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The challenges of defining Auroville’s economy

 

In November 2011, a group of about 70 students walked out of Professor Gregory Mankiw’s Economics 101 class at Harvard University, protesting against the narrow financial view of economics taught in the course. Nothing as dramatic happened when the Growing Auroville’s Economy Sustainably (GAES) team made their presentation on July 14 this year. But there is widespread dissatisfaction about how narrowly Auroville’s economy seems to have been defined by this team, at least as presented in this kick-off meeting.

In their presentation, the GAES team used a somewhat unorthodox definition of an economy, saying that it is “a system of organizations and institutions that either facilitate or play a role in the production and distribution of goods and services in a society.” It went on to say that in Auroville, “the organization includes the following groups or bodies: AVF, FAMC, TDC, BCC, HRT, ABC, ABS, AVC, WC, GG, FS, Housing, Entry, School Board, …” Apart from the fact this is an annoyingly long list of acronyms, this definition of Auroville’s economy seems to be more about mushrooming committees, boards and panels than to clarify the purpose and function of the economy.

Most of the presentation was centred around Auroville’s finances – sources of income, performance of commercial units, income by sector, expenses and maintenances. While all this is useful information, the presentation seems to conflate economy and finances. Financial income is just one small portion of what an economy generates. The assumption is that, if we can grow financially, we will achieve our economic objectives. But what are those objectives? Let’s take an example from the external world. If one of our objectives is to reduce inequality, does growing the financial economy automatically reduce inequality as promised by the Kuznets curve? We have enough evidence now to say that this is not how things work. The “growth will solve all problems” approach has been thoroughly discredited. When we say growth, especially in Auroville, we must ask growth of what and for what.

It’s hard to tell if we are making progress in the way we think about Auroville’s economy. In March 2015, the Auroville Retreat identified the economy as one of the critical areas of progress and listed several goals and actions. The first goal was “to have a sustainable economy with no exchange of money by 2018, both in the sustenance of individuals as well as creating a surplus for the development of Auroville. ”That was certainly an audacious goal, perhaps drafted in the euphoric spirit of the Retreat. But the direction was clear – we wanted to move towards the ideals of Auroville. The current effort of the GAES team does not seem to share the same spirit of progress.

Money and wealth

John Maynard Keynes, the founder of modern macroeconomics, once remarked that “the difficulty lies not in the new ideas, but in the old ones which ramify … into every corner of our minds.” What are some of these old ideas? Defining an economy in terms of monetary flow alone is certainly one of the hardest to get rid of. This idea of money being central to an economy, or even being synonymous with economy, was formalised in the years after the Great Depression and the Second World War. Understandably, the focus at that time was to get income flows circulating around the global economy.

But what is money? That might sound like a strange question because we are so used to the idea of money. In fact, it’s hard to imagine life without money. Turns out, the answer to that question can be quite complex (see David Graeber’s Debt: The first 5000 years for a brilliant analysis). Put simply, money is a social agreement. It is a marker for what a society considers valuable. So, if a society considers certain goods and services valuable, it will create a system of money that supports the exchange of these commodities.

But what if a society cares deeply about human relationships? How would we account for that in the economy? Most of us know that Adam Smith wrote An Inquiry into the Nature and Causes of the Wealth of Nations. What many of us might not know is that, when Smith started writing The Wealth of Nations at the age of 43, he moved in with his mother. The wealth of Smith’s relationship with his mother does not show up in his magnum opus, the bible of classical economics.

Wealth is not only embodied in assets such as houses and factories, but also in people, in nature and in knowledge. If the purpose of Auroville’s economy is not to drive the accumulation of assets but to support a thriving society that regenerates knowledge, relationships and nature, how can we design such an economic system?

Some societies have experimented with complementary currencies. In the Swiss city of St Gallen, people over the age of 60 can earn “care-time credits” by taking care of the local elderly. Helping others with their everyday tasks and giving them company earns these citizens a “time pension” that they can use for care and company when they need it in the future.

Bernard Lietaer, the Belgian complementary currency guru, says that he can design a currency to solve any social or environmental problem . In Rabot, a run-down district in Flanders inhabited by first generation immigrants, he designed a currency called Torekes. Using Torekes, the citizens could rent plots of land to grow food. To earn Torekes, they had to volunteer to clean litter, maintain public gardens and switch to renewable energy. They could also use this currency to travel in public transport, get local fresh produce and buy energy-efficient light bulbs. The result was not just a cleaner district but one that valued the contribution of immigrants to create a regenerative urban space.

