Reorienting the Economy to Prioritize Human Well-being: The Role of Government

With the goal of offering transformative visions for global ecological governance, Neva Goodwin, Distinguished Fellow at Boston University Economics in Context Initiative (ECI), was invited to give a talk in August 2022 on her years of experience developing the theory and application of economics to account for the social and environmental contexts within which the economy operates.

In her talk, Goodwin discussed the role of the government in reorienting the economy towards maximizing human well-being. She outlined issues with the standard approach to economics that prioritizes markets before going on to discuss the role of government in reorienting the economy, citing examples from Nordic countries. She concluded by offering examples of governance at the international, national and local levels.

Moving beyond markets

Starting with the argument that standard economics has encouraged the development of an economic system that has become increasingly destructive to social and environmental well-being, Goodwin explained the need for an alternative model that can draw on the most useful parts of all systems of economic theory, including the standard neoclassical model, to achieve a healthy and sustainable economy. She noted that the economy should be understood beyond the basic concept of markets: two non-market spheres – the public purpose economy (including government and non-profits) and the core sphere (including households and communities) – should be considered as central to social and economic well-being.

The focus on markets alone means that economic activity is often driven by the goals of increasing consumption and maximizing profits. But as Goodwin emphasized, economies should be organized around the goal of the core economy, which is to maximize well-being – not profits or consumption.

Leaning on the government

How can the economy be reorganized around the goal of enhancing human well-being? Goodwin argued that at this moment in history, the role of government is key. Even though governments are imperfect in many circumstances, and they can be corrupt, they have the crucial potential to act as a countervailing force to businesses.

The business sector today has become the dominant driver of most modern economies, but it is not equipped to prioritize social goals over short-term profits. Often, protections for workers or for the environment are neglected in favor of increasing business profits. Hence, there is a tremendous need for the government to step in and create regulations to tame businesses and prioritize well-being. In Goodwin’s words, “governments need to be reimagined specifically to serve the goals of providing well-being to people in their full lives, including their work.”

Learning from Nordic countries

Goodwin continued by asking listeners to “imagine a future when care and well-being are central ideas around which goods and services are distributed, and all government and business activities are intended towards taking care of people’s needs and fostering well-being within an ecologically sustainable world.” How much socialization of the economy is needed to accomplish this? She cited examples from Finland and other Nordic countries as models to learn from.

To illustrate how some Nordic countries have achieved better well-being outcomes, such as less inequality and better health and environmental standards, Goodwin takes the example of homelessness. In the US, the response to dealing with homelessness has been to deal with its symptoms. The focus is on curing people of their addictions or teaching them healthy work habits in order to be given an opportunity of earning a rental home or owning a place of their own someday. Finland takes a very different approach, by giving homeless people a home, with appropriate support, including essential meals and childcare support.

To Goodwin, it doesn’t matter whether or not the Finnish policy is socialist, only that that the approach is oriented to the well-being of the people. Importantly, the Finnish government is able to act on its goals because it takes in enough revenue, mostly in the form of progressive taxes, and uses this revenue to reduce disparities of income and wealth. Goodwin argues this is not a terribly complicated system, it just requires that the people realize what matters to them and are willing to support a government that provides comfort and security to all. It also means that predatory businesses must not be able to sway the people to a false sense of what they want, and that the business sector should live within a social contract.

Moving towards a more sustainable economy

An ideology that prioritizes business over social goals has spread throughout the world with the power of multinational corporations. An outstanding example is the work of fossil fuel companies to delay for decades public, private and business efforts to prevent the worst of climate change, as they not only hid their own knowledge from the public but obfuscated the issue from the public and among politicians.

While the prioritization of profits over responsible behavior flows out of the business sector of the economy, it is also a cultural issue. The consumerist culture that has been fostered to enable businesses to sell everything imaginable needs to change. Goodwin argues that governments are critical to creating an economic system and culture that prioritizes well-being.

International regulations can help prevent businesses from shielding their profits from taxes, or from off-shoring pollution, while national regulations are essential to protect consumers, workers and the environment from preventable harms. Local level initiatives exist as well, below national or state government, where actors in the public purpose economy – municipal and state governments and their agencies, as well as the non-profit sector – are emerging as essential agents for positive change. Examples of such local level initiatives include the gradual increase in worker cooperatives and depositor-owned credit unions; and the recent resurgence of labor unions, in the US and abroad.

Goodwin started the talk noting the limitations of standard economics, and the need for an alternative that takes into account the full social and ecological context of the economy. This provided the context for her discussion on the importance of balancing the business economy with a strong public purpose economy, and prioritizing the goals of the core economy, which is where people’s needs are met and they can find satisfaction in life.

Explore the full recording: http://amplifycities.org/projects/post-american-world-symposium/

Note: Goodwin’s presentation starts at 17:15 and ends at 28:55.

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