“Theocracy: government of a state by immediate divine guidance or by officials who are regarded as divinely guided.” – Merriam-Webster’s dictionary
Society has come a long way since the middle ages. No longer governed by divine right, we are subject to (more) rational forces. Reason has been restored to human affairs to a large degree, and we have made progress, inheriting our society from our forefathers, improving and strengthening its open foundations.
But we have overshot our target.
The problem is evident in the Economy. A closer look reveals the birth and proliferation of a market-fundamentalist dogma that has taken over our lives, like theocracy did so many centuries ago, only much faster.
Here’s the lowdown. The free-market economy rests on the following tenet: the markets will adjust of their own accord, in the best possible way, as if an invisible hand guides their operation. Adam Smith, founder of market capitalism, said so in so many words in his book, On Capitalism.*
The notion is wonderful and groundbreaking, perhaps the cornerstone to modern society and a better life. When first introduced, it worked wonders, introducing trade and competition to otherwise oppressive and closed societies, opening up their borders to commerce and enterprise. Markets were created and expanded, bolstering national economies, enabling them to interact with each other and create opportunity the world had never before seen. Innovation flourished and society advanced exponentially.
Two hundred years down the line, and the terrain is not the same. The ideas and approaches that worked so beautifully don’t apply anymore. The situation has changed, and so have its necessities. Extreme deregulation leads to chaos and breakdown. Increasing costs and growing demand give rise to a collective obsession with bottom lines, letting profit destroy social responsibility and accountability. Disorganization subjecs the ecology to a global tragedy of the commons, each enterprise out for itself and mindful of only how to survive, in the process plundering and abusing our common resources i.e. the planet.
Market fundamentalists are unimpressed by this turn of events and dismiss all such claims as exaggerated scaremongering. They see no fault in their ways and no limitation to their creed, faithful in a system of magical corrections, all of it effected by an invisible hand in the sky. Everything will fall together and adjust in ways that are fair and just, as if by magic, if only we allow it, goes the mantra. If only we let it do what it does.
The argument is dubious. Organized religion has been preaching this kind of nonsense for years, convincing people to have blind faith in the workings of a world governed by an invisible being’s will, trusting everything will be ok as long as they obey the Word, the canon, the metaphysical and unaccountable structure. Trusting in it to watch over us and act in our best interests, as long as we give in to it.
Plenty of individuals see through the dubious argument, no longer buying it, voicing their criticism loud and clear. Market fundamentalism, extreme as it has become – having less and less to do with free market economy – is an ideology getting out of hand. Opposition is growing, and alternative suggestions have been made.
The main alternative is that we change course and steer clear of this rampant mode of business, engaging in more unitary and cohesive economics – something in line with the needs of the globe, the individuals who constitute it and the nature that sustains us.
It’s a reasonable proposition, but – sweet ironic but – it has been hijacked by extremists. State interventionism has stepped up to the cause, overtaking the argument and taking the lead in the fight against market fundamentalism, making a mess of it.
(Economic) State Interventionism… What is it? ESI is a radical approach aimed at controlling deregulated, free markets gone berserk – and has nothing to do with the state intervening to avert disaster when absolutely necessary. This is an unhinged ideology that believes in the systematic steering of fiscal policy by special administrative bodies. Its advocates deem free markets unstable, which, incapable of regulating themselves, demand heavy regulation in turn. Specific measures are to be taken to commandeer society on track. Committees are to be selected to intervene where necessary, steering the economy in the proper direction. Decisions are to be made according to the judgment of expert panels, set up for that purpose alone. Enterprise is to be driven and molded by specialists of supreme knowledge. So say the interventionists.
The arguments are dubious and counter-fundamentalist. (It sounds like forces high above are getting summoned again, expert hands coming to the rescue of every man, woman and child.) The same old story. Whenever the going gets tough, we summon the gods, eager to see them go to work, set things straight again, make everything alright – maybe even prevent trouble in the first place by preempting the markets with austere top-down policy.
Only this time they’re not ethereal, these gods, but made of flesh and blood.
And the alarm bells go off. When people are promoted to godly status in order to preserve order, sanctioned to work from parapets of supreme and non-transparent power, it’s a dangerous setup. Almost communist and despotic, this arrangement grants the few inordinate power, letting them steer systems which have been proven to respond poorly to commandeering. Not to mention how dogmatic the setup is, modeled after oppressive regimes/religions.
So here we are, stuck between an invisible hand and an invisible hand. One is made of flesh, the other of quintessence.