The purpose of Auroville’s economy

As the GAES team correctly pointed out in their presentation, the structure of a society’s economic system is “largely a social and political issue.” What this means is that the economic system and associated currencies that are designed for Auroville will depend on our social and political goals. How easy is it to define these goals? According to Amartya Sen, winner of the Nobel Memorial Prize in Economic Sciences, the focus of development should be on “advancing the richness of human life, rather than the richness of the [financial] economy in which human beings live.” In another context, he wrote that, “those attempting to guide the economy and our societies are like pilots trying to steer a course without a reliable compass.”

Fortunately for Auroville, we do have a reliable compass in the words of Sri Aurobindo and the Mother. Sri Aurobindo wrote: “The aim of its [the spiritualized society] economics would be not to create a huge engine of production, whether the competitive or the cooperative kind, but to give men – not only to some but to all men each in his highest possible measure – the joy of work according to his own nature, and free leisure to grow inwardly, as well as a simply rich and beautiful life for all.” It is quite clear, at least in my mind, that Sri Aurobindo was not talking about financial riches.

If we are to thrive as a society in a sense of balanced well-being, we must ensure that our economics is aligned with our purpose. Much like traditional Maori culture, we need to combine spiritual, ecological, kinship and financial well-being into our idea of economics. This is not just an old-fashioned idea, but an idea that is critical for our future. Some modern states are setting an example: Bolivia has incorporated buenvivir (living well) into its constitution as an ethical principle to guide the state. In 2008, Ecuador became the first country to constitutionally recognise that Nature, or Pachamama, “has the right to exist, persist, maintain and regenerate its vital cycles.”

What next?

During the July 14 presentation, the GAES team did mention that people with ideas on how to “grow Auroville’s economy sustainably” will be invited to present their ideas to the community. Based on the timeline shown, these group presentations are scheduled from August to November. No group presentation has taken place yet, but it is possible that at least two groups will come forward in the coming weeks. The first is the Exploring Prosperity Team, which recently circulated a note titled “A structure for a new Auroville Economy.” Their proposal is to create two legal entities under the Auroville Foundation umbrella – Auroville Services and Auroville Enterprises. Apart from trying to prevent GST being charged on internal transactions and solve the vexing issue of the Goods and Services Tax (GST), the proposal aims to eliminate cash transactions inside Auroville. It also proposes that commercial units contribute their entire cash surplus to Auroville Services. Capital needed for the growth of a commercial unit based on a business plan will be made available from a common fund.

The ideas of the Exploring Prosperity Team are certainly interesting. The proposal does not have too many details. But then the details are likely to emerge only through debate and discussion. What seems to be lacking in this team’s approach is a systemic view of the economy as a whole and its relationship to the larger ideals of Auroville.

The Lotus Group’s approach, on the other hand, is to propose a framework that encompasses all economic transactions in Auroville. It separates the economy of self-sufficiency in Auroville from the “economy of development.” The Lotus Group makes a well-structured argument for creating a local currency that encourages the local exchange of goods and services within Auroville. Their proposal for a Progressive Integral Economy charts a step-by-step course from individual exchanges at external market prices to collective exchanges in the local marketplace.

The Lotus Group’s proposal merits serious study and debate. Their 32-page document is densely packed with arguments and charts. But many Aurovilians might struggle to understand the proposal because it reads a little bit like an advanced economics text book. There is a real danger that the excellent ideas of this group will be ignored because they are too “intellectual.”

Which raises some key questions about how we can create policy in a domain like the economy, which is inherently complex. Should this be done by a group of elite technocrats? What should be the role of the residents? Do most Aurovilians have the background knowledge to truly understand the advantages and disadvantages of competing proposals? Should it be a case of competition between proposals or should the different teams work together to create a unified solution?

It is also possible that we might be looking at policy-making backwards. Instead of trying to create a perfect policy, perhaps the focus has to be on experimentation. According to Eric Beinhocker at the Institute for New Economic Thinking at Oxford University, economists should “think of policy as an adapting portfolio of experiments that helps shape the evolution of the economy and society over time.”

This would mean we will have to be prepared for stumbles, failures and changes of course. But that’s not such a bad thing. As the poet Taylor Mali said, “Changing your mind is one of the best ways of finding out whether or not you still have one.”