A welcome new approach to economics

Feb 25, 2024
Laptop computer and book with magnifying glass, concept

“The Alternative: How to build a just economy” by American author, Nick Romeo, that has been published by Basic Books UK in recent weeks, is a welcome arrival to a human world in crisis.

The Professor of Economics at the University of London, Ha-Joon Chang, says of the book “TINA (There is No Alternative)” has been the most powerful weapon deployed against its critics by neoliberal free market economists in recent decades. In this informative and courageous book, Nick Romeo, shows there is an alternative – or, rather many alternatives – to the currently dominant neoliberal economic system. In doing so, he liberates our economic imagination and puts the backbone into economics as a moral science. This is a very valuable field manual for those who want to change our economics for the better.”

Romeo argues that a major obstacle to an expanded sense of economic possibility, is the widely shared belief that is promoted by advocates for neoliberalism, that current social and economic arrangements are the result of immutable economic laws that have resulted from years of mathematical modelling. He strongly challenges the validity of that view, and calls for recognition of the relevance and importance of new thinking about issues like a living wage, participatory budgeting, worker cooperatives and new, combined public and private sector initiatives.

He points out that the best evidence that alternative arrangements are viable, is to show that they already exist. And his book has demonstrated the viability of profoundly different social and economic models from the one under which we currently live.

Everything that is actual, says Romeo, is possible, while the converse is not true. There were once no job guarantees, no employee stock ownership plans, no participatory budgeting, no true prices, no corporate takeovers by investment funds, but all of these ideas were possible before they were trialled and have now been shown to be viable.

I am particularly impressed and excited by the chapter about participatory budgeting (PB), which I think, could have particular relevance to cities in Australia, immediately. The PB process has been most highly developed in Portugal and especially in the municipality of Cascais, a seaside town of a little over 200,000 people.

In “Chapter 8.A Tale of Two Cities. Building Economic and Climate Democracy. Romeo says that the city of Cascais conducts a process in which citizens propose, debate and vote on ideas that the public budget will fund. Winning projects receive up to 350,000 Euros, and the city guarantees to complete them within three years. About 15% of public expenditure in the town, goes towards PB projects. Since this process was introduced in 2011 the town has spent 51 million Euros on this task, and collectively, these projects have reshaped the urban landscape.

The basic premise of participatory budgeting, (PB), is that, since citizens are a source of public funds and users of public services, they deserve a direct say over how some of this money is spent. Romeo states that when executed well, PB can address central political elements of our age, strengthening civil society, increasing transparency and trust in government and improving the quality of public works and services.

The town holds regular PB sessions attended by interested members of the public from the age of 12, and anybody can propose an idea. Seated at tables with five to seven people, the winning ideas from these meetings are vetted by municipal employees to ensure their financial and legal feasibility.

As we confront the multifaceted risk to long-term human survival from a group of human-induced catastrophic threats, that have been detailed by The Club of Rome and The Council for The Human Future, new economic thinking becomes a vital ingredient of new policy development.

The book deserves a wide readership by politicians, economists and public servants, and its proposals should be considered and discussed by community members of all ages.


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