Hilkka Pietilä, M.Sc.
Independent writer and researcher
Jussaarenkuja 5 N 134,
00840 Helsinki, Finland
Tel/Fax: 358-9-698 1288
e-mail: hilkka.pietila@pp.inet.fi

Reprinted - as revised and updated - from Ecological Economics, Vol. 20, H. Pietilä: The triangle of the human economy: household - cultivation - industrial production. An attempt at making visible the human economy in toto. Pages No. 113-127, Copyright 1997, with permission from Elsevier Science.

BASIC ELEMENTS OF HUMAN ECONOMY

A sketch for a holistic picture of human economy

Preface

Today, there is a pressing need for a new, more comprehensive and relevant perception of human economy as a whole in order to understand the prerequisites for sustainable livelihood for the whole of humanity and to be able to create a lifestyle which could provide a dignified quality of life for all people, with due respect to the ecological boundaries of the biosphere.

The presupposition in this paper is that human economy is composed of three major, distinct components instead of one, monetized industrial economy, as usually taken for granted in mainstream economics. Those components are the household economy and the cultivation economy in addition to the industrial economy. In fact, households and cultivation have always existed, long before money and industry ever emerged, but they have remained invisible in the eyes of scientific economics.

It is the purpose of this paper to make all these three components visible and elaborate their background and characteristics, and to argue for the necessity of their inclusion. The ultimate aim is to challenge alternative and feminist economists into collaboration for the creation of a new theory of human economy and to expand the domain of economic inquiry accordingly.

Hopefully, this paper would also prompt us to consider to what extent we would like to acquire more control over our livelihood and to decrease our dependency on factors beyond our control, such as the globalizing free market with all its consequences, and to what extent this would be possible without putting at risk other important elements and needs in life. This will also lead us to seek the options to handle the increasingly serious scarcity of basic resources, which humanity will have to face in not so distant future.

Introduction

Human well-being consists of material and nonmaterial "goods", of monetized and nonmonetized production. The historical transition from the subsistence economy to monetarized economy has had many repercussions on basic conditions of human life, and particularly on the life of women. Not all of these effects have been positive, and neither have they all been understood and taken into account.

Understanding the history and the composition of human economy more comprehensively may give us new visions and insights on how to solve the problems of living in a global economy of increasing scarcity. We in the North need visions for transition from a wasteful, consumerist market economy towards a more sustainable way of living.

The concept of human economy is used in this paper to signify all work, production, actions and transactions needed to provide for the livelihood, welfare and survival of people and families, irrespective of whether they appear in statistics or are counted in monetary terms. It implies also a basic understanding of the necessity to manage the human household in a sustainable way.

The major blind spots in the prevailing economic thinking seem to be:

• the household economy, which is used here for the nonmarket, unpaid work and production within a group of people having a household together, irrespective of whether they are kindred or not; or even a group of small households living close enough to create a joint economic unit, and
  
  
• the cultivation economy, i.e. the production based on the living potential of nature, which is the interface between economy and ecology, human culture facing the ecological laws.

These constituents of human economy are either misconceived or ignored. The doctrines of economics seem to be derived from physics and mathematics, the sciences dealing with non-living objects and material in the universe (Mäki, 1991; Vorlaeten, 1995). Thus, economics does not take account of biology, the science of living creatures and processes in nature; and that explains why economists seem to be blind to the logic of living nature.

Both of these economies are very basic from the point of view of a sustainable way of living, and thus for human survival and people's ability to control their own lives.

This paper will point out also the necessity of recognizing two things:

• the extent and significance of nonmarket labour in the households and neighbourhoods for direct production of welfare, and thus as an essential component in human livelihood;
  
  
• the profoundly different nature of cultivation economy, in comparison with industrial production.

Human beings are not considered in this paper merely as part of living nature - as many ecologists do - but as the only rational and responsible species in the universe, which is accountable for its behaviour and its management of the only planet suitable for its existence and welfare. Neither does this paper take a human being as mere "homo economicus", whose only motivation is the pursuit of self-interest and maximized satisfaction of needs on lowest possible costs and efforts.

1. The household - a core of human economy

The household as a basic economic unit in a society lends itself easily to use as a new angle from which to look at the economic process as a whole. For all human purposes, the household is the primary economy, which all other economic functions should serve as auxiliaries. If we start looking at production, trade and economic activities of any kind from the household point of view, the whole picture will change.

1.1. The origin of the picture

In the course of history, most societies have at some stage of social evolution been agrarian societies consisting primarily of fairly self-sustaining farming families. Such families had their fate in their own hands for the good and the bad, i.e. they had much more self-reliance and control of their livelihood - though at a very modest standard of living - than people living in the affluent, consumerist society.

The basic structure of the society at that stage is the often quite extended private family, which provides for most of the basic needs of the family members: for food, clothing, shelter, caring, entertainment etc. On a modest level, the family is a fairly autonomous unit, depending only on the provisions of nature and the capabilities of its members.

In spite of the often very patriarchal nature of traditional agrarian families, women had a central role in this kind of society because of their vital contributions to the livelihood of the family. Since only women knew certain essential tasks, this gave them a leverage of power in the society, where the services and goods could not be bought on the market. Thus the gender-based distribution of labour into male and female tasks does not necessarily imply inequality, as so often maintained in the feminist debate.

In the process of so-called modernization, industrialization, monetization, commercialization of the society, many traditional functions are transferred outside the family. Making of furniture and clothing, growing of food, child and health care, training and education, even entertaining, have been transferred outside the family and monetized. They have become either public services, provided by the society, or commodities purchased on the market.

