those who choose freely to be poor in order to help others in need. As long as the characteristics of freely chosen poverty are not embraced, a simple and selfless life style, communion, and brotherhood, our culture is not capable of combatting new and old kinds of involuntary poverty. St. Francis reminds us that no one can see nor fight against bad poverty before loving its good form. Rich politicians and officers, who fly from their conferences on poverty to opulent vacations, are usually responsible for implementing the governmental or private programs fighting poverty. As long as this remains the case, poverty will continue to be (uselessly) studied and chosen as a theme for research and conventions; through this approach it will be neither seen nor understood, let alone healed.

There are new kinds of “poverty” (which add to the old ones) in Europe and other wealthy societies such as the exclusion from public life, mental disorders (rapidly increasing), and multitudes of non-integrated immigrants; besides gambling – a true epidemic among the lower classes of society –, and other new addictions that impoverish people. All these have a common related origin: although, sometimes, they are caused by the lack of income and wealth, their origin, and therefore the solution, isn't economic but rather relational and social.

Since its founding, the EoC has and continues to experience that the first step to addressing poverty is to foster relationships, from those of the family to those with politics: Poverty is not simply one single issue but a collection of unhealthy relationships. The first treatment for every form of poverty is to foster relationships of brotherhood and reciprocity. In the simple subsistence economies where people were able to emerge from forms of endemic poverty, family and community relationships were strong and stable (even if often unjust and illiberal: just think of the role of women). To enable people to emerge from the traps of poverty, it was first necessary to increase per capita income, public goods (health, infrastructures, houses, …), and meritorious goods (especially schools). Today we live in an era when the relational good is very fragile and rare. If we do not first heal and rebuild relationships, the necessary interventions regarding income/earnings, public, and meritorious goods will likely remain ineffective. That's what happened during many decades of public assistance in Europe. This approach needs to change, and the experience of the EoC, which begins with relation-building as a pre-condition for every human development project, can serve as an example.

The EoC tells us that before poverty (seen as a category) exists it is the poor people who exist. Without meeting the person, poverty will never end and, at most, it will be managed by insulating oneself from it.

Only the poor can cure the poor, and therefore charismatic movements are necessary. Through philanthropy the capitalist system has increased the number of institutions for the poor, however, there is no genuine encounter between helper and helped. St. Francis embraced the lepers of Assisi and cured their bodies and souls. An embrace is the first part of the cure. Our culture though is immune to brotherly relationships and teaches us to avoid embraces. St. Francis warns us not to fall into this trap. On one hand, in the institutions created to “heal” poverty, the number of professionals to assist and to cure has grown more numerous (which is good), but, on the other hand, the embraces have grown scarcer. Brotherhood is another beautiful Franciscan word. It can be measured by the inclusion of the poor in our communities. It turns out that the creation of specialized agencies to take care of the poor is often inversely proportional to their inclusion. The commitment of these institutions to “cure the poor” is an excuse to keep them as far away as possible from our pristine and insulated cities.

In the EoC this experience of embracing (the leper) is lived by giving tangible assistance, through living the communitarian experience, and, perhaps above all, by not resting until the poor are offered jobs in our businesses. This is also in accordance with Chiara's first foundational experience in Trent when, instead of taking the poor to shelters, they were invited for lunch (“a focolarina, a poor person...”); the same experience today is lived by inviting the poor “for lunch” at our businesses through creating new jobs. As long as one cannot work, one remains poor.

b.    Inequality; communitarian and above all productive inclusion is the answer

Besides poverty, inequality is crucial since in the past few decades its growth has picked up pace.

