Modern Economics as a Moral Instrument

Nick Romeo, The Alternative: How to Build a Just Economy

Most wage-earning workers with house payments and bills know the current economy cannot survive much longer. People working overtime cannot afford groceries, and housing prices are more exorbitant now than immediately before the 2007 collapse. But with Cold War rhetoric still discoloring all economic discussions, what alternatives exist? What, importantly, has worked in real-world scenarios?

Nick Romeo is a journalist, not an economist; he doesn’t postulate alternative economic models from dust. Instead, he travels to places which have implemented economics beyond the dictates of neoclassical capitalism, to report on what works, and what doesn’t. This may mean cooperative models, like the Mondragon Corporation of Spain’s Basque Country, or the direct democracy of Cascais, Portugal. Everything described here has worked somewhere, and could hypothetically work elsewhere.

In his first chapter, Romeo briefly stops through American postgraduate economics programs, examining how academicians teach contemporary economics. The discipline he encounters is self-righteous and exclusionary, with a strong historical disdain for history and the humanities. It assumes humans are rational and amoral, and mathematics can describe economics better than anything else. But an increasing number of academic economists are recognizing how purblind this approach is.

Only in this first chapter does Romeo engage in abstruse theorizing; everything else focuses on real-world accomplishments. But this theorizing helps establish Romeo’s thesis statement, further expounded throughout the book, that economics isn’t a science (he uses the term “pseudoscience” generously). Economics originated a moral enterprise and a branch of philosophy, and Romeo aims to recapture that humane foundation.

Not for nothing, Romeo writes, was the Mondragon Corporation founded by a Catholic priest, not an economist. More a federation than a centralized corporation, Mondragon deploys the skills of diverse workers, who have democratic control over their employers. Mondragon eschews love of money or worship of hero CEOs, both hallmarks of American capitalism, preferring to empower workers to take ownership of their work and workplace.

Despite his talk of morality, and his lavish praise of Mondragon’s Father Arizmendiarrieta, Romeo’s economics isn’t religious. It is, however, humanist, prioritizing workers whose labors turn raw material into wealth, and not either money or economic “laws.” For Romeo, economics should focus on getting food, shelter, and necessities to humans, and protecting the natural environment. Mathematical models fail if they don’t achieve these goals.

Nick Romeo

Romeo’s moral calculus emphasizes economic outcomes excluded from textbook considerations. Are jobs merely a nicety provided by the ownership class, he asks, or a social entitlement? When workers’ productivity and ingenuity create corporate wealth, should workers own equity? Does “making a living” mean mere subsistence, or does the economy owe workers something more? These aren’t theoretical questions, and Romeo boldly proffers field-tested answers.

However, this creates some fuzzy outcomes. Romeo admits that morally minded economic models, like True Cost, must make flying decisions about what constitutes meaningful externalities, and therefore its titular “truth” remains open for interpretation—and, sadly, misinterpretation. Likewise, he praises purpose-driven corporation models which protect workers’ rights, housing access, or environmental restoration. He politely elides the idea that corporations might harbor bad purposes.

Employee stock ownership plans (ESOPs), a democratic model Romeo describes across several chapters, he finally admits isn’t a single system. Some ESOPs give workers complete ownership over the companies their work has created, but others grant only nominal equity, less than a 401(k). Economic liberty, Romeo admits, comes from diligence, not from assuming the monied classes care about your outcomes.

Also, approaching his denouement, Romeo admits that economic circumstances change, and responses must change commensurately. He began writing during and immediately after the pandemic (mostly written thus, “the pandemic,” as though afraid of its scientific name, like saying Macbeth). As pandemic furor dissipated, the economy moved from stagnation to inflation, and he admits it’s necessary to back-construct responses from the models he’s previously explained.

Consistently, morality matters first. Throughout the Twentieth Century, politicians and economists have sought economic models they could deploy and ignore, like a well-oiled machine. Romeo instead describes economics as a moral instrument, to be nurtured, tended, and when necessary, replaced. I’m reminded of Distributism, a similar morally-minded economic model, which uses agrarian metaphors. We farm the economy, not grease its wheels.

Romeo shows economic models which prioritize care, cooperation, and human dignity. He doesn’t invent new systems from cloth, though he admits countless further untried systems exist. Instead, he encourages us to read economics as an opportunity to increase human flourishing, build stronger communities, and preserve the environment. We only need to treat economics as a liberal art, as it is.

See also: Why We Need Liberal Arts in the Business World