CAN WE SOLVE THE
CRISIS?
Learned from the past on Economy
Economics, as we know it today, is a cultural phenomenon, a product of
our civilization. It is not, however, a product of our civilization in the
sense that we have, intentionally, produced, or invented it, like a watch. The,
difference lies in the fact that we understand a watch —we know how it works
and we can deconstruct them into their individual parts and put them back
together. However, we still don’t really know what, matter as such, is made of?
We understand watches, so to speak, from a certain level up. Nor do we know what
the real essence of time, is? So we, understand the mechanics of a watch, the
parts that we have, ourselves, constructed. This is not the case with
economics. So much, originated unconsciously, spontaneously, uncontrolled, unplanned,
not under the conductor’s baton. Before it was emancipated as a field, economics
lived happily within subsets of philosophy - ethics, for example - miles away
from today’s concept of economics as a mathematical- allocative science that
views “soft sciences” with a scorn born from positivistic arrogance. But our
1000 year “education” is built on a deeper, broader and oftentimes more solid
base. It is worth knowing about.
THE STORY OF OUR ECONOMY
To
understand the story of our economy we need to search our entire history for
answers, from the beginnings of our culture to our current postmodern age and
examine the moments that helped change later generations’ (and our current)
economic perception of the world; it is to look at the stops in the
development, either at certain historical epochs, like the age of Gilgamesh and
the eras of the Hebrews, and Christians, etc. or at significant personalities
that influenced the development of man’s economic understanding such as
Descartes, Mandeville, Smith, Hume, Mill, et al. In other words, we seek to
chart the development of the, economic ethos.
We
ask questions that come before any economic thinking can begin—both
philosophically and, to a degree, historically. The area here lies at the very
borders of economics—and often beyond. The more important elements of a culture
or field of inquiry such as economics are found in, fundamental assumptions, that
adherents of all the various systems within the epoch unconsciously presuppose.
Such assumptions appear so obvious that people do not know what they are
assuming, because no other way of putting things has ever occurred to them, as
the philosopher Alfred Whitehead notes in Adventures of Ideas.
What
exactly are we doing? And why? Can we do ethically all that we can do
technically? And what is the point of economics? What is all the effort for?
And what do we really believe and where do our (often unknown) beliefs come
from? If science is “a system of beliefs to which we are committed, ” what
beliefs are they? As we has become a key field of explaining and changing the
world today, these are all questions that need to be asked. In a somewhat
postmodern fashion, we will try to have a philosophical, historical, anthropological,
cultural and psychological approach to meta-economics.
THE TIP OF THE ICEBERG OF ECONOMICS
All
of economics is, in the end, economics of good and evil. It is the telling of
stories by people of people to people. Even the most sophisticated mathematical
model is, de facto, a story, a parable, our effort to rationally grasp the
world around us. The story told today, through economic mechanisms, is
essentially about a “goodlife, ” a story we have born from the ancient Greek
and Hebrew traditions and that mathematics, models, equations and statistics
are just the tip of the iceberg of economics; that the biggest part of the
iceberg of economic knowledge consists of everything else; and that disputes in
economics are rather a battle of stories and various meta-narratives than
anything else.
People
today, as they have always, want to know from economists principally what is
good and what is bad. We are trained to avoid normative judgments and opinions
as to what is good and bad. Yet, contrary to what our textbooks say, economics
is predominantly a normative field. Economics not only describes the world but
is frequently about how the world should be (it should be effective, we have an
ideal of perfect competition, an ideal of high-GDP growth in low inflation, the
effort to achieve high competitiveness…). To this end, we create models, modern
parables, but these unrealistic models (often intentionally) have little to do
with the, real world. A daily example: If an economist on television answers a
seemingly harmless question about the level of inflation, in one blow a second question will be
presented (which an economist will frequently add himself without being asked)
as to whether the level of inflation is,
good or bad , and whether
inflation should be higher or lower. Even with such a technical question,
analysts immediately speak of, good and bad , and offer, normative, judgments:
It , should , be lower or higher.
IS ECONOMI GOOD OR EVIL
Is there an economics of good and evil? Does it pay to be good, or does
good exist outside the calculus of economics? Is selfishness innate to mankind?
Can it be justified if it results in the common good? If economics is without
any deeper meaning, it is worth asking such questions.
Despite
this, economics tries, as if in a panic to avoid terms such as “good” and
“evil.” It cannot. For “if economics were truly a value-neutral undertaking,
one would expect that members of the economics profession would have developed
a full body of economic thought” (Nelson, Economics as Religion). This, as we
have seen, has not happened.
In
my view, it is a good thing, but we must admit that economics is, at the end of the day, more of a normative science. According
to Milton Friedman (Essays in Positive Economics), economics, should be, a
positive science that is value-neutral and describes the world as it is and not
how it should be. But the comment itself that “economics, should be, a positive
science” is a, normative statement. It does not
describe the world as it is but as it should be. In real life, economics is not
a positive science. If it were, we would not have to, try for it to be.
