Our current economic crisis is not only a crisis of the economy. It is also a crisis of economics. The free-market fundamentalism of the closing decades of the 20th century today has been thoroughly discredited – or at least, should have been – by financial collapse, swelling inequality, global imbalances, mass unemployment, and environmental degradation.
The public is hungry for an economics that is tuned into the realities of the 21st century. Yet the talking heads of the media conglomerates continue to preach old-time economic orthodoxy, blaming our economic woes on regulation, taxes, foreigners, or a few rogue bad apples in the Wall Street barrel. To the public, economists seem unhinged from reality and oblivious to the human consequences of economic malfunction.
When people see relatives, friends and neighbors losing their jobs or homes – or when it happens to them – they know something is deeply wrong about the economy. As they watch the richest “one percent” fiddle while the economy burns, and grow ever richer, their dismay turns to anger. As they see the government operate hand-in-glove with financial and corporate elites to crush the livelihoods and hopes of working people, the stale liberal-versus-conservative debate about the relative merits of the state and market seems beside the point.
The desire for an economics that makes sense of our economy is especially intense among young people. When they embark on introductory economics courses in high schools, community colleges, four-year colleges and universities, students have not yet been indoctrinated, or simply turned off, by orthodox economic doctrines. They are eager to understand the world in which they will live and work. But in the classroom they are regaled with fairytales about perfect competition, efficiency, rational expectations, free trade, and economic growth. Young people want and deserve something more.
A new initiative is seeking to increase the share of voice of reality-based, ethically grounded economics in public discourse and the classroom. It’s called Econ4: economics for people, the planet, and the future.
Econ4’s mission statement sets out four necessary conditions for a healthy economy:
- A level playing field: A child’s life chances should not depend on accidents of birth such as race, gender, or parental income. Access to food, health care, education, and a clean and safe environment are basic human rights. These are not privileges that ought to be allocated on the basis of political power, nor are they commodities that ought to be allocated on the basis of purchasing power.
- Resilience: A healthy economy can withstand unanticipated shocks. It can bounce without breaking. We can build resilience into our economy by embracing the principles of dispersion, decentralization, and diversity. Rather than relentlessly chasing the illusion of maximum “efficiency” at any single point in time, we should aim to minimize our economic vulnerability over time.
- True-cost pricing: The prices that guide economic decisions, whether in markets or in government policymaking, should incorporate a full accounting of costs and benefits. When pollution goes uncounted, the result is an implicit subsidy for activities that harm people and the planet. When family care for children goes uncounted, the result is an implicit tax on services that benefit us all. True-cost pricing does not mean that everything – including freedom, community, and human life – can or ought to be measured in dollars and cents. But it does mean that these and other non-market values should not be ignored and effectively priced at zero.
- Real democracy: An economy that works for people, the planet, and the future requires transparency, accountability, and participation. Economic institutions – whether in the private sector, non-profit sector, or public sector – will serve the public good only if they are insulated from the short-term greed of political and economic elites. This insulation can be secured only by the democratic distribution of power, founded democratic institutions, active citizenship, and a democratic distribution of wealth.
Econ4 aims to produce animated economics videos for viral dissemination and classroom use; launch a network for innovative economics teaching; end intellectual monoculture in the training of new economists; and upload ethics into the economics profession. Its basic premise is simple: to build an economy that works for people, the planet, and the future, we must rebuild economics itself.
This post is adapted from the mission statement of Econ4: Economics for People, the Planet, and the Future, of which Boyce is a founding member.