What Would An Ideal Economy Look Like? - The Platonist

I would now like to point the finger at the economics establishment, and suggest that economists have almost entirely retreated from what should be the main purpose of their field, which should be to ask: 

How can we make it so that everyone has maximum access to maximum resources?

Instead, economists have bent over backwards to avoid this question.  Instead, they have devoted themselves wholeheartedly to maximizing world economic output, with very little regard to how this wealth is distributed, and even less regard to how this might impact the sustainability of the environment, and thus of life itself.  Why is that?

Well, it’s because the Marxists thought that they had come up with a great answer to the question of maximizing access for the maximum number of people, but it turns out that they were wrong.  Not only wrong, but they based their theories on deduction, rather than induction, meaning that they started from a theory, and then tried to make it fit facts.  When, as economists and historians have finally concluded over the past 30 years, the only way to do history or any other social science, and come up with anything like a true theory, is to utilize induction. 

Part of the problem with the Marxists’ coming up with a theory based almost entirely on other theories (deduction), is that it allowed them to conclude that things like ‘revolution’ are “inevitable,” and, worse, that “violence” is more or less “necessary,” to the improvement of mankind.  Certain historians (such as me) are starting to conclude that, in fact, the only way to improve the lot of mankind is to have more democracy, which means more reasoned debate, and less violence.  Arguably, every violent action and every violent speech is a blow to democracy, and vice versa.  So, marxism is essentially incompatible with democracy.  Thus, we see that anywhere it has been tried, it has entirely failed to create anything like the utopian democracy that Marx and co envisioned.

To return to modern economists, what this all means, is that modern economists have been able to smugly retreat from asking any questions having to do with peoples’ welfare, because economists could point, and say:  hey:  we use induction, we start from facts.  People who ask questions like that are basically a-scientific socialists–hippies who don’t know their economic arse from a door handle. 

Thus, marxists have done immense discredit (by advocating violence, revolution, etc.,) to the notion of creating an economics of equality.  And in the meantime, real economists, who use facts and scientific methods and can therefore legitimately justify their opinions as scientific,  have spent the last 80 years or so serving business and government interests, which are entirely focused on real-world money making.  And economists have generally done a great job at this, ever since Keynes figured out how to regulate an economy properly (and note, that when Greenspan abandoned Keynes too much, the whole world paid for it – but Keynesian theory et al then helped Bernanke to right the economy far faster than anyone believed possible).

The effect of Marxism and its socialist derivatives, then, been that practical, “vocational” economics has been almost entirely separated from idealistic, “social” economics, whose goal is essentially a moral one:  to create the most wealth for the most people.  Now, it is true, that classical economists from Adam Smith onward believed that they were advocating the greatest utility for the most people – and, to this day, vocational economists can very happily point to that Smithian notion that the free market is the answer:  it will, inevitably, provide the greatest good for the greatest number of people.

Except, of course, as the latest economic spiral has shown us, there is no such thing as a ‘free market.’  The capitalist economy is, much more than the average economist will admit, entirely a product of regulation, and social norms and mores, which developed in a very specific historical context.  Thus, libertarianism is a crock.  And this is demonstrable with the simplest of proofs.  If you got rid of anti-trust law tomorrow, and allowed the free market to operate on its natural terms, then within a few months you would have one company left, which owned all the others.  Thus, the point that a free market is like a bubble-baby:  it cannot survive except in an artificially sterilized atmosphere.

The point is, that if there is no such thing as a free market, then we have to question, quite rightly, whether a free market can be counted on to provide the maximum utility for the most people:  and patently this is untrue.  The market, at any given time, is the product of regulation, and regulation is decided by the regulators.  And the regulators, historically, tend to regulate for their own best interests, meaning for the rich, since, in the US especially, the rich have managed to control government and regulation much more than in other western countries (which opted for a more socialized approach, because their populations realized that it was in the best interest of all to have more of that – though, of course, there is the problem that the US’s deregulated system did and does, for the most part, provide a much greater standard of living for the average person than European socialized systems have done.  Of course, that means that the bottom 25% is more or less sacrificed to live in squalor, violence, and fear.  But that’s another story.

It is time, then, to take back economics from the vocationalists. 

A new ‘ideal’ economics, is one which puts people first.  But, it is empatically not ‘socialist’:  it does not advocate the choking of free market systems to the point that they become sluggish and clogged, and the average standard of living declines to the point where people prefer to go on the dole rather than to work.

