Own or be Owned ... Every Citizen an Owner!
Though the conspicuous absence of such Constitutional specification of individual economic rights is glaring – especially within the context of an ostensibly “free market” economic environment and theoretical orthodoxy which formally asserts that maximizing systemic efficiency actually hinges on minimizing or eliminating competitive barriers to entry to achieve universal participation - in more recent times, inklings have intermittently emerged which suggest some at least peripheral recognition of the importance of the oversight with respect to individual economic Rights. One example, of course, would be the famous Franklin D. Roosevelt ‘Four Freedoms’ speech in which he asserted the Right to ‘Freedom From Want’ as one of these Four Freedoms; clearly a freedom having profound economic implications if taken more seriously. Then the 1946 Employment Act might be construed as another step in the direction of acknowledging that our broad array of specified and evolving human, civil and political rights are incomplete in the absence of any explicit specification of individual economic Rights if the claim of an economic Democracy is to have any real substance. Even more recently, with the 1978 passage of the Humphrey-Hawkins Full Employment Act, another step occurred in this general direction when Congress imposed as an integral mission of the Federal Reserve Banking System the imperative to elevate the objective of maintaining “full employment” as an operational criterion on a footing equal with price stability. As an aside, it is worth noting that this particular case raises a significant irony in that, according to the monetary aspects of binary logic, price stability and full employment are mutually entailed and enhanced by virtue not of some layered on, administrative imperative assigned to the Fed as a directive to try to balance ostensibly conflicting objectives, per se, but inherently realized in a binary system via the very simultaneity with which monetary expansion is coupled to expansion of productive capacity, which is coupled to expansion in the distribution of ownership of that expanded productive capacity throughout the population, which then endogenously balances wealth distribution, aggregate demand and maximizes capacity utilization, including labor/employment. And, to emphasize, it is precisely the simultaneity of this series of inter-linked couplings which is the important factor here. The necessary pre-condition being the resolution of the very underlying consumption/savings schism illuminated by Dr. Moulton, and made viable by simply enabling the Federal Reserve to exercise its’ existing powers for providing direct discounting to extend credit for the creation of new productive assets and, in so doing, freeing the system from its’ current and historically virtually exclusive dependence on recourse to accumulations of past savings to make current investments. In other words, when you operate a system under conditions of the prevailing consumption/savings schism, and on the presumption that the only viable mechanism for the mass distribution of wealth is that of labor, the resulting decoupling and absence of the simultaneity just noted means that you are left with a bifurcation between price stability and employment which not only does not need to obtain, but should not obtain in a properly conceived, structured and operating free-market economy which inherently minimizes barriers to entry and maximizes full participation; a systemic profile which is the exact inverse of what we have now.
This observation also illuminates an important aspect of the current political debate. One hears considerable lip service in these generally highly contentious debates grudgingly conceding that what is really needed under the current economic circumstances is to both stimulate demand and induce severe fiscal restraint. But absent the deeper structural couplings and simultaneity just noted, and which are unique to a binary system, achieving that objective is an exercise in nearly intractable trade-offs. And even if Herculean political effort manages some provisional success in arriving at these, the results are invariably ad hoc compromises truly satisfying no one, generally of only transitory policy relevance, and offering no deeper, fundamental resolution precisely because the bifurcation also just noted is as structurally built in to our current system as the inherent coupling and simultaneity is to a binary system. Generally speaking, both Republican and Democratic approaches assume that it will never be politically necessary to pursue both of these (seemingly) conflicting objectives at the same time, whereas the inherent production/consumption couplings characteristic of the binary regime effectively act as a deeper systemic inoculation against the objective of a simultaneous balance between supply and demand being in conflict to begin with.
But a major part of the historical importance of the fundamental insight that capital should be properly viewed not, as all other ‘schools’ of free market economics do view it, as an ancillary and purely dependent factor in economic production, but a factor of independent and equal importance, is that it introduces into considerations of our implicit social contract, and our explicit evaluation of how personal economic Rights should be defined, the most profound implications in an Industrial and post-Industrial economic environment. And to parenthetically reiterate, the crucial conceptual equalizing of these factors is the reason for the designation “Binary” in the previously cited titles, and other related literature. But if we deny even that any such Rights do or should exist, then continuing to endlessly congratulate ourselves that we are a true Democracy is reduced to political pabulum and transparent pretense, if not farce. No one within a system which so nearly ignores that something of the centrality to nearly every aspect of life – let alone of Liberty and The Pursuit of Happiness - as the economic dimension has to our lives should delude themselves that such a glaring and enormous omission in the specifications of our Rights is consistent with the status of a fully realized Democracy. If we grant, especially in the declared context of Founding-Document-terminology asserting rights to “Life, Liberty and the Pursuit of Happiness”, that such Rights should and do exist, then it becomes equally transparent that their fulfillment is not remotely adequately satisfied by such strictly jobs-related provisions cited above in a modern economy where the independent productiveness of capital so clearly obtains, in spite of a theoretical orthodoxy which remains guilty of such a fundamental conceptual oversight in continuing to deny acknowledgement of this reality.
Further, a whole series of interesting questions are entailed by such considerations which should be of the greatest possible interest to all manner of activists determined to contribute to constructive change; and not merely out of the quite justified and legitimate moral concern pertaining to the unconscionable and growing disparities of wealth which currently obtain not only in our system, but now also increasingly around the world. A market economy structured around binary principles and institutions opens the prospect of a genuinely win-win scenario which would establish a form of free-market capitalism which is even more productive and efficient than the hobbled versions within which we currently operate. While few would deny that the global introduction of at least some significant modes of free-market operations in the so-called BRIC countries – Brazil, Russia, India and China - have lifted tens of millions of people either out of poverty or even into the swelling middle classes around the world, this simply begs the question. If even market systems flawed by oversights as deeply fundamental and conceptually important as those relating to the consumption/saving schism, and the concept of capital being independently productive are, manifest the capability of achieving such wonders on only the hobbling mechanism of labor/wages and welfare; if even a free-market capitalism based on an exclusionary regime of productive-asset ownership (and therefore not really very free at all), which effectively inherently limits the population of real capitalists to a miniscule percentage of the total population and bakes-in the systemically risky consumption/savings and financial ‘maladjustments’ which Dr. Moulton warned us of so many decades ago now, and which recent events make blazingly clear continue to obtain, has such productive power, how much more productive, efficient, and just would a form a capitalism be which took both the general ideas of free-market capitalism and Democracy seriously enough to aim for making every citizen an owner of a viable estate of productive capital assets; i.e., a real capitalist and not merely a wage and/or welfare-slave vacuously day-dreaming of hitting the lottery in one form or another? And other questions occur.
