As we transition from the current consumer and knowledge economy systems, three structural changes need to happen to facilitate an Integrative Economy. All three are possible to do—and together they set the framework for what comes next.
We did not begin measuring our economy until 1946, when Simon Kuznets designed the tool for economic measurement. It primarily measured production and profits. But Kuznets warned us, even then, that the idea of an ever-increasing GDP equating to an ever more successful economy was folly. He said: “Distinctions must be kept in mind between quantity and quality of growth, between costs and return, between the short term and the long term. Goals of more growth should specify more growth of what and for what.”
But we didn’t listen, and today we are obsessed with increasing the GDP—even when we do it at the expense of social and environmental systems. One of the best explanations of how limiting the GDP is came from Robert F. Kennedy in 1968:
“Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things…. The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play…. It measures everything, in short, except that which makes life worthwhile.”
Robert F. Kennedy, address at the University of Kansas, Lawrence, Kansas, March 18, 1968Today, we have the technological capacity to measure beyond the GDP. Numerous groups have worked on how to include social and environmental measurements as part of our overall economic measurement. We simply need to come together and choose one as our new measurement tool. Nothing will be 100 percent perfect, but the GDP is clearly missing one-half to two-thirds of the valuable work being done in this country.
It is time for a national referendum on this issue. We could bring together the different groups who have developed measurement tools and ask them to integrate their work into a consensus tool. Once designed, all entities that measure the economy would use it alongside the GDP, and this new measurement system could become the norm.
For a hundred years, our economy was strongly correlated with industrial production. Factories crisscrossed this country, and millions upon millions of people worked in them. But around 1980, things began to shift. We began outsourcing jobs overseas, and technology enabled us to produce with far fewer people.
One simple example: when Kodak was at its peak, it employed 140,000 people and was valued at $28 billion. Today it is out of business, and Instagram has replaced it as the way people make and share pictures. When Instagram sold to Facebook, it employed thirteen people and sold for $1 billion. What happened to the other 139,987 people? Multiply this by the hundreds, and you can see why fifteen to twenty-five million people remain unemployed, underemployed, or working in jobs that don’t pay a living wage.
The way our economy runs today, you work in the market sector (for-profit businesses) or the government sector to earn your livelihood. The nonprofit sector is a subsector of either, since most of its funding comes from those two sources. And then there is the illegal work sector. You might find it odd to count this as an actual work sector, but when there are no jobs available in the market or government sectors, people turn to crime to survive. It’s estimated that the illegal sector represents 5 to 10 percent of GDP. So yes—it has to be counted. Lots of people work there.
The work we need done in the future will be very different from what was needed in the last hundred years. It is work that will use our brains and requires high-functioning people working together to determine what our communities need to be vibrant and dynamic. When we change how we measure the economy, the necessity of this work—and the capacity to fund it—will result in the development of many new businesses and jobs. We call this the Local Community Capacity sector.
This work will include social and environmental arenas, and the need for it will be locally driven and determined. What’s needed in Mobile, Alabama, will be different from Concord, New Hampshire, or Missoula, Montana. It will be up to communities to determine this and to employ people in the LCC sector to produce it.
The Local Community Capacity sector will absorb many of the nonprofits currently supported by the market and government sectors—only now they will stand on their own, as we recognize that this work is vital for all our futures. By bringing this work out of the shadows and recognizing it as an equally valuable work sector alongside the market and government sectors, we enable a thriving economy that can employ millions.
Wealth accumulation today is far too limiting. We are all dependent on a federal dollar monetary system—and as we saw in 1929, 1987, 2008, and 2020, when that single system crashes and the money disappears, life seems to stop. Millions join the ranks of the unemployed, banks stop lending, foreclosures skyrocket, and the economy tanks.
But life didn’t stop—it just got jolted and pushed to the sidelines, simply because federal dollars as a medium of exchange disappeared. This limitation is no longer necessary. By expanding the ways we can accumulate and share wealth, we can prevent the abundance-for-some, scarcity-for-most dilemma that results from a monoculture financial system.
There are many ways to create new wealth exchange at the local level. Here are a few examples:
There are many other ideas being explored; we are not trying to share them all here—simply to make it clear that there are options. The federal dollar system isn’t going away, nor should it. But we don’t need to stay 100 percent dependent on it as the only way to accumulate wealth. When we let go of that old perception and embrace new wealth options, the possibilities for our lives are tremendous—and as part of a vibrant Integrative Economy, the quality of our lives gets much better overall.
Leave your email and we’ll add you to our two Substack newsletters—Ann’s and Lawrence’s—where we publish the essays, videos, and dialogues behind an Integrative Economy. Both are free, and that’s where this conversation lives.