I’m thinking about the sluggish US economy and trying to do the math. Seventy percent of our economy is based on consumer spending… rich seem to be getting richer and more of everyone else are falling into economic distress. Do all of us with disposable income need to go back to “shopping til’ we drop” and buying stuff we don’t need to make our economy grow again and move people out of that economic distress? There’s got to be a different path forward that leverages some sort of “less is more” principles. Can we somehow shift our economy from being based on private overconsumption and perhaps redirect it more towards building say more shared public infrastructure?
I as always, apply my hierarchy vs circle of equals frame of reference to these issues. My thinking generally is that we, as a species, have reached a phase in our individual and collective (cultural) development where we are transitioning (sometime three steps forward and two back) from lords, monarchs, bosses, (even experts?) etc to a more level and egalitarian relationship with each other. My “ministry” is all about calling out and facilitating that transition and doing what I can to not get “stuck” in conventional wisdom and the path of least resistance.
So given my agenda, I tend to look at issues through a lens that puts a premium on facilitating our freedom and development versus limiting that freedom and directing our development. So applying this lens to economics policy and practice, I tend to favor economic policy and actions that create and facilitate an enriched environment for entrepreneurialism and empowering everyone as a “circle of equals”, over other policies and practices that are more directive and represent top-down “command and control”, more typical of hierarchical systems and thinking.
Recently, as I have been doing lately, I put the thoughts that I started this piece with out on Facebook, which caught the attention and piqued the interest of my High School friend Erik, who had studied at the London School of Economics. I asked him if there really was anything in either the Democrats or Republicans economic policy that could realistically create more jobs in the US economy without us returning to the “shop til’ we drop” hyper-consumerism. My friend Erik responded…
Boy, the answer to that question really comes down to the fundamental debate between adherents of the two greatest 20th Century economists – John Maynard Keynes and Friedrich von Hayek.
Again, I’m not well studied in economics. I’m a bit familiar with Keynes and have heard of Hayek, but that’s about it. But as a “life long learner” I always want to understand stuff, and short of reading whole books on or by these two, I often go to Wikipedia…
Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle… though it lost some influence following the stagflation of the 1970s. The advent of the global financial crisis in 2007 has caused a resurgence in Keynesian thought. The former British Prime Minister Gordon Brown, former President of the United States George W. Bush, President Barack Obama, and other world leaders have used Keynesian economics through government stimulus programs to attempt to assist the economic state of their countries.
Okay… I get that! A capitalist/free enterprise system including a significant amount of “active” government regulation and even intervention to “stabilize the business cycle”, including reacting with strong government spending to events like the Great Recession.
Hayek on the other hand believed…
that the efficient exchange and use of resources can be maintained only through the price mechanism in free markets… allowing society’s members to achieve diverse, complicated ends through a principle of spontaneous self-organization… a “self-organizing system of voluntary co-operation”… while in centrally planned economies an individual or a select group of individuals must determine the distribution of resources, these planners will never have enough information to carry out this allocation reliably… the central role of the state should be to maintain the rule of law, with as little arbitrary intervention as possible.
Okay… get this too! The more libertarian, anti-socialist position of many conservatives today.
As a person wrestling with my own budding more left-libertarian ideas, I was curious to read further…
Hayek did write that the state has a role to play in the economy, and specifically, in creating a “safety net.” He wrote: “There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.”
Though Hayek is more often championed by conservatives than progressives, the above Wikipedia synopses sounds pretty reasonable and pragmatic to me! I wonder how many Tea Party supporters would agree with a statement like that? I read that Hayek, though often championed by more conservative thinkers today, was never comfortable with that label, and was more of an outside-the-box thinker. Based on that last quote above, it sounds like he might even be supportive of our current US efforts at universal health care within the context of our mostly for-profit health care system!
So back to my cheerleading for our transition to a circle of equals and the focus on facilitating an enriched environment that goes hand in hand. It looks like both Keynes and Hayek are supportive of facilitating an enriched and “level playing field” for free enterprise, looking to more directive economic intervention by the government only during an economic crisis, with Keynes maybe being more willing to invoke that sort of “martial law” for routine downturns in the business cycle with Hayek reserving it for events more outside the norm.
So then back to my original question… do we need to “shop til’ we drop” to invigorate the US economy, given that those of us of economic privilege (whether earned or not) really don’t need to buy more stuff to have a “good life”?
I keep thinking we probably need to buy less, save more, and even work (and get paid) less, so there is more paid work to go around and less extra dollars burning a hole in our pockets. So say if my employer currently employs 20 people as business analysts working 40 hours a week, it could instead employ 24 people (20% more) working only 32 hours (20% less) a week. That’s my own crazy idea that I don’t see many (if any) others suggesting, and I know the reality would be more complicated than my simple math.
I think we all would be served by acknowledging that we are in a transitional time that is unlike any time before, and “shop til’ we drop” and other conventional consumerist economic wisdom needs to be seriously reexamined, and an economy that depended on that overconsumption needs some significant rethinking as well. Why are so many of us investing in big-screen TVs while our libraries and parks are closing for lack of funds, and our teachers are being laid off? Why are so many of us still struggling in economic uncertainty if not totally engulfed in poverty?
The challenge is, if we are truly becoming a society of a circle of equals, we all need to answer this question together, and not pass the buck to someone further up what remains of the traditional pecking-order. Perhaps the answer is a new consensus to rebuild and enhance the public infrastructure of our country – schools, parks, libraries, health care, etc. Perhaps the answer is something else. Whatever we can come to a compromise consensus on, I hope it is in alignment with our evolutionary development, our growing agency, and can be more about freedom and an enriched environment, rather than taking direction from some authority above.