Monday, December 07, 2009

When the Economists Are in Charge

In October, the British historian Tony Judt delivered a lecture with the sobering title, What Is Living and What Is Dead in Social Democracy. Speaking at New York University, where he is currently a professor of European history, Judt said, "We appear to have lost the capacity to question the present, much less offer alternatives to it. Why is it so beyond us to conceive of a different set of arrangements to our common advantage?"

Judt's question is particularly pertinent today, as the Copenhagen Summit on the Environment begins. The reason for our lack of vision, Judt claimed, is because, for quite awhile now, we have been "resort[ing] to 'economism', the invocation of economics in all discussions of public affairs."

For the last three decades he maintained, "we have not asked is it good or bad? Instead we inquire: "Is it efficient? Is it productive? Would it benefit gross domestic product? Will it contribute to growth? This propensity to avoid moral considerations, to restrict ourselves to issues of profit and loss -- economic questions in the narrowest sense -- is not an instinctive human condition. It is an acquired taste."

We now see everything through the prism of economics -- particularly Neo Classical Economics. And viewed through that prism, there is no such thing as the collective. Or, as Margaret Thatcher put it, "there is no such thing as society. There are only individual men and women and families."

But Copenhagen is all about the collective -- the global collective. It's about state and international solutions. However, in the wake of World War II, and beginning with the Neo Classical economists -- like Friedrich Hayek and Joseph Schumpeter -- there arose, among those who set policy, a deep suspicion of the state. It is significant that a number of the economists who eventually became associated with the "Chicago School" were refugees from Austria. Their mistrust of government grew out of their experience between the wars. And, as the British and American welfare states struggled under the forces of globalization, their ideas gained currency. It is these ideas which the prime minister and his party have adopted as unalterable truths.

That baggage -- at least in part -- explains why Mr. Harper lacks any real vision. His mission is to propagate Hayek's and Schumpeter's mistrust of the state. That mistrust has led to greater economic inequality and greater social instability. It has also led to a planet at its tipping point.

Mr. Harper did not intend to put in an appearance at Copenhagen. He changed his mind when he discovered that Barack Obama was going to attend. Moreover, he has no policy on the environment. Worse still, he called the Kyoto Accord, -- the last attempt at a coordinated plan to save the planet -- "essentially a socialist scheme to suck money out of wealth producing nations."

The last two years have given us some insight into the consequences of the Chicago School's doctrines. Applying those ideas on a global basis would be an unmitigated disaster. That realization does not appear to have dawned on Mr. Harper. Perhaps that's because he fancies himself an economist.


David V. said...

I think the Chicago boys have got a bit of a bad rap lately. Not that some of them aren't heartless bastards, but the Chicago school dropped off the agenda pretty darned quickly last year the moment it was realized that there were better ways for large corporate interests to pilfer the public treasury. Chicago's back in business now only because it's economically useful for those same interests.

I really like Judt's point. Reducing everything to simple economic calculus can't possibly be good for us in the long term, and you're absolutely right, it's our major stumbling block on climate change. We have to get people to think in terms of what is good for humanity again. Harper is hard-wired not to think that way.

Owen Gray said...

I could not agree more. The prime directive of the Chicago School was that a price could be placed on anything. Unfortunately, as the last year has proven, some assets are very difficult to price.

The one thing the Chicago boys never figured out was how to put a value on something. They thought they knew the cost of everything. But they never knew the value of anything.

ChrisJ said...

These ideas abound throughout society, and education is no exception. Where I work we have two factions: One views education as a right and as something of value; the other sees it as a commodity and as a way to make money. Unfortunately, right now, the "cost" rather than the "value" people are in charge.

Owen Gray said...

And they have been in charge for quite awhile. Their influence on education has been particularly tragic, because the emphasis on cost has been accompanied by an ethic of self-promotion.

My experience has been that the cost people are more interested in promoting their own careers than in promoting their students to the next level -- what ever that is.