The Full Spectrum of Economic Sectors
Partnership economics revisions economic theory and policy-making to include the full spectrum of economic sectors: the household economy, the unpaid community economy, the market economy, the illegal economy, the government economy, and the natural economy.
Today a growing number of economic thinkers are taking a broader view of economics. Highly visible figures such as Amartya Sen, Herman Daly, Paul Hawken, David Korten, Paul Krugman, Manfred Max-Neef, Robert Reich, Hernando de Soto, and Joseph Stiglitz recognize that we live in one of the most challenging times in the history of our planet. They argue that the dislocation of rapid technological and economic change, the escalation of violence and terrorism, the widening gap between haves and have-nots, the extermination of entire species, and the massive threats to our natural habitat call for a more environmentally responsible and equitable economic system.
The need for revisioning economics has also been the theme of thinkers whose works have not been as publicized, such as Barbara Brandt, Edgar Cahn, Nancy Folbre, Janet Gornick, Mona Harrington, Heidi Hartmann, Hazel Henderson, Duncan Ironmonger, Julie Nelson, Hilkka Pietila, and Marilyn Waring. These thinkers take economic analyses an important step further by factoring in the economic contributions from the household and nonmonetized community economy.
A common premise of these women and men is that economic theory must go beyond the market – and more specifically, that it must recognize the value of caring and caregiving. As Nelson writes, “continuing to think about economics as somehow opposed to caring and ethical behavior simply keeps care in a vulnerable, subordinated position.”
This is a central theme of Folbre’s book The Invisible Heart, where she writes that we can’t understand or change economics without taking into account the caring activities traditionally performed by women in the home. Pietila writes that “the biggest single contribution to daily well being of most families is still the unpaid or non-market work.” Like Folbre she also notes that current economic models fail to take into account the life-supporting activities of nature.
A similar argument is made by Henderson, who notes that current economic thinking (and measures) ignore the unpaid contributions of the household and community economy. She writes that the market economy “cannibalizes” these contributions, and that the entire economic edifice rests on them. She trenchantly critiques economic measures for failing to distinguish between what she calls “goods” and “bads” – that is, between activities that benefit or harm humans and nature. Like Brandt, Folbre, Harrington, Hartmann, Nelson, Pietila, Waring, and other feminist economists, she too repeatedly emphasizes the importance of the work of caring and caregiving.
A Full Spectrum Economics
These alternative economic analyses provide important insights for constructing a partnerist economic theory, and provide building blocks for an economic model that includes all six of the sectors that actually compose economic systems:
- the household economy
- the unpaid community economy
- the market economy
- the illegal economy
- the government economy
- the natural economy.
Once we recognize all these economic sectors, we can envision a new theoretical framework for economics. This theoretical framework will not come together all at once. There will be many subsets of theories. But as the demand for more caring structures and rules grows worldwide, we can begin to revision economics in ways that support positive changes in economic policies and practices.
The Household Economy
These changes start with the first economic sector: the household, where the labor force needed for a functioning economy is produced and cared for. We need new economic indicators that factor in the value of the caring activities performed in households. We also need economic inventions that reward this work in ways that put food on the table and pay the rent. There are already a few such inventions, like child-care allowances and paid parental leave, which should be replicated worldwide. But we need many more, if only because they are essential to produce the high quality human capital we hear so much about today.
The Unpaid Community Economy
In the second economic sector, the unpaid community economy, the caring and caregiving activities of volunteers can also be recognized through economic inventions such as reduced transportation costs and other “perks” for rendering free services. Barter systems such as local currencies, through which people and small businesses exchange goods and services, are another economic invention that can be used to recognize the real value of this essential work. A notable example is Time Dollars, a community currency invented by Edgar Cahn.
The Market Economy
The third economic sector, the market economy, also needs economic inventions that give visibility and value to caring and caregiving. Again, there are already a few such inventions. For example better training and pay for childcare, nursing, elder care, and other caring professions has long been proposed as central to the movement for “comparable worth” – that is, comparable pay for professions that require similar levels of skill and training.
Another economic invention that gives visibility and value to caring in the market is the rapidly growing socially responsible investment fund industry, which provides a vehicle for investors to support more caring business practices and policies. It makes it possible to avoid buying stocks of companies that fail to pay attention to the welfare of employees, customers, consumers, the larger community, and the natural environment.
