The problem is that making more money and acquiring more and doing more and bigger things does not necessarily improve our quality of life. Like a plant inside a container, if it continues to grow, it dies. Like a cancer that grows, it kills its host and then it itself dies. Nature balances growth with death; our current economic model does not.
How often have we heard that this country's (or province's) economy is "the biggest" in the world (or country)? Does that really mean prosperity? We should instead be asking ourselves and judging our economy on the basis of the statement: "This country's economy is the most effective".
Distilled to its basics, economic growth is proportional to the speed at which people exchange money as well as the purchase value of that money in terms of how much it can buy.
Normally, once we meet a need, we stop buying = negative growth; if we're satisfied, it's a bad thing. If we can satisfy the same periodic need by being able to buy it on a regular basis = no growth; if we're secure, it's a bad thing. As long as we're receiving and spending more money now than we did before = growth; transitioning money is a good thing regardless of how that spending affects us emotionally or healthwise.
With the current economic model based only on "growth" defined this way, our emotional state or health doesn't need to be good or bad in order to affect the economy one way or the other. If we're happy, we may spend more as we get happier - or spend less. If we're sick, we will spend more (than we did before when we weren't) = growth; sickness is good. In fact, if we're unhappy, we'll tend to spend more in order to deal with and hopefully move ourselves back into the happy world. Once happy, we'll probably spend less = negative growth; happiness is bad.
Because of our current economic teachings, economic slowdown frightens us. We panic - lack of jobs - less money to spend - more hardship to endure. The current economic model uses fear as a tool. Then we start to invent ways of forcing the economy to grow again: make items that break down more easily, add variety and interest to items to tempt people to acquire them, think of new items to build, print more money so that in the short term people will be able to buy more things, which will reemploy people otherwise out of work. The result often destroys our ability and desire to create good solid long-lasting tools and processes, which eventually and inevitably leads to deeper and deeper crises. Either way, our lives are impacted strongly and often negatively by economic crises, causing such problems as inflation, poverty, hunger, social instability.
Fear uses up our energy in following short-term fixes (which will benefit a smaller segment of society) and saps our energy away from pursuing healthier long-term solutions (which would benefit all of society).
The current economic model is designed to hurt us in the end. It doesn't guide us into fixing the basic problems. For example, if people make less money, they pay less in tax, and the government has less money to maintain the infrastructure we need. As the infrastructure degrades, people begin to suffer. Once that suffering becomes too great, people begin to run around and do strange non-constructive things: riot, break things, kill, go to war. This is a downward spiral, and only once we hit bottom does a solution rise from the ashes - any solution whether wise or foolish will seem better than chaos.
Human history is a story of failed solutions.
Throughout human history societies have tried numerous economic models. Generally each model improves on its predecessor in its ability to improve human living standards. But eventually most, if not all, models have failed – drastically impacting living standards for a period of time. These failures, especially dramatic failures, have a silver lining. Like the fire-phoenix legend, such failures often serve to motivate societies to rethink and redesign their economic model in an attempt to avoid similar failures and consequences in the future.
From time to time the crisis, or fear of a crisis, has motivated the rare individual or society to develop a totally new or radically different economic model. Frequently such new advances were made unilaterally and privately by individuals such as John Meynard Keynes (capitalism is good) and Karl Marx (capitalism is bad) – as two recent examples.
We have had several such crises in the past 100 years, the most recent being the economic downturn of 2008-2009. These crises were, and still are, a warning that the current economic model is not good enough for us. “Not good enough” is a rather lame phrase for deprivation, starvation, war. So we need to address the current “not good enough” before real instability and conflict set in.
Focus on the gaps between the actual goals of our economic model and the intended goal of improving our quality of life.
In my research, I have never yet heard any economist start with the basic foundation for having an economy. The discussions I’ve heard all start with a presumed solution - things that can be produced and exchanged, and the methods of such exchange.
Yet, although not met by any economic model to-date, I feel that the intended objective of each economic model has been to improve the quality of life of a society and each individual in it. However, no model has yet had the power to do so. Even our current economic model is based on the assumption that it can, and because it can, that it will. But ultimately - even it - doesn't.
