First, successful economies are not jungles, they're gardens —
A great quote. Unfortunately neoliberalism may have had its own logic in paving the way for the move from human-scale economies to inhuman-scale ones. The shift from the "real world" economics of farms, factories and services to the new, more virtual seeming, world of finance economics. Naked global capital flows.
And so "gardening" might still be going on. But at that higher "Davos man" level and not at a human community level, or even at the competitive nation state level.
So going back to the past seems not an option. The world system has been financialised. It is a beast that must now find its next step up or simply collapse - the extinction event that would return any surviving humans to an old fashion community economics and actual gardening if lucky.
:grin:
The nature of that next step is the interesting question. To side-step climate change extinction, it looks like we are relying on exponential technology. We have to get off fossil fuels and on to renewables, of course. In a general way, the virtual reality of global capital flows and national debts has to be reconnected to physical reality.
Neoliberalism operated by streamlining the economic realm so that capital was disconnected from the material world in the form of human labour, energy inputs, and most of all, the actual longterm costs of the environment as a sink for the entropic waste that physical effort must produce.
Freed of real world constraints, neoliberalism could run up a tab on this physical and social capital. That allowed the exponential creation of financial capital (in the form of credit. Ie: debt). But now physics is catching up on that streamlined fiction. The entropic sinks that it relies on - a degraded environment, a literally heating climate - are costs becoming due.
The only way out it would seem is technological utopianism - a reconnect of some kind where the physical and informational aspects of being a human organism, the evolving
Noösphere, find a new functional balance.
This is the Singularity argument (of which I am always skeptical). But it is also quite exciting that there are now glimpses it could be an economic reality.
Kartik Garda at the ATOM -
https://atom.singularity2050.com/ - gives a lucid account of how tech is on the cusp of becoming an unstoppable deflationary force. Tech will drive the cost of everything (even harnessing energy or growing food) down to practically free. Almost all jobs can be automated, creating unbounded growth in per capita labour productivity.
In this next phase of the economic system, the world can not only afford its MMT money printing and Universal Basic Income policies, Garda argues it is already having to pursue them to stave off the early stages of the coming great tech disruption.
The central banks can't generate even a flicker of inflation these days, despite throwing trillions of debt into the maw of the beast since the GFC. And the reason is that tech deflation - the way automation and AI makes all physical products cheaper - is already a counter-force flowing at several percent of the total economy. Garda argues money printing has to become exponential just for its inflationary pressure to balance the exponential rate of tech deflation. And - with the pandemic - that is why the central banks have felt so free to do just that. The money printer goes brrrrrr....
So yes. The existing system is broke. But it is no revelation that "free markets" always are part of something larger - a system of governance that encodes the current economic paradigm.
A market of some kind is still required. It is the intermediating mechanism between the global constraints that govern (the co-operating society) and the local individual action that makes room for the competition that defines us all as self-interested selves.
To be a "human" system, economics has to be aimed at maximising both our collective human identity and our own free expression of "being human" .... as currently defined in our ever-expanding developing human story. So a market - as a cohesive collective space populated by equally individuated actors - is always going to be the heart of the system.
But the question is always about what grand flows is the market equilibrating?
At base, it always has to be a balancing of energy expenditure and intellectual capital. The human adventure is about developing the savvy tricks - fire, tools, gardening, politics - that allow us to harness an ever increasing amount of the biosphere's physical capital.
For the longest time - see Smil's Energy and Civilisation - this was just whatever physical capital that the sun grew. Hunter-gatherer, then agriculturalist. And then came the sugar rush of discovering that fossil fuels could sustain an exponential economic paradigm based on machines (and environmental sinks).
The machine age - the industrial revolution - was pretty grim in many ways. Yet also liberating. There is always going to be good and bad. And overall the human lot became better. And while also unequal, an argument can be made that the inequality is merely a natural powerlaw expression of wealth distribution - what equality looks like in an exponentially growing system that, by statistical definition, has no mean.
The machine age was focused on labour and capital. All our views on left and right, capitalism vs socialism, are founded on the tension between the factory workers and the factory owners - a step up in abstraction from the previous tension of farm labourers and land owners.
The problem to solve was balancing lives at both scales. And post-WW2, this was somewhat sorted by the emergence of social democracies and corporate businesses. You had unions and welfare systems to build in protections for labour. You had "wrap around" corporate structures that were tied into a general notion of being "good citizens" - delivering a return on capital that recognised the need to balance the needs of shareholders and workers.
But capital - as its own abstracted flow - wanted to be liberated from this socialised/physicalised constraints. And so along came neoliberalism as a tool to break down all the accumulated publicly-owned stores of capital - the railways or telephone systems which had citizens as the shareholders - and put them on the market.
Financialisation could then take off as its own thing. It was a way to mine the world of its promised future growth by taking out leveraged derivative bets on tomorrow's income streams. And then eventually, just to mine the promises that fictional growth would surely occur.
We now have that broke system where the central banks - the Fed in particular - have in fact had to socialise the actual asset markets. There is no price discovery in the stock markets if their prices are simply reflecting the largesse of trillions in debt "stimulus" (nor price discovery in terms of the true value of the US dollar that still underpins the world financial system).
But the argument that is currently most believable to me - in this very shaky feeling time - is that we are never going to make a well-designed step backwards into any kind of Green utopianism. The gardening metaphor. That is impossible because thermodynamics is a ratchet - a flow that only has the one direction that spells "growth".
So we have to hope for Tech utopianism to be true as an alternative. And actually act on that expectation. As Garda and others (like Jeff Booth, who wrote The Price of Tomorrow) say, the field of economic punditry is obsessed by the problems of yesterday and not yet seeing the solutions of tomorrow. Someone has to be brave enough to understand what wants to happen as the next step of this story and push it through into the institutions of governance that thus frame the collective space that is the market.
It is a moment where we need revolutionary scale reforms to absorb the contrasting imbalances of unbridled debt creation and exponential (possibly) tech deflation. And of course, the cost of those ecological and environmental sinks have to be including in the grand accounting now. They must be monetised and be a factor in the newly-designed marketplace.