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The New Economy 101: A primer
For more information, visit the Institute for Policy Studies, the New Economy Working Group, and Slow Money.
Originally published in The Commons issue #104 (Wednesday, June 8, 2011).
BRATTLEBORO—Buzz words like “slow money,” “self-interest economy,” “common-good economy,” and “new economy” zipped around last week’s Slow Living Summit that kicked off the annual Strolling of the Heifers weekend.
But what do these phrases mean, anyway?
“New economy” refers to a set of financial values that embrace caring for local communities, food systems, and the environment, explained John Cavanagh, director of the Institute for Policy Studies (IPS), a Washington, D.C.-based think tank.
Cavanagh, who spoke at the event, said these values contrast with the present Wall Street financial system that treats the economy like a “giant casino.” He describes the current economic situation as a “Great Depression moment” and said that the majority of Americans believe that the old money system has broken down.
“At IPS, we see work to create a new economy as the most important work in the county right now,” he said.
Cavanagh has co-authored 12 books on the economy and also co-chairs the New Economy Working Group, a joint program by IPS, YES! Magazine, and the Business Alliance for Local Living Economies.
He describes Vermont as a potential “pacesetter” for economic innovation, crediting the Shumlin administration and the state’s growing population of creative entrepreneurs.
Five key concepts
Cavanagh supports five key values for the new economy.
The first includes making choices and building systems that care for the environment.
A shared prosperity is also important, he said, adding that the U.S. has a “horrendous” distribution of benefits that rival the Gilded Age of the late 19th century. This inequality “erodes our democracy,” he said.
The third concept Cavanagh calls “a deepening of democracy.” This deepening entails the establishment of more forms of enterprise, like cooperatives and other employee-owned businesses, which give workers direct participation in their workplace.
With Vermont’s strength in this particular area, Cavanagh said, the state “truly could be a leader in the country.”
Fourth on Cavanagh’s list is what some call “resilience,” but what he calls “rootedness.”
The more that people cause their economy to take root locally, the less vulnerable they are to that economy’s external fluctuations. For example, many local banks survived the 2008 credit crunch better than the big nationals, he said.
Well-being rounds out the final key concept. This means constructing economic policies that take in a community’s overall health, rather than solely focusing on making a bottom line grow.
Cleveland has discovered the power of supporting its local economy, said Cavanagh. A few years ago, the economically struggling Ohio city encouraged anchor institutions, like hospitals and schools, to purchase goods and services locally. Co-ops providing linens and food sprang up around this model.
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