Creating an Alternative Economy

This excerpt from Environmental activist Hazel Henderson book "Creating Alternative Futures: The End of Economics" provides an excellent framework for imagining and working toward an alternative economy.
May/June 1978
A book excerpt on the topic of working toward an alternative economy. A neighborhood recycling center receives a load of recyclable materials, building both community connections and environmental awareness.


An excerpt from Hazel Henderson's book "Creating Alternative Futures: The End of Economics" discussing working toward an alternative economy.

Creating an Alternative Economy

Senator Edward M. Kennedy has called Hazel Henderson "a unique contemporary pioneer in the effort to humanize modern science and technology". 

E.F. Schumacher once stated, "Mrs. Henderson's essays — every one of them — have more 'reality' than almost any other writings on societal problems I know."  

And Jacques-Yves Cousteau has said of Hazel Henderson's collected writings, "In this book are most of the ideas we are fighting for. Anybody longing for a better life must read it."  

And just who is this Hazel Henderson that all these people are talking about? She's an internationally published thinker, activist, and a founder of many public interest (particularly environmental) organizations . . . who, perhaps, sees things more clearly than most of today's Establishment "leaders" because she's never attended a day of college in her life.  

Furthermore — with her husband, Carter F. Henderson — Hazel currently (as of 1978) directs the Princeton Center for Alternative Futures, Inc. . . . a deliberately small and independent think tank.  

Mrs. Henderson is also a director of the Council on Economic Priorities and of the Worldwatch Institute, a member of the U.S. Association for the Club of Rome, an advisor to The Cousteau Society and to the Environmental Action Foundation, and a member of the Advisory Council of the U.S. Congress Office of Technology Assessment.  

And here — for those of you not already acquainted with her provocative point of view — is a sampling from Mrs. Henderson's published collected writings: Creating Alternative Futures: The End of Economics 

There are many signs, both physical and metaphysical, that industrial cultures are breaking down. But I want to emphasize that the breakdown of an old culture can also signify a needed breakthrough. Times of crisis, as the Chinese say, are times of both danger and opportunity.

From ecological theory, we know that all biological systems (including human societies and those abstractions they call their "economies") involve continuous cycles of entropy and syntropy: the breaking down and building up of structure and the constant recycling of the detritus that releases the nutrients for new growth, synthesis, and evolution. So let us now look at what is being born: the emerging, regenerative, "counter-economy" now beginning to grow amid the old industrial systems.

This basic model of the entropy/syntropy cycle and the irreversible evolution of all natural and biological systems is crucial to our understanding of the particular subsystem we call our "economy" and in helping us see current economic difficulties in longer time perspectives as the onset of the decline of industrialism.

This decline will undoubtedly prove uncomfortable, as it already is for the millions of unemployed in mature industrial countries. But it will only affect the unsustainable modes of production and consumption it has fostered. With leadership and foresight, adjustments can be made without severe consequences.

Meanwhile the declining system is already releasing "nutrients": capital, management, and human energy and initiative . . . which are spurring the development of this already visible counter-economy, now beginning to flourish in the interstices of our existing institutions.

While economists struggle to recycle themselves in order to address these new conditions and unfamiliar variables, it seems to those whose vision has remained unclouded by economists' mystification that this transition is obvious, that it can be inferred from extremely simple metaphors; e.g., "There is no such thing as a free lunch", "Nothing fails like success", "Growth can be cancer". Indeed, average citizens in these societies have learned to tune out their leaders and mass media and are well on their way to understanding the true situation, in spite of the obfuscations of legions of intellectual day laborers and the divinations of "experts".

In fact, it is fairly self-evident that these mature industrial societies could not continue expanding at past rates, simply because such rates are always in relation to the size of a base. Any citizen knows that as a base grows, the rate of its expansion must sooner or later decline . . . whether one is looking at the rate of increase of today's shares in IBM or Xerox, compared with their past spectacular performance . . . or the rate of growth in the size of oil tankers, airplanes, or human settlements. In fact, the only current exception to this rule appears to be bureaucracies, but they too may decline like the over-centralized, unsustainable technologies that gave rise to them.

And yet, I still find a great deal of hand wringing and rubbish talked in Washington today, about falling rates of economic growth (GNP-defined) and falling rates of technological innovation and "productivity" (inadequately defined), where the base for calculating such rates — the giant U.S. socio-technical system — is the largest on the planet! Surely we know by now that human cultures have a habit of rising and then declining as they exceed some resource limit, run out of technological adaptability, or simply lose creative steam.

