The Benefits of the Economy of Mutual Guarantee

There are many benefits to an economy based on mutual guarantee. By attempting to cling to the existing, failing economic model and ease the immediate problems following the financial crisis, we are making it harder to appreciate the vast potential of the mutual guarantee economy. If we imagine that we are already in a state of mutual guarantee, we will be able to see its many advantages:

1) A just and fair standard of living for all: An economic policy based on mutual consideration will help us allocate the necessary public funds to raise the lower classes above the poverty line. At the same time, workshops, life skills training and consumer science will help people develop financial independence. Living beyond our means and over-consumption have become a global liability that requires correction [72], [73].

2) Lowering the cost of living: When greed is no longer the basis of our economic relations, when each of us is content with a reasonable profit and does not aspire to maximize profit at the expense of others, the prices of products and services will drop to near-production cost. Today, the prices of many goods and services are too high because each link along the commercial chain strives to maximize its profit. Extolling the value of mutual guarantee in communication networks and in the public discourse will make firms add public benefit to their equations. This will make life more affordable for all of us.

The first signs of a cost-lowering movement are already emerging. Social unrest is actually causing manufacturers to lower the prices of products and services. For now, these are variable, occasional, minor, and passing discounts, but the trend is clear. When we transition to a relatively balanced consumption pattern, both demand and prices will come down.

Also, diminishing the cost of living will diminish inequality and social gaps, one of the primary advantages of the mutual guarantee economy.

3) Diminishing social gaps: One of the primary ills of the present global economy is a constant increase in inequality. This is the prime initiator of the worldwide unrest that demands social justice. When we treat each other like family, we will not tolerate inequality of opportunity or means among us or anywhere in the world. Instead of unrest and fear of revolution and violence, the mutual guarantee economy will yield broad consent as economic gaps are diminished, and the stability of the system is enhanced.

Diminishing inequality means, among other things, economic and social concessions on the part of the top income earners. Education, the influence of the environment, and an effective mechanism of communication—such as the round table—will make certain that all decisions are reached with transparency and fairness, and reflect the social and economic consensus—imperative for mutual guarantee. In return for their concessions for the common good, those who make them will be rewarded with public appreciation for their contributions. Additionally, those who receive assistance and resources will be able to enjoy a better, more dignified life. They, too, will appreciate the new method.

4) A genuine, thorough budget reform: The only thing that can create a sense of social justice and mutual guarantee for each individual in society is the belief that we are all in the same boat, and must work together. This will require a fairer method of prioritizing in the national budget, reached by broad consensus, not through the squabbles of lobbyists and pressure groups.

An economy managed with transparency will allow everyone to understand how decisions are made, and will even help people influence them. When we feel a sense of partnership and involvement, we no longer feel negative emotions such as the frustration that currently exists toward policy makers. This lessening of negativity will allow people to agree with and support the decisions made by decision-makers, even when some of their choices are not popular. The satisfaction of acting as one family that makes decisions at the round table will encourage us to make concessions to each other.

5) Increasing the financial “pie”: If every citizen, business, and government office feels part of the global family, many extras will appear in money, goods and services, state and municipal budgets, and even in our personal budgets. Consider how many things we have at home that we never use. We can take our surplus food and clothing, give it to the poor, and put the financial extras toward covering a significant portion of others’ current needs. This will not even require an increase in the budget deficit, or impose austerity means or taxes.

However, we are not suggesting charity as a solution, although charity is a great expression of a solid community life and mutual assistance. Rather, we are talking about efficacy. For example, according to a CNN report, 30% of all food produced in the world each year is wasted or lost. That’s about 1.3 billion tons, according to a report by the U.N. Food and Agriculture Organization [74].

Why can’t countries where hunger is a real problem receive that surplus? The answer, in a word, is “interests.” Distributing the surplus food means increasing the supply, which would lead to lower prices. This, in turn, would diminish the profits of food producers and marketers. In an economy based on mutual guarantee, such a situation would be impossible. How can we throw away food when members of our family are starving?

This is just one example. For more examples of the benefits of mutual guarantee economy, see chapter, “Surplus and Improving Public Well-Being.”

6) Improving employer-employee relations and firm-government relations: Research in behavioral psychology indicates that wealthy people seek respect, not money [75]. Yet, today companies and CEOs are evaluated based on their profits and gains. Greater profit means a higher ranking in rating firms or appearance on the list of “most successful CEOs of the year.”

Possibly the best example of this narrow, self-centered thinking of maximizing profits is the U.S. job market. The reason why the American job market is not adding more jobs, even as the economy grows, is that firms prefer to increase their workers’ overtime, or shift part-time workers into working full time, rather than hire new people.