By the way, being value-free is a value in itself, a great value, to economists anyway. It
is a paradox that a field that primarily studies values wants to be value-free.
One more paradox is this: A field that, believes, in the, invisible hand of the market,
wants to be without mysteries.
A HOLISTIC VIEW
Since
economics has dared to imperialistically apply its system of thought to
provinces traditionally belonging to religious studies, sociology, and
political science, why not swim against the current and look at economics from
the viewpoint of religious studies, sociology and political science? As long as
modern economics dares to explain the operation of churches or conduct economic
analyses of family ties, which often results in new and interesting insights,
why not examine theoretical economics as we would systems of religions or of
personal relationships? In other words, why not attempt an anthropological view
of economics?
To
look at economics in such a way, we must first distance ourselves from it. We must
venture to the very borders of economics or even better, beyond them. Following
Ludwig Wittgenstein’s metaphor of the eye observing its surroundings but never
itself to examine an object (Wittgenstein, Tractatus Logico-Philosophicus,
section 5.6), it is always necessary to step outside of it, and if that is not possible, at the very least to use a mirror. We will employ anthropological,
mythical, religious, philosophical, sociological and psychological
mirrors—anything that provides us with a reflection. Here, at least two
apologies must be offered. First, if we look at our own reflection in anything
and everything around us, we often get a fractured and disparate picture.
Importantly, we only deal with the legacy of our western science culture and
civilization and ignore the other legacies such as Confucian, Christianity,
Islamic, Buddhist, Hinduism, and many others, although we would certainly find a
great deal of stimulating ideas if we did.
Let´s
focus on Hebrew and Christian thought that concerns economics, but we will not
study the whole of ancient and medieval theologies. Our goal will be to pick
out the key influences and revolutionary concepts that created today’s economic
modus Vivendi. The justification for such a broad and somewhat disjointed
approach is the idea Paul Feyerabend explained longago, that “anything goes”.
The
beginnings of economic belief, the genesis of these ideas and their influence on
economics
THE NEED FOR GREED
The
history of Consumption and Labor, here we start with the most ancient myths, in
which labor figures as the original human calling, labor for pleasure, and later through insatiability as a
curse. God or the gods either curse labor (Genesis, Greek myths) or curse too
much labor (Gilgamesh). The birth of desire and lust or demand. The asceticism
in various concepts and Augustinian contempt for this world dominates; Aquinas
turns the pendulum and the material world gets attention and care. Until then,
care for the soul dominated and the desires and needs of the body and the world
were marginalized. Later, the pendulum would again swing the opposite way, in
the direction of individualistic-utilitarian consumption. Nevertheless, from
his beginnings, man has been marked as a naturally unnatural creature, who for
unique reasons surrounds himself with external possessions. Insatiability, both
material and spiritual are basic human meta characteristics, which appear as early as the oldest
myths and stories.
PROGRESS, NATURALNESS AND CIVILIZATION
Today
we are intoxicated by the idea of progress, but in the very beginning, the idea
of progress was non-existent. Time was cyclical and humanity was expected to
make no historical motion. Then the Hebrews, with linear time, and later the
Christians gave us the ideal or amplified the Hebrew ideal, we now embrace. Then
the classical economists secularized progress.
How
did we come to today’s progression of progress, and growth for growth’s sake? The
Economy of Good and Evil, does good pay economically? In the Epic of Gilgamesh,
where the morality of good and evil, it would appear, were not connected; on
the other hand, later, in Hebrew thought, ethics ruled as an explanatory factor
in history.
The
ancient Stoics did not permit the calculation of the yield of good and the Hedonists, on the other hand, believed that anything that paid in its
results was good as a rule. Christian thinking broke a clear causality between
good and evil through divine mercy and shifted reward for good or evil to the
afterlife. This theme culminates with Mandeville and Adam Smith, in the
now-famous dispute on private vices that produce public benefit. Later, John
Stuart Mill and Jeremy Bentham built their utilitarianism on a similar
Hedonistic principle. The entire history of ethics has been ruled by an effort
to create a formula for the ethical rules of behavior.
The
development of the economic soul from the very bedrock of written human memory
on this planet all of this left traces, even in today’s times. We all have in
ourselves the stories we live and the ones that our ancestors have passed on to
us. We have also inherited others, often unknowingly. There is a piece of the
wild Enkidu in everyone of us, a bit of the tyrannic and heroic Gilgamesh, a
large piece of Plato’s influence,
mechanical dreams shared with Descartes, and others. There are the words and deeds of Jesus and the
prophets that we hear resonating in our heads from millennia past. They help us
make our own life stories and give reason or meaning to our own deeds. And these
often unknown parts of our life stories and the story of our civilization, shine
forth and reveal themselves, especially in times of crisis. The ancient Greeks
devoted much of their philosophy to economic issues. So did Christianity. Their
keywords and principles in the Gospels are of economic or social origin. Also
Thomas Aquinas and others have contributed greatly to principles that were
later attributed to Adam Smith, who elucidated on them at the right time in history.
