Finance. Climate. Pandemic. Inflation. Housing. Geopolitics. We are nearly two decades into what has been termed a global “perma-crisis”. Antonio Gramsci, the Italian communist imprisoned by Mussolini, famously said that “the crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear”.
If it was the 2008 global financial crisis that shattered any illusions of uninterrupted progress, we are still witnessing all manner of “morbid symptoms”: from Brexit to Trump to the rise of the far right and the apparent accommodation of revanchist Russia. Three ambitious new books take a look at what ails the political economy of liberal democracy, and how we can chart a course to a better future.
Abundance
Informed observers lament the biggest lacuna in Irish public policy not as a lack of ideas or lack of money, but lack of delivery. What is striking in reading Abundance, by Ezra Klein and Derek Thompson, is that, far from being of parochial Irish concern, an inability to build the housing and infrastructure people need afflicts the world’s largest economy too.
Abundance is a book written by those on the American left, for those on the American left. For an Irish readership, however, the commonalities in the challenges we face – and some of their causes – can provide insight for those across the political spectrum.
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If “Abundance” is the sunlit uplands, “scarcity” is the present reality: “an abundance of consumer goods distracted us from a scarcity of homes and energy and infrastructure and scientific breakthroughs”.
A good part of the blame for this state of affairs, according to Klein and Thompson, lies with progressives who completely ceded the supply-side agenda to the disciples of Reagan and Thatcher. Their efforts may have focused on well-meaning regulations to protect the environment and biodiversity, to weed out corruption or to improve worker safety, but at the cost of making it more difficult to build. This is an argument that will – and is meant to – challenge the sensitivities of many readers.
[ Ireland is not the only resource-rich nation that cannot figure out housingOpens in new window ]
An Irish example would be the introduction of policies to increase demand for housing – such as Help to Buy or other tax incentives – alongside a planning regime that constrains supply. Inevitably, this means we don’t build enough homes, prices are unaffordable, and we have record homelessness. Perversely, the laudable aim of increasing building standards has effectively outlawed construction of the very sort of two-up, two down Victorian red-bricks that go for a song in urban areas.
The point is that individual regulations may have merit, but their combined weight can lead to scarcity and high prices. If the regulatory pendulum has swung too far in one direction, some form of correction may be necessary. The challenge will be to calibrate this shift to stimulate building while avoiding a detrimental free-for-all. For example, one phenomenon the book doesn’t address is the role financial deregulation, and the consequent commodification of housing, has played in the and the current affordability crisis.
Abundance is a fundamentally optimistic book. It revels in the possibilities of breakthrough technologies to build a better future, and the central role government can and must play in making sure we get there. Again, in an Irish housing context, this could mean state-backed factories to mainstream modular construction. The technology already exists. There is sufficient funding for productive investment. But is there the political will?
However Abundance does not purport to be a coherent agenda for change. For this reason, it may leave readers unsatisfied. It’s all very well to identify the problem, and brave to pinpoint the role your own political coalition played in causing it, but beyond calling for new ways of thinking it does little to help navigate the trade-offs inherent in deregulating. Bureaucratic environmental proceduralism may not be the answer, but how exactly do you weigh protecting endangered species against building much-needed homes?
The Care Economy
Ecological economist Tim Jackson takes a simple maxim – that health is better than wealth – and considers the possibility that this could be made the overarching organising principle of our economy as an alternative to the current growth obsession.
Ironically, according to the author, by prioritising growth over health we end up damaging both in the long run. The continual pursuit of more is bad for our bodies, and ultimately for our societies. It results in more chronic ailments and greater susceptibility to infectious disease.
Jackson observes that economic growth is important in the early stages of economic development, when it is positively correlated with health outcomes. Although this effect lessens as economies become richer, and can even turn negative, the pursuit of growth remains culturally and institutionally hard-wired. This results in structural impediments to a care-focused economy.
