Sunday, January 1, 2012

... And now for a bit of philosophy: On economics as a science of prosperity

Happy New Year to everyone!

Since I suggested two posts ago that 2012 might be the year of Ecological Economics, and since I have claimed that Existential Ecological Economics ("EEEcon") is the only genuine way ahead, I would like to offer you some reflections which encapsulate what I, as an economist, find most important philosophically speaking. Since the ushering-in of the New Year is sometimes an occasion to do some soul-searching and some realigning, here are a few simple thoughts on how economics could be made into a more relevant science for the challenges we face -- both at the environmental and at the anthropological level.

After these few posts on economics as a scientific discipline, I'll go on exploring Next-Step scenarios, with a substantial part of the effort being devoted to discussing the work of other scholars and practitioners in the area of sustainable development and the "green economy." The idea is not to go on philosophizing forever. I do believe, however, that reflecting on method and science is an integral part of ushering in the Next-Step Economy. That's why I want to make occasional discussions of economics, ecological economics, and EEEcon part and parcel of this blog.

And now, on to those reflections...

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Economics is a science of infrastructure. Its sole social function -- but it is, of course, an important one -- is to work out the conditions under which everyone can access the required goods and services to live a full life. Period. By infrastructure I mean here not just investment goods and equipment (which is what the word means in common parlance), but whatever resources are necessary to underpin, or support from the inside ("infra") the search for a full life. This includes both annual income and accumulated wealth, i.e., flows as well as stocks, private as well as collective.

This means that scarcity has to be overcome in all relevant existential dimensions, to whatever extent necessary for full access to be ensured for each and every human being on earth. But the way to overcome scarcity -- the mechanisms by which "tradeoffs" are going to be made through the adjustment of economic variables -- is a matter for political choice, not a technocratic issue at all. Technicians, among which most of today's economists, have no entitlement in determining these mechanisms. As technicians they can only follow the guidelines established by political decisions. Now it may be that, perhaps, there is a "congruence" mapping linking certain types of "fullness" of life to certain types of scarcity-overcoming mechanisms. To that extent, and that extent only, is the economist allowed any critical claim. But if so, then competence in the philosophy and anthropology of economics is required. Most economists nowadays do not have that competence. This implies that most of today's economists have no entitlement to express preferences as to what kind of scarcity-overcoming mechanisms are to be politically chosen and implemented. However, once such a philosophical and anthropological competence is developed -- as I believe it ought to be -- an existentially and ecologically informed institutional economics can become a discipline that constructs and promotes normative arguments about which scarcity-overcoming mechanisms are preferable.

Data about the "happiness paradox" show that there is indeed a level of economic infrastructure (goods and services) below which the search for a full life is deeply impaired. Let's call this level the happiness threshold. (We'll change that name in a moment to something better.) This provides ample justification for the existence of a science of the economy. In fact, economics is part of the economic infrastructure it purports to study. Economists have to judge themselves on the basis of how well they fulfill the task at hand. This means that no element of the infrastructure -- neither the way the economic system as a whole is organized, nor the way in which the economics profession is organized -- can be off limits. The only task at hand is this: to ensure that every single member of humanity accesses the happiness threshold.

Above the happiness threshold, the building and maintenance of per-capita economic infrastructure is pathological. It means that people keep generating more income and wealth -- eventually in the form of constant "growth" -- while their search for existential fullness stagnates. This is the pinnacle of absurdity. It illustrates a simple but extremely important fact: Once per capita economic infrastructure has exceeded the happiness threshold, an economic science that takes as its objective the continuation of that "growth" for any individual is a science of existential avoidance. Therefore, the threshold is more aptly termed the "existential-absurdity threshold." Let me explain.

One hallmark of existential absurdity is that you keep on doing something that has long since lost its initial meaning. You're on a mechanical treadmill, going through the motions and no longer recalling precisely why you're here. We often have this feeling in our lives, and waking up to the reality of absurdity can be extremely painful. In the most extreme cases -- which, unsurprisingly, are getting more and more frequent in today's economic climate -- the waking-up mechanism is curtailed by addiction: you can't wake up because that would simply mean the end of what you feel is Your Life, with capital Y and capital L. For the addicted, waking up means dying. But even in less extreme cases where waking up would merely imply a more or less severe dose of transitory discomfort, keeping on the treadmill is literally a way to avoid the pain of waking up to the absurdity. The best parable for this figures in Antoine de Saint Exup√©ry's Little Prince, when the small boy asks a drunk what he's doing. "I’m drinking," answers the man. "And why are you drinking?" retorts the Little Prince. "To forget." "And to forget what?" The man’s answer pierces the reader’s heart: "To forget that I'm drinking." Haven't we all, in one form or another, experienced this inner dialogue?

