Saturday, 1 September 2012

It never was the money...

At times, at least in the fevered on-line world, it seems that there’s a coalition of the heterodox. At least where talking about the world economy and the ways in which its current ailment might be cured is concerned.  The assorted oddities of economic thinking are as one – old-school Marxists, modern Marxists, believers in the magic money tree, goldbugs and schools of thinking named for places in central Europe. All these folk share two revealed truths (to them at least) – the “orthodox” is wrong and our salvation lies in doing something about “the money”.

The thinking of these disparate adherents to the heterodox goes as follows:

  • The current orthodoxy (however described and defined) got us into the mess we’re in
  • This orthodoxy doesn’t describe or define the problem where as (insert heterodoxy du jour) does
  • Therefore apply our solutions and we will all be happy, smiling and rich

And the solutions are always simple (and we should remember what H L Mencken had to say about simple solutions) and wrapped in an irreducible logical certainty.

I recall a friend at university – Neil he was called – who spoke of the problem with articles written by incredibly clever politicians such as Enoch Powell or Tony Benn. Neil’s thesis was that the writing of these men was logical, clear and convincing but that, when you read the text carefully, it contained – roughly half way through – a piece of breath-taking intellectual legerdemain. And so it is with heterodoxy. The seamless, almost commonsensical argument contains something that causes it all to fall apart. Adherents do not see the illogicality despite having it pointed out to them all the time (mostly by followers of a different illogicality).

I don’t know the answer. But I’m prepared to admit this as an essential starting point.  What I do know is that economics isn’t about money. When you pick up the founding texts of the discipline – the works of Adam Smith, David Ricardo, Vilfredo Pareto, even Karl Marx – the writing isn’t about money but about the ordering (or not) of human activity. For sure, the writers spoke of money but not as an economic driver. The thing driving the economy is the enterprise of men and women the world across not the notes, coins, ones and zeros we use to exchange, to measure and to store the fruit of that enterprise.

It is in the idea that the problem begins and ends with money – less of it, more of it, spent, saved, taxed and squandered – that our crisis lies. But money is just a will ‘o the wisp tempting us away from what makes the economy – enterprise, effort, work, exchange.  And into a mire where money is detached from these things where voices tell us that we can have it without effort – just print some money, the government can provide, the deficit doesn’t matter, enterprise didn’t create our wealth, effort isn’t an aid to success, those who are rich have stolen the government’s money.

The solution isn’t in that mire. My guess is that is lies with us remembering that it’s not the money but the food on the table, the roof to keep the rain out, the means of transport, the great novel, the wonderful music. It’s a pint of ale sat with friends, it’s the cinema and the restaurant. It’s all these things and many many more. It’s not the money. It has never been the money.


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