So I am not impressed when U.S. rates of technological innovation and "productivity" are compared with official horror to the higher rates of Japan (with a postwar base about an order of magnitude smaller than our own). I am not upset when I'm warned that new "science and technology gaps" are widening and when Congress is urged by science and high-technology-promoting groups to appropriate ever more tax dollars to save us from this fate. Their underlying assumption in all these exhortations is that the health of the scientific and technological enterprise, as currently defined and constituted, is coterminous with the health of the country as a whole. I and many others reject this proposition.

Far from being faddish, the counterculture and citizen-protest movements of the past decade that are forming the nucleus of the emerging alternative economies — based on self-reliant, decentralized, ecologically harmonious lifestyles — are deadly serious. These movements must be explicitly documented and reinforced, since they represent the best repositories of social and cultural flexibility during the decline now underway in many mature industrial countries . . . the decline which points to a coming contraction in our system of world trade.

The evolutionary dilemma summarized by the aphorism "Nothing fails like success" can be restated in terms of anthropology as the Law of the Retarding Lead, which holds that the best adapted and most successful countries have the greatest difficulty in adapting and retaining their lead in world affairs, and — conversely — that the backward and less successful societies are more likely to be able to adapt and forge ahead under changing conditions.

L.S. Stavrianos uses these principles to argue in his book, The Promise of the Coming Dark Age, that on the crowded, ecologically depleted planet of today, Western societies must flounder. On the other hand, says Stavrianos, there is the possibility of synthesizing unique development strategies by adapting from the Chinese communal model of self-reliant development and mass-participation, from the Yugoslavian model of worker self-management, and from the counterculture, citizen-action, community-control models now developing in the counter-economies being born in the Western industrial countries.

If Western societies are to become regenerative and sustainable, they indeed may have to learn from these so-called less developed countries . . . as well as relearning much traditional wisdom and skill from their own pasts.

In the face of the current transition of industrial societies and the efforts at reconceptualizing the new situation, it's not surprising that levels of cognitive dissonance are increasing. In the U.S., in spite of a decade of predictions of their transience, we see the durability of the counterculture, the environmental movement (now stronger than ever), consumer and public-interest advocacy, and the women's liberation and minority-rights movement — as well as the diffusion of new values and new lifestyle options brought about by these trends — while statistics document the reverse migration from cities back to rural areas.

In any period of cultural transition, the dominant organs of a society often increase their efforts to reassure the public, while their leaders privately express doubt and fear. This is not surprising, since it is precisely these institutions of government, business, academia, labor, and religion which are in decline and whose power is threatened and eroding. The information-gathering and disseminating media, the statistics, and the indicators are all geared to measure the society's well-being in terms of the well-being of these existing institutions. Therefore, the growing shoots of the society go unmeasured and are overlooked and will remain insufficiently monitored and studied as new social models.

Some of the most interesting and significant manifestations of the counter-economies in the U.S., Canada, the United Kingdom, the Scandinavian countries, the Netherlands, Japan, Australia, and New Zealand, include:

The growth of counter-media and alternative publishing (a measuring rod of the counter-economy) . . . for example, in the U.S.: Prevention (nearly 2 million circulation), Organic Gardening (1 million), Rolling Stone (600,000), MOTHER EARTH NEWS (550,000), and The Whole Earth Catalog and Epilog; the proliferation of regional magazines dealing with ecological lifestyles and appropriate technology; the 80-some publishing ventures operated by feminists; the rise of the black press; and the hundreds of small, often cooperatively owned book publishers and distributors.

The alternative marketing enterprises . . . for example: the Alternative Christmas Catalog , which offers — instead of materialistic goods and junk gifts — a vast selection of "psychic gifts" such as subscriptions to counterculture magazines and newsletters and memberships in various counterculture, public-interest, and citizen organizations; the growth of organizations that market rural crafts such as quilts, embroidery, clothes, and toys to urban department stores, often on a non-profit basis; the alternative merchandising media now offered to small rural businesses and crafts by the burgeoning counterculture media with their inexpensive advertising rates and well-defined audiences; highly professional alternative opinion-survey firms, such as American Research Corporation and Hart Associates; public-interest advertising agencies, the best known of which in the U.S. is the Public Media Center of San Francisco, which does not take ordinary commercial clients but sells citizen organizations and their social causes.

