We Need Alternatives To Liberalism. A New Book Points The Way Forward.

In the development of Christian Democracy in America, distinguishing an alternative to liberalism – a dominant ideology based on the prioritizing of individual rights – is an utmost prerogative. To be merely centrist, simply a unique mixture of left and right policies, fails to significantly distinguish the philosophy of Christian Democracy and separate its unique patrimony from the guiles of a political system which offers no real alternatives. Unfortunately, the experience of politics for most Americans is distilled exclusively by the Democratic and Republican parties, two different reflections of liberalism.

It is difficult for the average citizen to imagine an alternative outside the spectrum of left liberalism and right liberalism. This is made all the more difficult by the deeply rooted role of liberalism within our education system, best embodied by the iconic and sacrosanct position afforded to Adam Smith as the basis of economic thought. What if instead of Smith – or even John Stuart Mill, Jeremy Bentham, John Locke or Thomas Hobbes – our thinking was based on the work of an Italian contemporary who provides a non-liberal alternative approach to society and the market?

The Italian civic economy tradition, an ideology based on communal good rather than individual welfare and assuming the natural cooperative disposition of humans, was established in the late eighteenth century by Antonio Genovesi, a Catholic priest. Four years prior to Smith’s The Theory of Moral Sentiments, Genovesi was named chair of the first economics department in Italy. While The Wealth of Nations is often recognized as the first work of modern economics, Genovesi published his major work, Lezioni di Commercio, O sia di Economia Civile (Lessons in Commerce, or in Civil Economy), a year earlier in 1775. Despite equalling Smith’s brilliance, the Italian school of thought did not spread in the same way throughout the anglophone world and has largely been forgotten; an alternative to liberalism which is largely unknown outside of Italy.

The civil economy tradition has been given new life by Luigino Bruni and Stefano Zamagni’s book Civil Economy, an exploration of the tradition’s central tenets and how as a paradigm it provides a pathway to overcome some of our society’s current challenges: dignity of life, justice, environment and peace. Whereas liberalism focuses on the freedom and utility of the individual, civil economy is rooted in relationships between individuals. This change in focus, from the self to the commons, naturally works in concert with the motivations of Christian Democracy. In building on the legacy of Genovesi and those who followed in his intellectual footsteps, Bruni and Zamagni describe what easily could have been the legacy of the west if the Italian civil economic tradition had prevailed instead of the liberalism of the British Isles.

The valuing of the civil over the individual, and the collection of assumptions that change as a result, leads to societies based on supporting community rather than serving individuals, economies and markets meet needs and generate well-being instead of wealth alone, and facilitate development which is ordered toward authentic flourishing and true democracy.

Mutual reciprocity ought to be the basis of our community.

The central assumption of the civil economy tradition is that humans are political animals, meaning not only are they inclined toward cooperation, but communities flourish when they are capable of cooperating. The civil economy vision of society is one of reciprocity rather than individual self interest. Dr. Giorgia Nigri, a student of Bruni and Zamagni, describes “gratuitousness” as the essential quality of this vision, though one many outside the more communal Italian culture can find difficult to grasp. For English speakers, gratuitousness can hold a negative connotation, such as gratuitous violence in film or TV, but for Italians this term – gratuità – is one that connotes the perfect self gift of familial love. The civil economy is one in which parties are in a mutual state of freely giving and freely receiving. While this can be received on American ears as reflecting a commune or evoking images of utopian fantasy, it is best visualized in the exchange and support offered by a family; all parties give as they are able and receive fully from the others. While the reciprocity is mutual, it is not necessarily equal as each party differs in need and ability.

This is distinguished from the anti-social theory which has formed the basis of modern political thought. The anti-social theory, as advanced by Hobbes, proposes humans are selfish beings who would utilize their unlimited personal freedoms to wage “war of all against all.” Liberalism proposes that society should be ordered toward each individual acting in self interest for their own benefit. As thinkers like Locke have since proposed, a social contract can create the conditions by which a self-interested actor would rationally choose cooperation. Within liberalism, such selfishness is even praised through the application of theories like the invisible hand which suggests an individual acting in their own self interest will create greater unintended social good. Attempts to wrestle with the role of self interest in promoting the good of society have continued into the 20th century with John Rawl’s veil of ignorance, a thought experiment in which one creates a just society by designing it not knowing what their position in it will be.

