Robert Neuwirth is the author of two books on the street life of the developing world, “Stealth of Nations” and “Shadow Cities.” He was a 2020-21 Berggruen Institute fellow.
– one –
There are two types of economics active in the world right now — which basically means two radically divergent varieties of economic life. The first is economics as most economists and writers see it and talk about it. The second is economics as most people live it.
Call the first “the top-up.” It’s the economics of competition and asymmetrical knowledge and shareholder value and creative destruction. It’s the dominant system. We know all about the top-up. Tales of the doings of the top-up economy are mainlined into our brains from business articles, financial analysis, stories about our planet’s richest people or corporations or nations. Bezos. Buffett. Gates. Musk. Zuckerberg. The Forbes 400. The Fortune 500. The Nasdaq. The Nikkei. On and on.
Call the second “the bottom-down.” We don’t hear as much about it because it’s a lot less sexy and a lot more sticky. It involves survival mechanisms and community solidarity and cash-in-hand calculations.
But it’s the economic system of the global majority, and this makes it the more important of the two.
– two –
The fundamental opposition is not between what’s mine and what’s yours — it’s between what’s mine and yours and what’s ours.
Ricky Dollison is the fourth generation to take charge of his family’s land in Poulan, Georgia, and he’s become a certified success as a hog farmer. He recently summed up his achievements this way: “The best thing I’ve ever done in farming is to be responsible for my supply chain: I grow my feed, I raise my hogs, I process my meat, I distribute my product.” He’s even got his own brand: Warrior Creek Premium Meats — named after the stream that flows by his fields. And now that his daughter Leiandra has joined the business, he’s passing the legacy to the fifth generation.
Over time, Dollison has come to realize that growth in the modern market will not come from working solo. That’s why, six years ago, he banded together with a cluster of other Black farmers in Georgia and Kentucky to inaugurate the AgFirst Community Cooperative.
“How to grow a crop isn’t a problem,” Dollison said. “It’s all the changes the world system has put in place.”
Sausage, for example. If he wants to sell sausage in supermarkets, Dollison told me, his farm will have to get certified as having “good agricultural practices” — GAP, for short. That would require major investments in modern practices and equipment. “We’re Black farmers,” Dollison said. “We all had a bunch of old equipment. We can’t afford to buy new stuff. We don’t do enough business.”
As Nancy Dawson, a professor and a fellow member of the co-op who farms a three-acre urban garden in Russellville, Kentucky, explained: “Most small farmers can’t meet these standards on their own. I mean, where am I going to get $35,000 for a new tractor?”
Joining AgFirst (not related to the AgFirst Farm Credit Bank, headquartered in South Carolina, with $37 billion in assets) does not require farmer-members to sign over their land to communal ownership and work their fields in common. Instead it encourages them to share knowledge and resources and to split costs, while continuing to reap rewards individually.
“We didn’t pool together to make a million dollars,” Dollison said. “Yes, we want to make money, but we pooled together because we want to survive.”
* * *
In the picturesque Swiss village of Hinterrhein (population 60 or so) high in the Alpine canton of Graubünden, Carelia Joos prepared to move her family’s herd of 18 cows to pastures on the slopes on the mountains above her home. In this bucolic wonderland, she and her family seem like self-reliant farmers in the tradition of William Tell, the Swiss folk hero-farmer. Yet behind the Joos’ agricultural success are cooperative roots.
Joos sells the milk from her cows to a 176-year-old dairy co-op in the neighboring town of Nefenen. The co-op purchases all the milk from its 20 or so farmer-members, and a hired-cheesemaker produces 160 tons of organic bündner bergkäse — an alpine cheese made in just a few Swiss valleys. Even the co-op’s waste is profitable — the liquid left over once cheese solidifies (whey) is sold to a firm that transforms it into protein powder.
Without the co-op, Joos cheerily confessed, her family’s life would be unsustainable. “There’s no way to make a living as dairy farmers without the co-op making cheese,” she said. “We would have to sell all our cows.”
