the economics of justice presentation to the european economic summit 7sep2016

The Economics of Justice

Prabhu Guptara

Outline of my remarks this evening

• How much progress have we made since the last EES?• The Economics of Justice and the Economics of Injustice• Clarity about the struggle• Strategy• Struggling (and winning!) with grace

We call upon our governments and policy makers to … (1)

a) Adopt new paradigms:• Reduce unemployment, underemployment and income inequality by

enabling business to be transformational • Adopt new metrics of national progress that take into account human

capital, social capital and natural capital, and not just GDP - – (and relational capital?!)

• To address the refugee stream by combating poverty, countering systemic corruption, and fighting desertification by supporting initiatives which have been shown to be effective, eg. Farmer Managed Natural Regeneration (FMNR).

We call upon our governments and policy makers to … (2 )

b) Reform the corporate sector:• Change company and financial law to encourage responsible

behaviour: “No reward without responsibility, no investment without involvement, no profit without participation”

• Stimulate the SME sector• Change corporate law where necessary to enable businesses to

take into account their multiple stakeholders and not just shareholder profit

We call upon our governments and policy makers to … (3)

c) Reform the banking and financial sectors: • Significantly and permanently reduce the level of personal, corporate and

national debt using dialogue with the parties involved and national legislation where necessary

• Discourage speculation and financial transactions divorced from the real economy by supporting financial transaction taxes and by legislating a minimum amount of time that shares need to be held before they can be sold

• Dismantle the derivatives market.

We call upon the Church in Europe to….

• Model what it means to be a relational community and to support the development of healthy relationships

• Provide a moral compass for individual and collective decision-making in the complex tapestry of 21st century society by educating members on the meaning of the holistic gospel and its practical application in the different societal spheres

• Fight the culture of greed by encouraging a culture of giving and generosity.

We call upon Entrepreneurs to….

• Personally model and implement structures that will support what it means to be relational in their businesses.

• Redesign their business to build permanent value across the full spectrum of capital - financial, physical, individual, natural, spiritual and community level.

• Apply their relationships, skills, experiences and other resources in their communities, and in developing nations, by providing training in business, by becoming mentors, by exploring investment opportunities and by pro-actively working with NGO’s and business groups which have a similar focus and holistic ethos.

• Commit to conducting their businesses with integrity, transparency, professionalism and excellence.

We call upon all individuals to…• Prioritize character development• Treasure their families and other close relationships• Practice responsibility by avoiding accumulating (excessive)

personal debt and paying it off as soon as possible where this has occurred.

• Live within their means• Be generous• Invest time and money in something that benefits others

and not just themselves.


• How much progress have we made since the last EES?• The Economics of Injustice• Clarity about the struggle• Strategy• Struggling (and winning!) with grace

One indicator:• Between 1949 and 1979, the share of income going to the top 0.1% of

earners fell from 3.5% to 1.3%. Since then the trend has reversed. • Average FTSE 100 CEO pay rose from “only” 47 times more than the

average employee in 1998, to 129 times by 2015• Pay package: £5.48 million in 2015 (up from £4.96 million in 2014, and

from £4.129 million in 2010) - annual survey released 8 August2016 by the High Pay Centre, U.K.

• “There is an irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses” – Theresa May, 11 July 2016


• How much progress have we made since the last EES?• The Economics of Injustice• Clarity about the struggle• Strategy• Struggling (and winning!) with grace

What is “just” is *not* commonsense

• Should taxation be progressive or “equal”?• Should punishments be progressive or “equal”?• Is VAT/ Sales tax the modern equivalent of a tax on straw

and grain which is denounced in chapter 5 of Amos? • What about a wealth tax?• Should there be equal payment for the same work done by

men and by women (indeed should women be allowed to work at all?)

The Economics of Justice (not Capitalism, nor Socialism;

not Islamic, nor Vedantic or Humanist!)• Rule of Law, not Rule of the Elite• Entrepreneurship not merely Capital• Merit not merely Connections• Work rather than Handouts (except wherever there is real need)• Responsibility not Self-Indulgence

Practical consequences• Not allowing companies to get too big: non-accountability, ‘too big to fail’ etc. That would mean

restraint on debt finance by changing current rules which advantage debt over equity. Recent examples include big UK banks, Amazon, Google etc not paying national taxes in the UK, etc

• Constraints on national debt which otherwise creates gross injustice between generations (Paul Mills’s Cambridge Paper on ‘The Prodigal Steward’.

• Requiring companies to measure and report on quality of stakeholder relationships. To do so, they would have to talk to employees and other stakeholders rather than only serve the interests of the shareholders.