Who to choose? Hard to say. The expert hand of the interventionist committees has the advantage of being run by human beings, not an omnipotent heavenly force that can’t be seen or defined. One can reach these people over the phone, get an interview from them, summon them to testify, subject them to scrutiny, jail them if they do wrong, in theory anyway. Our gods, in this case, are among us, part of us, and that should give us some comfort.
Then again, granting human beings such power is a liability in itself, as dangerous as any dogmatic creed. That’s how theocracy came about in the first place, feeding on the body of faith, claiming divine right to rule in the name of something noble, something hijacked by the people in power in the name of the powerless people.
So where does it lead us? What do we choose? The Invisible hand of the market, or the visible hand of the potentially untouchable committee?
Fact is, no one’s infallible, nor can one be trusted to be, no matter how well intended one’s actions are, or how well educated one is. But trusting in the invisible/intangible isn’t a logical option, either.
At first glance, handing over control to experts in the field sounds like a far more reasonable option, more rational than relying on magical invisible hands, idealized market corrections etc. Time to claim back our destinies from the airy-fairy.
The issue then becomes about how to monitor the monitors, how to make sure that those we appoint do a good job.
The answer is transparency. These appointed supreme leaders have to be open to scrutiny, held accountable for their choices. Should they falter or stray, they must be removed, replaced, and punished if need be. It’s the only way to guard against error and abuse.
Easier said than done. Total transparency and complete accountability are hard to attain in practical terms. Committees are designed to report and answer to further administrative bodies, in theory anyway, but what if they get too powerful, these committees? What if they – or those they work closely with – enact legislation to guarantee their immunity in the name of ‘impartialness’ or ‘an emergency,’ or some other excuse? What if total transparency and accountability are a myth, part of the inspirational but deceptive tale we tell ourselves about our system’s ‘openness,’ a story we’ve constructed over the centuries to give people hope and make them trust in the future?
Is our society as open as we think it is?
Common sense says no. We’re bound to blind spots and dead ends, more than we w’d care to admit. There are pitfalls along the way, many of which come about when the drivers of noble causes claim supreme power (in the name of restoring order, peace, operations etc). That’s how communism started, on the noble but misguided idea that some people could rule over others with divine power in the name of the greater good. The problem was not the setup, or Russian culture, or Chinese mass mentality, or the Burmese, Libyan and North Korean state of mind. The problem is in the ideology of supreme/centralized power. It’s a faulty and dangerous concept that should be kept at bay at all costs. Any society deeming itself immune to supreme/centralized power, thinking it can keep its supreme and unaccountable rulers in check, is going to suffer for it.
So why create a blind spot where there isn’t one, risking another dead end? Why relinquish so much power to omnipotent economic committees, giving them the opportunity to become gods among mortals? Absolute interventionism was the reason the world was in a state of atrophy for most of its history. Monarchy, theocracy, oppression from bodies and committees that answered to no one. Must we go back to that state of affairs again? We needn’t exchange an invisible hand for an unaccountable one.
Let us be reasonable instead, combining regulation with openness. Regulate the market to close the loopholes and get it back on track, watch over it from the side, not from above, not from a position of dubious authority, but from an authoritative position – just watch and guide and play alongside it, learning how to use it and be part of it. Mend its shortcomings when necessary (rather than steer it from the onset in the direction we think it ought to go). Keep the colossal failure of supreme/centralized power in mind, and forego our grandiose plans of commandeering the economy.
To do so we’d do well to educate people and create responsible citizens. Only an informed population will respond well to a crisis, constituting a market able to adapt to the needs of the times.
As far as the top-down approach is concerned, government and watchdogs may need to flex some muscle from time to time, strong-arming corporations into more social responsibility strategies to avoid disasters such as the Deepwater Horizon Oil Spill and the Fukushima Nuclear Fallout.
Combining the two approaches – a free market society composed of educated individuals, plus top-down legislation or incentives to promote social responsibility when none is offered of its own accord – these two approaches have the capacity to bolster economies across the board, helping the global economy recover. The point is for the markets to grow in a healthy manner, serving what they were supposed to serve in the first place: the globe and its citizens. Anything else, from market fundamentalism to state interventionism, is just political expedience in the wake of disaster, another theocracy in the making. We have no use for that anymore. We need a system that works on reason. The time has come to own up to the economy and let it guide us toward a better life. For our children and future.
*“Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” – The Theory Of Moral Sentiments, Part IV, Chapter I, pp.184-5, para. 10. (Note – how the invisible hand was originally envisioned)