789 Billion Cubic Dollars Of Panic
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It’s here, and for better or worse, the American “Economic Stimulus Package” will soon be gushing out from Washington, barrelling down gutters, and spilling over the dry, parched, and broken lawns of suburbia. 789 Billion imperial gallons of Change, metric tonnes of Hope, cubic dollars of panic. One great and final shot before the economic meteor shatters the American Way.
Like a legion of Dr. Strangelove’s – huddled around monitors in bunkers of ivory, glass, and internet – Economists have emerged and formed up ranks to debate the outcome be it hit, miss, or spare. But economics is a young pursuit, its myths and hero’s not much older than America itself, both siblings of an age of social upheaval and economic revolution. Economic theory, like the only world we know, is still a malleable, unfinished science. The sad and miserable fact of economic thought being simply…that nobody really knows, and the depth of head scratching really depends on which team of economic thought one plays for.
In late 18th century Europe (“The Age of Enlightenment”, there apparently not being one since), Economics wasn’t something one “studied”, it was something one “did”. Adam Smith, a confirmed bachelor who lived with his mother, but forever known as the “Father” of Economics, published the ponderous “An Inquiry into the Nature and Causes of the Wealth of Nations” in 1776, a year pregnant with the course of history… and not that long ago. Smith rocked the world by stating the obvious; that men will always act out of self interest, and especially so where their money is concerned. He went on to conclude that this force was powerful enough to provide an equilibrium to the marketplace, the individual competing forces of self interest alone enough to bring communal financial stability. Fight like a dog, cover your ass, and enjoy the ride. But this was an era of historic social upheaval and the emergence of the individual, and its triumph over state. The French Revolution, The American Revolution, The Industrial Revolution. The theory and understanding of man and his place amongst others was coalescing into a new world spirit. And it is in this context that Smith wrote, and must be understood.
Smith’s economics supported the precepts of the nascent American Democracy, which could not exist without a religious belief in the natural right of free men, markets, and will. Thus Smith, a man with imaginary friends and who muttered happily to himself, is the starting point of all conversation this side of sedition. The market as competition, where everybody gets what they deserve. The “Wealth of Nations”, the gospel of grimly spoken magic spells. Like Abraham, Smith spawned wandering tribes of babbling economists, all of whom date the cosmos from the scripture of their own, common book. Smith begat “lazia faire”, which begat Karl Marx, which begat John Maynard Keynes, which begat Milton Friedman, which begat 789 billion reasons for birth control.
And so it came to pass that the multi faceted socioeconomic development of our Western Culture morphed a curious new discipline – the “Political Economist”. It was the first Political Economists who led the essential task of arguing strenuously that markets should be free of state meddling… as a matter of state policy. This new breed of economic parvenu soon came to dominate the field, drawing together the loose ends of Politics and Social Structure, and adding weight to the emerging arguments of “survival of the fittest”. The cult of Economic Personality had begun.
Karl Marx, synonym for evil, pre eminent Political Economist, and the man who coined his own alter synonym – “Capitalism”, released his Opus Dei “Communist Manifesto” in 1848, with yet again, another infamous synonym. With rigid labels now firmly in place, Marx was able to argue that while the “theory” of free markets was all well and good, it did not take into account the simple observation that people were more than theoretical data, and if anyone cared to look out the window (the great Jewish German Communist lived in Soho, London, England) they would see that the actual people themselves were poor, unhappy, and in chains to the theories of free markets.
Marx lived at a time when classic “labour” – the individual mans toil in exchange for life itself – was being rapidly displaced by technology and big business. Capitalists were increasing their share of the wealth while displacing everybody else form the opportunity. Jobs were being wiped out by advancing technological wonders, factories were closing and high paying work was being shipped off shore in a hunt for cheaper labour, unemployment was skyrocketing, and demand for goods was collapsing. Unsold goods no one could buy piled up in overflowing warehouses, ports sat idle and the economic wheels ground to a halt. With more and more people having less and less to spend, profits were evaporating and while the rich Industrialists continued to bonus themselves, the whole social structure was unravelling, dividing into the few very rich, and the many who were not. Marx called this “Economic Depression” (another quotable term), and it was a necessary and unavoidable stop in a system of boom and bust cycles that would forever enslave mankind. As if.
Of course, Marx was crucified for such dim thinking and pessimism, painted Red, and banished to the other team. There he sat, a grim faced, bearded, black and white photo, the masthead of the Evil Empire, finally getting his comeuppance in 1980 at the hands of Uber capitalist, American Ronald Reagan. Love him or hate him, Carl Marx forever enshrined the belief that whatever happened, it was the people behind the theories that count (and vote with their pens, wallets, and guns). Marx died in 1883, too early to experience the thrill of victory in 1914, as Europe’s Industrial giants sought to maximize their self interest at the expense of millions of their workers, blasted, broken and maimed, buried deep beneath the shattered fields of Europe.
The catastrophe that was the First Great War destroyed the arrogant monarchical families of Europe, and offered proof that survival of the fittest was indeed a bloody sport, the staggering new weapons of utopian industry felling worker and Czar alike. Adam Smith grew from the urgency of the Industrial Revolution, and Marx from the necessity to keep economic study apace with an increasingly global world. In its turn, the War to end all Wars gave birth to the greatest and most lasting prophet of economics, a man whose name is not absent from any polite cocktail discussion geared to impress, John Maynard Keynes.
