The world has enough for everyone’s need, but not enough for everyone’s greed.
—GANDHI
The economy must exist to serve society, not to be served by society. It must also benefit society as a whole.
Without condoning the imposition of sterilizing constraints on the spirit of enterprise, innovation, and prosperity, economic regulation must prevent those driven solely by self-interest from taking advantage of the intricacies of the financial system to siphon off a disproportionate amount of resources. As the French writer Daniel Pennac said: “Individual happiness must have collective results, failing which society is just a predator’s dream.”1 The state must protect the weak, guarantee that everyone’s work is fairly remunerated, and ensure that the privileged and the wealthiest do not exert their power to influence political decisions in their favor.
An economy becomes dysfunctional when those who have made a negative contribution to society are those who reap the most reward. An example would be the autocrat who becomes immeasurably rich by seizing ownership of his country’s natural resources, or even the banker who receives colossal bonuses even though his actions have placed society in a precarious situation.
A healthy economy must not give way to disproportionate inequality. This does not refer to the natural forms of disparity that are manifest in any human community, but rather extreme inequality that derives not from people’s actual dispositions, but from the economic and political systems which are skewed to promote this iniquity.
None of this is inevitable, and it is entirely possible to set things on a different course, provided there is a popular and political will to do so. Even in the world of economics, the respect for human values exemplified by altruism is not an idealistic dream but a pragmatic expression of the best way to achieve a fair economy and long-term harmony. To be harmonious, the pursuit of prosperity must accommodate an aspiration for the well-being of all citizens and respect for the environment. Economists might argue that it is not their job to be altruistic or compassionate, but if they say that they don’t “care” for society, it is not acceptable. This is why we need a more caring economy.
The concept of the “economic human,” Homo economicus, appeared at the end of the nineteenth century as a critical response to John Stuart Mill’s writings2 on political economics, and was widely adopted by the founders of so-called “neoclassical” economic theory, in particular Francis Edgeworth and Vilfredo Pareto. This involves a theoretical representation of the relationships between humans, identifying them as selfish agents capable of making rational choices that optimize their chances of satisfying their own preferences and promoting their own interests.3 This theory stands in opposition to the notion of Homo reciprocans, which states that humans are motivated by a desire to cooperate and take into consideration the benefits to the community.
The underlying idea is that if everyone were to behave in this way, and the supply-and-demand market remains free of any constraint, said market will work out best for each party. Neoclassical theory has been taught to millions of students since the start of the twentieth century. In Economics, one of the most influential textbooks on economics, Paul Samuelson and William Nordhaus explain that Homo economicus represents an idealized vision of rational man, in which the population would be made up of two types of persons: “consumers who are endowed with sets of tastes that they try their utmost to satisfy, and entrepreneurs who are only trying to maximize their profits.”4 Yet as Philippe Kourilsky, professor at the Collège de France in Paris, explains: “Homo economicus is a caricature of real mankind. In truth, it is a dehumanized version that contributes to the dehumanization of a section of economic science.”5
As one might suspect, Homo economicus is not altruistic: “The first principle of Economics is that every agent is actuated only by self-interest,”6 wrote Francis Edgeworth, one of the founding fathers of modern economics.7 Many others have echoed his views, among them William Landes and Richard Posner, an economist and lawyer respectively, who state: “Altruism is not a trait with a particularly strong survival rate in the competitive markets.”8
According to this reductive view of humankind, even if we do each other mutually beneficial favors, it is always in the service of our own needs, and we only seek to gain profit from any human relationships we maintain.9 Here we see again the notion of universal selfishness discussed earlier. Even the idea of fairness, which economists call upon frequently, does not escape this fate. The psychologist Elaine Walster and her co-authors assure us that “equity theory, too, rests on the simple, but eminently safe, assumption that humans are selfish.”10 All these statements are based not on scientific evidence but on dogmatic beliefs.
This conception of economics is at once simplistic and erroneous. As the Nobel laureate and Harvard professor Amartya Sen writes:
It strikes me as absolutely extraordinary that people can dismiss any attitude as irrational other than that of the maximization of self-interest. [Such a position] necessarily implies that we reject the role of ethics in our real decision-making.… Taking universal selfishness as read may well be delusional, but to turn it into a standard for rationality is utterly absurd.11
Homo economicus’s most serious flaw, continues Kourilsky, is his fundamental amorality: “In classic economics, one supposes that this moral deficit is compensated for by the rather mystical notion of the ‘invisible hand,’ which would re-establish—somewhat mysteriously—a balance of sorts.”12 According to the metaphor used by Adam Smith, the “invisible hand” describes a spontaneous phenomenon that guides the markets when reasonable individuals governed by self-interest alone are placed in free competition. Smith argues that in trying to maximize their own well-being, individuals contribute to the good of society as a whole. According to him, the intervention of the state is useless, since the invisible hand is the best way of regulating the economy. Passionate advocates of the market economy are therefore of the opinion that, since the invisible hand is taking care of everything, they have no duty whatsoever toward society.13 The truth is that the invisible hand of blind selfishness cannot build a better world: freedom without duty leads only to an exacerbation of individualism. Adam Smith himself readily recognized this: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”14
Nowadays, many founders of companies are aware that the notion of Homo economicus is nothing but a caricature of human nature, and have themselves introduced far more complex value systems in which altruistic qualities play a vital role.
Milton Friedman, the famous champion of libertarianism and deregulation, stated: “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.”15 Over the last ten years, observes Frans de Waal in The Age of Empathy: “every advanced nation has had major business scandals, and in every case executives have managed to shake the foundations of their society precisely by following Friedman’s advice.… All too often it leads to exploitation, injustice, and rampant dishonesty. Given its colossal fraud, the Enron Corporation’s sixty-four-page ‘Code of Ethics’ now seems as fictional as the safety manual of the Titanic.”16
It is clear, emphasizes the French economist Serge-Christophe Kolm, that “an economic system does not simply produce goods and services. It also produces human beings and the relationships between them. The way in which a society produces and consumes has a major influence on personalities, characters, knowledge, desires, happiness, and types of interpersonal relationships.”17 So many things that are essential to happiness have nothing to do with economic transactions.
Adam Smith himself, the father of the market economy, was not nearly so extreme as his successors and, in a work too often overlooked by economists, his Theory of Moral Sentiments, he stated: “To restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature; and can alone produce among mankind that harmony of sentiments and passions in which consists their whole grace and propriety.”18
Any theory of economics that excludes altruism is fundamentally incomplete and diminished. Most of all it is at odds with reality, and as such is bound to fail. Essentially the complex mathematical models created by neoclassical economists to try to explain human behaviors are based on presuppositions that are for the most part false, since the majority of people are not entirely selfish, are not fully informed (concealing information is one of the strategies used by those who manipulate the markets), and are far from making rational choices all the time.