In addition, we need economic rules and structures that ensure businesses have real incentives to be more caring. Sadly, some corporate executives are aware of the health and environmental damage they cause, and deliberately conceal this knowledge as long as they think they can get away with it. But for the most part, the issue is not one of bad people. It’s bad economic rules that come out of, and help maintain, dominator economic structures and relations – rules that can, and must be changed.
This does not mean replacing markets with central planning. Though some central planning is certainly needed, markets have an important function. Indeed, markets play a key role in a healthy economy. But, as we have seen, current market valuations are often based on a distorted system of cultural values. And what is often described as just the dynamics of supply and demand actually consists of artificially created demands for unhealthy products. Moreover, for markets to work effectively and equitably, price systems can no longer externalize the costs of exploiting nature and people. And present economic rules actually encourage businesses to compute profits in ways that harm both people and nature.
The Illegal Economy
This matter of harm leads to the fourth economic sector: the illegal economy that is so harmful to both people and nature. Because globalization has lowered barriers to illegal as well as legal commerce, the illegal economy is today a multibillion industry.
- From 1992 to 2002, the global drug trade more than doubled to $900 billion annually. The counterfeit goods trade accounts for another $630 billion per year.
- The illicit arms trade, which supplies terrorists and guerilla fighters in Africa, Asia, the Middle East, and Latin America, adds another $100 billion.
- One of fastest growing and most lucrative illicit trades is trafficking in people. Hundreds of thousands of people, including children, are sold into slavery in the international sex trade and other forms of servitude every year.
- According to UNICEF, over 100,000 girls and women have been trafficked from Albania alone, many of them sold into prostitution by their own families.
None of this could go on were it not for lack of caring. Nor could the illegal economy have grown so big were it not for the fact that government officials at all levels are often complicit in it through bribes, and even through part ownership of criminal syndicates in some places.
The Government Economy
This takes us to the fifth economic circle: the government economy. It is the responsibility of governments to enact policies that ensure the safety and well-being of a nation’s people. Most industrialized nations except the U.S. have realized that caring for basic human needs cannot be left to the market. Indeed, it’s a mystery why U.S. corporations don’t insist on a government healthcare program, since healthcare costs make U.S. companies less competitive in the global economy.
Policy makers must also take into account findings that support for caring and caregiving is needed to solve one of the most troublesome problems of working families in the U. S. today: the stress of lack of family time. As we have seen, this is a major factor not only in absenteeism and low worker productivity but in the fact that workers in the U.S. are less happy than those in nations where parental leave, high quality child care, flexible work options, and other family-friendly policies are the norm.
Since the government sector also provides public services directly or by contracting them to private enterprises, it should enforce standards of care for government employees and contractors. And of course, it should make and enforce rules for business honesty and responsibility, and itself live up to these standards.
As it stands now, the U.S. government gives away billions of tax dollars to major political donors. We must end this corruption through real campaign finance reform and other rules that ensure governments promote a nation’s well-being rather than enriching political cronies.
The Natural Economy
This problem of political corruption is a major factor in the failure of economic policies to protect the sixth economic sector: the natural economy. While it may not always be called corruption, when powerful corporate interests basically buy protection for environmentally destructive policies through campaign contributions, that’s what it is.
Yet even now, when it’s clear that the natural resource base on which the entire economy rests is becoming overexploited, the solution offered by some economists is even greater commodification of nature. They argue that if water, energy, and even the Earth’s atmosphere are made private property, they will be more efficiently managed.
This argument ignores the reality we see all around us, of companies that often operate with the most cynical disregard of the harm they do to our natural life-support systems. As Inge Kaul, Director of U.N. Development Studies, points out, what we need are international rules that make it possible to collectively manage our natural resources in more sustainable, equitable ways. These resources are what she and other economic thinkers call “global public goods.” And protecting these global public goods requires economic indicators, rules, and practices that recognize that we must accord real value to caring – including caring for Mother Earth.
Indeed, just about everything we just looked at comes down to one thing: creating rules, policies, and structures that encourage and support caring for ourselves, others, and nature.
Excerpted from The Real Wealth of Nations: Creating a Caring Economics by Riane Eisler