The Economic Crisis and the Proposal of the Economy of Communion

In the ambit of the Forum "The Economy, a Matter of Gift"

Speaker: Luigino Bruni

Brussels, Seat of the European Parliament, Alcide DE Gasperi Room, 12 May 2012

120512_Bruxelles_Forum_07_Luigino_Bruni_Sala_ridDiagnosis of the crisis.

Europe is going through a grievous crisis, not only on the economic level, the worst since the last war. It is from this Europe though that something new can come about for the economy, the financial picture and our lifestyle, and in this search for something new even the charisms, the communities and Christian movements can give, together with many other ‘seekers of the common good', an essential contribution.

Europe is the place where the market economy was invented. The medieval cities, as well as the monasteries and convents, were those living laboratories from which the first categories emerged, the first institutions, that in the following centuries gave life to the market economy as we know it today, or rather, the way we knew it, because the Europe of today, and with it the world, risks destroying through financial dictatorship a patrimony of civil virtues, of trades and work ethics, on which the market has rested and has grown in modern times.

Christianity, in particular its various and numerous charisms in all the Christian denominations, has played a fundamental role in building up the market economy in Europe, from which modern humanism was born: freedom, equality and fraternity were made possible also thanks to the invention of the markets, and their new relations which progressively transformed the feudal ties: servant-master, in horizontal relations founded on "mutual advantage" ( Adam Smith, Glasgow) and on "mutual assistance" (Antonio Genovesi, Naples) between persons no longer beggars but partners in exchanges and market contracts.

Without the market, democracy as we know it today would not have been possible, as we would not have had this state of wellbeing without the action and the innovations of the entrepreneurial class.  In all this, the Christian humanism and its values, its charitas and its charis, have played a decisive role, which no one can seriously question.  At the same time, it is also obvious that this market economy has entered a deep crisis in the last few decades, which exploded in 2008 and has a still uncertain and distant end. It is a crisis born from many factors, but which has at its core the excessive weight that speculative financing has assumed in relation to the real economy: finance is, in fact, civil while it is of support to the real economy; but it becomes uncivil and highly damaging when this relationship is inverted, and goods, services, and above all the environment and workers are enslaved and used by speculative capital, as a means to attain profits. When this happens, as it has, the greatest damage becomes inevitable, where human work, from being civil and therefore ethical and spiritual, shifts from being central to the economic and civil system to becoming a slave to profit, which today is no longer entrepreneurial profit, but that of speculative financing. The latter, being always the farthest from the actual workplaces, no longer "sees" human work but only consumption and income.  Today we must remember and greatly emphasize that the epicenter of social conflict is no longer between businesses and workers, but between the world of work (businesses and workers together) and that of income, especially financial income, but also that of over-paid managers, and the category of protected professions.  The greater part of wealth, if we wish to call it that, produced by Europe today, no longer travels through the 'manufacturing company' or the real economy, but outside of it, in the financial markets, which increasingly control from within the outcome of the economy, of politics and of societal institutions.

Finance is a healthy plant which has grown too much, suffocating other plants in the garden: it needs to be "pruned" back to its natural dimensions, 120512_Bruxelles_Forum_06_Luigino_Bruni_riduseful to 'oikonomia' (governing the common home). Politics and, above all, democracy is not able to keep in step with the timeline of the globalization of markets and of finance: ("democracy is government by discussant"), in the famous words of J.S. Mill.

It is also due to a too large financial economy that the Western world has grown too much, and badly.  The rate of growth of the last 20 years has been greater than that of the industrial revolution of the Eighteenth century. The environment and communities cannot withstand such rhythms of growth of the GDP: while the European institutions and their governments speak in chorus of re-launching growth, we must not forget the crucial question which is: “Growth of what?"

Growth of what?

