Prosperity as human development, not wealth
from Asad Zaman
The main thesis of our lecture is that our quest for prosperity has failed to deliver the sought-after goals because we have misunderstood the meaning of prosperity , and looked for it where it cannot be found. We base our economic policies on modern economic theory, which is based on the amazing assumption that human beings act to maximize lifetime consumption, since this is the sole source of human welfare. Human beings are far more generous and cooperative than the assumptions of economic theory allow for. Even more important is Richard Easterlin’s discovery that enormously increased levels of consumption do not bring about corresponding increases in happiness. Consumption only brings short-run happiness; long-run happiness has no correlation with consumption, and is far better correlated with character traits like generosity and gratitude. Mindless pursuit of wealth, implemented by policies to maximize growth, has led to increasing misery, instead of prosperity . Growth-oriented policies have destroyed family lives, engaging all members in production of wealth, and they have damaged our environment, destroying the future of our species for short run gains.his damage be reversed? Can we improve human lives and welfare, and also stave off the impending environmental crisis? At the core of the crisis we face is the prioritization of wealth over human beings. A market economy cheapens human beings because it is based on the idea that human lives are commodities for sale in the labor market. Reversing these priorities requires the recognition that all human lives are infinitely precious, with amazing potentials and capabilities for growth in dimensions unknown. Taking this principle seriously would require re-writing all economics textbooks, and radically re-organizing our economic, political and social institutions. Taking collective responsibility to ensure that all members of a society get the chance to develop their capabilities would be a new definition of prosperity , very different from GNP per capita, which is the current focus of policy makers across the globe. read more
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—– look inside —– $5.94 / $20.00
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—– look inside —– $15.99
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—– look inside —– $5.93 / $12.99
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—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
————— Michael Hudson ————–
Maria Alejandra Madi / Jack Reardon
————- Edward Fullbrook ————-
—————— Steve Keen —————–
————— Richard Smith —————
————– Gustavo Marques————
– Victor Beker and Beniamino Moro –
————– Lars Pålsson Syll ————-
—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
————— Mauro Gallegati ————–
————— Herman Daly —————-
————— Asad Zaman —————
—————– C. T. Kurien —————
————— Robert Locke —————-
Real-World Economics Review Blog 
If there was a like button or thumbs up I’d push it infinitely. In the meantime, once I get through the stack of books I have I’m going to tackle your writings. Thank you for writing so plainly and clearly. Truly, you are a person with wisdom (Ilm and tasdiq).
You might want to look up Bhuddist Economics also. It’s been around by that name at least since the 1950s and seems to represent all those main ideas.
Yes, indeed, thank you.
While I certainly do agree with Zaman’s complaint re: “…the prioritization of wealth over human beings…“, I do not agree with his assertion that it is The Market Economy which cheapens human beings and encourages employers to view them as “commodities.”
I think the “inspiration” to view laborers as mere commodities comes from a very different source. I say that avarice is a human social tendency that has arisen quite directly from the efforts of male intellectuals over countless generations to deny that they have a fundamental need for the approval of other human beings.
I propose that this is the missing ingredient that “behavioral” economists have needed in order to justify their intuitive belief that the primary motivator of economic activity is NOT profit-maximization, NOT (narrowly defined) “self-interest”, NOT concerns re: lifetime aggrandizement goals.
If we posit a fundamental and intrinsic NEED for the approval of other human beings, possessed by every human being as a condition of hiser existence, it essentially annihilates the foundational assumptions upon which neoclassical economic theory is based.
If all economic theorists were to acknowledge this fundamental truth re: human nature, they would be forced by logic to agree that one important reason why individuals and firms would not necessarily want to optimize profits/aggrandizement is because it would increase the likelihood that it would earn them the disapproval of both their employees and the masses in general.
Deciding to earn their approval with generosity would suddenly become the logical thing to do.
But because most men (not only men, of course) learn to try to pretend that they do not have a need for the approval of others, many within the social elite try to convince themselves that they don’t care what other people think about their selfish behavior.
