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An Economic System for a Healthy Society


The following is a rough transcript of a presentation I gave at Medsin’s (www.medsin.org) National conference 08, held at University College London UK.  My presentation was part of a series of workshops which ran along side each other, covering a variety of topics relating to the main theme of the conference which was Power and Politics in Global Health.   The workshop was reasonably popular and generated a lively debate amongst those who attended, raising many good and important questions.  It is in  the hope of generating further discussion on these important topics that motivated me to write down my argument for a wider audience to consider.  I also hope that people will want to help improve this argument.  I think it has great potential to be developed into a strong and important argument for progressive social transformation in the 21st Century

 

Introduction: Argument Structure and Content

In this paper I will present an argument in three parts. 

Problems:  In part one I will highlight a major problem that connects economics and healthcare.  This is the problem of economic inequality.  Drawing on the latest research we will see, perhaps in surprising ways, that there is a strong correlation between the level of inequality within a society and how healthy that society is likely to be.  We are not talking here about the rather obvious correlation between extreme poverty, malnutrition and life expectancy.  The problem I want to highlight has to do with the impact social inequality has on our psychological state, which in turn impacts on our body systems and ultimately effects our physical health.  I say "ultimately", but of course this effect on our physical health has a negative impact back on society generating a cyclical rather than a linear dynamic.

Explanations:  In part two we will try to answer the following question; where does inequality come from?  In order to answer this question we first have to learn how to carry out a simple economic analysis.  This analysis will identify the root causes of the problem we highlighted in part one.  It will also become clear that the problem we are dealing with here has to do with economic systems and the possible prevention of ill health.  But we will also touch on the subject of how economies impact on science, research and therefore cures for illness.  

Solutions:  In part three I will introduce the main features of the participatory economic (ParEcon) system and show that this new model institutionalises self-management and therefore egalitarian control over ones economic life.  It also systematically promotes the interests of the "common good" which in turn fosters social cohesion.  ParEcon, I will argue, therefore overcomes the major "psychosocial" health problem highlighted in part one – but importantly, it can do so in ways that have no negative effects on our material well-being.           

 

Part 1. Problems: Economics and Healthcare (Prevention and Cure)

Economic Inequality:  Describing his work on the social and economic determinants of health that he has been engaged in over the past 20 years Richard G. Wilkinson says that "In many ways, doing research is like walking in the dark and trying to make out the dimly perceived shapes which loom up ahead of you."  He continues this description of his work as follows –

Initially, what you see is so unclear that you fear that it is as likely to be a product of your imagination, as of anything which actually exists.  There is a natural desire to say what the shapes in the statistical darkness are as soon as possible.  Balancing that is the fear that you will be proved wrong when the visibility increases.

Perhaps not surprisingly with such a controversial and (potentially) radical research subject he says that "This long journey … has not been without its traumatic episodes."  But after years of careful research Wilkinson states that "It is now clear that the scale of income differences in a society is one of the most powerful determinants of health standards in different countries, and that it influences health through its impact on social cohesion"   and that "… there is now a great deal of epidemiological and experimental evidence which removes any doubt that psychosocial factors can exert very powerful influences on physical health – both morbidity and mortality."

He also points out that "Having attained basic minimum standards for the vast majority of the population, it looks increasingly as if the psychosocial influences on health are pre-eminent." a point that has also been made by Polly Toynbee and David Walker -

It is relative income and comparative social standards that matter, not absolute standards of living.  Those with most control over their life and work thrive, while the powerless and despised suffer.

Wilkinson sums up his findings as follows –

Among the developed countries it is not the richest societies which have the best health, but those that have the smallest income difference between rich and poor.  Inequality and relative poverty have absolute effects: they increase death rates … Healthy, egalitarian societies are more socially cohesive.  They have a stronger community life and suffer fewer of the corrosive effects of inequality.  The public arena becomes a source of supportive social networks rather than of stress and potential conflict … Increased inequality imposes a psychological burden which reduces the well-being of the whole society.  The pattern of modern disease shows that the material standard of living in developed countries is no longer the main issue.  The problem is now the psycho-social quality of life, which must be supported by greater material equality.  Without it, important social needs will go unmet and health will suffer.