At the opposite side of Graubünden, Janic Fasser, whose family traces its roots in Val Müstair to the 1400s, also operates communally. Fasser grazes his 20 cows along with several hundred others from 11 other farmers, and they sell their milk to a local cooperative. He loves the co-op model so much that he has helped his fellow farmers form two additional ones — for grain and meat — and is pressing them to go all in, with every field and herd and harvest held in common or rented to the coop. His neighbors are proving hard to convince, but Fasser is undeterred. He said the importance of cooperation is not ideological but social and economic. “This,” he assured me, “would be extremely good for our town.”
* * *
In their own mythology, the merchants of Alaba International Market in Lagos, Nigeria, are ardent apostles of Adam Smith. Ask and they will tell you. Alaba’s astounding ascent over the past four decades — from 18 merchants hiding out in the bush to a global commercial hub with thousands of traders — was a product of two things: unfettered homegrown free-market capitalism and the grace of God.
In this street market, to trade is to hustle and to hustle is a way of life. In Nigeria, more than half of all young people are unemployed, but thousands of youths work in the markets. The naira, the national currency, has been in steep decline, yet merchants still hammer out billions of dollars of deals every year.
No wonder, then, that this massive market seems to offer some sort of experiential proof-of-concept for the free market. “The only politics we understand here is that of the stomach,” the market’s former chairman, Celestine Umeohabike Ezeani, told me. “Everything you see here is a result of what the people themselves have been able to put in place.”
It took me weeks of wandering through the market before I discovered that there was a complementary reality that lay underneath the free-market rhetoric, a hidden parallel structure based on Igbo tribal customs and not described or codified in law. It doesn’t involve trade. It isn’t efficient or profitable. In fact, it involves the selfless dispersal of vast sums of money. In essence, it is a massive, collective, tribal venture capital program in which each merchant brings in apprentices and then seed-funds their solo efforts once they have learned the business. And, unlike traditional V.C. approaches, it’s a pay-it-forward scheme — instead of paying back their funders when they turn a profit, new merchants bring in new apprentices and endow their successors.
One day while I was there, Goddy C. Dike gathered some of his former apprentices in the cramped stall where he sells household appliances. Some of these young men, he confided, have become far more successful than he is — and he proclaimed himself proud, as if he were a teacher whose students have gone on to fame and fortune. More than individual profit, he said, he treasures the idea that his contribution to the market’s unwritten code will nurture his apprentices and his apprentices’ apprentices and his apprentices’ apprentices’ apprentices through the ages, fueling sustainable growth in the market, in the city, in his tribe, in the country, long after he is gone.
* * *
Three dozen people stood in the early morning chill at the crest of a hill. Each clutched a shovel, as if posing for a demented version of Grant Wood’s “American Gothic” painting.
We were there to participate in a modern reenactment of a venerable tradition. For centuries — dating back before the founding of the American republic — people have gathered in villages across northern New Mexico to join in the annual limpia, the spring cleaning of the irrigation channels that bring water to local farms. Near the headgate of the Acequia del Pueblo Abiquiú, above the village where Georgia O’Keeffe lived and worked, fashioning her impressionistic renderings of the harsh and individualist beauty of the southwest — bleached bones and delicate flowers, swirling sands and pointed antlers — we were joining something whose existence contradicts the economic norms our country holds dear.
Each of the 700-odd acequias at work in northern New Mexico is a tiny commons, apportioning mountain run-off as fairly and equitably as possible to farmers in the area. The system was brought to the U.S. in the 1600s by Spanish colonists — and they apparently learned it from North Africans who conquered most of the Iberian Peninsula almost 1,000 years before. “The acequias are really the first form of government,” explained Martha Montoya-Trujillo, an elected commissioner of the 2.6-mile-long Acequia del Rincon in Pojoaque, just outside Santa Fe, which feeds water to 60 private farms and to fields belonging to the Native American Pueblo of Pojoaque. All told, this single small ditch provides water to 158 acres of farmland.
