Last week I wrote about 8,000 words in a series we titled Understanding Growth. Sometimes it takes that many words of writing for me to understand something. I've been asked to simplify a little which, at this point, I think I'm able to do.
All of that writing was an attempt to process Tomas Sedlacek's book, Economics of Good and Evil and place it into the context of Strong Towns. These are my interpretation of his thoughts mashed together with a little Nassim Taleb, Jared Diamond, John Dominic Crossan and some of my own.
The profession of economics has long had a moral component.
Sedlacek starts with the Epic of Gilgamesh, an ancient poem, and then spends time looking at the moral teachings of ancient Hebrews and early Christians. From restrictions against interest to the forced rest of land, people and debt (mandatory debt forgiveness), economic transactions have long had a moral dimension.
Even when we reach the Enlightenment, we still see the writings on economic systems coming largely as an extension of philosophy. Adam Smith, often credited with starting the profession of modern economics, was primarily a moral philosopher. His work, The Wealth of Nations, spent a great deal of time on the moral implications of economic transactions.
Our current economic system has a moral component that is largely captured in the invisible hand metaphor.
Modern economics has become a profession of numbers and equations. In doing so, it presents itself as being value neutral; as not projecting any particular set of moral constructs but simply reporting the facts. This is a distortion.
For example. the Invisible Hand -- Adam Smith's suggestion that individuals, acting in their own selfish, self-interest, will undertake endeavors that will benefit all of society -- is an accepted truism of modern economists. The "greed is good" belief is embedded in the entire structure of our market economy, essentially an elevation to moral of what, in a prior age, would have been called vice.
The invisible hand metaphor has evolved into a system where growth is now our most important objective.
The way in which "greed is good" is transformed from a vice to a moral imperative is through growth. Economic growth is one way to improve standard of living. When there is more opportunity for consumption -- both on the supply and the demand side of the equation -- people see their lives improved.
Until they don't. As Sedlacek points out, there is a limit to how much can be consumed. How do you hold a banquet for someone who is full? You can convince them that they are hungry OR you can make tomorrow's meal contingent on them overeating today.
Greed is good via the invisible hand. Growth uses the invisible hand to improve our standard of living. Therefore, to improve our standard of living we need more growth and, thus, more greed. It's a self-reinforcing bit of circular logic than can be used to justify just about anything.
A system where growth is the main objective will fail, but only after it has exhausted every means to expand consumption.
Once we collectively believe that growth is the primary vehicle to prosperity, there is very little we won't do to achieve it. That includes bailing out Wall Street banks, turning the financial system predatory, taking on trillions in debt with no intention of ever paying it back except with more debt, reducing individual freedoms, etc...
We will use negative interest rates -- charge people to save money -- in order to force people to consume today instead of save for tomorrow. We will, in the words of Sedlacek, sell stability in order to buy growth. Ultimately, we will have neither.
Growth is good, but is not the most important thing. We need an economic system that can accept this fact and still continue to function.
Economists have become so important to our country because we are now so dependent on growth. Without growth, our economic system falls apart. Economists thus fill a social role similar to the shamans or prophets of old. They look at the tea leaves and predict the future, albeit with spreadsheet instead of goat entrails. They tell us what us what we need to do now to satisfy our god: growth.
Every single person reading this has given up some economic advantage somewhere in their life for something they felt was more important. The economics profession discounts this behavior and surmises that any altruism you have is canceled out by someone else's greed. What a horrible -- and untrue -- way to look at humanity.
In this Q&A, Sedlacek talk about economists, growth as a value and what, if not growth, should be our obsession. I start at roughly minute 22 and recommend you listen through to 29:25.
A more localized set of economic institutions and practices would personalize transactions so that human values (beyond simple growth) could be expressed.
This is my adaptation alone. I'm not sure what Sedlacek would think about it, but it seems to me that part of making this transition from a growth economy to one where growth is good, but not a requirement, will involve adding a moral dimension back into our transactions. In a country as large as ours, and an economy as enormous as ours, the only way that happens is to bring as many transactions as possible back to the personal realm. I buy from you and you buy from me. We know each other and, while we are going to care about profit and loss, we're also going to care about each other on a human level.
Note that I'm not suggesting that localizing fixes our problems. I'm firmly convinced that the problems we face -- the growth Ponzi scheme we've gotten ourselves into -- are not fixable. This system is going to break -- is already breaking apart -- and will be replaced by something else. We can help that transition to be less painful and set ourselves up for a more prosperous future by starting to make these changes today. We can do that ourselves in our own cities, towns and neighborhoods.
And a final observation: I realize we're in the middle of a political season that has got everyone right where our national parties want them (fearing the other candidate). I don't hear this conversation on growth anywhere in our current discourse. Whether your candidate is a modern socialist (which means the state as Robin Hood, not the state controlling the means of production, as in real socialism), a modern state capitalist (where capitalism is directed for the objectives of the state) or a member of the debt capitalist establishment (where debt is used to create growth as a state objective), you're not getting a serious critique of the growth economy, it's fragile nature and an urgent need for an alternative approach.
Let's start talking to our friends and neighbors about it.