The development of alternative marketing groups such as Oxfam's "Bridge" in Britain, which links small, rural producers of handcrafted goods and art in the Third World with affluent, concerned consumers in Britain, thus setting up new trading relationships that operate in a non-profit, people-to-people mode, avoiding profit-motivated trading channels and multinational enterprises.

Another growing idea is that of staging both rural and urban "fairs", where various sectors of the counter-economy can nucleate and cross-fertilize. These feature new-lifestyle speakers, book stalls, booths for local citizen organizations, and commune-made arts and crafts. An example is the Toward Tomorrow Fair in Amherst, Massachusetts, an annual event which features some five acres of alternative technology exhibits by small businesses in solar, wind, and bioconversion, flushless toilets, do-it-yourself housing, and home and garden tools. The fair, which attracts some 30,000 people, has become an institution. Similar fairs and festivals, such as The Cousteau Society's "involvement days" and the many concerned with improving nutrition and wholistic health, draw similar crowds. They augur new lateral linkages and networks, insulated from traditional industrial merchandising and based on emerging value systems impervious to the old, materialistic, Madison Avenue "hard sell".

The growing interest in household economics; i.e., the economics of use-value, rather than market-value. Professor Sol Tax has proposed in The Center Report that we begin looking through the other end of the telescope at the possibilities of the family as the basic corporate unit and, where necessary, alter our tax structure and laws to favor this smallest unit of economic and social organization rather than large corporations, as at present.

In 1780, over 80% of all Americans were self-employed, many in household economies. Canada's Vanier Institute for the Family is dedicated to the concept of household economics and the promotion of local self-reliance . . . to decentralizing economic power and exposing the absurdities of national economic statistics that do not recognize the enormous productivity of households simply because they are not — and probably never should be — a part of the cash-based economy.

In Home, Inc., Scott Burns estimates that if our national statistics were to include the value of households and the work performed by men and women in them, the total would equal the entire amount paid out in wages and salaries by every corporation in the U.S. Burns notes that government statisticians only value the household when it breaks down; i.e., they know the cost of welfare, aid to dependent children, and social services, and thus could compute — negatively — the value of viable households. In addition, he notes that while income tax laws allow corporations to deduct and depreciate items of capital equipment, householders are forced to treat their own productive assets — e.g., sewing machines, ovens, freezers, yogurt makers, and other home tools — as if they were consumer goods!

A 1969 survey measured the total value of all goods and services produced by the household sector in 1965 as about 8300 billion. The increasing protest at the statistical blackout perpetrated for so long on the household economy is, of course, being spearheaded by women, who have been consistently ignored by economists' definitions of "productivity" and "value", as well as excluded from the GNP and their rightful access to retirement security. Many women fight these terrible injustices by going outside the home and competing successfully in the market economy, while others, together with concerned men, fight to restore the proper place of the family in our economic life and to strengthen its role in the vital nurturing and socializing of the young and in maintaining intergeneration cohesion.

Many others in the counterculture work to enlarge the definition of the family to include communes and intentional families of all kinds, based not only on sex roles but also on work and companionship. Most of our economic statistics are devised to plot the market system, rather than to trace the full and real dimensions of our total economic system. So far, the sparse academic efforts to overhaul the GNP to include the value of the household economy and subtract the soaring social costs of market activities have never been promoted by the economics profession, in spite of general acknowledgment of the glaring errors in GNP measurements of economic growth.

The growth of the various movements for alternative technology. These movements are flourishing in all mature industrial societies, particularly Britain, the Scandinavian countries, the U.S., and Canada. There is almost a surfeit of studies and statistics related to the characteristics of dominant modes of industrial scientific and technological development, since technological "productivity" and technology transfer are issues of keen interest in national and international trade. However, the emerging economies based on more culturally and ecologically appropriate technology have been almost totally ignored by most agencies of government in the countries where these movements exist. One can only infer the size of this sector from advertising linage in alternative media, and from the best-seller status of its gurus such as Schumacher, whose posthumously published new book, A Guide for the Perplexed , was eagerly awaited. While obituaries for Schumacher in the dominant press were respectful, a groundswell of memorial services and salutes occurred in many countries.

