The Social Economy and the Common Good

The folloging article about the social economy is an extract of the Climate Action Plan written by Swiss activists in conjunction with scientists and experts and was published in January 2021 [1-3].

The social economy and the common good go well together. Christian Felber has been concerned with the common good for many years. With his book "Gemeinwohl-Ökonomie" (Economy for the Common Good), published in 2010, he has achieved a bestseller [4, 5]

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[1] CAP - Social Economy.pdf (extract as file | EN)
[2] Climate Action Plan | climatestrike.ch
[3] Climate Action Plan | geho Bibliothek
[4] Christian Felber on the GWÖ | Jung & Naiv
[5] Gemeinwohl-Ökonomie | geho Bibliothek

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DE | EN

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Extract from the Climate Action Plan, pages 308 to 313:

Social Economy

Introduction

The climate emergency demands for “rapid, far-reaching andunprecedented changes in all aspects of society” (IPCC 2018). Accepting thescientific consensus also means to accept that small, individual changes willjust not make it, but a structural redefinition of our economic system isinevitable if we truly want to limit climate change. We therefore need to envisiona new economic model based on the reassurance that our labor is able togenerate communal welfare without the necessity of ever-expanding materialthroughput. At the core of any climate policy adhering to a just transitionmust lie a plan to redistribute the wealth and fruits of societal productionand reproduction equitably: a social economy.

This involves a shift of economic reason away from profitcreation towards social welfare and community wealth. This also means changingthe way we rationalize economic growth, instead of focusing on GDP a GenuineProgress Indicator needs to account for sustainable human and environmentalwellbeing (The Green New Deal for Europe 2019, see more in policy 9.6). Acomprehensive change in production and consumption schemes must be centered ongreen jobs providing a better living and caring for community goods. At thesame time, shifting production away from carbon intensive to low-carbon jobsachieves more than just CO2 reductions - care and education provide necessarymeans for community development, allow for stronger societal bonds and must bethought more broadly. Community care involves jobs in sports, play, culture,ecosystem repair, kindergartens and public leisure, to name just a few.Providing a job guarantee and collectivizing reproductive work can contributeto close gender imbalances and is effectively enhancing quality of life. At thesame time this incentivizes more sustainable living habits as it opens upquality time through a general reduction in overall working hours with fullwage compensation.

A Green Transition is a Just Transition.

Decarbonizing our economy means moving from profit-orientedtowards communal welfare- oriented modes of production. Our goal is to build aneconomy which prioritizes not material growth as the sole denominator forsocietal development, but for an economy in which the wellbeing of people andour environment is pivotal in the question of how we organize our societies.The past decades have been predominantly focused on a radical privatization ofpublic services, including healthcare, education, housing and pensions.However, having the climate crises in mind we will have to relearn public participationthroughout our economic organization. This means to enhance workers’ rights notonly in the way labor is accounted for, but also in what ways we are using ourcollective ability to work and what we are producing. A just transition doesnot only mean to provide green jobs, it also means to provide meaningful jobs.

Policy 9.3: Working Time Reduction (WTR)

Description

We aim for WTR in a post-growth economy, which allows us toreduce working hours while redistributing the work more evenly on theworkforce, thus giving people jobs who may have lost a job during thetransition to a decarbonized economy.

The number of full-time weekly working hours is graduallyreduced from 41 hours (FSO 2020b) to e.g. 30 hours per week in the next 2years, and to 24 hours per week until 2030. The working week is reduced to fourworking days (the standard week lasts from Monday to Thursday) immediately.

Working time reduction is a crucial measure to redistributethe productivity gains of the economy to the workers by compensating (fully orpartially) less working time with higher wages, and to ensure that all workershave a secure working place in a post-growth economy (Kallis 2017)(Kallis2017). Historically working time reduction has been a central demand of thelabor movement and poses several impactful positive effects on the ecological,care-economical and the social realm.

