CAN WE SOLVE THE CRISIS?

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.

We have overcome nearly everything and have long been able to do as we pleased. The fact that we did not do very much good in recent years with