Since the financial crash there's been much discussion of the nature and purpose of economics. Is it a science? Does it have any predictive power? Should it be modest in ambition, seeking simply to describe the accidental play of market forces and facilitate their smooth operation, or should it be oriented towards some vision of the common good?
For the past few decades the orthodox view has been that economics is best understood as a quasi-scientific discipline that studies the workings of the market so as to develop mathematical models that seek to forecast its future behaviour, which in turn help governments design economic frameworks that enable frictionless exchange of goods and services by producers and consumers, 'rational actors' pursuing self-interested objectives in competition with others. Economic activity doesn't have a 'purpose': it is no more or less than the aggregation of countless interactions undertaken by participants within an open marketplace in pursuit of their own ends.
An abstract, severe and utilitarian field of study then, not without a certain cold beauty, with no criteria for success other than the setting of appropriate conditions for the optimal working of the machinery of the free market.
Suffice to say, there's growing dissatisfaction within and without the profession with this rather circumscribed conception of the parameters that should guide economic decisions that bear so directly on the welfare of society and our environment. Deregulated markets do not seem to be delivering the optimal outcomes promised by established economic models. To summarise: over the past few decades, and especially since the crash, the proceeds of economic growth have been distributed ever more unequally; that growth has slowed to a standstill across much of the world; and the kind of growth generated by the free play of the market is environmentally unsustainable.
A self-effacing pragmatic economics that simply seeks to liberalise marketplaces within which profit maximising agents seek to accumulate wealth, innocent of considerations of the fundamental purpose and sustainability of economic growth, no longer seems adequate. A huge amount of work has and is being done to develop guiding principles for a new 'holistic' conception of economics that encompasses notions of social justice and ecological sustainability: the widening of measurements for the success of economic policy beyond the utilitarian to include indices for more nebulous concepts such as human welfare and environmental balance. In brief, one might say, to embed the theory and practice of economics in the language of moral discourse, rather than science.
A few noteworthy examples:
- The New Economics Foundation has produced a wealth of policy proposals inspired by a vision of a fairer and greener economics.
- Oxfam has developed a Humankind Index setting out a wide range of social and environmental benchmarks against which to measure the effectiveness of economic policy.
- The Equality Trust campaigns for realisation of the principles for more equitable distribution forcefully advanced in Kate Pickett and Richard Wilkinson's well known book The Spirit Level: Why More Equal Societies Almost Always Do Better.
- The Occupy movement continues to develop a network of campaigning organisations seeking radical reconfiguration of established economic systems.
- Many, many books have been written, and journals established, seeking to evolve new economic philosophies and policies: I confine myself to mentioning the ongoing work of Will Hutton to design more sustainable and democratic economic institutions; Robert and Edward Skidelsky's invocation of Keynes' concept of a 'stead-state' economy that prioritises leisure over unrelenting productivity; Michael Sandel's consideration of What Money Can't Buy; and the emergence of radical journals such as Jacobin that are evolving a new socialist economics that appropriates and reconfigures elements of the Marxist tradition.
- University economics departments are beginning to reconsider the focus of their curricula on orthodox economic theories, as illustrated by the widespread coverage a week or two back of protests undertaken by students at Manchester University over the continued teaching as received wisdom of economic theories discredited by their failure to predict or even adequately describe the financial crisis.
These attempts to redraw the boundaries of what is proper to the study of economics might be understood as attempts to recover a much earlier understanding of the subject as being embedded within the wider discourse of politics. The founders of what we today term 'classical' economic theory, 18th and early 19th century writers such as David Ricardo, Adam Smith, John Stuart Mill and Thomas Malthus, saw economics as being part of a wider field, 'political economy', which considered the moral choices that should set the management of economic resources. Back then economics was acknowledged as a thoroughly political pursuit. It was only in the later 19th century that economics began to be discussed in isolation from politics.
Economics according to Plato
Anyway: all of that is a rather long preamble to my wanting to note one or two things about an interesting lecture I attended last Wednesday at St Andrew's and St George's West given by Ian Mason of the School of Economic Science, titled Harmony with Nature: Economics, Justice and Mother Earth. As one might expect from the title Mason's argument was squarely in line with this new (old) way of thinking about economics: given the destruction wrought by the free play of unfettered market forces we need a just economics directed towards the good of all, respectful of the limits to growth set by nature.
What I found particularly interesting was the way Mason defined justice. His terms and metaphors were unabashedly 'Platonic': living in 'harmony' with our environment is a matter of discerning the 'natural law' underlying the shifting world of appearances; a balanced, ordered, socially and ecologically harmonious mode of life is there waiting for us to discover, through the attentive application of reason. Mason interspersed his address with references to some key texts in the Platonic tradition, including the Upanishads, the Sanskrit epics, the Homeric Hymns (in particular the hymn to Gaia), and of course Plato himself. Living in accordance with this sense of balance allows us to tend the world as a garden, to the mutual benefit of nature and ourselves.