An important policy goal of the WTR should be to set freetime to enable people, households and communities to pursue non-paid (notcommodified and potentially low carbon) activities and to regain autonomy overtheir immediate environment and community life. Hence WTR must actively ensurethat the increasing leisure time is not used for more (and potentially highcarbon) consumption (Kallis 2017; Gorz 1991). This will be achieved through theGHG pricing and the respective border adjustment (see Policy 1.2 and Policy 1.3).

Types of Working Time Reduction

A reduction in the hours a person works through their lifecan be achieved in several different ways. Not all measures are equallyeffective in terms of gender and social equality as well as ecology. Several ofthe presented measures can be combined. A shorter working week could becombined with a shorter workday. Often the amount of labor is measured inworking hours per week or year. A WTR measure could also consist of a reductionin the total working hours per worker during a week, year or a whole life, whichwould make the current labor policies more flexible. A shorter working week hasbeen a demand for a long time from different interest groups. A shorter workingweek could result in a three-day weekend for the whole population or workerscould choose, on which days they work. Some of an enterprise’s workers couldwork from Monday to Thursday and the others from Tuesday to Friday.

A different approach would be to reduce the length of theworkday. The standard eight-hour workday would be reduced to a shorter workday.There have been experiments in Swedish companies introducing a six-hour workday(De Spiegelaere and Piasna 2017).

Another measure could delay the entrance of the labormarket by extending the period spent in education. Alternatively, the retirementage could be lowered. This reduces the overall working years of a person.

A lowering of the retirement age would counter the currenttrend increasing the retirement age (Finnish Centre for Pensions 2107). Workerscould also have the possibility to take sabbaticals with the guarantee toreturn to their workplace after the sabbatical.

Financing

The WTR is financed through the tax on large assets whichis in effect a redistribution of the productivity gains back to the workers (see Policy 9.9).

Impact

The positive impact of shorter working hours is the use ofless energy and therefore carbon emissions. When workers do work for a shortertime period the output of the whole economic system can be substantiallyreduced. According to Nässén and Larsson (2015) a reduction of working hours to 21 hours would reduce carbon emissions by 41%. However, Nässén and Larsson (2015) do assume a parallel reductionof income which shall not be assumed since this goes contrary to the principleof climate justice. Its social compatibility will be further discussed in therespective section. On the other hand, more working hours translates into moreconsumption and studies report on a direct link between (very) long workinghours and carbon-intensive consumption. The reverse is not necessarily true butdepends on what happens with the freed leisure time (Dengler and Strunk 2018).

Working time reduction can have other positive effects.Continuing productivity gains will reduce wages to a lesser extent than workinghours. Hence, people will work less with a partial compensation of wages. Inother words, people will have more leisure time and can do all the things theynormally do not have time for. Their purchasing power will also decrease,although to a lesser extent. Since the goal is not to spend more free time toconsume more, a small reduction in purchasing power can be justified (with exceptionin low paid jobs where workers cannot afford any wage cut).

Some parts of the additional leisure time may be used forless carbon-intensive ways of commuting. Furthermore, carbon emissions ofcommuting will be reduced by 20% since workers only have to commute on fourdays per week.

Social Compatibility

A reduction of income with the same ratio through allincome levels would be antisocial. Not all people contribute equally to theoverall carbon emissions (Chitnis et al. 2014). The shortening of working hoursposes a unique chance to create a more just society. While the average incomeneeds to drop to ensure mitigation of carbon emissions, it can be done in a waythat leaves a larger part of the cake to the working class. It is possible toextend the income of the working class, while reducing carbon emissions. Thiswould require a redistribution of wealth from the wealthy, big-polluters to thelowerincome classes of society. It is essentially a shift from capital to labor(Kallis et al. 2013) - a shortening of surplus labor. There exists a wide rangeof options to redistribute wealth: A maximum and a minimum wage should beintroduced and the tax on large assets (Policy 9.9). These measures wouldreduce carbon emissions and fight income inequality at the same time.