Very similar findings emerged from two and a half decades of research by Michael Marmot.  Like Wilkinson, he points out that " … for people above a threshold of material well-being, another kind of well-being is central."  But for Marmot it’s not just inequality of economic income that matters but "Autonomy – how much control you have over your life  - and the opportunity you have for full social engagement and participation …"  These he says are "crucial for health, well-being and longevity."  He continues stating that "It is inequality in [control and participation] that plays a big part in producing the social gradients in health."

More precisely, Marmot explains, " … the causes of the social gradient in health are to be found in the circumstances in which we live and work; in our set of social arrangements"  and that "It is not the calamities that most determine well-being, but the way we go about our daily lives, in offices, banks, factories, houses and neighbourhoods.  It is about the fact that control over life circumstances and full social engagement and participation in what society has to offer are distributed unequally and as a result health is distributed unequally." 

But if material needs are met how can inequality by itsself effect a person’s health?  "Quite simply," Marmot answers "the key lies in that most important organ, the brain.  The psychological experience of inequality has profound effects on the body systems."  Marmot asserts that factors such as inequality of control and participation "are not a footnote to the ‘real’ causes of ill-health in countries that are no longer poor; they are the heart of the matter."

 

Part 2. Explanations: Capitalist Economics

An obvious question follows from the problem I have highlighted in part one.  This is – Where does inequality comes from?  In order to answer this basic question we need to do a simple economic analysis.

Economic Analysis:  If we want to gain a good understanding about the basic character of any economy what are the important questions to ask of that system?  Here I want to propose what I think are the 5 most important question.  They are -

1. Ownership – who owns the economic institutions?

2. Decision-making – how and by whom are decisions made?

3. Structure – what is the internal structure of the institutions?

4. Allocation – how are goods and services allocated?

5. Remuneration – by what criteria are people rewarded? 

Next I would like to apply these questions to the existing capitalist system followed by my answers –

1. Ownership? – Private.

2. Decision-making? – Top-down / Authoritarian.

3. Structure? – Corporate Division of Labour.

4. Allocation? – Competitive Markets.

5. Remuneration? – Ownership / Power.

Institutionalised Inequality:  From this simple economic analysis we can already see that capitalist economics institutionalises inequality.  Roughly speaking capitalism institutionalises inequality in the following ways -

  • Private ownership (and remuneration for ownership) creates a capitalist class who make up between 2 and 5% of economic actors. 
  • The corporate division of labour – whereby around 15 – 20% of economic actors monopolise empowering and desirable tasks, plus decision-making authority, within the economy – results in a coordinator class that this system rewards for its power. 
  • The remaining 80% is made up of the working class who rent themselves out to the owning capitalists for a wage and follow the orders of the coordinator class.  Typically the jobs of the working class are made up of mind numbing and/or back breaking tasks.

There are of course many more subtle aspects to the institutionalised inequality found in capitalist economics than this description suggests.  For example, stratification levels can be found within all three broad classes and we know there can be some movement from one strata / class to another – up or down.  However, the point here is to demonstrate that capitalist economies institutionalise inequality and in doing so systematically promote unhealthy societies.

One conclusion we cant help to make from these findings is made by British journalists Polly Toynbee and David Walker when they say that "Lessening inequality could cut demands; seeking social change is going to be better value than spending on the NHS."  They continue their point as follows –

Perhaps historians will judge Labour’s increase in health spending from 6% to 8% of GDP as a mistake.  This was consumption, not investment in the future.  Doctors, hospitals and drugs may be in demand but they don’t address the underlying causes of ill health and lack of well-being … The answer to better health is out there, in society itself.

 

Systematic Distortion of Economic Priorities:  So far I have not said anything about markets.  But as we will see allocation via competitive markets only adds to our problem.  As Michael Albert has pointed out –

Capitalist market rhetoric trumpets opportunity but capitalist market discipline curtails satisfaction and development by replacing what is humane and caring with what is commercial, profitable and in accord with existing hierarchies of power and wealth.

A very good example of this was highlighted by Joel Bakan as part of his fantastic analysis of "the pathological pursuit of profit and power" by corporations –

… in the year 2000, no drugs where being developed to treat tuberculosis, compared to 8 for impotence or erectile dysfunction and 7 for baldness.  Developing drugs to deal with personality disorders in family pets seems to have a higher priority than controlling diseases that kill millions of human beings each year.