Platonism isn't terribly fashionable, and hasn't been for some time. Quite rightly, there's considerable scepticism about the supposition that the unaided 'light of reason', diligently applied, allows us to perceive 'Reality', 'Truth', the 'Divine', whatever you want to call it.
But I've a soft spot for it. I'm aware of the difficulties but I think there is something significant about our capacity to make judgements, the confidence we all have about saying that some things are right or wrong, that there is a hierarchy of values, not just in the sphere of science and mathematics, but also in the foggy realms of moral and aesthetic decision. We have, after all, evolved legal systems, and artistic canons, that signify common acceptance of the enduring validity of certain ethical and artistic judgements. And, to my ear, Platonic language is just so beautiful: all that talk of 'harmony', 'justice', 'light', 'order', 'truth', 'goodness' and 'beauty'. So I was intrigued to hear those terms used to imagine an ideal economics.
Whatever one might think of the Platonic metaphysics that underlies it Mason's essential argument seems to me to be surely right: we need to design new economic frameworks that prioritise wellbeing over blind pursuit of profit, respectful of natural limits to growth.
From theory to practice
So: how do we actually achieve that? Much has been spoken, and ink spilled, but how do we even begin to set about the practical task of reorienting a world economy hardwired for untrammelled growth? Mason had time to offer a couple of suggestions:
One was the formal adoption, at national and international level, of more sophisticated indices for economic success on the Oxfam Humankind model: full, stable employment, fair distribution of income, time for leisure, respect for work that by its nature doesn't allow for profit generation, the democratisation of economic power through its devolution from overbearing corporations and states downwards to regions and communities.
Another was the intriguing concept of a 'Declaration of Rights for Nature': a legal code similar to the Declaration of Human Rights setting the ecological bounds within which economic activity can operate. Mason talked about the evolving field of Earth Jurisprudence, which attempts to enforce environmental responsibility through law. Reminding companies of their duties towards nature is not enough, Mason said: we need to give nature rights.
Earth Jurisprudence seems to hold some promise for progress, leveraging national and international law to force companies and governments to operate with due environmental care. But the possibility of any mainstream political party with a chance of power formally adopting and pursuing an economic programme that prioritises measures of progress other than the traditional focus of growth in GDP seems far off. All nations must participate, indeed compete, within a world economy framed for exclusive focus on growth. How could any one country shift to a different model and survive? The fundamental question that haunted revolutionaries through the 20th century (in a very different context) comes to mind: how can socialism be built in one country? (Of course one might want to substitute a different term in place 'socialism', according to taste.) It seems that fundamental change would be possible only through international action: a significant block of countries committing to the adoption and determined pursuit of an alternative economic model.
There's certainly debate within mainstream politics about the wisdom and possibility of shifting the grounds of economic policy making. Here in Britain we have the Green Party of course, which has promoted an alternative economic platform for many years. But they have the privilege of not having too worry about the imminent prospect of actually attaining power. Traditional parties of government have to compromise in order to attain power, and even more so once they have gained it.
Consider for example Britain's largest progressive party, Labour. There's certainly much talk within the party about the possibilities of developing a richer economic policy that looks beyond fixation on unbridled growth. The ideas generated - primarily by Maurice Glasman - under the term Blue Labour are interesting in this regard, as are the attempts by Jon Cruddas to look behind the managerialism of New Labour to an older Labour tradition that spoke unhesitatingly about politics in terms of concepts such as 'virtue', 'community' and 'localism'. Indeed the appropriation by the party's leadership of the old Tory language of 'One Nation' reflects some of this thinking, the energy price free announced at the party's being the most prominent manifestation thus far of a willingness to consider direct state intervention in the operations of the market.
But it's rather small beer when set in the context of the radical thinking taking place in the world of political debate beyond party politics. One wonders whether radical change will ever be achieved through the mechanisms of mainstream politics, whether the pragmatism forced upon politicians by electoral considerations and the sheer difficulty of seeking to govern against the grain sets narrow constraints on what can be achieved.
That's a subject for another post. But briefly, I think adoption of a more sustainable and just economics might be forced through extraneous shocks to the system. Such as:
- The continuous, indeed more frequent occurrence, of the kind of environmental disasters we've seen this month in the Philippines, last November in New York, and across central Russia in 2010: to name just a few.
- The escalation and intensification of the mass political protest that has periodically surfaced across Europe, the Americas and the Middle East this decade. There has been severe rioting in Greece and the United Kingdom. Radicals on both sides of the political spectrum in the United States have expressed their unrest through the Occupy and Tea Party movements. And the Arab Spring signifies desire for economic as much as democratic reform.
A somewhat bleak prognosis I know. But it's not clear, to me, how else things will change.