Even though we are generally convinced that we are rational, our decisions, economic or otherwise, are very often irrational and strongly influenced by our immediate gut feelings and emotions. Intuition is a highly adaptable faculty that allows us to make fast decisions in complex situations, but it also lures us into thinking that we have made a rational choice, which takes more time and deliberation. This has been widely evidenced in behavioral psychology, chiefly by Amos Tversky and Daniel Kahneman. Their findings won them the first-ever Nobel Prize in Economics to be awarded to a psychologist, in this case Kahneman, who recently painted a revealing picture of these traits we have in his much acclaimed book Thinking, Fast and Slow.19 Similarly the neuroscientist Brian Knutson and his team at Stanford University have shown the extent to which economic decisions, especially risk-taking, are strongly influenced by emotions, impulses, and personal preferences. They indicate that the parts of the brain associated with the limbic system, which is linked to the emotions that govern primitive behaviors such as searching for food and evading predators, also play an important role in our reactions to monetary rewards and punishments.20 What’s more, at the point when investors make financial decisions, observations of their cerebral activity reveal heightened states of excitement that facilitate risk-taking and influence the degree of objectivity in their decision-making.
The context of a situation also influences decisions that are supposed to be rational without our realization: the psychologist Dan Ariely asked participants in a study to note down the last two digits of their Social Security number on a piece of paper, then asked them to take part in an auction. The people whose Social Security number ended with a high figure, i.e., between 80 and 99, bid an average of fifty-six dollars for a computer keyboard, while those whose number ended in a lower figure, i.e., between 1 and 20, only bid sixteen dollars for the same keyboard.21 There is nothing remotely rational about this economic (yet perfectly ordinary) decision.
Emotions, motivations, and value systems undeniably influence economic decision-making. Since this is the case, it is best for these emotions to be positive and their motivations to be altruistic. Why not then introduce the voice of care into the economy, instead of satisfying ourselves with the voice of reason, a necessary but insufficient voice on which economists place too much importance?
The billionaire investor and philanthropist George Soros uses the term “free market fundamentalism” to describe the belief that the free market is not only the best but the only way of managing an economic system and preserving civil liberties. “The doctrine of laissez-faire capitalism holds that the common good is best served by the uninhibited pursuit of self-interest,”22 he writes. If the laissez-faire attitude of an entirely deregulated free market were based on the laws of nature and had some scientific value, if it were anything other than an act of faith pronounced by the champions of ultraliberalism, it would have stood the test of time. But it hasn’t, since its unpredictability and the abuses it has permitted have led to the financial crises with which we are only too familiar. For Soros, if the doctrine of economic laissez-faire—a term dear to philosopher Ayn Rand—had been submitted to the rigors of scientific and empirical research, it would have been rejected a long time ago.23
The free market facilitates the creation of businesses; innovation across many fields, for example in new technology, health, the Internet, and renewable energy; and affords undeniable opportunities to young entrepreneurs wishing to start up business activities that will further society. We have also seen, in the chapter on the decline of violence, that commercial exchange between democratic nations considerably reduces the risk of armed conflict between them. Yet, in the absence of any safeguard, the free market permits a predatory use of financial systems, giving rise to an increase in oligarchies, inequality, exploitation of the poorest producers, and the monetization of several aspects of human life whose value derives from anything other than money.
It therefore is not free trade in itself that must be called into question, but the fact that all freedom can only be implemented in a manner that is responsible toward those around you. These responsibilities are governed by moral values and by an ethical code that is respectful of the well-being of the community as a whole, starting with the obligation not to harm others when pursuing self-interest. By virtue of the fact that the unscrupulous and profit-hungry miss no opportunity to take advantage of unconditional freedom for their own profit and to the detriment of others, it is essential to establish regulations, which are nothing more than protective measures for society. This is, however, not what has happened, as Amartya Sen explains:
The apparatus of regulation was dismantled year after year by the Reagan administration until George W. Bush’s time in office. But the success of the liberal economy has always certainly depended not only on the dynamism of the market itself, but also on regulatory mechanisms and controls to ensure that speculation and profit-seeking do not lead to excessive risk-taking.… If you are concerned about freedom or happiness, you must try to organize the economy in such a way that they are possible.26
According to Stiglitz, “well-designed regulations did succeed in ensuring the stability of our financial system for decades, so regulations can work. Moreover, this period of tight financial regulation was also one of rapid economic growth, a period in which the fruits of that growth were more widely shared than they are today.… By contrast, in the period of ‘liberalization’ the growth of a typical citizen’s income was far lower than in the period of regulation.… There is a simple reason for the failure of liberalization: when social returns and private rewards are misaligned, all economic activity gets distorted, including innovation. The innovation of the financial sector was directed not at improving the well-being of Americans but at improving the well-being of bankers.”27
The reality is that the free market economy does not work as well as its supporters claim. They say that it leads to greater stability, but successive global crashes have shown that it can be very unstable and have devastating consequences. What’s more, all the evidence points to the markets being far less effective than they maintain, and that the fairness of supply and demand, so dear to classical economists, is nothing but a myth, since we live in a world where a vast number of needs remain unsatisfied, and in particular where the investment required to eradicate poverty and respond to the challenges of global warming is lacking. For Stiglitz, unemployment, which prevents countless workers from contributing to the economy to their full potential, is the worst failing of the deregulated market, the greatest source of inefficiency, and one of the major drivers of inequality. Poverty, as Amartya Sen explains, is a deprivation of freedom, and not just any freedom: the freedom to express the potential that each person has in life.28
The politicians and economists who have dominated the US political establishment since the Reagan administration thought we had to do away with all regulation pertaining to the free market and give free rein to the laissez-faire philosophy. They thought it was the best way to create equal opportunities for all: the most enterprising and the hardest working would be those who would succeed the most. The American Dream glorifies the shoe shiner who becomes a millionaire through sheer force of ingenuity and perseverance. Yet studies show that in the United States, with the odd exception, the wealthiest people, who lest we forget make up 1% of the population, as well as their descendants, have the greatest chance of preserving their level of wealth in the long term. Stiglitz summarizes the situation as follows: “America had created a marvelous economic machine, but evidently one that worked only for those at the top.”29
According to the champions of deregulation, the rich’s accumulation of wealth is supposed to benefit the poor due to the fact that they create jobs, stimulate the economy, and let wealth “trickle down” to the bottom. We must therefore not kill the goose that lays the golden egg. The problems start when the goose keeps all its eggs. The reality is that nowadays there is a minimal amount of trickling down, and it no more quenches the thirst of the poor than the water of a mirage.
