“An economist,” Laurence Peter says, “is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.” He was the famous inventor of the Peter Principle – the belief that once a labourer rises to a position over his head, he will become incompetent. Many of our modern day economists have been around a while, long enough for us to begin to question the present direction of modern capitalism, our financial markets, and the need for political systems to depend increasingly on economic growth for their validity.
For a long time the belief that each successive generation can be more prosperous than the last has driven much of the policy and financial apparatus in everything from interest rates to social programs. It was never an exact science – perhaps best displayed whenever frequent recessions dashed our economic prospects with cold water for a time. Yet we always seemed to bounce back and, over time, became more adroit at both predicting and preventing the worst of recessionary times. It’s a continuum – perpetual growth – that has infused almost every major institution with the idea that economic expansion is a natural as breathing.
Well, these days we’re panting pretty hard. For decades, even as global economies grew at dynamic rates, we were slowly coming to the understanding that the future of employment wasn’t a sure thing anymore. Poverty, and the cost of maintaining it, was becoming a growing concern. Even in the heyday of the environmental movement (it’s had a few), we were never able to land on firm policies or resolve how to reign in climate change because we were constantly being barraged with economic analyses claiming we couldn’t afford it. The decline in middle-class purchasing power was largely masked by the flood of cheap products filling the global marketplace, but we are now coming to terms with the reality that consumption depends more on income than the prevalence of cheap items and with unemployment running at all-time highs, the middle class can’t spend like it used to.
Occasionally certain economists, like John Kenneth Galbraith, or more recently Paul Krugman or Robert Reich, have questioned policies structured on the belief of endless growth. In the main, economists promote minimalist roles for governments. That’s why we’re seeing the endless rounds of calls for austerity measures on both sides of the Atlantic, and occasionally across the Pacific. The best way to stimulate economies, the traditional rationale goes, is to decrease public debt, relax regulations, and permit the free market to do what it does best.
Well, what is that exactly – its best effort, I mean? The economic meltdown from this last recession still leaves a bitter taste in our mouths and the massive financial institutions still remain the easiest targets. Ironically, trillions of public dollars were used to bail out financial institutions that showed little care for communities or the welfare of citizens.
But it goes deeper than that. Small and medium-sized businesses are experiencing significant problems getting started or keeping going. While parents still leave generous legacy gifts to their children, they have also left a public policy wasteland behind that provides decreasing investments in public holdings and institutions. We have yet to see any credible environmental policies enacted by governments even as global warming attains a tighter grip around our collective throat. Many companies that are actually leading the way in environmental reform nevertheless call for increasingly limited roles for governments in the climate change challenge.
Businesses are permitted to acquire massive debts while at the same time calling on governments to tighten their purse strings. Yet the irony of all this is slowly coming in from the periphery among citizens and their traditional trust in prolonged progress or even the advice of economists is becoming increasingly suspect.
And yet we go on. In a world where billions of dollars are accumulated in mere hours we can no longer afford university, catastrophic drugs, higher employment, carbon taxes, even a home. There is no longer a sense of confidence that the usual set of rules imposed on financial systems can generate similar outcomes to those of the past. We have grown out of work, out of environmental sustainability, out of health, education, welfare, and precariously out of time. We have grown and grown to the point that we no longer create the kind of jobs that can generously purchase commodities. We have grown so much in the historic model that we have an abundance of supply that can no longer be purchased on the demand side because they can’t be afforded. And in that one area where supply is increasingly limited – oil – we have no effective plans of what to do when supplies run out or when fossil fuel emissions alarmingly limit the possibilities for our children.
We have filled our world with growth concepts until we have run out of room to expand. Economists ask us to hold tight, don’t borrow so much, pay off our debts, limit our public expenditures as a people, and collectively tighten our belts. Yet they often fail to turn their sights on a corporate world that is draining the very resources we require as a people to tackle our greatest problems.
Worst of all, political parties across the board can’t break with that narrative, and this for one key reason: citizens vote against their own best aspirations. The continuum drags on, with modern citizens the only ones who can bring about change but who refuse to bring economics back into the peoples’ hands lest it cost too much.