The way the world works
Our economic future lies on the politics we play
BY Jim Stanford
Photography courtesy Library of congress: Alfred T. Palmer
Our economic future won’t ultimately depend on dollars and cents, on budgets or taxes, on the ups and downs of the financial markets or even on technology. Ultimately, the economy depends on the political choices we make as a society.
Forget the standard jargon about “supply and demand.” What really matters is politics—meaning not just “elections” and “parties,” but the ways that human beings have always confronted and tried to negotiate their competing interests.
Most people are mystified by economics: “the economy” seems like a ghostly terrain of supernatural, unstoppable forces (technology, competition, globalization) that shape our economic lives. But that’s nonsense. The economy is just the place where human beings work to produce the goods and services we need to stay alive and enjoy ourselves a bit. Economics is the simple act of getting off our butts every day to do something useful. Most of us, anyway.
Some of it is paid work, whether white-, pink- or blue-collar. Some of our work is unpaid, such as raising a child. As part of “work,” I even include (sometimes begrudgingly) the work of managers to organize and oversee production; that’s also essential and productive work.
None of us works alone, either: even Robinson Crusoe had Friday around to help. Even a supposedly “self-made” billionaire would be nothing without the work performed cooperatively by his or her employees, suppliers and customers.
And none of us works with our bare hands. Our tools make us more productive. That means dedicating some of our work to building and maintaining those tools: building a boat before we go fishing, a tractor before we start farming. Building those tools is essential, productive work. (Merely owning them, on the other hand, is not.)
Now, with this matter-of-fact approach in mind, how and why does the economy change over time? Simple: because our work changes. Or the tools we use change. Or because the way we relate to each other changes.
And that last point brings us back to politics.
Just consider the immense ups and downs of social conditions over the last century. They were not driven by technology or “market forces.” They mostly reflect epochal shifts in the balance of social and political power between different groups in society.
Things were very bad in the 1930s. In the wake of collapsed stock market shenanigans (sound familiar?), capitalists couldn’t accumulate their way out of a wet paper bag, and governments couldn’t break out of their old, orthodox passivity. Things stagnated for a whole decade. Things got better, perversely, with the outbreak of world war. Priorities suddenly shifted, and people (via their governments) became willing to invest enormous resources (i.e., “work”) in meeting a broad social purpose (defeating the Nazis), rather than maximizing private profits. After the war ended, things stayed pretty good, relatively speaking, for 30 more years—largely because the powers-that-be were too compelled by fear (of Communism in the east and national liberation in the south) to offer the rest of us a decent shake.
But in the past quarter-century, things have gotten significantly worse. It’s because of what we now call neoliberalism: a tough-love era in which the rich and powerful exhibit a new, aggressive arrogance, thanks to their unprecedented global mobility, and a general absence of political resistance. Despite the promise of new technology, real living standards for the majority haven’t budged in 25 years, and most people feel precariously insecure. Worst of all, we’ve largely accepted the false inevitability of this regime.
Turns out, however, that despite their largely unchallenged global power, capitalists still can’t accumulate their way out of a wet paper bag. Business investment on actual capital products (as opposed to “paper” financial investment) is slower, incredibly, than in the tumultuous, high-inflation, strike-prone 1970s. Financiers also show an ever-increasing talent for screwing things up with their wasteful and unethical speculation. And all the while, unmet human needs cry out for attention: preventable disease, malnutrition, environmental protection. They could be resolved with relatively trivial economic investments (i.e., “work”). Instead, the powers that be allocate a much larger amount of “work” to unwanted dinnertime telephone solicitation, ever-more-complex financial intrigues and copycat drugs to treat erectile dysfunction.
Which way we now head on this grand historical sociopolitical roller coaster is pretty much up to “us”—the masses of humanity who, after all, perform the vast majority of the work that constitutes the economy in the first place. Our attitudes, our choices, our willingness to expose the failures of neoliberalism and demand something better. And, most importantly, our collective ability to build political power to enforce those demands. That’s what will determine whether or not the economy evolves in a way that makes people better off.
In a Canadian context, let me map out two broad choices for the economic future. (In reality, of course, there are infinite shades of grey, not just two extremes.)
If we accept the status quo, a system in which corporate profit guides the work we do and how we do it, I can predict with considerable confidence what we’ll be doing 20 years from now. More of our GDP will consist of digging stuff out of the ground (mostly oily tar) to lubricate growth in the U.S. and other countries (like China and India)—precisely because that’s by far the most profitable thing going in Canada. Regional and social inequality will grow. The share of wealth controlled by the richest one percent of Canadians, which has already doubled in the last quarter-decade, will double again, and living standards will stagnate for pretty well everyone else. Manufacturing and other non-resource export industries (like tourism) will wither away. Those who can’t find work in resources will end up in low-productivity domestic services (like cleaning other people’s homes and walking other people’s dogs).
There’s another choice. I call it a “high-investment, sustainable economy.” It would impose deliberate social criteria on economic decision-making—which means rejecting private profit as the sole guiding force for organizing our work. Like we did back during World War II (although for very different reasons), we’ll devote massive resources to important social and human priorities—such as environmental protection, housing and public services, not iPhones and monster homes. We’ll deliberately push investment—which ultimately means work, good old-fashioned elbow grease, not just cash—into the system. And we’ll direct it to the sectors we want more of (like high-value manufacturing, high-quality services, the environment and public programs). We’ll even let capitalists in on the action, so long as they, too, productively perform their assigned “work”: financing and organizing real production, instead of clipping coupons and speculating on paper. We’ll be aggressive about making sure the jobs and income resulting from this investment boom are shared universally.
Policy levers could be invoked in all kinds of areas (government spending, taxes, regulation, tax laws, labour market policies, trade agreements and more) to make this high-investment, sustainable economy a reality—rather than a dream. The key problem, in other words, isn’t the feasibility of policy, it’s the reality of politics. All we need is enough people pissed off at the failures of the current regime, and actively demanding something better, to start building a very different economic future. Both of these economic choices are technically feasible and internally coherent.
Both of them “add up” at the bottom line. The choice is ours. Indeed, even in today’s rather grim real world, there’s way more diversity in economic practice than both apologists and critics of the system often assume—just compare Sweden and France and Japan and America.
So take your pick. In short, where the economy goes depends on our political choices, expressed through a process (again, much broader than elections) that ultimately depends on power, not dollars and cents. Despite systemic instability, regular financial crisis and even environmental limits, I do not expect that modern-day capitalism will significantly change, let alone collapse, of its own accord. It must be pushed to change, through the collective force of millions of people who prove by their actions their unwillingness to tolerate the status quo. That’s where our unions, our anti-poverty movements, our environmental struggles and our other campaigns for change come in.
And that’s why the future of economics, ultimately, is all about the future of politics.