In collaboration with economists from various countries, French economist Thomas Piketty has analyzed hundreds of years of tax records from thirty countries across Europe, the US and Japan. The conclusion of his fifteen years of painstaking analysis from this unprecedented mass of data is that the rich are getting richer and that their wealth doesn’t trickle down. In fact it trickles up. These findings, presented in Capital in the Twenty-first Century,30 flatly contradict the claim, repeated over and again by libertarian economists, that the accumulation of wealth at the top of the pyramid benefits everyone by filtering down to the middle classes and the poor. This is simply not true.
One of the main features of Piketty’s findings is that when people obtain most of their wealth through inheritance and from subsequently investing it, they invariably grow richer and richer, while those who earn wages and salaries for their productive work grow relatively poorer. This goes plainly against the idea that a small government and a deregulated economy made the USA a land of opportunity for all. The current system resembles a game of Monopoly with one player having one set of dice and the other three. The latter can only get richer and richer. His success has nothing to do with his hard work and personal skills. The three sets of dice represent inherited wealth, earnings made on financial investment and assets (such as property, art collections, etc., which generate non-taxable passive income), and proportionately less taxation on the rich. One set of dice stands for productive work based on personal skills.
Piketty has also shown that the only times when inequality decreased in the USA was when the government directly intervened to promote growth, during the New Deal in the 1930s and the Marshall Plan after World War II. Then the working person could hope to gain equal footing with the financiers through his or her own merit and hard work. Based to some extent on altruism, a Keynesian style of economics is aimed at achieving prosperity for both present and future generations, not at ensuring the selfish, short-term gain of a minority. Thoughtful regulation allowed the creation of a balance in society by applying an incremental wealth tax rate. People were more concerned for their fellow man and the social contract had a stronger element of cooperation instead of barefaced competition. From the 1980s on, the American Dream ended with the likes of Ronald Reagan, Milton Friedman, and Ayn Rand, as social solidarity waned and inequality continued to grow thanks to major tax cuts granted to the rich.
If more and more citizens across the world are feeling outrage toward the current economic system it is because, as Stiglitz says, following the 2008 crisis: “It was rightly perceived to be grossly unfair that many in the financial sector (which, for shorthand, I will often refer to as ‘the bankers’) walked off with outsize bonuses, while those who suffered from the crisis brought on by these bankers went without a job.… What happened in the midst of the crisis made clear that it was not contribution to society that determined relative pay, but something else: bankers received large rewards, though their contribution to society—and even to their firms—had been negative. The wealth given to the elites and to the bankers seemed to arise out of their ability and willingness to take advantage of others.”31
To illustrate this, let us remember that at the onset of the crisis, Goldman Sachs highly recommended that its customers invest in Infospace,32 a start-up selling various online services that had grown rapidly and been given the highest possible rating, even though it was dismissed by an analyst as a “piece of junk.” Excite, a similar business that also had a strong rating, was dismissed as “such a piece of crap.”33 In 2008, after 9 million poor Americans had lost their houses, often their sole asset, the heads of Goldman Sachs received 16 billion dollars in bonuses. Similarly, the five most senior people at Lehman Brothers, one of the biggest sellers of risky mortgage loans, pocketed over 1 billion dollars in bonuses between 2000 and 2007.34 When the company went bankrupt and their customers were ruined, they held on to the entirety of this money. As Stiglitz remarks: “Something has happened to our sense of values, when the ends of making more money justifies the means, which in the US subprime crisis meant exploiting the poorest and least-educated among us.”35
In 1982, President Ronald Reagan, with the support of Chicago School economists in favor of a laissez-faire system, ushered in a period of thirty years of financial deregulation by lifting regulations on bank deposits, thus allowing bankers to make risky investments with their customers’ savings. By the end of that decade, hundreds of savings and credit organizations had filed for bankruptcy, costing the American taxpayer 124 billion dollars and gobbling up the savings of those who had placed their trust in the system.36 In 2004, Henry Paulson, CEO of Goldman Sachs, manipulated the core political establishment into deregulating the banks’ debt limits, allowing them to increase their borrowing immeasurably without any guarantee whatsoever that they could pay it back.
According to Nouriel Roubini,37 a professor at the New York University School of Business, the financial sector, step by step, seized control of the political system. Between 1998 and 2008, it spent 5 billion dollars lobbying politicians.
In Washington, there’s an average of six lobbyists for each Congress representative or Senator. Since the 2008 crisis, even more money has been spent on lobbying. In Europe, according to figures presented by Siim Kallas, European Commissioner for Administrative Affairs, there were 15,000 lobbyists representing 2,600 interest groups in Brussels.38
The economist James K. Galbraith (son of the famous economist John K. Galbraith) summed it up by saying, about the wealthiest elite, that “the members of this new class have set out to take over the state and to run it—not for any ideological project but simply in the way that would bring to them, individually and as a group, the most money, the least disturbed power, and the greatest chance of rescue should something go wrong. That is, they set out to prey on the existing systems.”39
The freedom provided by deregulation ought to have been used to stimulate creativity as well as healthy, fair competition, but too often it has allowed investors to make use of new technologies to circumvent the few remaining regulations, charge predatory rates, and cheat people with increasingly opaque financial schemes. In 2009, Lord Turner, head of the Financial Services Authority in the UK, described much of the City’s40 activities as “socially useless.” They help the rich to become richer, but do not help the middle class and the poor, who constitute the largest part of society, to become better off.41
The only regulations in force in the United States, for example, were created under the influence of major financial groups to wipe out any potential competitors and return to the age of monopolization. Patents on living organisms, plants, and seeds, and the shares of firms like Monsanto and big pharmaceutical companies, are prime examples of this.42 The financial powers-that-be are especially resistant to any form of regulation that aims to protect consumers and the environment.
George Soros has said that—considering their inherent instability—regulation is indispensable to the markets in the same way that watertight compartments are to a large tanker: if one financial sector takes on water, the others remain unharmed, thus preventing the entire thing from sinking.43 One of the ways of limiting market volatility would be to apply the Tobin tax, proposed in 1972 by the Nobel Economics Prize winner James Tobin, which involves a tax on international currency transactions. The rate of taxation would be minimal, between 0.05% and 0.2%, but it would help to control the unstable nature of transactions. Such a tax would also be an effective tool against speculation. It is now being seriously considered by several governments and the European Parliament.44
Regulations must be devised by experts with the requisite skills who have the interests of society at large in mind, who wish to uphold fairness, reduce inequality, crack down on free riders, and give the majority of the population—who support cooperation and benevolent mutual aid (as we have already seen in the experiments carried out by Ernst Fehr and Martin Nowak detailed in chapter 36—the option not to be held hostage by a small number of unscrupulous speculators.
