Economics Unmasked : Review

Jun 23, 2011 Comments Off on Economics Unmasked : Review by

Economics Unmasked :
Philip B. Smith & Manfred Max-Neef

Economics Unmasked leans more towards conspiracy than cock-up as it compellingly spells out the disastrous effects of the ‘free’ market on individuals, communities and the planet. The text often reads as though the whole crumbling edifice of mainstream economics is a ‘designed-for-purpose’ mechanism for progressively syphoning off wealth from the poor to the rich and reinforcing the control of the elites while turning a blind eye to the devastating societal and planetary damage they carelessly bequeath to our children.

This mindset may irritate readers who are as yet unsure as to which of these undoubted effects are pre-planned and which incidental. And that would be a shame, because the book is very well worth reading.

The two authors, a physicist and an economist, met at a Sustainable Development conference in 1996 and formed a close friendship that lasted until Smith’s death in 2005. The book is a tangible and fitting memorial to what was clearly a great relationship. At times it is a little haphazard, as if they had better things to do with their time than to harmonise their writing, but it restates clearly what has now become an open secret outside of the vested interests of the status quo – that the systems underlying mainstream economics are broken – underpinned by a false science, dependent on the impossibility of everlasting growth and inextricably linked with the basest human values.

Much of the language of the book is passionate and emotive but there are some arresting passages.

At the beginning of Chapter 8, the authors write: “The Food and Agriculture Organisation [of the UN] [informs us] that hunger is affecting 1 billion people and that $30 billion annually would suffice to save those lives. [In 2008 and 2009] the six central banks poured [billions] into the financial markets to save private banks….. until by September 2009 it had reached an estimated $17 trillion…. Where was that money? For decades we have been told there are not enough resources to overcome poverty, yet there are more than enough resources to satisfy the wants of speculators. $17 trillion could generate 566 years of a world without hunger. [Our] dehumanized economy [is] accustomed to the fact that there is never enough for those who have nothing, but there is always enough for those that have everything.”

In the chapters on globalization, the authors present an excellent historical perspective on the antisocial values that accompany international ‘development’. They clearly contrast the benefit to the developed country of ‘free trade’ with the need for the developing country to protect its own ability to produce with trade barriers and tarriffs, and set this in a historical context. They describe clearly the way that the Bretton Woods Institutions (World Bank, IMF, World Trade Organisation) systematically undermine these countries ability to protect themselves, and highlight the 1984-like ‘doublespeak’ that allows neo-colonialism to be labelled as free trade.

Businesses ‘trawl the world looking for the most exploitable forms of labor’, ‘producing unemployment in [their] place of origin and underemployment in the place where work is outsourced’. As a result ‘there are more slaves now than there were before the abolition of slavery, at least 2/3 of these being chidren’.

In Chapter 10 the authors anticipate some of the characteristics needed for a more humane form of economics and show the fundamental limitations of GNP as a yardstick of progress, but these are rather generic; some more specific examples or frameworks for the future would have been good.

To the authors it is no coincidence that the new ‘Qualitative Progress Indicators’ such as the ISEW (Index of Sustainable Economic Welfare) peak in many countries around 1970 – just at the time when the WTO and IMF were getting their teeth into the ‘restructuring’ of delinquent national economies, and after the 25 year ‘honeymoon’ for social reformers that began post-war with Beveridge, fuelled by a new optimism and concern for the common good.

Finally, in Chapter 13 the authors address how a more humane paradigm might come to be? They quote Paul Hawken whose Natural Capital Institute in California has catalogued 300,000 civil society organisations worldwide: ” a global humanitarian movement arising from the bottom up….. Many outside the movement critique it as powerless, but the assessment does not stop its growth….. this is the largest social movement in human history. No one knows its scope and how it functions is more mysterious than what meets the eye.” There is no specific reference to the Internet here in facilitating the self-organising that is taking place, or of the P2P movement, but if the authors are right in their leaning towards conspiracy rather than cock-up, the elites may well have a beady eye on all that.

The book as a whole is more wide ranging than this short review can reflect: there are notable sections on the rise and fall of Keynesianism (partly described above); the sham of economics presenting itself as a science to gain false authority and its very unscientific tendency to continue to promote failed theories; the role of the academic institutions in promulgating this false science; and the negative impact of globalization on the developed countries themselves – notably the dramatically increasing gulf between rich and poor in the USA.

The authors try to be positive and are clearly positive individuals. They do not predict whether change might come through enormous massive organic grassroots development or via dramatic systemic collapse. Their parting advice (somewhat confusingly for the authors of a book on the subject) is for activists to remain invisible for as long as possible; and to ‘make an effort to try to discover what is beyond what you see’.

Like much of the coverage of current convergent crises, this book is stronger on analysis and description of the probems than on the solutions; but this is perhaps to be expected. Escaping our enforced dependency on the very dysfunctional systems we want to replace is not going to be easy.

Graham Barnes

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About the author

Graham Barnes is a Currency Innovation Strategist. He is a Director of Feasta and co-organiser of the Feasta Currency Group. He holds a PhD in Computer Science and worked at a senior level in IT and online marketing in a previous life. His current projects include the design and delivery of currencies to be sponsored by a local authority; by a social entrepreneur to complement and enhance a well established sustainability methodology; and by a restaurant chain.

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