Plenitude: The New Economics of True Wealth
by Juliet Schor
Penguin Press (2010)
The main premise of Plenitude is that neoclassical or free market economic theory falls short in addressing the global economic crisis because it fails to account for the negative ecological impacts (aka externalities*) of markets. The author Juliet Schor proposes a new economic model which addresses both environmental impacts and inequality.
Schor’s new “plenitude” model builds from ideas on downshifting and simplified living she introduced in her 1998 book The Overspent American. It’s based on four main principles.
The first involves a new allocation of time away from the market economy and a reduced reliance on money to meet individual needs. By Oct 2009, eight million jobs had disappeared in the US alone. There’s no way these jobs will ever be restored. However by reducing their hours of work (either voluntarily or involuntarily), people can make a conscious trade-off of money for time. With more time, households can increase their social networks and supports and find new ways (other than money) of procuring consumption goods.
The second principle involves diversifying away from the traditional economy by “self-provisioning,” growing and making things for ourselves instead of paying other people to do it. Schor sees distributed production facilitated by 3D printing** as a big part of this process.
The third principle is what Schor calls “true materialism,” an environmentally aware approach to consumption in which people are more aware of the ecological impact of their purchases. Rather than sacrificing a comfortable lifestyle, this might mean paying more for better quality clothes, shoes and consumer goods.
The fourth principle is restoring our investment in one another and our communities. Especially in times of crisis, these connections, sometimes referred to as social capital, are every bit as important as money or material goods.
Government Interventions Required
Despite numerous examples Schor gives of individuals, groups and cities that have already transitioned to the new model she proposes, new government policies will be essential to ensure the planet reduces its carbon footprint in time to avert ecological catastrophe.
Unlike French economist Thomas Piketty, author of the bestseller Capital in the 21st Century, she specifically opposes after-the-fact taxation to redistribute market income. She rightly points out that it fails to increase new wealth. Instead she would support a proposal put forward by Peter Barnes to set up a Sky Trust similar to the Alaska Permanent Fund. The Sky Trust would tax corporations on the carbon dioxide emissions (and possibly their destruction of habitat and discharge of toxic chemicals) and return the revenue earned as a dividend to citizens.
Secondly she calls for the adoption of social program (single payer health care, support for child care and tertiary education and reliable pensions) common in other industrial countries. She cites studies the common misperception that Americas work the longest hours in the world to acquire more consumer goods. The real reason they stick with jobs with impossible long hours and stress is because that’s the only way they can pay for health care, child care, college and a secure retirement.
Third she calls for a change in intellectual property laws to facilitate sharing new techniques and technologies) permaculture, agroforestry, biodynamic farming, cob, earthen and strawbale home construction, alternative technology, renewable energy systems) that enable more efficient use of resources.
Fourth she sees an essential government role in cleaning up toxic waterways and brownfields and restoring forests, which are also fundamental steps in restoring true wealth and reducing inequality.
Finally she would call on government to abandon their growth at all cost policies. She blames the financialization of the US economy for the pressure for constant growth. Although the sale of financial products produces no new wealth, it requires a continuous increase in economic growth to pay shareholders and bondholders.
Reigning in the Financial Sector
The main weakness of Plenitude is Schor’s failure to propose specific policies to reign in an out-of-control financial sector. In European parliaments, the main policies being explored include ending the ability of banks to create and control the money supply (restoring this function to government)*** and a financial transaction tax.****
*In economics, an externality is a consequence of an industrial or commercial activity which affects other parties without this being reflected in market prices, such as rainforest destruction.
** 3-D printing is a manufacturing process that builds layers to create a three-dimensional solid object from a computer model. Video of houses being printed in China:
***See The IMF Proposal to Ban Banks from Issuing Money
**** A financial transaction tax is a levy placed on financial institution for specific types of monetary transactions.