A Convenient Truth

For more than half a century now, Milton Friedman and his Chicago School of Economics have convinced most of us that the only way to view the real world is through the prism of economics. This way of seeing the world was based, at least in part, on Ayn Rand’s 1957 book, Atlas Shrugged, which promoted an extreme form of free market libertarianism. As Raj Patel notes in his latest book, The Value of Nothing, this “convenient truth” convinced us “…to believe that egoism would lead to the best of all possible worlds, and that any form of restraint would result in disaster.”

This “convenient truth” is what guided the American economic guru, Alan Greenspan, in his role as Chairman of the Federal Reserve for nearly two decades before the economic meltdown in 2008. Under intense questioning by the US Congress, Greenspan admitted to a fatal flaw in his ideology, namely: that markets always know best. That same year, Larry Summers, Senior Economic Advisor to President Bush also admitted that “…his view that the market was inherently self-stabilizing has been dealt a ‘fatal blow’.”

It is hard for us to comprehend what the implication of such admissions might be. If the fundamental policy by which both government and business have operated for so long is in fact flawed, how do we proceed? Some continue to argue that this flaw in the system was based on faulty input data and that we could have fixed the problem if we had responded more quickly when it arose.

But the proverbial horses are already out of the barn and it will be difficult to round them all up. Thoughtful people everywhere are beginning to look around for new and better models. As Raj Patel urges, “We need not only a new way of mooring our expectations of our society and our economy, one based on richer human assumptions about human nature, but also a different ideology governing the exchange of goods and services.”

So, even while many are attempting to re-create the world that ended in economic collapse, many governments and millions of individuals around the world are attempting to address the fatal flaw Alan Greenspan spoke about. There is a growing recognition that business needs the checks and balances provided by a thoughtful society in order to be sustainable into the future.

Not that the economic prism through which we have been trained to see the world is shattered, we can all begin to build well-balanced kaleidoscopes through which to envision a new future. Instead of a singular focus on economic theory, we can now begin to envision a world that encompasses other values besides making money.

What would you want to inject into this new vision? I have some ideas. How about adding sustainability into the formula, both economic and environmental. And while we are at it, why not insert a notion of justice that would invite both the underprivileged and the overprivileged to a common table that has enough for all?

Jack Heppner