The Daily Ticker had an interesting interview with economist Graeme Maxton a few days ago (video below). Maxton is the author of a new book with the welcome title The End of Progress: How Modern Economics Has Failed Us. I am happy to report that Maxton makes the following statements in the interview.
In 2008 the world economy reached a turning point. It wasn't just a bump in the road, we reached the end of a 30-year period of history. We can't carry on that path anymore... The belief that growth was going to go on forever, the belief that we could carry on borrowing, the belief that consumption was the goal, all of that has to change, because we simply can not carry on borrowing anymore. I mean, if you look at the average American consumer they've borrowed beyond their capacity. Banks are bust, although we don't talk about that. The Federal Government's debts are just off the scale. And at some point, you have to stop borrowing or go bust. And start paying that money back.
And nobody wants to do this, nobody wants to hear the message that we can't carry on growing on forever. But ... "on a finite planet, the only people who believe we can grow forever are the mad, or economists."
Thus it would seem that Maxton's thinking is in accord with the baseline view here on DOTE. Nevertheless, I have mixed feelings about Maxton's approach. Who is to blame for the mess we're in?
We should blame the economists for their sloppy thinking and the politicians for selling us such twaddle.
Indeed, I do blame economists and politicians, but lost-at-sea economists merely affirm political agendas after the fact, while corrupt politicians carry out the agendas of those who bought and paid for them. But my disagreement goes much deeper than that. Maxton seems to think that ideas and belief systems are the principal motivators of human behavior. This quote is from an essay at Graeme's website called Economic Growth: Is That It?
Too many of us believed that growth was good, that it was a valid measure of human progress. We believed that unregulated free-markets were the most efficient way to allocate the world's resources. We believed that globalisation was advantageous for everyone, despite the unequal way in which we knew the benefits accrued. We believed that big businesses and big banks would behave benevolently, and in our interests, just as long as they were free from government interference.
As well as blaming ourselves for such foolishness, we should blame the economists for their sloppy thinking and the politicians for selling us such twaddle. Our belief in these wrong-headed ideas has allowed economic power and wealth to become concentrated in the hands of a few people and institutions, with the combined wealth of the 793 richest people [in the world] now equal to that of the three billion poorest.
And because it was merely human belief systems that got us into this mess, Maxton says this about the huge problems facing humankind—
All these problems will be resolved, of course. It is how they are resolved that is the question.
Yes, that is the question. And here comes the optimism. We will change our expectations, and thus our behavior, and things will work out, at least for some.
We can probably find a way to overcome the financial troubles and the coming resource shortages. We can change our diets and improve crop yields to ease the suffering of the poor. We can find diplomatic answers to the sources of conflict between the world’s peoples.
But much thought will need to be given to dreams and expectations. Many developing countries need to accept that they have been condemned by the current system, that they will never become industrialized nations as they once hoped.
I think that many in developed countries (like the United States) need to accept that they have been condemned by the current system. That's what we're seeing. You'd have to be blind not to see it.
Here's my view. Human "beliefs" like markets should not be regulated, globalization is advantageous to everyone, and big businesses and banks will behave benevolently are mere rationalizations which conveniently allow a certain class of powerful humans to do what they are wont to do—figuratively speaking, they want to rape and pillage. They always do so in the name of Progress. And that's what they've done. Human Nature is where the problem lies. How else can we account for the fact that 793 powerful monkeys (by Graeme's reckoning) have more wealth than the three billion poorest? Surely this outcome wasn't a result of mistaken belief systems!
Confusion arises when material Progress for some is conflated with actual Progress—real positive changes in human behavior—for all.
Nevertheless, I do not mean to be too hard on Maxton today. He starts the essay cited above like this—
Why are we all here? It is a difficult question to answer, having troubled philosophers and thinkers for centuries. Thankfully, modern-day economists have found the answer. Better still, we have all accepted their conclusion. The purpose of life is to consume...
And ends with this—
We also need to ask ourselves what life is about. It is not about economic growth. There are a vast array of other pursuits that can fulfill us—social, cultural, intellectual and spiritual—which do not drain the planet of its resources or promote disharmony.We need to take control of our future, to create just and sustainable societies.
Most of all, we need to develop a model for the future that is not held captive by the free market, by consumption and by growth for its own sake. We need to think differently about inequality, poverty and population. We need to think about how we can restore the bonds of good society. We need not abandon free market economics entirely—but we need to ensure that our economies are managed to meet our needs—all of our needs.
I couldn't agree more, although I am not hopeful that any of these noble goals will be accomplished, and therefore I am not sanguine about future outcomes. I haven't read Maxton's book, but I'll bet the farm it includes the Obligatory Hope. Otherwise, how can we explain why The End of Progress has been nominated for the Financial Times and Goldman Sachs Business Book of the Year Awards for 2011?