To see an economy as a system is implicitly to treat it as though it’s a coherent set of parts that are adapted to each other. this implies the system has an internal integrity and purpose and those who interact with the system should help to keep it functioning, to repair it if it is in trouble rather than replace it with something new and better, but alien to the original intents.
But if the economy is really an aggregate of decisions and revisions made over centuries by people who did not know each other and had different frames of reference, then the economy is a hodgepodge, a colage, and there is no reason to not re-think any of the parts. There is no underlying system integrity that has to be preserved.
The economy we have is a short blip in history. Discovery of fire, domesticating animals, organizing in families, empires, feudalism, industrialization using capital from increases in land value, wars, over-production, consumerism: yet we tend to attribute a rock solid presence to the economy as if it and its major structures and the concepts to name them are part of the long duree, almost universal, almost timeless, while our society, like those ferrys leaving South East Asia for Australia, are overloaded with problems we do not seem able to solve and likely to sink of their own weight. Fred Hoyle, the cosmologist in his book 10 Faces of the Universe says that if we solve the energy problem without solving social problems we will sink the species,, because the forces that lead to war, population increase, and inequality will use the increased energy for their own purposes If those purposes are still in place. A minor example is that LED Replacing conventional lighting in cities is leading to an increase in the amount of Illumination from the existing costs rather than cutting costs and energy use with the same levels of illumination.
We have so broken our economics into specialties that we are not dealing with the general problems.
In the Adam Smith spin factory it was important that somebody remember that they were making pins with all the division of labor of labor, but In economics, the division of labor into segments and specialties forgets that we are making a society.
Things change and morph, but economics tends to think of the economy as a kind of platonic concept that can be discovered in nature and was not made by men (mostly). Real change is considered impossible and we have to live with TINA. We are hobbled by our own assumptions.
Five new books I find extraordinary that are opening up the range of thought about who we are, how we have coped, and what might – might – happen.
1. Dotan Leshem The origins of neoliberalism from Jesus to Foucault
The humor in the title masks the seriousness of the content
Two key points: first is that Aristotle and Plato both said that surplus beyond existing needs would be produced by a “well manage estate.“ (the meaning of ‘economy’. The question they both asked was what to do with the surplus. They agreed surplus should be used for leisure to engage in politics and philosophy and not for consumption of unnecessary goods and trinkets. Second, Lesham shows that the language moved into early Christianity and can be found even in St. Paul who uses the word economy, the well-managed estate, to discuss the management of God’s kingdom on earth. The understanding that good management lead to surplus was used in the new context of the Christian community and monasteries.
The idea of surplus is maintained but shifted to meditation and prayer. The early church leaders were aware that the population was expanding and that to reach an infinite god the well-managed estate should grow in order to take care of the larger task. The logic for growth moved into the standard economic thinking later centuries, Now turned into “we need growth to meet humans’ insatiable needs”.
2. James Scott, Against the Grain. A deep history of the earliest states.
The argument is complex beginning with the fact that early states were not created around settled agriculture, and settled agriculture was not a response to need for food but as part of the new states maintaining the boundaries of slavery. Early settlements had lower quality of life and worse diet. Also history has exaggerated the role of large settlements because they were the places that left artifacts easier to study. The result has been to ignore the significance of life lived outside compounds. The book has radical reframing on almost every page.
3. Andro Linklater, Owning the Earth: The transforming history of land Ownership. more radical reframing. The first property that could be called private property (As distinct from personal items) were patents. Patent‘s were the first registered and named pieces of property that existed without some kind of restriction in the form of entails and ownership by the monarch. These restrictions on land ownership (The form of almost all property)could not be borrowed against. Patents were assigned to Individuals without entails. The first land that could be borrowed against was that created by the US homestead provisions where the government sold the title to land free of any entailing. The result is such land could be borrowed against which led to the freeing up the capital to build factories and railroads. The increase in land value rather than the output of production was the major source of investment capital. The book is sophisticated and mature and full of interesting detail.
4. I can add Jack Goody, Capitalism and Modernity. Breaks the link between the West and innovation. And in this context well worth the time to watch the video of last weeks seminar on China. Both imply more marginalization of “the West” than we are used to.
5. Germano Maifreda From Oikonomia to Political Economy. The details of thinking, mostly lost to modern histories of how we got from the Greeks to Adam Smith. Wonderful writing.
Let’s add two
Goetzmann, Money Changes Everything, showing the deep story of complex finance back to Mesopotamia and 2000+ BC. Goetzman by the way has a solid interest in art as can be seen by his twitter tweets.
Francis Fukuyama Political Order and Political Decay, showing the complexity of history since the renaissance. I think it also shows the futility of trying to change the Economics while ignoring politics. We tend to be aware of economic history but not the rich political history it is embedded in. This book is a solid political history well worth the reading.