Writing on Long Term Capitalism I described business which puts people and their needs before maximising shareholder value as the New Bottom Line.
The position paper for people-centered economics argued a fundamental predicate that humans are not disposable and that we should measure and calibrate output in terms of human beings.
It’s now more than 20 years since Terry Hallman, founder of People-Centered Economic Development questioned the purpose of business arguing against the assumption of shareholder primacy, in favour of an economy where people, particularly those in greatest need come first.
“We have only to ask ourselves individually whether or not this is the sort of progress we want, where we accept consciously and intentionally that human progress allows for disposing of other human beings.
“This is a tricky question. Except in the case of self-defense, if for any reason we answer ‘Yes’, regardless of what that reason is, we are in effect agreeing with the proposition of disposing of human beings. Whether disposal be from deprivation or execution, the result is the same for the victim. If we agree that sometimes, for some reasons, it is acceptable and permissible to dispose of human beings, actively or passively, the next question is ‘Which people?’ Of course I will never argue that one of them should be me, though perhaps it should be you. You respond in kind, it cannot be you, but maybe it should be me. Not only can it not be you, it also cannot be your spouse, your children, your mother or father, your friends, your neighbors, but, maybe someone else. Naturally I feel the same way. Maybe we come to an agreement that it shouldn’t be either you or me, or our families and friends, that can be disposed of, but perhaps someone else. While we are debating this — passionately and sincerely, no doubt — a third party comes along and without warning disposes of the both of us, or our families, or our friends. And there is the trap we have fallen into, because whether or not we approve of our or our families’ and friends’ demise is irrelevant. It is fair because we accepted the principle of human disposability. We just didn’t intend that it be us who are tossed, but if we or our families and friends die, it is in accordance with principles that we ourselves have accepted and so must live — and die — by.”
He wasn’t describing combining profit with purpose, it was about the application of profit for a social purpose. A business must make a profit or it will not survive but there is no reason why it should benefit only the shareholders.
“Dealing with poverty is nothing new. The question became ‘how does poverty still exist in a world with sufficient resources for a decent quality of life for everyone?’ The answer was that we have yet to develop any economic system capable redistributing finite resources in a way that everyone has at minimum enough for a decent life: food, decent housing, transportation, clothing, health care, and education. The problem has not been lack of resources, but adequate distribution of resources. Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.”
Following his death in 2011, I described this as The New Bottom Line.
‘This is a long-term permanently sustainable program, the basis for “people-centered” economic development. Core focus is always on people and their needs, with neediest people having first priority — as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine’s poorest and most desperate citizens, rather than a “top-down” approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first — not secondarily, along the way or by the way. ‘
5 years earlier, he’d reminded me that he was writing for his life. When we met he was a homeless man fasting for economic rights, His life ended fighting for the lives of children abused and neglected in institutional care.
Today, the argument that business has a purpose beyond maximising profit for shareholders is almost a given, but that’s only halfway toward what he was describing.
What he said about laissez-faire economics was this:
“Modifying the output of capitalism is the only method available to resolving the problem of capitalism where numbers trumped people — at the hands of people trained toward profit represented only by numbers and currencies rather than human beings. Profit rules, people are expendable commodities represented by numbers. The solution, and only solution, is to modify that output, measuring profit in terms of real human beings instead of numbers.”
"Economics, and indeed human civilization, can only be measured and calibrated in terms of human beings. Everything in economics has to be adjusted for people, first, and abandoning the illusory numerical analyses that inevitably put numbers ahead of people, capitalism ahead of democracy, and degradation ahead of compassion."
What that meant in practice was that rather than trying to measure the social impact of a business in terms of a social return on investment, that we calibrate the extent ot which human wellbeing is enhanced. In terms of institutionalised children for example, the numbers transitioned to loving family homes.
It could be argued that this is impractically utopian, but then so was the idea that business has a purpose beyond profit.
We’re seeing the beginning right now as New Zealand PM Jackinda Arden announces the intention to measure progress in wellbeing.
“We want New Zealand to be the first place in the world where our budget is not presented simply under the umbrella of pure economic measures, and often inadequate ones at that, but one that demonstrates the overall wellbeing of our country and its people.”
In South |Korea last year, President Moon Jae-In announced plans to double public spending and create a people-centered economy.
In a recent talk about the Doughnut Economy , Kate Raworth argued that the netric for our new economy will not be money, but a sweet spot for humanity.
In the wake of the 2008 economic crisis, founder Terry Hallman addressed the international conference on Economics for Ecology reiterating his argument for measuring profit:
“Among three main areas of economics, the financial sphere remains dominant over social economics and environmental economics. The reason for this is very simple: in order for any system of economics to be sustainable over time, it must first be financially sustainable. If a system costs more than it produces, it requires infinite inputs over time. Infinite inputs are not available in a finite world, and we live in a finite world. If we pursue a system that costs more than it produces financially, it must and will necessarily collapse. But now, the financial system itself is broken: it costs far more than it produces.”
People-Centered Economic Development began as an advocacy with a position paper for the steering group of the Committe to Re-elect the President in 1996. ,
Founder Terry Hallman (deceased)
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