The Danger of Good Intentions

This is a response to Change the Economy – Save the World (06/01/2015)

By Wim Romeijn, Editor, CFI.co

Not even the most rabbit of yesteryear’s Marxist-Leninists would have dared propose the draconic economic measures now advanced by those rather ill-guided but undoubtedly well-meaning souls embracing the Economy for the Common Good – a concept apparently devised to press the global economy into an environmental straightjacket and – as a sort of afterthought – promote social inclusion, justice, and equality.

If the road to hell is indeed paved with good intentions, the Economy for the Common Good will not disappoint. According to believers, there is but a single path leading to the common good: no deviation is allowed for as global resources are finite and social issues pressing. The presumed gravity of the situation imposes solutions that are not to be argued with on pains of being branded an apologist for environmental destruction.

Proponents of the Economy for the Common Good seem plagued by pessimism. Human resourcefulness – i.e. technology – is not to be trusted upon to provide solutions to common problems. The Economy for the Common Goods largely aims to find a problem to a ready-made solution.

Take persistent global poverty, one of the many ills identified as driving yet another nail in capitalism’s coffin. The doomsayers wholly ignore the plain fact – established by most any statistical yardstick – that world poverty levels have been slashed over the past quarter century or so. According to UN and World Bank numbers, 43% of the world’s population lived below the poverty line in 1990. Last year, abject poverty affected about 14% of people worldwide.

“Though the Economy for the Common Good does include a free market (of sorts), private initiative is to be severely restricted.”

Though the remaining redoubts of poverty may prove difficult to eliminate, it is hard to deny that progress was made and has been quite remarkable. Solid economic growth provided the main impetus for this progress. However, it is precisely economic growth that the Economy for the Common Good – a misnomer if there ever was one – aims to restrict in order to avoid exhausting the world’s resources.

In fact, de-growth is called for in order to stay within the ecological boundaries of our planet. And not a little bit of it either: the global economy needs to shrink by half in order to be sustainable. Capitalism – conceived to generate growth and wealth – is not equipped to accomplish this.

Though the Economy for the Common Good does include a free market (of sorts), private initiative is to be severely restricted. Business are expected to serve …wait for it… the common good. They do so by being exceedingly responsible and altruistic. “Unnecessary products” and those deemed harmful may not be manufactured lest the offending company be subjected to punishing taxes. Poor Adam Smith, his invisible hand was up to no good.

The Economy for the Common Good contains a few other gems of utopian thought. An international authority is to oversee the allocation of resources and the issuing of pollution permits. Successful countries must make compensation payments to those less fortunate while banks must maintain full capital reserves and not provide any credit beyond this point.

Let’s throw a few numbers at this scenario. By halving the world’s economic output, global GDP would descent to barely $40tn. Nominal per capita income averages would tumble from about $7,200 to slightly over $3,500 annually.

The Economy for the Common Good aims to promote distributive justice. However, with GDP slashed by about 50%, there is significantly less income to distribute. Everyone’s is the poorer for it. The good news is, of course, that being quite poor, people will have less money to spend on products and services that damage the environment or exhaust the planet’s resources. This seems to be the point.

So, in a nutshell, the answer provided by the Economy for the Common Good to today’s many pressing questions is a single one: become quite poor and give up any and all hope of material comfort or solace. While it shouldn’t be objectionable to anyone that those people adhering to, and disseminating, such radical thoughts renounce material comforts and seek shelter in caves, it is another matter for them to dictate others to do likewise.

In and of itself, the Economy for the Common Good – the brainchild of Austrian publisher and activist Christian Felber – is not a bad idea insofar as it attempts to place limits on corporate greed and position human well-being at the centre of economic life. Mr Felber goes off track when he argues that “selfish values” should be replaced as drivers of economic life with “relationship and constitutional values.” Mr Felber insists, as does Naomi Klein in her latest book This Changes Everything, on denying basic traits of human nature.

Human beings are gatherers and as such have an inclination to collect and accumulate stuff. It is how nature wired us to be. We are, of course, also social beings and usually measure our success – or failure – against the efforts of those around us and the rewards they obtain. Attempts to change human nature seem pointless.

Rather than findings solutions to pressing global issues in the modification of human DNA, it may be wiser to seek answers by appealing to our collective intelligence and resourcefulness. Climate change, world poverty, and rising inequality must indeed be addressed. Doing so in ways that are bound to fail and disappoint is both unacceptable and irresponsible. This is not the time to engage in wishful thinking.


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