If there were two words that I could use to describe the current state of economic thinking, they would be pessimism and helplessness. All economists can offer is an indefinite period of continuing misery, which they call austerity and that this misery is unavoidable and necessary given the conditions that prevail in the world economy. The Europeans in particular must suffer for indulging in a frivolous life style in which they squandered money on welfare, education and health services, money which would have been better spent on investing in industry. Now it’s payback time. What Europeans did not realise that there is an economic Darwinism, that governs the world economy. Those nations that are uncompetitive fall by the wayside and must suffer the consequences of which the main one is a dramatic fall in living standards. Europe having become uncompetitive through increasing its labour costs by taxing employers to pay for welfare spending etc. must now pay the price. The price is increased unemployment, poorer working conditions and lower pay and only then will Europe become competitive in the world economy.
What economists never say is that they are advocating for Europe a return to what used to be called the ‘second world’ standards. In the initial period after the Second World War there was a category of development status between first and third world, it was the second world. Second world economies were those of Eastern Europe where the standard of living was modest, people were poor but not in want, that is they were fed, housed and clothed but lived a life devoid of luxuries such as car ownership. Labour was cheap in these countries and businesses would never lose out to foreign rivals because of high costs.
The best way of understanding contemporary economics is by way of metaphor, contemporary economists can be compared to high priests in the blood stained Aztec, Mayan and Inca cultures. Then the people believed that the natural catastrophes that they suffered were the actions of malevolent Gods, who punished the people for offending them. Only the priests understood how to manage these supernatural malevolent forces which was through human sacrifice. The priests decided when sacrifice was necessary and how many should perish. The Mayan had one cruel ritual in which two teams of young men played a form of hand ball, in which the losing team were beheaded. This ritual blood letting would appease the Gods and stop them inflicting suffering on the Mayan people as a whole. Today rather than priests it is the economists who understand and manage the malevolent forces that threaten our well being. Only they have the knowledge necessary to appease the angry Gods of the free market and that is yet another form of human sacrifice. Fortunately the sacrifices to be made are of income not life. People must be prepared to accept drastic cuts in their standard of living for the betterment of all. In a world beyond human control the only way to control or assuage those violent forces that threaten human well being is to appease the Gods of nature or market through human sacrifice.
There is a crude economic determinism that governs economic thinking. People are pawns in the game of competing market forces, if those forces turn against a people they must expect to suffer. Economists can read the runes and advise that sacrifices have to be made to avoid the direst of economic consequences. Any reading of an economics textbook demonstrates the view that the economy is a force outside or beyond human control, and that human life must be managed according to its dictates. There are the laws of supply which demonstrate that if prices are too high (incomes) demand will fall and products will remain unsold (unemployment). Only when prices (wages) are cut will demand rise (employment levels increase). This even has a name it’s called Say’s Law.
One example is the economic austerity that is deemed necessary to reduce the out of control government deficit. It makes sense that if we reduce our spending our debts are reduced and as government debt total is about 80% of GDP, obviously we the British must cut our spending until the debt is back under control. Actually this is nonsense economists are lying. They are well aware of the much greater national debt and that is the one run up by the banks which totals about 400% of GDP. If the UK GDP was £1.5 trillion government debt would total £1.2 trillion while bank debt would total £6 trillion. Economists rarely mention the latter, it is deemed irrelevant relevant to their analysis. What matters is not the truth but what authoritative voices say is the truth. Economists as with the ruling caste of priests in Mayan culture could manipulate data to further their interests. If there was a bad harvest the solution was not to arrange a fairer distribution of food, but to appease the Gods by increasing the number of human sacrifices. Economists as with the Mayan priests practice a philosophy of non answers, ritual substitutes for action. Enforcing a policy of austerity on the majority benefits the economists and the financial elite of which they are members, as it is a ritualised substitute for taking sanction action against the real debt, bank debt. Cutting bank debt would mean reducing the cash balances of the banks and as the largest depositors are the rich they would suffer disproportionately.
Rather than seeing us as the victims of economic forces beyond our control, the economy should be seen as a human creation subject to human control. The economy is a organised set of human relationships designed by people to achieve particular ends. If it is a human creation, it is infinitely malleable and it can be designed to serve a variety of ends. Either the economy is designed to benefit a privileged elite or to benefit the majority. There are
There are other ways of understanding of economics other than accepted Neo-Liberal model. To outline the alternative I want to borrow from the writings of the 19th philosopher Hegel on phenomenology. He believes what we experience as reality, is reality as perceived through our conscious mind a reconstruction of reality, nothing more. We live in the world of our imagination. Hegel’s theory of phenomenology is fraught with difficulty when applied to the natural world, as our perceptions of cold and heat are not subjective. However it does offer insights into understanding society, something not visible but understood through our consciousness. Is it not true that we know the social world subjectively? It is a projection of our minds, yet it is also a imagining rooted in the common reality of our culture. If we admit that any individuals understanding of society is subjective, the apparent realism of free market economics with their laws of supply and demand disappears, it becomes just one of many understanding of social reality. Admittedly an understanding that one of the most authoritative groups in society that the interlocking elites of economists, financiers, traders and economists. There can therefore be other equally valid understandings of the economy. Why should the understanding of Andy Haldane (Senior Bank of England economist) be privileged over the understanding of a joiner, engineer or doctor. This economists understanding of the economy is but one of the valid views, there is no reason why the joiner should not have an equally valid of the economy. What I have in mind is the ends or purposes of an economy, rather than the techniques of economic management, in which Andy Haldane will be superior. Ends do inform technique so the separation is not complete. The joiner would see making people unemployed in large numbers as an invalid technique of economic management.
Rather than there being one authoritative understanding of economics there needs to be an acceptance of their being a number of equally valid interpretations. In a free society there would be representatives of different economic understandings participating in the political debate that decides economic policy making; instead of as in the UK where only representatives of the Neo-Liberal economic tendency are heard in the political debate. Holders of dissenting views are not usually imprisoned in the UK, the exception being is if their campaigning is perceived to be too,effective. Yesterday representatives of Occupy London and Jenny Jones London Green Party Assembly member were arrested for demonstrating in Parliament Square and intimidating the MP’s going about their business. Other ways are usually found to exclude or marginalise holders of dissenting views.
In a democracy the economic understanding of the economist or financier would be challenged by the holder of an alternative view. The financier would want freedom from regulation which which restrict their entrepreneurial activities arguing that by so doing the society as a whole would benefit from their wealth creating activities. This would be opposed by a trade unionist who would argue that the removal of restrictions on the entrepreneur would harm the community. They may want to use low cost methods of manufacture that are dangerous and pose a threat to the health of the workers. They may want freedom to employ labour as and when they need them, but the trade unionist would point out that this would be extremely harmful to the individual worker who would be denied a regular wage with which to support their family. The needs of people cannot be switched on and off to suit the whims of an employer. While neither side would ever accept the standpoint of the other a compromise could be achieved whereby the excesses of each could be curbed. A process not too similar Aristotle’s mean, whereby he saw virtue situated between two extremes. Courage was the virtue equidistant between foolhardiness and fear. Courage has elements of both, the courageous person knows fear but has the ability to overcome those fears. Perhaps the ideal state is one that practises Aristotle’s mean, all be it an economic mean.