A four-part series first published in THE DAILY NEWS New Plymouth, New Zealand on March 7-14, 1985
2.The Next Economy
by vivian Hutchinson
March 12, 1985 8 min read download as PDF
LAST OCTOBER, a conference on The New Economic Agenda was hosted in a magnificent lecture hall overlooking the Findhorn Bay in Northern Scotland. It was convened by the Findhorn Foundation, an international educational community who, over the last 10 years, has hosted many major gatherings on international affairs.
This gathering brought together several streams of thought and activity that has been part of the ongoing work to make sense of our new economic landscape.
It was perhaps largely inspired by a former member of the Findhorn Community ... American entrepreneur Paul Hawken. Hawken was the founder of Erewhon a now famous American mail-order supplier of natural foods. Today he runs a successful tool company and writes for many journals as a freelance contributor.
It was in an obscure journal called Coevolution Quarterly that Hawken began contributing his articles on the present economic transformation.
His own perspective on our economic changes developed the earlier ideas of Dr Fritz Schumacher .. . and were equally as. challenging: "We have not been through a decade of inflation, but through a decade when we refused to deal with the inherent limitations of the industrial economy.
"We do not have high unemployment, but off-employment, millions of people working at jobs which make no sense, which accomplish little in the way of common good.
"We do not have high interest rates, but rather a culture that has borrowed too long and cannot pay its debt to itself.
"We have an economy that is no longer economical because it is part of a living system, and like any living system, it is bound by growth, development and decay . . ."
Paul Hawken, author of The Next Economy
Hawken's articles began to attract attention throughout America and he began to be beseiged by publishers encouraging him to write a book, which finally went on sale late last year. Entitled The Next Economy it gives practical and pragmatic advice on the transformation from the Industrial to Information Age.
Hawken argues that we actually have two economic systems around at the moment. One, the Industrial Economy, is on its way out. The other, the Information Economy, is still emerging.
"The current economic crisis," says Hawken, "only exists in institutions of the large scale Industrial economies. Their time is up.
"People in their everyday lives are intuitively, or by experience, finding out how to avoid being victims and discover the new opportunities.
"Economic life is moving to a more mature stage than the Industrial Age it was in .. ."
Hawken's analysis is challenging to the depressing forecasts quoted to us. daily in our newspapers.
One major reason for these depressing forecasts is that most of the economic indicators are linked to a way of life that is in its twilight years.
It's a bit like gauging the health of a family by only taking the bloodpressure of the grandparents.
The book The Next Economy takes a backward look at how we got to where we are today.
The basis for the development of the Industrial Economy for most of this century was the continuing decline in the price of energy (especially oil) relative to labour costs.
Technology embodied the energy and saved labour. Because energy costs declined while energy consumption rose, the economy expanded. It produced goods more cheaply, wages rose, prices of goods declined, the demand for goods increased.
In the Fifties and Sixties we had what is now referred to as the "party" years on the Industrial Economy. It was the party of its last hours.
There was an unprecedented cheap-energy-based upsurge in the value of labour and the standard of living soared.
There was also a shadow side to this rapid expansion ... the goods produced were often shoddy, the work was boring for many people, the environment was desecrated in ways never before thought possible.
Meanwhile these concerns were hardly within the attention of our political, economic and business leaders who were caught up in these "party" times.
The "Next Economy" was ushered in by the price of oil. From 1973 its cost has risen 500%. The real price of oil is back where it was in 1910.
The value of labour has also declined. In the USA real wages have dropped 16% in the last 10 years.
Schumacher was one of the first to say that the "party" was over back in 1973. But it has taken many of our cultural leaders 10 years to get over that hangover and wake up to the fact that the whole context of our economic system has changed.
And the new economic landscape before us includes some surprising anomalies ...
Bankruptcies are at a record high while also new business start-ups are also at a record level.
As full-time jobs disappear, we are seeing an upsurge in more flexible part-time employment and self-employment.
Large-scale institutions from governments to multinationals are effectively downscaling to a more feasible size.
Workers are being increasingly offered ownership in business.
Charles Handy, former oil executive and now lecturer at the London School of Economics gives his lecture on "The Future of Work"
While Paul Hawken argues that the new economics will be based on information, he defines this information in much wider terms than just the production and distribution of "data".
In his view, human imagination, intelligence, design, utility, craftsmanship, service and durability are all components of the new Informational economy, and the basis of new wealth in the future.
Quality, service, openness and responsiveness to customers and their needs are what will enable businesses to prosper in the "Next Economy".
When I joined the conference last October, I found that there had already been several other major gatherings which sought to bring together the scattered threads of this new economic theory. Two such gatherings deserve special mention here.
Last June the heads of government of the western world were meeting at their economic summit at London's Lancaster House. Around the corner at the Royal Overseas League ... another economic summit was in full swing.
It was dubbed TOES — the acronym for "The Other Economic Summit" and was a historic gathering for advocates of the "New Economic" agenda.
It cost $NZ52,000 to mount and participants came from as far afield as Chile, India and the United States.
Like their heavyweight political counterparts they also issued a communique at the end of the conference. But this press release called for more small-scale, conservationist technologies, greater local self-reliance and participation in economic planning, more popular access to land and writing off of the Third World debt.
Many such proposals were simply laughed at by the political heavyweights who called them "utopianism and "... a return to the Stone Age".
But a closer look at the papers presented at the conference showed that the speakers could definitely back up their claims and proposals in clearly pragmatic terms.
Dutch Government projections presented at the conference gave one such instance.
They indicate that giving priority to environmental and energy saving measures would produce GNP growth of 27% between 1980 and the year 2000 ... only 2% less than that produced by conventional economic policies.
Hot on the heels of TOES conference was an equally unusual conference convened at the London School of Economics.
This gathering contributed a different face to the debate on the "next economy" as it brought together several London leaders at the top of "big business" circles.
Hosting the conference were members of a London-based group called "The Business Network". Last year, Francis Kinsman, a member of the network, interviewed 30 senior managers on what they saw is the main issues ahead for big business in the 1980's.
His interview list included such figures as John Harvey-Jones ( chairman of ICI), Sir Peter Parker (ex British Rail), Sir Jeremy Morse (chairman of Lloyds Bank) and Clive Thornton (formerly of Abbey National Building Society).
Kinsman found amongst these managers a remarkable call for a "new initiative" in their business affairs ... one that stresses the very same human and social requirements listed by Paul Hawken in his analysis of the "next economy".
Francis Kinsman (right) of The Business Network - with Edward Posey and Liz Hosken (left) of the Gaia Foundation
"These people have to think in the long-term," says Kinsman, "... they are entrepreneurs who have grasped the essence of what the informational economy of the future will mean for their companies.
"Their fundamental message could be written on the back of a postage stamp: people matter most. The high unemployment rate has obviously had its effect on the thinking of those I interviewed. There is much comment along the lines of humanising British business ...".
The Business Network were co-sponsors of the October Findhorn conference. It seemed perfectly timed for a ripening of the debate-in-process on new economics. It also brought together a surprising range of people from all sections of society and from many countries in the world.
For me, there were some challenging conclusions, which, if true, will certainly transform the way most of us think and act in the next few years.
Part three: The Findhorn Conference ... some challenging conclusions.