According to Harvard professor Michael Porter and economic consultant Mark Kramer, good regulation encourages social objectives and investment, generates shared benefits, and stimulates innovation, rather than promoting the pursuit of short-term profit that only benefits the few, as is the case in a deregulated economy. Such regulation must, according to them, state clearly defined social goals regarding, for example, the use of energy resources, as well as matters of health and security. It must also prompt producers to factor the environmental effects of their products and activities into their accounts and cost price analysis (e.g., waste management, environmental degradation, depletion of natural resources, etc). But regulation must also sustain companies’ innovation potential by giving them freedom of choice regarding the measures they implement to achieve the social and environmental goals set by regulators. It must not undermine the progress it seeks to encourage.
In all circumstances, regulation must foster transparency, root out malpractice, and serve as an antidote to markets subjected to harmful monopolization by big multinationals.
Porter and Kramer advocate a form of capitalism that is nourished by social goals, creating shared value and engendering mutual benefits. They cite the example of Yara, a Norwegian mineral fertilizer company which realized that many African farmers did not have access to fertilizers and other agricultural commodities because of a lack of port and road infrastructure. With the help of the Norwegian government, Yara launched a 60-million-dollar program in Mozambique and Tanzania aimed at improving port and road facilities, creating “corridors of growth” that sought to improve the situation of 200,000 farmers and generate 350,000 new jobs.45
Current trends illustrate what happens when we cease to let ourselves be governed by ethics or even common sense, the original basis of “protestant liberalism.” A British banker explained to a friend of mine that the employment contract he signed when he was hired in the City of London stated that “obviously no bonus will be paid if the bank has not made an overall profit.” If such contracts—which were the rule back in the 1970s—had remained in force, many scandals would have been averted. “It was madness. People lost their souls—it was all about earning more, more, more than other people. Why? They weren’t even sure,” says Henri Philippi, former boss of HSBC France in L’Argent sans maître (Money Without a Master).46 When things are going well, financiers receive incentive pay, which aims to encourage good performance, and when the results are poor, they receive so-called retention pay (no longer any mention of the “incentive” word) urging them to stay at the company.47 Some companies even go so far as to pay off their outgoing executives so that they promise not to join a competing firm.
In a referendum on March 3, 2013, 67.9% of people in Switzerland approved a law curbing the “excessive pay packages” for Swiss company bosses. In particular, this law forbids bonuses for executives when they join or leave a company (the notorious “golden handshakes”). Indeed many big companies attract senior executives by offering them a starting bonus that can be as much 5 or 10 million euros. In addition, the Swiss decided that board and management salaries must now be approved at annual general meetings for shareholders. Penalties for breaching these rules range from a fine equivalent to six years’ salary to three years in prison.
In February 2014, the European Union followed suit as the EU’s two legislative bodies, the European Parliament (EP) and the European Council (Council), agreed to restrict retail asset managers’ bonuses and are now trying to enforce this measure while bankers are devising new type of allowances to circumvent this European Union’s bonus cap.
There are two types of problems that free economic market activity and individualistic selfishness will never be able to resolve: collective goods and poverty in the midst of plenty. To solve these problems we need to bring about the voice of care and altruism. This is the opinion of Dennis Snower, economics professor at Kiel and founder of the Global Economic Symposium (GES), which was held in Rio de Janeiro in October 2012, and which I attended at his invitation along with the neuroscientist Tania Singer.
Making such a declaration in an opening speech, in front of an audience of some six hundred financiers, statesmen, social entrepreneurs, and journalists, required audacity. Indeed, for traditional economists, it is unthinkable to talk of motivation (beyond that of self-interest) and emotions (although they influence all the decisions we make), let alone altruism and solidarity. As we have already seen, economics is not supposed to use any language other than that of reason. Snower was therefore somewhat anxious before his speech, just as he was in dedicating three plenary sessions to a neuroscientist discussing empathy, and—worse still—a Buddhist monk explaining that altruism, inextricably linked as it is to happiness, is the concept that provides the most effective response to the challenges of our times.
Much to his relief, things went extremely well and, three days later, when participants had to vote for ten proposals that the GES would then endeavor to support, two of our projects were included. These involved “compassion gymnasia” aimed at fostering altruism within companies, and compassion training from preschool level, based around a hugely successful program led by the psychologist and neurobiologist Richard Davidson in Madison. Snower’s gamble had paid off: those in attendance were open to his vision.
His question was as follows: how do we promote the cooperation required to solve the world’s most serious problems? We are faced with two particular types of problem, that of “collective goods” or “public goods,” and that of poverty in the midst of plenty.
A collective good exists in a social group in so far as it can be used by all members of the group, irrespective of their contribution to it. Social services, fundamental science and medical research, and parks and gardens for the enjoyment of everybody, are examples of this. Democratic freedoms are among the most important collective goods, even if they are often not regarded as such. In numerous countries, citizens have fought for these freedoms and they have often had to pay a high price to institute them. But once these freedoms are in place, everyone benefits from them, even those who have not fought for them.
The problem with collective goods is that those who make no contribution to them can nonetheless continue to draw advantage from them. As such there is a strong temptation to behave like a free rider. Those who contribute to collective goods are acting in a truly altruistic manner, because they are making sacrifices that will benefit others. This is the case, for example, when someone writes an article on Wikipedia, makes a Social Security contribution, or takes the effort to prevent global warming, overexploitation of our oceans, or any other environmentally harmful activity.
The state of the environment in particular is one of the most vitally important public goods, in which one person’s benefit does not reduce another’s. Everyone wins, for example, when greenhouse gas emissions are reduced. If everyone contributed to the efforts and costs required to reduce these gases, we would all benefit. But if this contribution is made only by some, they will pay dearly for their actions without collectively gaining much, since a few isolated efforts will not be sufficient. On a totally different level, any attempts to establish global regulations to clean up the dysfunctional financial system also have an impact on the collective good, while giving free rein to the selfish and to free riders can result only in the deterioration of the environment and society.
Natural resources—forests, open farmland, water, biodiversity—of course enter into the idea of collective goods. Each hectare of forest destroyed on behalf of a private individual or a small group reduces the overall area of forest available to everyone on the planet. If everyone were to act selfishly, the effect would be catastrophic.
In Dennis Snower’s words, “Homo economicus—the individualistic, self-interested, rational person on whom economics and much economic policymaking focuses—will not contribute sufficiently to the provision of collective goods. The reason is that free economic market activity does not compensate this person for the full social benefits.” In other words, if an individual acting in isolation makes the wise decision not to destroy too many trees, the market economy couldn’t care less.
Snower goes on to ask how this situation can be remedied. His answer is clear: “It is the willingness to contribute to the common good, even though the individual cost exceeds the individual benefit.”
