Embedded Files
Helpful prior knowledge and learning objectives
Helpful prior knowledge and learning objectives
Helpful prior learning:
Section 1.1.1 The economy and you, which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems
Section 5.1.1 The state as a system, which defines the state, its parts and their relationships, and some ways to classify states
Section 5.1.2 Origins, legitimacy and power of states, which explains how states came about, how they gain legitimacy and maintain power
Section 5.1.3 Functions of the state, which explains the various roles of the state in providing goods and services, protecting the population, and stabilising and guiding change
Section S.1 What are systems?, which explains what a system is, the importance of systems boundaries, the difference between open and closed systems and the importance of systems thinking
Section S.2 Systems thinking patterns, which outlines the core components of systems thinking: distinctions (thing/other), systems (part/whole), relationships (action/reaction), and perspectives (point/view)
Section S.3 Systems diagrams and models, which explains the systems thinking in some familiar information tools as well as the symbols used to represent parts/wholes, relationships and perspectives
Section S.5 Causal loops, feedback and tipping points, which explains the feedback loops that can stabilise or destabilise systems.
Section S.8 Leverage points, which explains the different areas of a system that we can influence to bring system change
Learning objectives:
explain the importance of balancing state and non-state economic power and strategies to achieve such a balance
In the late 1990s, South Africa faced a deadly HIV and AIDS crisis. Life-saving antiretroviral medicines existed, but the prices were so high that most people could not afford them. In 1998, the South African government passed a law to import or produce cheaper generic versions of the drugs.
In response, 39 major pharmaceutical companies took the government to court. They claimed the new law violated international patent rules that gave them the exclusive right to sell the drugs. Civil society groups across South Africa and the world joined with the state to defend the law. After three years of protest and legal pressure, the companies dropped the case. Cheaper medicines became available, saving many lives.
In this case, the state, working with others, acted as an opposition-force—what economists call a countervailing power—to multinational corporations trying to maximise profit. As Section 5.1.3 explains, this is one of the positive roles of the state. But sometimes the state itself becomes too powerful, especially when it joins forces with powerful business interests.
Why is it important to balance state and non-state power in the economy?
Why is it important to balance state and non-state power in the economy?
Households, markets, commons, and the state all play roles in the economy. But their interests don’t always match. One institution’s goals can conflict with another’s. If power becomes too concentrated in one, the whole system can be distorted in its favour.
States and markets usually hold more power in economies than households and commons. Over time, this imbalance can worsen through reinforcing feedback loops. For example, when a company grows, it can use its profits to influence media and laws. This gives it more market power, helping it grow further, a cycle known as the ‘success-to-the-successful’ system trap (Section S.9 and Figure 2).
When state and market interests are too closely linked, this can lead to state capture. Decisions are made for the benefit of a few instead of the public. Economic and social systems become unfair and unstable, people and the planet suffer.
Figure 2. Reinforcing feedback loops showing how increases in business size and market power lead to economies of scale and higher profits which lead to further increased market power (right) and political power (left).
The consequences are visible around the world. Before the 2008 financial crisis, banks used political donations and lobbying to weaken rules on risky investments. When the system collapsed, millions lost jobs and homes. Public money was used to rescue the same firms that caused the problem.
Another example is the exploitation of resources for green technologies. States around the world make deals with mining companies to access metals like copper and cobalt, often displacing local communities and damaging ecosystems. Local people usually cannot stop this, because market and state power are closely linked (Figure 3).
Figure 3. Market-state alignment creates a familiar pattern of enclosure, human displacement, and environmental damage around the world.
How can power be rebalanced?
How can power be rebalanced?
To create a regenerative economy, we must prevent or disrupt reinforcing feedback loops and strengthen balancing ones. This means limiting concentrated power, whether it is focused on the state, or on market-state alliances. It also means building up countervailing powers of commons, employees, households, and civil society.
Figure 4. Reinforcing feedback loops can be disrupted, but how?
Building limits into the state
Building limits into the state
Some limits on state power can be built into the system itself. This includes things like free media, regular elections, and systems that divide power between different branches of government with different roles and power over each other. Many state systems have different groups (or branches) in the state that have different roles. A legislative group makes laws, an executive group carries out laws, and a judicial group interprets laws. Power can also be distributed between local, regional and national levels of government (Section 5.1.1).
These internal limits are important for preventing any one part of the state, like a president, from assuming too much power. They can also help prevent corruption and state capture so that the state acts in the public interest.
Rewriting or strengthening the rules/laws
Rewriting or strengthening the rules/laws
Laws shape who holds power. They set the boundaries for what governments, businesses, and citizens can do. Laws can prevent or disrupt reinforcing feedback and strengthen balancing feedback.
