. Nog extra toevallig is dat je haar op die plaats tegenkwam.Een jaar of vier geleden heb ik Adep en [...]
Though I’m in a gloomy mood, I hereby declare I love mankind. But, lets be honest about it, the world would probably have been a better place without the human species.
I love believers. They are my fellow men and women after all. But don’t you think the lot of them wouldn’t be so fucked up, if they never ever had been in touch with their ideology?
Surrounded by friends and family members who are economists of a kind, I can’t but love economists. I do so also because they are part of mankind. And because, as professionals, they are believers. They usually believe economy is a science. The only science with an absolute unshakable truth: the free market. As you know in this ideology the invisible hand is God and Milton Friedman is his prophet. To them there is no economy, but free market economy. There is no alternative.
The point is that , over thirty years economists have been boasting their successes. Gross National Products have set record after record – the EU, Singapore. Economies are flourishing – China, Malaysia. Wealth has been accumulating – Gates, Soros, Saudi royal family. They claim the accomplishment of turn arounds in economically desperately disastrous situations – Chile, Portugal, Ireland.
But it all is a set of fuzzy truths. The gospel is false. The free market ideology has not produced what it should have produced in the first place:
- The prevention of the now exploding food prices world wide ( from which billions as suffering)
- The prevention of stagflation ( where we are heading for now)
- The prevention of the actual and previous financial crises (which make the outrageous income and bonuses of Financial CEO’s look incredibly obscene)
- The prevention of recession, at least serious economical depressions or collapses
- The prevention of the industrial destruction of the environment
- The liberation of over 2 billion people from poverty
- The more fair and even distribution of wealth in the world
- The diminishing of the gap between rich and poor and the more equal distribution of income, influence and education
- The safeguarding of relatively deprived from being the victims of financial crisismanagement.
It didn’t work out. But their philosophy did bring about the abolishment of the welfare state ( modernization), the replacement of public services by private enterprises and the sell out of national treasures and commodities to the market. The promised land of milk and honey did not materialize for the overwhelming majority however. Not twenty years ago when the stock market crashed and caused a crisis, not a decade ago when the Asian crisis brought mayhem and misery to countries like Indonesia, not at this moment now globalization implies a global crisis.
“When the going gets tough, economists go very quite†. That is what Simon Jenkins (photo top, left), an insider, referring to the situation in the UK, said about it the other day in the Guardian.
I can go with these quotes about economists by an economist. Especially when they are disciples of the free market. Because almost all of them are members of this church of the free marketeers, it probably applies to nearly all of them:
“They’re happy to take the credit in the good times, but the disciples of this false science are hard to find as recession looms.
So the Footsie has tumbled again. Forgive me for asking, but where are the economists? As the nation approaches recession, an entire profession seems to have vanished over the horizon, like conmen stuffed with cash, and thousands left destitute behind. They said recessions were over. They told politicians to leave things to them and all would be fine. Yet they failed to spot the sub-prime housing crash, and now look at the mess.â€
And:
“When muck hits fan, economists always blame politicians. They would have some justice if they did not take credit when things go right. I was always uncomfortable at the overselling of economics as a science, when it is rather a branch of psychology, a study of the peculiarities of human nature. Its spurious objectivity, manifest in its ridiculous love affair with maths, induced a “Jupiter complex”, a conviction that scientific certainty, applied with enough rigour to any problem, triumphs over all.â€
And:
“Economics has long traded on being a science when it is not. In this it is like war. For a third of a century since the 1976 IMF crisis it has enjoyed great influence over British policy. Now it has met its Waterloo and a little humility would be in order. Once again economics must be rescued by that true master of all things, politics.â€
Well, politics? The politicians? Let me humbly disagree with Sir Jenkins at this point.
The great leaders of this world, the likes of warrior George W. Bush, fraudulous Berlusconi and charismatic lover Nicolas Sarkozy, held a G8 meeting in Japan last week. They did produce thin air only. Words, no meat. No sound analysis. No concrete plan. No commitments. It was the 34th meeting. Anybody remember the 33rd, the 32nd? And which improvements they brought about?
Politicians are they, no statesmen. Not any better than free market economists, I guess. Last year was better than this one for the world. This year will be better than next year. Yes, I’m in a gloomy mood. Fortunately my name is not Cassandra.
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• Wikipedia says about Simon Jenkins:
Sir Simon Jenkins (born 10 June 1943) is a British newspaper columnist currently associated with The Guardian after fifteen years with News International titles. He was educated at Mill Hill School and St John’s College, Oxford.
A former editor of The Times newspaper, he received a knighthood for services to journalism in the 2004 New Year honours. Among his many other awards, he was named What the Papers Say Journalist of the Year in 1988. He also holds honorary degrees from the University of London, the City University, Exeter, Central England, the London Institute of Education and an Honorary Fellowship from the University of Wales, Lampeter.
