Roadmap to a New Economics: Beyond Capitalism and Socialism

When thinking of a new economics, let's not think of stocks, bonds, derivatives, or other financial instruments. Let's think of children. Let's ask what kind of economic policies and practices are good for children. Let's ask what's needed so all children are healthy, get a good education, and are prepared to live good lives. More fundamentally, let's ask what kind of economic system helps, or prevents, children from realizing their great potentials for consciousness, empathy, caring, and creativity -- the capacities that make us fully human.

Once we address these questions, we can start designing the road map to the economic system we want and need: one that promotes not only human survival but also full human development.

We must design such a system, not only because it is the right thing to do, but because it is the economically sensible thing to do, particularly as we move into the postindustrial knowledge-information era where the most important capital is what some economists call "high-quality human capital." Indeed, Nobel Prize-winning economist Amartya Sen concurs that the aim of sound economic policy must be human capacity development.

This I agree with. But I want to add that for a truly new economic system, we need a broader definition of human capacity development than a purely economic one. Which brings us back to the children and to our human capacities for caring, empathy, consciousness, and creativity.

When children are the starting point for a new economic paradigm, the first step is to go beyond the tired debate of capitalism versus socialism and all the other old isms. Both capitalist and socialist theory ignore a fundamental truth: the real wealth of nations -- and the world -- consists of the contributions of people and nature.

Adam Smith and Karl Marx ignored the vital importance of nature's life-sustaining activities. For them, nature exists to be exploited, period. As for the life-sustaining activities of caring for people starting in childhood, they considered this merely "reproductive" labor, and not part of their "productive" economic equation.

In other words, their focus was on the market -- for Smith to extol it and for Marx to excoriate it. Neither included in his economic model the life-sustaining sectors, without which there would be no market economy: the household economy, the natural economy, and the volunteer economy.

The first step toward building a truly new economics is a full-spectrum economic model that includes these sectors and gives real visibility and value to the most essential human work: the work of caring for people and for our natural environment.

The move to this comprehensive economic model in turn requires understanding something else ignored in conventional economic discussions. This is that economic systems don't arise in a vacuum: they are influenced by, and in turn influence, the larger cultural system in which they are embedded.

The Failures of Capitalism and Socialism

In the wake of the global economic meltdown that began in 2008 has come an outcry against capitalism, especially against its latest stage of "neoliberalism" with its massive deregulation of powerful moneyed interests. Critics point not only to the havoc wreaked by deregulating banks and other financial institutions but also to the gargantuan size and power of multinational corporations; the widening gap between haves and have-nots, both between and within nations, caused by the globalization of "free markets"; and the decimation of our natural environment by irresponsible business practices. Some argue that capitalism must be replaced with socialism because historically capitalism has been unjust, violent, and exploitive of both people and nature.