WTR should avoid creating a "dual society" (Gorz1991) of highly productive professional workers (whose high productivity can betranslated into reduced working time with equal pay, e.g. people working in thebanking and finance sector) and low-skilled low-pay jobs in the service industry(e.g. the care or gastronomy sectors). Rather, WTR should be designed to reducethe proliferation of low pay precarious service jobs by decreasing the demandfor such jobs. A WTR policy will increase the effective wages in the care andservice jobs sector (since less working hours will be at least partlycompensated with higher wages). Moreover, the market for some service jobs willincrease (care jobs) while for others it will decrease. Most of those existbecause working people do not have enough leisure time to organize their livesin their free time (Gorz 1991).

Questions and Uncertainties

The choice of the right amount of WTR in hours per weekcannot be calculated with technical precision. We cannot know how productivitywill develop in a world with WTR. Any decision about the right amount of WTR isat least initially a political decision, not a technical one (Gorz 1991).

Policy 9.4: Strengthening the Care Economy

Description

The care economy is a relatively low-carbon economy andshould replace some of the other (carbonintensive) sectors in the economy as animportant job and wage-earning market.

The care economy (caring for children at home and inday-nurseries/Kindergartens/Schools, caring for elderly at home or inretirement homes, caring for sick people in hospitals) will be expanded andlowpaid jobs or unpaid reproductive work at home will be paid good wages. Thosewho will want to work in the care economy will be given a job guarantee.

Childcare will be recognized as a full-time job, entitlingeach parent up to 12 months’ pay of a Swiss average salary by the state or, ifthey choose to work otherwise, free child care in a day-nursery. The state willthus pay in total up to 24 months of childcare. Single parents are entitled to 24 months of childcare.

Mothers and fathers can choose if they want to take care oftheir children and be paid by the state, or rely on free childcare and work ina job (paid by the employer). The time spent to reintegrate into the job marketafter giving birth (or for fathers after taking care of children at home) iscompensated by the state at the amount of at least half the average Swisssalary, potentially more (it should not be less than the effective minimum wageand/or standard of living in Switzerland).

Financing

Higher wages in the care economy, more jobs in the careeconomy, and full recognition of reproductive care will incur costs on societythrough taxes on consumption of goods and services which will become moreexpensive. On the other hand, care services (day-nurseries, kindergartens,elderly care, health care) will become cheaper or free, compensating partly forhigher costs of living.

Impact

Strengthening the care economy will have socially positiveimpacts by contributing to gender equality (Dengler and Strunk 2018), andenvironmentally positive impacts by contributing to less societal consumptionof high-carbon goods and services (degrowth of carbon intensive goods andservices) and to more consumption of care services (growth of low-carboneconomic activities).

Socially and environmentally, paying higher wages andexpanding the job market for care of children, elderly and sick will provide astrong labor market of low-carbon jobs that are needed to compensate for jobreductions in the high-carbon labor markets that will shrink due to the CAP.Upgrading of jobs in the care economy and expanding it will contribute to lesssocietal consumption of high-carbon goods and services as these will be taxedto finance the upgrade of jobs in the care economy.

A full recognition of reproductive care as part of normaleconomic activities will further reduce gender imbalances in present and futureincome. All sexes can be caretakers at home, entitled to full pay orcompensation. In terms of climate mitigation, it will also contribute to lessconsumption overall since such a recognition will be financed through societalconsumptive activities. This will help reduce the GHG footprint.

Social Compatibility

We expect only positive social effects.

Policy 9.5: Foundations and Cooperatives Replace Corporations

Description

The legal form of corporations and stock-companies dependson economic growth and on the externalization of environmental costs(Binswanger 2019). Corporations and especially listed stock-corporations arenot only forced to generate revenue to satisfy their shareholders with dividendpayments, but the basic interest of shareholders is growing share value, henceshareholders will push for economic growth. Typically, salary structures andmanagement bonuses are linked to the share value and create further incentivesto grow, whatever the societal costs may be. If shares of a company are tradedon the stock exchange, there is constant pressure to maximize shareholdervalue. If management chooses to pursue other goals and forego some profitopportunities, they risk lowering the value of the shares. In this case, thereis an incentive for investors to buy this company at a low price, change themanagement and maximize shareholder value again. This will increase the stockprice again and the investors can sell the shares at a higher price and make ahandsome profit (H.-C. Binswanger 2009).