Albert also points out that " … under the pressure of market competition, the firm I work for must try to maximise its revenue to keep up with or outstrip competing firms.  If my firm doesn’t do that, we lose our jobs and have only equitable poverty.  So we must try to dump our costs on others.  We must seek as much revenue as possible, even via inducing excessive consumption.  We must cut our costs of production, including reducing comforts for workers and unduly intensifying labour to win market share, regardless of the benefits and costs to others."

This reality of competitive markets and the resulting pressures to maximise profits also impacts on scientific research because as Albert also points out "commercial funding and ownership affect what questions are raised and what projects are pursued.  If patent prospects are good, money flows.  If they are bad, even when reasons of general curiosity or improving human welfare warrant a line of inquiry, funding is hard to come by."  Again these harsh realities are echoed by Bakan when he points out that –

Whatever the rhetoric about social responsibility and stake-holders, whatever the good sentiments and intentions of people … who run drugs companies, whatever good works programs the companies have in place, and however many people could be saved from horrible deaths, for-profit corporations make drugs for profit.  That’s the bottom line.

But these are the more obvious points Albert makes regarding the negative effects of markets.  His most important insight has to do with how the logic of markets requires a class system and institutionalised inequality –

To relentlessly conceive and pursue all these paths to market success … would requires both a managerial surplus-seeking mindset and also freedom for the managers from suffering the pains that their choices induce … In other words we impose on ourselves a coordinator class.

In short, competitive markets create a stressful environment in which producers and consumers are pitted against each other – and given that most of us are both producers and consumers this results in a conflict of interest within ourselves.  As we have seen, class ridden – profit driven economic institutions operating within a competitive markets environment also systematically distort economic priorities away from what is generally needed / wanted and towards the interests of those who own and control the economy.  But most importantly here, competitive markets make it necessary to institutionalise inequality in order to survive – thus rationalising a system that is bad for us. 

 

Part 3. Solutions: Participatory Economics (ParEcon)

But it is no good just criticising the capitalist economy as so many left-wing / progressives do.  There is no point in highlighting the horrors of competitive markets, or pointing out how wasteful the corporate division of labour is, or how unfair private ownership is, etc. unless we can propose economic alternatives to these institutional features that address the problems highlighted in part one.  Here I would like to introduce a new economic model called participatory economics (ParEcon).  As we will see ParEcon proposes alternatives to every major capitalist economic feature. 

To introduce participatory economics I will first answer the same 5 most important questions we raised earlier during our analysis of capitalism -  

1. Ownership? – Social.

2. Decision-making? – Self-management.

3. Structure? – Balanced Job Complex.

4. Allocation? – Participatory Planning.

5. Remuneration? – Effort and Sacrifice.

I will now give a brief description of each of the main institutional feature that go to make up the participatory economic system –

Social Ownership:  In a participatory economy private ownership is replaced by democratically run worker and consumer councils.  Although we talk about social ownership as an alternative to private ownership it is probably more accurate to say that ownership in a participatory economy would become something of an none issue.  "Societal stewardship" has been suggested as a more appropriate notion. 

Self-Management:  As we have seen ParEcon institutions are democratically run.  But as we all know "democracy" is a term applied to all sorts of systems including top-down authoritarian organisations.  By democracy we specifically mean that people have a say in decisions in proportion to how much they are affected by the outcome of that decision.  So if the outcome of a decision affects X 100% (and no one else) then X gets to have 100% say in that decision.  If the outcome of a decision affects X and Y equally (and no one else) then X and Y have 50% say each.  And so on.  This is a simple illustration of what we mean by self-management but the principle can be applied as rigourously as practically possible. 

Balanced Job Complexes:  In a participatory economy the corporate division of labour is abolished and in its place all jobs are made up of an equal mix of empowering / desirable and disempowering / undesirable tasks.   We call this institutional feature "balanced job complexes" to reflect the nature of this new arrangement. 

Participatory Planning:  Instead of markets, in a ParEcon goods and services are allocated via a process called participatory planning.  This process involves a series of rounds in which producers and consumers propose and revise their economic activities in co-operation with each other until an equitable and efficient plan is arrived at. 

