Page 249 - Sustainable Cities and Communities Design Handbook

The Next Economics: CiviceSocial Capitalism Chapter j 11 223

The new civic economic model must take into account the growing power
of large firms and the inability of competitive markets to work effectively
without oversight. It is the role of oversight that restrains these large firms
from being uncompetitive and to exercise market power. In James Scott’s
words, “Today, global capitalism is perhaps the most powerful force for ho-
mogenization, whereas the state may in some instances be the defender of
local difference and variety.” Thus the civic market is not built on the premise
that a competitive market must be created and maintained; instead it is built on
the premise that such a competitive market is impossible to guarantee and that
the public good must be served and assured by active public partnerships
between empowered state agencies and innovative and socially responsible
companies.
A number of economists have argued (see various issues in The Economist
in FebruaryeMarch, 2002) that the collapse of Enron proves how neoclassical
economics works. As the argument goes, if a company cannot perform in the
market, it fails. Other companies come in and take its place. The free market
economy moves on.
The problem with this argument is that it ignores what allegedly Enron did
in the first placedset up and influence the deregulation of the energy market,
then manipulate it, and finally, use or profit from investors so that in the end
the collapse of the company was based on inflated shareholder value and
unsecured creditors who lost their funds. Employees lost their retirement with
the collapse in the value of the stock, thousands of stockholders outside the
company as well as mutual funds and retirement portfolios suffered. Thus the
consequence was not just a failed company; it was a cascade of pain for people
all across the nation, and it was the leading contributor to the $40 billion
electricity charge to the citizens of California.
However, there is a growing environmental economics tradition in which
strategies for valuing the economy are made. For example, in business, making
a profit may not be the only motive for the firm itself, the individuals working
within it, and the shareholders themselves. Ritzau indicates in his study of
Danish researchers that success is not defined totally by monetary reward. The
survey results from 63% of about 350 researchers indicate that there are other
rewards (what we call deep structures) for inventing and patenting new ideas
and innovations.
As Ritzau puts it “for the majority of the scientist economic benefits are not
the primary motivating factor for them to patent their research. Much more so
is it the prospect of being able to contribute to the development of society and
at the same time secure their own research projects. An economic benefit is
considered nice and indeed motivating, but seems not to be the primary
incentive of patenting.”
Kuada indicates much the same in his work with African entrepreneurs and
companies. Ritzau summarized the universal concept even more precisely with
a focus upon “Scientists who have filed patent applications” notes that these