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An Economy Based on Meeting Human Needs –a Banner to March Under?

At the time of writing, Occupy Wall Street is the dominant 24 hour news cycle item. Its mantra like demand: an inversion of the economic pyramid to favor the bottom 99% via the redistribution of financial wealth accrued by Wall Street elite.

More power to the OWS protesters, but it confirms my biggest quibble related to movementism – a large mass of people in unison cannot say anything more complex than ‘we are the 99%!’ Sure, I get that the function of OWS is an important cultural, memetic milestone where fists were raised at the symbolic inequity and corporate greed that Wall Street represents. But, as regards the slew of tangled economic, social and political issues that have no clear solution, the hard work to address those will have to be done in the trenches of our daily lives in economic, political and cultural realms and will involve nothing less than a radical systemic change in the means of production and consumption in the material economy. For as Engels and Marx would point out, the superstructure constituting the dominant ideologies of our time “including such things as “politics, laws, morality, religion, metaphysics, etc”  are entirely determined by the modes of production that our society is dependent on. Simply put, even the language of our protest, in cultural terms, is mired in the mores of machinations of production and consumption which support endless GDP growth, and is ultimately doomed to futility.

Much like our response to the planetary ecological crisis qua economic crisis – we are responding to both as individualistic consumers or rational economic agents in a neoliberal economy. In a really jolting Orion magazine article, Sandra Steingraber quoting the psychologist Gerhart Wiebe points out this discrepancy – ‘well-informed futility flourishes whenever there are discontinuities in the messages we receive’ going on to articulate how the proposed solutions to the truly dire problems we face are trivial and meager – climate change? Change your light bulbs! Economic crisis? Why, regulate Wall Street!

The modern neoliberal economy is a model premised on endless quarterly growth. Indeed, a recession is technically defined as a period when there has been two consecutive quarters without any growth in GDP. The GDP is such a ubiquitous indicator of economic progress, that it is routinely used as a reliable index to gauge how well countries are doing. Which is perhaps why people were surprised in late 2009, when they were told that the recession was over in America – technically this was true, the economy had indeed been showing signs of sluggish quarterly growth, but the fact that millions of Americans were clearly not doing well economically was not reflected by the rising GDP.

Not only are indices like the GDP the final word on individual fiscal wellbeing, or a raison d’être that validates the existence of all modern economies – ‘developed’ or otherwise – but also influential on environmental policy.   And this is deeply disturbing because by several accounts the GDP is a severely flawed metric to measure human welfare. Despite its ubiquity, GDP, as well as other modes of measuring national income is not very old. Its widespread adoption followed Simon Kuznets’s work commissioned by the US Congress during the Great Depression to measure economic activity, even though Kuznets expressed unease since vast sectors of the economy went unrepresented. David Rothkopf in a recent NYT article underscores Kuznets’s unease at how the rather rudimentary economic measure leaves out many spheres of economic activity such as household work and illegal enterprises in the gray market. And, yet in validation of Marx and Engels, the GDP has become such an entrenched statistic in our collective superstructural consciousness despite its apparent disconnect from meaningful human welfare. It is also interesting that Kuznets inspired the extrapolation of another contested idea called the Environmental Kuznets Curve, used frequently in the environmental policy realm, wherein the argument goes that pollution decreases with increase in national income. This is also interesting because it is essentially the working premise for any global modern economic development narrative, or whenever environmental regulation needs to be sacrificed at the behest of economic growth.

Digressions aside, measurement of national income metrics as a rule, incentivizes some incredibly negative outcomes for human beings and their environment – war, generally perceived as a bad thing, causes GDP numbers to rise because it requires tremendous inputs of materials, and puts to work labor and capital to create wartime necessities. It is a sobering thought indeed, to realize that the Great Depression was essentially stymied because of the advent of the perversely ‘well timed’ Second World War. Other universally bad things such as inaccessible health care, is also a product of being slave to the GDP – the higher the number of sick people in a hospital running up insane hospital bills, the better off the economy is! And the list goes on – high incarceration rates, high pollution levels, beefier military-industrial complexes all contribute to a happy and burgeoning national economy.

It is not hard to see why there is such tremendous inertia against a systemic transformation of national accounts. This lethargy isn’t inimical to the success of corporatist forces which in turn ensure that the GDP as a metric of human welfare is thoroughly entrenched in the larger social consciousness for vested interests of their own. This is perhaps why there will never be a market driven endeavor to ensure that pollution is regulated, or that health care has a preventative focus instead of a curative one, or that institutional racism is reversed instead of being reliant on a retrograde prison industrial complex. The inevitably biased and irrational marketplace will always remain recalcitrant to basic human needs such as these. Ditto our planetary health.