Effort and Sacrifice:  As private ownership has gone, along with authoritarian decision-making and the corporate division of labour, we can no longer reward ownership and power.  This creates a void in the system that needs to be filled.  As a means of filling this void and as a fair criteria for remuneration we propose rewarding people for effort and sacrifice only.  By this we mean that if a person works longer or harder or if a person undertakes tasks that are generally considered to be less desirable then they should be entitled to more reward. 

From these short descriptions of the main feature of a participatory economy we can already see that there is a strong tendency towards –

Institutionalised Egalitarianism:  Balanced job complexes complement and reinforce self-management which in turn allows for egalitarian control of ones economic life. 

Systematic Promotion of the Common Good:  Participatory planning creates a co-operative environment in which producers and consumers can identify economic priorities that reflect the common good / interest which in turn helps foster social cohesion.

 

Conclusion: Some Concerns and Some Strategic Considerations

Efficiency?  One issue that may concern people at this point is the issue of efficiency.  People may be thinking that this all sounds great!  ParEcon clearly addresses the psycho-social problems highlighted earlier.  But they are also thinking it does so at the expense of our more basic material needs – not so great! 

My feeling is that this position has to do with two related assumptions that people make about economic organising. The first has to do with the belief that capitalism is an efficient economic system.  The second has to do with the belief that any democratic alternative to capitalism will, by definition, be less efficient. 

Now this is a very important issue that, for a lot of people I suspect, will make or break their support for participatory economics.  Advocates of participatory economics claim that ParEcon is a system that can not only deliver our material requirements in an efficient (not to mention sustainable) way but can do so in a way that also addresses our psychological needs.  One of the basic reasons we believe this is because we assume that the 80% of people who, under capitalism, are reduced to spending their lives working at jobs that socialise them into roles of passivity, ignorance and obedience, in a different system have the potential to be constructive participants in economic life. 

 

Strategic Considerations: The books that I refer to in part one of the argument presented here all finish with proposals for reforms intended to address the problems highlighted above.  In my opinion many of the suggestions are very good.  However, I do think that there is a problem with proposing reforms that are not part of a more comprehensive programme. 

For one thing reform campaigns need a good idea of where they want to end up – otherwise there is a good chance that our organisations will end up in a different place than they had intended.  Another reason, which is connected to the first, is that if we hope to generate and maintain popular support for reform campaigns then it seems to me that they need to be informed by a compelling long-term vision of an alternative economy.  In short reformist campaigns are problematic because they assume that defining institutional conditions will persist forever – or at least they act as though they will. 

What I present in part three is an example of a long-term vision of an alternative economy.  I claim that this new economic system addresses the root causes of much of the health problems highlighted in part one and explained in part two.  I have argued that participatory economics can achieve this because it replaces institutional features that are bad for our health with institutional features that are good for us.  I have argued that this new economic model will function in such a way as to systematically promote good health.  

However, ParEcon is a long term vision that is not going to be created over night.  So, it seems clear that we do need to think of a strategy that takes into account the transition from capitalist economics to participatory economics.  Advocates of participatory economics tend to propose "non-reformist reforms"  as a strategic framework for such a transition.  This means that we engage in reform campaigns – but unlike standard reform campaigns these are informed by our long term vision.  The idea here is that such strategies are much more likely to take us in the right direction and maintain support. 

One last point.  National Health Care employees are used to working within the rational framework of "evidence based practice" (although, for ideological reasons, in the present system some evidence will of course receive more attention than other evidence).  Any transition from capitalist economics to participatory economic that is driven by the desire to improving the health levels of the people who live in that society should not only be informed by long term vision but also guided by evidence based practice.  Obviously we would expect to see measurable improvements in health standards with every round of reforms that move us away from capitalist economics and towards participatory economics.  So as well as reform campaigns that are informed by long term vision our strategy should also be guided by the evidence that results from our previous campaigns.  This, I think, is a good and necessary guard against any new forms of ideological dogmatism. 

 

References / Further Reading

Unhealthy Society – the afflictions of inequality.  Richard G. Wilkinson.

Unjust Rewards.  Polly Toynbee and David Walker.

Status Syndrome – how your social standing directly affects your health and life expectancy.  Michael Marmot. 

The Corporation – the pathological pursuit of profit and power.  Joel Bakan. 

Realizing Hope – life beyond capitalism.  Michael Albert.

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