My old Economics teacher always had a joke or two about his much loved subject; one of my favourites is ‘that you could lay every economist on earth end to end and still not reach a conclusion.’ If Economics was a person, he’d say, it was probably the mythical one, Sisyphus. I really liked my old Economics teacher. Not a fan of Economics though, nor its futile efforts at explaining the ways that people organise things.
The question is; when did ECONOMICS become the only thing that seems to matter? After all, it’s just a social science, but it’s somehow become not just the way we understand THE ECONOMY, but also the dominant social science, the only way in which we can understand… well, life, the universe, and everything. The only certainties, after all, are death and taxes.
It’s not only the key thing that matters but also the most significant of subjects of social discourse (with perhaps the sole exception of the weather). The economy is so weighty a matter it’s not just the subject of social discourse but also its language; we spend time, we value things monetarily, we think of the costs. Many of our metaphors are mercantile, our accounts of things are written up in monetary terms, we budget time, we allocate resources. On the news, day after day, we hear (and see, usually with the aid of graphs) about stock movements. The rise and fall of markets, bears and bulls. We get told how to budget for hard times – and times are nearly always tough. We need financial planners in our lives, apparently.
The government (and its opposition) talk to us about just about any and all stuff with a weather eye on the Economy as the primary consideration. We know our Treasurer’s name, and probably can dredge up the Finance Minister’s too. We hear (and see, usually with the aid of graphs) about the costs (ever ballooning) of doing anything, and someone or other must tell us how so and so is (or is not) a good economic manager.
And what’s the big ticket item at the moment in the English speaking world – which is the one I am culturally forced to listen to (my French is rudimentary, my German non-existent and I only speak a smattering of Street Bahasa Indonesia): it’s the ‘Cost of Living’. Not living, you’ll note, but its cost.
Richard Denniss writes of ‘Econobabble’. “We hear it every day, when politicians and commentators use incomprehensible economic jargon to dress up their self interest as national interest…” It’s our NATIONAL interest they dress self-interest up as. And, as far as I can see, every nation does it. (That’s another reason it’s babble; the multitude of languages. Economics is the real tower of Babel, one with biblical significance.)
If you type ‘when did ECONOMICS, allegedly how we understand The Economy, become the only thing that seems to matter?’ into a search engine – almost UNDENIABLY GOOGLE – you’ll mostly discover lots of stuff on the history of economic thought… but that wasn’t the point, was it, and doesn’t really answer my question.
And I realise I’ve asked the wrong question. I want to know WHY it’s the ECONOMY that seemingly is the only thing that matters? Typing this revised (‘why’ is such powerful little word, but…) question doesn’t really improve my responses – most of the hits related to articles on scarcity – until I find this little gem. Entitled ‘What if the single most important idea in Economics no longer works?’ Go on, read it. I did, and though it didn’t really answer my question in any full and meaningful way, it did prompt some more reading, and thinking, and wondering.
Note particularly these bits:
The phenomenon Smith had his eye on is the mysterious order that seems to emerge from free exchange in a market. No-one tells bakers what to do, or helps them coordinate with their suppliers, or forecasts how many loaves of bread they should make. And yet bakers get up damned early, and work damned hard, and make a decent fist of judging the baguettes and the braids and the rounds.
Smith’s explanation for these outcomes is that the market acts as a coordinating mechanism. As prices are set and as consumers make choices, this reveals underlying information about what people want, and it incentivises other people to meet those wants.
The market thereby aggregates self-interested preferences into an output that looks, on the face of it, selfless. It’s a form of emergent intelligence that led Smith to his most famous metaphor: the invisible hand.
What Smith wasn’t claiming, contrary to what many on the left and right like to think, is that markets are perfect, or that they can self-regulate, or that there’s no need for the state. As Jesse Norman shows in his biography of Smith, the idea of the invisible hand is both narrower and more contingent than it’s often claimed to be.
Smith saw, for example, that markets can create harmful byproducts. Our baker might, in their blinkered focus on bread, throw their litter into the street. Smith also acknowledged the risk of collusion, warning that, whenever company bosses meet, the conversation is likely to end “in a conspiracy against the public.”
Smith even saw that people are prone to irrational behaviour[SK1] , a strand of thinking that later matured into behavioural economics. This all means there’s a role for the state: banning or taxing ‘bads’ like pollution, breaking up monopolies and cartels, and protecting people from exploitation.
Behind all of this, however, lies that central conviction: that a baker’s ambition is aligned to a customer’s appetite. The baker’s route to a good life is to make the customer’s life good. And it’s because of this lucky alignment that markets — if we can contain all those byproducts — lead to a prosperous social order and drive progress over time.
So why is the economy the only thing that matters? How is it that the ECONOMISTS took over? And, in another question derived from my research, how has the INTERNET affected all this? And a few other questions/thoughts
- Has the Economy replaced God in our culture[s]? And this brings me to thoughts of how rapacious many religious fundamentalists and cults seem; the purpose of preaching is the making of money (a.k.a. monetisation, one of those words I hate). But has money, or the Economy, also replaced god with THE ECONOMY as the key ways in which societies are and should be organised, which translates as money and POWER. Has the INVISIBLE HAND, of Smith’s imagination, become in fact the will of god?
- So, in this new universe, of Money or The Economy as God, is Man, once crafted by god as a creature become wilful because he picked from the Tree of Knowledge of Good and Evil, now acting as Homo economicus – a creature not wise but driven by a need to accumulate wealth, whose rational decisions are all only about competitive edge and making more money?
There’s more to follow.
[SK1]‘prone to irrational behaviour’ indicates that they cannot be Homo economicus
Inkstained fingers 