Must We Always Follow the Money?
Proposition: The international discourse over the next decade will (still) be economic in nature.
JH (against): What is striking about the past 20 years has been the growing variety of forms and content of international discourse. While social, economic and political connections remain mainly local and national, international discourse, driven by peer-to-peer linkages, is developing apace. Economic issues have no pride of place in these emerging connections; nor should they. The emerging international, peer-to-peer discourse seeks to share ideas and experiences on subjects as diverse as building more efficient cooking stoves, providing clean water and green electricity in remote communities, creating social connections within teeming cities, and the nuts and bolts of building and maintaining human health and well-being.
It is true that the G20 â in many ways the new forum of choice for official discourse (providing global reach at manageable scale, hence complementing the UN and the International Financial Institutions) â started life as a grouping of finance ministers and central bank officials. And it took an economic crisis to elevate the G20 to the leadersâ level. Despite this economic starting point, and despite the importance of building and maintaining shared understandings among the leaders of the worldâs largest economies and powerful nations, the main content and progress of the emerging international discourse will occur lower down. On global warming, for example, watch what happens when cities, citizen groups and corporations share ideas and jostle for bragging rights based on progress achieved.
PZ (for): The economistâs embrace of a global public sphere is intriguing. But can public pressure indeed accept the credit for the switch from lobster to chicken at the 2009 Davos Economic Forum? Labelling the 2008-2009 crisis as the worst since â if not worse than â the 1929 crash is quickly becoming mainstream. Meanwhile, the diagnosis offered by, say, Krugman, Shiller, Baker, Skidelsky or Soros has been entering the public consciousness, through its ubiquitous accessibility at huge online discounts, at airport bookstands or on the âjust publishedâ tables in just about every bookstore â so pervasively that one could get the impression that we had just about had enough of markets, irrational exuberance and frivolous lending. The images of countless familiesâ evictions after defaulting on their mortgage are indeed so present on todayâs TV screens, newspaper stands and in parliamentary debates and local and global policy fora, that the voicing not only of hope, but even of confidence in a move from economics to politics has something going for it. Or has it? How real is President Obamaâs turn to the bailed-out banks to make them âpayâ? How effective is it going to be? And, more importantly, how does it fit, first, within the framework of the current âcrisis response,â and, second, within our historically evolving thinking about market regulation? Are the present policies and the beginnings of their implementation reflective of âpanic politicsâ or of âlearned lessonsâ? Are the market regulation generals (re-)fighting the last battle, and if so, is the context of 1929 that of 2008-2009? Is the uncertainty today the same as back then?
To me, this implies still a lot of thinking in economic terms. But, yes, it is a different kind of economics than the one that has been pursued, in âhigh-flyingâ fashion, for the last 30 to 35 years, since Bretton Woods came down and the world became one competitive marketplace of global dimensions â seemingly able to turn every man, every woman and every child into an investor. The thinking that is now needed is not the type that dismisses economics for having held a firm grip on governments, collective and individual minds, but one that can matter because it is adequately complex. Economic thinking can indeed go further in tailoring its modelling to the world in which we live. This is forcefully illustrated by the again fast-growing work among economic sociologists â returning not only to Weber, but also to Polanyi, in order to embrace a more comprehensive, layered and differentiated view of the âworld.â Because this world is not so easily decipherable, economics must now become serious about meeting political scientistsâ current mappings of âsovereignty,â legal conceptualizations of ârights,â âstatesâ and (sustainable) âmarkets,â as well as ethical and philosophical deliberations about justice and democracy. Or they could just start somewhere â for example, by initiating more eloquent exchanges between rational-choice economists (and like-minded lawyers) and those who are scrutinizing business cycles, employment and income (not salary) patterns.
