'Economy' is simply the Greek word for 'housekeeping'. Remembering this is a useful way of getting things in proportion, so that we don't lose sight of the fact that economics is primarily about the decisions we make so as to create a habitat that we can actually live in. We are still haunted by the dogma that the economic world, 'economic realities', economic motivations and so on belong in a completely different frame of reference from the sort of human decisions we usually make and from considerations of how we build a place to live. And to speak about building a place to live, a habitat, reminds us too that we look for an environment that is stable, 'sustainable' in the popular jargon, a home that we can reasonably expect will be an asset for the next generation.
Economics understood in abstraction from all this is not just an academic error: it actually dismantles the walls of the home. Appealing to the market as an independent authority, unconnected with human decisions about 'housekeeping', has meant in many contexts over the last few decades a ruinous legacy for heavily indebted countries, large-scale and costly social disruption even in developed economies; and, most recently, the extraordinary phenomena of a financial trading world in which the marketing of toxic debt became the driver of money-making – until the bluffs were all called at the same time.
If we are not to be caught indefinitely in a trap we have designed for ourselves, we have to ask what an economy would look like if it were genuinely focused on making and sustaining a home – a social environment that offered security for citizens, including those who could not contribute in obvious ways to productive and profit-making business, an environment in which we felt free to forego the tempting fantasies of unlimited growth in exchange for the knowledge that we could hand on to our children and grandchildren a world, a social and material nexus of relations that would go on nourishing proper three-dimensional human beings – people whose family bonds, imaginative lives and capacity for mutual understanding and sympathy were regarded as every bit as important as their material prosperity.
Practically speaking, this means that both at the individual and the national level we have to question what we mean by 'growth'. The ability to produce more and more consumer goods (not to mention financial products) is in itself an entirely mechanical measure of wealth. It sets up the vicious cycle in which it is necessary all the time to create new demand for goods and thus new demands on a limited material environment for energy sources and raw materials. By the hectic inflation of demand it creates personal anxiety and rivalry. By systematically depleting the resources of the planet, it systematically destroys the basis for long-term well-being. In a nutshell, it is investing in the wrong things.
The whole speech given as a keynote address at an economics conference in London is a good read. I must admit that I am somewhat torn on the issue of what kind of economic growth we need. On the one hand I think it is beyond dispute that if the rest of the world grew in the manner that the US economy has grown it would mean the environmental degradation of the planet. On the other hand lots of people are out of work right now including friends of mine. We need some kind of economic growth to put people back to work.
I read lots about small-scale, environmentally friendly, self-sustaining, economic growth and it all sounds very attractive and ethical. I am all for stepping off of the mindless, dispiriting consumer train of endless addictive growth that also despoils the plant. But how a better way gets implemented on a large scale that avoids massive unemployment and dislocation isn't clear to me. On the other (third?) hand, our current way of living is no guarantee that we won't see massive unemployment and dislocation. So maybe it is time to give "another way of living" a try.