• A monetary system which does not allow the elite to print money without limitation, so as to increase their asset values at the expense of those seeking to get onto the housing ladder, pensioners, those on fixed incomes, etc

• Ability of companies to promote products which are toxic to families (betting, liquor, consumer loans) without being required to pay for the costs of picking up the pieces, which is then left to the taxpayer…

The dimensions of the struggle

•Spirit and Soul•Calling and Passion•Cultural and Intellectual challenges•Practical issues

Four General Principles1. Every nation should arise at least to

the Minimum Level of Prosperity – that is:

the value of its physical resources divided by its population

Four General Principles1. Every nation should arise at least to the Minimum Level of

Prosperity

2. Most nations have never done so throughout history

Four General Principles1. Every nation should arise at least to the Minimum Level of

Prosperity2. Most nations have never done so throughout history

3. A few nations have succeeded in far surpassing the Minimum Level of Prosperity

Four General Principles1. Every nation should arise at least to the Minimum

Level of Prosperity suggested by its physical resources divided by its population

2. Most nations have never done so throughout history3. A few nations have succeeded in far surpassing the

Minimum Level of Prosperity4. When achieved, the question is : How sustainable is

that achievement? Or, How can it be sustained?

Why nations do not achieve the Minimum Level of Prosperity

• Looting/ Stealing/ Corruption... vs the Rule of Law


• Looting/ Stealing/ Corruption

•Structures of oppression that create hopelessness, apathy, cynicism and paralysis


• Looting/ Stealing/ Corruption/ Murder• Structures of oppression that create hopelessness,

apathy and paralysis

•A belief-system that torpedoes the possibility of progress


• Looting/ Stealing/ Corruption/ Murder• Structures of oppression that create hopelessness,

apathy and paralysis• A belief-system that torpedoes the possibility of

progress

•Ignorance or unwillingness to put best policies and best practices into place

In order to achieve/ surpass the Minimum Level of Prosperity:

• Eliminate corruption/ looting/ stealing/ murder• Instill a culture that will lead to prosperity• Identify and weaken/ remove the structures of

oppression• Struggle systematically against pride/

arrogance/ complacency/ apathy/ fatalism.

STRATEGY: Development, Implementation, Monitoring,

Refining/ Re-orienting

WHAT IS THE “KEY ISSUE” AND HOW TO CAPTURE THAT?• Environmental scanning• Sector Analysis• Identification of Opponents & Allies• Identifying and reaching out to potential Co-Belligerents such

as Restorative Economy, Bcorps, Circular Economy… (RTn)• Putting in place SMART goals, with requisite resources• Announcing and celebrating small and big victories.

One starting point (right now!)www.relational-analytics.com

Two starting points (from next month!)

* The Relational Economic Plan for Europe


•How much progress?•The Economics of Injustice•Clarity about the struggle•Strategy•Struggling (and winning!) with grace

Abraham Lincoln• An examination of his relationships:

• William H. Seward, Salmon P. Chase, and Edward Bates• His rivals for the 1860 Republican presidential nomination

Throughout Lincoln's first term, Chase plotted against him, criticized him behind his back, and sought to wrest the 1864

nomination away from him -while actually serving in his cabinet.!

Chase twice offered his resignation in an attempt to manipulate Lincoln, and yet Lincoln kept him in his cabinet right until 1864, until a dispute over the appointment of an assistant treasurer for New York finally persuaded Lincoln that Chase had to go. But just a few months later, when Lincoln had won, Lincoln forgave Chase's treachery and nominated him as Chief Justice of the Supreme Court.

Goodwin reports that when Lincoln announced his intentions to a friend of Chase's, the friend replied: Mr. President, this is an exhibition of magnanimity and patriotism that could hardly be expected of any one. After what he has said against your administration, which has undoubtedly been reported to you, it was hardly to be expected that you would bestow the most important office within your gift on such a man.

Lincoln admitted that he "would rather have swallowed his chair than to have nominated Chase." But he thought it was the right decision for the country and that Chase would serve well in that position.

Such things are only possible in a culture which is committed to loving one’s enemiesIf we want to return to such things, we have to think: what actions and strategies will rebuild such a culture?

Without such a culture, polarisation (political and economic) of the sort that we are seeing, is impossible to avoid.

And polarisation, when taken to its inevitable conclusion, has consequences of which we are all aware – and are all rightly terrified – and therefore rightly reject.

the economics of justice presentation to the european economic summit 7sep2016

Economy & Finance