Despite numerous efforts, it has so far not been possible to place our economic system on a sustainable path. As a result, increasing attention is being paid to new concepts and actors within an “alternative economy,” which are often attributed significant transformative potential.

Despite their differences, these approaches share a common idea: to embed economic activity within social and ecological contexts by developing and practising alternative forms of production and consumption. They are critical of the dominance of fundamental economic categories such as markets, growth, and profit maximisation, and propose alternative models in their place.

Against this backdrop, alternative economic practices can also be understood as responses to growing uncertainties associated with ecological and economic transformation processes. In doing so, they always address the institutional conditions and logics under which such transformations take place. They appear to hold the potential to transform the existing economic order and culture. However, so far they have not achieved this.

This article, therefore, examines the extent to which the normative aspirations of alternative economic practices can be realised within existing market interactions—and where their systemic limits lie.

Alternative economic actors and their values and norms

Among the various approaches to alternative economic practices, the common good economy (Gemeinwohlökonomie) and the solidarity economy (Solidarische Ökonomie) approaches occupy a special position, as they explicitly articulate their normative frameworks and develop them—at least in part—around questions of justice and the good life. This makes an extensive reconstruction of their normative foundations unnecessary.

When addressing the ethical question of the purpose of economic activity, proponents of alternative economic models draw on debates about the good life. For example, the solidarity economy calls for economic activity to be oriented toward human needs, positioning this as an alternative to a focus on monetary profit. Such a needs-based orientation is intended to contribute to a higher quality of life (Embshoff et al. 2017).

When we ask about the meaning of life, we are asking about what is essential—what constitutes or should constitute our lives. We develop a conception of the good life as an end in itself. Questions about how to organise economic activity inevitably lead us back to such considerations.

While some philosophy schools of thought assume that consensus is possible on questions of justice—and therefore make strong universal claims—this is not the case for questions of the good life. At the same time, the fact that such answers carry a lower justificatory standard than claims about justice is no reason to avoid them. It does not mean that justification must be abandoned altogether.

The normative foundations of any economic theory are always articulated from the perspective of participants in ongoing discourses. They must therefore be understood as provisional—open to further development—and inevitably marked by limitations. However, one never starts from scratch; one always builds on prior debates and existing arguments.

Both the common good economy, with its concept of the common good, and the solidarity economy, with its emphasis on a good life for all, implicitly also raise claims of justice. The aim is that everyone should benefit (equally?) from economic activity. However, questions of distributive justice arise whenever competing claims come into conflict.

In the case of the common good economy, such ideas are further specified in the “common good matrix,” which includes, among other things, proposals relating to material distributive justice, such as limits on income inequality (Felber 2010).

Beyond distributive justice, both approaches—particularly the solidarity economy—emphasise equal participation as a fundamental condition of justice. Accordingly, both advocate democratic co-determination within economic organisations (Embshoff et al. 2017).

These normative claims provide the benchmark against which alternative economic practices must ultimately be assessed in their interactions within markets.

Critique of the “logics” of the existing economy

In addition to philosophical questions of the good life and justice, proponents of alternative economic practices also engage—rightly—with broader social-theoretical issues. They critically examine market-based forms of economic interaction.

A defining feature of these approaches is their sharp critique of existing economic structures and their underlying “logics,” such as the logic of profit and the logic of competition (Felber 2010; Giegold/Embshoff 2007). These logics are seen—particularly within the common good economy—as responsible for a range of crises, including crises of meaning, distribution, climate, and democracy.

Accordingly, the claim is to deactivate the logics of profit and competition and to replace them with the principles of the common good and cooperation (Felber 2010). The solidarity economy similarly seeks to replace profit logic with solidarity, defined as an orientation toward the needs of cooperation partners (Giegold/Embshoff 2007).

This implies a transformation of market interaction itself. However, within the solidarity economy movement, there are differing strands. While some—like the common good economy—seek to transform market interactions, others advocate their far-reaching abolition. For example, the “gift economy” movement, with its slogan “sharing, not exchanging!”, aims to replace markets entirely with alternative coordination mechanisms (Habermann 2018).

To assess whether—and to what extent—these normative aspirations can be realised within existing market systems, we must examine the systemic dynamics of markets more closely.

The systemic effects of markets

What exactly do we mean by “the market,” and to what extent is it shaped by systemic forms of coordination? What constitutes the “logic of profit” or the “logic of competition”?