One way that laws can strengthen balancing feedback is through recognition of customary land rights for commoners (Section 4.4.1 and Section 4.4.3). In many places, land and forests are cared for through traditions and rituals passed down in commons over generations. But these commons are often at risk from market–state alliances as businesses and governments seek control of land for profit. Legal recognition of commoners’ land rights can strengthen the countervailing power of indigenous or local groups to resist enclosure of their lands so they can continue to care for shared resources.
Labour laws can also support balancing power. Many countries have laws that give workers the right to form unions, bargain collectively, and go on strike. This gives workers more countervailing power in employer-employee relationships than they would have as individuals, helping them to resist poor treatment and low wages. Strong unions also influence laws and politics, acting as a countervailing power against business lobbying that results in state capture.
Figure 5. Labour unions, also known as trade unions, are an important countervailing power in society.
(Credit: InfiniteFlow, licensed from Adobe Stock)
Antitrust laws are one way to halt reinforcing feedback loops of power in business (Section 3.2.4). These laws enable states to break up monopolies or stop mergers and other business practices that reduce competition. When there is more competition in markets, businesses act as a kind of countervailing power among themselves, preventing any one business from gaining too much.
Strong legal protections give communities the ability to push back when power becomes unbalanced. But states have to make such laws in the first place, and hold powerful interests to account when they are violated. Once the state is captured or corrupted, this becomes more difficult.
Strengthening democratic participation
Strengthening democratic participation
Another way to balance power is by giving more people a voice in decisions. If more people help set public priorities, decisions are more likely to meet human needs within planetary boundaries. When they hear the word democracy, most people think of voting. Voting is essential, but it is not enough on its own (Section 5.1.1) to ensure balanced power. True democratic participation includes many other forms of involvement.
One approach is participatory budgeting, where residents identify needs in the community, discuss solutions, and help decide how public money is spent. In Porto Alegre, Brazil, citizens have helped plan city spending since 1989. They vote on local projects like schools, roads, and water systems. This increases trust and builds cooperation in the community.
Another approach is the citizens’ assembly. Here, people are often selected by lottery and reflect a wide mix of society. They study an issue, discuss it in detail, and make recommendations. In Ireland, citizens’ assemblies helped shape national laws on abortion and same-sex marriage. To work well they have to provide the financial and logistical support to enable people from all parts of society to participate. By giving ordinary people time to learn, reflect, and discuss, citizens’ assemblies can balance political and corporate influence with informed public judgement.
Protecting free speech and protest rights is also key to democracy. Around the world, people have used protests to challenge injustice and demand change. But these rights are under threat. In the UK and the US, new laws have targeted peaceful climate activists, restricting their ability to speak and protest. When these rights are weakened, it becomes harder for the public to act as a countervailing power, so protecting them must be a priority.
Figure 6. Citizens’ assemblies can balance political and corporate influence with informed public judgement.
(Credit: GoVocal)
Figure 7. Protests and free speech are essential rights that support countervailing power in societies.
(Credit: Markus Spiske, Pexels license)
Public or commons control of resources and services
Public or commons control of resources and services
Sometimes, the best way to balance power is to shift control of key services back to the public or the commons. This can happen at the city level, known as remunicipalisation, or at the national level, known as nationalisation (Section 5.2.2 - link coming soon). This reduces corporate influence and gives people more say in managing essential services for the common good rather than profit maximisation. In Hamburg, Germany, a public vote in 2013 led the city to buy back its electricity grid. The new public company focuses on clean energy and social well-being instead of profit. Citizens have more input in decisions, and the goals of the system have changed.
Figure 8. The city of Hamburg, Germany remunicipalised energy services to orient on human and ecological wellbeing, changing the goal of the system.
(Credit: Hamburger Energiewerke)
Why are local communities so important for balancing power?
Why are local communities so important for balancing power?
Healthy economies, like healthy ecosystems, are diverse with distributed networks and power. They need many forms of ownership and decision-making. This creates redundancy, the ability of one part to take over when another fails. Even when national governments are inactive or captured, local communities often act.
To support this kind of community action, long-term investment is needed. That includes supporting local leadership, ensuring access to information, protecting civic space, and guaranteeing the right to organise. Balancing that power is essential if we want an economy that serves everyone and stays within planetary boundaries.
Activity 5.1.4
Activity 5.1.4
Concept: Power
Skills: Thinking skills (critical thinking, transfer)
Time: varies, depending on the option
Type: Individual, pairs or group (depending on option)
Option 1: Attacks on countervailing power
Time: 40 minutes
In many places, businesses and states are attacking countervailing power. The following are four mini-case studies of recent attacks. Read through them and respond to the questions, with a partner or small group if possible so you can discuss them.
