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Scrapping Economics and Starting Over

Market fundamentalism has been exposed as soulless. Before we forge ahead, we need to realize the scope of what we've lost.
Economics stock market

Having garnered almost one third of the votes in this week’s Italian elections, the Five-Star Movement (M5S) has emerged as Italy’s single largest party. Though they won’t form a government this year, they’re sure to act as the official opposition to the center-right coalition led by Matteo Salvini and Silvio Berlusconi.

Expect M5S’s gains to cause panic on both sides of America’s political aisle. Though usually characterized as green and left-libertarian, the party has tremendous appeal to the populist right. Progressives won’t care for its Euroskeptism and moderate immigration restrictionism. And establishment conservatives will be horrified by its support for degrowth economics, by which they mean:

an ecologist and anti-capitalist economic policy that views overconsumption as at the heart of environmental problems and social inequality. Degrowth instead suggests well-being is better maximized through sharing work, consuming less, and devoting more time to family, culture and community. The party supports a 20-hour working week, monthly stipends for the unemployment and debt renegotiation.

This is a new kind of heterodox economics. Both the protectionist Donald Trump and the socialist Bernie Sanders insisted their respective ideologies would be a boon to the GDP. Laissez-faire types argued that both were naïve, and dangerously so. But what can any of them say to M5S, the party committed to working against such economic gains in the first place? Their program is backed up by polls: 30 percent of the Italian electorate have no interest in accumulating more wealth, either by means of the market or by means of the state.

“Degrowth” as a government policy strikes me as absurd and unworkable. I can’t see how it would be implemented, except by literally punishing success. But the idea that the economy is just too big—too cumbersome, too impersonal—is a perfectly valid one.

When our market-fundamentalist friends insist on the importance of “economic growth,” huge swaths of the American electorate must ask themselves: “Why?” It’s true that per capita income tends to increase with the GDP, albeit at a slower rate. Rising tides do lift all (or most) boats. But that doesn’t mean wages will keep pace with the cost of living, which is one of the reasons, for instance, that a larger share of the population is renting homes than at any time in five decades.

We are wealthier, yet we don’t feel wealthier. We might have more money, but it seems to get us less. And what we do get hardly seems worth having. No pie chart or Lord Acton quote will convince people that tiny apartments full of Ikea furniture and streets lined with McDonald’s drive-throughs are “progress” in any meaningful sense of the word.

None of which, of course, is useful in economic terms. But that doesn’t make it any less true.

That was the point E.F. Schumacher tried to make in his masterpiece Small is Beautiful. The market fundamentalists, no less than the Marxists, erect a Berlinesque wall between man’s material and spiritual needs:

What is the meaning of democracy, freedom, human dignity, standard of living, self-realization, fulfillment? Is it a matter of goods, or of people? Of course it is a matter of people. But people can be themselves only in small comprehensible groups. Therefore we must learn to think in terms of an articulated structure that can cope with a multiplicity of smallscale units. If economic thinking cannot grasp this, it is useless. If it cannot get beyond its vast abstractions, the national income, the rate of growth, capital/output ratio, input-output analysis, labour mobility, capital accumulation; if it cannot get beyond all this and make contact with the human realities of poverty, frustration, alienation, despair, breakdown, crime, escapism, stress, congestion, ugliness, and spiritual death, then let us scrap economics and start afresh.

A handful of traditionalist thinkers have made similar appeals. Russell Kirk (no enemy of competitive enterprise) warned against those “zealots” who “instruct us that ‘the test of the market’ is the whole of political economy and of morals” and “assure us that great corporations can do no wrong.” Likewise, Sir Roger Scruton told an interviewer: “the conservative position is rooted in cultural rather than economic factors, and that the single-minded pursuit of competitive markets is just as much a threat to social order as the single-minded pursuit of equality.”

Schumacher, Kirk, and Scruton are philosophers, not wonks. They can’t be expected to manage both theory and praxis. Yet generations of center-right commentators, think tankers, and legislators refused to take their insights under consideration, much less turn them into actionable policy. They’re happy to borrow Kirk’s and Scruton’s intellectual currency, and even to appropriate the word “conservative.” But they refuse to compromise their fundamentally materialist, libertarian worldview.

We should point out also that all three remain popular with huge swathes of the center-right base. Every publication that calls itself conservative is eager to carry Scruton’s writings, as they were Kirk’s, even if they completely ignore both men’s trenchant criticisms of the mainstream right. The traditionalist wing has always been sorely under-represented in the conservative movement’s halls of power.

Now we are paying the price. Principled Conservatives™ endlessly bemoan the “economic illiteracy” of the base but are deaf to their complaints that market fundamentalism is soulless and inhumane. How many opportunities have we had to forge an authentically conservative economics—one that accounts for both our material and our spiritual needs? Yet we’ve squandered every single one.

So one may be alarmed that right-of-center voters are replacing The Road to Serfdom with The Art of the Deal on their bedside tables. But we shouldn’t act so surprised. Schumacher’s suspicion could soon be realized: we may have to scrap economics altogether and begin again.

If so we should start with Schumacher. Then go to Scruton’s The Meaning of Conservatism, with its careful and constructive criticisms of the Thatcher government—all of which, to some extent, have been applicable to the GOP since Reagan’s ascendency. Then read Kirk’s Economics: Work and Prosperity. It’s an excellent synthesis of the material and spiritual imperatives necessary for human flourishing: competition and community.

Then read widely from the forgotten classics of traditionalist economics. Don’t discount anything just because it doesn’t seem immediately relevant: their insights are still strikingly fresh. For instance, as Louis de Bonald warned in 1802:

Modern administrators, concerned to promote mechanical inventions that make man’s work easier and more productive, do not clearly perceive that the more machines there are to replace men, the more men there will be in society who are nothing but machines.

All of these fine old books—however dated, obscure, or fanciful they may seem—are worth revisiting. Before we forge ahead, we must acquire a sense of what we’ve lost.

Michael Davis is U.S. editor of the Catholic Herald. He tweets @MichaelDavisCH.

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