For example, the production of widgets can be made more efficient through technological advance, but it is far more challenging to achieve productivity gains of similar magnitude in the provision of care, where “value depends intrinsically on the input of human time and attention”. This means that economic incentives cause widgets to crowd out care, and “care can only survive in the market by suppressing wages”. So, in the language of Abundance, we have lots of consumer goods but a shortage of what really matters.
[ We can’t build our way out of the capacity issues in the health serviceOpens in new window ]
This is not the result of an immutable or invisible hand of the market but of conscious social and political decisions. Some societies decide to override the logic of the market by, for example, making universal healthcare free at the point of need. According to Jackson, we live in a “careless economy” because those who have power have structured the economy in such a way as reinforces that power through financial gain, and “because policy fails to keep up with cultural values”.
The Care Economy concludes with a dozen aspirations, from securing the right to universal healthcare to eliminating gender inequalities, to redefining economics and retraining economists. But this book is less about a specific policy agenda and more about the need for the profound cultural shift required to make such a policy agenda not only possible but inevitable. If people could just see what was important, the policy solutions would be obvious.
Written in a deeply personal, philosophical and at times even literary tone, The Care Economy takes us on an intellectual journey through the history of medicine and the economics of capitalism, interspersed with the author’s own interactions with the health system. This has the virtue of making the material accessible and humane, but at the occasional cost of brevity and clarity.
The Measure of Progress
If The Care Economy flags the need to “redefine economics”, then The Measure of Progress, by Diane Coyle, dissects one way it could be done: by changing the economic statistics we collect. This might seem like a dry or esoteric area of focus but, as the author points out, it is profoundly important, deeply value-laden and often taken for granted.
As the title suggests, Coyle looks at how statistics help economists answer key questions, such as, “Are things getting better or worse? For whom? And what does ‘better’ even mean?” The maxim underpinning this book is that “we measure what we value and we value what we measure”.
GDP may be a peculiarly inappropriate measure of progress for Ireland, but the author would go much further and say that it is essentially defunct everywhere. The System of National Accounts, of which GDP is a core metric, was developed in the 1940s to assess the performance of a wartime economy where physical capital was the binding constraint.
In the intervening decades, the structure of our economies has changed fundamentally, as services have displaced manufacturing and, latterly, digital services have become pervasive. Upwards of four-fifths of our economies are now classified by statisticians as “hard to measure”, with inferences and workarounds employed to get at what can’t be directly measured. Of course, GDP never measured unpaid work, including the provision of care. It is now nature rather than physical capital that has becoming the binding constraint.
These developments have given rise to “yawning gaps in our basic statistics”, so that they have become a “distorting lens, or even a set of blinkers”. This means economists and policymakers are less and less focused on what’s really important to people.
The author is likely correct to say that “articulating a new political economy, if it is indeed starting to emerge, will require a different framework of economic statistics”. It is this framework that Coyle attempts to set out in the latter part of the book. The first pillar, comprehensive wealth, is based on the intuition that it is changes in economywide wealth, properly measured, that are the best indicator of welfare. But, instead of considering only physical and financial capital, comprehensive wealth would also factor in natural, human, social and intellectual capital.
[ What is the best basis for measuring our economy against others?Opens in new window ]
The second pillar would be a time-based accounting framework where the use of all the hours in a day is aggregated across the economy, yielding more meaningful measures of efficiency (in production) and wellbeing (in consumption and leisure).
This innovative framework would allow us to better assess how efficiently and sustainably resources are being used to produce and consume activities and products of value.
Measuring Progress is, unfortunately, not the most accessible of its genre. The challenges it identifies and the solutions it proposes are highly technical. But it is no less important for that. It should be widely read by anyone involved in economic policymaking or research.
One unifying theme of these three new books is that they force us to confront potential contradictions in established modes of thinking, to weigh up trade-offs that we didn’t know – or were afraid to admit – existed. Each in its own way makes a valuable contribution to the new ways of thinking struggling to be born.
The challenge for those who care about progressive social, economic and ecological reform is precisely to “articulate a new political economy” that both works for and wins the support of the people rather than entrenched elites. We need to do better.
