The purpose of an economic system should not be merely to produce clothing, food, and houses, but to clothe, feed, and house people. Human beings are, after all, what the economic system was created to serve, not vice versa. If human needs could be met without a single commercial transaction (i.e., if we could develop houses and clothes that never wore out and if everyone raised their own food) human needs would be met. No one would be poor, no one hungry. But what would happen to the economy? Our present industrial economy, where income is dependent on job employment, would collapse.
Modern industrialized economies do not make the satisfaction of human needs a number-one priority. They are instead designed to stimulate business and promote commerce. Industrialized economies are based on throughput. They prosper only so long as production and consumption remain high. Income is derived from wages and salaries and, as a result, every effort must be made to assure that there is never any shortage of jobs. Products must wear out or be consumed so that they may be replaced. Styles must be changed so that whatever does not wear out is discarded anyway. People must be dissatisfied so that they want more. Resources must be exploited. Growth is essential.
Kenneth Boulding suggests that any economic system based on throughput is appropriate only in a “cowboy” world where there are endless frontiers of inexhaustible natural resources.1 On the “spaceship earth” where we live today, resources are limited, and pollution is a serious threat. Under such conditions, an appropriate economic system would be one that concentrated on the satisfaction of human needs rather than on the rate of production and consumption. We should be attempting to maximize the accumulated supply of utilitarian goods, not simply the level of industrial output.
Today the human race numbers almost 4 billion persons. This is more than twice as many people as were alive at the beginning of this century and only half as many as will be alive shortly after the start of the next. Today one-half of all human beings are malnourished, and more than two-thirds are without adequate housing, sanitation, or medical care.2 If the material needs of this great mass of unfortunate persons are ever to be met, we must devise an economic system that can feed, house, clothe, and provide basic health services in a much less wasteful manner than presently seems possible from the experience of the industrialized countries.
We must recognize the fact that there are no more frontiers left. We no longer can afford to behave as if this were a cowboy world. The earth is a spaceship and, if we are to live on it in peace and prosperity, we must shift from throughput economics to storehouse economics before it is too late.
The key to making such a basic shift is the elimination of the virtually exclusive role of wages and salaries in the income distribution system. So long as job employment is a prerequisite to obtaining income, any significant shift from throughput to storehouse economics would create chaos. If products were made more durable, if mass advertising of trivia were eliminated, and if all unnecessary jobs were discontinued, unemployment would soar, recession would occur, and millions would be without income altogether.
Throughput economics depends on continuous growth to create enough jobs to keep everyone employed. Storehouse economics would eliminate unnecessary jobs and seek to satisfy human needs with as little effort and expenditure of resources and energy as possible. Storehouse economics is based on the principle that, if things don’t wear out, they don’t need to be replaced.
The NMF and Storehouse Economics
The National Mutual Fund would provide the mechanisms necessary to make the shift from throughput economics to storehouse economics. NMF income would decrease the importance of job employment as a source of income. As NMF dividends gradually increased to the level where they could provide a comfortable living, a great many persons would voluntarily leave the labor force. This would create job vacancies at every level. Persons wishing to continue working would have numerous opportunities for advancement or for transfer to more satisfying occupations. As a result, unnecessary jobs could be eliminated with no hardship. Make-work and featherbedding would become passe.
NMF investments in robot factories and automatic industries would further accelerate the shift to storehouse economics. Robot factories would not require large numbers of employees to be concentrated within commuting distance. This would lessen the need for commuter traffic and substantially reduce congestion and pollution.
It would also mean that small-town communities might once again prosper. People would be free to live wherever they wished and could adopt slower-paced, less resource-consuming lifestyles.
The automation of some major industries would, of course, not eliminate the need for human workers altogether. Not all industries would, or even could, be automated in their entirety. There would be many small businesses and community services that would not be automated. However, the existence of a substantial income from the NMF, together with the total automation of a major portion of heavy industry, would considerably reduce the pressures toward urban crowding and the inevitable costs in pollution and congestion.
An additional benefit of robot factories would be that they could easily cope with fluctuating production requirements without causing labor dislocations or financial crises. In periods of high consumer demand, automatic industries could be operated 24 hours per day 7 days a week. There would be no requirements for overtime or for importing new workers to industrial areas. High production would lead to high NMF profits, and consumers would have plenty of income to meet their needs. Furthermore, NMF distribution of profits through dividends would assure that everyone shared in the benefits.
