Home > Uncategorized > Neoclassical economics III: a machine to destroy the world

Neoclassical economics III: a machine to destroy the world

from Geoff Davies

The false nostrums of the pseudo-science of neoclassical economics have been used to create a system that promotes endlessly increasing consumption of resources and endless elaboration of technology. This system already operates far beyond the needs of people. Our survival requires that we rein in the machine and return to proven and durable, social and moral forms of organisation.

Growth has a fundamental place in the biological world, of which we humans are a part. Unchecked growth has no place, outside of the microbial world. Unchecked growth is called a plague, an epidemic or a cancer.

Growth, among mainstream economists, has become a reflexive, mindless goal, specifically growth of the Gross Domestic Product. Growth of the GDP is the dominant global criterion for allegedly successful management of an economy. GDP is an indiscriminate measure of what we spend money on: some things good, some useless, some bad and, increasingly, some attempting to repair damage from previous spending. GDP is not a useful measure of our quality of life, whose improvement should be the real goal, but it does correlate with resource use and resource waste, also known as pollution.

The claim that unchecked competitive markets are the most efficient way to increase material wealth has no basis, as I explained in Part II. Nor have free markets worked in practice. Australia’s economic performance post-1983 has never come close to that in the 1950s and 60s when it averaged over 5% annual GDP growth and 1.3% unemployment.

However economists and the self-interested rich have promoted a system based on unrestrained markets that in turn promotes anything that yields short-term profit. Thus we have unsustainable extraction of natural resources, and for-profit aged care that consigns our grandparents to disgusting neglect.

We also have potent and dangerous new technologies like face recognition, meta-data analysis, artificial ‘intelligence’ and various biotechnologies including, imminently, the suspension of biological ageing. The planet really needs a plague of demanding, smart-aleck old farts. The surveillance state is a reality, and rapidly gaining in power and pervasiveness. I am only mentioning war making and killer robotics.

Some older people occasionally wonder why the forecasts of our childhood have not come to pass. We were told that by the year 2000 no-one would work more than 15 hours a week. The reason is that we have been kept on the treadmill so as to keep the GDP increasing. A major motivator has been ‘labour market flexibility’, the notion that your labour is just a free-market disposable commodity that needs to be used to maximum efficiency and effect. One difficulty of course is that your labour comes with you attached. The primary effects have been to keep the employed insecure and to enrich the rich and empower the powerful.

The recently-deceased David Graeber addressed another aspect of the treadmill in his book Bullshit Jobs. He found that nearly half of office jobs are useless, or even harmful, according to those occupying them. He also found that payment is in rough inverse proportion to the usefulness of the job, so a garbage collector is paid very little, a receptionist making her boss look important is paid more, and a corporate lawyer defending his firm against other corporate lawyers is very well paid, although collectively they accomplish very little.

Exploitation is nothing new. Six thousand years ago people started over-exploiting local environments, animals and lower-rank humans, using the new-fangled agriculture, and soon the Pharaohs over-exploited the slaves and paid little attention to the environment supporting everyone.

Five hundred years ago bands of rapacious aliens started invading many parts of the world and carrying off wealth, people and well-being. Those aliens were from Europe. European tribes had been fighting amongst themselves for centuries and they had become very good at it. I learnt only recently that H. G. Wells’ War of the Worlds was inspired by events in our own, notorious, Van Diemen’s Land.

Two hundred and fifty years ago people discovered how to harness fossil fuels, debt and competitive markets to hyper-charge the exploitation of everything, everywhere.

The fact that there has been a moderately widespread increase in material wealth since then is taken as proof that fossil-fuelled markets are good. It is true that even some of the common people gained more wealth, erratically, through this period. However that share of wealth was not simply gifted by the rich, it was wrestled from them by people who managed to band together in unions and other common causes. There are still many poor in the world, and their ranks are growing again.

Meanwhile we watch with trepidation as the clever innovators create technologies whose power and implications are difficult to comprehend, except they are tampering with the deep and ancient order of the living world, of which we are still inextricably a part. Why do they do it? Because it is there to be done, and someone will pay them for it.

Our popular culture is well aware of the dangers of our trajectory, as manifest in dystopian tales of many kinds. However I can’t remember any tale of the future that portrays a happy, pleasant Earth, or even a reasonably tolerable one, with a future of its own. We stare in fascination at our predicament, but most of us don’t know what to do about it, and think it is inevitable anyway.