To achieve a society based on reciprocity, public trust is necessary. To some this may sound like an impossible goal and certainly the heightened polarization of the present age casts doubt on this in our time, but the existence of a common market and the perseverance of our political system affirms the foundation of the kind of public trust needed to facilitate mutual reciprocity. As Genovesi states, “Public faith is thus a bond of families united in a sociable life.” Rather than our trust in institutions and principles which are ordered toward self interest as it is now, transitioning to a civil economy requires trust to be shifted toward institutions which are communal in nature and a greater commitment to bonds with other families and persons existing around us.

The shift in our understanding of markets is less about a quantitative science and more about changing a culture to meet needs and value social well-being over increasing personal riches.

Mill is attributed by Bruni and Zagmani as saying no one can be a good economist if they are just an economist. The civil economy views the market as a matter of philia, civil friendship, and thus to be a good economist one must also be a friend and an engaged member of the commons. Medieval economics concerned itself with justice, meeting the needs of the community while avoiding excess. The financialization of the economy we experience today is rooted in the gradual divorcing of productive labor from wealth generation in the era of classical liberalism.

While liberal capitalism celebrates and incentivizes economic rents – non-productive earnings paid to an owner to bring those factors into production or as a result of monopolizing a natural opportunity – the civil economy makes clear its critique of rents as inhibitions of productive capitalism. Bruni and Zamagni focus on the ideas of Achille Loria, a nineteenth and twentieth century political economist, to describe how rents prevent the full expression of society’s productive capacity; “Landowners, either by deliberately holding back part of their land or by offering the rest under conditions that discourage the deployment of capital, make it impossible to productively use some fraction of total capital.” Economic rents forego some social benefit of profit to the exclusive benefit of monopoly owners. The authors point out how a system of economics rooted in measuring marginal utility communicates that each production component ought to be compensated based on its productivity, but fails to provide a means to measure the productivity of the owners and shareholders.

In fact, Bruni and Zamagni characterize capitalist society as one in which land has been appropriated by a dominant class, “Inequality, therefore, is not so much the result of penury, as it is the presence of economic institutions that absorb the excess produced in the economy and turn it into rents, which are always parasitic.” Some civil economists, such as John Ruskin, argue markets are more about power than wealth and becoming rich is a means to create inequalities which give one power over others. Liberal capitalism facilitates this continued divergence in outcome between the general public and an increasingly small circle of powerful elites. The civil economy presents policies which could counter this trend. In practice, this can look like; 1) the profit from land should be distributed socially since increases in land value are from society, 2) profit from capital should be distributed amongst the workers, undoing liberal capitalism’s natural divide between productive activity and wealth generation, and 3) a principle in favor of ‘free land’ which creates an alternative to wage labor and increases the ability of workers to secure fair salaries.

At the core of the civil economy’s approach to the market is a reevaluation of wealth. In the very root language it is based in, wealth shares its etymology with wellness and well-being. Wealth is an idea that calls for more than simple increases in richness. While Bruni and Zamagni note, “With the abolition of slavery in Europe and America hundreds of thousands of jobs were lost,” they assert society was far wealthier, in the authentic and true sense of the word, because “this vile trade” had ended. This is an indication of how little GDP and modern liberal measures of wealth have to do the actual wellbeing of a nation. A civil economy understanding of wealth recognizes that while less economic activity may occur, and less riches may be gained by some individuals, the society itself is much wealthier.

One approach to rethinking liberty and wellbeing is provided by Amartya Sen, an Indian born Nobel prize winning economist and philosopher. Sen’s capability approach determines human welfare as the actual ability to achieve well-being, as opposed to just having a right or freedom [for example, if a school has stairs leading to the entrance, a wheelchair bound student only has a right to education if they have a capability to go to school, such as if there was a ramp or elevator]. Capitalistic markets can’t distinguish between preferences and needs, they meet preferences that can be paid instead of satisfying needs. Liberty in the market is not just the freedom of choice, it is the ability to act on freedom by actualizing choice.

The role of the market is perhaps best summed up within the preface of Civil Economy; “actual markets, different than those described in textbooks, are never ethically neutral; they are either civil or uncivil.” To be civil, a market must, “create value and values,” “create work” and “respect and care for the environment.” The civil economy tradition, which takes its name from this goal of crafting such an economy, calls for our economic systems to be based in fraternity and a valuing of actual wellbeing rather than personal benefit and non-productive rents.