The acequias don’t run according to a profit motive (though the individual farmers who depend on them certainly do) and the field-flooding irrigation favored by most farmers (drip tape and hoop houses can be costly interventions) is said to lose lots of water to evaporation. But through booms and busts, droughts and cloudbursts, changes in ownership and challenges from developers, these tiny collectives have endured.
– three –
An economy is only as good as it is participatory — that is,
when the percentage of people subject to it who can fully operate in it is high.
Our economic system promises what it can’t deliver.
It vows to provide wealth and equality. That’s what the entrancing metaphor of the invisible hand, coined by Adam Smith in 1759 in “The Theory of Moral Sentiments” (and restated in somewhat abbreviated form in 1776 in “The Wealth of Nations”), is all about: “[The rich] consume little more than the poor, and in spite of their natural selfishness and rapacity … they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the Earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.”
Smith anointed the division of labor — in which production is split into individual tasks — as the driving force of this process. At the start of “The Wealth of Nations,” he labeled it “the greatest improvement” in “the general business of society” in human history. But in what should be a “How it started … How it’s going” meme in every economics class around the world, here’s what Smith wrote of the same subject some 700 pages later: “The progress of the division of labor” makes a person “as stupid and ignorant as it is possible for any human creature to become. … In every improved and civilized society this is the state into which the laboring poor, that is, the great body of the people, must necessarily fall.”
Despite the magical metaphor, there’s a cancer at the heart of the market system. If it is true, as Smith wrote, that “no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable,” then it is impossible to say that any society on our market-mad planet is flourishing and happy.
For sure, Smith was not alone in being flummoxed by the incompatibility of individual profit and general welfare. This conundrum has dogged philosophers and economists for thousands of years. More than 2,000 years ago, Aristotle saw the solution as a combination of restraint and oppression: “The beginning of reform,” he wrote in “Politics,” “is not so much to equalize property as to train the nobler sort of natures not to desire more, and to prevent the lower from getting more; that is to say, they must be kept down, but not ill-treated.”
A few decades on from Smith, David Ricardo and John Stuart Mill returned to this Aristotelian view that the problem of poverty is the problem of the poor: The poor, Ricardo wrote, “have rendered restraint superfluous, and have invited imprudence.” “Poverty, like most social evils, exists because men follow their brute instincts,” Mill echoed.
Both proposed Aristotelian solutions, though without the ancient philosopher’s faith that the rich can be reined in: “Impressing on the poor the value of independence … that they must look … to their own exertions for support,” was Ricardo’s way of putting it. “Altering the habits of the laboring people” was Mill’s.
John Maynard Keynes diagnosed the same problem in his 1936 opus “The General Theory of Employment, Interest and Money”: “The outstanding faults of the economic society in which we live are its failure to provide full employment and its arbitrary and inequitable distribution of wealth and incomes.” But Keynes feared reining in the rich, seeming to suggest that if you strip wealthy people of their money, they will go on a rampage against everyone poorer. “It is better that a man should tyrannize over his bank balance than over his fellow citizens,” he opined.
Writing less than a decade later, Joseph Schumpeter was also clear-eyed about the failures of the system: “Capitalism does not merely mean that the housewife may influence production by her choice between peas and beans; or that the youngster may choose whether he wants to work in a factory or on a farm,” he wrote in “Capitalism, Socialism and Democracy.” “[I]t means a scheme of values, an attitude toward life, a civilization — the civilization of inequality and of the family fortune.” Schumpeter foresaw a government-controlled socialist future — but with an elitist authoritarian twist: “There is little reason to believe that this socialism will mean the advent of the civilization of which orthodox socialists dream. It is much more likely to present fascist features.”