The second issue is that of poverty in the midst of plenty, another problem that Homo economicus will clearly never be disposed to solving. In his eyes, if a single mother who has not had the chance of an education is in poverty, the only option is for her to work more. The process of globalization and rising wealth have marginalized many countries and trapped them in poverty, ill health, food insecurity, corruption, conflict, and a poor level of education.
To break this vicious cycle, the privileged must not only accept the need to fix inequality, but also want to achieve this without hoping for anything other than improving the lives of other people. For Snower, this is something that the free market cannot ever automatically engender, and here again the solution lies in the will of the privileged to make a concerted effort to render better services to those most in need.
Traditional economists came to the conclusion that to do this meant finding ways of encouraging people to face up to the problems of poverty and shared wealth. The government can, for example, raise taxes and subsidize the most disadvantaged; it can also reconsider property laws, redistribute income and wealth, or directly supply the population with collective goods.
But in a world where politicians aim only to be elected or re-elected, where financial interest groups wield a disproportionate influence on policymakers, where the well-being of future generations is often ignored since their representatives do not have a seat at the negotiating table, where governments pursue national economic policies that are to the detriment of the global interest, decision-makers have barely any inclination to create institutions whose goal would be to encourage citizens to contribute to collective wealth, which would serve to eradicate poverty.
In this context, how do we go about persuading different countries and cultures to enrich collective goods? There are two foreseeable responses: one is the voice of reason; the other is the voice of care.
The voice of reason is what urges us to consider things objectively. It allows us above all to reflect on how perspectives are interchangeable, and makes us understand that if we want others to behave responsibly, we must start by doing so ourselves by favoring cooperation. This rational step has undoubtedly been a significant factor in promoting the rights of women, minorities, and other sets of individuals whose rights have been trampled upon. In addition, it drives us to take into account the long-term consequences of our actions. According to Snower, even what we just attributed to reason might actually result from our instinct for reciprocity, through which we expect people to reciprocate our beneficial and responsible actions.
In fact, Dennis Snower states, no one has been able to show convincingly that reason alone, without the help of some prosocial motivation, is enough to persuade individuals to widen their sphere of responsibility to include all those who are affected by their actions. What’s more, if the balance of power tips in your favor, nothing will stop you from serving yourself shamelessly at the expense of others. Devoid of care and spurred on by selfishness, reason can lead to deplorable behavior, to manipulation, exploitation, and merciless opportunism.
This is why we need the voice of care. It is founded on a different interpretation of human nature and can naturally accommodate empathy in economics, as we do in life, not to mention the capacity to put ourselves in others’ places, compassion for those who are suffering, and the altruism that encompasses all these qualities. Combined with the voice of reason, the voice of care can fundamentally change our will to contribute to collective goods. Such ideas echo the Buddhist teachings on uniting wisdom and compassion: without wisdom, compassion can be blind; without compassion, wisdom becomes sterile.
For anyone who holds that it is more rational to be selfish than altruistic, on the basis that it is the most realistic and effective way of guaranteeing their prosperity and survival, and that altruists are utopian and irrational idealists ripe for exploitation, Robert Frank of Cornell University has this to say: “Altruists are neither more nor less rational than non-altruists. They are simply pursuing different goals.”48 It is even probable that, in many situations, the altruist will act in a more realistic manner than the egotist, whose judgments will be tarnished by the pursuit for self-interest. The altruist pictures everything with a more open perspective. He will find it easier to view situations from different angles, and to take the most appropriate decisions. Lacking consideration for the interests of other people is not rational—it is just inhumane.
In addition, while the voice of reason alone does not provide a sufficiently compelling rationale for the selfish to eliminate poverty in the midst of plenty, the voice of care does many times over. As such, it deserves our attention and must guide us in our efforts to resolve the world’s problems.
In this spirit, Dennis Snower concluded his opening address to GES 2014 with this remark: “When mainstream economics tells us that people cooperate only to exploit economic synergies, it blinds us to our innate capacities for care, reciprocity, fairness and moral concern. We must work toward a society and polity that gives emphasis to our most inclusive moral values—such as the Golden Rule, central to all the great religions—and give dignity to those artists, employers, and public servants who devote themselves to widening our horizons of compassion. In building social affiliations that match our needs for economic cooperation, we will help lay the groundwork for a peaceful, fulfilling future for all.”49
Altruism is contagious, and imitation, or inspiration, plays an important role in human societies. Numerous studies have shown that the mere fact of seeing someone help a stranger increases the probability of the onlooker doing likewise. This trend is cumulative: the more one sees others acting generously and taking care of others, the more likely one is to follow suit. Conversely, the more selfish others are, the more one tends to be too.
The combination of the voice of care with reciprocity is a powerful force for achieving social good. In the 1980s, the French economist Serge-Christophe Kolm, former professor at Stanford and director of studies at the École des Hautes Études en Sciences Sociales in Paris, investigated, in his book La Bonne économie. La réciprocité générale (The Good Economy. General Reciprocity), how to achieve a sufficiently altruistic and united society in the modern world. Expressing a markedly different stance from Francis Edgeworth’s cited above, and unusually for an economist, Kolm is of the opinion that:
Good society is made of good people.… Goodness is the prioritization of altruism, voluntary solidarity, reciprocal giving, generosity, sharing amongst brothers, free community, loving one’s neighbour and loving charity, benevolence and friendship, sympathy and compassion.50
According to him, two economic systems prevailed in the twentieth century: “Capitalism and totalitarianism, each founded on selfishness, the objectification of others, hostility, conflict and competition between people, domination, exploitation, alienation.” But there is an alternative: “Another system is possible, founded on drawing out the best in people and the best in social relations, and on reinforcing them.” This system is the economics of reciprocity, an economics which engenders interpersonal relationships that are “infinitely more gratifying and humane, which produce better people.”51 According to Kolm, general reciprocity is the process by which each individual gives to society (time, resources, skills) and, reciprocally, benefits from everyone else’s contributions, without being entirely sure about from whom they come–a spirit of “all for one, one for all.”52 On the other hand, we could talk of negative reciprocity, where goods and services are exchanged in the hope that one will benefit from that exchange more than others. So, positive reciprocity is also a form of fairness.
