Pamela (December 13, 2001)
I’m puzzling, as usual, over what to do with all I know about what’s wrong in the world, particularly around economics and globalization issues. It’s hard to not be able to fix things. As we are urged to be patriotic and buy, can you direct me to a cogent, current description of an economic model that is not based on ever-expanding markets?
Walter (January 30, 2002)
That is a 64-thousand-dollar question (surely it must be 64 million these days). And maybe that’s the real answer to your question of an economic model not based on ever-expanding markets. The answer is not economic. It is at the very least socioeconomic, and more likely goes to the heart of the human condition.
During the 20th century, economics tried to distinguish itself from the other social sciences by being more scientific, which meant dealing with hard facts. Since hard facts are often difficult to come by, economists are more apt to deal with abstractions and equations, whose mathematical structures are "scientific" but in which the real world is irrelevant. Since economics, at its core, now bears no relation to reality, it is difficult to find any economic model that is much use in describing anything that is going on in the real world.
"Growth theory," which is at the heart of expanding markets, is only one aspect of this general failure of economics to understand the real world. According to growth theory there should now be no underdeveloped countries on Earth. By now growth theory has become more of a faith than a science, but economists are unwilling to accept that. So they go on trying to prove their tautologies against all the evidence. Or they try to cook the evidence to fit their theories (though, very slowly, more and more economists are beginning to doubt their own theories). The search, therefore, is not for an economic theory that works, but for a theory of life that goes beyond economics. Such a theory cannot compete on the economics playing field because it cannot be put into econometric equations.
There are a number of institutions, probably numbered into the thousands, that are looking for a broader canvas. For the most part they know more about what is wrong with the world than how to fix it. They know that money mania is wrong; it is not only destructive, it isn’t even fun. They know that poverty is a sin against humanity, and that much of it is caused by wealth. They know that governments are too often bought. They know that wars don’t solve problems. They know that power corrupts. They know that small is beautiful. And they know that cooperation (love in action) often works wonders. They just have a strong feeling that putting one foot in front of the other in what appears to be the right direction might hopefully get us somewhere.
P.S. About the push to "buy, buy, buy; it’s good for the economy": That push has lowered the incomes of the lower three-fifths of the population; increased the debt burden of consumers, leaving some in serious financial condition (and less able to buy); been a major factor in the merger and acquisition movement, which has reduced the level of competition and hence of fairness in the market; increased monumentally the income and power of the large corporations; led to an emphasis on material rewards that has warped many persons’ concept of what life is all about; led to a phenomenal decrease in business morals to the extent that it is hard to find a really honest corporation (in the past five years 19 of the 20 largest brokerage houses in New York City have been convicted of fraud); crushed the populations of the poorer peoples of the world, who are at the mercy of our large corporations; and been a primary breeding ground of terrorists (ask any al-Qaida member why he hates the United States).
If we want to stimulate the nation’s economic activity, get the rich (or the corporations) to spend; they are the ones who have the excess money. Or ask the corporations to hire more workers so that they will naturally go out and spend. Or provide more relief for the poor; they’ll spend almost every bit of it. Asking the rest of us to spend out of current income is mere advertising for the purpose of increasing the profits of business.
Pamela (February 2, 2002)
I know a lot of what is wrong, and I know a lot of the elements of what would make a good society. But things happen that are confusing. For example, the guy that my son Timothy works for runs a coffee shop, and is now expanding to two. He sells a product that only the well-to-do (i.e. middle-class people) can buy, and his business is completely nonessential, but it allows at least half a dozen young people to make a living. Or, after September 11, people were afraid to travel, and all these folks in the hotel and tourist industry lost their jobs. President George W. Bush said that the patriotic thing to do was to go out and buy things, which seems totally obscene, but if everybody goes home and makes their own coffee, Timothy loses his job. Or, all these people come to the U.S. from poor countries and are thrilled out of their minds to earn enough money—from the discretionary income of wealthy people, which we think shouldn’t exist—to be able to support themselves and their families back home.
Do we want a system where more people go back to putting their labor into the things that we now do (often poorly) with expensive high-tech machinery? What will everybody be employed at? Is it possible for hundreds of millions of people to have a good life on the farm? What about regional economies? (Will we stop eating mangos in the northeast?) For that matter, what about nation-states?