Magazines also grow apace in this field, such as Canada's Alternatives; Britain's The Ecologist, Undercurrents, Resurgence, and Appropriate Technology; and Australia's Earth Garden,Grass Roots , and The Powder Magazine. In the U.S. are MOTHER EARTH NEWS, Foxfire, Journal of the New Alchemists, Co-Evolution Quarterly, Rain, Science for the People, Workforce, Shelter, Self-Reliance , and scores of others, many of whose ideas emerge — after a several-year lag — in the more cautious, Washington-based journal, The Futurist.

The rebirth of populism and the cooperative movement, neighborhood and block development, "sweat equity" urban renewal, land trusts, and the increased bartering of skills and home-produced goods and services. The Cooperative League of the U.S.A., in its 1975 review, stated that more than So million Americans belonged to cooperatives. These included co-op banks to provide credit that commercial banks deny, credit unions, insurance plans, nursery schools, farmers' marketing co-ops, rural electric coops, student housing co-ops, rural telephone co-ops, fishing coops, memorial societies to provide dignified burial rites, and (the most recent type) food co-ops.

A bill to establish a national cooperative bank came close to passage in the 94th Congress — and will probably pass during the Carter Administration — to help counteract the discrimination coops have suffered at the hands of commercial, multinational banks. Many local organizations are campaigning to set up state-owned development banks modeled after the successful state Bank of North Dakota. This will make credit available to small-scale farmers (whom the U.S. Department of Agriculture had proposed to consign to oblivion by dropping them from its statistics). It will also encourage local community development corporations and co-ops.

The Massachusetts Community Development Finance Corporation may be one of the first in the field. Already authorized, with an initial appropriation of $10 million, it will buy stock in enterprises owned in common by the residents of any area in Massachusetts. Meanwhile, grassroots community organizations are springing up, many based on the spectacularly successful model of ACORN in Arkansas — a coalition of poor homeowners, farmers, sharecroppers, workers, and urban residents of all races — whose solidarity has shown how local satrapies controlling millions of dollars of tax money can be captured by determined voters who study their own local political systems carefully. Still other grassroots organizations have shown how utility rate increases can be fought (and also reduced, as demonstrated in California and other states by the Lifeline coalitions).

Horrified at the success of these grassroots efforts, utilities have launched emergency counterattacks in the form of stepped-up lobbying and advertising (charged to their customers' bills), while deposed political hacks in Arkansas and editorials in Little Rock newspapers talked of "the Lilliputians who banded together and tied down Gulliver".

Not only is it costly, but it demands intellectual creativity to design new statistics on this cooperative, neighborhood-based political and economic activity, since few official measures are available and status quo institutions often are successful in playing down such activities or in blacking out the reporting of them in commercially controlled media.

The rising worker-participation and self-management movements. These are more active in Western Europe and Canada than in the U.S. or Japan. Western Europe's political traditions make for easier dissemination and cohesion of efforts to gain more influence over the quality of working life. In the U.S. the labor movement has, up to now, seen more material rewards in traditional bargaining strategies for higher wages. This attitude is changing, though, as — under inflation — real incomes have remained fixed for protracted periods and faltering growth can no longer assure workers of steady employment.

In Japan, worker demands for self-management have been headed off so far by management's commitments to lifelong employment and all-embracing welfare benefits. But as the Japanese economy is weakened by Its raw-material and energy dependence and reliance on unrealistic levels of exports, corporate executives are adopting Western-style mass layoffs. The radicalization of the Japanese labor force will sooner or later result from this change.

Western European countries, such as Sweden, Norway, Germany, France, and Britain, are making almost daily accommodations to the pressure from unions. Examples include Sweden's Meidner Plan to substantially shift the ownership of Swedish industries to their workers, Germany's worker-management parity on boards of steel companies, and the milder forms of job enrichment that are becoming commonplace.

U.S. management is well aware of the radical implications of these experiments. In some cases — as workers have successfully organized production, achieved productivity gains, and worked out salary differentials in their own committees — they gain the confidence to ask the taboo question, "What are all these managers doing . . . aren't they just featherbedders?" At this point, many of the experiments are quietly discontinued, since the workers are challenging "the divine right of management". In Britain, this issue — which underlies the ancient war between labor and capital — has erupted into class warfare, while the model for worker self-management experimentation may be Yugoslavia, where the concept of private property is similar to that of our own founding fathers.