For anyone who fears that such an economy cannot function and would lead us into recession, Kolm shows—with equations to back him up—that the opposite would happen. Reciprocity “brings about a much more efficient and productive economy.”53
What’s more, this efficiency, and the resulting prosperity, cannot be reduced to some abstract “global prosperity” calculated by indiscriminately adding up everyone’s fortunes, which would give a deceptive image of the situation of different segments of the population. What matters is the real prosperity that benefits the population at every level, including the middle classes and the poorest. For those stuck in poverty, it makes no difference if the country’s wealth doubles, whether that country is the United States, where 1% of the population has 40% of national wealth, or an African country whose oil or mineral riches go directly into the coffers of the ruling elite. In the United States, prosperity has not even benefited the middle classes, whose incomes have been flat-lining for twenty years. As the French engineer and humorist Auguste Detœuf wrote: “Capital is an accumulation of work, but since we can’t all do everything, there are those who do the work and others who do the accumulating.”54
According to Kolm, there are multiple advantages to reciprocity. It promotes efficiency, productivity, and transparency, by virtue of the fact that information is naturally shared instead of monopolized or concealed—the case, as we have seen, in most big companies. Altruistic motivations promote cooperation, which boosts efficiency. Reciprocity brings about greater fairness in the distribution of resources and benefits. Fairness, by its token, promotes reciprocity, and a virtuous cycle is set in motion. Reciprocity leads to cooperation, which has always been at the heart of the evolution of species, creativity, and progress. It is strengthened as individuals gain awareness of its possibilities and advantages. In particular it leads to a decrease in the spending normally apportioned to competition, and a considerable increase in working relations, which bolsters creativity.57 But how do we inspire this dynamic shift?
According to Edgar Morin, we are today witnessing a renaissance of the social and solidarity-based economy in different countries, including France. This development is based on cooperatives and mutual funds, microfinance (so long as it does not get diverted from its original intention by the quest for financial gain), and on fair commerce, which promotes small producers in developing countries by protecting prices from the brutal fluctuations of the markets, and by supporting local associations that cut out rapacious intermediaries. It also encourages local food production and supply, as with the Associations pour le maintien d’une agriculture paysanne (AMAP), a community-supported agricultural association in France, which allows market gardeners to deliver their products to individuals in towns. Organic production and agroecology are further contributors to this development.
Here again we see a will to move away from the single way of thinking that is the markets, instead favoring mutual assistance and using social networks that leverage different financial, bonding or guarantee instruments based on trust between members.58
An economy that prioritizes the common good must promote social justice and equal opportunities so that every human being can fully reach their potential. At the World Economic Forum in Davos in January 2010, during a session called “Rethinking Values in the Post-Crisis World,” Muhammad Yunus, winner of the Nobel Peace Prize and pioneer of the concept of microfinance, which lets poor entrepreneurs escape poverty, said:
We do not have to change the way business is done, we simply need to change its goals. There is selfish business, the purpose of which is just profit for a few people. It reduces humanity to a single dimension, money, and thus ignores our humanity. Then there is selfless business, the goal of which is primarily to serve society. This is also known as social business. Charity is a one-time giving that can be very helpful, but does not have sustainable effects. Social business can help society in a sustainable way.59
Social business is viable and can be as profitable as selfish business, but the direct beneficiary is society. You may, for instance, start a business for the very purpose of creating one hundred jobs, or to provide many communities with cheap and clean water. These are your direct goals, rather than making money just for the sake of it. If you succeed in creating these jobs or in providing the water required, this is your success indicator on your end-of-year balance sheet. According to Yunus: “Today, most of technology is put at the service of selfish business. But the same technology could be used for selfless business. We could also create a social business stock market, functioning like any other stock exchange, which would give people the choice to invest in the selfless economy. The goal is not to replace or compete with the traditional economy, but to provide an alternative, so that the selfless economy can have an opportunity to do more good in this world.”60
In his book Le Commerce équitable (Fair Trade), the French social entrepreneur Tristan Lecomte talks about the tragedy of small producers who, because of their chronic poverty and isolation, and their inability to group together to offer a sufficient level of production, are incapable of trading with buyers and powerful multinationals that dictate their prices to a large number of dispersed and disorganized small producers. To have direct access to the markets, these small producers must be incorporated into a group which respects their interests and guarantees them a decent income.62
What’s more, there are many intermediary organizations that seize the bulk of the profit. In Thailand, for example, husked rice is bought from small producers at just 10 euro cents per kilo. Thai buyers have come to form an almost mafia-style network that keeps prices as low as possible before selling it on at a much higher rate.63 In addition, world prices fluctuate greatly. The price of coffee, for example, fell by 45% in a year between 1998 and 1999.
A Madagascan worker who sews T-shirts in a textile factory, for his part, makes 2.5 euro cents per T-shirt, or fifty times less than what a French worker would earn for the same job.64
The United Nations Conference on Trade and Development (UNCTAD) advocates fairer trade between countries from both sides of the so-called North-South divide, but just like the International Labour Organization (ILO), whose aim is to protect workers in developing countries, it has no legal power. This is not the case with the World Trade Organization (WTO), which has the power to punish countries that do not respect their obligations, but unfortunately hampers producers in poor nations from gaining access to markets in richer countries. As regards IMF loans for countries experiencing hardship, these are linked to demands for structural adjustments that have often let the countries in question avoid economic collapse (as was the case in Argentina), but they almost never go toward serving the interests of the most destitute or to small producers, by virtue of the fact that they favor hegemonic multinationals.
In order to promote sustainable development and fair trade, it is therefore essential to help production centers in poorer countries make progress by improving the social and environmental conditions that are key to their production activity. Without this support, the challenge of protecting the environment could become an additional burden for small producers, who are shackled with paralyzing obligations at the same time as pitiful prices for their products.
Unlike aid in the form of charitable giving, fair trade establishes a trade system that allows small producers to prosper and, over time, to self-finance.65 Charity is thus replaced with a solidarity-based economy.
The year 1988 saw the creation of the International Federation for Alternative Trade (IFAT) and the launch in the Netherlands, initially through products with the Max Havelaar label, of fair-trade products in major retail outlets. In 1997, the three main international fair-trade labels—Max Havelaar, Transfair, and Fairtrade—grouped together as the Fairtrade Labelling Organization (FLO). The British association Oxfam is another pioneer in this field, having coupled aid programs with the purchasing of products from small producers and selling them via a broad network of shops, mainly in England.
The “Max Havelaar” logo guarantees that the sales channel of a product is fair trade, and now numbers over 800,000 producers in 46 countries, all the while improving the living conditions of some 5 million people.
In short, according to the charter of the French fair-trade organization Plate-Forme pour le Commerce Équitable (PFCE), this form of trade must be based on solidarity and prioritize engaging the most disadvantaged producers in order to achieve a sustainable collaboration. Their products must be bought as directly as possible and at a price that allows the producer to live properly. Fair trade must also be transparent by providing the buyer with all necessary information on the product itself and its distribution channels. It must support the environment and free and democratic dealings between producers and buyers, cutting out the exploitation and abuse of child labor and encouraging autonomy among producers.
In 80 Hommes pour Changer le Monde (80 Humans to Change the World), the entrepreneurs Sylvain Darnil and Mathieu Le Roux cite several examples of successful fair-trade businesses.66 In Laos, for example, Sisaliao Svengsuka has founded Laos Farmers Products, the first non-collectivist cooperative in that now peaceful country, albeit one under an authoritarian communist government. This company gathers the harvests from 10,000 families and distributes their products via fair-trade retail outlets in Europe and the United States.