A Swedish researcher, Ulla Olin, analysed this process profoundly in her paper prepared for a seminar on women and development, just before the first UN World Conference on Women in Mexico City, 1975 (Olin, 1975). She considers the family as a general model of human social organization and thus also of a society at large. Since an emerging state formation increasingly takes over the functions earlier performed by the family, she suggests terming the nation state as a symbolic family or public family. This fits the Nordic welfare states in particular. (Figure 1.)

We have to study also the interplay between private and public families. In traditional cultures, the societal structure outside private families was fairly thin. In the process of modernization, the structures of industrial production, trade, administration, public services, security and education grew stronger and increasingly powerful.

In this process, the tasks and skills of people became dispensable. It became possible to substitute almost everything with industrial products. Nobody is indispensable any more in the economic sense. This was the beginning of commercialization of human relations, too. For women, this development has naturally given new knowledge, tools and gadgets to make life easier, but it has been detrimental, too. The skills and tasks which used to be particularly women's strengths have become dispensable and thereby their inherited leverage has virtually vanished.

In the course of this process, women were the last to remain in the private sphere, when men went to war, work and politics, children were sent to school, the sick were taken to hospital, and the aged were put into old people's homes. Thus women were also the last to enter the labour markets. That is one of reasons why they got the most monotonous and mechanical jobs, or those requiring manual skills and patience. Men were not able or willing to do these kinds of jobs - therefore they are also poorly paid even today (Friberg, 1983).

This process follows the dogma of industrial society to believe, that economic progress consists of a continual shift of labour and skills from household-based production to the commodity-based consumption, as presented lately by Mario Cogoy (1995). The extreme form of market utopia consists of the idea of total abolition of work and skills in the families: i.e. in private life, as all labour and skills are absorbed into the market, time outside the economic system is reduced to pure unskilled leisure-time.

If the market forces are allowed to pursue these aims to the ultimate, they will render people totally dependent on the markets and make them helpless and powerless pawns in their society. This would legitimate the continuity of the market forever and use people as mere fuel to keep it running.

The process described above imply that - in the course of history - the public family, production, politics, culture and organization outside the private family, was designed, planned and built up exclusively by men, who possessed neither the particular gifts nor the experience which women had acquired over centuries of managing the private family and nurturing its members. Ulla Olin considers this long-term imbalance between the male and the female rate of influence in planning and conduct of modern industrial societies to be the virtual source of most of the social, economic, human and international problems which we face today.

1.2. The value of nonmarket, unpaid work

Seeing the process of emergence of the market economy through gender lenses helps us to understand better the lopsided state of industrial societies today, and the exclusion of and discrimination against women in these societies. It also gives an insight into the dynamics which still prevail between the home-based subsistence production of goods and services, on the one hand, and the public services and markets on the other.

It is obvious that the amount of unpaid work is significant in the developing societies, but what is the amount and value of non-market production of goods and services in the industrialized countries? Even though industrial production and public services have taken over a major part of this, a lot of work is still done in homes and families.

A lot of surveys has been made in different countries concerning the time and amount of unpaid work in the households. And plenty of work is done for developing appropriate methods for measurement and valuing of the work and production done within the households outside the monetary economy and market ( INSTRAW, 1995).

The usual pattern of approaching this issue is that first the amount of work done in the households is measured in time, hours and minutes, the so called time-use survey being done. Even this is a complicated matter, since the housework usually implies several jobs being done parallel, for example tending to children while cooking and laying the table or ironing and mending the cloths. Is the issue just counting hours spent or counting the hours per function as to how many hours for tending to children and how many hours for cooking and laying the table?

For the statistics the value of work has to be calculated in money. This is even more problematic. What is the time wage or market price of the work which has an incalculable human value - like taking care of lively and dear children - and which requires a command a great number of skills? Or the work which is composed of low paid and highly paid components like washing the cloths requiring simple washing work plus the knowledge of the technician for managing the washing machine and the chemist knowing the composition and effect of the detergent?

The Organization for Economic Cooperation and Development, OECD has done a lot of work for creating the data sources and methods for measurement of unpaid, non-market household work and production in the OECD countries(OECD, 1995). The main categories of methods they have elaborated are the following:

• the "opportunity cost" method, which is based on the potential salary, what is the wage opportunity lost by a woman who does unwaged work, for example caring for her children or parents or doing subsistence farming instead of doing a paid job;
  
  
• the "global substitute" method, whereby a general housekeeper's wage rate on the market is taken as a substitute value for all unpaid housework, and which rests on the assumption that housework does not require any particular qualifications;
  
  
• the "specialist substitute" (also called "the replacement cost") method, which relates various types of household tasks to the wage levels for the type of work performed by professionals such as cooks, nurses, gardeners etc.

All these ways of measurement are applying so called input-based method, because they measure the household production through the inputs to the process, in particular the working hours. The UN International Research and Training Institute for the Advancement of Women, INSTRAW, suggests a method not mentioned in the study above, such as

• the "output-based evaluation", which implies the valuation of the non-market production in terms of the market value of the outputs produced, whereby the products and services produced in the household are assigned a value equivalent to the price of similar market goods and services (such as the meals served in the restaurant, the cleaning performed by a professional firm, etc). Output-based evaluation method does not necessarily require time-use data.

It is obvious that the estimates of the value of household production depend, on the method used. A OECD researcher Ann Chadeau considers the specialist substitute method to be the most plausible and at the same time feasible approach for valuing the non-market work and production in the households (Chadeau, 1992). INSTRAW deplores, that in the past there have been very few attempts to estimate the value of household output, while it is technically possible and less time-consuming than the surveys based on time-use measurement (INSTRAW 1995).

The thorough surveys on unpaid housework was made in Finland in 1980 (Housework Study, 1981) and 1990 (Vihavainen, 1995). The monetary value was assessed according to the current salary of municipal home helpers ie the so called "global substitute" method. In the 1990 survey the monetary value was counted also, for comparison, using the average wages on the labour market for all employees. Due to somewhat different procedures, these surveys in ten years apart are not fully comparable, but some conclusions can be drawn by comparing their results in terms of both time and value of work.

