Homo Economicus

EARLIER THIS MONTH, THE WORLD'S financial leaders met in Washington D.C. at the World Bank and International Monetary Fund (IMF) to discuss what they were going to do about a struggling world economy. Observers were surprised to hear the acknowledgement that capitalism isn’t producing the results many had hoped for following the financial crisis of only a few years ago. Just exactly how they will tackle the growing inequality and poverty wasn’t forthcoming, but still the admission of failure was perhaps a positive step as the world attempts to make sense of what went wrong.There was the open admission from two major plenary panels that we are rapidly becoming a world of extremes  They also conceded that with 67 people now owning half of the world’s wealth that there's clearly a problem. In an environment when the financial rules are rigged in favour of the fabulously wealthy, there was hope that those with the resources would apply themselves to humankind’s great challenges. Alas, there was another admission that this hadn’t transpired. This isn’t fully so in regards to capitalism, as we shall note in the next few blogs. Some corporate leaders are steering a new course that brings community value back into circulation, but they are few and the prognosis for the failure of capitalism and democracy isn’t good.We sometimes forget just how wildly things have fluctuated. Only 300-400 years ago, the average Chinese family was better off than those in Europe. But when the emerging West utilized its advantages of more open politics, enhanced institutions, trade, free enterprise, scientific invention, and growing public education, things began to change, and rapidly. By 1978, the average North American was 22 times better off than their Chinese counterparts economically. Today that number has switched again and we find that we are only 5 times better off.And yet China is heading down the road of similar mistakes as we have made. Presently there are 800,000 millionaires and 65 billionaires in China. While many struggling families in that great country have emerged from dire poverty, they are also watching the gap between the rich and poor inevitably widen.Most of us understand why China is doing better, but are experiencing great confusion as to why the great capitalist engine of the West has faltered badly enough to assist in the widening gap between the rich and the poor, flattened communities, increasing environmental degradation, and a growing animosity between average citizens and corporations in general. When World Bank president, Jim Kim, suggested that more “pinstriped suits” get involved in finding ways to get trillions of dollars from corporate wealth into struggling economies for “moral” reasons, there was no backlash or rebellion. The world’s financial elite are getting closer to realizing they have played a hand in the great decline. What is yet unknown is how they will respond to that culpability. Just as they have replaced the idea of individual citizens with consumers, so they have reduced communities to market bases or employment pools.Where we were once known as homo sapiens – from the Latin homo (meaning “human”) and sapiens (meaning “wise” or “rational”), we have been reduced by the modern financial order to homo economicus – “economic humans.” We have become one-dimensional creatures in the eyes of modern finance and in the process our local communities have been reduced in the same manner.Yet, for reasons which largely remain a mystery, some corporate leaders have moved out ahead of the World Bank and IMF and are attempting to bring human value and dimension into their business and corporate models. We shouldn’t be fooled into becoming maudlin and wishful about their motives. They understand that they are businesses and that by appealing more to social good they are merely opening up their business to a larger pool of customers. Nevertheless, when we have reached the point where international monetary leaders are confronting their illegitimate offspring – jobless, environmental degradation, declining communities, inequality, corporate dysfunction and corruption, and lack of public trust – and at least by acknowledging the results of their decades of excess, we might at least have a starting point in which to discuss saving our communities from eventual ruin.The word “capitalist” now resides in the cellar, along with “politician” – both the object of public disdain. Significant efforts must be made by the leaders of both finance and democracy to not only restore their reputations, but to bring our communities back to a place of economic and social health. Somehow the counsel of Thomas Jefferson doesn’t seem too dated anymore: “The end of democracy and the defeat of the American revolution will occur when government falls into the hands of lending institutions and moneyed interest.”There is only one way back, although the various motives will vary. The change must come from communities fighting for the lives they want and from businesses and corporations who realize that their days are numbered if they continue to isolate themselves from the effects of their policies.