Simon Kuznets, who won a Nobel Prize in 1971 for developing what has come to be known as the Kuznets curve — a pictogram purporting to show that inequality increases after industrial development but then falls as society adapts to modern realities — admitted in his prize lecture that his graph actually failed to describe much of the world: “Concurrent with the remarkable positive achievements of modern economic growth are unexpected negative results even within the developed countries; while the less developed countries are struggling in the attempt to use the large potential of modern technology in order to assume an adequate role in the one and interdependent world (from which they cannot withdraw even if they wished to do so).” Even in wealthy nations, he asserted, political struggles and tensions “will become more intensive and acute as the perceived gap widens between what has been attained and what is attainable with modern economic growth.”
– four –
No great fortunes without a history of commonality.
The top-up economic sphere functions like a gated community in which people who have money can pretend that everything they do and have in life is based on merit, and that the communal and cooperative boosts from which they profit are nothing but natural outgrowths of that merit.
Legacy admissions to elite institutions of higher education are a perfect example. Elite colleges are such a privileged enclave that most of the schools openly reserve a high number of their entry slots every year for so-called “legacy admissions” — kids whose parents or relatives went to the same institutions and who might not have gotten in otherwise. Ivy League universities have admitted that some 15% of their students are legacies. While the actual number may fluctuate, this much is sure: It is far easier to get into these institutions if you have a family connection than if you’re part of the general pool of applicants. Though the admission rate for Ivy League schools is less than 6% historically, Princeton accepts as many as 41% of its legacy applicants, while Harvard has admitted 33% of its legacy applicants.
For sure, having a degree from an elite institution does not guarantee success. But it is a status marker in a society where these kinds of chits are super important. Having gone to the same college gives you a shared vocabulary, a shared bunch of references and jokes, knowledge of some of the same traditions, the same buildings, professors, bars, coffee shops and local lore. Such familiar referents make you part of an exclusive club. Former Harvard President Larry Summers — an economist who used to advise U.S. presidents — expressed this perfectly when he said, “Legacy admissions are integral to the kind of community that any private educational institution is.”
Most people around the world, of course, don’t live in this gated community. They are part of the bottom-down.
– five –
We’ve got the market backwards. We believe it involves opposed buyers and sellers who exploit asymmetrical knowledge to achieve domination and sometimes creative destruction, when what’s really important is sharing, togetherness, collectivity and satisfaction.
Oddly, I owe some of my thinking about this to the work of a free-market absolutist. Paul Heyne — the author of an influential textbook published 40 years ago called “The Economic Way of Thinking” — was an anomaly as an economist. He began his career as a divinity student with an anti-capitalist ideology. Then he read the economic scriptures and migrated across the political spectrum to become a free-market true-believer. In 2000, just before he died (too early, of cancer), Heyne gave a lecture in which he dismantled all the moral critiques of capitalism — all, that is, except one, which he suggested was indisputably true. In typical no-nonsense fashion, Heyne expressed this one valid criticism in an efficient three-word koan: “Capitalism subverts community.”
Community, Heyne believed, was fundamental to human life. Despite his unwavering commitment to the freedom implicit in an economic way of thinking, he was sure that economics alone would not create togetherness. “Don’t expect the market to generate community. It won’t do it,” he insisted. “We won’t get it by trying to turn the market into some vast California hot tub.” Heyne’s bottom-line advice: “Find ways to nurture community without destroying the market.”
Community is an unacknowledged economic category. On a local level, banding together can cut costs and, as with the Swiss dairy coops, enable communities to retain a greater share of their wealth. But the key benefit of communal and cooperative ties is more basic: They provide platforms from which people can see further as they move forward in the world.
Change always comes from below — and it is in the bottom-down relationships where growth and egalitarianism can flourish. Every volunteer fire department is a community platform. Every mutually managed water system demonstrates that neighbors can build things when they need each other. Every community-based childcare network or parent-teacher association is a nascent collective. Every civic association, neighborhood or church council, social action network or food pantry gives people a broader perspective. Every collectively run savings and credit association demonstrates that communal trust can give people a leg up.
It is through these self-governing institutions — which people join with their hearts as well as their heads — that we can hope to impact our system’s most intractable problems.