Crisis, What Crisis?

As hopefully everyone has now noticed, there is an economic crisis going on. Everyone is very worried about this. Plenty of people have already written about how capitalism caused the crisis. I’d just like to point out how little sense the way we’re responding to it makes.

We’re richer than ever before, in technological and resource terms. Certainly in, for example, the UK, we have enough food, enough housing, and enough of pretty much everything to ensure everyone a comfortable existence. So what if there’s a crisis – even if national GDP halves, all it means is that we don’t get so much of the fancy stuff we don’t really need. This is no big deal, surely?

But it is a big deal. And don’t call me Shirley.

To understand why, let’s compare what a rational society would do, and what our society does. A rational society would arrange differently the production and distribution of goods that have different levels of necessity. Really basic things would be guaranteed, whatever happens, whereas luxuries would be allowed to be produced at a more volatile level, in proportion as various contingent factors made doing so appear reasonable.

The result would be that any overall fall in output just produced a reduction in the luxuries available to all citizens, while those things that are in any sense ‘needed’ remain unaffected.

Now let’s consider what our society does. In our society, regardless of how rich we all get, any overall fall in output will 1) affect a section of people and make them severely impoverished, depriving them of their homes and jobs, and 2) affect a much larger section of people with stress and anxiety over the possibility that this might happen to them. If more stuff was the answer to poverty, then there would be no poverty: poverty is a structural inevitability because our economic system produces it at every opportunity.

There, that’s my anti-capitalist rant done. I’d just like to point out a couple of things:

-Firstly, the rational approach I described, arranging things so that important goods are guaranteed and only inessential ones volatile, mirrors the approach a sane individual would typically take to their finances: start by ensuring that the bases are covered, that you’ll have a sufficient income, a secure place to live, insurance in case of accidents, etc. and then take risks and accept uncertainty regarding less important but fun things.

-Secondly, in both cases, the effect of this rational approach is to displace the economy from the centre of society. That is, once the really important things are sorted out, the economy itself becomes less important. Imagine if there was no prospect of foreclosures or unemployment, if nobody anywhere was having to struggle to ‘make ends meet’. A drop in economic output would still be reported, but it wouldn’t be the main news story for months on end. Non-economic issues would displace it from being at the centre of political disputes. There might be a recession and nobody notices, being too busy doing more important things.

5 Responses to “Crisis, What Crisis?”

  1. Duncan Says:

    Nice hook on this post.

  2. Awais Says:

    I totally agree with you.

  3. Lindsay Says:

    Another thing that has occurred to me is that (in reference to the American economy at least) all the eggs are in one basket.

    Our economy is hugely dependent on the transportation industry. We grow our food in a few places, or import it from abroad, and have to ship it everywhere there’s a supermarket. Similarly, almost all of our economic activity necessitates shipping something or other, usually by truck, which is only a workable enterprise for the truckers if fuel is cheap. When fuel is not cheap, these supply chains start getting disrupted.

    Another example of all the eggs being in one basket is the recent craziness in the financial sector: everything was built on debt and property values (and said property was often financed on credit! More debt!), which worked well for generating more and more interest for the creditor classes, but not so much for releasing wealth into the economy as a whole.

    My solution is fairly simple: instead of a single global economy, I would have there be millions and millions of smallish local economies, using not only money but also the goods themselves as currency. It’s become clear to me that the bigger the venue in which economic activity takes place, the smaller the proportion of people who profit by this activity becomes.

  4. Alderson Warm-Fork Says:

    Are there not advantages to larger economies though? Economies of scale, avoiding needless duplication, etc. What about goods, like information, TV shows, etc, that can be transported at very little energy cost? I guess I’m thinking that “the bigger the venue in which economic activity takes place, the smaller the proportion of people who profit” may not be true in all economic systems.

  5. Links for January 28th from 09:50 to 17:45 Says:

    […] Crisis, What Crisis? « Directionless Bones – “As hopefully everyone has now noticed, there is an economic crisis going on. Everyone is very worried about this. Plenty of people have already written about how capitalism caused the crisis. I’d just like to point out how little sense the way we’re responding to it makes.” […]


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