Why, for instance, have we had unions devoted to ‘labor’ for a century or so, but not only no ‘ownership unions’, but a dearth of NGOs, or related governmental institutions, pressing to systematically and universally en-capitalize a wide array of other constituencies which might easily be imagined or defined based on criteria other than merely being a laborer; e.g., citizenry, region, consumer-status (e.g., with respect to utilities, insurance companies, banks, appropriate public investments, etc.)? These, and other forms of institutional innovation designed to a.) universalize productive-asset ownership, and b.) embody greater consumptive demand for the products and services of the companies in our economy, are precisely what readers will find laid out in the titles previously cited as sources. And why has the important and growing “stakeholder” movement not recognized how well their interests and fiduciary role would be served in an economy adopting binary principles; principles which promise the multiple win-win benefits of both an expanding economic pie based on a broader consumptive demand once we’re unbound by the myth of a systemic investment-dependence on only accumulations of past savings, greater systemic efficiency in achieving superior growth, and diminished systemic-risk associated with finally correcting the consumption/savings ‘maladjustments’ which gross imbalances of wealth distribution induce? Similarly, one cannot help wondering if the countless caring and humane individuals – including many well known celebrity examples such as Bono, George Clooney, Edward Norton, Angelina Jolie and Brad Pitt and others – and the many NGOs devoting themselves so honorably to efforts intended to address poverty wouldn’t recognize that, meaningful and ameliorating as such efforts may be in the short term, they are ultimately tragically analogous to the efforts of the little Dutch Boy trying to find enough fingers with which to plug a leaking dike as long as the underlying conceptual and institutional infrastructure of the very system within which they’re operating is structured in such a way as to inherently maintain the very feedback dynamics which inevitably lead to the skewed distributional outcomes which work against their well-meaning efforts? One cannot help but wonder if they wouldn’t collectively recognize that long term effectiveness in meeting their laudable aspirations to eliminate poverty would be much more systemically and durably served by at least including efforts to change those underlying conceptual and institutional oversights which relentlessly work against their current efforts? Where are the rock concerts, telethons, websites, donation mobile apps, social networking projects aimed at creating a tsunami of demand to economically empower every citizen – American and global – with the right to become owners of truly productive assets? It is well to remember the old biblical adage distinguishing between the well meaning generosity of giving a person a fish, versus the higher generosity of showing a person how to fish or, better still, providing them with the tools which will enable them to fish for themselves. The logic of a market economy founded on binary principles and institutions is the modern, Industrial/post-industrial fulfillment of the latter vision. Obviously posed as essentially rhetorical, these questions are intended to convey some hint of how significant the opportunities for focused activism based on binary economic principles and institutions really are, and how compelling a concerted effort – preferably global – by the electorate to lead their leaders on this issue might quickly become.
And because the history of academic resistance, and the perhaps understandable but often too reflexive and unconsidered political buy-in to that resistance, insidiously constitutes such an undermining influence on such efforts, there is another important factor which should be more than merely noted here; it should be emphasized with strong caution and concern. The important academic and cultural tradition of peer-review is not to be lightly impugned or dismissed. When properly applied, its’ objective is to safe-guard well established knowledge from spurious and misguided challenge. At its’ best, it is an invaluable tradition which serves education, science and society very well. But there is an equally important proviso which should be very well considered, but generally is not only rarely considered seriously, it is rarely given even a passing thought. There is, however, also a notable recent exception to this indifference worth mentioning with emphasis, if only in passing, for the substantial support it affords the general point I am about to make. In the January/February 2011 issue of American Scientist magazine appears an article about various significant and potentially highly problematic issues associated with Peer Review entitled, “Troubled Tradition” (see: http://www.americanscientist.org/issues/pub/2011/1/a-troubled-tradi... ). Though this article importantly focuses on factors such as bias, inefficacy, incompetence, and a range of ethical transgressions, there is an additional factor which it overlooks, but which bears directly on our considerations with respect to an approach to economics based on binary principles; and it may be the most insidious factor of all.
In his deservedly well known work on the nature and structure of scientific revolutions, renowned philosopher, Thomas Kuhn, distinguished “normal” science from science more revolutionary in nature; a distinction very important to our context. The reason it is so important to our considerations is because the appropriate province for the application of Peer Review is to “normal” science; i.e., the state of any given science when not showing indications of significant anomalies between what is theoretically expected and what is actually observed. When, however, in response to the observation of significant anomalies, serious proposals of conceptual alternatives to what may be the prevailing perspective of “normal” scientific consensus are issued, the conventional application of Peer Review can be highly problematic. Rather than providing a fair assessment of the alternate proposal, it may actually seriously retard even consideration of the proposal precisely because it is strongly inclined toward a dismissiveness predicated on an allegiance with the propositions of the “normal” science it is generally in service of defending. This is a highly non-trivial problem, and one which even many of the “hard”/ physical sciences historically have and continue to suffer at the expense of, let alone the “softer” sciences such as economics and other social sciences. In effect, the problem resides in the fact that the review by peers steeped in the conceptual framework of the prevailing “normal” scientific perspective will deny recognition of resolution of the cited anomalous evidence not because the alternate proposals are “wrong” or logically internally inconsistent, but precisely because their theoretical and conceptual constructs aimed at providing resolution are naturally not formulated in terms consistent with the conceptual framework of the “normal” existing science; a rather rich and difficult irony since, by definition, the new or revolutionary proposals are conceptually distinct to begin with precisely because the conceptual framework and associated terminology of the prevailing science has been unable to resolve the outstanding anomalies. Probably for reasons directly related to such issues, physicist Max Planck – justly renowned as the discoverer of quantum physics – famously observed that profound theoretical advances rarely prevail by virtue of logical persuasion, but rather must generally simply await acceptance until the demise of the previous, resistant generation of scientists devoted to a prevailing conventional view. Unfortunately, the history of science suggests that his timeline for acceptance may have been unduly optimistic.
In any case, this is exactly the unwelcome position which the proponents of a binary analysis of the kind of economic problems which Dr. Moulton raised so long ago (growing in number, but often too timid or otherwise unwilling to risk being academically and professionally ostracized for being so politically incorrect as to actually take seriously an alternate theoretical framework which may only have going for it the advantage of being correct) find themselves in. And let no one imagine that this quandary of misapplied peer review is without cost. Aside from the often terrible personal frustration and professional losses inflicted on important and often brilliant theorists, to say nothing of the effects on the ideals and spirit of open inquiry and genuine interest in exploration for its’ own sake, when peer review gets it wrong, the social cost paid in retarded scientific and/or economic progress can be staggering, and there may be few cases where these consequences are more pronounced than with the protracted and ill-founded marginalization of an approach to economics, development and poverty- alleviation predicated on binary principles and institutional prescriptions. So much so, in fact, that this leads us to a series of related and increasingly important perspectives on why this is so important: systemic optimality, national security and international competitiveness.