They do, of course, but because the habit of self- and other-deception (regarding this emotional need) is so universally practiced, rich people feel as though they would be admitting a fundamental flaw in their character/persona/being that would leave them extremely vulnerable.
Making themselves vulnerable in this way is—on an instinctive level—the very last thing they would ever want to do.
And so wealthy victimizers continue to victimize, having convinced themselves that anything those poor people out there might think about their stupid-selfishness is of no concern to them (mostly because they intend to continue to immerse themselves in the phony approval of sycophants).
I understand the sympathetic basis of the criticism of markets, but I think those who voice such criticisms will eventually find that it is not the existence of markets that is responsible for the failings in behavior/motivation they see, but is rather the failure of the intellectual class—thus far—to acknowledge the fundamental dependency that all human beings have on each other’s approval.
Yes, it is indeed a very big topic to discuss.
Their are many kinds of markets; they are not all benign (e.g., sex trade). Do you recognize their are some markets that simply should not exist James?
Sure, Rob. Certain markets should not not be allowed to exist if they create perverse incentives or are rigged to produce immoral outcomes.
For example, America’s private, for-profit health care market creates perverse incentives for both physicians and hospitals and drug-makers. It is a “market” which often gives self-employed physicians a financial incentive to over-prescribe certain treatment alternatives (that will generate for them a higher level of disposable income).
In still other circumstances—e.g., so-called “managed care” arrangements—providers are given a financial incentive to under-prescribe care. The best way to eliminate these perverse incentives is to give doctors a generous salary to simply provide the care that the symptoms recommend for a certain number of hours per day.
Another market which thrives on immoral behavior and perverse incentives is the private banking industry, which allows bankers to generate profits in ways that are not available to anyone else.
Historically, bankers have been able to commit other people’s money to high-risk adventures without any fear of failure (because they have been able to buy off the legislators who make it legally possible for them to get away with their crap). And then there is the systemic risk they create when they participate in asset-bubbles.
Other markets—e.g., the labour market in most laissez-faire economies—do not normally function as they should (to optimize the economic welfare of all citizens) without a conscientious effort by the people’s government to make them work “properly.”
While I fully appreciate the way that “properly functioning” markets facilitate economic transactions, I do not insist that any and all markets can do no wrong, nor do I believe that the government should always avoid intervening in them.
Quite the contrary, I am a big advocate of government interference in the marketplace when it can be shown that the intervention can make markets work for the betterment of all.
That is precisely what we should expect if governments would commit themselves to an effort to maintain high levels of demand for labor in pursuit of valuable economic investments.
So no, I don’t believe all markets “naturally” function in a way that optimizes the welfare of society. I do believe that “market failures” can often be fixed by government interventions which essentially force them to work as they ideally should…
Thanks James, appreciate your very cogent answer. I completely agree with you. The myriad of ways is stunning that markets are being manipulated that make a farce of mainstream economic theory.
Re: markets, I thought I might add that one of the unacceptable (sometimes) outcomes of markets is that they ration scarce goods/services according to the disposable incomes of potential consumers.
In most civilized societies, that is an unacceptable method of rationing when it comes to certain circumstances or certain markets.
If for example there is a supply shock in some vital industry due to war or other developments (e.g., an oil embargo) society may prefer a more principled method of rationing.
Price rationing is likewise unacceptable in most civilized societies when it come to the provision of emergency health care services.
Even in America’s deplorable health care system it is common practice to base the provision of emergency health care services on triage evaluations, which is as it should be. Such services are rationed according to the pressing biological needs of the moment.
It is in the area of elective—i.e., non-emergency—health care services that America’s approach fails miserably.
The problem is that scarcity is a reality even in the health care industry. It’s not just the availability of surgeons and clinics and operating rooms, it’s also the fact that The Best physicians and The Best hospitals available are limited in quantity.
The only reason America does not have the same problem with “waiting lists” that England has is because 1) America’s private, for-profit providers set prices so high, most poorer people cannot even afford to get a place in line, and 2) the NHS is generally under-funded, thanks to Conservative politicians.