Up until now, historical models all assumed that the ebb and flow of products and services automatically contribute to our quality of life. So our current model ignores what kind of products and services are being created and exchanged. We’re happy to assume that supply will be controlled by demand; we assume that supplied demand is directly proportional to the quality of life. But:
Any model based on such assumptions is open to abuse and potential failure. Strong leaders can control production. People who lack sufficient information can remain unaware of what is being produced or consumed, and assume the best as long as the economic model produces money in their pockets. Because the model does not go beyond activity and money, people who are busy or have money can become complacently satisfied that their quality of life needs are being met. Yet the real factors that do influence one’s quality of life are not part of the economic equation. Without us necessarily realizing it, our demands can be manipulated by tools such as advertising or peer pressure, or addictions, or by the replacement of healthy objectives by surrogates (real fruit today; fruit-flavored drinks tomorrow). Within such manipulations, the search for surrogate solutions can also become a driving force; helps the economy but not the people.
Any model that doesn’t also include the identification, source, and destination of what is being “economicked” is based on shifting sand. Our current economic model in the West is one such. I can think of two reasons or scenarios – or requirements – under which our current limited economic model may enjoy success: 1) a strong leadership that also has a good altruistic heart and lots of power and sufficient time (i.e., a benevolent dictatorship) can unilaterally guide the economy based on their perception of quality of life needs; and 2) a broad and open society with lots of levels of governance and checks and balances, and open access to information. With 2) we can shake and dither our way along hoping for the best.
We are challenged to come up with a feeling that our economic model is successful.
A natural human attribute is the feeling that the more we have of something, the more successful we are relative to that item: more food, more possessions, bigger this, larger that, more happiness, more money. Because our economic model is based on money, and to a lesser degree, activity, we assume the model is successful if it enables us to acquire more money. Most of us think that way, at least. Stress and greed can limit our ability to research and comprehend larger issues; therefore, stress and greed become useful forces in determining the success of our economic model. Under our existing model, situations that increase stress are good for the economy.
We measure our economic success on how much money we have and how busy we feel we are in the pursuit of that money.
We like to have the feeling that more money means more opportunity and more opportunity and assets mean a better quality of life. Our current economic model therefore:
An illustration of our faith in our economic model is that we feel – and most of us assume – that if we have enough money we can buy what we need to improve our quality of life. That the items available for such a purchase are limited by factors beyond our current economic control is too complicated for us to consider (especially if we are under stress).
Because it presumes a solution and does not address the real objective, our current economic model of unimpeded (read “unfocussed”) capitalism has segued from its original life improvement objective to schizophrenically biting back on its original goal, allowing and encouraging unhindered growth and profit while actually undermining our quality of life. The model has assumed – what were we thinking about while we were asleep at the time? – that growth and profit alone would bring about the answer to our dreams?
For some reason, probably catering to the human attribute of greed, we also equate the quantity of money with success and quality of life, meaning that the more money we have, the happier we can be. Therefore we strive to get more money, rather than insist on more quality, and we become too busy to try to figure out the quality side of the equation. Instead, we figure out how we can make more money: create more, increase the amount of work we do or its complexity. So we are beginning to base money, not on quality of life, but on things that negatively impact our quality of life. No wonder our economic model suffers the occasional hitch. It’s a miracle that it’s worked at all.
Our existing economic model fails at both ends: the basis on which is exists, and the measurement of its success.
Ultimately, the bottom line strikes us. Real needs and demands poke through the pulsating economic model. Lack of trust and, worse, uncertainty, poke death-dealing blows at it and the economy, predictably, slows down. Horrors!
Then questions arise relative to our own satisfaction with our quality of life; we fear that the future may be less than rosy. It also dawns on us that, as stressed out we may be, our economy and personal successes are perceived differently by different people. We lose track of how our personal quality of life depends on that of others. Fear makes us try to face the ultimate questions and yet we don’t know how to answer them.
Right now our society and societies try to fill in the gaps between life quality and the part carved out by the economic model by relying on religion, faith in other people and leaders to make the right choices from the soup of possibilities, and historical practices we’ve learned to accept. Unfortunately, we also rely frequently on fear and prejudice, and addictions, to guide our economic decisions. We instinctively realize just how important these gaps are, which is why we hold so strongly to our beliefs, our heritages, our histories – and are willing to challenge and fight others who don’t share similar views. A bit of mare’s nest, if you ask me. “The cause of much evil,” if you want to delve even deeper into the metaphysical.
This page, and the other 4 associated pages contain graphics that have been taken directly from pictures posted on the Internet. I thank those who have originated the pictures and assure them that as soon as I am able, I will drawn my own images and remove theirs from my site.
This page is written by myself, Peter Vasdi; this page first published and posted on the Internet on Sunday 16 October 2011.