There is a lot that's fundamentally wrong with the current brand of capitalist
economic theory, the "neoclassical" synthesis that currently reigns in the
American economics profession. But I think this analogy is a little too
simplistic and somewhat unfair to mainstream economists, some of whom are
better at grasping material reality than this parable suggests.
Nicholas Stern, to take one example, is a respected capitalist economist --
former chief economist with the World Bank -- who evidently takes the bath-tub
filling up very seriously.
Witness his new report on the subect.
I haven't read US economist William Nordhaus on the subject of global climate
change, but the headlines in the news media indicate that in the 1990s
Nordhaus, too, studied the issue of anthropogenic climate change and published
urgent warnings about the need to take action on the problem.
These days, if you read scan the news articles in FORTUNE, FINANCIAL TIMES
and the ECONOMIST, and even sometimes in the Wall Street Journal, you'll find
evidence that even some corporate business economists are highly concerned
about CO2 emissions and AGW. If only for the risks that AGW poses to the
insurance industry, for starters.
The economist in this fable who's playing Tetris on the computer while the
bathtub fills therefore therefore MAY be a fair model for all too many
mainstream economists, especially in the Western fossil fuels industries. But
he doesn't represent the whole economics profession.
It is fair, I think, to conclude that even most of those business and
governmental economists who are able to understand the threat of AGW are still
committed to a completely unsustainable model of exponential economic growth
being able to continue on this planet forever. And this despite what the Club
of Rome stated in its 1971 "Limits to Growth" report.
But there are some urgent reasons besides escapism or professional neglect
why capitalist economists almost invariably favor perpetual growth and almost
invariably ignore warnings by ecologists and other physical scientists about
such growth being logically impossible.
Back in the pages of "The Wealth of Nations," writing in the 1770s, Adam
Smith included that free market capitalism is only favorable to human welfare
when society is in a "progressive" state -- that is, when total economic output
is growing pretty rapidly. When growth stalls or a market economy actually
begins to contract, Adam Smith reasoned, average business profits will fall to
a very low level, because too much capital investment will be chasing too few
business opportunities.
Because of the structure of the capitalist labor market, Smith also believed,
an economy in the "stationary state" or in recession will have a relatively low
demand for labor compared to the available supply, and because of the way
supply and demand work in the job market, this will result in wages being
driven down by employers until most working people are living in "misery," or
severe poverty.
Most mainstream economists, with some brave or foolish exceptions,
fundamentally accept Adam Smith's formulation of the issue. Ergo: virtually
all of them are intent on the economy perpetuating growth at all costs -- to
forestall steeply plummeting profit levels and rock-bottom wages.
The "steady-state" or no-growth economist Dr. Herman Daly, in his books on
creating a steady-state economy, also has pointed out that most capitalist
societies, and most socialist societies that have so far existed as well, have
generally relied on economic growth to quell social conflict, as a substitute
for a fairer distribution of wealth and income.
So long as the economic pie keeps growing, Daly reasons, the poor and other
discontented groups can be placated with promises that "a rising tide lifts all
boats," and this without the government having to take any money from the upper
classes so as to keep the lower classes happy.
But if growth stops, then poverty alleviation becomes a zero-sum game, and
the poorest people can become richer only if someone else gives something up.
Which is a sure-fire recipe for bitter social conflict.
It's almost certainly these considerations, and not simply professional
neglect, that has so many capitalist economists simply ignoring the upstairs
bath-tub overflowing while they play with the Tetris game.
Because in the analogy, the Tetris game isn't really just a game. So long as
the competitive and individualist rules of captialism continue unchanged, the
"game" is deadly serious. Serious enough to make most economists afraid of
even thinking about shutting it down -- even if a new Deluge lies around the
corner.
Michael Tobis <[EMAIL PROTECTED]> wrote:
Imagine that you are an economist who enjoys playing Tetris on your computer,
so while your bathtub is filling you decide to play a round in the living room
upstairs.
The round of Tetris is going fabulously well. You are in the zone. You are
placing piece after piece where it goes; you have long since passed your all
time high score; you are having a whale of a time. Your bathtub is meanwhile
filling up.
A tiny corner of your mind suggests that you ought to get up and check your
bathtub. Fortunately, you are an economist. The tiny corner of your mind that
is concerned with the structural integrity of your house and not the joy of
Tetris is sufficient to reason as follows.
Probably the tub is not full yet, so the utility to me to keep playing this
next piece exceeds the utility of running downstairs to turn off the water.
Maybe the tub is already flooding. Well, then, that is too bad, but the
additional flood cost of playing this next piece will be small compared to the
total flood cost, while the pleasure I am getting from this game going so well
would be terminated.
Perhaps the tub is right at the point of starting a flood; a "tipping point".
Well in that case you suppose you would have to run right downstairs and turn
it off, but what are the odds of that? Certainly there is no way to prove this
highly unlikely circumstance to you, especially given that you are upstairs
playing Tetris and paying very little attention.
And why should you pay attention? After all, you have just proven that the
matter does not deserve much attention for the duration of placing this next
Tetris block. Perhaps you will revisit this problem later when you are placing
another block.
So you keep playing, secure in the knowledge that you have maximized utility.
mt
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