Several years ago, during a promotional tour related to the release of a new, updated edition of his best selling book, Hot, Flat and Crowded, New York Times columnist, analyst and author, Thomas Friedman, touched on a very important, if rather esoteric and abstract, theme during an appearance on the PBS interview program with Charlie Rose. In the general context of concern with a perceived insufficient sense of urgency about the necessity to take more timely and decisive policy action to address climate-change and related issues, Mr. Friedman conveyed that he was becoming increasingly interested in and concerned about the problem that our review and policy-determination processes could only consistently be relied upon to arrive at systemically sub-optimal outcomes; that the endless process of often merely political jockeying led to equivocations and compromises on principle, even if and when sound scientific analysis might justify anything but compromise. This is a very real, very important and, analytically, very challenging area of study with conceptual and mathematical tentacles reaching widely into the study of complex, non-linear systems, multi-dimensional data analysis, measurement and control theory and with profound game-theoretic implications and consequences once actually ‘elevated’ to political process. But the reason for detouring into referencing this here relates to raising the question of how much worse the situation becomes when arriving at a systemically optimal solution is resisted by virtue of the two leading political parties having effectively incorporated into the very marrow of their ideological identities and policy platforms adherence to not merely mutually conflicting, but conceptually equally incomplete and flawed biases of economic logic, as opposed to contention over merely some nth degree derivative of a more or less merely topical disagreement? In such a scenario, virtually all of the air is sucked out of the policy- consideration arena, as it were, by these political partisans feeling compelled to literally defend the respective existing political/economic ‘party lines’, rather than dare considering that omissions and flaws in the very underlying conceptual foundations of both of those ‘party lines’ might be the real problem; might frustrate even being able – let alone willing – to recognize that something completely distinct from what appears in those platforms is required to arrive at a genuinely fundamental and systemically optimal solution. Again, this may be why we are at a juncture where it will become necessary for the ‘leaders’ to be led by the polity whose best interests they are supposed to be serving. And there is another thread worth mention in the context of such optimality considerations.
Philip Ball's recent book, Critical Mass: How One Thing Leads to Another, provides an overview of the broad and growing range of theoretical and academic work applying concepts and methodologies from statistical physics to the domains of social science, often especially to economics. Chapter Ten, "Uncommon Proportions," devotes considerable space to the issue, and sub-optimal consequences of, highly skewed distributions of wealth. In this chapter, references are made to the importance of power-law distributions in statistics, the fact that the presence of these relations in relevant indicia strongly suggests that the probabilities for the emergence of "extreme events" are greatly increased, with Pareto's Curve (which expresses the relative tendency for wealth to become concentrated) presented as an economic case-in-point, etc. But from the standpoint of their relative importance in supporting the logic of an approach to economics on the basis of the binary principles and institutions noted here, the following paragraph may be of the greatest relevance and significance.
"Econophysicists Sorin Solomon in Israel, Jean-Philippe Bouchard in France, and their co-workers have proposed models to explain how the Pareto law might arise, drawing on ideas developed to explain the movement of the chainlike molecules in polymers. The researchers compare these motions with the movements of money in investment markets. Solomon, working with Zhi-Feng Huang of Cologne University, has shown how there is a tendency for trade to increase the steepness of the Pareto slope in unregulated markets, creating an ever-increasing disparity between rich and poor. One consequence of this is that market fluctuations also increase: the market becomes less stable. So, the researchers argue, a social policy that aims to raise the wealth of the poorest members of society 'is not just a humane duty but also a vital interest of the capital markets' — a form of enlightened self-interest." (Emphasis added.)
There are multiple dimensions of this paragraph which might be extensively "unpacked" with respect to their implications for an assessment of the importance of basing a free-market system on binary principles and institutions; but within binary theory, given the importance of the concept that there is a very important, powerful and positive relationship between economic growth, stability and efficiency on the one hand, and the socially distributive breadth of the ownership of productive assets of the economy on the other hand, the closing allusion to a critical symbiosis between a normative factor such as economic justice and the supposedly more "objective" factors such as economic efficiency and stability is only the most obvious. In short, arguing that there not only should be but simply is an effectively inherent egalitarian, or even moral, dimension to economics is not to be dismissed with misplaced Darwinian fervor as mere bleeding heart fluff, or an economically vacuous Pollyanna delusion.
Given the importance of the stated conclusions of these scientists in regard to such normative considerations, it will be most interesting to explore in more detail the theoretical models of the researchers with another consideration in mind with respect to their allusions to "movements of money" and "trade"; a consideration deeply fundamental to a binary approach to economics, but one often overlooked by those carried away with merely examining statistical indicia or carried away with ‘mathematizing’ economics virtually for its’ own sake. Namely, that what such indicia portend conceptually, may generally be far more related to what the parameters of the system are than to the specific variables chosen for statistical scrutiny, per se. And in the case of economic systems, the parameters may be considered to be comprised of the legal, theoretical and institutional infrastructure which defines rights of property, the operational rules-of-the-game for how the markets are allowed to work, etc. In short, the frequently — if not generally — tacit presumption of many (if not most) conventional economists, that the statistics associated with the outcomes of "the market" as currently structured can justifiably be taken as reflections of a Divinely ordained, temporally eternal set of underlying legal, institutional and theoretical parameters as fixed as the laws of physics are presumed to be, is wildly misplaced. There is absolutely nothing divinely-ordained or fixed by natural law, requiring that economic parameters can only be defined or configured in a manner leading to the kind of highly exclusionary and highly concentrated profile of productive-asset ownership that happens to prevail in their current non-binary “free”-market configuration.
As a brief topical aside, there is an aspect of the emphasis in the passage from Mr. Ball’s book just cited of there being an important linkage between trade increasing the steepness of the Pareto indice and “unregulated markets” which may be worth a passing comment. It is by now well known that former Federal Reserve Chairman, Allan Greenspan, was long among the most ardent advocates of the view that “the market” might be safely left with very nominal, if any, regulatory oversight because it would, in effect, regulate itself by virtue of the individual and collective self-interest of all the participants acting to inhibit behavior detrimental to market viability. It is by now also well known that, in the wake of the near implosion of recent years, Mr. Greenspan has not merely recanted in terms bordering on revelatory awakening, but expressed shock at both the fact and scale of the failure of this self-regulation. But this might be taken as another example of the failure of peer review under conditions when “normal” science really does not apply in the following sense. From the perspective of the binary conceptual framework, there would be very good reason to be surprised by Mr. Greenspan’s surprise for a simple reason that goes back to the free market foundations established by Adam Smith. For anything approaching genuinely autonomous self-equilibration to obtain – which, effectively, is what is claimed by asserting that regulation is superfluous - according to these basic tenets, universal participation should not be impeded by insuperable barriers to entry. As we have repeatedly noted in this essay, to say that there are significant barriers to entry with respect to universal participation in ownership of productive capital assets would understate the case by a very long shot since we have virtually the inverse of this; we not only have a productive-capital ownership regime which is highly exclusionary rather than participatory, we have a prevailing theoretical economic orthodoxy whose conceptual framework does not even recognize that this is a problem by virtue of considering productive capital assets as a factor in wealth generation and distribution to be categorically ancillary to labor. Because of this conceptual oversight – not primarily mathematical, statistical, etc., per se – advocates like Mr. Greenspan are effectively not merely flying in the face of one of the most fundamental tenets of the very free market logic which they tend to be the most ardent advocates for, but are also flying blind with respect to even properly defining the variables and metrics which would be necessary to analytically track how effectively the market is at fulfilling the ideal of self-equilibration or self-regulation. This is important in the further sense that one of the most common obfuscating tactics invoked by academic defenders of the status quo lies in taking refuge in the often dizzying mathematical machinery which has come to envelope economics on the tacit presumption that mere mathematical sophistication categorically trumps everything else; and this on the further presumption previously noted that the existing legal, organizational and theoretical parameters of the system providing invisible support for this exclusionary ownership regime were somehow Divinely ordained and necessarily fixed. Given that they are neither, it may seem less radical to suggest that peer review predicated on using the mathematics associated with the presumption that they are both may be highly problematic, since this utterly ignores that there may be perfectly valid and completely distinct variables and metrics, or distinct ways of interpreting familiar variables and metrics in new ways, which are remaining, as it were, unseen by virtue of these conceptual oversights. It is for reasons related directly to such considerations, and exploring them much more openly and fully, that Professor Ashford has so long aspired to and so diligently worked toward gaining greater academic receptivity for doing exactly this; has so long aspired to see the great intellectual, networking, legislative-policy-influence and other resources which the academic world, at its best, has available to bring to bear on the otherwise profoundly compelling nature and implications of binary economic logic.