In line with standard economic theory, the market can initially be understood as a network of exchange relationships in which goods and services are allocated through the interaction of supply and demand. Exchange in markets is always mediated by money.

Economic theory assumes that no party is made worse off through exchange (Pareto superiority). This assumption is embedded in the very concept of voluntary exchange—exchange without coercion. Market participants are conceptualised as homo economicus, agreeing to exchanges only if they are beneficial, or at least not disadvantageous.

Thus, exchange is, by definition, Pareto-efficient—at least in the ideal-typical market. In reality, however, few economists believe that actual markets fully conform to this ideal. Much of modern economic theory focuses instead on market failure or market distortions, defined as deviations from this ideal. The ideal itself, however, is treated as the normative benchmark; the market principle as such is not seen as failing (Egan-Krieger 2021).

This ideal type—the “logic of the market”—represents a theoretical model of how markets are supposed to function. It is independent of time and place and can be realised to varying degrees.

The question then arises: when can we speak of a self-regulating market governed by a distinct systemic logic?

In pre-industrial societies, economic activity was embedded in moral and institutional contexts. With industrialisation, however, the economic system became increasingly detached from the lifeworld—a process Karl Polanyi described as the “Great Transformation.” The decisive shift was from socially embedded markets to a market economy dominated by a self-regulating market. Labour, land, and capital were transformed into commodities. Max Weber described the associated mindset and course of action as the “spirit of modern capitalism” (Weber 2004 [1920]).

This development can also be analysed through systems theory, particularly Jürgen Habermas’s distinction between social and functional integration. With the emergence of a self-regulating market, normative social integration is replaced by functional system integration in the economic sphere. Economic activity is increasingly coordinated not through social understanding but through the medium of money. This reduces the need for communication and enables high levels of complexity (Habermas 1981).

These theoretical perspectives help to explain why market actors face structural competitive pressures which often are experienced as “objective constraints.” Market coordination through money takes the form of competition. Since actors can switch exchange partners, each such shift places others under pressure. Even if individual changes are minor, their cumulative effect produces a persistent competitive dynamic that compels firms to remain competitive (Thielemann 2010).

In sum, markets generate systemic competitive pressures that largely escape the control of individual actors.

Embedding and limiting markets

At first glance, these systemic effects seem to render the idea of replacing profit maximisation with the common good unrealistic. Does this mean such proposals are merely “utopian”?

Not necessarily. Even within market systems, forms of action oriented toward mutual understanding remain possible. Market actors can choose to behave ethically despite systemic pressures. This is therefore not an “impossible” option.

However, the scope for such behaviour is limited. The degree to which markets are governed by competition varies. This means that, alongside the possibility of limiting markets, there is also the possibility of embedding them—introducing non-market considerations into market processes. This perspective is commonly referred to as the embeddedness of markets (Streeck 2007; Deutschmann 2015).

Implications for alternative economic practice

It is therefore in the interest of ethically oriented firms to advocate for state regulation that embeds markets by limiting competition. Only when competitive pressure is reduced does ethically motivated self-restraint become viable.

At the same time, such measures cannot fundamentally “reprogramme” a market economy, as proposed by the common good economy. The systemic effects described above are inherent to markets. They cannot be eliminated within markets—only constrained.

This is precisely why the efforts of the solidarity economy to experiment with non-market forms of organisation are so important. If markets are to be both embedded and limited, alternative non-market systems are needed to ensure production in areas excluded from market coordination.

Ultimately, the respective roles of embedded markets and non-market practices in enabling a meaningful and just economy cannot be determined in advance through theory alone. Rather, this requires both broad democratic deliberation and extensive economic experimentation.

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Editorial Note:

This article is produced as part of a collaboration between Rethinking Economics International, Makronom and the Economists for Future DE and was originally written in German language. The 2026 contributions engage with ongoing debates on anti-authoritarian and anti-fascist perspectives on economic policy, with particular attention to how social security arrangements can help counter authoritarian and nationalist tendencies. Contributions in this series also explore welfare state design, property relations, pension systems, and institutional reforms with a view to strengthening democratic cohesion, ecological stability, and economic resilience. The views expressed in this article are the author’s own and do not necessarily reflect those of the participating platforms.

About the author:

Tanja von Egan-Krieger is a fellow at the Denkfabrik für Wirtschaftsethik and holds a Ph.D. in philosophy. Her research interests lie in the fields of economic philosophy, critical theory, sustainability theory, and degrowth.

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