It’s hard to know how much "progress" and "evolution" are actually at work in our social systems, whether there’s a natural inevitable globalization and specialization of human society or whether it’s just decisions that have been made and can be changed (not easily, of course). Maybe it’s a combination of both. Is specialization just a social construct? The idea of progress is so deeply embedded in our collective psyche that it’s hard to get a good perspective on it. I just wish that I could be more confident that what seems right and good and true to me wouldn’t end up, if put into practice, throwing millions of people into greater misery.
Walter (February 12, 2002)
You raise a lot of interesting questions, and I am not sure of the answers, but I will try to start at the beginning. Your coffee shop example poses a difficult problem in the real world of today. I would not suggest that Timothy give up that job, and I assume that you wouldn’t, either. You are deliberately raising the questions that should give us pause precisely because the answer disturbs us. In this economy the answer to such questions is not, "Which is good and which is bad?" but "Given the present choices, which is merely unfortunate and which is intolerable?" My basic response to that dilemma is to do what work can be done with a clear conscience under today’s rules, to try to do our best to find work (in the generic sense) that conforms to our ideals, and to do our darnedest to change the rules.
It is undoubtedly true that buying today will help some people to stay employed, but the major fraction of the money spent will help a coterie of millionaires (and billionaires) amass their own fortunes, and the devil take the workers. The corporations, with vastly increased sales, laid off hundreds of thousands of workers in an attempt to squeeze more money out of a vibrant economy. The very unusual side effect of these massive layoffs has been, until very recently, a reduction in unemployment. Where all these laid-off workers went I don’t know, but most of them must have found self-employment, local jobs, or work with smaller companies and those who were more concerned for their employees. Which is what we want. (I worked two summers, and my brother worked almost his whole life, with Disston, a small company, particularly in those days, that never laid off a single employee throughout the Great Depression.)
With regard to food production, not everything primitive is per se admirable, but civilization didn’t get its start in 20th-century United States. Cooperative farming is not doing too well in this country because both business and government practices have practically eliminated the small farmer, but don’t tell that to the farmers in Vermont, rocky as their soil is. We have our garden; you have yours in what little space you have in the city; we have our ducks (and this morning took 3 dozen eggs to the homeless shelter).
Perhaps more to the point, I know an economist who worked with farmers in Sri Lanka to institute an equitable plan for sharing irrigation waters as they flowed from the source reservoir to the sea. The farmers involved were of two highly hostile tribes, and the government agent of the district said that it would hardly be possible to get 10-15 farmers to cooperate. At the end of four years he had over 10,000 cooperating to distribute equitably a still scarce supply, which led to noticeably increased crop productivity. Maybe primitive peoples do this sort of thing better than we sophisticates with our high standards of living.
I am sure that we will never manage (or want) to go back to those primitive conditions. But there is a lot of sentiment for back-to-the-land, and there are still real farmers left. There is Consumer Supported Agriculture. There is a multitude of craftsmen and women, local merchants and contractors, lawyers, dentists, doctors, and many sophisticated business persons who run their own companies. And there is a vocal plea from the labor unions for shorter hours, which, among other things, would spread the work.
The real question is not what everybody will be employed at, but rather, whether we will be satisfied with our manner of living. Society in the United States today is constantly being bombarded with the necessity for a growing economy. Why? Does it produce happiness? The answer is clearly no. Are we happier today than we were 30 or 60 years ago? Are the rich happier than the poor? Public opinion polls show overwhelmingly that a rise in personal income or gross domestic product does not increase personal perceptions of well-being. In fact, they show that most people don’t put money or wealth very high on their list of wants. What do people want? Family, health, a satisfying job, children.
In the same vein, many people get great pleasure out of doing things they are interested in, but not paid for, like knitting, making chess sets, putting together a model airplane, growing things, getting together with friends, making clothes, helping neighbors, or crafting toys. I’ve built three houses, you helped with two of them. We chop our own wood and heat the house with it.
