"Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." So begins a significant new report by the New Economics Foundation in the U.K., quoting economist Kenneth Boulding. "The most pressing problem facing humanity now," says the report, The Great Transition, "is how to share scarce planetary resources in ways that are just, sustainable and support the well-being of us all."
The koan for our times might be: How can there be a devastating financial crash that produces no serious financial reform? Like all koans, this one is instructive because it forces us to contemplate the deeper reality that lies beneath superficial appearances.
One of the virtues of a commons-based economics is that it would help sweep aside some of the foundational fallacies of neoclassical economics.
Last weekend I traveled to Bloomington, Indiana, to speak at a community-organized conference on the commons. As I got up to speak, I paused and gulped: there in the audience was the pioneering scholar of the commons, Elinor Ostrom.
It was not an academic conference, but rather a gathering of 125 regular citizens at the local Unitarian-Universalist Church. Several slides in my presentation drew upon her work or mentioned her. Would she agree with my interpretations? Would I get something wrong?
It’s a great victory for the commoners that our tax monies for student loans may soon go directly to students, via a U.S. Education Department program, rather than through banks. Yesterday, by a 253 to 171 margin, the House of Representatives voted to shift billions of dollars in college student loans to the Education Department. The move prevents Sallie Mae (the largest private corporation providing student loans) and banks from continuing to act as parasites on public resources and as predators of needy students.
All economies require social trust to work. While there are many reasons for the lack of confidence in the marketplace today, surely one of the most important is the unreliability of price as an indicator of value. A lot of people just don’t trust prices as reflecting the actual worth of a house or corporation, let alone the intangibles of social life or nature that we also value.
This is symptomatic of the crisis of neoliberal economics and public policy. As I see it, there are a number of mutually reinforcing reasons for the waning confidence in the price system:
Charles Dickens’ character Scrooge has lasted for more than two centuries because we love to witness a villain who stubbornly refuses to see the value of human connection and kindness -- and then, suddenly, gets it! Scrooge comes to mind when re-reading The Deadweight Loss of Christmas (pdf file), a now-classic essay that appeared in the venerable American Economic Review in December 1993 (vol. 83, no. 5, pp. 1328-1336).
In the mid-1990s, my colleague Jonathan Rowe co-authored a major piece in The Atlantic about the gross deficiencies of Gross Domestic Product (GDP) as a way to measure national well-being and progress. The essential point was that our nation’s obsession with economic growth as an end in itself was (and is) trampling on all sorts of other forms of wealth that we must also nurture. We need stable families and communities as much as economic growth — and sometimes the two are in direct conflict.
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