Keynes, who as literally born at Cambridge, was the British Economic representative at the Versailles Treaty table. He quickly became disillusioned with a process that did nothing more than ignore the facts strewn in wrecked human life all around it, saddled Germany with a crushing debt impossible to repay, and generally continued the same old, same old. Like any good prophet worth his salt, Keynes predicted the collapse of Germany, the Great Depression, and the Second World War as a direct result of the lunacy of Versailles. He walked out of the conference in disgust, and into history.
Essentially, Keynes argued that every aspect of economic life – that is, pretty much everything – is tightly interconnected, each a butterfly that once stepped on, sends a ripple through everything else. Economics is but one part of a complex whole, where each piece rests upon the other, mutually supporting and entwining each in such a way as to make our world nothing more than the elegant sum of its rusting parts. Keynes believed that governments had an obligation to monitor and tweak the many bits and pieces to ensure the best accommodation for the most of society. He also believed that people acted differently in their struggle in the system, depending on where they sat in the economic strata. While the prevailing attitude amongst social economists had been to let nature run its course and allow it to find its own equilibrium, Keynes believed that nature was too slow. “In the long run…” said Keynes, in what may be the greatest economic understatement ever made, “…we are all dead”.
Fulfilling one last prophecy, Keynes died in 1946 and unlike Marx or Smith, he got to see firsthand, through two world wars and a Great Depression, the proof he would rather not have had. He also lived at a time of expanding globalization, communication, planes, trains, and automobiles. Keynes published prolifically, his ideas travelling the earth at the speed of technology. While the world’s first computer was being kitted out, Keynes and 730 of his colleagues were meeting in Bretton Woods New Hampshire, determined to build a new world financial architecture based on his theories. The world we know today, its finance, trade, and international economic superstructure, all were established in those three weeks in the summer of 1944. The goal was to provide a truly global economic system, one in which all nations and peoples were empowered through careful monetary and trade policies, and all tied to the wonders of freedom and Democracy. In this way, war, conflict, and mutually assured economic destruction could be forever banished. A brilliant system for a brilliant new age. Might have worked too, if the assembled brain trust had bothered to cut the two thirds of the earth who still loved their Karl Marx in on the action. Any colour you want, as long as it’s not red.
And so was born a new breed of economist, the Economic Patriot, the Darth Vader of the solar system. Following Keynes there came a movement dominated by Americans who had survived the war intact, and were riding the only horse in the stable with more than three legs – America emerging as a powerhouse of conspicuous consumption and cold hard cash. Known as “The American Way”, economic patriotism based on the freewheeling surge of American success came to dominate Western thinking. The Bretton Woods model had been constructed around that “Citty on a hill”, and it was greasing the wheels for US hegemony. All charts pointed up, all systems were go. Buying stuff became the heart of the American dream, the American dream being the purpose of life itself. Far from uniting the earth in peace and harmony, coupling economics to nationalism only served to slit the earth into competing parts. Marx’s people threw up a wall, Mao turned off the lights.
The battle for supremacy between the competing science’s of economics lowered the discourse to nothing more than vindictive and supposition. Gossip and slander. Unlike real science, where observation, trial, error, and criticism all work to improve the facts, economics has for a generation been nothing more than a debating society peopled by folks who put their political ideology first. As the battle between good and evil got down and dirty in the latter half of the 20th century, the Western team moved their game plan to the political right in an effort to cripple and overwhelm the Marxian horde. The storm troopers of the effort came to be known as “The Chicago School” of economics, named after the University of Chicago lecture halls where the infamous economic giant Milton Friedman ruled the roost.
Friedman figured that if free markets were making all his neighbours rich, freer markets would make them richer. Adam Smith redux. Keynes became a socialist, and his followers anti American. The disciples of the Chicago School fanned out across the world, making common policy of harvesting the earth and shipping it’s wonders to America – and what’s good for America, would be good for the world. Ronald Reagan rebranded the effort as “trickle down” economics, where loading up the rich would cause the bucket to spill over with pennies for the poor. In a sudden flurry of economic and military combinations, the Chicago School toppled Marx and his people, and dumped good old American capitalism into China’s special trading zones.
Friedman argued for a laissez-faire economy, where governments stayed out of the kitchen, the fires of economic growth stoked constantly by the simple printing of more money. And so it came to pass that Keynes was moved to the nosebleed seats, Marx into history, and the average American was given birth right to more and more, faster and faster, always and forever. An entire generation, the largest demographic cohort in history – the Baby Boomers – know no other way. Of course, as we all know and can attest to now, that kinda sorta didn’t work to good. Smith was wrong. Marx was wrong. Keynes was wrong. Friedman was wrong.
And so we, the generation left to clean up the mess, are left with nothing more than wrongness with which to right the ship. Nothing but 789 Billion imperial gallons of Change, metric tonnes of Hope, cubic dollars of panic. One great and final shot before the economic meteor shatters the American Way.
Who Knows? Nobody.
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