The time spent in unpaid labour in average Finnish families in 1980 was 6.7 hours/day. The survey included all the unpaid work in the households irrespective, whether it was done by women, men or children, but the gender distribution of work was also assessed. The women's share of this work was in average about 70 %. The total monetary value of the unpaid labour in households in Finland in 1980 was about FIM 80 000 million, which was then equal to 42 % of the GNP. (For comparison: In the same year, the sum total of the Finnish national budget was FIM 50 000 million.)

In the 1990 calculations, the result was that the average amount of unpaid work by women was 236 minutes (about 4 hours) a day and by men 140 minutes (2 hours 20 minutes) a day. Altogether it amounts to 6 hours 16 minutes per day, which is only 26 minutes less than in 1980. When assessed in 1990 according to the current salary of municipal home helpers, it makes FIM 232 000 million. Using the average wages on the labour market for all employees as the yardstick, it reached about 300 000 million FIM. The sum total of the Finnish state budget in 1990 was FIM 140 000 million. Thus the non-market household production was worth more than one-and-a half to two times the amount of the state budget in that year, depending on the method used in assessment.

Table 1. Gender distribution of unpaid labour in households in Finland, 1980 and 1990.

The distribution of unpaid work between men and women varies a lot between the households as well as between the countries. Then an interesting aspect in the Finnish surveys was, whether the distribution of unpaid work between men and women had changed during ten years. It had levelled out a little, men now doing a little more and women a little less in 1990 than in 1980, which confirms the general impression that participation of men in housework is slowly increasing.

"Whatever valuation method is used, the value of unpaid housework is substantial in relation to GDP. Non-market household production is an important component of household income, consumption and welfare," concludes Ann Chadeau in her paper (1992).

In Finnish calculations for both 1980 and 1990, the value of unpaid housework was between 42 - 49 % of GDP, depending on the method of estimation. This is comparable with the results from various countries shifting between 30 - 60 % of GDP (INSTRAW; 1995). Thus the conventional SNA statistics give a grossly distorted picture of the magnitude, composition and trends of productive activities in each country.

"For the last fifty years national income statistics have been widely used for monitoring economic developments, for designing economic and social policies and for evaluating the outcomes of those policies. Had household production been included in the system of macro-economic accounts, governments would have had quite a different picture of economic development and may well have implemented quite different economic and social policies," says Ann Chadeau.

The women's movement has insistently demanded for decades that the value of women's unpaid work should be counted as part of the national income in each country and included in the System of National Accounts.

In Finland the first professional woman economist Laura Harmaja argued in her writings and public debates 1920s for the inclusion of the household production into the system of national accounts. In her extensive work on this issue she presented already well founded estimates about the amount and value of this work proving that the sum total of this work would be much higher than the production of state, municipalities and consumer cooperatives altogether at that time. Her main work Kotitalous kansantalouden osana ('A Household as Part of National Economy') was published in 1946 (Heinonen, 1996).

In recent years the most prominent proponent for this issue has been Marilyn Waring, whose book If Women Counted. A New Feminist Economics became a classic right after its publishing 1988. Her criticism focuses particularly on the prevailing international system of national accounts and contributed undoubtedly to the revision of the SNA by the UN in 1993 (Waring, 1988).

The women's movement as well as feminist economists have also criticized the methods so far being used in these kind of calculations. Calculating the monetary value of the household work by comparison to the wages which women could earn at the labour market (where the women's wages are lower than men's in all countries) or to the prices of the same type of work performed by a professional ( which most likely will also be a low paid woman), both methods would perpetuate the pattern of all labour market, where women are low paid in general.

This criticism is particularly apt to the method of using as the measurement the general housekeeper's or municipal home helpers' wages, which is very low rate work in all countries, indeed. The output-based evaluation method suggested by INSTRAW do avoid this problem, although it obviously gives different values in different countries related to the level of prices and salaries at the market in respective countries.

The other method, which does not fall into this trap, is to take the average of all wages in the labour market as the yardstick as it was made in the Finnish study in 1990 for comparison. It makes some justice also to the fact that the housework - more than practically any other job - demands the multitude of skills from cooking, cleaning, child care to planning, administration and management, economic calculation as well as physical and mental health care, design and composition of the housing, gardens and surrounding, tending to social, economic and cultural relationships, etc.

1.3. The breadwinners of the world?

The UNDP/Human Development Report 1995 gives even a global estimate of the amount of women's unpaid labour. The main theme of the 1995 report is the failure of statistics in general to do justice to women in reporting on their economic contributions, paid and unpaid. "If more human activities were seen as market transactions at the prevailing wages, they would yield gigantically large monetary valuations. A rough order of magnitude comes to a staggering 16 trillion (dollars) - or (if added, it would make a total of) about 70 % more than the officially estimated 23 trillion of global output. Of this 16 trillion, 11 trillion is the non-monetized, invisible contribution of women."

"Of the total burden of work, women carry on average 53 % in developing countries and 51% in industrial countries." (See Figure 2) Out of the total time of women's work, 1/3 is paid and 2/3 unpaid. For men it is just the reverse: 3/4 of their working time is paid and only 1/4 is unpaid. "If women's unpaid work were properly valued, it is quite possible that women would emerge in most societies as the major breadwinners," concludes the HD report (UNDP, 1995).

Due to the long cooperation with INSTRAW (the UN International Research and Training Institute for the Advancement of Women) the Statistical Division of the UN took a stand on whether household production should be included in the SNA (System of National Accounts, 1993). The 1993 SNA recommendation entails two different categories of national accounts. Its hard core contains the traditional national accounts, which are called the central framework. This is surrounded by looser satellite accounts, which are separate from but consistent with the core national accounts and can measure areas of interest that are difficult to describe within the central framework. (Ruuskanen, 1995).