It has long been asserted by those in favor of transitioning free-market economics to a foundation on binary principles and institutions that this generally invisible or overlooked legal, econo-theoretic and institutional infrastructure is deeply and profoundly important not merely to systemic optimality and efficiency, but precisely because outcomes having more socially constructive normative consequences serve systemic optimality and efficiency. Part of the beauty, and certainly a major portion of the importance of binary theory, is the revelation that the normative and the stable and efficient are not only not to be viewed as in opposition but, indeed, are complementary. And that is, fundamentally, far more a conceptual than a statistical or mathematical issue, though almost certainly having significant mathematical and statistical implications; and it is at the conceptual level — the level of its theoretical emphasis on the distinction between productiveness and conventional productivity, and the relative importance of the former, the Binary property right, and the concept of Binary growth — which may be the truest measure of its historical importance. In this sense, the importance of approaching economics from binary principles is not merely in illuminating the theoretical and institutional errors and oversights in the prevailing "invisible infrastructure" which conspire to inhibit the kind of optimal economic systemic efficiency, stability and justice alluded to by these researchers but, in so doing, making that infrastructure far less invisible.
What is perhaps most significant in this context about the work of theoreticians such as those cited above from Critical Mass, is that they may be providing important insights – even if inadvertently and completely independently - supporting such an assessment. And given a social, political and academic environment so conspicuous for its manifest absence of moral courage, and a tepid reluctance to challenge conventional wisdom - virtually no matter how urgently circumstances may suggest that such challenges would be highly apropos - such support may prove to be very important indeed.
Finally, in the important recent Joint Subcommittee hearings into the causes of market “flash crashes” sponsored by Senators Reed and Levin, Senator Reed (see:
http://www.c-spanvideo.org/videoLibrary/search-results.php?key=Re... ) had the courage to ask a question which he feared might be viewed as naïve but which, in reality, is not only of fundamental importance, but also relevant in the context of both optimality considerations and the systemic consumption/savings ‘maladjustments’ issue. In short, he wanted to know whether and to what extent the kind of games and strategies – often intimately related to arcane and highly leveraged instruments causally implicated in the calamitous recent crises - potentially used for market manipulative purposes in stock and/or commodity markets feed back into the ‘real economy’ in destructive ways. In addition to being an inherently interesting question, its’ wider systemic causal correlates are also highly non-trivial. If we broaden the question somewhat to include the ‘proprietary trading’ operations of major money center banks – operations which have become such significant profit sources for these companies, that they are sometimes the single largest revenue source for some of them, surpassing even revenues from conventional loan and other operations with direction connection to the ‘real’ economy – the linkage to our considerations become a bit more direct, and provide at least a partial answer to Senator Reed’s important question.
Though it is a long-standing market truism that general Futures or derivative trading operations, per se, aside from their value in providing liquidity for market-making and transactional efficiency, are otherwise simply zero-sum neutral macro-economically – i.e., what one trader gains another must lose and vice versa and, thus, of no systemically wider supply/demand or destabilizing portent with respect to the underlying commodity or contract - this assessment may be a bit too blithe in the present context for a simple reason: it is no longer the case that all traders are small/individual speculators, or even larger hedgers off-setting risks directly tied to actual economic production and trade operations. When major money center banks, having credit-extension and, effectively, currency-generation powers, not merely participate in proprietary trading operations which have often grown to become primary, if not dominant, balance-sheet profit centers, but are involved in fabricating novel derivative instruments and contracts existing not in the real world of tangible commodities such as wheat, cattle, or heating oil, but in a rarified and highly abstract nether world that is also often increasingly self-referential in their linkage with other such instruments or contracts having little or no connection to such tangible commodities or companies, it may be a bit of an understatement to say that zero-sum neutrality may no longer obtain. In these cases, two interesting issues arise. First, given the high degree of self-referentiality with other fabricated and highly intangible instruments and contracts, increasingly if not completely divorced from the real economy, does the piling up of profits from such operations by an entity with credit-extension and currency-generation powers – powers which do have very real consequences in the real economy via the monetary multiplier implications of these – but who use these profits not to support credit-extension into external businesses involved in the broader economy of real productive activity but, rather, self-referntially feed back into the fabrication and trading of yet more such instruments, make these inherently inflationary, or should the very innovative act of creating and trading in such instruments now be construed as being part of the broader economy of production; i.e., the ‘real economy’; i.e., just another example of Professor Reich’s high value-added service production? Second, even if we answer this question with the more benign interpretation implied in the latter proposition, the highly insular and exclusionary nature of these operations entails that a wholly new and very powerful (indeed, perhaps virtually steroidal in nature) generative source for the kind of upward concentration of wealth which Dr. Moulton importantly points out is perhaps the key driver sustaining the consumption/savings schism, has emerged in our system. (Indeed, when one participant in the customized, OTC sub-prime-related derivatives activities famously boasted that ‘we’re just printing money’, he may not have realized just how close to truthful he was being, even if truthful only uncharacteristically and inadvertently.) Finally, in addition to the important policy issues concerning the degree of leverage and transparency which should be imposed on such operations, this generally overlooked perspective also raises the perhaps equally or more important question of whether rules demanding that external credit-use of such profits should be imposed to constrain the self-referential feedback into yet more such activity by banking participants and, thereby, meet some minimal threshold of application to the ‘real economy’, or suffer escalating taxation penalties. In any case, one thing that is clear in the context of Senator Reed’s question is that such dynamics powerfully exacerbate the consumption/savings schism and, thus, problems of financial ‘maladjustments’, and the systemically insufficient demand issue which Dr. Moulton so importantly addressed in The Formation of Capital. In that sense, the answer to Senator Reed’s question, is that there is a very real and not at all benign consequence associated with these operations for the ‘real economy’; it is simply that the consequences may not be as simple, direct and transparent as he might have hoped. And it is interesting to note that though an article in the current, Jan-Feb, issue of the Federal Reserve Bank of St. Louis Review publication importantly addresses the general subject in an article entitled, What Explains the Growth in Commodity Derivatives? (see: http://research.stlouisfed.org/publications/review/11/01/37-48Basu.pdf ), unsurprisingly, it misses – or, at least, is silent on - these deeper, more subtle systemic-risk dimensions tied to the consumption/savings issue.
