Provocation 237. Unregulated economy (no long term view nor strategy) vs managed economy (with concern for values and goals).
Economics discusses equilibrium and the desirability of non-interference by regulations. But as a result there is little discussion in economics of the goal of an economy, nor, for this economy, of its values. I read last week a comment that China thinks long term and strategically, but the West, especially the US, has no strategy, putting it in a weak position vis a vis China.
Robert Skkidelski in Project Syndicate just wrote “China’s quest for legitimacy.” He quotes from the piublisher of “The Quest for Legitimacy in Chinese Politics”:
Xiang explains the nature and depth of the legitimacy crisis facing the government of China, and why it is so frequently misunderstood in the West…Arguing that it is more helpful to understand the quest for legitimacy in China as an eternally dynamic process, rather than to seek resolutions in constitutionalism(regulations), Xiang examines the understanding of legitimacy in Chinese political philosophy. He posits that the current crisis is a consequence of the incompatibility of Confucian Republicanism and Soviet-inspired Bolshevism. The discourse on Chinese political reform tends to polarize, between total westernization on the one hand, or the rejection of western influence in all forms on the other. Xiang points to a third solution – meeting western democratic theories halfway, avoiding another round of violent revolution.
In the same issue of Project Syndicate we have, from the West:
“In today’s globalized world, falling behind technologically carries major costs. That is why the world need a comprehensive understanding of the digital revolution’s effects on individual and social welfare as soon as possible. … From mobile Internet to artificial intelligence, blockchain to big data, digital technologies have the potential to bring about dramatic improvements in human wellbeing. But they also pose serious risks to communities and individuals in their roles as consumers, workers, and citizens. Reaping the digital revolution’s benefits, and avoiding its pitfalls, will require us to manage an unprecedented structural transformation for which the world is woefully unprepared. Given the transformational effects of digitization, it may seem prudent to think through the risks before allowing new technologies to take hold. ‘
Comparing the scope of one and the technocratic focus of the other would be worth a conversation. Not to put too rosy a picture on China, its problems are in part its forced emulation of the West, or to be overcome as in the Opium Wars.but strategic conversation and issues are more a part of Chinese civilization.
Market equilibrium,, homeostatic thinking, are taken to support values of freedom but in reality free market is a mechanism for wealth concentration we are advised to keep our regulations away from. In every transaction the wealthy are likely to gain and the poor lose. The poor buy Cornflakes and the rich buy stocks.
The question of values, which we avoid, should be about what kind of world is being produced by the producers, and what kind of governance gives coherence to the whole without having to police a recalcitrant population.
Our leaders are not in a conversation about these and as a result have little to offer the people at elections and the people are pissed off. Economics, as the “practical” social science has played a destructive role in creating this ungovernable situation.
Thee are discussions of values in the West , but not wide spread. (From Lapham’s Quarterly):
“The warming of the planet currently spread across seven continents, four oceans, and twenty-four time zones is the product of a fossil-fueled capitalist economy that over the past two hundred years has stuffed the world with riches beyond the wit of man to marvel at or measure. The wealth of nations comes at a steep price—typhoons in the Philippine Sea, Category 5 hurricanes in the Caribbean, massive flooding in Kansas and Uttar Pradesh, forests disappearing in Sumatra and Brazil, unbearable heat in Paris, uncontrollable wildfires in California, unbreathable air in Mexico City and Beijing.
The capitalist dynamic is both cause of our prosperous good fortune and means of our probable destruction, the damage in large part the work of Adam Smith’s invisible hand, guided by the belief that money buys the future. Nature doesn’t take checks. Who then pays the piper—does capitalism survive climate change, or does a changed climate put an end to capitalism?
But they are hardly central to our thinking.
Seems to me lots for economists to talk about.