In Japan, Yusuke Saraya founded Saraya Limited, a prosperous company selling 99.9% biodegradable detergents. In 2003, the company generated sales of 150 million euros. Saraya has managed to reduce its use of energy, water, and packaging by 5% to 10% per year, maintaining growth throughout.
In India, Elaben Bhatt founded the first trade union for women, originally itinerant vendors, in the region of Gujarat. Dubbed the Self-Employed Women’s Association (SEWA), it has allowed women excluded from official workplaces and who are victims of bullying by the authorities to be recognized and respected. Elaben fought to gain them licenses and also created a microcredit bank modeled on Muhammad Yunus’s Grameen Bank. It is now possible for the union’s 700,000 members to secure loans at favorable rates to invest in their business activities. As with Grameen Bank, the loans are repaid in as many as 98% of cases.67
Even though they now only represent a few percent of the financial market, ethical funds are today expanding rapidly.
Various qualifying criteria remain: child labor is forbidden, while educational support, health care, development aid for people in third-world countries, preserving the environment, and advantageous employment policies for workers are all encouraged. What’s more, ethical funds attract good long-term investment because they are, by virtue of their altruistic missions, less subject to the sort of immoral or reckless conduct that plagues the selfish economy.
Socially responsible investing (SRI) applies the principles of sustainable development to financial investment. Financial managers practicing SRI select companies exhibiting best practice in environmental, social, and governance issues, and exclude those whose founding values are morally deficient and that do not adhere to international standards, as well as some broad business sectors such as the tobacco or arms industries. In 2012, following an in-depth study of fourteen European countries, SRI accounts for as much as 6,760 billion dollars, or 14%, of financial assets.68 It ought to be noted, however, that the SRI tag is often attributed to funds content to avoid investing in certain industries, such as those mentioned above, but which are prepared to invest in, for example, the oil and gas or pharmaceutical industries, where ethical standards are very poor. There are, on the other hand, a small number of SRI funds that actively seek out companies with a truly positive social and environmental impact, as is the case, for example, with Triodos Bank in the Netherlands, where investments are made with complete transparency, as well as Calvert Investments in the United States.69
For his part, former United States vice president Al Gore has, along with the financier David Blood, launched an investment fund called General Investment Management (GIM), aimed at projects and services promoting long-term change and environmental protection. This fund has already raised several hundred million pounds sterling.
Global Alliance for Banking on Values (GABV) is a consortium that brings together twenty or so alternative (microfinance, community banks, sustainable development banks, etc.) or ethical banks from all five continents, all of whom have sworn to serve local communities while also seeking viable solutions to global problems. Each takes into account in a balanced fashion the “triple bottom line” notion frequently used by economists, i.e., profit, individuals, and the planet. This rapidly expanding consortium aims to encompass a billion people by 2020.
One useful initiative would be to create positive economy stock exchanges across the world that would bring together investment linked to economic business activities targeting the common good and that include an altruistic element. The idea behind such stock exchanges would not be for them to enter into competition with the prevailing financial system, but to offer a trustworthy and effective alternative to anyone wishing to join in the effort already under way in the various sectors of the positive economy:
• the social and solidarity-based economy, which gathers together cooperatives, mutual funds, mutual savings banks, microfinance enterprises, crowdfunding initiatives, impact investment funds, and solidarity-based careers;
• ethical funds, which only pursue socially and ecologically responsible investment, as well as investing in areas conforming to a comprehensive range of ethical criteria;
• fair trade, which safeguards the interests of small producers, and allows them to organize themselves better and enjoy a more visible status;
• the green economy and the generation of renewable energy (with states providing subsidies to enable it to replace energy generated by hydrocarbons). It also includes investment in fighting pollution in towns and natural spaces (rivers, oceans, etc.), as well as the production of forms of vegetable protein, and curbing industrial farming and the exploitation of animals;
• impact investing is a new investment model whose primary objective is to respond to a social or environmental need, with the potential promise of a “moderate” financial return. According to some financial experts, this method represents a new type of financial asset that is set to grow considerably. A study by J.P. Morgan and the Rockefeller Foundation published in 2010 estimates that this form of investment will reach as much as 500 billion dollars in the ten years to come.70
• cooperative banks, which have no shareholders but rather “cooperative members.” Such banks often propose investing in social ventures and sustainable development.
Some initiatives have already been launched. In London, the Social Stock Exchange (SSE), in the works since 2007, finally opened in 2013 after a few setbacks. Its aim is to be a gateway for social enterprises looking to raise capital and for investors who wish to find businesses reflecting their ethical values.
In Brazil, the social entrepreneur Celso Grecco founded the Bolsa de Valores Sociais (BVS), another sort of social stock exchange, which operates within Brazil’s largest stock market, Bovespa, and offers investors a portfolio of socially responsible investment opportunities with an efficiency and transparency that is sometimes lacking in philanthropic organizations, especially those in Brazil. In 2006, the BVS model was replicated in South Africa by the social entrepreneur Tamzin Ratcliffe, founder of the GreaterGood trust, whose partnership with the Johannesburg Stock Exchange is creating new socially responsible investment channels.
According to OECD figures on official development aid (ODA) given to developing countries, the United States comes out on top in terms of total spending, with 30.7 billion dollars in 2011, ahead of Germany (14.5), the United Kingdom (13.7), France (13.9), and Japan (10.6). Yet if we look at this contribution as a proportion of GDP, of the countries featured in the study, just Sweden, Norway, and Luxembourg reach 1%, and along with Denmark (0.86%) and the Netherlands (0.75%) they represent the only five countries attaining the 0.7% target stipulated by the United Nations. These are well ahead of the United States (0.2%), South Korea (0.12%), and Greece (0.11%).71
Andrew Carnegie stands as one of the great philanthropists of the nineteenth and twentieth centuries. He was an American industrialist who, at the start of the twentieth century, donated what in today’s terms would be 7 billion dollars to various foundations, and in particular funded some 2,500 free public libraries in the United States. Bill Gates, founder of Microsoft, has devoted 95% of his fortune to fighting disease and illiteracy in developing countries. His foundation, the Bill & Melinda Gates Foundation, set up in 2000, has already spent almost 10 billion dollars on vaccinating 55 million children, and has a spending power equivalent to that of the World Health Organization (WHO).72
As for Warren Buffett, he has pledged the equivalent of 28 billion euros to charities directed by Bill and Melinda Gates and by members of his own family. This decision, which accounts for over 80% of his fortune, represents the largest individual donation in history.