The riddle of consumption has always been with us, that humans are naturally
unnatural, and that we will always strive for more, no matter how much plenty there
is around us. That hideous want has been with us since Pandora and Eve, and it
is connected to the toils of labor. Even the most ancient civilizations knew
what we are - at great pains - (re) discovering today. The quest of
self-control is up to us. It is not for nothing that it is written in the Old
Testament, that “He who is slow to anger is better than the mighty”
REDISCOVER AND RETHINKING
It appears that
contemporary economics should leave some new ideas and - on the other hand - return
to many of the old. It should abandon the persistent dissatisfaction, artificially
created social-economic shortcomings, while it should rediscover the role of
sufficiency, resting, and gratitude
for what we have. And, by the way, we really do have a lot; from a
material-economic standpoint the most in the history of Western
Greek-Jewish-Christian civilization . . . or any civilization known to ever
walk this planet. We should therefore leave behind this material daintiness and
the excessive emphasis on the happiness material prosperity can provide.
The reason for this
rethinking is that economic policy following the material goal only inherently
runs into debts. Any economic crisis will become much worse if we were to
constantly shoulder the burden of this debt. This burden should be repaid fast
—before the next bigger economic crisis hits our system and finds us unprepared:
having not learned our lesson and being pampered.
LIVING ON THE EDGE
Those who constantly live
on the edge should not be surprised when that edge cuts. Those who cut the competitive
edge should not complain when that edge cuts them. Those who fly too high and
too close to the sun, like the fabled Icarus, cannot be surprised when their
wings sometimes melt; the higher he flew,
the farther he fell. And we have skated too long on an edge that was
very sharp. Skating and flying moderately were not enough for us; perhaps the
time has come to return to safer and more pleasant altitudes.
It appears to me that we
have given politicians and mathematicians too large a role at the expense of philosophers
and own values. We have exchanged too much wisdom for exactness, too much
humanity formathematization.
FOUNDATIONS BUILT ON SAND
It brings to mind an
extremely detailed ivory tower, but one that has its foundations built on sand.
It goes without saying that one parable speaks of how a wise builder pays more
attention to his foundations than to the baroque decorations on the tip-tops of
his building’s towers. When the rain comes, the cathedral will not fall like a housemade
of sugar. While we are speaking of towers, isn’t the confusion of scientific language—the
inability for understanding between individual scientific fields—also a result of
each of the fields climbing up to the highest heights, where it tends to be empty
and lonely, leaving the common lowlands empty? Isn’t the confused scientific
language similar to what happened long ago during the construction of the Tower
of Babel? True, staying low to the ground does not offer such a view to a
distance, but, on the other hand, this is the place where people live.
And isn’t it better—as is
often said—to be roughly right than precisely wrong? If we let up on our
sophistication and speak clearly and understandably, more simply, we may understand each other more. And
we would be more aware of how much these isolated disciplines mutually need
each other so that the building would hold together fast.
LESSONS LEARNED FROM THE STORY OF OUR ECONOMY
If I have written about
what we should abandon, the question of what to return to should come more
easily. Here the answer appears as follows: Step down from the ivory Babylonian
tower before the confusion of languages (no one understanding anyone or
anything) is completed. I do not reproach the progress that science has made
till now, but as economists, we must constantly repeat what we know and what we
do not know—and what we believe. We know much, but there is no doubt that there
is ever more of what we still do not know and probably never will.
Too happily have we run away
from these moral principles, principles on which economics should stand.
Economic policy has been set loose, and a deficit psychosis in the form of
gigantic debt is the result. Before setting out to seek new horizons, however, it
is time for economic, retro. Ultimately, if a mathematician reveals an error in
a calculation, he does not continue with it. That would not cover up the
mistake nor resolve it. He must return to the point where the error occurred,
correct it, and then calculate further.
OUR ONLY HOPE
Learning from the crisis
appears to be our only hope. In good times, it is not an appropriate time for
scrutiny and reflection, let alone for a substantial, change of direction, in
the original spirit of the word, repentance. The truth appears in a crisis—frequently
in its unpleasant nakedness (the emperor wears no clothes!).
The debt crisis is not
just an economic or consumer crisis. It is much deeper and wider. Our era lacks
moderation. I am not calling here for a turn to nature or to the natural state
of things, nor am I urging the denial or rejection of the material. The
material has its role and it is one of many sources of happiness. We should
therefore be aware of our own situation; become aware that we must be grateful
for what we have. And we really have a lot. We are so wealthy and strong that
we do not have external limits.
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