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  • Writer's pictureYolanda Sancho

The Economy of the 5C

Updated: Jun 11, 2021

Change of the Economic Paradigm in Times of the Coronavirus. Yolanda Sancho, Economist.


In these exceptional days in which we have voluntarily taken responsibility as citizens to avoid a collapse of health systems due to the Coronavirus pandemic, I firmly believe that it is essential to rethink our priorities as a society. And for this, we must, yes or yes, necessarily question the basic foundations on which the global Economic System in which we have been operating for decades is based and, therefore, consider a change in the Economic Paradigm that redefines the goals and priorities of our business. ordering of needs and the efficient use of the necessary resources to satisfy them. CANNONS OR BUTTER Any student of Economics receives in his first class of Economic Theory notions about what the choice of preferences or priorities entails, taking as an example the so-called "War Economics". And it is because in exceptional situations such as war, the authorities must decide, with certain and scarce resources, between producing, simplifying, "cannons or butter", that is, Production Goods or Consumer Goods, a simile popularized by Professor Paul A. Samuelson in his book "Course in Modern Economics" (1948). Thus, the State should prioritize how to use public resources or how to encourage the use of private resources to satisfy, as far as possible, the basic needs of the population together with what we could call “needs” of strategic interest.

OUR CANYONS: PUBLIC SERVICES In these moments, when fighting an almost invisible enemy such as a virus, our Public Services have become our “guns”. The main one right now would be our Public Health System, the best in the world according to the latest report from the World Economic Forum, but also our Social Services and other basic public services provided mostly by the Autonomous Communities and City Councils.

Our Public Services, and fundamentally Health and its workers, have become the true battering ram against the emergency, despite having suffered a decade of huge neoliberal budget cuts in order to degrade them and thus have the perfect excuse to proceed with its privatization. And yet, right now, it is that same private sector that refuses to provide an essential service such as health care, which has forced the Government of Spain to consider for the first time to put into practice article 128 of our Constitution : "All the wealth of the country in its different forms and whatever its ownership is subordinate to the general interest", opening the door to the possible intervention of the economy and / or certain companies for the general interest.



THE BUTTER OR THE ESSENTIAL CONSUMPTION TO GUARANTEE

And the butter? They are those consumer goods that satisfy the basic needs of the population. These days of almost total isolation from the population in their homes, should make us reflect on the true nature of our “needs”.

When I began to study economics, it was said that individuals logically have a series of needs and based on those needs, products or services are created capable of satisfying them. And yet, for a few decades now, that is no longer the case: products or services are created, and a posteriori, the “need” is generated for us to acquire them because we cannot live without them. In reality, unnecessary needs, as also stated by Professor José Luis Sampedro.


Therefore, we must reflect and seriously rethink our needs: do we really need everything we consume to live well? To feel complete? So that our life has a meaning? Or are they just ways of masking a somewhat empty life in which we have been leaving our vocations and illusions along the way, filling it with an empty consumption that leads to nothing?

Yes, I know that I get into the field of Philosophy ... but let's not forget that Economics is a Social Science that etymologically means "the Administration of the Resources of the House", understanding by House, our Planet. So, shouldn't economics study the motivations of human beings to use natural resources in one way or another? And shouldn't we go into studying the why of this without simply staying with merely observable purchasing or consumption behaviors? The study of Economic Theory therefore begins with the fact that society must make decisions (cannons or butter) to "maximize SOCIAL UTILITY", understood as being able to satisfy the needs of the entire society in the most optimal way. However, in the development of this concept, orthodoxy then makes a triple somersault and generalizes ensuring that this maximum principle, in practice, translates into "MAXIMIZE THE PROFIT" or "MINIMIZE THE COSTS".

Thus, without blushing. And also, add 10 axioms, or maxims on which an economic system is based, so it will be efficient. Axioms, premises that are generally known that are never really fulfilled: perfect information, perfect markets, etc. And based on all that we know that is not fulfilled, the Economic Theory is articulated, the consequent making of Decisions of this nature and the Economic Policies.

THE CHANGE OF PARADIGM IN ECONOMY


Therefore, taking advantage of the situation in which we are at the moment ...

Hasn't the time come when the Economy itself should be the one to propose new models that replace previous ones based on individual consumption decisions, seeking individual Profit to do so based on the Utility of the collective?

Shouldn't we, as Science, finally rethink a change in the Paradigm that was already on the table since the 70s, when an efficient and collective use of the planet's resources was proposed, a change that at the moment a small virus is pushing it?

Should we not seriously consider redirecting economic activity towards low or almost zero carbon activities that satisfy real needs and that fight against the Climate Emergency? Because yes, from the Ecological Economy we have been proposing for decades new models of economic relations that take into account the effects on nature and the human being of those decisions. The Coronavirus and its global spread is also one of the consequences of the extraordinary situation of Climate Change in which we find ourselves.

