FEBRUARY 2003
A crisis of vision in post/modern economic discourse revealsthe outline of a more Integral Economics for a 21
st
centuryeconomy centered on knowledge and values.
O’Connor:
A Crisis of Vision February 2003
Page 1
“
The ideas of economists and political philosophers, both when they are right and whenthey are wrong, are more powerful than iscommonly understood. Indeed the world is ruled by little else. Practical men, who believethemselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority,who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.
”
—
John Maynard Keynes
“
We are ready to accept almost any explanation of the present crisis of our civilization except one:that the present state of the world may be theresult of genuine error on our own part and that the pursuit of some of our most cherished idealshas apparently produced results utterly different from those which we expected.
”
—
Friedrich Hayek
At the close of the 20
th
century, the market economy in America and elsewhere was in the midst of a veritable renaissance. Twenty years of privatization,deregulation, and liberalization had rendered the
“stagflation” of the early 1980s a distant memory.
During one of the greatest expansions in Americaneconomic history, productivity rose to record highs,unemployment fell to record lows, and inflationremained under control. Corporations realigned theirstrategies and restructured their operations tocompete in the new era of globalization.Entrepreneurship flourished through the convergenceof innovative new technologies, free-flowing venturecapital, and relentless market-ing. The mainstreammedia regaled us with a continuous stream of economic notions, from the iconic CEO to the free-agent worker to the once-and-for-all transcendence of the dreaded business cycle. For the first time ever, it
was actually “cool” to be in business and everybody
was following the stock market. The
market
, both as asystem and as an idea, stood vindicated.
1
The economists, politicians, and executives behindthis renaissance are united by a well-schooledpreference for individual and corporate freedom in arelatively unfettered market economy. They pro-claimthemselves
economic liberals
and pay homage to theclassical economic philosophy that favors free marketsand limited government as essential to both economicgrowth and social liberty. For reasons that will becomeclear in a moment, I call them
economic
libertarians
.
2
The best of these economic libertarians seem tothink that in pursuing market opportunities they arecontributing to the development of a civilization. Theyare indeed. Their record of entrepreneurship andinnovation is unparalleled in history and the simplefact that they create so many of the jobs that fund ourway of life confirms their value to society. As for themillions of economic libertarians who have neverstarted a company or invented a new technology, theverdict is still positive. With each new market exchangethey are creating some small incremental addition tothe overall wealth and well-being of our society.Though some struggle just to survive in the market,they staunchly defend its very real virtues, preferringto lift themselves up by their own bootstraps ratherthan being, as they see it, hoisted by a social safety net.Despite the recent recession and the spate of high-profile corporate failures
—from the forgettable “dot
-
bombs” to the not
-so-forgettable Enron, WorldCom,and Arthur Andersen
—
economic libertarians remainrelatively sanguine about the market system and itsfuture. While making no excuses for the decline inprofessional standards that led to these corporate
failures, they hail the market’s success in eventually
fostering the transparency and accountabilitynecessary to right the system. As they see it, themar
ket’s swift justice is driving wasteful and unethical
firms right out of business before the government andthe outraged public can even begin to make sense of
what happened. They’ve seen this before, they assure
themselves, and it too shall pass.Nevertheless, their critics contend, too manyeconomic
libertarians harbor a fundamentalist belief inthe virtue of the market
—
a blind faith in this all-
Too many economic libertariansharbor a fundamentalist belief in the virtue of the market
—
a blind faith in this all-knowing,ever-present force for humanliberation that borders on asecular religious fervor.
O’Connor:
A Crisis of Vision February 2003
Page 2
knowing, ever-present force for human liberation that borders on a secular religious fervor. Their faith blindsthem to the very real problems with the market, whileabsolving them of any responsibility for its results.
When confronted with evidence of the market’s
apparent mistakes, they tend to recite some version of the self-justifying libertarian credo:
If there is a problem,the market will correct it.If the market does not correct it,then it is not really a problem.
In other words,
the market solves its own problems
.Everything else is commentary.
But this is not the only renaissance that began totake shape at the close of the last century. In what looks like a revival of a movement we first saw towardthe end of the 19
th
century, a multi-faceted counter-revolution has emerged worldwide and coalescedaround a critique of the very economic philosophycredited with producing the booming Americaneconomy. An unlikely coalition of activists andintellectuals
—
from labor unionists and environ-mentalists to journalists and economists
—
has begun tovoice a common concern over a very different economic story.
3
As they see it, the closing decades of the 20
th
century were less a vindication and more anindictment of the market. Financial markets, onceconsidered the servants of free enterprise, revealedthemselves to be the masters of that enterprise,allocating technological, human, and natural capitalaccording to the speculative imperatives of globalfinancial capital. Politicians, once considered theservants of a democratic populace, graduallysubordinated themselves to these same speculativeimperatives, deregulating markets, subsidizingcorporations, and bailing out the wealthy losers in onefinancial disaster after the next. While domesticcorporations outsourced high-wage jobs to low-wageeconomies in order to enhance their profitability, thesesame corporations managed to reduce their incometaxes to a mere fraction of what households werepaying. Thus, despite the apparent strength inemployment, productivity, and growth, most Americans saw their real incomes stagnate, their debt levels swell, and their prospects for retirement undermined by a Social Security fund that defied allcredibility and a stock market bubble that defied all
rationale. As if believing its own “new economy” hype,
the mainstream media failed to acknowledge the harshnew realities of this economy, from the overpaid CEOto the redundant worker to the systematicimpoverishment of society and nature by unregulatedmarket forces.
4
The diverse authors of this provocative story sharea common adversary in the economic
libertarians asmuch as any particular ideology. While some maintaintheir faith in the contemporary economic philosophyfavoring interventionist governments and managedmarkets, an increasing number seem to be channelingtheir energies into social activism via
global
civil
society
, a self-organizing network of non-governmental,non-commercial organizations. Their various criticismsof the market and its institutions are typically framedwithin the overarching themes of
social
responsibility
,
environ-mental sustainability
, and
economic democracy
.
Although they are derided as an “anti
-
liberal backlash”
by the libertarian orthodoxy, these increasingly vocalcritics have a decidedly
liberal
agenda of their own. In
fact, they’re challenging the seats of economic power
with the same conviction that the libertarians havealways reserved for their assaults on the seats of political power. Lacking a name, I call them the
economic egalitarians
.
5
The more thoughtful members of this economicculture perform a great service to all market participants by raising our awareness of theunfortunate and often unintended consequences of market-based economic development. Beneath thesurface of what may sound like alarmist rhetoric oftenlies a sound assessment of the specific ways in whicheconomic growth is misaligned with genuine economicwelfare. By focusing on difficult issues like wealthinequality, corporate corruption, technologicalredundancy, ecological degradation, currencyspeculation, and all manner of economic injustice,
Many economic egalitariansdisplay a rather pretentiousskepticism about the economy.They insist that market logicsomehow undermines socialvalues and that they should be
allowed to correct the market’s
mistakes, if not throughgovernment intervention thenthrough social activism.
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A Crisis of Vision: Toward a More Integral Economics
A crisis of vision in post/modern economic discourse reveals the outline of a more Integral Economics for a 21st century economy centered on knowledge and values.
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