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Update: The anger about failing economists is growing. Sargasso, the best of all Dutch journalistic blogs, had this post last friday, the 18th of july 08. The author, alias ippekrites, is writing a series on the seven modern plagues. The sixth plague he mentions is the overkill of economists. He ridicules the free market philosophy ( free market, free enterprise will not cause the cheapest and most efficient products, because of all kinds of agreements to maximize profits at the cost of high prices and lousy quality) and the dogma of the ”invisible hand” which is supposed to lead to outcomes which never have been established.
Don’t led your mood affect too much what you think. Rationality is what remains, when you think without emotion. Sure, there is a downside to pure rationality, but this post swings the pendulum a bit too far to the other side, if you’d ask me.
Some replies:
1. The main benefit of a religion is that it creates perceived certainty. People cannot cope with having no certainty at all, and religion helps in this regard. Things may be bad (war, poverty…) but if you have an explanation for it, you can at least cope with it. That, in turn, may set your mind at ease such that you’re capable of actually doing something about it.
2. Economists. Friedman is a libertarian. Nowhere in the world have libertarions obtained strong government positions. Luckily, there are enlighted economists everywhere, and they dominate. They hold that people will make more choices which are good for them and others, when they have the freedom to enjoy the benefits of their choices. Of course, choices sometimes are wrong and hurt others, but that does not imply that the alternative is so much better. Food prices are rising, true. But that is mostly because people have become more wealthy and thus increase their consumption. I cannot tell them not to, for most people still have lousy living conditions. Sure, food crises are not good, but the alternative would be to ration food. Some countries tried to do this, by keeping their rice production for their own people. These people will be better off (though not best off: as food prices will be fixed inside this country, production will come to a stand-still), but others will be even worse off (supply on the world market decreases more than demand does and therefore, prices will rise even further). Tarriffs and quota cause hunger. The real problem is that there are just too many people on this planet.
3. It’s a bit odd that economists are held accountable for the existence of recessions. When the interest rate is low, companies will invest. Production will rise, companies obtain higher profits, and people will ask for higher wages. Higher wages cause inflation (as the wages are reflected in prices), and governments increase the interest rate to curb inflation (and, by that, investments). This, in turn, causes unemployment, lower consumption, and governments will increase the interest rate again after which it all starts all over again.
That naturally introduces some fluctuation into the economy, which is not bad (because bad investments crowd out; recession is a great time for creative destruction). It’s odd, though, to blame the economist. We do not blame the doctor for people getting ill, either.
4. Over-use of the environment, and the existence of poverty are by and large the consequence of a growing world population. I wouldn’t know (maybe nice to support the argument with facts??), but my hunch would be that although the world population grew, the relative number of poor people declined. When people get richer, they are able to feed children and are initially more likely to grow larger families (though in the Western world, the opposite happens). Again, what is the alternative? Except for the most invasive solutions (e.g. bombing Beijing; no health care services after retirement), one might say that deviations from Friedmanian solutions actually cause poverty. When there is no social security system, people will think twice about getting pregnant when they do not have a job. I am not saying that this is the ideal situation, quite on the contrary, but the mitigation of financial incentives actually causes other problems which need to be remedied by further introducing welfare-suboptimal constraints.
Thus, the main message: it may be that the current system is not optimal for everybody (no system will ever be), but what is the alternative? Seventy years of state planning didn’t quite produce the innovative and prosperous Russia Lenin had in mind, and many other dictatorships fare less well than states based on the principle of free choice. There is no free choice when choosing does not have consequences, both positive and negative. And free choice has clearly been related to growth and prosperity for most, though not all.
Of course the free market has its problems; every system has. Since I am not an economist, I shall withdraw myself from further economic speculating. But one thing is for sure, every solution to every problem has a trade-off between good and bad consequences. That is why making a choice can be very difficult.
Is the world really better of without human beings? One can call this a ‘contradictio in terminis’, because ‘world’ originally means ‘era of human beings’. So, there can be no world without the human species. Maybe earth is better of without us. It is a possibility, but I still believe that most of us try to make the world a little better everyday. In this way, we almost find ourselves by the most fundamental question that exists: Why? Why are we on earth? One can drive his or her self mad by asking this question too frequently.
Some people find the answer in their religion or ideology. Doing such can give peace and trust, but it can make people act like monsters too. Yes, we are again facing a trade-off. What is better, to be religious or to be an atheist? There is no right answer. People do what they think is the best.
Of course, it is terrible to see that we cannot seem to get things like hunger and poverty out of the world. Without us, these afwul phenomena would be gone. Without us, there would be no fighting, no crime, no air pollution. But without us, there would be no human love, no human friendship and no human science to discover our earth and our world. It is, again, a trade-off.
Let us try our best to make our world a little better, everyday of our lives.
P.S Of course I would not dare to state that human love is better than animal love, but in my opinion there are essential differences. Anyway, that is another story.
@Gerwin: Your extensive and expert answer is to the point and convincing to a layman like me. And, I should add, I feel honored by the trouble you took. But I’m not ready for total surrender yet.
Ad 1: I didn’t mean to specifically target religions as such. And I grant you faith can set minds and hearts at ease. People may find comfort there. But historical facts are abundant to cast doubt: more often than not the outcome has been closed minds, compulsive proselytizing, intolerance towards competing convictions. This is what I had in mind: the loss of doubt.