Alternatively, when consumer needs were met and markets become saturated with durable products, production could be cut back. Robot factories could be shut down completely or shifted into entirely different product lines without creating any unemployment. There would be no need to artificially stimulate additional consumption through mass-media advertising, style changes, or planned obsolescence. Of course, reduced production would decrease NMF profits and lead to lower public dividend payments. But if people already had what they needed, they would spend less and therefore wouldn’t need as much income.
The Demand Regulation Policy would prevent lack of income from causing personal hardships or precipitating a deflationary spiral. The DRP would always supplement NMF payments by reduced withholdings, accelerated redemption, or newly created money in an amount sufficient to prevent prices from falling. Thus, any reduction in demand due to consumer needs being met would trigger increased income from the DRP. This would assure that any decrease in consumer demand was not the result of insufficient purchasing power, but rather a manifestation of increased human contentment.
The DRP would guarantee that NMF dividend payments would fall only after the need for consumer goods had declined, and not the other way around. For example, if cars and appliances were made more durable, then production would fall because few people would need to buy new ones. This would reduce NMF profits and, hence, public dividends. But it would at the same time increase DRP payments by whatever amount was required to prevent a decline in the price index. Thus, any reduction in NMF income would be more than compensated by the combination of increased DRP payments together with the benefits of more durable products at a constant price.
As a result, every shift in consumer preference to more durable products or less wasteful services would be rewarded by increased personal wealth for everyone! The DRP would, in effect, pay a bonus to society for every change in taste that led to more self-sufficient, less resource-consuming lifestyles.
The NMF and DRP would work together to assure that consumers would always have sufficient income to purchase whatever they needed. At the same time, there would be no need to produce unnecessary trivia or to artificially stimulate consumption in order to prevent unemployment. Free-market pressures for maximizing NMF profits would assure that nothing was produced that was not needed, yet the universal distribution of income through the NMF and DRP would assure that production was never curtailed while there were still human needs unmet.
The overall effect of the NMF and the DRP would be to encourage and reward every tendency within society to shift from throughput economics to storehouse economics. The effect would become significant as soon as NMF dividends became large enough to relieve the overwhelming pressures for full employment that today dominate virtually every major economic decision. As soon as NMF dividends and DRP bonuses became a substantial fraction of the average family’s income, conservation would become as economically beneficial as new development; restoration would increase incomes as much as new construction.
There is no reason to believe that such a basic shift in economic values would not be just as satisfactory for the average person as our present throughput-oriented economy. It is true that many people enjoy new cars, new houses, and new clothing styles. However, it also seems likely that most people would welcome cars that operated trouble free. It is certainly true that antique furniture is often more prized than new, and fine old restored houses are more appealing to many people than the cheap crackerboxes that are sold as houses in many suburban developments today.
Storehouse economics would not mean that nothing new would ever be built. It would simply mean that new development for its own sake would no longer completely dominate the economy. People would have plenty of money to buy whatever they wanted. Individuals would be financially independent and free to choose for themselves what they preferred.
Also, storehouse economics would not mean that everyone would leave the big city in favor of the small town. However, it would mean that those who wanted to, could. It would mean that the economic pressures that result in urban crowding, suburban sprawl, and the wasteful consumption of natural resources for the primary purpose of creating jobs would be substantially reduced, if not eliminated altogether.
The shift would undoubtedly be gradual. Basic attitudes of an entire society do not change rapidly. However, in many ways attitudes are already changing. The ecology movement and the efforts of those who are concerned about the environment have already begun to raise our consciousness concerning the beauties of nature and the value of what is old. Recent polls and other indexes suggest that people are embarking on a period of new respect for old values and restrained lifestyles after the upheavals of the past decades.
Unfortunately, this shift in attitudes runs directly counter to the basic goals of growth and exploitation that are so fundamental to the present economic system. It is difficult to see how these recent attitudinal changes, however desirable, can prevail in the long term unless they are accompanied by institutional changes in the existing system of capital financing and income distribution.
The National Mutual Fund and the Demand Regulation Policy would provide a mechanism for a fundamental shift in economic goals away from full employment and toward full income, away from maximum production and toward maximum utilitarian wealth, and away from increasing growth and toward increased well-being.
By themselves, the NMF and DRP could not force a national shift from throughput to storehouse economics. However, they could provide the institutional framework under which such a shift could occur without severe economic dislocations. And more than that, they could provide positive reinforcement for the shift by linking each step taken in the direction of conservation to increases in the personal financial security of every individual. By this means the NMF and DRP could reconcile the environmental goals of conservation and preservation with legitimate desires of human beings everywhere for participation in the good life.