You are certainly right in highlighting the developments of the last two decades in terms of an undeniable growth and intensification of transnational policy networks, awareness and activism platforms, and a public discourse that has become truly border-crossing. These developments are a welcome and crucial itch in the side of the leviathanic body of the Washington Consensus. And yes, despite the continuing hammering of âItâs the Economy, stupid!â that induces disappointments at Copenhagen and fuels various regional (Albertaâs oil sands, Detroitâs cars) â as well as national â resistance against more forward-looking policy development, it is true that a lot has come into motion. But, whether or not it is true that we can indeed see the emergence of the fragile contours of a global polity, this would not constitute the end of economics. Even the G20âs mission is still â and is likely to continue to be â principally shaped by an economic mindset through which its members assess what the world needs â for example, a more crisis-resistant global reserve fund.
JH: Lots to agree on here.
Will there still be lots of unsettled economic issues in the world deserving and getting international discourse? Yes. We agree on this, although most of your quotes and examples are US-centric, rather than truly international. A similar assumption that the US situation would be mirrored elsewhere underlay the failure of many to realize that the post-2008 recession would be much smaller outside of the US. There are two reasons for the muted effects elsewhere: first, global product markets are not as dependent on US imports as many assumed; and second, the financial damage is mainly in the US, and in a few copy-cat banking groups elsewhere.
Will a different kind of economics be required? Yes, we agree here, too, on the need for a return to a stronger behavioural base for economic and social research and policies. This will require, as agreed by the Stiglitz Commission report, broadening the national and international information base beyond GDP to measures of subjective well-being. When these are more available, they will facilitate a broader international discourse, just as the development of the national accounts of income and expenditure 75 years ago provided the possibilities for applied macroeconomics.
Will this necessary broadening of international discourse mean the end of economics? Neither of us thinks so.
I treat this broadening of economics â and of international discourse more generally â as essential. Its success will require equal breadth of vision from all disciplines. I see the desired results as requiring and combining the best of economics and the other social sciences. The resulting discourse will not be dominated by economic issues or objectives. Economic where necessary, but not necessarily economic?
PZ: Having just read the Irish journalist Fintan OâTooleâs breathtaking 2009 account (Ship of Fools) of Irelandâs triumphant rise and devastating fall between the mid-1990s and today, I might want to quip a little further about the âcopy-cat banking groupsâ outside of the US, but you are certainly right to note that the fact that the lionâs share of the financial collapse was American in genesis has in fact been shaping the present analysis and writing on the financial crisis.
Our topic is a different one. To address â approvingly or sceptically â the proposition that the future international discourse will âstillâ be economic in nature, we must work hard to be able to enlarge the perspective, precisely because the financial crisis has us all spell-bound like the rabbit facing the famous headlights of the oncoming car. The issue being debated is â before, and perhaps still after, our attempts to re-embed economic discourse in a more comprehensive, more interdisciplinary theory of society (including âmarketsâ and âstatesâ) â whether or, rather, to what degree we can pursue this search outside of the economic paradigm. In my view, the discourse is going to be whatever it is going to be, the vocabulary might carry a larger number of non-economic terms, and it might even be that the vocabulary blossoms into universe-embracing holisms, long-term orientations and hopefulness.
Still, the discourse is going to be economic, simply because economic rationalities are likely to more adequately capture the world as it is. The reason for my insistence on this is the overwhelming adaptability of economic rationalities (and by that, I do not mean the mindset of homo oeconomicus) to changing societal circumstances. Faster than any form of communication, the economic calculus has over time and space remained utterly unembarrassed by any transformation occurring within or outside of the borders of the nation-state. Meantime, law and politics have been struggling to adequately address social change â most recently, the explosion of globalization, understandable only as a complex process of societal pluralization, representable only with reference not to this or that national society, but to a âworld society,â constituted through myriad overlapping rationalities: legal, political, religious and, overwhelmingly, economic. In the face of societal differentiation, economics has never been speechless, as was the case with other social systems. Law, for example, has been in a constant state of breathlessness and exhaustion â conceptually, doctrinally and institutionally. And yet, law has stubbornly been seeking to maintain or reintroduce stability of expectations against an irreversible erosion of traditional bases of normativity; against inherent pressures toward pluralization. Another example: politics. Politics has over time been sufficiently inventive to operationalize questions of power, sovereignty and balance in considerably abstract forms geared toward the realization of a better life: a just, democratic, egalitarian society; or a world of peace. And yet, the very indeterminacy of these abstractions has brought politics down to the nitty-gritty of different times and places, resulting in the ever-recurring tradeoffs between majorities and minorities, with compromise replacing long-term orientation, abstraction and universalization. Overwhelming political challenges stand in stark contrast with the limited timeframe between elections and the patent absence of an institutional framework sufficiently complex or responsive to the highly diversified demands placed on âpoliticsâ by pluralistic constituencies. âTransparency,â then, magically, becomes the sole currency. Transparency or âgovernance through disclosureâ has become a stand-in for serious deliberation over the goals and aspirations of politics. Governance replaces government; networks and regimes supplant the state.