In any society that pretends to honor the principle of equality and justice under the law, however, such services should be provided on a first diagnosis –> first serve basis.
Since one of the concerns of America’s upper class re: universal health care is their fear that they might have to wait in line for services provided by the Best Hospitals, I have proposed a “market solution” which might assuage some of those fears:
Set up an “Exchange” which allows those of lesser means to auction their places in line to wealthy bidders. If they believe the price they are offered will adequately compensate them for trading their place in line, then a switch could be arranged. If not, they keep their place in the queue.
This way, rich people would be reassured of usually getting the best of services, but it would require them to heavily compensate those who are willing to give up a privileged position in the queue, one which they originally obtained on the basis of strict equality of opportunity.
Not perfect justice, perhaps, but a lot more fair than the total crap we now have for a health care system in America.
Reading you brings a smile James.
In a good eay, as in, neck ya!
Again, thank for your thoughtful response. America is a society that pays lip service (pretends) to the principle of equality and justice under the law. I understand, given the social context here in the US where market fundamentalism has usurped all other considerations (social justice, equity, and fairness) why you propose exchanges. A pragmatic solution to facts on the ground that the American society only pays lip service to ideals of social justice and economic fairness.
We are raising two future scientists, researchers, and doctors and funding their education. They have consistently their entire lives excelled academically. Our family, on the dime of our personal C-Corp traveled around the world for a number of years, living in places like Nederland, Japan, etc. We have seen how healthcare is funded and practiced in other countries. In the end it comes down to social values. And that is why we are now preparing them to leave the US and seek citizenship outside the US to further and fulfill their academic and medical careers abroad in a more socially enlightened countries that welcome immigrants on a merit based system. We believe it is better to be less wealthy and live in a society that has social values that at least pay less lip service to those values that truly matter. No society is perfect; but the US is a grossly out of step compared to the more enlightened developed countries when it comes to healthcare and social justice. Perhaps it will get there someday.
My wife is an immigrant who became a naturalized citizen. She too is ready to leave as the US gets uglier and uglier. We want our grandchildren to live in society that realizes elevating market fundamentalism over all other values and considerations eventually undermines the social fabric of society and those very institutions and norms the very market depends upon.
For David Sloan Wilson, the central lesson to be learned from any study of economics is that the concept of individual self-interest is a dead-end in human evolution. Per Wilson, this is arguably the major problem with economics and the major contribution that Multilevel Evolutionary Selection Theory (MST) can make in providing a more coherent alternative. Unlike animal societies, human societies are reverse dominance (pro social) and have been for 2 million years. In our distant ancestors, members of groups found ways to collectively suppress disruptive self-serving behaviors, which provides a more hospitable social environment for cooperation. Pro-sociality is the path favoring human survival. Humans survived by suppressing subversion from within the group. One of these defenses is gossip. Gossip ranges from minor to severe, with severe gossip destroying a group member’s reputation and thus the ability to work with others cooperatively within the group. So, you see etiquette and good manners are important for human evolution. If infractions are greater or deterrents fail then human groups apply other options, from ostracization to expulsion to execution. These actions squelched the possibility that one individual succeeds at the expense of others within the same group, the only alternative is to cooperate within your group in competition with other groups, which might take the form of direct competition such as warfare, or indirect competition such as surviving during hard times as other groups perish.
In simple terms the entire organization of Sapiens societies today, and since at least the middle ages is totally out-of-line with Sapiens biological evolution. The cultures that dominate the world today have been skewed by human subversives that groups failed to suppress. Economists are not the root of this situation, but they certainly do nothing to correct it. Anthropologists usually state quite bluntly the consequences of such failures – without mutual control and cooperation, human societies are likely to veer in the direction of chimp society – fear of an alpha male. Enforced equality is the key evolutionary adaptation that separates Sapiens from chimps. And it’s complex. But it seems a good start in explaining human morality. Meanwhile economists are still focused on the same evolutionary dead end – individual self-interest. Now we can see why the current versions of prosperity are so screwed up.