The great English economist Alfred Marshall called economics the study of mankind in the ordinary business of life. That said, economics should be about organising ourselves, our communities and our societies to function in a way that we all lead fulfilled, meaningful lives expressed through the concept of utility ie life satisfaction. But somehow economics is now all about money and consumption. Ross Gittins believes it went pear shaped when we decided it was too hard to measure utility unless we focussed it on helping societies maximise their production and consumption of goods and services.
The focus on money is so pervasive in our society that F.S Michaels describes it as the ‘economic monoculture’ in ‘Monoculture – How One Story is Changing Everything’ (2011). In his words
Because of the rise of the economic story, six areas of your world are changing – or have already changed – in subtle and not-so-subtle ways. How you think about your work, your relationships with others and the natural world, your community, your physical and spiritual health, your education, and your creativity are being shaped by economic values and assumptions.
So what’s happening to society as this economic monoculture changes not just our minds but our lives? Well, its reducing society down to a marketplace, its increasing the income gap and its turning us into narcissists. The narcissist epidemic is noticeable not just in those piling into mental health clinics but also evident in the rise of the memoir and personal blogs, and self-proclaimed titles like director, scriptwriter and designer says Antonia Case in the article ‘Invest in your masterpiece – yourself’ in a great new magazine titled ‘The New Philosopher.’ This is Australia and New Zealand’s first philosophy magazine for the general public with Case’s article in Issue 5 titled ‘Self.’.
Alain de Botton and Clive Hamilton both acknowledge that the hijacking of economics in this way has reduced society down to ‘a marketplace.’ That is, where our consumption of goods and services expressed through the brands we choose are what define us, as well as the career we have. If you don’t have a career and hence no money to spend on consuming goods and services, to the vast majority of people you do not exist in our society. But it shouldn’t have to be this way.
Thomas Picketty’s recent book ‘Capital in the Twenty-first Century’ (2014) is “one of the watershed books in economic thinking” according to Branko Milanovic (former senior economist at the World Bank). Picketty’s extensive research covering thirty countries has found that surging inequality may be endemic to capitalism:
- during periods of modest economic growth, such as the one that many advanced economies have experienced in recent decades, income tends to shift from labour to capital
- rising income inequality is largely a corporate phenomenon whereby major companies are giving their top executives outlandish pay packages and the opportunity to earn dividends, capital gains, interest payments, profits from private businesses and rents which is why inequality is rising so fast.
Judith Sloan also thinks the rising incidence of highly educated dual-income families at one end and of single-parent families at the other is also contributing to the wealth gap.
Capital breeds capital
Picketty calls the tendency for inequality to rise during periods when the rate of return on capital is higher than the economy’s rate of growth “the central contradiction of capitalism.” The law is simple. When the rate of return on capital – the annual income it generates divided by its market value – is higher than the economy’s growth rate, capital income will tend to rise faster than wages and salaries, which rarely grow faster than GDP.
So when is enough, enough?
With more people now finding themselves out of paid work post GFC they are wondering how much ‘capital’ does one need. And am I prepared to accept the costs of achieving that?
“I take the view that I’ve made my contribution to society particularly as no one seems to want to employ me now. Problem is I have to try and convince my wife that downshifting is a good thing.” (former work colleague)
“Since I was made redundant I’ve worked out that what really makes me happy and satisfied is having the house clean, cooking and eating a tasty meal and then sitting down with a glass of wine to watch a good film. Life doesn’t get much better than that for me.” (friend)
“No one ever rings me back or gives me feedback on my job application. All I get is silence. It’s as if I don’t exist. How can I get a job if I don’t know what’s wrong with me.”
“I’m sick of applying for jobs and being interviewed only to eventually find out that there is no job – market or company conditions have changed so the job has vapourised.” (friend)
The good news is that
It is individuals living quiet lives who mobilise their inner resources to break with the social order. It is individuals living hidden lives who stand their ground and act. It is individuals living unseen lives who give birth to change, who risk retribution, who nurture independence (F.S Michaels, 2011).
What will you do to break with the social order? One thing my husband and I have done is to both work part time while our children are young. We’ve had our ups and downs, and faced quite a lot of prejudice but we believe we are doing the right thing in the long term.