Introducing Jubilee Economics
/By Elizabeth Stalcup, founder and executive director of Healing Center International
Most of us are aware that there is dire poverty in many parts of the world, yet during our lifetime not much has changed, making it hard to imagine that it ever will. Some multi-national corporations today command more power than many countries.[1] Businesses operate according to Milton Friedman’s financial model, proposed in 1970, which says that business has only one social responsibility: to increase shareholder profits.[2]
In 2017 Jay Jakub, a member of our community, and his boss, Bruno Roche penned a book called Completing Capitalism: Heal Business to Heal the World that presents an alternative to Friedman’s model. The book describes a new economic model they call Economics of Mutuality[3] or Jubilee Economics. This is a robust model that can transform the world. I want our HCI community to understand and champion this model. We interviewed Jay by Zoom in late April to give you a brief introduction. Some of the information in this interview is from the book, Completing Capitalism.
Betsy: How did the Economics of Mutuality model originate?
Jay: Leviticus 25 is for us, a blueprint for God’s economy. It shows us how to remunerate people, nature, and money—one day of rest out of seven for people, one year of rest out of seven for the land, and a reset of money every fifty years—the jubilee cycle.
I work for a family-owned company. One day one of the owners came to my boss and asked the question, “What is the right level of profit for the company?” This was extraordinary, because the owner was not asking, “How can you get me more profit?” But was asking, “Are we taking too much of the profit, thereby creating a need somewhere else in the business chain?” We looked at this Old Testament blueprint and turned it into a business model to answer the question posed to us.
Betsy: What is the basic model?
Jay: The model, Jubilee Economics, is about reciprocity, not about redistribution. Every relationship needs to be mutually beneficial, reciprocal in nature. It starts with the premise that the purpose of business is not to create profit. The purpose of business is to create profitable solutions to the problems of people and the planet. Not to profit by creating problems for people and the planet. If a business understands its purpose, it will direct its attention appropriately, to solving the problems of the key stakeholders, not just enriching the shareholders. A business ecosystem has at its center a sense of shared purpose. The company is just one stakeholder among many.
Betsy: What do you mean by stakeholders?
Jay: The stakeholders are those who have a stake the business all the way down the supply chain—from owners and suppliers to employees and customers. We believe that business can be more profitable by benefiting people and the planet. To do so they must manage multiple forms of capital, not just financial capital. Instead of looking only at financial capital, our model values additional forms of capital, for example human capital, social capital, natural capital, and what we call shared financial capital.
Betsy: Can you give me an example?
Jay: We’ve found that if we prioritize people and the planet over the shareholders in the company, we create more value for the stakeholders and shareholders than we would have had we only tried to maximize the shareholder’s returns. If we are true to the means—how we behave towards others—God will return a double blessing. If we solve the problems of the stakeholders, we create a healthier, healed ecosystem. It creates value for all. This requires that we value, measure and manage other resources than money—capital in business terms. So human capital would be well-being at work; social capital would be trust, community cohesion, and the capacity for collective action. Natural capital would include materials, air, water, and topsoil erosion. Shared financial capital would be looking at how the economic benefits of a business are shared by the entire supply chain. We want to identify where supply chains are strong or vulnerable.
Betsy: Why is this so important for Christians?
Jay: In our culture today, we are serving money. That is not the way God intended it. In 1970, Milton Friedman launched a financial capitalism model on the world, a model that fifty years later—a jubilee cycle—is collapsing on itself. Why is this? There is a natural order of things in the economy. In the natural order finance plays an important role—it is an accounting instrument that allows goods and services to move freely. But finance was not meant to be at the top. Finance is meant to be at the bottom. It is meant to support the economy, which supports businesses, which supports the planet and its people. Only God himself is above people.
Fifty years of financial capitalism has turned this natural order entirely on its head; where people are at the bottom. People and the planet are supporting the economy, which through business is supporting finance which if anything is supporting itself. So, mammon is at the top. It is the idol that we are all worshipping whether we like to admit it or not. And people are at the bottom. This is wrong. It is exactly opposite of the way it should be.
So, the Jubilee Economics model exists in part to reverse the dysfunction of the global economy, to bring it back to the natural order of things: putting people at the top and money at the bottom. Money plays an important role, but it is not supposed to be at the top; not supposed to be worshipped.
The Jubilee Model of Economics is about healing the relationship between business and people as well as healing the relationships between business and the planet. Business and money are meant to serve people, to solve problems for people. Instead we live in a world where people serve money.
Betsy: So, you and your boss came up with a management innovation that took into consideration everyone who was involved in your businesses from the bottom up?
Jay: Yes. We began, with our team, to create a model where all the stakeholders had value.
Betsy: How did you test it?
Jay: We first tested our model in the poorest slums of Kenya, where 2.5 million people live. One of our first partners was an NGO that was helping lift up unemployed single mothers. One of the products our company makes is chewing gum. We found a microfinance lender who was willing to offer loans to these women so they could buy a bicycle with a basket—to deliver the goods. The lender was willing to give the loans, because of the reputation of our company, and the fact that we were willing to back, and train, the local employees.
We started creating a web to solve one another's problems, which grew trust. The end result of this cooperation was profitable for both worker and lender. Some of the mothers were able to purchase motorbikes with their profits, as well as hire others to work for them. Later in the process, we met with a pastor in Kenya who loved the principles of what we were doing. He created a pipeline for us to help more people, both men and women, become micro-distributors in the program.
Betsy: Was your pilot project in Kenya successful?
Jay: Yes. Absolutely. We actually made more financial profit than the neighboring chewing gum business that was operating outside the slum. They had advantages we did not, but we returned more financial profit!
Betsy: How many businesses do you have right now who are implementing the model?
Jay: Right now, we are working on about 20 different EOM initiatives. We also partnered on a pilot with the largest family-owned French retail conglomerate, which has 11 businesses within its organization.
As a result, my company has decided to fund us in setting up an independent foundation in Switzerland with its own consulting arm. Our purpose will be to share this business innovation globally.
Betsy: It sounds like the Lord has given you and your colleagues viable solutions. The economic situation of the world has been so grievous for so long with such intrenched poverty in parts of the world. As you said, you don't want to give handouts. It all comes down to treating others and the planet with respect. I see where this can have a phenomenal impact to change the world.
I have one more question for you. How do you think the Covid-19 virus will affect the world economic system? Do you think this virus is going to accelerate transformation away from financial capital and towards other forms of capital?
Jay: Absolutely, this pandemic is changing everything that we know about how we need to operate going forward. There will be very substantial disruptions to the global economy, but it is also creating opportunities for leaders of business to realize that this is a once in a generation moment where they can adjust their operating models and actually be able to deliver solutions to problems instead of trying to reap as many benefits as they can for themselves. The sole social responsibility of business can no longer be maximizing profit for distribution to shareholders.
Business has a huge role to play in solving the problems of the world. The big concern I have now, is that governments are being looked at as the savior, and they are creating massive debt by creating money that is not underpinned by anything, as well as getting more and more involved in the stakes of businesses going forward. I don't see how governments can play a lasting and constructive role as major players in business.
In my opinion, business needs to move very quickly into the void they have created by not recognizing their role as problem solver for society and the environments. Otherwise governments will take on that role. We should not have to live with bigger governments simply because no one else is solving problems for people and the plant. There is somebody else—business operating in a godlier way!
Thank you, Jay, for sharing your wisdom with us. We pray that God would bless your endeavors and rapidly expand the number of businesses that are operating by this mutually beneficial model.