In principle, the SNA approves the notion that the goods and services produced at home are part of production in the widest sense of the term. Nonetheless, the problem seems to be, what should be counted as production? The production of goods and services at home for the needs of the family members does not fit into the definitions which have been used until now. Therefore, for the purposes of the central framework, the SNA has now chosen to use the definition that production includes the goods but not the services produced in the household for members of the same household.

This may make the calculation of the value of unpaid household work even more complicated, since it has to distinguish the work for goods from the work for services. Even the definition of goods seems to be fairly arbitrary. Growing of vegetables, production of wine or cheese, and making of clothes are counted in the SNA; but preparing meals, washing the dishes and clothes, cleaning the house, or caring for children and the elderly should go into the satellite accounts (SNA, 1993). Still, even these functions would be counted in the SNA if they were produced by paid domestic servants.

Nothing seems to be mentioned about collective voluntary work for the common good in the neighbourhood or in tending the environment, participation in the activities of voluntary organizations, etc. The third role of women, community management, still seems to be entirely forgotten.

In the monograph "Measurement and Valuation of Unpaid Contribution: Accounting through Time and Output" INSTRAW (1995) recommends that:

• a framework defining activity classification for SNA and satellite activities should be established;
  
  
• an internationally acceptable SNA Satellite Household Sector Account should be defined;
  
  
• the Household Satellite Account should include all activities associated with the maintenance and upkeep of households and families, all activities related to gaining an education, and volunteering;
  
  
• an output-based approach to valuing non-market production be developed;
  
  
• steps to be taken to develop accurate and efficient time-use data collection approaches;
  
  
• data capture for the household satellite account should be carefully planned and undertaken using a range of instruments and approaches.

According to the INSTRAW monograph: "Benefits from the development of a household satellite account and the generation of data to service that account would be far-reaching. Such an effort would facilitate implementation of the 1993 SNA measurement requirements, provide time-use data for formulating policies on women, and facilitate increasing literacy, the assessment of the importance of the transportation sector, the accounting for time lost due to sickness, the measurement of children's work input and the human capital building process, the measurement of voluntary community services, the measurement of social and economic change, and informal sector measurement."

The INSTRAW monograph was published before the IV UN World Conference on Women in Beijing in 1995 in order to prompt the recommendation for the support of the SNA Satellite Account on Household production to be adopted. An extensive chapter on Women and Economy was included in the Platform for Action adopted in Beijing (UN/WCW, 1995). It elaborates thoroughly the triple role of women in economy - production, caring and community management - and the impact of both national and transnational economic policies on women. The Platform strongly urges the governments and UN Agencies to make sure that the SNA recommendation concerning satellite accounts of women's unpaid work and production will be implemented.

This urge by the Beijing PFA prompted the European Union to make an invitation in 1996 to the Statistical Offices of the member states to submit tenders for developing a common concept of a comparable satellite system in each member state and a common one for the European Union for making visible the unpaid work done in the EU countries. The Statistics Finland won the tender and it has provided to the Eurostat a proposal for a European system of satellite accounts attached to the new SNA, which is implemented in Europe from the beginning of 1999 (EUROSTAT, 1998).

However, this is just the first step in Europe. It will take time and work - not the least from the women's lobby in Europe - to bring this process forward first within the EU system until it will be "a harmonized common satellite system on household production for the European Union" adopted by the Commission and given as a binding directive to the member states. This process should be prompted by the representatives of the member states and therefore the lobbying work in each country is constantly needed particularly to keep the debate alive and thus disseminating information about the issue to wider public.

2. Developing the picture of national economy

On the basis of the 1980 assessment in Finland we made an effort to rectify the picture of national economy in such a way that it included the nonmonetary, home-based economy as well (Pulliainen & Pietilä, 1983). Corresponding to Figure 1, we found it natural to place this essential portion of the economy in the centre of the picture, as illustrated in Figure 3. (The idea of the tripartite picture of national economy has been suggested also e.g. by Lars Ingelstam in 1980 and Mats Friberg 1985.)

Our point of departure was to find ways of reducing the need for economic growth in a well-off industrialized country like Finland, with a view to decreasing international disparity and extensive exploitation of the natural resources. We suggested that revival of the self-reliant non-monetary local and even household-based production of goods and services makes economic growth unnecessary in small industrialized countries, without necessarily jeopardizing the quality of life.

We called the non-monetary household work and production the free economy, since it consists of the work that people do "freely" without pay for the well-being of their families and for pleasure. The protected sector consists of production and work for the home market as well as public services (such as agriculture and food production, construction of houses and infrastructure, administration, schools, health, transport and communication etc.). This sector has e.g. in Nordic countries been protected and guided until lately by legislation and official means, and thus the prices and other terms were determined relatively independently, without too much pressure from the world economy.

Hard, large-scale production for export is usually called the open economy. We call it the fettered economy, since it is fettered to the world market. The terms of this sector, the prices, competitiveness, demand etc. are determined by the international market, therefore the broader the fettered economy, the more dependent the national economy on outside factors. This limits the scope to control the national economy. (Figure 3.)

In 1980 the fettered economy in Finland accounted for only 10 % of the total working hours and 19 % of the value of total production in l980. In 1993-95 this hard core export industry has been doing better than ever - from its own point of view - but it makes no difference to the rest of the national economy. It does not increase the tax revenue of the state, since it has not created any new jobs, neither decreased the high unemployment rate.

The fettered sector is still considered to be the most important one by economists and politicians. It was for the interests of this sector that Finland was manoeuvred to become a member of the European Union. The sole purpose of the European common market is to improve the competitiveness of European enterprises vis-a-vis the competitors in the USA and Japan. Since international competitiveness is the key factor in this whole game, society is geared to working towards increased competitiveness.