The May, 2010 issue of Fast Company magazine (see: http://www.fastcompany.com/magazine/archives/2010 ) featured a cover story article about the increasingly expansive national security vision of Military Joint Chiefs of Staff Commander, Admiral Mike Mullen, and the fact that this now includes considerations of economics. Greatly to his credit if correct, Admiral Mullen would seem to be in the best ancient traditions of the warrior/scholar, with a genuinely open mind in the interests of a more thoroughly informed basis for strategic purview. The article’s sub-title synopsis makes the key point suggested above:
“Admiral Mike Mullen says the sea was his business. Now, as America's top military officer, he's reshaping strategy for a world in which economics and security are intertwined.”
Reinforcing this in a considerably more striking manner, were the comments of former Congressional Budget Office Director, and current Brookings Institute Fellow, Alice Rivlin, during a recent Brookings Forum entitled, The Defense Budget and American Power. (See: http://www.brookings.edu/events/2010/1222_defense_budget.aspx ). While this forum was uncommonly stimulating and thought provoking for the general quality of the various strategic and national defense analyses voiced, what was especially striking was the extremely strong cautionary tone of economic warning voiced by Ms. Rivlin during this forum. It is rare to hear a leader of national stature use terminology as raw, unvarnished and dire as Ms. Rivlin chose to use about the potential consequences to America’s military power and national defense capabilities if the economic conditions of this country fail to reverse their recent and current deterioration; the probabilities for which she was courageous enough not to claim greatly sanguine expectations for, with particular emphasis on deficit accumulations.
In short, no one could listen to the perspectives voiced in this forum and not come away assured of the intimate linkage between issues of economics and national security. What is far less assured, however, is whether there is any comparable cognizance that the conventional Republican/Democratic remedial prescriptions assumed to be correctively necessary are not – as often claimed, and contrary to frequent political, Press Release or news report terminology - fundamental; what is far less assured is whether there is the political and professional courage necessary to acknowledge that these prescriptions effectively amount to mere tinkering within existing systemic constraints – however relatively substantive they may comparatively seem – instead of representing genuine recognition that the very conceptual foundations of the system within which the tinkering is being done are fundamentally incomplete and flawed as long as the risks literally baked in to the system by failure to resolve the underlying savings/consumption and capital productiveness oversights remain. Whether we choose to view this through the lens of the kind of institutional rigidities and inertia which President Clinton importantly noted – which they perfectly legitimately certainly can be characterized in terms of - or through the Kuhnian lens of potential progress being stymied by a continued failure to recognize that we may have finally entered territory where continued denial that something other than recourse to “normal” economic science is required, what truly is fundamental are the persistence and consequences of those oversights. Though hidden in plain sight, these will relentlessly continue to exert their insidious, underlying force in feeding recurring ‘maladjustments’ such as those discussed by Dr. Moulton and as we’re currently experiencing, like some irritating celestial observation of planetary orbits being perturbed from expected trajectories due the unaccounted-for gravity of some previously undiscovered planet. We can choose to continue wearing our political and academic blinders for another seventy-five years, as we have since Dr. Moulton’s original work, by continuing to abide by these denials, but in so doing we forfeit any right to be surprised, disappointed or to claim refuge in later protestations of being unaware of any alternative. To borrow a bit of therapeutic jargon, you cannot correct what you don’t first acknowledge, and we are falling way short with respect to the imperative of what needs to be acknowledged. In this sense, Admiral Mullen’s aspiration to arrive at a more comprehensive perspective for defining national security would be very well served to take economics as being seriously implicated in National Security, and would be even better served to extend his open mindedness to the extremely constructive implications which an approach to economics based on binary principles makes available. Doing so might offer him the opportunity to make a very important contribution and perhaps one with the best chance of leaving the greatest legacy in the interests of true National Security which he could make.
Transitioning from issues of economics and national security, to economics and international competitiveness is merely one of shades-of-gray rather than a hard line of demarcation. Here, however, the emphasis would probably be better placed on the theme of what economists call the ‘opportunity cost’; the costs of failing to take full advantage of what could be achieved were the opportunities pursued; i.e., such costs effectively amount to a kind of ‘sins of omission’. Here again, Professor Ashford provides a very succinct but compelling summary of examples of systemic benefits we are inadvertently choosing to forgo by virtue of our unwillingness to simply relinquish our habit of denial.
“1. As capital income is more broadly distributed to welfare dependent people,
government transfer payments can be reduced, and corporations whose shares
provide that income can be given a tax deduction.
2. As capital income is more broadly distributed to taxpayers, they will pay more
in taxes thereby increasing government revenues and providing a basis for tax
deductions for corporations whose shares provide that income and/or general tax
3. As poor and working people are provided a more competitive means of acquiring
the least risky, most insurable capital acquisition, well-capitalized people will
have incentive to move further out on the investment risk curve, thereby
providing more financial capital for entrepreneurial activities, the development
of new technologies, start-up companies, and smaller companies,
4. With a broadening distribution of capital ownership and income so that the
supply generated by technological change and increased investment will be
increasingly balanced by a corresponding increase in demand, the amplitude of the
booms and busts of business cycles will be reduced.”
Individually and collectively these are highly significant and each are deserving of considerable expansion. Whole volumes, no doubt, could be written about how significant the implications of just point #3 might be in the context of our increasingly urgent need to maximize, for purposes of both ecological sustainability and global economic competitiveness, investment in new energy technologies, “cradle to cradle”, “Industrial ecology”, and “green chemistry” production and recycling processes and technologies, etc. Though far from complete, a selective but illustrative sampling of important processes, initiatives and technologies, having profoundly transformative implications if properly developed in a favorably conducive economic climate, might include the following:
(Indeed, it might very legitimately be argued in this context that we face no greater challenge than establishing a production/consumption profile which materially and energetically functions like biological and/or ecological systems do in that waste at any given level of the system is utilized as feedstock for production elsewhere in the system so that the export of entropy and waste to the wider system is minimized. In fact, given that the wider system in this case is planetary rather than national, over the long term, incorporating such a minimization imperative into our formal economic criteria on an internationally collaborative basis may be the only way to reconcile economic growth with ecological sustainability since the utterly unforgiving planetary feedback mechanisms couldn’t care less about our Congressional or Senate-floor polemical rites of political denial, or whether we find it expedient to ignore reality by playing with terms such as “externalities”.)