Advancing our society requires both democracy and the market to exist in a balanced relationship.

Development, in the sense which is ordered toward human flourishing and not just increases in consumption and aggregate expenditure, requires both democracy and the market. Development stalls when the market expands without democracy expanding similarly, when one is allowed to operate unfettered from the other. Democracy itself is a common good, but as a democracy requires relative equality, we must choose to reduce inequality or reduce the presence of democracy in our society. Bruni and Zamangi describe democracy as a form of creative destruction, a constant pursuit of virtue which fosters progress through the innovation that results from the elimination of injustices (“within a few decades industrial and technological revolutions had come about precisely because slavery had ceased”).

The fusion of the market and democracy in a reciprocity focused society is an environment where communal solutions are superior to those of private and public methods. Rather than solutions being dictated by supply, in communal solutions the focus is on recognizing and responding to the present demand. True reciprocity only occurs when there is mutual vulnerability. This vulnerability facilitates a reciprocal dependence and creates a symmetry of needs. Our current social safety net focuses on fragility welfare and meeting the needs of those who are already in a state of crisis. While fragility welfare responds after an individual is already in a situation of deprived wellbeing, reciprocity and vulnerability based welfare systems and communal solutions actively seek to prevent such crises in a way liberally oriented political or economic entities cannot.

There is a false belief that democracy can progress by keeping the laws of efficiency and solidarity separate. In giving primacy to efficiency, “which has become the real principle of reality,” capitalism necessitates less efficient members of society be excluded. If the value of society is wellbeing, rather than efficiency, then this exclusion is a net negative for society and antithetical to progress. Instead of efficiency, valued because of the personal gain it can maximize, Bruni and Zamagni call for civil entrepreneurs who invest in society without personal hope of return; a gratuitous display of reciprocity. Civil entrepreneurs order their project toward the common good. Bruni and Zamagni, while stating it is not a moral distinction, assert that those who seek profit alone are not entrepreneurs, they are engaging in financialization and are mere speculators. “Thus an entrepreneur is one who never completely ‘instrumentalizes’ her company,” while the profit which is generated “is one good,” it is not the primary purpose. Economic activity must contribute to the democratization of the market.

A mechanic which they emphasize is circular subsidiarity. As opposed to traditional subsidiarity which is vertical – a system where sovereignty is given to the lowest appropriate entity – circular subsidiarity is horizontal, sovereignty is freely shared. The systematic interaction of government, businesses, and civil society becomes a means to actionize reciprocity on a larger scale while “planning and fielding interventions,” that care for the good of all in society. Circular subsidiarity acts to prevent state decay, a condition in which opportunistic and parasitic institutions predominate inclusive ones. Regarding the role of corporations and businesses, the authors take the surprisingly affirming position that, “in the long run the competitive advantage of a nation depends on the civil fibre of its companies.” While liberalism emboldens capitalism to accept businesses ignoring the call to advance the common good in order to focus purely on profit, within the civil economy corporations bear and carry the same responsibility for the common good as the government and civil society.

A civil economy unites ethics, politics, and economics to institute a paradigm which advances the common good through embodied solidarity.

Within the liberalism of the enlightenment and modernity, there is a division of spheres; ethics is the sphere of values, politics is the sphere of goals, and economics the sphere of means. The division of these realms allows for abuses which are even incentivised by the dominant valuing of the individual as the center of society. This problem and the lack of accountability among the spheres is made worse by the post-globalization trend which flips the roles of politics and economics; multinational corporations determine and shape the ends of society while politicians retreat further into entrenched positions which fail to boldly seek policies which better the lives of the general public. It is a curse of liberalism, one which will continue to decay our society as inequality, injustice, polarization and tragedies of the commons prevail amidst the responsibility-free self interest of classical liberalism in the modern age.

Civil economy speaks to these ills by uniting these three spheres; by requiring the economist to not just do economics, but to also consider the ethical motive and political opportunities presented by the moment. The civil economy is one in which the institutions of society seek wellbeing and erasure of inequality alongside authentic democracy. At its core, the civil economy is solidarity; mutual vulnerability with one’s neighbor based on reciprocity to meet a symmetry of needs. If the sickness within modern America is rooted in liberalism’s individualism, then it can only be healed by the solidarity of the civil economy.

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By Tony Guidotti