The resurgence of ethnic and indigenous peoples all over the planet. This phenomenon requires further study. Such populations are beginning to recognize the inability of metropolitan centers to meet their needs, and to determine that the exploitative relationships from which they suffer must be openly resisted and severed. From the extraordinary secret "summit" meeting which was held in Trieste in 1975 by the oppressed ethnic minorities of Europe — with its vision of a "Europe of Peoples" — to the American Indian Movement in the U.S. and the demands of Canada's native residents of the Yukon and Northwest Territories for the return of their lands, these manifestations are widespread.

Many of the goals of these ethnic peoples are similar to those of the counterculture and citizen-action movements: curbing the excesses of the profit system, creating new principles of balance and accountability of both corporate and bureaucratic power and wealth, making science and technology serve democratically determined social and human goals, decentralizing decision making and public access to information and government, ending discrimination based on race and sex, and drawing on the wisdom of traditional cultures to redesign lifestyles harmonious with each other and with nature.

The global ecology movement and the feminist movement. Both are playing unique roles in social transformation, since they operate within the mainstream of our culture. The male-dominated industrial societies find it impossible not to deal with either, as the wives of corporate and government bureaucrats become their uncomfortable social "consciences", while many male executives must face their own children to defend ecologically or socially destructive decisions.

The building of new coalitions in industrial countries between formerly fragmented citizens' groups. I have noted in earlier articles how formerly disparate local groups operated in the 1960's in the U.S.: Some fought air pollution in New York and California and some tried to clean up local rivers or to stop roads or airports, but with little knowledge of each other's activities. Only after Earth Day in 1970 was there a convergence and a quantum leap in the conceptualization of their fragmented problems of "pollution" as protection of the environment and the planetary biosphere.

Similar convergences occurred around the concept of corporate accountability. Consumer and environmental advocates and members of civil rights, women's, and student movements joined with antiwar groups and with media-access, freedom-of-information, and counterculture forces. All had found that the targets of their grievances were, among other things, the practices of large corporations. Today's coalitions bring together many of these existing forces, along with new and older elements of the labor movement, rural voters, small business people and farmers, grassroots and neighborhood groups, and appropriate-technology advocates.

These coalitions are nothing more than consumer demand (that cannot be expressed in the marketplace) for mass transit, solar and wind energy, recycling, and bioconversion industries . . . the growing edge of the regenerative, sustainable economy. Their political efforts will begin to shift the pattern of investment to underpin these new sectors of the economy, just as they created the pollution control industries and our current $50 million solar industry.

Those for whom the status quo is still providing comfortable livings and meaningful lives are naturally impatient at the citizen movements, the public-interest advocates, and the counter-economy's fumbling efforts to articulate its visions with cohesion, to innovate technology, to gain access to media, markets, credit sources, and government contracts. Futurists' scenario building and hypothesizing and explorations of values are also scoffed at for their lack of "rigor" by comfortable academicians who are well rewarded for their orthodoxies. Yet in the future even learning will be less institutionalized and more entrepreneurial, whether in the renewed interest in apprenticeship and interning or in the learning that will more often occur in the workplace as a result of the development of more communal and enriching production modes.

I confess that I am a member of the counter-economy myself. The past decade of my life has been spent in citizen-action movements, public-interest groups, and social change. I am self-employed and already operate a family corporation. We have reduced our material expectations and our corporate income in order not to serve those corporations whose values we reject. We have no income security or group pension plan, but — on the plus side — we do not need to commute to work but live by the natural cycles of sun and seasons, and — best of all — we have the freedom to think and write what we please, without institutional constraints.

The decline of industrialism, while upsetting to many power wielders, is a heady (if insecure) time for many of us. To share our sense of awakening and rebirth, old intellectual, emotional, and financial investments will have to be written off, while personal risks will be required. Yet even those who choose to remain industrialism's managers or intellectual servants to the old system will no doubt have to lower their own goals or material acquisition and accept less job security, tenure, and pension benefits.

There is, after all, a very appropriate personal trade-off between striving for greater secular power and wealth and ego gratification, and taking the path toward expanded consciousness. Those of us in the counter-economy have opted for the latter . . . and consider it a bargain.

Excerpted from Creating Alternative Futures: The End of Economics by Hazel Henderson, copyright 1978 by Princeton Center for Alternative Futures, Inc., and reprinted by permission of Berkley Publishing Corporation, 200 Madison Ave., New York, N.Y. 10016.