28/11/2011 § Leave a comment
Some American economists have put together a group with a website called Econ4. They stand ‘4 people, 4 the planet, 4 the future’. They say:
We need an economics that aims to secure long-run human well-being, not an economics preoccupied with maximizing short-run output and profits. We need an economics that recognizes that we need to safeguard the Earth for our children and generations to come. We need an economics for people, the planet, and the future.
There are several initiatives to reform economics, so it is instructive to think about this one. The goals are laudable: long-run well-being and safeguarding natural resources. These are also central questions in economics. How do we achieve well-being in the long run, and how do we organise the series of short runs to get there? How should we use natural resources, and how much?
Economics has good tools and models for analysing these questions. There is an abundant supply of economic theory for understanding welfare and natural resources. Econ4, in fact, provides a bunch of names from the economics canon: Keynes, Veblen, Robinson, Galbraith, Sen.
That suggests that the ‘problem’, if there is one, is on the demand side. Maybe there isn’t demand for the kind of economics that promotes long-term well-being and safeguarding of the planet. The ideas are there, ready to be deployed. If they aren’t being used then maybe there isn’t interest in them.
I have found this particular disconnect revealing over the last few years. There’s no end of economic theory trying to explain what’s happening in the global economy and what to do about it. And yet, here we stand, 9% official unemployment in the US, the euro straining to stay together, and NZ sputtering along in first gear. Do we really need more ideas, or just a willingness to use the ones we already have?
One could argue that there isn’t effective demand. That is, the demand for theory is controlled by money, not people. With that argument, the demands of the moneyed few outweigh the demands of the democratic many. If that’s the problem, then Econ4 has the wrong analysis. They don’t need supply-side initiatives, they need to sort out demand. I suspect that’s a much harder problem.