No one is entitled to impose the specifics of what "a full life" means. However, unless we are already fully alienated to the pervading culture, we must recognize that there are some constants to the quest for existential fullness. To witness, the sorts of preoccupations our toddlers, children, youngsters, and adolescents have when they're not busy conforming to the latest commercial fashion or TV fad. What preoccupations? The basic "business of life": getting reassurance, warmth, and affection; building and maintaining meaningful human relationships; coping with the fragility of one's body and psyche; integrating one's sexual impulses; giving one's vital energy to causes worth fighting for; feeling at home in nature; knowing why one is alive, whether there is a transcendent meaning and how one can understand it and translate it into one's actions. With apologies, let me wrap all these things together in the somewhat dry expression "existential integration." No, not food, not water, not shelter, not clothing -- those are already part, albeit a very basic, indispensable part, of the infrastructure. Health yes, in the sense of a basic feeling or awareness of one's body, mind, and spirit operating in a fluid synergy and opening up horizons of sensation, thought, meaning, and understanding; but health services, no, and not medication, either. The latter are, again, part of the very basic infrastructure, the access to which it's the economist's job to secure for everyone.

None of this implies that anyone is going to impose one specific doctrine or faith about existential integration should be gotten. That's open. What matters is that the path to existential integration not be obstructed by a peculiar, and particularly pernicious, form of poverty: the poverty of economic affluence…

When kids or young people get caught up in fashion, fads, or imitation rivalry, they have already been infected by existential alienation. It's not specific to our modern commercial culture. However, the curse of consumerism is that it creates the deadly illusion that existential integration can be equated with a flow of goods and services, extending all the way to health services and medications (which also get more and more routinely over-consumed). To the extent this is the case, "commodities" end up summarizing existential integration in the very process of also making it meaningless -- and the whole economic infrastructure becomes a scam for existential avoidance: escapism from fragility, relationship, mortality, sexuality, etc. There's a lot of death and sex imagery in consumer culture, but it's precisely there to mask the true issues involved in mortality and sexuality.

In that sense, there is a widespread, rampant poverty in affluent society. It is quite literally a poverty created by the very affluence and opulence we have generated to block out the difficulties of true existential integration. You can be poor by being insufficiently rich, i.e., when your economic infrastructure lies below the existential-absurdity threshold; but you can also be poor by being too rich, i.e., when your economic infrastructure lies above that threshold.

Let's distinguish between a lower and an upper threshold: below threshold A, you are poor by lack of economic infrastructure; above threshold B, you are poor by excess of economic infrastructure. Below A, your existential integration is bad-to-mediocre because of sheer lack, and it improves only slowly as you get somewhat less poor, picking up speed as you reach threshold A. Between A and B, you can develop your potential for existential integration by actually using the economic infrastructure to enhance your integration -- that is, by using health care and transport and clothing and food to pursue and perfect your relationships, sexuality, religious quest, and so on. Above B, however, as material wealth continues to climb your existential integration dwindles, and you might get so caught up in the absurdities of large wealth that you could drop to pre-A integration levels. The factors that account for these threshold effects can either be linked to (a) the unanticipated external effects of infrastructure buildup, such as the degradation of social relations and the degradation of environmental conditions; or they can be linked to (b) the unconscious internal effects of infrastructure buildup, such as the alienation suffered in meaningless work, in mindless accumulation, or in mechanical consumption. (In this blog, I have called the former "bio-environmental externalities" and the latter "anthropo-environmental internalities." See the April 18, 2011 post.)

Economics is about keeping us all prosperous, not about making us ever more affluent. That's a very wrong message, which the hijacking of economic science by the industrial-capitalist-modern mentality has ended up sending out. Economics ought to be about nothing else than maintaining human beings between these two thresholds -- prosperous, which means neither too despondent nor too affluent. It's a great and noble task, full of links to psychology, ecology, and spirituality. It's why I wanted to be an economist. And it's also what no economics class ever taught me because for two centuries economists have been busy trying to push people above threshold A. Meanwhile, economists have become so engrossed by wealth as a value, and by the social legitimacy which their role as professional assistants to "wealth creation" gave them in the eyes of the powerful (as well as being a juicy a source of financing for their own personal career purposes) that they have ended up forgetting to look out for threshold B.

Moreover, they have in their overwhelming majority -- and despite their above-mentioned incompetence in matters of philosophy and anthropology -- taught the "virtues" of an economic system whose logic makes some people's overcoming of threshold A dependent on other people's overshooting threshold B. This is the current rhetoric of free-market "development" through international trade or, more generally, the rhetoric of a "trickle-down effect" going from the affluent over-consumers to the under-consuming poor. It neglects the existence and relevance of the A/B divide. All economic systems that make some people's overshooting of B a mechanical or technical condition for the survival of those who remain below A are perverse systems.

To renew economics, we simply need to make visible the distinction between thresholds A and B, and to insist that navigating the more or less narrow space between them is what the "new" economics should be about. Economics should be about wealth reduction just as much as about wealth creation. (Please note that I wrote "just as much as," not "instead of.") When this is so, it will be about prosperity, as indeed it should be: a science of increasing or reducing economic infrastructure in the name of people's existential integration.

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So much for philosophy. The reflection on Existential Ecological Economics isn't just an abstract, reclusive activity. Existential integration isn't merely an intellectual concept. They serve as the (often unrecognized) basis for our more concrete and immediate efforts. Therefore, all of these reflections having been set out, it's now back to the Global Green New Deal, the development of sustainable investment, finance and banking, the promotion of eco-preneurship, the development of efficient mobility and responsible tourism, and so on. It's all part and parcel of the same endeavor.

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This post from the "Eco-Transitions" blog by Christian Arnsperger is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.