Oct 312017

While we watch the ongoing and ever growing battle between the economic, market driven imperative and civil rights (which includes the right to health, education and a clean environment), there is also a growing call to democratise economics and thus try to level the playing field and rebalance the influence of economics and democracy on our daily lives..

The neo-classical purists see any interference with market principles and the invisible hand as necessarily leading to sub optimal outcomes – the model proves that! Unsurprisingly the neo-classical ideology itself has come under increasing scrutiny* since the GFC of 2008 which was hardly an optimal outcome for the millions who lost savings, homes and a livelihood.

But can one really defeat the primacy of homo economicus, which has so captured and indoctrinated our thinking and discourse, by increasing democratic participation in the economy? I fear not. For is this not just that old worn out argument between centralised planning versus free markets?

I am not arguing against democratic institutions establishing parameters which protect society and the environment against harmful economic practices. But this can only be properly achieved if democracy and civil rights are themselves first extricated from economics, not further intertwined. Only then will civil rights and all they encompass be properly determined through democratic processes, uncorrupted by economic considerations.

As long as we see every aspect of life as an economic utility, as long as we still use terms such as “labour market”, “human capital”, “financial products” and treat land as a commodity, we are operating inside the economic paradigm. Whatever features we introduce into our economic system just become other economic utilities with a price subject to demand and supply. We hear it routinely from politicians who can hardly talk about anything without declaring the economic cost attached. Hence we pit jobs against the environment, turn a blind eye to human rights abuses in support of foreign trade.

Mainstream economics with its complex mathematical modelling is already impenetrable for the ordinary citizen and indeed many business people and professionals who like to justify their decisions and prognostications using economic modelling.

So let’s not add more species to the already impenetrable forest; instead let’s start by removing those exotic species which contaminate the field that has now become an economic jungle encroaching upon and consuming almost every other aspect of our lives.

So how do we identify which species are exotic?

I propose a simple starting point: economic activity is concerned with the production, distribution and consumption of goods and services. While the range of goods and services is enormous they all have some common attributes in that they are designed to meet human needs and can rightly be traded in the market place. In general their economic value is at a maximum at the point of purchase and subsequently declines over time, sometimes quickly and completely in the case of food, sometimes over long periods in the case of furniture, capital equipment or buildings.

What is not produced by human effort, cannot be rightly traded in the market place or does not deteriorate over time does not satisfy these requirements to be an economic commodity, hence it probably qualifies as an exotic species.

Land is not a product but a pre-existing foundation for all human existence.  The “purchase” of land is a misnomer as it cannot be removed, dismantled or in any way consumed. The true definition of land “purchase” is an assignment of rights or entitlement to occupy, farm, mine etc. Stewardship and not ownership was once widely understood and practiced. The assignment of rights over land (just as over the seas) are a legitimate issue of public interest since the right (productive, sustainable) or wrong (wasteful, degrading) use of land and sea affects everyone.

Labour is not itself a product, but the human means by which products are created. To place labour and the human being at the disposal of the market is called slavery.

Money is of course not a product but a social construct. While it has assumed various outer forms throughout history (beads, seeds, metal coins, paper notes etc. and now simply electronic digits), its purpose is to facilitate trade or confer credit (in the form of loans) or gifts (in the form of grants or benefits that do not need to be repaid.

So what would this mean if land returned to the commons and was only available for use or under public licence and in the public interest? No more land speculation!

What if everyone had a right to a basic universal income independent of their employment status? The myth of employment for all would be finally discarded in a world currently oversupplied with goods and services and undersupplied with effective demand.

What if new money (original credit) could only be created by government authority (debt free) rather than by banks? What is quantitative easing anyway?

Time to re-establish a sovereign space for homo politicus.


*Along with the call to democratise economics is the push to pluralise the academic discipline of economics. This will be considered in a future sketch.

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