The pressure for economic competitiveness has become ever stronger during the years, and now it has even spread to other fields than economy - like e.g. hospitals and universities - irrespective of whether it fits or not. The rule of "management by (economic) result" is devastating for caring institutions, cultural activities, environment etc. and for the whole idea of welfare of people.

The question arises, why should the whole life of the society be geared to supporting the fettered sector, since it counts for only such a modest proportion of the production and contributes hardly anything to the welfare of the nation?

2.1. Interplay between public and private

The dynamics and interplay between the public family and the private family, i.e. the visible and invisible economies, is easy to be realized in the Figure 3. In the passage above we discussed the importance of the unpaid labour and production in the households and neighbourhoods. In national economy such essential functions in the society as child and health care, cooking and cleaning, education and training, etc. are not counted as contributions (inputs!) as long as they are performed within families. But as soon as they are transferred from the private family to the "public family" and performed by private or public institutions (schools, hospitals, business), they cost money, they imply large investments and expenses to both individuals and society. Then they are outputs and counted in the GNP.

The fact is, however, that when these functions are performed within families or otherwise by voluntary work they cost a lot of time and work, and when produced in public sphere, they cost money. A major part of economic growth in recent decades has consisted of the functions that have been transferred from the private family to the public one, from the non-monetary sector to the monetary ones and have thus been made visible.

From women's point of view this discussion is very important. The non-monetary economy even in the industrialized countries is still primarily a female economy. Its invisibility is a supreme manifestation of women's invisibility in the society at large. The family economy is in the hands of women even in its monetized form, the consumption of marketed goods and services, because purchasing decisions are made primarily by women.

Now, due to the recession and prevailing trends in Europe to cut public expenses, the ministries of finances are pretending of making savings by pushing the services back to the private sphere and "disemploying" women - squeezing the number of employees in the public institutions - to work unpaid for producing these services in private. They rely on the potential of the families and women to expand their caring capacity in proportion to curtailments of the public spending.

As it was pointed out already in the beginning of this paper, the household economy (both monetary and non-monetary) is, from the human point of view, the primary economy. It works directly for the satisfaction of essential human needs - material, social and cultural. It also produces things that are not available on the market and cannot be purchased for money, such as the feeling of being somebody, closeness, encouragement, recognition and meaning in life. All this is realized in connection with living and doing things together; cooking, eating, cleaning, playing, watching TV, sleeping, sharing joy and sorrow, and transferring human traditions. In this sphere, every man, woman and child is a subject, recognized as a person; everyone is indispensable.

If the human maintenance - mental and physical - and the nurturance of human beings are not taken care of, no other economy is possible. Thus the household is basic not only for the economy, but for the whole society, for the survival of the human species. Therefore the picture of the human economy should be turned the right side up; the industrial and commercial economy should be seen as auxiliary, serving the needs of families and individuals instead of using them as means of production and consumption.

We counted, how much will the GNP be in Finland in 1980 and 1990, if also the non-monetized work and production was included. The figures below are then counted as proportions of this "greater" GNP.

Zaskakujące, że w ciągu dziesięciu lat (1980-1990) udziały procentowe w poszczególnych sektorach uległy tak niewielkim zmianom. W latach 1992-1995 "wolna gospodarka" utrzymywała się prawdopodobnie na dużo wyższym poziomie, co spowodowane było 14-15% bezrobociem. Nierynkowa praca w domu, dla rodziny znacząco wzrosła, od kiedy ludzie zaczęli radzić sobie z malejącymi dochodami pracą w gospodarstwach domowych. Badania dowiodły, że standard życia społeczeństwa (tj. jego jakość) nie uległ pogorszeniu w tym samym stopniu co bieżące dochody jednostek.

Z początkiem 1995 roku, fakt członkostwa Finlandii w Unii Europejskiej spowodował, iż zdecydowanie zaczął ulegać zmianie cały obraz fińskiej gospodarki narodowej. Zniesienie granic wewnętrznych pomiędzy krajami UE, usuwanie barier ochronnych (np. ceł) pozwoliło złożonym efektom oddziaływania rynków międzynarodowych na trwałe wpływać na gospodarkę narodową.

2. 2. Bridging the private and the public

The tripartite picture of national economy is nothing new. It differs from prevailing economic thinking only by making visible a component which has always been there - the household economy. But the interplay between the private and public merits particular attention. Would it be possible for people to benefit from the dynamism existing between the private and public as an asset in their own hands and decide themselves where they want to stand in this interplay?

The Nordic women's research group for the "New Everyday Life" felt that even in the small societies like the Nordic ones the interplay between private and public spheres did not function appropriately. The group was in fact born out of dissatisfaction with the split-up everyday life, the shuttling between the private and public, which affects women more than men. (Research Group, 1979, 1984, 1987, 1991)

It was felt that present-day households in Scandinavia are simply too small to be able to solve their problems within the individual household. Women had a vision of a society organized in small, well-planned units with high degree of local self-management. The essential functions of living should be brought near to each other. There should not be too much distance between dwelling, work and recreation, between production and reproduction, between different age groups and genders.

Therefore "an intermediary level is needed between the private and the public spheres, between the 'big society' and the 'shrinking family'". There is a need to recreate a functional geographical and organizational level, something what the traditional villages have been at one time. This intermediary level must exist in the neighbourhood and be built on a community of working and self-determination of groups of people and families living close together.

The Nordic welfare-society is based on functional division of public services. There is the dwelling, the day-care, the working place, the hospital, each of them excellent institutions, which solve the problems of dwelling, baby-sitting and care, but which must be patched together in a complicated pattern of time and space. A great deal of women's time and energy is spent in the process of transforming these fragments of reality to something that at least reminds of a coherent whole.