In fact, we must be more aware that the most important question on growth is, indeed, “of what?" When one thinks of growth, one normally thinks of GDP. This would be wrong, because even though it is not mentioned, this crisis has been generated by a wrongful growth of the GDP. In these last decades, in fact, the GDP has grown too swiftly and badly, since it has grown and is still growing at the cost of the natural environment as well as the social, relational and spiritual realms, feeding the hypertrophy of financial speculation.  In Italy and in Europe in full crisis, the GDP has grown thanks also to an abnormal increase of the public debt - it is too easy and irresponsible to augment the GDP by increasing the cost of public administration! Today we have absolutely no guarantee that by increasing the GDP one creates work and the wellbeing of people, because if this growth continues to be guided and allowed to be drugged by financial speculation, and thereby its income, the lives of the Italians would certainly continue to worsen even if the GDP level were to increase by a few points.  As we know it today, the GDP is neither an indicator of human wellbeing in general (and this is a known fact), nor is it a good indicator of economic wellbeing in the era of finance (and this is a less known fact).  If we wish to measure growth in the proper way, we must reform the GDP, and above all measure it with other indicators, which however - and here is the crux of the matter - ought to be indicators of stocks and not of flows ( as is the GDP). In which manner? 
The concept of Gross Domestic Product was coined in Seventeenth Century France (by the "Physiocrats), with the genial and revolutionary intuition that the economic strength of a country is not measured by its capital or stocks, but by its annual wealth (a flow therefore), since a country is not rich because it has mines, oil and forests, but only if it is capable of putting these resources "into monies," which depends on many factors (people, technology, culture....).  And from there, we arrived at the Nineteenth Century, to the birth of the GDP, while continuing to believe that it is the flows and not the stocks that enrich a nation. Today, that wonderful old idea is, however, a risky and misleading one.  Even while wishing to leave its value to an indicator of flows (a new GDP), it is most urgent that stocks and capital return to occupy the center of the economic, political and social scenario. The environmental, as well as the relational and social topics, dramatically central, are forms of stocks and not of flows, capital accumulated throughout millenniums (or millions of years in the case of the ecological environment), which is being deteriorated and damaged by the race to increase income flows.

If we want to, and we must re-launch growth, we need to concentrate on the maintenance of these forms of capital, which if not strengthened, sustained and in some cases recreated, the economic flows will not restart; or if they did while being drugged by the financial sector or European funds, they would continue to deepen the crisis of our times.  It would be enough to think about the impoverishment of the civil capital contained in those age-old neighborhood relationships and of that 'productive collaboration' of the territories, which up until recently have generated the many experiences of co-operation in the European industry. The deterioration of this capital is bringing about a progressive sterility in our social fabric, which is not able to generate any flows, neither cultural, nor spiritual or economical.  To be able to re-build this indispensable capital soon, one must be able to see it first, then to measure it, giving life to new measurements of stock, or, better yet, of that patrimony ( a more suggestive word because if intended as Patris-munus, the gifts of the Fathers, it symbolically reminds us that these gifts have been received by us from past generations), that we must therefore look after and develop if we do not wish to be remembered as that generation of ungrateful people in history, the first one to interrupt the great chain of inter-generational solidarity. This is true also for re-launching, today, good economic growth.

What should be done?

120512_Bruxelles_Forum_02_LB_Van_Ackere_ridIn European history, in the face of economic and political crisis, charisms were born: from St. Benedict to St. Francis, to the many other socially-oriented European charisms (in all the Churches, even in the Reformed ones), the charisms have been and still are an answer to the social crisis of each period.

The crisis we are living today is also because of an insufficient presence of charisms in the public sphere, with their own typical style: gratuity (from Charis, charism and grace), reciprocity, non-instrumental motivations, gratuity-gift as in action for the common good. The word ‘common’ comes from cum-munus, reciprocal gift:  contracts and interests are not enough to build the common Good, and to care for and not destroy the goods held in common (commons).

There is a need therefore of a new action, a choral one of the charisms (inside and outside the Churches), in order to overcome this crisis. How? I will limit myself to a few proposals:

a.    A new cultural season, as well as a civil and economic one:  Today, the world of the charisms needs to return to forming culture, to make its voice heard on the cultural plane, telling a different narrative on how and why we do business, politics, consume, and save: there is a need for new proposals for a renewed humanism for our time, revolving around new and typical words: gratuity, sobriety, reciprocity....

b.    Bring the financial sector and the economy back to the public squares: allow these places to be lived in and filled by people, because they are much too important to be left only to the economists and financiers. Without civil society and its most attentive and prophetic part, the globalized economy will not be able to serve the common good, but it will serve only private interests in games with increasingly “zero outcome” ( as in gambling games) where the strongest gain the greatest advantages while the poor pay the price.  Only civil economics and finance can serve the common Good, that is, the good of each and everyone.

c.    Start from the poorest:  poverty today is becoming the new social issue, even in Europe;  In Greece but also in Portugal and soon in Spain and in Italy, the middle class risks precipitating under the line of poverty, caused by unsustainable maneuvers (not always dictated by the common good, but by the interests of banks and financiers, who make great wealth by speculating). We must re-learn to read societal life with the eyes of the least among us.

d.    A new social pact (not only contract): today Europe has an urgent need to re-launch the idea of a Pact which can hold up and sustain economic contracts. There is no future for the Eurozone (Europe of the euro) without Europe, or for the euro, without a political Europe which gives an ethical foundation and robust social sphere to economic-financial agreements.

