Book review: Fair Economics – Nature, Money and People – Beyond Neoclassical Thinking
Irene H Schoene, Green Books, 2015
A challenging, widely referenced analysis of the grossly unreal assumptions on which ‘neoclassical economics’ is based; the author quotes from a very wide range of sources, mainly British and German, the latter reflecting her nationality, which her writing betrays. (Many of her extensive footnotes are entirely in German, which is a bit frustrating for a non-German speaker!)
The author starts by comparing in detail the writings of Adam Smith with the selective misinterpretation of them by ‘neoclassical’ economists, and this is a theme returned to frequently through the book.
Based on her analysis of this, she advocates radical changes in our views of the relations of ‘labour’, as a commodity, as though disembodied from the labourer; nature, as something separate from humanity and ‘free’ for us to exploit, rather than as what we are part of, and dependent on; and money, as something to strive to accumulate, rather than as a simple means of exchange.
On this last issue, she includes an article by Michael Hudson, in which he notes that ‘Bankers took deposits and lent them out,,,’ and then refers to ‘… the banks’ privilege of credit creation’ without comment on the contradiction between these points, even though he later notes that ‘the proper role of banks … was discussed exhaustively prior to World War1.’
[I learned from my father that this was perhaps more widely true of the period between the World Wars, when he was active in promoting the ideas of Major CH Douglas, known as ‘Social Credit’, who noted that the banks created the money they lent, and by deciding who to lend to, how much and for what purpose, and by charging interest on it, were gaining increasing power and wealth – which is now the major source of the world’s problems!]
Irene does note that some argue for ‘100% reserve’, with government creating all of the money supply, but does not note the vital difference in effect on overall levels of debt, between having the supply entering circulation by being spent, rather than lent – even without interest being charged.
Another important point she makes is the absence in Neoclassical economic theory of any consideration of the vital but unpaid acivities which make up perhaps the major part of the real’economy’ – though she notes that increasingly, more of this is being taken over as paid employment, in the desperate efforts to maintain or achieve ‘full employment’.
The banks’ privilege of credit creation has been extended, especially since their ‘deregulation’ in the 1970s, to the point that now over 97% of our money is bank-debt based, and this has enslaved us all in the resulting debts, as well as causing huge inflation; this is now the cause of the crash of the system, as these debts are too great to ‘service’.
Douglas also argued that we all were inheritors of ‘the common cultural inheritance’ of skills, knowledge and infrastructure, and so should be entitled to a ‘National Dividend’ or basic entitlement to a share of the general wealth enough to live on as of right (as did the ‘Henry Georgeists’ in relation to the proposed tax on land values).
Though Irene does not explicitly advocate this, she does strongly argue for the ending of wage-slavery in pursuit of real democracy, and the need for unconditional, universal availability of adequate means of life.
She lists many of the irrational distortions of economic aims such as ‘The lifetime of products is even perhaps artificially shortened, as only through the sale of new wares can new profits be realised’; this was deliberately introduced as ‘planned obsolescence’ at the end of World War 2, to avoid the Capitalist disaster of the arrival of abundance! Also, she notes, the globalisation of trade must be reversed; local production for local need should be the norm, and organic food production, to eliminate the soil-poisoning chemicals used in modern farming and to restore the health and fertility of the soil.
While noting the use of ‘9/11’ to launch the ongoing ‘war on terror’ and the growth of surveillance bringing Orwell’s ‘1984’ to real life, and even extending it, she does not question the official version of the cause of the events of ‘9/11’.
Her advocacy is for a radically different society, based on individual freedom and responsibility, with transparency of duties and rewards – for instance the ending of bonusses for civil servants adequately rewarded by their publicly known salaries; all public-sevice jobs and posts should have their salaries or fees made public. To achieve these changes, her main hope is for a radical change of our understanding of the world and our relationships to each other and to ‘nature’, leading to progressive changes. I think that while these are certainly needed, the fastest way to promote them would be through ending the debt-based money system, using instead money spent into circulation, and by isuing adequate Basic Incomes.