[Baltimore Sun] We need an economics that recognizes the greater good | GUEST COMMENTARY
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Whenever anybody writes about the failure of mainstream economics as a discipline, they usually have only a handful of issues with the discipline in mind. The failings, however, are systematic.
Training in economics has incorrectly been seen as foundational to ordered, logical, rational thinking. Econ 101, as the basic course is often called, also feeds a career track in law and business administration. So what’s being taught matters, especially since only a few students will pursue any further studies in economics and any intricacies.
The origins of mainstream economics in moral philosophy are, sadly, now abandoned in favor of an orphan discipline, expressed today as an idealized, ideologically driven system of equations that assumes away any motive other than a practically religious devotion to mythical self-interest and endless accumulation. We call this ideology neoliberalism.
University students learn that on the supply side, people are atomized as production labor (L), and all other means of production are reduced to capital (K). L and K combine in a mathematical equation to produce Q (output). On the demand side, what is produced is unimportant as long as it meets demand, achieves a mythical equilibrium for profit-taking and provides an amorphous satisfaction, called utility. Because we can’t measure utility directly, it’s equated with consumption of all that output, weighted by market prices (P). The joy of consumption, as we’re told, does not distinguish between needs and wants. Externalities, always unpriced (an indirect cost or benefit) to a third party, are ignored. The benefits of growth and accumulation are taken for granted.
The textbook lubricant of this philosophy, as Jon Erickson writes in “The Progress Illusion,” is the belief that putting a price on everything in a way that presumes people and the planet are disposable, tradable and otherwise serves profit-taking and the invention that we call the economy. In a 2007 survey of North American professors, economics stood out as the only field where a majority (57.3%) disagreed with the statement, “In general, interdisciplinary knowledge is better than knowledge obtained by a single discipline.”
Abiding by this understanding, we would never confront the catastrophes of today’s fossil-fuel-driven climate catastrophe in the form of physical breakdown and social destruction. That matters.
In the case of physical breakdown from global warming, the obsession with this or that different alternative fuel for automobiles ignores the larger benefit of getting people out of automobiles and using more public transit.
Evidence that free trade and globalization aren’t a rising tide that “lifts all boats” might also be cause for some soul-searching. Trickle-down economics, as it’s been called, is simply a myth.
Recent studies show that minimum wage increases don’t lead to higher unemployment but have a lasting effect in increasing incomes. But you wouldn’t know that if you were strictly applying the classroom lessons on supply and demand theory, which say the opposite.
All of which has led me to ask: What if we started Econ 101 not with ideologically cooked theories of overconsumption but with humanity’s long-term goals, and then sought out the economic thinking that would enable us to achieve them?
This is not an appeal to a centralized or bureaucratic government that specializes in misallocation of resources. It’s simply a recognition of the proper role of government in supporting all of society’s endeavors for what economists used to pay attention to, the greater good.
Lots of smart people know that we need a new economics that’s fit for the 21st century. We have to recognize the need to move beyond the failures of both the ashes of a mainstream ideology and a mythical winner-takes-all society. Sustainability should not be an externality.
T. Nelson Thompson (analytics2002@aol.com) was a Woodrow Wilson fellow in international economics at the Johns Hopkins University. He has taught economics at various universities in the United States and is the author of “After Babel: Reflections on Language and Languages.” He lives in Mount Rainier in Prince George’s County.
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