But in apparently being willing to continue paying the horrendous opportunity costs associated with squandering such unrealized benefits, the question we should also be asking ourselves in a global environment of such rapidly emerging competitors as the BRIC countries constitute, is whether we really have the luxury of continuing to adhere to our hubristic presumptions that merely tinkering within existing systemic constraints is sufficient; especially when any or all of these competitors may be first to recognize the benefits to be gained by relinquishing the conceptual and institutional denials which we seem so wedded to maintaining? If or when that ever occurs, it may also be appropriate to ask how likely it will be that they will be as delinquent in their willingness to take full competitive advantage of these heretofore unrealized benefits as we have been and continue to be? And while different people may be motivated more by either the fear of the competitive risks associated with continuing to ignore these profound opportunity-cost issues or, conversely, by the enormously exciting proactive opportunities for economic growth and social, technological and ecological improvement which open up in a more fully participatory economic system designed to unleash the full productive power of capitalism by finally correcting the consumption/savings and capital productiveness oversights, either motivation is a sufficient basis for a call to immediate action.
But, again, if that action must ultimately come by way of the public leading its’ leaders, if it must come from a busy, distracted-with-survival, information-overloaded, weary, angry and disenfranchised citizenry, will both of those motivations seem too distant and abstract to allow for overcoming the easy siren call of habitual inertia? Perhaps, but in moving these considerations toward a close, it may be most appropriate in the context of such concerns to reiterate the emphasis on the issue of Rights. As justified as the public has a right to be in their simmering anger with the violations of law, ethics and their collective trust which have been rampantly on display in the long lead up to the recent financial and economic crisis, these violations have been embedded in such a penumbra of overlapping financial, accounting, rating, analytic, administrative and regulatory arcana and complexity that this seems to have diffused any focus from that justifiable public outrage, resulting in the absence of the kind of concerted action on the basis of such outrage which has surprised, and repeatedly been observed by commentators. But a public, a citizenry coming to realize that they have long been, and are continuing to be completely unduly denied the Right to more fully participate in the economy, not merely as the obvious owners of their own labor, but also as prospective owners of productive capital assets, that is another matter entirely; that is conceptually and logistically a much simpler and more tangible basis on which to envision a mass movement not timidly pleading for, but demanding, of their leaders, with force of righteous anger and/or sustained civil-disobedience if necessary, remediation; that is much closer to being the economic analog of the social, political and legal denial of Civil Rights and the denial of the political right to vote, and we all know how collectively motivating those denials were once their realization became crystallized in the awareness of the relevant public constituencies being denied their due Rights in these areas. In this case, the public constituency is universal; it is not a race, ethnicity, religion, gender or sexual orientation but, rather, the very nearly entire population currently excluded from meaningful economic participation as owners of the most productive factors in our economic system. That is a denial which might well significantly focus the collective attention, and very well should. So, assuming that it might, how do we get from here to there; how do we facilitate that crystallization?
One dimension of the answer is beyond question: education. This is where the decades of not merely unheralded but often vociferously resisted effort by people like Dr. and Mrs. Kelso, their protégé and colleague, Professor Ashford and his co-author, Rodney Shakespeare, Center for Economic and Social Justice theorist, activist and educator, Norm Kurland and colleague, Michael Greany, is justly to be considered heroic. But education is clearly merely a necessary, but not sufficient condition for getting from here to there.
While we have already briefly touched on just some of the possible constituencies which might have powerful reasons to recognize the relevance and remedial and operational systemic potential of these proposals – including some which may seem like odd bedfellows, whether broadening the idea of unions from being limited to a strictly ‘labor’ orientation to being expanded to embrace the orientation of ownership, to the Military’s concern with national security, to the growing assertiveness and creativity of a range of corporate stakeholders having a broader vision of fiduciary interest, responsibility and opportunity, which also includes sustainability – the real tipping-point crystallization leading to more concerted mass action in demand of the universalization of productive capital asset ownership has yet to kick in. But a recent book by well known analyst and futurist, Don Tapscott, begins to raise some very interesting ways by which modern Internet technologies might be brought to bear in facilitating this incipient tipping point. In his new book, MacroWikinomics: Rebooting Business and the World, Tapscott and co-author, Anthony D. Williams, relate how creative leveraging of the Information Technology Open Source principles of openness, collaboration, sharing, integrity and interdependence have begun to have profound impacts in facilitating and advancing opportunities in a broad range of fields, including education, scientific research, health & medicine, and government. Under the sub-heading, A Challenge to Public Sector Leaders, the following closing passages of Chapter 14 are highly apropos in our context:
“As we step into the future, societies are facing incredible challenges of complexity on a global scale. Sustaining societies and economies in the face of climate change, energy shortages, poverty, demographic shifts, and security threats will test the ingenuity of those who wish to see, do, and participate in the public good. In each of these issue areas governments face a reality in which they are increasingly dependent for authority on a network of powers and counterinfluences of which they are just a part. Whether streamlining government service delivery or resolving complex global issues, governments are either actively seeking – or can no longer resist – broader participation from citizens and a diverse array of other stakeholders. Just as the modern multinational corporation sources ideas, parts, and materials from a vast external network of customers, researchers, and suppliers, governments must hone their capacity to integrate skills and knowledge from multiple participants to meet expectations for a more responsive, resourceful, efficient, and accountable form of governance. It’s a journey that has only just begun.
The wave of digitally enabled ‘E-government” strategies delivered some important benefits. It made government information and services more accessible to citizens while creating administrative and operational efficiencies. But too many of these initiatives simply paved the cow paths – that is, they focused on automating existing processes and moving existing government services online.
This next wave of innovation presents a historic occasion to fundamentally redesign how government operates, how and what the public sector provides, and ultimately, how governments interact and engage with their citizens. Government can and must rise to these challenges. It is truly a time when government either plays an active and positive role in its own transformation, or change will happen to it. The transformation process is at the same time exhilarating and painful, but the price of inaction is a lost opportunity for government to redefine its role in society and help launch a new era of participatory government.”
In any case, these emerging capabilities may prove to be not only viable mechanisms, but invaluable in helping to facilitate the kind of mass public involvement and movement demanding an economy based on binary principles which commentators have so frequently been surprised to observe the more general absence of in response to the recent (and on-going) financial and economic crisis. Whether dramatically expanding the education of economics based on binary principles and institutions in formal academic settings, or through existing business and purely social-networking sites, or completely new venues globally devoted, perhaps, to calls for the kind of progressively more provocative civil disobedience which marked the strategies of the late Mahatma Gandhi and American Civil Rights leaders with unresponsive or blatantly obdurate leadership, or through other yet-to-be-conceived virtual means, this is a campaign which needs to ‘go viral’. ASAP. And though MacroWikinomics references numerous interesting instances of how these technologies are being leveraged, both within and beyond government, to enhance the effectiveness of governance, one allusion which may have particular salience for the kind of mass crystallization cited here as needed may be worth noting explicitly here.
