The Evils of Economic Man
WAY, OEORGE P. BROCK
The Dismal Science THE EVILS OF ECONOMIC MAN BY GEORGE P. BROCK WAY Nineteen ninety bids fair to go in the books as the year of ironies. Everywhere economists are being asked the way out...
...The modern world (it will be our successors who name it) can do the same...
...We're just beginning to find out how many of us are homeless...
...Economic Man will not be easy to displace...
...EvenKeynes, after painting an unappealing portrait of him, wrote, "For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair...
...Adam Smith thought Economic Man's selfishness would be automatically curbed by competing selfishness, while Karl Marx thought it would be inexorably curbed by dialectical materialism (not his phrase), which is another way of saying class selfishness...
...He is an essential organizing idea of contemporary economics, just as mass and energy are organizing ideas of physics...
...There are 15 nations whose citizens have alonger life expectancy than we do in this country...
...Not that long ago it was widely believed that if either unemployment or inflation stayed long above 5 per cent, there would be condign punishment of the politicians in power...
...Now that the Cold War is melting away, it is possible to see that these ironies have a similar, if not a common, source...
...Regardless of what a society considers good, there is, at least in theory, some point above which an individual's income can provide more ofthat good than a person has civilized use for...
...So Keynes would be justified in putting the end of the tunnel at least another hundred years down the road...
...See "How Our Sun May Rise Again," NL, July 12-26,1982...
...Until we make fundamental reforms, especially in income distribution, we can expect a series of crises and minicrises...
...Prices are soaring...
...The solution (so everyone says) is to cut down on regulation and become more like us...
...Our banking system is in disarray...
...No selfrespecting woman would want to be mistaken for him, but it is on the basis of his absolutely greedy behavior that economists deduce the laws they solemnly tell us about...
...We have finally acknowledged that the Head Start program enormously improves the effectiveness of our schools, but we provide it for merely a small number of our children...
...Everywhere economists are being asked the way out of the present Slough of Despond—and everywhere economists are sure only of the way in...
...Our atomic plants are in disrepair...
...The inflation rate is only a fraction of ours, but it is rising...
...By "we" I mean not only the countries mentioned above but also the rest of the world —all of us...
...The East Germans will again become important people in the world on condition they realize they're less equal than their Western cousins...
...Unemployment is rising...
...The West Germans will get all that eastern land (except for Sudetenland and the Prussian part of Poland) on condition they clean it up and modernize it and re-educate its citizens...
...so wages must be further restrained or employment reduced or "rationalized," thus increasing polarization and narrowing the market for industry's products—a phenomenon Professor Robert Averitt calls "TheParadoxof Cost Reduction...
...We can for convenience call it the idea of Economic Man, who is selfishness incarnate and perhaps the one creature, real or imaginary, who can safely be referred to as "he...
...The Pharaonic World, the Roman World, the Medieval World, the Mandarin World, all stagnated for centuries...
...Such a situation cannot correct itself...
...Our troubles (so everyone says) are caused by our deficits, which (so everyone says) are caused by our lack of saving...
...The amount of money that flows into speculative markets—preeminently the securities markets—is increased...
...If "avarice and usury and precaution" are to be desanctified, we must create gods to put before them...
...workers consequently have fewer job opportunities...
...Repairing them will cost upwards of $200 billion...
...Japanese invest in American real estate, like Radio City, because it is so much more profitable than Tokyo real estate...
...The Soviet Union and its former satellites are in trouble...
...ranks low in literacy and lower in comprehension of mathematics and science...
...so prices in these markets escalate...
...Although it will be none of my business, I expect it will be a lot farther away than that...
...Store shelves are empty...
...More than 31 million have no health protection...
...Investment banks are being bankrupted by their own greed...
...But we are in trouble, too...
...Despite the best efforts of the Bank of Japan, the yen is erratic against the dollar...
...Contemporary economics holds that any curbing of Economic Man is inefficient...
...The solution (so everyone says) is to become like Japan...
...Speculation in real estate has made home ownership impossible for all except the very rich...
...The position of Japanese women is at a level we reached a century ago...
...If the rich are frustrated in their attempts to consume their incomes, they turn to speculation...
...The secure and happy life of the Japanese worker has always been a fable propagated by the American business press...
...The part of it that was created to encourage home ownership and personal saving has been destroyed by doctrinaire "deregulation," and it is now estimated that it will cost over $500 billion to clean up the mess and pay off the depositors...
...Economic polarization has malign consequences across the distribution scale...
...The slow deterioration of a society can go on for a very long time...
...Conversely, there is some point below which an individual's income provides little or none of the good...
...the rich consequently have fewer opportunities for investment...
...And it will do the same as long as we continue to worship Economic Man...
...Among the industrialized nations of the world, theU.S...
...But Japan is in trouble, too...
...Meanwhile, we seem to be unable to find a few billion to try to pay for the damage that we caused directly in Panama and indirectly in Nicaragua...
...Both industry and agriculture are failing...
...The solution (so everyone says) is to become like us...
...Whatever, with each crisis unemployment and inflation will inch upward...
...Until we learn how to displace him, we face a long, slow, erratic decline...
...Planned profit is in conflict with wages...
...Commercial banks are choking on nonperforming real estate and foreign loans...
...Now 5 per cent for either rate is a cause for unabashed selfcongratulation...
...Then there are the two Germanies, whose situation is nicely described in Cynthia Propper Seton's A Fine Romance(oneoî my favorite novels, which I'm rereading for the fifth time): "Proust discovered that all our desires are fulfilled on condition that they do not bring the happiness we expected from them...
...Avarice and usury and precaution must be our gods for a little longer stül...
...Perhaps a trillion dollars has been lost in its stock market so far this year...
...some must be closed down as dangerous...
...For only they can lead us out of the tunnel of economic necessity into the daylight...
...and in general Japanese investors are finding fewer and fewer opportunities at home...
...Escalating security prices force corporations of the producing economy to increase their "normal" or planned profit in order to attract the capital necessary simply to continue in business...
...Sixty of Keynes' hundred years have gone by, butheimposedtwoconditions we have not met: no important wars (we have fought three: World War II, Korea, and Vietnam) and no important increase in population (ours has doubled, and the world's has multiplied two and a half times...
...The poor are unable to buy the products that industry could produce...
...The Japanese standard of living has never equaled ours and is only coming closer as ours falters...
...for foul is useful and fair is not...
...Six million Americans are unemployed, another million are too discouraged to seek work, and 23 million are working only part time...
...The next one may come about as a result of Third World debt, or consumer debt, or trouble in the insurance business, or another market crash, or junk bonds, or (ironically) the end of the arms race, or something quite unforeseen...
...Our highway system, most of it more than 30 years old, is also crumbling and will cost hundreds of billions to restore...
...Crime and corruption are rampant...
...On the contrary, the amplitude of the difference between the rich and the poor tends to increase, and the numbers of the rich and the poor tend to increase, too...
...industry consequently has fewer opportunities for further expansion...
Vol. 73 • July 1990 • No. 9