The modern neoliberal economy is fueled by technological innovations that have been beneficiaries of military endowments – in fact it is hard to think of modern inventions or appliances that are in common use which haven’t begun life as a prototype for the military. This would not be as startling if it weren’t for the fact that the same perverse ideological orientation which start wars are essentially the intellectual premise which we have to thank for, for this modern life we enjoy. The inextricability of humankind’s progress with military growth, serves as a reminder about how convolutedly illogical our priorities are, as well as indicate the need for changing our indices of measuring economic value so positive things are incentivized.

Ecological economists have been attempting to critique the intellectual premise of neoliberal growth for a while now, having recognized that there are limits to growth. Forty years ago, the Club of Rome commissioned Donella Meadows to publish a study called Limits to Growth, which modeled future outcomes based on patterns of increasing populations and concomitant increase in resource use, and predicted a dire future for the planet, as resources were finite which would be unable to support exponentially growing human populations. Basically an empirical validation of Malthus’s seminal ‘An Essay on the Principle of Population’, it sparked off heated debates and essentially gave rise to the discipline of ecological economics (which has since splintered into sub-disciplines). Critics of the study quibbled over the glossing over of details such as concurrent technological growth, which arguably is the basic contrarian position, i.e. the Meadows team hadn’t allowed for the ‘technological progress’ variable which would neutralize exponential resource use, hence the study must be fallacious. Yet, realistically, there hasn’t been technological progress anywhere near the scale, as must be required by a population that will hit 10 billion by the end of the 21st century, natural resources remaining finite.

Technological cornucopia is rampant in almost every mainstream economic modality – it is assumed that innovation and increases in efficiency will save the day from the jaws of resource scarcity, whereas this has consistently failed to happen for a really long time now. The first half of the twentieth century did in fact see massive technological innovation, but since then, we have roughly had the same energy sources, appliances, automobiles, housing and so on. David Brooks in a NYT article comments wistfully in a Steve Jobs obit “we have hit the trough phase in all sorts of problems — genetics, energy, research into cancer and Alzheimer’s” bemoaning the current pattern of innovation stagnation. Richard Heinberg an energy expert, elaborates in his book titled ‘End of Growth’ how technophile proponents invoke Moore’s Law (the observation that every two years sees a doubling in how many transistors can fit onto a microchip) while celebrating superficial progress in computer technology, while in reality human beings can only invent truly, paradigmatically new things very rarely. Most ‘inventions’ are in fact merely slight improvements in speed.

In short, the falsely emblematic progress of being able to download movies on smart phones is not only an effete distraction but a serious blinder to the general trend line of decline that is indicated by most available raw data of remaining resources. Those who support Donella Meadows’s analysis, roughly tow the Ecological economics line which recognizes that the economy is a subsystem of the ecosystem and stress firmly on a preservation of natural capital while emphasizing that human made capital (e.g. technology) cannot replace natural capital. With that analysis in mind, ecological economists have devised the theory of the ‘steady state economy’ where there is no new growth, or no irretrievable consumption of non-renewable resources. Herman Daly, one of the chief architects of the steady state narrative, proclaims all economic growth uneconomic, asserting that – ‘I think economic growth has already ended in the sense that the growth that continues is now uneconomic — it costs more than it is worth at the margin and makes us poorer rather than richer.’ Paul Krugman, makes a similar point in his NYT column, while deriding the senate Republicans’ jobs plan (which involves dismantling environmental regulations – kowtowing to big oil and big coal), saying that ‘there are a number of industries inflicting environmental damage that’s worth more than the sum of the wages they pay and the profits they earn — which means, in effect, that they destroy value rather than create it.’ This isn’t to say Krugman is an ecological economist, far from it, but mainstream support can definitely be used to devise new modes of evaluating human welfare in economic terms which more robustly measure income distribution, non-monetary transactions or environmental degradation.

There are alternative modes of measuring well-being that challenge the ubiquity of the mighty GDP. Among these are Genuine Progress Indicator (GPI), Index of Sustainability and Economic Welfare (ISEW), and Gross National Happiness (GNH) to mention but a few. They measure roughly analogous things such as resource depletion and/or estimating the complex calculus of human psychological needs and welfare, but they haven’t made a dent in the role of GDP, which still remains the primary policy goal of most nations. Green accounting is a methodological tool employed by the related yet distinct field of environmental economics which has formed the bedrock of most of these incipient indices of measuring welfare. Green accounting attempts to value environmental externalities and the value of ecosystem services that don’t accrue monetized value to human societies. It has mostly been very controversial because it has failed to carry weight in policy circles to abandon the perpetual economic growth premise. The collective bane of indices like GPI, or GNH is the fact that they can be easily dismissed since they do not follow the logic of markets, or lack the appurtenances that facilitate monetization. It is obvious then, that a corporatized military industrial complex has much to gain from maintaining such indices in limbo. Such impotence is vastly characteristic of much in the field of ecological economics, or even the larger environmental discourse. Solutions are largely dispensed in the form of new agey panacea while rarely challenging the dominant paradigm of perpetual economic growth which desperately needs the collusion of demanding consumers to do so. And yet, focusing on recycling or individual consumer habits is a vastly ineffectual tool to reverse the onslaught on the environment. The onus is largely on the individual consumer vis. a vis. environmental action, and this may have its origins in the Reagan years, where individualism was treasured over communitarian, collective action. The consumer as the central foci for the modern economy as well as the modern environmental movement is quite in line with that precedence.

