Debate and Proposition :-That this house believes that Economics stands in need of radical reform
Miriam Kennet and Volker Heinemann,Directors of the Green Economics Institute opposed by Terry O' Shaughnassey Economics Tutor at Oxford University (St Anne's)
What does economics mean-?" it comes from the ancient Greek, oikonomia pertaining to the household, and Aristotle-in the Politics, described the science of the management of the household and the search for the good life.
Economics today is neat, attractive, simple and easy to understand and has become easy to model, to quantify, to plan and to have jobs in. It is about making our money work for us and about supply and demand- the greatest riches for the greatest number.
It is a well established intellectual discipline with many aspects so no economist will ever get bored. If you look at the current state of the world - yes the economy is expanding, yes firms are getting richer, more people are probably wealthier than before and in this country more and more people have access to consumer markets - GDP is going up and the economy and house prices are rising most of the time.
Unfortunately, I would argue that the modern theory and practise of economics, has also come to mean suffering and tragedy in a vast number of households on earth.. In fact 3 people own more than the 600 million poorest people on earth, one per cent of the UK population own a full 13% of the weath.The sex trade continues to boom and is exploited by the mafia. The arms trade flourishes.
Why is the gap between haves and have nots in most developing countries getting worse? !n 1999 according to the World Watch Institute some 2.8 billion people were living on less than $2 dollars a day,which is what the Un says is the minimum for basic needs. Roughly 1.2 billion people were living on less than 1$ a day. !!!!or in extreme poverty.
The theory may be perfect, markets may be perfect but in the real world -a different story starts to emerge. There are a lot of wars- you cant go on holiday, anymore without worrying someone would like to blow up your plane with a suicide bomb.
If we are doing so well , why is the world feeling less safe, why is it possible that a couple of nice people have been in danger of being beheaded and why did UK troops cause chaos in Iraq?
What theory means its all right to kill all those civilians to get access to someone else' oil.?
Why are we experiencing unprecedented climate instability which could even threaten to wipe us out completely
Why are there more and more refugees- and why does the World Watch Institute say that unrestrained consumption, the very lifeblood of economic success is endangering our very existence.?
I will argue here that the basic assumptions of conventional economics as practised for the last 10 ,000 years have developed into a monster that is ruining our lives, our planet, our biosphere and our children's heritage.
Economics has no meaning unless it addresses the fundamentals of improving peoples quality of life and this means all groups on the planet - not just the few who deal with economic philosophy.
At the Johanesburg summit 2001, it is was acknowldeged that children born today in Southern Africa will enjoy a shorter life than their grandparents!.
Economics as practised today is leading to what has been dubbed the fourth mass extinction of all time - the normal rate of background extinction of one species every 5 years years has accelerated according to Norman Myers to a gushing heamohrage of a 100 species a day and four a day in Brazil alone. It started with the megafauna destruction of sabre toothed tigers, mammoths , the cave bear all important in the cultural development of our species until we wiped them out. The social success of humans in eliminating other species is turning into a severe handicap.
It is not just species and people who are suffering- but the biosphere with unprecedented human induced global warming and climate instability..
Over the last 10,000 years since the introduction of agriculture- the need for a stratified society has become a feature of our economic life.
Above all the need for a society where nuturing women no longer rule the roost, no longer share out the resources in an equitable way for the benefit of all,.... where the only economists we can imagine today are rational -efficient white middle class, western descendended and educated male MBA graduates, who dole out money on behalf of the Washington Consensus and the IMF and the World Bank, in a kind of nanny knows best way.
Caring., sharing- ensuring everyone has enough- is the antithesis of where modern economic practise and theory has taken us.
The latest manifestation of this cold unfeeling logic has given us multinational corporations, the new church of which the CEOs are the high priests and the new corporate social responsibility - the practise of building hospitals and schools in the areas, in which you have devastated the natural resources is the most interesting latest development. Even Milton Friedman believes CSR to be immoral.
We are a long, long way from the shared hearth of our relatively recent hunter gatherer ancestors and the household of Aristotle.
Economics has now actually separated economic life as practised mainly by men in the workplace from women's housework and homemaking which is excluded. The association of women with the family and men with the market has been the main foundation of gender definition since the nineteenth century.
In fact, anyone or anything which does not confirm to rational homo economicus- that is nature, the biosphere, the colonies, women are excluded from the economy- the contribution they make is disregarded, not counted or valued.
Environmental economics is similar in that it encouraged reckoning of environmental damage but did little to prevent the causes of that damage and to radically change our approach to it and to suggest other ways of working.
In fact that is where radical reform comes in
There is a pressing need to put the social back into the social science of economics- it needs to be broader,more inclusive- less rational , more feeling more caring and has to be more effective rather than efficient..