Ad 2: I would like to confirm your opinion. But as for now I stick to the overwhelming evidence Noami Klein produced. Unfortunately Friedmanians do have conquered strongholds in governments all over the world. The ‘Berkeley Mafia’ at the start of Suharto’s New Order, the deciding economists of Fascist dictator Pinochet in Chile after Allende had been murdered and the UK of Margaret Thatcher after the Falklands war. Chicago rules the world, not in a libertarian way, but as part of a reactionary revolution.
I also want to question whether the food prices rose because of greater wealth mainly. While over one year in Europe they went up 7%, in developing countries the rise has been 70%. Well, in Indonesia for instance the economic growth has been nearly 6%. So it’s hard to believe that this phenomenon can be explained by more wealth only. Even if we take China and India into account.
ad 3: In my opinion economists are to blame. They are decisive when it comes to choosing feasible policies. Elsewhere and here: some economical planning agency will more or less tell what governments are to decide.
Their advice proves not to be that good. It’s not enough to act like weather forecasters now: we don’t influence the economy, we just make a wild guess about what is going to happen. Economists pretended to be able to to tell what to do to have good weather all the time. And they fail and failed.
Ad 4: You are absolutely right: Compared to two thousand years ago we are richer on average. And compared to a century ago also. I often hear and read even fifteen years ago we were worse of. That goes at least for Ireland, Portugal or Russia. It is very unclear however whether there has been any significant contribution to progress by the economists of Ireland, Portugal and Russia.
As for your demographically tainted hypotheses, they are interesting but slightly on the bold side. I keep them in mind.
Last but not least you ask for an alternative. Or rather you imply there is no alternative. Well exactly, that’s the point: economists of the world unite and at long last create a just and fair alternative for the unjust and unfair liberal capitalism.
@Marjolein: Reading you comment I feel guilty in a way.
You are right of course. In a imperfect world there are no perfect solutions. Yet it is our moral duty to work on it. My ‘anger’in relation to free market economy is that, in my perception, it is a very influential morally bad ideology – it brings about egoism, greed and progress at the cost of the poor, the weak and environment.
The big question ‘what’s the sense of life’ is too big for me. I didn’t mean to tackle that. But in moments of despair I find rescue in Albert Camus: just keep busy by struggling on.
As for the world without humans, well, it was meant to be a rhetoric trick only. If it worked out wrong, I apologize.
I don’t think you see market economy in a fair perspectives.sorry for that. I do believe in competitive market, not free market alone. Free market per se, might create persistent imbalances, competitive market will not. For most of Indonesian politicians nowadays market economy is as bad as free sex (at least in Indonesia free-sex is a bad word
), and they began to curse bad names like “berkeley mafia”. The truth is, if not because of them, there will be no asian miracle in Indonesia in the first place. Indonesian will instead inherit considerably high inflation, extravagantly poor,and lack of technological innovation.
I don’t see Indonesian 1998′s Crisis as an example of market economy failure, as gerwin said, economic fluctuation is normal,and sometimes normal fluctuation turns into recession due to high debt,and bad fiscal management. I do agree that at that time the institution was not strong enough to deal with all the money flowing all over the place. IMF made some mistakes about the banking policy at that time, underestimating the institutional problem embedded in the banking sector. But please don’t generalize it to all market economist concept.
How about food prices? again I agree with gerwin,people eat meat more than ever, doubling the need of food stocks. surprisingly, as people consume more,we produce even less and so prices are skyrocketing. Why we produce less? may be there is something to do with high subsidy to european/US farmers distorting the price of staple foods, moving away the incentive of food production to other kind of productions. Instead of investing their money to increase production of food in developing countries, with all their R&D superiority, they prefered to protect their agricultural market, nurturing their farmers with high subsidy, creating a dream world where food prices is relatively low until everything broke down, and all hell breaking loose.
Thanks for your solid reply. And I confess: maybe I’ve been a little bit unfair and generalizing.
As an outsider I assumed the capitalist free market paradigma implied a competitive market: the best will always win in the end and the consumer will benefit; and therefore we should remove all obstacles which may hamper glorious entrepreneurship.
This is a very dynamic concept – maybe even cutthroat dynamism. The aggressiveness and dynamics are the great assets of free market capitalism, I guess.
But why accept as a law of nature the cycles of crises? Or why accept that some benefit 40 or even 400 times as much from economic growth than others? Why should we forget that – at least in Europe – during the reign of the Keynesian paradigma (’45 – ’75)- economic growth and an ever growing more even distribution of wealth did take place? Why shouldn’t we remember that “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyoneâ€.
So I’m unrepentant. I still blame the economists to have got stuck in this Friedmanian paradigma only over the last 35 years. Primarily I blame the normative part of the science of economy and only to a lesser extent the positivists. Speaking about competition: a grown up science should have major discussions between different paradigma’s.
I don’t believe more free market/competitive market will do any of us any good. Well, it will do good to the high and mighty 1 promille.
So I call for the brainy part of the economic world to provide us with a new and better paradigma. Dynamic, but fair for a change.