I am accepting your challenge that the discourse about the world that we want to live in is, in the future, likely going to have to incorporate a certain âenough is enoughâ in the face of the deafening noise of the last decadeâs exuberant growth euphoria. For to address the challenges at hand â to your climate change and well-being, I might add global poverty and the asymmetry of access to basic provisions â a belief in the omnipotence of markets appears totally inadequate. But, in the end, economics might still have the longest breath.
Imagine a street accident: a number of pedestrians happen to wander onto the scene. They will, according to their different mindsets, see very different things: the lawyer will see a plaintiff and look for liability; the local politician will wonder what effect the repeated occurrence of comparable accidents at that corner will have on the publicâs appreciation of her city hallâs handling of street safety; the priest will perhaps still wonder about the sense in all of this; as will the mother who remembers her child having barely survived a similar accident the year before; and the economist, for his part, will put a price on the situation. Yes, the âsituationâ consists of these different perspectives, but it is still the price that is likely to dominate the discourse after the accident. Just think of Haiti: how do we measure âhelpâ for Haiti? Economics is the device by which strategies are modelled â regardless of how âjustâ they turn out to be tomorrow, because justice arguably lies outside the realm of the model. As long as we cannot effectively counter the economistâs insistence on scarcity, it will be very difficult to âde-economizeâ our dealings with an uncertain future.
In respect of either the street accident or the devastation in Port-au-Prince, however appalling the economistâs insistence on pricing, it is still going to be more pervasive and âeffectiveâ than the other, conflicting depictions of what the accident â or Haiti â was all about. The economistâs depiction of what is going on in the world has turned out to be the dominant form of societal communication â able to suffocate competing social communications like law, politics and religion. Economics has crept into every corner of societal activity, and stuck a price tag as a form of yardstick to measure a thingâs, an ideaâs or even a personâs worth. This has been the case even in the face of the most eloquent displays of discontent and disgust.
JH: Let me see whether I understand your argument. First, to get the non-issues out of the way: I am unsure whether you thought that some of Irelandâs problems were or were not traceable to copy-cat banking groups. I think that a broader form of copy-catting was at work there. The narrower form was more applicable in Iceland, parts of the City of London and indeed go-go bureaux sprinkled more broadly.
To the substance: If I parse your paragraphs correctly, then you are saying that âthe economistâs depiction of what is going on in the world has turned out to be the dominant form of societal communication â able to suffocate competing social communications such as law, politics and religion.â And this is likely to remain the case because âeconomics is the device by which strategies are modelled â regardless of how âjustâ they turn out to be tomorrow.â
I do not believe either of these points, but am unsure what facts I could assemble to change your mind. I suspect, from your use of disciplinary stereotypes to show how different people would respond to a traffic accident, that you think that my notion of the reality and promise of interdisciplinary discourse with a well-being focus is pie in the sky.
Perhaps an example might help to show what I have in mind. You mention Haiti. Studies of previous earthquakes and other natural disasters have shown that their well-being consequences depend critically on the extent and quality of the social capital embodied in the afflicted communities. May I quote myself on this point?