But instead of getting mired in the time-worn debate about socialism vs. capitalism, I prefer to pose a whole new set of questions to be tackled by ‘ideal’ economics.  These would be as follows:

1)  how can we create a system where the most people have access to maximum resources?

2)  how can we maximize the basket of goods which the individual consumer can consume?

3)  how can we minimize income inequality, without crippling the system by discouraging entrpreneurialism?

4)  if we put maximum profits on certain basic goods, such as foodstuffs, can we increase the ability of the average consumer to buy food? 

5)  can we lower mortgauge interest rates, so that people do not pay interest to the bank for most of the life of their mortgauge? 

6)  or, to put 4 and 5 another way:  can’t we regulate the system from the consumer’s point of view?  And come upwith a way to make it so that the average income has housing and food costs as less than 1/3, say, or less than 1/4?

7)  In sum, I think that the system over the past 100 years has been regulated by the industry owners, and profit maximizers.  And, unfortunately, following a marxist model, the old unions, while they were very useful for a while, spent too much energy on being antagonistic, and now on clinging to outmoded means of changing the system.  The new answer is to regulate for the unit of the “average individual.”  The technical aspects of it will be tricky, and things will have to be tried that might rock the boat, or have unintended circumstances, but, in the end, can we afford not to try?

8)  Our main goal as economic thinkers, then, should be to devise a system in which everyone, ultimately, can be happy.  They can work or not, as they wish –  the system should reward work, similar to the one we have now – but, it should not, in a c19th fashion, leave you to the dogs if you happen to get behind, especially, as if often the case in the US, if you work your arse off, and still find that you cannot pay bills, have medical care, etc., etc. – i mean, it is demonstrable that most Americans are on average hard working, and yet they find that they have relatively little to show for it, while their over-bosses the CEOs are now reaping historically-high profits.  This not only needs to change, but it can change, very easily, if only we begin to look at market regulation from the point of view of the average person.  It does not have to be socialism:  it can be enlightened capitalism:  capitalism brought to a higher level – where, instead of historical domination, we have a move towards increasing equality.

Western culture during the c20th took many very good turns towards equality for minorities, women, handicapped people, homosexuals, and other historically disenfranchised groups.  Prior to this, Marxists had taken on the cause of the poor, and did achieve some significant results in the form of socialism – which was a more practical, watered-down marxism.  But then the US got so rich, and the rest of the west with it, after WWII, that people began to forget about the poor for a while:  it was a time of unprecedented economic growth and thus, social climbing. 

But now, with the west’s workers thrust into competition with much poorer third world and developing world workers, western workers are realizing that they are being dragged down to the average world level – and it’s not pretty.  Also, with major overpopulation (the result of runaway western medical technology, and food production, combined with still-traditional family-planning ideas [or their absence] in the third world), we’re realizing that the average person’s possible footprint is getting rapidly smaller, until we all face the prospect of having to live in a shoebox with 12 other people in a concrete jungle, away from anything natural, even as the super-rich live in more splendour and luxury in their island estates than ever before.  It is simply assinine for the average person to roll over and accept this.

And it starts with reforming economics.  Vocational economists have gotten away for long enough with this notion that their version of the ‘free market’ is the only solution.  It will make things better, they claim, we just have to wait.  it takes time.  And, they are correct, since with major 3rd world growth, and population slowdown by 2050, the world’s living standard will increase in an absolute level.  But one should counter with a) at what environmental cost, b) at what aesthetic cost (i.e. – what type of built environment do you want to live in?), and more germane to the present discussion c) what happens when the third world has caught up, and we’re all living at the same level?  Then, we will see that squeeze, that Marx correctly predicted, and which vocational economists want very much for us not to notice, predict, or talk about.  And, in the meantime, of course, the current system does increase general well being, but the main point of this essay is to state, that it could do so much more efficiently, and at a much faster rate, if only we began to regulate from the point of view of the consumer. 

Thus, we can call our new theory “Idealistic Economics,” because it first and foremost is concerned with the hapiness of the most people.  And we can call it consumer economics, because it seeks to regulate the economy, and thus create a ‘free market’, which is geared to maximize the profit of the consumer, rather than the profits of an elitist capitalist micro-minority.  They can have their cake, but we can eat it too.  Is anybody with me?

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