Therefore, foundations and cooperatives should become muchmore widespread legal forms for new and existing companies. These legal formsare less under pressure to grow.

Legally, it is rather easy to become a cooperative. Ingeneral, cooperatives have easy access to debt capital. Unfortunately, thecooperative form is not well present in business research and in business news.The conditions, pros and cons of foundations and cooperatives have to becomemore widely discussed.

In order to foster foundations and cooperatives, and theconversion from stock and other corporations the following measures need to betaken: Establish an office of free legal advice in each language part ofSwitzerland for new foundations and cooperatives and conversions. Providesupport for courses to establish business consulting and support theestablishment of a national association that represents the interests in thepublic and political arenas. There are cooperative sectors such as renewableenergy that need some financial and organizational support to professionalize.

Switzerland is a country with a long and deeply rootedtradition of cooperatives. This is a medium-term system change measure.Nevertheless, new frameworks and incentives should start immediately.

Financing

This could be done at low costs, and money that is spent onconventional business research, business development and location promotioncould be redirected, hence the measure could be financially neutral.

Impact

As this is only one factor that makes our actual economydependent on growth, we cannot expect wonders and it would be very difficult toquantify the impact.

This system change measure is consistent with the increasein social and non-profit enterprises and with the aim of younger people toengage in their daily work and not work in very hierarchical and topdowncorporations.

Social Compatibility

This is supposed to affect society at large. All the prosand cons of a post-growth society apply.

Questions and Uncertainties

Within the industry sector we propose three measures thattrigger among others sufficiency: the moratorium for new buildings andinfrastructure, the CO2-levy and this measure to slow down the inherent growthaspiration of corporations.

However, it is hard to predict how these measures initiatea system change into a more sustainable way our system works.

Policy 9.6: Replacement of GDP by Sustainable Development Index (SDI)

Description

Switzerland is playing a major role in the development andestablishment of the Sustainable Development Index (SDI), as proposed by JasonHickel (Hickel 2020). The SDI is based on five indicators (education, lifeexpectancy, income, CO2 emissions, material footprint) to combine the strengthof the Human Development Index with a focus on ecological sustainability,yielding an indicator of strong socioecological sustainability that measuresnations’ ecological efficiency in delivering human development. To this end,Switzerland is setting up an internationally oriented foundation and financingit with CHF 5 million annually. It invites all those institutions, organizationsand public bodies to join in these efforts, provided that they are committed tothe priority of the SDI over purely economic goals and measurement methods. Theaim is to establish the new indicator as an internationally authoritativemeasure of quality of life and prosperity.

Effects

The gross domestic product (GDP) is a purely monetaryquantity that is completely blind to ecological and social conditions. Itencourages a dogmatic fixation on monetary economic growth. In addition, GDPignores inactivity and its conditions as well as voluntary work, thus promotingthe marginalization of the care economy. GDP also has a considerable taximpact. By definition, a recession occurs when GDP falls in two subsequentquarters. It is taken for granted that this is bad and should be prevented byall means.

By replacing GDP with an SDI-based indicator, we canfinally start assessing the state of the economy in a more appropriate way,which should give tailwind to everyone interested in positive environmental changein the realization of the SDI-compatible economy.

The very fact that Switzerland is committed to thedevelopment of such a standard encourages debate and creates a global referencepoint for movements, NGOs and progressive politics.

Funding

Five million francs per year from the confederation'sgeneral financial resources.

Compatibility with Social Objectives

Since the SDI also includes many social objectives, asocial orientation of politics and economy is promoted.