Gernot Wagner of the Environmental Defense Fund, like Steingraber, comments on the inefficacy of individual action adding up to much when what’s required is colossal change globally at an institutional level, which has thus far proven elusive. And Ecological economics alone will not do the job, as one of my main issues with the discipline is its unease at confronting perpetrators who use institutional power to exploit the weak and the powerless and maintain the status quo. Gross National Happiness as practiced in Bhutan maybe a wonderful idea, but Bhutan basically remains a very ‘primitive’ society, in the worst sense of the word – gender inequality is high by all measures, life is short, if not nasty and brutish and access to water, healthcare, etc is generally poor. In that regard it is as ineffectual as the GDP according to which China is going great guns, but will remain a very poor country in per capita terms, even when it overtakes the US in terms of its GDP, with little social progress to show for it – no safety net, beset by tremendous social inequities. As will India, presumably.

At an institutional level, it seems, we would need a greater consensus about where humans as a people need to go – and this discussion needs to happen at a post-national forum because the planetary crisis is by definition, a global one. Natural forces will scrape humanity of the earth’s crust without batting an anthropomorphic eyelid. But humans in the western world, who control the planet’s destiny, will possibly need to decide on a path that moves away from merely tweaking regulations and not making fundamental changes to the system. Many environmentalists believe in an ecological modernization narrative which seeks to merge high profits and sound sustainability goals into a convenient win-win whole via efficient green technological innovation while GDP and human consumption keep rising unabated. This is mired in paradoxical futility, as has been posited via Jevons Paradox which warns that increase in efficiency will merely encourage higher consumption. Furthermore, an innovation model dependent on the military industrial complex like the one we presently have merely perpetuates the cycle of incentivizing negative outcomes.

Like the post-national ideal, the EU again provides a model that decouples military funding and technological innovation. James Sheehan in ‘Where Have All the Military Gone’ describes an ushering in of an era of demilitarization in Europe, where a conscious choice was made to not chase gauzy, lofty ambitions of being a superpower, but a concerted attempt to reduce military strength and ‘civilianize’, eager to avoid war and engage with the relative wellbeing of its citizens. Of course there are other complexities related to demilitarization that this space can’t really do justice to.

Finally, Wall Street. Not only is it representative of putrid and egregious greed, but in real terms, a loose cohort of colluding corporate entities – 147 corporations mostly banks (the fabled 1%) control about 40% of global wealth, it has now been empirically confirmed. A white paper submitted to New Scientist by Swiss complex systems analysts titled ‘The Network of Global Corporate Control’, has confirmed that such patterns are inevitable; interconnected clusters of highly connected members result in the incestuousness causing capital to agglomerate within that cluster. Hardly a conspiracy, but a very plausible self organizing principle; which sort of debunks the OWS Manichean narrative of good citizens versus bad investors. And that kind of monopolistic control will be opposed by many good liberals, yet they may willfully ignore the reality that capital invariably seeks to invest in stable, risk free realms. But, Wall Street is merely a meme – the real swindle happened earlier on in the social compact that people wrote bringing neoliberal economics to the forefront of the global economic modality.

My submission, therefore, is this: a cold war of attrition will not end corporate lethargy or predatory capitalism. The language of envisioning a new schema of national accounts qua indices of well-being is sorely needed, otherwise it remains bound within the quaint and insipid realm of PBS news hour specials on vignettes of Gross National Happiness in Bhutan. A very real transition needs to occur for this to speak to our sensibilities in the real world, otherwise we’re mired in the same old Reaganomics vs. Keynesian paradigm. By all means punish the wrongdoers on Wall Street; I hope the Citigroup CEOs go to jail for decades for betting on mortgage investments to fail. But merely having the SEC regulate firms would be a cosmetic change, while desirable, entirely unworthy of addressing the gargantuan sense of systemic malaise all of us feel. Which brings me back to OWS – it will probably be erroneous to pin our collective aspirations of salvation on the occupiers, for the outcome of this will inevitably be a modest one – social change is usually glacial – but it will be a useful springboard to launch into a brave new world of economic justice, peace and social equity. It would be tragic if the outcome of this was merely another pointless binary choice between repeating the retrograde Reaganomic policies of the Bush years or the even more insidious free trade policies of the Clinton years. This is our moment to draw a line in the sand and break away from that pattern, and there’s a very real chance that ‘Occupy Wall Street’ could be the silver lining that allows us to do so.

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