“Wealth is the parent of luxury and indolence, and poverty of meanness and viciousness, and both of discontent,” so wrote Plato
We need to admit that new economic thinking cannot occur without adding some political modeling and ideas. This is because the economics we have is part of a political regime that favors the one percent, creates inequality, ruins the environment and furthered the division of the country in ways that create voting out of anger and despair and potential violence. The result is a dysfunctional government that ignores the serious issues and governs through the theater of hyping the wrong issues. Our economics supports a dysfunctional government.
The positive view is not bandaid for the current system. Most bandaids floating in the press leave in place growth without environmental discipline and leave in pale the accelerating monopolization and wealth concentration that has sparked such powerful criticism in the years since 2008.
But the criticism, often quite rigorous, does not reach to solutions, even imagined. There ia a failure of imagination and vision.
In political history this is classic. Elites make choices for their own benefit and are blind to the impact of their policies on most of the population. The results add up until violent regime change. Some of it bottom up and some top down. The top down usually wins.
We need an economics that helps create an economy of “The wealth of Nations”, recognizing that Adam Smith knew what he was doing when he made it plural, and included in his book lots of advice on education as a state supported activity, and against any form of monopolization. The world is more complex than Smith could see. There were almost no corporations, few factories, most people worked in craft guilds or farms. The path from Smith to the present is full of detours he would not have liked and have gone agains his specific recommendations.
We must recognize that governance is very difficult in a crowded world with an overworked economy. We need leaders, but how are they chosen and how rewarded? The complexity of the world and its interdependence with technology makes their task almost impossible, but part of the problem is that the current goal of the system is simple inequality and extending production of the unnecessary. If the goal was meeting real needs rather than just consumerism elites would have a meaningful alternative and would recognize the value of democracy and serious education for all – not for jobs but for community imagination.
We need an economics which helps people meet real needs of family, science, communities, interdependence, education, health and quality of life in all its richness. The current model of providing the middle class a standard of living defined by consumerism rather than by livability of community. We have a lower class defined by their invisibility and whose work needs of computer and cell phone are treated as consumer items rather than as school and work necessities.
Economics as a guide to the wealth of nations would be a different economics. It would discuss values, political arrangements, quality of life, and be fundamentally interested in what is good for humans in their private and community life in a more democracy tending society. Instead of dismissing most of these issues new economics would above all find them interesting – as reality can tend to be.
This will be very hard work, in part because it means redistributing careers, power and assets, redesigning institutions and communities, and because we have not been educated for it.
Economics is the thinking and economy is the topic. But as we know the thinking affects the object it studies. Economics becomes the basis for justifications and regulation, yet much if what is economy has been increasingly avoided by economics, or left unspoken in hidden assumptions, especially issues of class, wealth, capital, land, war and political power.
There is a strong trend in economics toward mathematical formalism and deductive systems, such as complexity and game theory. Despite claims for how important these are for the future of economics, these are minor developments in what New Economic Thinking needs to be about if it is to help society restructure toward fairness and climate health. There is a struggle in economics between trying to be a science and its potential as a kind of engineering. The first is organized curiosity, the second is deeply pragmatic. New Economic thinking must break out of the mechanical cocoon it has tended to take as normal if it is to be socially relevant beyond a formalism that organizes careers and grants but no public policy or inform the population of what the economy is about.
New Economic Thinking, in that fuller sense, needs to be in partnership with neighboring disciplines, and be aware that what they can offer, sociology and psychology for example, has itself been limited by trying to copy the success of economics because of its success in attracting money and building careers.
The reason this outreach is necessary is because, with the limited range of concerns in current economics, the reason why we need to develop a new economics – inequality, the role of money in politics, the nature of capitalist culture – are excluded. You can’t fix the economics of the broken part if the broken part is seen as external to economics.
For me the idea of new economic thinking requires a framework of democracy. But we know that such a thought is not universal, so I will need to argue for it, and also discuss economics for non-democratic regimes.
Democracy is a developmental project. It requires the education and free development of the individual to be a knowledgeable participant in their society. It is because it is a development project for everyone that I am in favor of it, despite the difficulties.
The current thinking in society about economics is mostly driven by search for advantage. This is deep in the culture. A new economics requiring anew economy need a different basis inhuman motivation. Competition produces winners – and losers. We cannot afford more losers.
We need a new culture based on compassion. Adam Smith used is as the basis for organizing his first more important book The Theory of Moral Sentiments. Confucius used it as the basis for a social society. Buddhism is full of it. The Dali Lama says “All religion comes down to one step, it of yourself towards another.” Martin Buber said the most important act is to set another in front of you.
These together add up to a choice: compassion and democracy. The alternative is more authoritarian and hierarchical and probably war based.
An economics that makes democracy and compassion important…
These are my personal thoughts on what economic thinking has been, is, and could be. Economy is so much a focus of world wide urgent concern that good thinking is being published daily. Much of what appeared to be radical in this short book has already become common sense. So the book is a not quite up to date progress report to clarify my own thinking of what new economic thinking should be about. I keep a blog, dougcarmichael.com, where new thoughts are recorded in a more timely but less integrated way.
Most important, economies is about humans and their relationship to the material world that sustains them. People look to economics for guidance on how to manage that relationship. But economics falls far short, because it takes the one percent economy as given and sane and beyond modification. At its best economics embraces the view that society is on the planet, its people interact with many, and economics is a system within society, its politics and power relationships. A few words about the alternative view of economics.
Mainstream economics is obviously a vast reduction of that complexity to the isolated individual in a market of other isolated individuals, passing each other as though in hazmat suits. Economics should help understand and manage that relationship between people and world, taking into account anything that might be relevant.