Women are obliged to find individual solutions to collective problems and bound to cope with an unreasonably huge work load. As long as this work remains invisible, the increasing irrationality behind many officially rational resolutions remains hidden. Everyday life is the reality seen from beneath, it is society seen through the eyes of women, it is politics in practice.

Main types of work connected with the intermediary level are local household work, local care, local management and local production. Housekeeping and unpaid care rests mainly on the households. Through different arrangements part of this work could be moved to be done together between a group of households and ease the burden of individual households. (Figure 4.)

The Intermediary level (a caring level) creates a buffer or bridge between the households and communities and the "greater" society. It collects the widely spread services to the locations near people's dwellings, thus making local communities into more functional, human, family and woman friendly lively surroundings. The sleeping suburbs will be revived to become pleasant to live communities.(Cronberg & Vepsä, 1983)

The intermediary level has the advantage of more people and consequently a broader competence and larger resources than a single household. In relation to the "large society" and solutions from above, the intermediary level has the advantage of closeness and first hand experience. The solutions can be better adapted to the real needs, and the available resources are used better.

Through creation of an intermediary level people could

• gain more control over their own life and to break with the dependency on the market products and services on which one has little or no influence,
  
  
• reduce the division of work in society and gain experience of working with others and do other things than usually in "the working life",
  
  
• create a "social arena", which is not connected with production and paid work but open to all and for developing the sense of community, individual knowledge and capacity in cooperation with others,
  
  
• through interaction in everyday life become sufficiently conscious and strong to influence the overall structures determining the conditions for the everyday life.

2.3. The villages as intermediary actors

The women's research group created these visions with the revival of local life in cities and suburban areas in their minds. In reality people in the villages of rural Finland have created very similar "new everyday life" in last twenty years. Without knowing the ideas and work of the Research group people have invented and implemented much of the same thoughts and ideas spontaneously and made their villages - often a couple of villages together - to function very much as an intermediary level between the 'big society' and the 'shrinking villages'.

Starting in the beginning of 1970s the village action movement emerged spontaneously in Finnish country side as a reaction against the prevailing way of development, which is based on industrialization, urbanization and centralization and is threatening the life in villages. The movement is based on indigenous structures of country villages, which have been revived into new life to serve the needs of today as small, well-planned social units in the hands of local people. The movement consists of about 3 000 village committees and has had an impact in these years on lives of about half a million people.

Creativity and initiatives of people virtually exploded when they realized that they can take their fate in their own hands and save their way of life in the villages. Hundreds of villages have survived through strenuous collective work by villagers. Recent new trend is that villagers are organizing necessary services - even the shops, schools, banking and postal services - of their own in order to substitute the public ones, which are been closed or withdrawn by the state.

The most important resource of the people has been and still is the willingness and motivation to do voluntary teamwork, talkoot, which is an old Finnish tradition being revived. It is an effective means to realize even major projects without money. The work in common has proven to be also the best ground for the cultivation of the sense of commonality and belonging together. This way the people constituted a good ground for common endeavours and generated strength to demand also justice and legitimate entitlements from the public society. However, the more people's initiative and self-reliance increase, the less society's guardianship is needed. (Pietilä, 1993)

In fact, the village action movement has revived the 'free economy' to quite an extent in the direction as we proposed above (Pietilä & Pulliainen,1983) and what "the new everyday life" project also envisioned. The people in the villages have proved, that welfare does not depend only on money allocated from above. It depends as well on how much scope homes, small communities and neighbourhoods have to enliven and enhance the basic human functions - cooperation for common good, mutual self-help and responsibility for caring each other - that have been almost suffocated by an 'efficient' society geared towards competition and economic growth.

3. Cultivation economy - the interface between economy and ecology

The most fatal shortcoming of prevailing economics as science is that it does not distinguish the cultivation economy from the industrial production, from extraction and manufacturing. As it was stated in the beginning of this paper, the doctrines of economics seem to be derived from physics and mathematics, and therefore it does not recognize the science of life, biology.

The survival of human species, however, as the most complex life form in the universe depends ultimately and decisively on living nature, not on minerals and fossils. "The more complex forms of life ... are radically dependent on all the stages of life that go before them and that continue to underlie their own existence. The plant can happily carry out its processes of photosynthesis without human beings, but we cannot exist without the photosynthesis of the plants. Human beings cannot live without the whole ecological community that supports and makes possible our existence" (Radford Ruether, 1983).

Many indigenous traditions suggest that women invented agriculture and animal husbandry at "the dawn of history when their men were out hunting". Around the dwellings they started to cultivate the plants, which had been found tasty and edible, and they tamed the orphaned cubs of wild animals by breast feeding them. Thus they helped to provide food for the families even when men did not succeed in fishing and hunting. This indicates two different ways of relating with the nature; fishing and hunting, exploitation of nature, taking without giving; cultivating and feeding, nurturing when utilizing, mutually giving and receiving (Pietilä, 1990 a & b).

During the long agrarian history of the humanity the principle of 'nurturing when utilizing' was the most effective way of providing livelihood by men and women alike. Nurturing the animals was primarily the women's work and cultivating the crops and other plants the male job. Until this century - in Finland still in 1920s and 1930s - the agriculture was fairly ecological due to mere necessity, lack of industrially produced inputs, such as energy, fertilizers, pesticides etc.

3.1. Cultivation versus industrial production.

The cultivation economy produces basic goods in cooperation with living nature, i.e. the ecological systems. Agriculture, forestry, animal husbandry, fishing and all indigenous livelihoods belong to this type of economy, which operates with plants, trees, animals and micro-organisms (e.g. microbes, yeasts and Rhizobium), the renewable resources of nature. Soil itself is the ecosystem full of life. Cultivation is in fact the interface between human economy and ecology, interaction between human beings and nature, where we should profoundly understand the terms of ecology, and take them carefully into consideration.