Mangoes are fun, but it is possible to find healthful, nutritious, and tasty food from around the corner. It would be difficult to get all our food locally, but we could go a long way in that direction without feeling deprived. And don’t fall for the argument that we are helping farmers around the world by buying their crops. We are in fact destroying native agriculture in large doses by forcing specialization and mass production of the crops that we want, while pushing out the native foods that the farmers and their neighbors have traditionally subsisted on. Our demand shifts native agriculture away from the food they have traditionally grown, and actually increases hunger.
I don’t think that anybody has the answers to your overall question: what are the implications of possible solutions? Or perhaps everybody has a partial answer. The economist is totally disqualified from even trying. While he knows a little about raising maximum GDP, that is more likely to cause more problems than to solve the ones we already have. The answer lies not in systems or laws or moneymaking but in the heart of human beings. The answer is love. Just think a bit about what the implications of that are!
More concretely, the nuts and bolts are such things as community (you grew up in an intentional community, you help run a community school, and you work in other community organizations); simplicity (you know all about that from several angles, including your childhood, your school, and your mother’s example); relating to the land, to nature, and to the conservation of resources; respect for other people, and particularly, because it is most difficult, those who are different from us; being alive, aware, compassionate.
In a sense what I am saying is that you are the answer. Yes we need some expertise in particular aspects of life. We need farmers who know how to raise food. We need mothers who know how to raise children. We need mechanics to give us tools (and, God forbid, computers). We need teachers and doctors (but not lawyers). We need community groups. We need clear-minded thinkers. We need churches, synagogues, and mosques. We probably need visionaries who can give us a glimpse of the possible future.
What we don’t need are armies.
What we don’t need is advertising screaming that we have to go out and buy what we don’t need or often even want. What we don’t need are billionaires or millionaires and the gospel of wealth, a chimera that says that more money means more happiness. What we don’t need are the World Bank and the International Monetary Fund (both of which I praised highly in my doctoral dissertation). What we decidedly don’t need are the World Trade Organization and corporations that have gotten so large that they are above both law and morality—essentially a new world government. The WTO is a very clever tool for promoting corporation welfare. Are you aware of the fact that in matters of trade the WTO, through its court, which operates in secret and from which there is no appeal nowhere, nohow, can overturn national laws? It is corporations who are preventing us from signing the Kyoto Protocol (it would hurt their profits to reduce pollution) or to take other measures to protect the environment. You can’t cut military budgets significantly (even without the War on Terror) because that would destroy the big military contractors. I would be willing to guess that if we abolished corporations, a large number of our substantial economic, military, and environmental problems would disappear. Enough. Read David C. Korten’s When Corporations Rule the World.
What is economics? Oikos=house; nemein=to manage. So in its Greek origin, the first economist was the woman who managed a household. The first modern economist, Adam Smith, was a professor of moral philosophy, and his first book was The Theory of Moral Sentiments. As for corporations, he says they "scarce ever fail to do more harm than good," and he upbraids "the natural selfishness and rapacity of the rich."
In the line of economists, Adam Smith was followed by David Ricardo, then by John Stuart Mill, who was considered one of the most notable social reformers of the 19th century, and a strong defender of women’s rights. Then comes Alfred Marshall, whose Principles of Economics, first published in 1890, was still being used as the economics text into the 1930s, both in England and the United States. Alfred Marshall is a social scientist to the core. At the "top level of human achievement" he talks about honesty, good faith, generosity, kindness, love of virtue, richness of character, duty, the mandates of conscience, family affection, altruism, philanthropy, and love of one’s neighbor. He ultimately states that "the joys of religion are the highest of which men are capable." How would he fit into the corporate United States?
John Maynard Keynes is the only really outstanding economist of the 20th century, and outside of academia he was a banker and one of the two primary theorists behind the World Bank and the International Monetary Fund. Yet he wrote a remarkable essay in 1930, called "Economic Possibilities for Our Grandchildren," in which he said, "When the accumulation of wealth is no longer of high social importance, . . . we shall be able to rid ourselves of many of the pseudo moral principles which have hag-ridden us for 200 years, by which we have exalted some of the most distasteful of human qualities into the position of highest values." The worst of these qualities is "the love of money as a possession, . . . a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental illness."
I should apologize for the length of this response. But you got me started on thinking through the significance of much of my work over the last 30 years.
