Challenges Within ‘Global Overhaul’ of the Economy

A proposal that could see a global overhaul of the economy as we know it, with social and natural capital traded alongside financial capital, is being met with mixed reactions from experts around its benefits to society.  

The Universal Commons Project (UCP) proposed a movement to help fix “the fundamental flaw in economics”, by ensuring that profit and genuine value become one and the same.

Alan Schwartz, founder and funder of UCP, said they would do this by creating a standardised measurement for social and natural resources, which was why UCP had established the “measurement prize”, to encourage people within the sector to come up with a standardised measurement which did not yet exist.

Once social and natural capital could be measured, it would then be introduced into a marketplace, which people would be able to buy, trade and sell, similarly to a traditional capitalist market.

Schwartz told Pro Bono News they would be able to put “monetary value” on things like “literacy, health or the quality or eco-systems”.

“The next step is to create ‘asset classes’ of social and national capital, and place them in a marketplace so that people who are wanting to trade and who care about them can become better informed about what the price and cost of various elements are,” Schwartz said.

“When you can measure social and natural capital the way you can measure barrels of oil, you can actually start trading those things and you can create real value and real interest in improving them.”

Director of Social Ventures Australia, Simon Faivel, told Pro Bono News if UCP were able to move this idea to the point of a marketplace, it would transform the way social and natural capital were valued.   

“It’s exciting because we can move to a position where we’re starting to value the things that really matter,” Faivel said.

“Price as a proxy for what is valuable is an important message, it’s one that has permeated capitalism over a long time and allowed us to put prices on companies that have generally quite intangible assets.”  

But senior research fellow at La Trobe University, Katharine McKinnon, raised concerns over the financialisation of social and natural resources, and told Pro Bono News she was “hesitant” to support the UCP proposal.

She said programs like this were positive in the sense that they translated social benefits into “dollar terms” and a language visible to policymakers and donors, but she felt it “emptied out their social importance”.

“They reduce the complexity of social situations down to a number,” McKinnon said.

“We’re in a society where monetary measures have come to really dominate everything, and that’s worrying.”

She said it would be more beneficial if business and individuals reconfigured their models, to take into account the ecological impacts from the beginning.

Although she believed it wasn’t a “long term” solution, it was “one step towards shifting the system in a positive direction”, to help actors such as large corporations see value in social and natural resources.

While Faivel was mostly positive about the concept of a marketplace for social and natural capital, he believed the “devil was in the detail”, and the challenge would be focusing on the different sectors and areas of social and natural resources.

“I think it has to be really specific… and that will allow people to change their perceptions on how we can account for value,” he said.

“There’s so many different areas that could be could be considered as a part of this. When we look at social and natural capital, being able to define what it is and work out who’s prepared to trade that is really important.”

He added it was important for the social sector to come together to shape this idea so they could get the most out of this model of thought, and for the UCP to listen to their voice.

“It does come back to power relationships at play here, and the honesty that the UCP will have in hearing the voices of the sector to help shape what’s going to be most useful with respect to the structure of the framework, and what’s going to be tradeable, and how those voices can influence it practically,” he said.

McKinnon said this was not a new idea or concept, and that many groups had been working on this for some time, adding there was a long road ahead.   

“It’s a cultural shift that’s needed, and there are a lot of organisations out there who are busy trying to push that change and thinking up systems for how you account for these changes and how you can value things differently,” she said.

This is the second of a two part article, examining the economic overhaul proposed by the Universal Commons Project. Part one can be read here.