It is crucial for the fate of humanity that we understand the particular nature and terms of this economy and conduct our handling with it accordingly. We should learn to care the living creatures, plants and animals on their terms, while utilizing them. Their living processes and well-being is the foundation of sustainable wealth and health of human species, too. A successful and harmonious interplay between human economy and economy of nature, the ecology, is the essential prerequisite for sustainable cultivation.

Figures 5 A and B are an attempt at illustrating and comparing the basic differences of cultivation and industrial economies. The main characteristics of these distinct spheres of production are listed under the pictures, where it is easy to realize how profoundly different systems they are.

Cultivation economy can also be called a living economy, because it is regenerating and sustainable, if the ecological terms are taken into consideration. The productivity and output of this production can be predicted and controlled only in definite limits, since - for instance - the amount of rain and sunshine, warmth and frost cannot be predicted and directed by human means.

The nature has programmed the timing and rhythm of procreation and growth, too. The length and timing of production seasons are very different according to the latitude and geographic location of the countries and regions. Therefore the preconditions of production are extremely different in different parts of the globe. In Finland we can harvest only once a year, irrespective how hard we work or what methods we use. In Southern Europe the farmers can cultivate all year round and get several harvests a year.

Industrial production can be called extraction economy or dead economy, because it was originally based on manufacturing of nonrenewable, non-living natural resources - minerals and fossils - which are extracted from the earth. Today it processes also raw materials produced by cultivation economy, like wood, crops, meat, coffee, cotton etc. The industrial economy is not very dependent on the terms of living nature, thus its productivity and efficiency can be improved as long as the raw materials are available. Its driving force is profitability.

Economics as science is based on logic of industrial production, extraction and manufacturing of 'dead elements', nonrenewable energy and resources. When this logic is applied to the cultivation economy, the same demands of efficiency and productivity imposed on agriculture and husbandry as on industry, the system is bound to run into difficulties.

Nevertheless, national and international economies have been run this way for as long as any intentional economic policies have been exercised. This misperception and mishandling of cultivation economy is the reason why agriculture has become such a problem both in national and world economy. This is also the reason why no solution has been found for the food problems of the humanity. And now when we are reaching the limits of the arable potential of the planet, these problems are rapidly becoming fatal.

3.2. Food or commodities?

Trade has been considered to be mutually benefiting and profitable exchange between the partners with resources and capabilities. Competing with each other through trade the countries would also optimize their capabilities and the profitable exchange would benefit everybody. This goes as long as it is an issue only of competitiveness on productive skills and competence of people, and productivity and effectiveness of technical machinery.

But it is absurd to apply the demand of international competitiveness on agriculture, animal husbandry, fishing and forestry, while natural conditions vary enormously from place to place on the earth's surface. The human competence does not hold good for adjusting the length of winter or the warmth of summer to the needs of competitiveness and even the breeding of more productive animals and seeds meet very definite limits. . Mother Nature is not a negotiating partner in the World Trade Organization, her terms are unnegotiable.

The existing cultivation economies - both the basic production in developing countries and the agriculture of industrialized countries - are in unsurmountable trouble. Developing countries have fallen into enormous debts and regression. Agriculture in industrialized countries, in spite of the application of the most advanced technology and significant subsidies, creates constantly growing burdens for the national economies and is about to collapse under the burden and effects of insane cultivation practices.

The problems of agriculture seem to constitute even a major reason for rapid migration from rural areas around the world, and thus the unmanageable growth of slums and urban problems. Finally the consequences fall upon the environment and destroy the foundation of cultivation economy and human economy as a whole.

In free trade, agricultural products are treated as if they were equivalent to minerals and fossils or industrial products. The trade does not recognize the nutritional value as a particular quality; the food products are dumped into the same category as pulp and paper, tobacco and coffee. Hence, people's basic needs in many countries, have been set at risk to increase export income by producing for instance tobacco and drugs instead of food.

In 1974 a program for the New International Economic Order was unanimously adopted in the United Nations. It was a program for regulation of international trade for the benefits of developing countries. But it was never implemented due to the manoeuvring of the multinational corporate power already that time.(UN/GA, 1974.)

For the purposes of getting hold on the world food problems there should be rules for trade, whereby the commodities were handled differently according to their importance vis-a-vis the basic human needs. Thus they should be differentiated e.g. into the following categories:

1. Food and feed products;
        (grain, rice, milk and milk products, fruits, meat, groundnuts, soya, etc.)
   
   
2. Raw materials for industry;
        (cotton, rubber, jute, timber, etc.)
   
   
3. Luxuries, primarily for Northern market;
        (coffee, tea, tobacco, cocoa, sugar, etc.)

From the human basic needs point of view, these categories vary drastically in importance. If food production were a universal priority, as it should be, food problems would have been solved a long time ago. However, since priorities are defined only according to the commercial value of products, and to the rules of supply and demand, the world's food problems prevail. Meaningful priorities and prices do not coincide, since the market mechanisms are responsive only to demand and not to the poor people's hunger.

Particular attention should be focussed on the third category, the products of which take huge areas of the best arable land but are for no-one's basic needs, neither are they important raw materials for any necessary manufacturing. The rules of free trade may be well applicable to these goods, the law of the supply and demand might well adjust their prices at the appropriate level for those, who want and can afford to buy them. (Pietilä, 1991).

In any case there should be applied appropriate regulations within countries as well as internationally to assure the adequate production of goods meeting basic needs. For instance, food should not in principle be an ordinary commodity at all, but an utility secured for everyone by the states and the international community, it should be cheap and easily available to all. This is approximately what a nutritional perspective on trade and an establishment of a world food security system would imply.