This is why, now that possibly a large part of the population understands and accompanies this change, that I understand that it is essential to start proposing an Economy whose production aimed at satisfying consumption needs is based on what could be called the "ECONOMY of the 5C": CARE, FOOD, KNOWLEDGE - CULTURE, COMMUNICATION AND CLIMATE CHANGE.

1. Cuidados (Care)

In a world with ever-increasing life expectancies, we must support activities that preserve life: parenting, caring for the elderly, people with care needs, etc. It would imply significant job creation in general and in the territory, also helping to fight depopulation in emptied Spain.

Let's put LIFE at the center of everything. 2. Comida (Food)


Understanding it in a broad sense as everything that feeds us and helps us with our day-to-day needs: food, housing and basic supplies (energy, water).


We promote sustainable agricultural activities, focused on human nutrition and reducing the consumption of proteins of animal origin. Ecological and regenerative agriculture activities, which provide food with optimal properties and health to people, which will also have an impact on lower health costs and improvement of people's living conditions.


Let us truly guarantee the right to a roof for everyone, creating jobs with the rehabilitation of homes and construction only of those necessary where necessary.

Let us generate the optimal conditions for access to a basic necessity such as Energy: renewable and free energy, based on a decentralized and democratized system.

3. Conocimiento y Cultura (Knowledge and Culture)


Promote education and training in every sense of the population. Scientific research. Citizens' access to understanding science and its advances, their participation and incorporation into its results, dissemination, talks, debates, etc. That is, to encourage and promote the "Consumption of Knowledge" to push scientific advance focused on collective improvement.

In ancient Greece, in Epidaurus, all people, whether they were considered citizens, women, children, the elderly or slaves, had to go all together necessarily twice a year to the Theater in order to achieve as a whole the so-called “khátharsis”, The catharsis or “purification of the soul”, to promote personal internal change and collective social transformation.

Thus, Culture as a catalyst for a more cultured, advanced and empathetic society is essential. For this, cultural activities and education should be promoted at all levels. Support the "Consumption of Culture", but not only its dissemination but also direct participation in Culture: learning to develop the creative potential of citizenship in order to promote social advancement at all levels.

4. Comunicación (Communication)

Professional, truthful information, journalistic and professional research is a value in itself for an increasingly mature and critical society. The promotion of Connectivity between individuals, in an increasingly interrelated world, is essential for individual and collective improvement, as well as a basic work tool that can greatly benefit the maintenance of life throughout our territory: living peoples.

5. Cambio Climático (Climate Change)

A year ago, the idea of ​​the danger of our survival as a species due to Climate Change emerged with great force. In fact, it is no longer simply a phenomenon of Climate Change but of Climate Emergency. Mitigation, adaptation and fight against the causes and effects of Greenhouse Gas emissions should also form an important part of the Economic Policies at a global level. Thus: improvement of carbon sinks (soils, forests, crops, landscapes), renewable energies, transport not based on fossil fuels, etc. they are activities to promote and enhance from the public.

BASIC INCOME "IN KIND" AS AN EXCHANGE ALTERNATIVE The experience of these days will show us where our priorities are and what our real needs are. With the reduction to the maximum of economic production and the need to compensate with public resources for the loss of economic resources, especially of the most vulnerable population: workers, the self-employed, micro-enterprises and SMEs, we should not miss the opportunity to test a Universal Basic Income .


And no one doubts that today, the implementation of neo-Keynesian policies is going to be essential to encourage the Economy from the Public. The European Union is already proposing incentive policies in this regard: before the Coronavirus crisis, a Green Deal was already emerging for the Climate Emergency, but now a much more ambitious plan must be designed for obvious needs. But we must go further. In short, given that the future of the productive activity will pass with total security through the automation of processes and the so-called Industry 4.0, we will have to seriously consider that these policies are designed to guarantee a Universal Basic Income at least "in kind": that the States become committed to the fact that every person, by the mere fact of being one, must have the right to cover their basic needs. What we could call "the current cannons and butter": "Public Services and the 5C". And to achieve this, we must commit ourselves as global citizens, through the States, supranational institutions and international organizations, to firmly fight against the so-called Tax Havens, against unsupportive behaviors of a financial and tax nature, in order to allocate economic resources to the balance of collective needs.

Either that, or we will miss an incredible opportunity to reinvent ourselves, to imagine a Future as Humanity. So, with capital letters.

By Yolanda Sancho, Economist, Attac in Aragón and Former Consellor of Economic Alternatives in Podemos Aragón


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