Today, such considerations are considered logical. But in an economy conducted by mutual guarantee, the values will be such that more people will be able to share in the prosperity of the economy, rather than fewer people sharing more of the profits. Similar improvements will be made in companies’ relations with the government and tax authorities, leading to fairer taxes and fewer tax evasions.

7) Stability and long-term solutions: The new economy will be based on the values of mutual guarantee, and will necessarily be consistent with today’s global interdependence, Such an economic method, in harmony and balance with the global and integral network, will be more stable and sustainable than all the existing economic and social methods. It would match its environment and reflect a broad consensus among its elements: people, companies, and states. A balanced economy that is friendly toward both man and Nature would allow each person to live in dignity, to feel that the system was personally “friendly,” and to receive sufficient sustenance, along with the opportunity to reciprocate by contributing to the system.

8) Certainty: The transition to the new economy will be gradual. At first, there will be dynamics of change and hope, a new spirit in society, a sense of cohesion and personal security. The current fear of being exploited will make way for concessions and gestures of generosity in several areas, such as more affordable housing prices, employment contracts that do not exploit workers, a simpler bureaucracy that truly serves the public interest, fair banks, and service providers that actually provide the intended service at a sane price. In short, people will feel confident in their interrelations, a feeling so badly needed in these uncertain times, and one that money truly cannot buy.

9) True happiness: The new economy will create in us a sense of fulfillment that cannot be measured with money. As described in the chapter, “Studies Challenge the Notion that Money Means Happiness,” beyond a certain level of income, additional money does not improve one’s feeling. Instead, people get satisfaction from successful relationships, from a sense of confidence and self-fulfillment. The new economy and its benefits are not transient, but are solid and stable because they are in sync with the laws of mutual guarantee. These enable a decision-making process based on a broad consensus.

10) An applicable decision-making process: As the new economy will be conducted with transparency, everyone will see how decisions are made and will be able to influence them. This is the only way to establish a practical decision-making process that will make people feel that decisions are both fair and unbiased, reached after thorough consideration of everyone’s needs. This will also enhance the stability of the socio-economic system.

11) Economic and financial stability: Money markets have changed from a meeting ground for companies and investors into a battleground of aggressive global players, with enough power to rattle and shake global market in pursuit of “an extra buck,” regardless of the soundness of the system. A mutual guarantee economy will allow money markets to regain their original function without repeatedly falling into financial bubbles that pop and lead to disaster in the real economy.

12) Balanced consumption: The pursuit of excessive consumption has long become a key element in our lives and in the world economy. In the mutual guarantee economy, this will gradually make way for balanced consumption. In fact, the process has already begun, thanks to the present crisis and the gradual transition from a competitive, wasteful, and unequal economy to a balanced, functional one whose goal is to provide for everyone’s basic needs. Commercials and other forms of social pressure to convince us to buy redundant products and services will disappear, as will numerous superfluous brands and products. Instead, the desire to contribute to society and participate in community life for the common good will replace them as one’s pride and joy.

Also, because of the decreased demand, prices will drop and reasonable, dignified living will become affordable to all. Companies will produce only what is truly necessary for us to lead a comfortable and balanced life as described in the chapter, “Toward Balanced Consumerism in the New Economy.”

13) Global balance and harmony: The transition from excessive consumption to balanced buying will reveal that Earth contains sufficient resources to sustain all of us comfortably for many years to come. The exploitation of natural resources will stop, and we will discover Earth’s magnificent rejuvenation abilities.

The stability of the mutual guarantee economy is based on strong social cohesion and mutual concern. That stability requires that we understand that in an era of globalization, our interdependence requires us to adapt our connections and our social and economic systems into a single, harmonious system. It will provide for the needs of all of humanity, and support and encourage everyone’s needs to realize the great potential within them.

[72] “Average credit card debt per household with credit card debt: $15,799.” By: Ben Woolsey and Matt Schulz, “Credit card statistics, industry facts, debt statistics,” CreditCards.com, http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php#Credit-card-debt

[73] “The average British adult already owes £29,500, about 123 per cent of average earnings.” By: Jeff Randall, “The debt trap time bomb,” The Telegraph (October 31, 2011), http://www.telegraph.co.uk/finance/comment/jeffrandall/8859082/The-debt-trap-time-bomb.html

[74] Ramy Inocencio, “World wastes 30% of all food,” CNN Business 360 (May 13, 2011), http://business.blogs.cnn.com/2011/05/13/30-of-all-worlds-food-goes-to-waste/

[75] Tay, L., & Diener, E., “Needs and subjective well-being around the world,” Journal of Personality and Social Psychology (2011), 101(2), 354-365. doi:10.1037/a0023779