It needs to work for the expected 8.7 billion people expected on our planet by 2050. It needs to rediscover its roots and to reassess its aims which are NOT to make some people richer and more dominant NOT . to make firms, shareholders, corporations richer than many countries- the aims must be much more radical.
What does radical actually mean? It means going to the root of something-the foundation- thorough
A radical reform according to the Oxford dictionary means "a thorough reform- "
And this is exactly what is needed:- Economics has strayed so far from its original purpose and sphere of operation that it actually excludes the very household its scope was intended for at the very beginning
This radical reform, needs to take the form of a new paradigm in economics - which looks and more importantly feels, completely different in aims, theories, practise, methodology and most importantly of all -in outcomes and consequences. No more can the human cost be thrown out of calculations as mere "externalities". These costs are central and must be included.
In fact this view that economics and its manifestations need urgent reform is shared with a growing anti globalisation movement.
The last few years has seen the rise of new branches of economics critiquing the status quo- armies of world bank researchers criticising the banks previous projects- under the guise of development economics, and other people trying to find the Holy Grail of sustainable economics and sustainable development- with growth at the same time.
This was a worthy and neccessary period in the re-invention and soul searching of economics but again was often performed by the same priviledged white middle class western educated elite, who on the one hand critiqued the world bank and on the other made a fortune out of consultancy for it.
Some really interesting new thinking is happening at the moment which will lead to a radical reform of economics and a major change in how we lead our economic lives.
The underpinning philosophy and world view and radical reform seems to be coming out of the feminist philosophy and women's economics movements but as the literature says - its is not gender simply specific.
It talks about anyone or anything excluded by the current status quo and regarded as "other". It is more inclusive and this is leading to a maturing of the new developments in economics -such as Green Economics-fields which are characterised by concerns such as inclusiveness, human happiness, and includes all the factors of production- nature, the planet, non human species and all people's needs everywhere. It measures all the aspects that support the world economy, not just paid work. Women for example produce human resources at home which have huge value for the labour market but have hitherto been largely unvalued and uncounted.
Industrial societies define themselves by how much they can transform nature into resources and into profit. The capitalist ethos with regard to nature is both imperial and commercial and very wasteful. Mindless consumption is actively encouraged with no regard for restraint.
Jean Jaques Rouseau noted as early as 1755 that we require hierarchy, extensive division of labour and social inequality., that Homo sapiens are entitled to dominate the natural order and that this can be acheived without costs.
There was a belief that God gave land to the industrious and rational to improve humanity. The exploitation of nature was universally comodified, as was the work of people outside homo economicus
The capitalist ethos with regard to nature is both imperial and commercial and very wasteful.
Indeed as multinationals search for ever cheaper sources of supply- they founded Export processing Zones where taxes were waived by poor communities who were desperate for jobs. In these zones now in a race to the bottom firms that should know better pay $2.00 dollars a day or in China $.87 dollars a day, and up to 43 million workers work in such conditions.
So entrenched and accepted are these economic practises -that these firms are names with which we would be surprised- they are firms we shop and firms we support.!How many of you are wearing GAP clothing.
The attraction of these zones is that workers can have a temporary relationship or contract with the company - as a commodity and therefore having no rights, and this cuts costs and risks to companies such as Microsoft. These people will work overtime on long in human shifts. Indeed one such woman - (it is often woman as they are more flexible and more desperate) This has led to the death of at least one worker- Carmelita Alonzo who Naomi Klein describes as working all week on long shifts even though she had pneumonia and eventually she died at work making clothes for - Gap and Liz Clairborne-
.Biological products account for 45 % of world economy and annual benefits of it for US alone is $300 billion per annum .Quantification of economic value of the worlds eco systems and natural capital $33 trillion per year exceeding the global GNP of $25 trillion., Humans now have in production more than 40% of nett primary production of photosynthesis on land. Nature pays dividends.But there is no such thing as a free lunch. Living out of balance with nature is coming back to haunt us in many and diverse ways- climate, biology, human male fertility, to name a few
In fact a country that cut down all its trees ,sold them as wood chips and gambled away the profits playing tiddly winks would appear from its national accounts to have got richer in terms of GNP per person. According to Douthwaite in his book the Growth Illusion.
According to the logic of current economics Genetically modified food makes sense and so does nuclear power and putting a telephone mast on top of every school in this country. So long as the economics adds up on the balance sheet - common sense goes out of the window.
We need economics to become the social science it once was - we need it more than ever. And we need it radically reformed.
Economists can no longer afford to fiddle with their graphs and mathematical models- while Rome burns and the sea level rises.
Putting one's head in the sand and pretending everyone will benefit from globalisation is foolish.In fact the few may benefit an the majority may be worse off,Nobel prize winner Joseph Stilglitz claims.
The Oxford dictionary says that reformed means to convert and restore bring back to the original state or a previous condition. This precisely what is needed.
A man in a business suit is not and never has been the pinnacle of human evolution.
Miriam Kennet November 18th 2004