e.    Prophetic Minorities: in history, epochal changes were brought about not by great numbers, but by prophetic minorities which, animated by charisms, and therefore by a passion for the common Good, have been the yeast and the salt of their land and their time. Today even Europe, the economic and civil Europe, has an extreme need of the charisms of the prophetic minorities, capable of giving flavor and act as rising yeast in our history: without the gratuity (charis) of the charisms, the bread of life in common is like flat, unleavened bread..

f.    Put back into discussion the nature of capitalism, of business and profit , not just in thought or with good regulations ( they wouldn’t suffice): in the last decades we have all stood by silently as we thought that the present form of market economy was a sort of dogma or natural reality. Realistically speaking, the quest for maximization of profit is creating serious problems for other human patrimonies.

g.    The Economy of Communion, with its proposal aimed at businesses, for the division of profit into three parts, has a significant message to launch to the European economic and entrepreneurial world of today, but not only:

  • a.    Profit is a means in order to do other things, to edify the common good, and has a vocation and a social destination: it is not natural to think that the part of the added value which resides in a business after having paid costs, wages and taxes, should go into the pockets of managers and shareholders. There is at this time a serious question of the redistribution of profits, because, for example, the quota of the added value going towards the labor force is too low (in respect to the capital, the financiers, and the managers), as is too low the quota of value that goes to the excluded, the youth and the poor. 
  • b.    The business has to deal directly with exclusion, not just pay taxes, but to include those who are outside of as well as inside the company: a civil business has created social value (not only economic value) when it has included the excluded (farmers, blue collar workers, servants…), and if it instead speculates financially, the business is not faithful to its real vocation.
  • c.    The young people: the world of economy needs to take better care of the youth and of the formation of a new mentality, launching formative programs in the nations of the developing world (but not only there), because the States and the for-profit market will find it ever more difficult to fill the growing demand for quality educations with ethics that exists in the world. All this is called subsidiarity, even at the entrepreneurial level.

Some concrete proposals.

Can we put forward, in the light of this talk and of the message of the EoC, some more concrete proposals?

If we take seriously the “start from the least” and from the youth, we can elaborate some concrete proposals directed at civil society, at economic and political European institutions, among which:

  • a.    A moratorium on the publicity directed at children (this publicity has increased 100%in Europe during the last twenty years, with serious consequences on the mental health of children, on child obesity, and on the quality of family relationships. Some countries (France, Scandinavia) have introduced limits and rules:  we propose that they be extended to all of Europe.
  • b.    The same goes for the publicity on gambling and high stake games, which are causing heavy damage to the lower class and the most fragile part of the population.
  • c.    The re-uptake of the debate on the introduction of the Tobin tax (or something like it) on financial transactions involving high risk and speculation (such as the CST). 
  • d.    The reinforcement of the social and civil economy in all of Europe, at the legislative level as well, on the basis of the affirmation of pluralism for those forms of business and cultural enterprises: the capitalistic business should not be the only one recognized and guaranteed by European laws, but one must give major space, with opportune incentives given to cooperatives, to the social enterprises, in which one recognizes a direct contribution to the building of subsidiary and solidarity of the common Good. It will no longer be only the State, or the big for-profit business to create work: the new jobs will arise also from social networks, from health, from art, from culture, from energy, from goods held in common: but in order for what currently exits to become a new way, we need the participation of institutions and of good politics.

Conclusion

Today, for-profit capitalistic businesses do much more than just sell products: they sell and create culture, lifestyles and ways of thinking. There is a need for businesses and people who live the economy with a civil and spiritual commitment to commit also on the cultural level. The topic of ‘young people’ is a very important one in Europe today: if one thinks just of the serious state of unemployment, which for youth signifies lack of security and hopelessness for the future.  

For this same reason, we must make the public discussion on work a central focus. There is too much consumerism and too much finance today at the center of the civil, public, and economic debate in the media. Work is no longer seen and therefore no longer understood. We cannot fight the new and ancient poverties without re-launching a new culture of work and of working together. We need to do more, and to give life to new places of work and of production, which will put the person, who works and struggles, at the center. The charisms, in fact, are never u-topic (the non-place). The charisms are an already which indicate a not yet. Therefore, they already are.

The true challenge we face today then, in these times of crisis, and therefore of new, unheard of opportunities for those who search for and indicate the new, is to make sure that all the “already” which exists in many places (I am also thinking not just of the Industrial Parks of the Economy of Communion present in Europe, and here in Belgium), places that deal with work and the economy, that they may be able to grow and create a network, be more visible and speak louder. It is a question of responsibility, because Europe, and along with it our system of development, will not find the good road for growth without the essential contribution of the charisms, also for its paragraph of societal life which we call the economy.

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