Monday, November 28, 2011

Who Is the Economy For?

There is never a bad time to ask basic questions and examine fundamental assumptions. One of the most basic economic questions is this: “what is the purpose of an economy, and for whom does it operate?” This is occasionally asked by political theorists with an economic bent or by historians of economic thought, but is rarely asked by economists themselves,* and as far as I can tell is never asked in standard political discourse.
“What is an economy for?” An economy exists to improve life for everyone. Humans cooperate economically because we are social animals that increase our survival rates, enhance our quality of life, and develop our capacities by working together. We cooperate to improve things, whether making raw materials into useful objects or making ourselves into better examples of human beings. 
That implies a certain principle of fairness. The economy is made for all of us to partake in, and it should operate for all of us. This is not a matter of taking back according to what you give: almost everyone does make some productive contribution to the economy, but children, the elderly, and the infirm all should receive the benefits of our economic cooperation, merely because a better economy allows us to be more humane and generous. 

Immediately, now, someone will object, “But what about the lazy who contribute nothing?” In a just economy people would be able to do what they love and would become more fully aware of how their work contributes to society: they would be more motivated to work as many artists do, for the joy of it, or as many doctors and teachers do, because it contributes to society. And in a fair economy where the full measure of work received its just reward fewer people would drop out -- the whole point of having an economy is to improve life, so if someone is not gaining any benefit from it, but only being exploited, why should they contribute to it? Even those few who would be temperamentally lazy in such conditions should still be sustained until they can be taught or persuaded to make a joyous contribution to the general welfare.
“For whom does the economy operate?” Our economy as organized now operates for the wealthy few; all of society is set up to be a profit opportunity, with general commodification and commercialization everywhere. And the wealthy just keep wanting to commodify and commercialize more and more, from your children’s’ education to your Social Security benefits to your military. Your government was thoroughly commercialized long ago, through the monied lobbying process that led to wholesale deregulation and privatization. Making an economy that is entirely commercial is inherently biased towards those who already have money, and thus is suitable for an oligarchy – but not for a democracy. And thus it is not a real economy, as we defined it above, one that exists to improve life for everyone. 
*Economists sometimes ask, “What will be produced and how will it be distributed?” but that is a somewhat different, I would say sanitized, question. They usually ask it only to set up a facile dichotomy between market economies and Soviet-style command economies: “Either people in the market spontaneously and freely decide production and distribution, or the state can use force to impose its decision from above.” Not only does this ignore a rational balance of markets constrained by the rule of law, it ignores all sorts of non-market and non-state economic alternatives, such as cooperatives and participatory economics. And markets are hardly free of coercion or power, especially when wealth differentials are unequal, and indeed they depend on state power to exist; nor is government an alien and coercive force, when democratically accountable. We are going to have to get past such crude dichotomies if we are to have a truly democratic and sustainable economy. 

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