The practices and technologies to stop warming the planet and trashing its environment are available and well known, to anyone who looks. We can also manage the incentives our markets operate under, instead of leaving the incentives to chance and the manipulators. At present it is generally profitable to exploit people and trash the planet. If we make it profitable to nurture people and the planet we might be surprised how quickly things improve. That is what a carbon emissions price was supposed to do, for example.

The implicit goal of our present system is the creation and discarding of more and more stuff. It’s a bullshit job.

We can live well if we choose. The bigger challenge now is to displace the narrative of selfishness and entrepreneurial competition so we actually make that choice, collectively.

If we make our goal the indefinite improvement of the quality of our lives, and societies, there are other things we can do. We can make Enough the centre of our lives. We can acknowledge that we are in fact highly social. We can cultivate the community we are part of. We can appreciate that to love and be loved is what leads to a fulfilling life. We can connect or re-connect with nature, so we might glimpse our real place in the world.

It may be hard for us jaded moderns to believe, but many people have lived well this way, and their ways of life endured far longer than ours. Traditional values, indigenous values, developed over millennia because they work. This does not mean returning to only traditional technologies. If you live by traditional values you won’t destroy the world.

original source Pearls and Irritations

  1. keithalt
    March 6, 2021 at 6:27 am

    Totally agree – our current form of extractive neoliberal economics and the simplistic promotion of GDP a a “good growth measure” is a disaster. The benefiting corporates and politicians are reluctant to step of the treadmill to evident disaster later this decade.

  2. March 6, 2021 at 9:39 am

    Geoff: “Why do they do it? Because it is there to be done, and someone will pay them for it.”

    So where does the money come from? Curiously even Adam Smith warned against raising money: indexed in “The Wealth of Nations” as “Circulation, the dangerous practice of raising money by, 248”. [The reasons for it were outlined from p.243 on; I include only enough here to make the point. Note particularly: “In reality B in London owes nothing to A …” ].

    “The trader A in Edinburgh, we shall suppose, draws a bill upon B in London, payable two months after date. In reality B in London owes nothing to A in Edinburgh; but he agrees to accept of A’s bill, upon condition that before the term of payment he shall redraw upon A in Edinburgh for the same sum, together with the interest and a commission, payable likewise two months after date. B accordingly before the expiration of the first two months, redraws this bill upon A in Edinburgh; who again, before the expiration of the second two months, draws a second bill upon B in London …” etc etc.

    Introducing this, Smith has a weary traveller saying “The house is crazy and will not stand very long, but it is a chance if it falls tonight, and I will venture therefore to sleep in it tonight”.

    Your description of sanity is very well put, Geoff, but our having become used to using Ponzi money is surely the problem we need to address.

  3. Ken Zimmerman
    March 18, 2021 at 9:39 am

    Neoclassical economics is a threat to many cultures and certainly much of the natural world. But it is not the only such threat or the only major such threat in the history of the world. Eliminating the obvious ones to Europe before 1500 (e.g., Islam, Mongols, the Bubonic Plague, the Crusades, the Roman Catholic Church) I want to focus on one or two such threats to the New World, mostly from the Old World (Europe). When Europeans came to the Americas they brought with them Christianity and Mercantilism. The first offered Native Americans a religion to replace the hundreds of Native religions. Christianity offered salvation from humans’ original state of sin and alienation from God. And the reward of eternal life for full commitment. For most Natives this was senseless, so they fought against it and refused to accept it into their lives. For this they were enslaved, their cultures first gutted and then destroyed, and finally murdered either with war or disease. Mercantilism offered the reward of service to the ‘mother’ country (e.g., Spain, France, Portugal, the UK) as a colony. The objective here is for the mother country to create a trade surplus with their own colonies or other countries, to accumulate gold reserves for themselves. In simple terms, mother countries wanted to steal the resources (mostly gold, silver, and other ‘precious’ metals and gems) of their colonies and weaker European countries to enrich themselves. The operation of this policy in the UK colonies in North America was one of the grounds American colonists presented for the American Revolution. My point here is neoliberal economic thinking is not unique in terms of ‘philosophies’ that led to exploitation, enslavement, and undermining of other cultures in the world. This is in fact a common experience in the history of humans on earth. The consequences of this 16th century invasion continue up to the current period. It explains much of the current circumstances of so called ‘third world’ countries in terms of national wealth and autonomy. It also provides a context for understanding both World Wars and the later emergence of neoclassical economic theory and neoliberal political philosophy and capitalist markets.

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