Within the well known World Economic Forum (celebrated for its annual winter confab in Davos, Switzerland), is something called, Global Agenda Councils (see: http://www.weforum.org/community/global-agenda-councils ). The WEF would provide a very great global public service by making the theme of transitioning free-market economic systems to a truly free-market economics founded on binary logic, principles and institutions one of its Agenda Councils. And because of the extremely wide range of secondary, tertiary and broader causal implications for improved social, psychological, ecological and other effects associated with such a transition, then thematically linking this Council to the many others already extant where those implications might be especially significant may well further serve the crystallization needed for mass mobilization emphasized as necessary above. Also very much worth noting in this same context, is an important feature article in the current (Jan-Feb) issue of The Harvard Business Review by Michael Porter and Mark Kramer, entitled: The Big Idea: Creating Shared Value (see: http://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1 ). Though thematically distinct from MacroWikinomics in some ways, these works also share and mutually reinforce each other in important respects. And when these authors state in the executive summary just cited that - “The moment for a new conception of capitalism is now; society’s needs are large and growing, while customers, employees, and a new generation of young people are asking business to step up.” – there may be no better way for business to do so than recognizing and supportively acting on the recognition that leaving the deeply fundamental oversights addressed in this essay unresolved only severely frustrates, perhaps fatally so, the broader social/business synergies that this academic work is in the early stages of very importantly beginning to explore.
If it is the case that serious, pervasive movement toward universalizing citizen ownership of productive assets consistent with these insights is going to require that the constituents lead the legislative policy makers, if it is going to be necessary for the constituents to light a fire under their legislators so as to overcome the decades of dismissal and marginalization which they and/or their academic advisors have displayed toward such proposals, if not angry pitchfork and baseball bat-carrying masses, in ‘storm-the-Bastille’ marches in our streets, what form of activism should be pursued? The previous references to the MacroWikinomics work of Tapscott and Williams, and the Shared Value work of Porter and Kramer hint at some very exciting, but largely still-gestating possibilities going forward. But the conventional political cry of ‘throw the bums out’, while perhaps a necessary component of an activist strategy where necessary, is not initially sufficient because this is generally predicated on the assumption that the problem is merely inaction as opposed to not knowing what action should be taken. In a case where the action orientations and legislative biases of the key political parties are themselves not merely misguided and incomplete, but mutually negating and ultimately perpetuating of the very schism which underlies both the economic problem itself and the respective sense of identity with the incomplete and polarized biases for remedial action by current political participants, the initial movement of constituents leading their leaders may need to take the form of casting a strong and unambiguous pox on both their houses. But, to reiterate, until the general constituency itself, in some unified sense, is freed from the pox of the same misguided sense of identity with incomplete and, ultimately, mutually conflicting remedial actions, and begins to demand of their representatives - not plead, ask, or cajole - but assert and demand their right to participate in the economy not merely as the owners of their own labor in the form of a ‘job’, but also as owners of viable estates of productive capital assets, the problem of an uncrystallized mass political purpose and diffused political will regarding what to demand, the often-heard claims of or appeals to ‘economic democracy’ are little more than wishful thinking or transitory opiating political pabulum. Absent a clear, firm and unwavering assertion of such a demand for this participatory right of our representatives, the third freedom of President Roosevelt’s famous four freedoms – i.e., freedom from want – will forever hang suspended and in jeopardy with every election cycle for a sizable and perhaps relentlessly growing segment of the population. In short, a major part of what needs to become crystallized in the minds of both the mass constituency and its representatives is recognition that the singular mantra of ‘jobs, jobs, jobs’ is an anachronism which should have been left on the ash heap of history even long before the collapse of the State formerly known as the Soviet Union. The fact that it continues to be clung to, the fact that there continues to be such a failure to connect the dots between the singularity of this focus on the one hand and the relentless inexorability of calls for and expansion of the Transfer/Welfare State because living standards would otherwise be simply too transparently seen as going in the wrong direction for far too many in the face of the increasing income inadequacy of that exclusive reliance for distributing wealth on the other hand, may be taken as something of a metric for the extent to which there remains a general failure to recognize that it is these fundamental flaws and oversights which constitute the invisible gravitational force throwing our economic and social trajectory off the intended and desired course.
While recent years have seen some compelling instances of limited mass action – e.g., the numerous international NGO campaigns and sometimes riotous street demonstrations in opposition to the ills of ‘globalization’ - strongly suggests both a growing awareness that something is systemically fundamentally amiss, and a resolve to voice dissatisfaction, these have often been tainted with somewhat of a patina of nihilism and a sense that the participants are much more clear about what they’re opposed to than what they’re in favor of. But if such organizations were made aware and infused with the realization that there truly is something worthy of being in support of, as opposed to merely in opposition to, their fervor might be an invaluable organizing and activist force.
But this also begs the question of where is the activism on this critical ownership issue by many of the long-established NGOs in the U.S.? Where is The Urban League, where is the NAACP, where is the Rainbow Coalition, where are the churches? Have the many such organizations founded here, having both such valuable and important charters and great histories as these examples certainly possess, really been so co-opted by the conventional wisdom, by their relationships with the powers-that-be – perhaps another example of the rigidities to which President Clinton alluded - that their stated obligations to their real constituencies have been so tepidly and anemically relegated to afterthought status that they are, for the practical purposes of forcefully pressing for truly substantive change, fatally moribund if not superficial and superfluous? And where are those having the media platforms to do so much more than simply point out the obvious economic urgency with which we are confronted, including those who are so righteously willing to remind us about the poor with invocations of the rare and courageous commitment to economic justice voiced by Dr. Martin Luther King, Jr. in his later years? If Dr. King’s truly courageous example on this theme is an inspiration so worthy of emulation to them, where are Oprah Winfrey, or Tavis Smiley or others, when it comes to inviting Mrs. Kelso, or Professor Ashford, or Mr. Kurland to join them on their interview programs, or asking them to join special panel discussions airing on C-Span? Is it simply a matter of these profoundly important voices not having a sufficiently elevated PR profile to be regarded as an audience draw? If so, if PR value takes precedence over substance, then perhaps we would be justified, if certainly not in questioning the authenticity of the expressed concern for the underprivileged, then perhaps in questioning the apparently vicarious identification with Dr. King’s very real and very rare courage by simply invoking him; forty/plus years hence, that is not exactly an act remotely commensurate in commitment or courage to his, when such important media venues as these remain so mute by failing to extend such invitations in the face of such an important alternate vision of how to truly resolve poverty; a vision for addressing poverty, not so incidentally, which there is very good reason to suspect that Dr. King himself would have had the insight and courage to not only recognize the importance of, but to vigorously endorse and support, whether or not its chief proponents happened to have media agents or a sufficiently high PR profile. And since some of the viable institutional mechanisms available for expanding and universalizing productive asset ownership can be exercised on a local/regional basis – e.g., see: http://www.cesj.org/homestead/creditvehicles/cha-cic.htm - there may be highly significant opportunities for cooperation with the States, and/or through State Ballot initiative processes. Each of these, or some combination of all of them, may have an important role to play in the kind of more concerted constituent movement which may be necessary for the electorate to lead its’ leaders on this issue going forward. As Tapscott and Williams observe in MacroWikinomics:
“The promise is that digital engagement will support global problem-solving approaches that integrate policy development and implementation into a seamless and flexible practice of continual engagement, improvement, and innovation that can reach across national borders. Depending on the issue, emerging problem-solving networks will draw participants widely from governments, international organizations, businesses and industry associations, think tanks, academic institutions, civil society organizations, such as NGOs, associations, religious groups, and the general public. In doing so, we can better connect ordinary citizens to communities where conversations are happening and help build greater legitimacy for resulting decisions and projects. Indeed, if the first wave of democracy established elected and accountable institutions of governance but with a weak public mandate and an inert citizenry, the second wave should be characterized by strong representation and a new culture of public deliberation built on active citizenship.” (Emphasis added.)