Pamela (February 21, 2002)
What a treat to get your letter. Your thinking helped clarify mine. Thank you for being so clear in stating that we won’t solve all our problems simply with a better economics model. (And it is so useful to hear the emphasis on ethics and values in those economist giants of the past.) I guess so many people are suffering so much under this system that maybe we shouldn’t worry too much about the dislocations that will be inevitable in a switch to something more human-oriented. It just doesn’t seem right that that suffering will probably happen to others while I/we, who aren’t doing too badly under this system, might get by relatively unscathed
I think the thing that’s scary is that it is our disposable income that is at the service of the corporations. The fact that we have money to spend makes possible, for example, the creation of factories in China that produce goods that nobody needs for our market. If I don’t use my disposable income to buy those things, then a Chinese peasant has to go back to subsistence farming (on land that has been grievously polluted by Western-inspired chemical technology).
It’s like we’re trapped in the middle ("we" being anybody who has something in poor countries, and everybody who has anything in rich countries). My personal wealth is nothing compared to the corporations, but it’s pretty striking compared to the millions of the world’s poor. I’m not the one who is making a profit, but my relative wealth in a globalized capitalist system gives me power in relation to the really poor that I never asked for. Somehow we have to acknowledge our complicity and our unequal share, then go on to make the best decisions we can—both about our own relative wealth and our response to the corporations.
I guess the obvious way to address the issue of our disposable income (after inoculating ourselves against advertising—and checking whether the felt want/need will be best satisfied with a purchase) is simply to give it all away. If everybody who was inclined to buy coffee at Tim’s shop donated that $5 instead to a nonprofit engaged in Third World development, then maybe that group could help provide the kind of employment that I worry about in countries that really need it. While his coffee shop might close in the process, we would have to hope that its style of operation (small, personal, job-producing—the best of entrepreneurial) would be reproduced in other places and ways.
Withholding money from the system does not help anybody; putting money into the system through the market helps the corporations more than the people who actually make the products; putting money into the hands of groups/people that create and enhance livelihood around the world can actually help. Then the question comes down to how to help people get disentangled enough from the system first to recognize that they have disposable income, and then to see the life-giving opportunities of giving it back. It requires community, love, and faith.
I’m looking forward to thinking more clearly about how best to contribute to the anti-globalization movement. It seems imperative to address the issue not only in terms of personal and ethical choices but also in the realm of institutional change.
I love having this conversation. It really goes to the heart of what I care about. I guess I haven’t quite given up hope that somebody can confidently lay out how an equitable and functional global economy would work, so we could have something clear and workable to rally around. It sounds like nobody can, but the idea that we have
to go forth into the unknown, armed only with a faith that there has to be something better, is a little scary. I guess I just shouldn’t underestimate love and faith.
Walter (March 20, 2002)
I got your exciting letter almost a month ago and hoped to answer it
right away . . . .
I’ve just started reading Eco-Economy, by Lester Brown. While economists know about pricing and environmentalists know about pollution, the problem is that pollution has no price. If economists and environmentalists get together and work out ways of establishing satisfactory cost estimates of environmental damage, then tax the polluters (mainly corporations) for the cost of their fouling the environment, the only pollution left is, by definition, beneficial (if that’s not a contradiction in terms). My addition to that (and he may say it later in the book) is that this serves the poor by protecting the forests, the soil, the agricultural base that peasants worldwide are now being thrown out of, as well as saving all of us from environmental catastrophe.
One example: If the current Chinese plans for developing an automobile-centered transportation system such as that in the United States were to materialize, "China would need over 80 million barrels of oil a day—slightly more than the 74 million barrels per day that the world now produces.
The crux of the matter is in your sentence: "Somehow we have to acknowledge our complicity and our unequal share, then go on to make the best decisions we can." I know I’m rich though I never earned anything significant other than my teaching salary. Our answer so far has been to tithe 25 percent of our joint income, but even that doesn’t seem to be enough.
To end on a positive note. What I read in the New York Times, considered by some to be a highly conservative paper, is becoming distinctly encouraging. I read that the protest in Seattle was the start of a quiet revolution. As a very clear indicator of this kind of progress, I read that inside the halls of the New York meeting of the World Economic Forum, more time was spent discussing the problems of Third World poverty than was spent on corporate affairs. The times they are a-changin’.