The EoC calls on companies to share their profits: a daring project to foster a more equal and brotherly economy and society. In fact, true brotherhood only comes with an equal distribution of wealth and income, and therefore of capabilities, rights and freedoms. Businesses and the market, even if guided by the principle of community, aren't enough to build a more equal society. Public and political action is particularly necessary today, when people have come to believe that the liberal market has miraculous powers. The market is an expression of freedom and a means for freedom whenever it collaborates with the public sphere and civil society (respectively through wealth redistribution and reciprocity). Indeed, initiatives such as cooperative movement, both past and present, and the (true and good) social economy in Europe should be reevaluated and held in higher esteem. Europe, up to a few decades ago, managed to sustain growth with low levels of inequality. This wasn't achieved just through the greater influence of the Social State (stronger than in the USA), its well-known social market economy model, but instead thanks to the extraordinary influence of the European cooperative movement. It helped develop true democracies while fostering a democratic labor force and economy. The cooperative and the social economy movement encouraged people to be productive members of society. They weren't miserable employees anymore, dependent on the “generosity” of a few patrons, but were workers, partners, and, consequently, better citizens. Today the EoC comes to reinforce productive inclusion; an effective weapon against exclusion and inequality.

c. Civil entrepreneurs and the crucial role of labor

Businesses have also the mission to fight exclusion and poverty. Entrepreneurs should not be satisfied with just paying taxes and respecting the law. In these times of crises they must use their talents and entrepreneurial vocation to combat poverty and exclusion by creating new forms of work. When Chiara proposed businesses that re-invest profits back into the business to create new jobs, she was proposing something extremely new. She was saying that businesses can fight poverty too by creating jobs that productively include people; this would not primarily be about philanthropy. Entrepreneurs are job creators and not philanthropists, and as such they shouldn't give away “slices of pie” to the poor (other institutions do that). Instead they should create dynamic “new pies” through building businesses in which the poor produce goods so they do not only “consume” assistance. I believe it's important to regard business and labor as the core of the EoC. One should not forget that the crisis we are living in was not caused by business' profit, but it evolved from the financial speculation of top managers and protected professionals. This is the cancer in today's economy. Only a new alliance between workers and entrepreneurs can protect the labor market from the overwhelming super-concentration of income (the world urges workers and entrepreneurs to work together. A shocking fact: many small entrepreneurs have committed suicide since the crisis began). This income bubble is drying up the resources necessary to invest in production that would create sustainable jobs: today, combating poverty in Europe means fighting unemployment (“labor poverty”), above all, among the youth.

Indeed, in Europe, and in your countries as well, labor promoted democracy namely through broad labor movements. Men and (unfortunately few) women became citizens when they were released from their servant status in the rural feudal system and could start to work in factories, workshops, schools, offices and cooperatives. Servants and slaves can't bring about democracy, but free workers can. A democratic society is fostered by labor, otherwise society is based on non-democratic income and privileges.

The EoC is made by workers for labor. Income produced without work doesn't save the economy nor does it make people happy. A study on happiness concluded that:

- unemployment is a major cause for unhappiness

- the lack of youth work experience can make one feel unable to work, and therefore unhappy.

A respectful, dignified, and freely chosen job is a very important source of happiness.

3. Conclusions and future directions

I wish to end this presentation by indicating a few concrete steps towards an EoC experience that can be taken right here and now:

a. The implementation in this university of a small but permanent “commission and study center” of the EoC in Taiwan, which identifies how the EoC principles can be applied and developed to improve your economy and today's society in general.

b. The translation of the EoC website (www.edc-online.org), making it available and promoting its themes and news in your language.

c. The promotion of an exchange program for students and scholars together with Sophia and other universities where the EoC is taught (in Spain, Brazil, Argentina, Italy, Africa, …). Until now Taiwan has been missing.

Due to Taiwan's history and future economic prospects, the EoC is unthinkable without this country. We can start together today and I'm certain we will see the development of an EoC for the world and Taiwan as well. In fact, the principles of the EoC should be adapted to each country's culture, history, and values.

The EoC promoted by you will be fascinating! The world longs for it and so do we!

May Chiara help us from heaven and bless us all!

Bibliography:

Excerpts of this presentation were taken from my past speeches, articles and essays available on the official EoC website: www.edc-online.org

See powerpoint presentation

Translated by Cristian Sebok

 

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