âA natural disaster gives a chance for the connected community to show its mettle, to exercise and extend the ties of mutual support that are such strong determinants of individual, community and national satisfaction with life. By contrast, a similar event happening where trust, institutions and the social context are weak drives fresh wedges into existing cleavages, as scapegoats are sought, trust drops, and the fraying social fabric provides new opportunities for exploitation of the helpless.
Studies of the consequences of the 2004 tsunami in Aceh (Indonesia) and Sri Lanka illustrate both possibilities. In Aceh, studies show that the tsunami sparked wellsprings of fellow-feeling sufficiently strong to override the underlying religious and ethnic tensions, producing what has been called a âpeace dividendâ as a consequence. Remarkably, the positive effects of working together in the face of the natural disaster were great enough to lead to measures of life satisfaction significantly higher after than before the tsunami. By contrast, life satisfaction in Sri Lanka was significantly lower after the tsunami, because the peace dividend worked in reverse. So, far from leading people to work together in the face of a shared disaster, the tsunami led to escalation of conflict, and an even greater loss of well-being.
What can be done to make the Aceh outcome more likely that the Sri Lankan one? Here there is very instructive evidence from Japan. Deliberate and successful efforts were undertaken to build social capital sufficient to stem the tide of blame and shame in the wake of the Minamata disease. These efforts eventually succeeded in recreating hope and livelihoods, permitting the community to become a centre for pro-environmental research, a link to forgotten historical roots, and a widely watched case study of how good things can flow from bad beginnings.â (www.cigionline.org/sites/default/files/CIGI Special G20 Report Flashpoints for the Pittsburgh Summit.pdf)
PZ: I feel our editor pushing us toward the end of our debate, just as we are startingâŠ Our disagreement is less substantive than it may seem. We have not even begun to scratch the surface of what is â substantively â at issue. Much has, in my view, to do with unpacked assumptions with regard to the central components of the hypothesis that the âfuture international discourse will (still) be economic.â How does the formulation of âwill (still)â relate to the undeniable tension between an âeconomicâ discourse and alternative, complementary or contesting ones? This is the obvious elephant in the room. Are we to blame? The propositional nature of the hypothesis forces a two-value logic, and seemingly forbids a relational assessment. The choice between âyesâ or ânoâ in response to the thesis immunizes the proposition â the answer to which, we begin to realize, is in itself evidently meaningless â against any attempt to unpack or to clarify both the understanding of time (and ârealityâ) and the substance of the proposition. So we can have a conversation about something that might have been, and that is (thus) likely to continue or unlikely to continue. Or we might discuss what has not been the case â in relation to which the proposed continuation makes no sense. None of this has any weight, as the passage of time, learning from the past, governing the present or planning the future only makes sense if we know what it is that is on the operating table. Meanwhile, the term âeconomicâ remains illusive. So we engage in a series of seeming disagreements, while we should in fact be trying to unpack whatever it is that we are supposed to take issue with.
The âdisciplinary stereotypesâ to which you have referred in response to my traffic accident example, do in fact suggest a disagreement in substance â whereas they are, in my view, really not about disagreements at all. The differing âviewsâ held by the different bystanders at the scene are hyper-accentuated identifications of distinct rationalities, and as such, their exclusive attribution to just one person at any one time can only be wrong; wrong, because the example would have us believe that a living person can in fact have only that one mindset, by which he or she is able to assess a situation, a problem, conflict or dilemma. This is, of course, not the case. Rather, what you call âstereotypesâ are distinct rationalities associated with highly specialized communications. As such, they are relatively solidly constructed in terms of their vocabulary and representations of the âworld.â The described perspectives differ, by the way, not much from the three depictions of globalization that you so poignantly capture in the opening chapter of your book, Globalization and Well-Being. The only point of offering the traffic accident or Haiti or globalization examples in relation to our thesis was to suggest that the economistâs claim to put a price on what she sees has proven to be more pervasive, effective and dominant than the observations offered from the points of view of the other âstereotypesâ present at the accident. To be clear, this does not in any way mean that the economistâs view is superior or desirable. The persistent competition among the viewpoints suggests, rather, that any perspective is â on its own â bound to capture only a part of what it is, in the end, all about. It is only to say that â in light of a calamity or, in the case of globalization, a set of very complex processes â in respect of vexing questions regarding their sense, causes and consequences, the economistâs approach, time and again, cuts through other discourses, usurps them, hegemonizes them and shapes them.