And politically, what may ultimately justify conferring assignment of truly historic importance on the results of the 2010 mid-term elections may have little to do with the immediate interpretations of the punditry class voiced on the basis of the mere topical facts of relative, short term political advantage, or apparent advantage. The real historic importance may be less related to the size of the Republican ‘victory’ – fleeting, if not illusory, as it may prove to be – or the emergence of the Tea Party, per se; the real importance may be in what these results are more deeply symptomatic of, and what gradual but increasing realization in the collective consciousness of the electorate may portend going forward. If correct, the real historic importance of the 2010 election transcends even the interpretation that the political polarization of the electorate has become so finely, contentiously and precariously split that, from one election to another, a perhaps growing but ill-defined body of independents and/or frustrated partisans are willing to unceremoniously throw “the bums” of either party out. And contrary to – or perhaps complementary with - the conventional wisdom that this is because of anger over gridlock and their respective and collective failure to “get things done”, there may be a much more important dimension and nuance to what is happening which is not yet widely recognized because it is still so amorphous. The deeper historic significance is not even captured, as is often claimed, in an implicit imperative that the existing political parties need to “compromise” in the service of “getting things done” but, rather, it may be in the growing realization of an electorate increasingly sensing that something is deeply, fundamentally amiss by virtue of the persistence of these failures; a realization to the effect that you simply cannot get to the destinations of what really needs to get done, economically and socially, through the prescriptions offered by either party; a classic, ‘you can’t get there from here’ scenario and quandary. Though perhaps still only in gestation, what may finally be happening is that the electorate is beginning to get wise, that they are beginning to sense the presence of something like the unidentified specter to which we alluded at the outset and they are beginning to put two and two together on this score; that they are realizing that there is a reason why so often defensively lauded and self-congratulatory “compromises” such as the tax resolution at the end of 2010 seem like (and are) ad hoc, Rube-Goldberg monstrosities that really satisfy no one and constitute no deeper fundamental resolution. In short, the specter haunting us lies in the fact that the real systemic risk resides at a level deeper than specific companies at least somewhat arbitrarily designated as ‘too big to fail’; the real risk lies in leaving the underlying economic oversights addressed in this essay unresolved. And the real challenge for the electorate is not to settle for or tolerate leaving these oversights unchallenged with their legislative representatives.
Maintaining this emphasis on the need for and importance of public participation in demanding these changes of their representatives, there may be no better or more elevated way to conclude this essay than in the terms chosen for the closure of the recently aired PBS documentary on the life of the late Minnesota Senator: Hubert H. Humphrey: The Art of the Possible. This documentary eloquently closes with interview footage of Mr. Humphrey passionately expounding on the action-oriented, proactive terminology of the Preamble to the U.S. Constitution.
“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
Though this preamble is not, absent grants of power and any explicit restriction on persons, imbued with the force of law, per se, what Senator Humphrey sought to emphasize was that, “we the people”, are not only not prescribed from, but are ultimately responsible for continuing to actively honor those verbs: form, establish, insure, provide, promote and secure.
If it is correct that formulating economics on the basis of binary logic represents a conceptual breakthrough of the historic significance which a growing number of people are convinced that it does, if it is similarly correct that doing so will elevate economics much closer to the realm of a real science, then “we the people” have a unique opportunity to fulfill Senator Humphrey’s admonition through a more concerted activism on behalf of this historic transition. We have an opportunity to add some adjectives and adverbs to those verbs by insisting that this breakthrough is translated into forming an even more perfect Union, establishing not merely a much more efficient and productive economy, but also both much greater social Justice , and much more fully insuring domestic tranquility in so doing; not merely continue providing for the common defense, but by significantly diffusing so much of the economic instability, vulnerability and fear that are often driving forces behind the emergence of conflicts necessitating defense, much more clearly define what the economic dimensions of that provision entail and mean; promoting the general Welfare by finally recognizing and legislatively, if not Constitutionally, acting on the realization that doing so cannot truly be accomplished in an institutional setting which systematically reinforces a pervasively exclusionary regime of ownership of the very productive instruments upon which the general economic Welfare of the citizenry so significantly depends, and by doing so, also much more effectively secure the Blessings of Liberty in a manner which may be worth briefly expanding on more explicitly.
Thomas Jefferson famously held in highest esteem the ideal of the citizen farmer. Why? While he may have had multiple reasons, personal and otherwise, his political reasons for this seem to have revolved around the well-founded conviction that the economic competence and autonomy of a citizen farmer freed them to be much more independent in their assessment of social and political issues and, therefore, in exercising their responsibilities as participating citizens; effectively a kind of barometer of the health of a democracy. But a general constituency comprised primarily of wage and/or welfare slaves falls very far from the ideal of that kind of economic competence and autonomy, or reflective independence. With the insights that a.) it is an error to base a free-market economic system on the assumption that we are simply categorically stuck with the consumption/savings schism which Dr. Moulton illuminated the error of so long ago, and therefore systemically completely dependent for our investment needs on the deferred consumption embodied in accumulations of past savings and b.) that in an industrial and post-industrial environment where the independent productiveness of capital is so clearly a reality, and we are, therefore, also not exclusively dependent on ‘jobs, jobs, jobs’ as the only market-based mechanism for the mass distribution of wealth, we begin to see how Jefferson’s ideal of individual economic competence and autonomy, and reflective independence might be realized in the twenty first century and beyond. Being a couple of centuries late coming to these realizations, it may be appropriate to strongly suggest that it is about time.
MARK DOUGLAS REINERS