The food production should be protected in each country according to the climatic conditions of the country concerned. This will be a must in near future if we want to save viable agriculture, animal husbandry and forestry in various parts of the globe, and feed the increasing population. The food self-sufficiency should be an ultimate goal and policy where ever the natural conditions are realistically feasible. (For example in the Nordic countries, where people have developed during the centuries the skills and knowledge, how to provide the necessities for the inhabitants in spite of only one short cultivation season!)

Ultimately, the terms of survival for cultivation economy are the terms of survival for all of us, the whole humanity. They are dictated by living nature. The cultivation should be understood as an authentically different component of human economy and handled with due regard to its particular nature. The farmers and other "cultivators" should be given such terms which will enable them to apply ecologically sustainable means and methods in their production.

3.3. Three-layer cake with icing

The well known American futurist and alternative economist Hazel Henderson has clarified very illustratively the interrelationships of the three different components of human economy and their priority order already in 1982 in her Three-Layer Cake with Icing. It depicts beautifully that the production needed for sustenance and well-being of human society is much more than industrial production and trade (Henderson, 1984/85).

Here we see that all the private business production and transactions as well as public sector with all its structures and functions, which are seen in the SNA statistics, are only the upper part of the cake. They are standing on the foundation of two other layers, the "Social Cooperative Counter-Economy" - as she calls it - and the economy of Mother Nature. Although these lower layers are the foundation of all other economy and production, they are still invisible in economic theories and statistics until today.

The mainstream economics and policies recognize only the top icing of the cake. Still the private business layer of monetary economy and cash transactions are given all the attention and favor in the economic policies by governments and economists. This takes place today even at the cost of the actual top layer, the public sector, which in many developed countries is providing major part of the real welfare, the multitude of social and cultural services to the people.

Howeve, the whole top layer, the private and public monetary economy stands on the two bottom layers, the unpaid caring labour and production in the households and small communities and the foundation of renewal and nonrenewable resources of nature. These two layer are basis for everything else in the human economy, without them no other life and economy would be possible.

Hazel Henderson calls the non-market middle layer as "counter-economy", but she warns carefully for not confusing this with "underground economy" or tax-dodging, moonlighting, gray sector and all kinds of illegal cash-based transactions, which is today very much in focus due to its high and increasing proportions in many societies. "The 'Counter-Economy' is based on very different principles: altruism, volunteering, community and family cohesiveness, cooperation, sharing, respect for the environment and the rights of future generations, and conservation of all resources - human and natural", describes Hazel Henderson. Therefore it would be unfair to mix the "counter-economy" of altruism and care with the "underground economy" of greed and illegality.

The crucial point to notice is that the layers of the cake are founded on each other just in this order: GNP "private" sector rests on GNP "public" sector an d both of them rest on non-monetized, unpaid sector and finally everything rests on "Mother Nature".

4. Conclusion: The Triangle of Human Economy

This paper is written primarily with the economy and lifestyle of affluent, post-industrial, countries in mind. It is exactly these countries which are, today, the ones hosting the transnational corporations and supporting their policies. Hence we can claim accountability from them, directly and indirectly, for the proceedings of today's global economy. The considerations in this paper about limiting the economic growth naturally apply to the rich countries. These thoughts can be taken as the basis for criticism against the policies and actions of the rich industrial countries and as suggestions for change which is seriously needed particularly in the North.

The present process of the economic globalization makes these issues even more pertinent. How can the local societies and people maintain the space for their efforts towards sustainable and self-reliant livelihoods?

According to the Canadian feminist ecological economist Patricia Perkins, the local economies grow in response to economic globalization and global ecological realities. They are destined to play an important role in many peoples lives irrespective of whether they represent an accommodation to the global economy or an alternative to it.

"Local terrain is extremely important, not just because it is 'close to home', but also because community-based economic alternatives and resistance to centralized economic control represent a fundamental challenge to the juggernaut of globalization" (Perkins, 1998). The more self-reliant and sustainable livelihood people can develop locally the more powerful they are also to create political will towards their government to act against the globalized economic pressure.

Suggestions are made here for the revival of the nonmonetary work and production in the families and local communities, i.e. for empowering people to manage their own livelihood better and maintaining the control of their everyday life. The omission of non-market household work and production in the economic thinking distorts the picture of the national economy and makes it inadequate as the framework for the national economic planning and policies.

The household, cultivation and industrial production are the distinct components of the human economy. The household and cultivation cannot be accommodated into the narrow physical-mathematical framework of industrial economy. Caring, cosiness and health as products of unpaid work in the households do not fit in, neither do sunshine, rain and fresh air or the life processes of microbes and worms in the soil as inputs to the cultivation economy. They cannot be translated into mathematics, the only language in which present economics operate.

The households and local economies are major components in production of human welfare. The cultivation economy is an indigenous component in the totality of human economy. It produces the basic goods for satisfaction of basic human needs. It is a concrete interface between ecology and economy, where the human culture should operate with due respect to ecological laws. Each one of these components of human economy operates by its own logic. Now, only the logic and terms of the industrial economy are well known. The other components need to be further analysed and defined. And so needs the dynamism between these three.

The triangle picture of human economy (Figure 7.) sees these three components each one in its own right of existence and thus helps us to see the links and dynamism within and between the three. There are links between the macro and micro, monetary and nonmonetary, visible and invisible, living and non-living, private and public in the reality of human subsistence. Some of these links are within the components, some are in between them.

The need to develop a new theory for the totality of human actions for sustainable livelihoods is challenging. Such a new theory and understanding of the operation of this triangle human economy, will lay a foundation for the kind of economic planning and policy-making, that seriously aim to provide for a sustainable and dignified livelihood for all people, instead of constant growth and accumulation of capital and power in the hands of the rich and the strong. The suggestions and visions in this paper are an effort to contribute to and stimulate the process towards such a new theory (Pietilä, 1997)