Silencing Critics Through SLAPPs
Some powerful individuals and companies use lawsuits to intimidate people who speak out against them. These lawsuits are called SLAPPs—Strategic Lawsuits Against Public Participation. Even if the person being sued is right, defending themselves in court can be very expensive and stressful. This can discourage others from speaking up, fearing they might also be sued. For example, a journalist reporting on environmental pollution might be sued by a large company, not necessarily to win the case, but to silence the journalist and others.
Restricting NGO Funding in the EU
Governments often provide funding to non-profit organizations (NGOs) to help them work on important issues like protecting the environment and public health. In the European Union, the LIFE programme supports such NGOs. However, recently, some EU member states have tried to cut this funding, arguing that NGOs shouldn't receive public money if they challenge government policies or take legal action against the state. Without this support, NGOs may struggle to operate, making it harder for them to act as a check on government and corporate power.
Weakening Oversight in the United States
In 2025, President Trump’s administration weakened public agencies that are meant to limit the power of government and business. One example was the firing of 17 inspectors general. These officials check if government agencies follow the rules. They investigate problems like corruption, waste of money, or abuse of power. Removing so many of them will make it harder to find and stop these problems. Another instance is the 90% reduction of staff at the Consumer Financial Protection Bureau (CFPB). This agency protects people from unfair treatment by banks and credit card companies. With fewer staff, the CFPB can no longer do its job properly. These changes reduced important countervailing powers that help protect people from state and corporate power.
Tanzania’s Crackdown on Media Freedom
In 2024, Tanzania’s government suspended the online platforms of Mwananchi Communications Ltd for 30 days. The reason was a short animated video showing a woman watching news about people complaining of missing or murdered relatives. Officials said the video harmed the country’s image and national unity. Human rights groups criticised the suspension, saying it was a way to silence independent media. When governments punish media for reporting difficult stories, it becomes harder for journalists to question those in power. This reduces press freedom and weakens the media’s role as a countervailing power.
Questions
What are countervailing powers, and how do the examples in the case studies show their importance?
How did governments or powerful organisations try to weaken these countervailing powers in the case studies?
What could be the consequences of weakening countervailing powers, in each of the case studies?
Articles with further information about the mini-case studies in the Activity:
What is a SLAPP suit? Legal experts explain how these lawsuits suppress free speech
Rightwing MEPs threaten huge funding freeze for environmental NGOs
Trump uses mass firing to remove independent inspectors general at a series of agencies
Tanzania’s regulator bans media outlets as journalists harassed
Option 2: Citizens’ assemblies
Time: 30 minutes
Watch the following TEDTalk from democracy activist Ketakandriana Rafitoson about citizens’ assemblies in Madagascar:
Democracy is being tested. Citizen assemblies can help
Questions to consider (individually, in pairs, small group or as a whole class)
Ketakandriana Rafitoson points out that her initial work in communities is about helping people understand what democracy is and is not (Section S.2). She says that people confuse democracy with anarchy (2:00-4:00).
What do these two terms mean? How are they similar, how are they different?
Why is it important not to confuse the two?
She mentions a reinforcing feedback loop in the video (3:00-4:00), related to people’s lack of understanding of what a democracy is. Can you describe that feedback? If you know how (Section S.5), diagram it.
How do citizen assemblies in Madagascar act as a countervailing power in the face of weak or corrupt state institutions? What examples does Rafitoson describe?
What risks do people face when building non-state power in situations where the state is repressive or unaccountable? How have the groups that Rafitoson works with tried to reduce those risks?
Option 3: Finding local examples of countervailing power
Time: Several class periods - could be shortened if a teacher pre-selected examples
In this activity, you will explore whether there are countervailing powers active in your own country or region. Work individually or in pairs to research and present one or more local examples. These might include citizen assemblies, youth-led campaigns, watchdog organisations, community protests, or legal challenges to state or corporate actions. Some questions to consider for your example?
Are there any citizen-led initiatives near you that try to influence government or business decisions?
What issue(s) do they focus on?
What methods do they use to increase their power or make their voices heard?
What risks or challenges do they face?
Would you say they are acting as a countervailing power? Why or why not?
Prepare a poster, slideshow, or verbal summary of your findings for a class gallery walk or discussion.
Ideas for longer activities and projects are listed in Subtopic 5.5
Option 4: Leverage points for change
Time: 40 minutes
Note: To do this activity, you need to have covered Section S.8 on leverage points.