Chuck Feeney, an Irish-American philanthropist, was for a long time one of the greatest anonymous philanthropists in history. He secretly donated 6 billion dollars to various causes across the world before finally being identified in 1997 (see box below).73 Then there is Pierre Omidyar, the founder of eBay, and his wife Pam, whose Omidyar Network foundation has been involved in microfinance projects in Bangladesh, improving opportunities for women in India, and promoting government transparency in numerous countries.
Giving Pledge, a campaign launched in 2010 by Warren Buffett and Bill Gates, aims to encourage the world’s richest people to give the majority of their wealth to philanthropic causes. In April 2013, 105 billionaires had already committed to the pledge.74 These philanthropists comment that it is good to leave enough money to their inheritors so that they can get by, but not so much that they are tempted to do nothing.
In the United States, private philanthropy represents 1% of the country’s GDP, more than double the European average.
At the Philanthropy for the 21st Century conference held in Great Britain in February 2012,75 participants raised the fact that philanthropy is not granted the respect and status it deserves in the United States. Yet the fact that a growing proportion of the world’s wealth is found in the hands of private individuals shows that one of the best ways to create a social benefit is to donate to a fund serving to promote the common good. What’s more, a growing number of companies have become aware that social engagement is not only good for their image, but also improves the motivation and satisfaction of their employees.
According to Antoine Vaccaro, president of the philanthropic research center CerPhi,78 in a world where we can no longer rely exclusively on the state to safeguard the general interest, new forms of foundation and the multiple pathways between generosity and social or solidarity-based economies are now recognized as having the capacity to make a significant contribution to taking responsibility for the general interest alongside the state.
In France, the 1970s witnessed the associative sector boom; almost 30,000 associations were created in 1975 alone. There are now estimated to be around 1.2 million associations in France.
The online crowdfunding movement has also seen a spectacular rise in recent years. Around 2.7 billion dollars were invested in this way in 2012 (1.6 in North America), an 80% leap compared with 2011 figures. In 2013, this form of financing had surpassed the 5 billion dollar mark.79
On the site GlobalGiving, between 2002 and May 2013, some 321,644 donors gave almost 85 million dollars to 7,830 projects. One of the projects current in May 2013, Kranti (Revolution), received $165,342 from 1,142 donors to offer education to girls from India who had been victims of human trafficking and forced into prostitution.
Kiva was founded in 2005 with the conviction that “people are naturally generous and will help others if they get the chance to do it in a transparent and responsible way.”80 Via its microfinance site, Kiva encourages relationships based on partnership rather than charity. According to figures from May 2013, every week more than 1.5 million dollars are lent to over 3,200 borrowers by 21,600 lenders; the equivalent of one loan every twelve seconds. Since Kiva’s launch in 2005, 98.99% of loans have been duly repaid.
On Kickstarter, one of the best-known online platforms in this field, around 30% of investments in 2012 went toward social or philanthropic projects, versus 17% to small businesses, 12% to film or performing arts, and 7.5% to music. A single donor contributed to over 750 projects himself.
Since its creation in 2006, the crowdfunding site Razoo has already raised 150 million dollars and allowed over 15,000 NGOs to accomplish countless socially responsible projects. The Australian site StartSomeGood hosted, among others, a project by the Place in the Sun Foundation, which aimed to organize a seven-week summer camp in the middle of rural Mali to run a pilot primary education program with five local teachers. In Mali, only 33% of adults can read or write—the lowest literacy rate in the world. Some $9,600 were needed, and after nine days 43 donors had given as much as $7,800, and the project was ultimately successful with $10,700 of funding.
Edgar Morin and Stéphane Hessel proposed to create maisons de la fraternité (fraternity houses), bringing together existing solidarity-based public and private institutions, adding new emergency services aimed at people suffering from moral or material distress, “victims of overdoses not just of the narcotic kind, but also of unhappiness and sorrow.” These centers would provide friendship, outreach, support, information, initiatives, and volunteering opportunities.81
The some 18.6 million registered contributors to the online encyclopedia Wikipedia have voluntarily dedicated over 41,019,000 hours to the collaborative project, versus just 12,000 hours of work for the first edition of the (chargeable) Encyclopædia Britannica, which has for a long time been the leading light in this area. In France alone, over 1 million rubrics are edited every quarter and, from Wikipedia’s launch in 2001 until April 2013, 1.29 billion edits were carried out in the various languages on offer.82
Anywhere in the world where there is an Internet connection, it is now possible to follow university courses from prestigious colleges for free. This practice was inspired by the Massachusetts Institute of Technology (MIT), the famous American university which opened up this new concept over twenty years ago. Nowadays, many of the world’s major universities are following suit. The website Coursera (www.coursera.org) already offers 370 free courses from 33 universities to 3.5 million subscribers, while EDX (www.edx.org) has made available courses from 28 of the world’s most distinguished institutions, including Harvard University, MIT, the École polytechnique de Lausanne, Australian National University, etc.
These sites let users pick the best courses available at the same time as raising the profile of teachers, who can now reach a very large audience. The teachers for their part have to supply well presented, attractive, and regularly updated courses.
The success of these altruistic schemes dispels the preconceptions of traditional economics and shows that systems based around cooperation, openness, and trust ultimately work better. This is highlighted by Gilles Babinet, an expert in digital economic matters:
The digital transition will never be complete unless we move from a culture of mistrust and division to a culture of collaboration and sharing. Indeed the success of the digital transformation has hinged on values of openness, free access to information, and worthwhile co-creation. More often than not its success stems from cross-fertilization between content generated by multiple collaborators for free. Public spheres or big business, which favor compartmentalization, the culture of secrecy, the principle of hierarchy, and vertical channels of communication, are having real difficulty adapting.83
In many developing countries, affordable mobile telephones offer banking services to millions of small farmers and producers, letting them sell their products directly at more favorable prices without going through multiple intermediaries who take their share of the profit at each phase. In Kenya, Vodafone M-pesa serves 10 million small producers, and transactions made through them account for 11% of the country’s GDP. In India, Thomson Reuters has implemented, for a cost equivalent to a four-euro quarterly subscription, a mobile messaging service that keeps people living in the countryside updated on the progress of their agricultural products, along with weather forecasts and other bits of advice. An initial assessment of this service showed that it had increased the income of its 2 million subscribers by a factor of 60%.84
Johnson & Johnson, a company which, since its foundation in 1886, has emphasized social values, has for example helped its employees quit smoking, resulting in a two-thirds decrease in the number of smokers. The company ultimately saved 250 million dollars in health care bills, almost 3 dollars for each dollar invested in the detoxification programs run from 2002 to 2008.85 Johnson & Johnson was ranked third in a survey conducted by the weekly magazine Newsweek on the “greenest” companies in America in 2012.86 Here we see the shared benefits for the employer and the employee, the producer and the consumer.