This brings us back to the tension between the person and the rationality. Living neither on an island nor in a bubble, people are shaped by their context or environment, which they in turn also shape. This shaping, however, is a process that will, again, have to be dissected into its various components through particular systems of meaning and understanding. None of them â be it law or economics, politics or religion â makes claims to any kind of normative dominance. Rather, it is only through their coexistence and the overlapping interpretation and appropriation of anything that happens âin the worldâ that we give expression, âvoiceâ and meaning to what happens around us. Fearing that we are still too far removed from that which matters, and that our theories of justice, âcommunityâ or âsocietyâ still remain too exclusionary â and that this tendency will only worsen in the absence of effective opportunities for participation on a global scale â the future discourse might thus be called âcontextual,â âdemocraticâ or âegalitarianâ â rather than, say, âeconomic.â It might also be that the dominant trait of future international discourse might be a concern with well-being â with concepts of well-being that you have outlined in our debate and your previous work, or as they have recently been conceptualized by Amartya Sen in his remarkable engagement with Rawlsâ theory of justice.
I think that we would both agree, now, that none of these depictions is more than a mere label, and that they all only deflect from what should actually be discussed. I argue that our concern around an âeconomicâ or alternative discourse is in fact about the things, projects and decisions to which these labels get attached at different times: to believe and to engage, for example, in impossibilities such as a âwar against terrorism,â or to stick to misnomers such as âhumanitarian interventions.â We can no longer deny the fact that these labels, names or themes, in and of themselves, contain no answer, programme or remedy. This is because, effectively, it does not matter whether we call the future international discourse this or that; that is, our present concern is, and will likely continue to be, about how we can reach beyond labels, ideologies and âdominantâ discourses.
The X-discourse that I see taking some hold in debates, policy proposals and differently specialized publics is one of inclusiveness and participation, comprehensiveness and balance. It is also one of great uncertainty and anxiety not only about security and environmental sustainability, but just as much about the still-unanswered calls from globalizationâs discontents, the marginalized and excluded, the poor, exploited and instrumentalized â in places distant, as well as here âat home.â Ever the optimist, I see in the recent renaissance of interest in Polanyi and economic sociology, in Keynes, and in a related, fresh look at the nature of markets, the contestation of global corporate governance standards and securities regulation by historically informed work in comparative political economy, Shillerâs and Akerlofâs deconstruction of homo economicus, Robert Skidelskyâs call for the âReturn of the Master,â Ostromâs Nobel Prize and your and Senâs plea for an economics of well-being, elements that impressively testify to the opportunity for a new economics. Where we continue, however, to engage with more or less pervasive arguments about âeconomicâ governance, âlessâ or âmoreâ âstate,â de-, re-, self- or even meta-regulation, let us not forget that none of these terms is self-explanatory or meaningful. The future, like the accident scene before our eyes, is an entity the content and meaning of which will still be depicted and represented through the competing discourses of law, economics, politics, religionâŠ
John Helliwell is the Arthur J.E. Child Foundation Fellow of the Canadian Institute for Advanced Research (CIFAR), and co-directs CIFARâs programme on social interactions, identity and well-being from his base in the Department of Economics at the University of British Columbia.
Peer Zumbansen is Professor of Law and Canada Research Chair in Transnational Economic Governance and Legal Theory, as well as Director of the Critical Research Laboratory in Law and Society at Osgoode Hall Law School, York University (Toronto).
(Illustration: John Hersey)