Leverage points are places in a system where even small shifts can lead to big changes. Consider the information from this section on balancing state and non-state power.
Make a quick list of the strategies mentioned in the text.
Choose one of the strategies that interests you and remind yourself how it works.
Identify what kind of leverage point in the system (Figure 9) that strategy seems to be tapping into.
What are the implications for power relationships of tapping into that leverage point? What is it about the system that is being affected and how?
Figure 9. Twelve key leverage points for changing systems.
(Credit: Meadows (1999) from DEAL)
Checking for understanding
Checking for understanding
Coming soon!
Further exploration
Further exploration
Local Futures - a website exploring how local economies and strong communities can help solve global problems like climate change, inequality, and loss of culture. Great for learning how relocalisation connects to regenerative economics. Difficulty level: medium
How to Citizen - a podcast exploring the perspectives and practices people are using to wield collective power to build a better future. Difficulty level: easy
Amy and Goliath: How a law student took on Big Pharma - This article from Salon magazine tells the story of a South African student who helped lead the fight against 39 powerful drug companies during the AIDS crisis. A powerful example of how young people can make change. Difficulty level: medium
Abuses Linked to the Mining of Energy Transition Minerals in the Democratic Republic of the Congo - a 15 minute documentary form Amnesty International about the dangerous conditions faced by people mining cobalt in the Democratic Republic of Congo.
Democracies are being tested. Citizens’ assemblies can help - Madagascar activist Ketakandriana Rafitoson explains how citizen assemblies help ordinary people learn about democracy, protect their rights, and shape their future through collective decision-making. Difficulty level: easy
The Goldman Environmental Prize - the website of an award that honours grassroots activists confronting the ‘toxic mix of corporate power, regulatory failures, and political corruption’. The awards are made every year and the website captures these inspiring stories of countervailing power. Difficulty level: easy
Sources
Sources
Amnesty International. (2023, September 12). DRC: Cobalt and copper mining for batteries leading to human rights abuses. https://www.amnesty.org/en/latest/news/2023/09/drc-cobalt-and-copper-mining-for-batteries-leading-to-human-rights-abuses/
Blink, J., & Dornton, I. (2020). Economics: Course Companion. Oxford: Oxford University Press.
Carbon Neutral Cities Alliance. (n.d.). How Hamburg regained control of its energy utility. https://carbonneutralcities.org/how-hamburg-regained-control-of-its-energy-utility/#:~:text=With%20the%20remunicipalization%2C%20the%20City,Gasnetz%20Hamburg%20GmbH%20
Committee to Protect Journalists. (2024, October 15). Tanzania’s regulator bans media outlets as journalists harassed. https://cpj.org/2024/10/tanzanias-regulator-bans-media-outlets-as-journalists-harassed/
Glionna, J. M. (2001, May 1). Drug firms drop South Africa suit. Salon. https://www.salon.com/2001/05/01/aids_8/
Go Vocal. (n.d.). What are citizens’ assemblies and how do they work? Go Vocal. https://www.govocal.com/blog/citizens-assemblies-deliberation
Miller, Z., Tucker, E. and Weissert, W. (2025, January 26). Trump uses mass firing to remove independent inspectors general at a series of agencies. AP News. https://apnews.com/article/trump-inspectors-general-fired-congress-unlawful-4e8bc57e132c3f9a7f1c2a3754359993
Neslen, A. (2025, February 4). Rightwing MEPs threaten huge funding freeze for environmental NGOs. The Guardian. https://www.theguardian.com/world/2025/feb/04/rightwing-meps-threaten-huge-funding-freeze-for-environmental-ngos
OECD (2020), Innovative Citizen Participation and New Democratic Institutions: Catching the Deliberative Wave, OECD Publishing, Paris, https://doi.org/10.1787/339306da-en
Safstrom, J. & Riedmueller, R.. (2025, March 11). What is a SLAPP suit? Legal experts explain how these lawsuits suppress free speech. The Conversation. https://theconversation.com/what-is-a-slapp-suit-legal-experts-explain-how-these-lawsuits-suppress-free-speech-251098
Stevens, M. Bowles, S, and Carlin. (2024). “7.8 Price setting, competition, and the market”. The Economy 2.0. https://www.core-econ.org/the-economy/microeconomics/07-firm-and-customers-08-price-setting-competition-market.html.
World Bank. 2008. Brazil : Toward a More Inclusive and Effective Participatory Budget in Porto Alegre, Volume 1. Main Report. World Bank. http://hdl.handle.net/10986/8042
Terminology (in order of appearance)
Terminology (in order of appearance)
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