An economy (noun) is a social entity’s aggregate activity of producing, distributing, and consuming goods and services. Economics (noun) is the study of economies. The various aspects, attributes, and metrics things associated an economy are sometimes referred to as economics (noun). An economic policy is intended to influence or control the behavior of an economy. All governments have an economic policy. Usually, governmental economic policies put the interests of the nation, and/or special interests within the nation (e.g., its wealthy, or its political leadership) first. All too rarely do they put the welfare of the general populace, or the environment first. These governmental economic policies are often nominally formed around one or more economic schools of thought. Collaboratively, these economic policies and schools of thought shape the economy of a nation. Historically, these economic policies — and, an inordinately large proportion of economic thought — have been in the interest of the wealthy. Now, more than ever, since forever, what is needed is an all-inclusive economy that provides and equitably distributes the requisite goods and services of a society whilst giving utmost consideration to the general welfare, and to the protection of the natural environment. Such an economy would surely employ the best of current economic thinking.
The economies of our hunter-gatherer forebearers were based foremost on survival; were economies that dealt with the economics of life itself. Necessarily, their economic policy was one of finding a way of subsisting. This began to change with the accrual of wealth. Wealth could be accumulated; could be grown. Whether wealth begat greed or greed begat wealth is hard to know. What is known is that one of the earliest means that humans adapted for the growing of wealth was slavery.
For millennia, slavery was a part of economic policy in many parts of the world. When replaced, it was invariably replaced with economic policies that were variations on the theme. In order, slavery was replaced by feudalism, colonialism, and capitalism. From slavery to feudalism, feudalism to colonialism, and colonialism to capitalism there is an underlying continuum of exploiting labor in order to increase wealth. Each an evolution of the previous. Most were sanctioned by government as economic policy, and done so in the interest of the wealthy. The exploitation of labor by the wealthy in quest of greater wealth was the shared commonality of this continuum. Just as modern capitalism was specific the industrial age, each of the continuum’s policies was specific an age or time.
We are now, have been for a good while, well into transitioning from the industrial age to the digital age. A transition that looms every bit as transformative as the one spanning more than two hundred years associated with the industrial age. Now, as then, there is a real question as to what, if anything, history can accord that will help us navigate this that portends to be a humongous transition. History does provide record of some of the mistakes made in transitioning to the industrial age; mistakes that visited horrific consequences on the working class, on society. The prospect of such peril beseeches us: To employ our best thinking in the hope of avoiding some of the worst consequences of that earlier transition. To ask, “What economic policies are best suited this new digital age?”
The modern capitalism of the industrial age, as with its predecessors, was all about exploiting labor. The digital age is much about replacing labor. The industrial age required huge capital investments. The digital age doesn’t. Begging the questions: What economic policies will evolve specific the digital age? What comes after capitalism?
To date, the remnants of capitalism have gone offshore in search of labor to exploit; continued existence. Here in America, as in the United Kingdom before, most wealth has turned to financialism for returns. Whereas capitalism exploited labor, financialism is exploitative of everyone except the wealthy. Whereas capitalism was about production, financialism is about tapping the flow of money. Today, financialism’s tendrils spread far and deep; from retirement plans, personal credit, student loans, rents, mortgages, car loans, and healthcare to corporate buyouts. Just as capitalists before them, today’s financialists ‘own’ members of congress in order to influence our nation’s economic policies. As in no previous time, today, they bought and paid for, ‘own’, supreme court justices. Financialists ‘own’ a lot of state legislatures, and governors. Of late, Congress gives the uber wealthy tax cuts which they invest in Certificates of Deposit (financials) that are based on student and home loans, then claim that the tax cuts created jobs. The influence of wealth on economic policy, politics, and justice abides.
Much as the industrial age and associated modern capitalism came into being with the advent of mechanical power and machines, financialization came into being with the advent of modern computers, the internet — the digital age. So did social networks. These children of the internet play an ever-increasing role in today’s economy. Today, businesses don’t hatch in a garage, they hatch on a social network. Without the digital age, there would not have been an internet. Without the internet, no hedge funds, no Amazon, no social network $Billionaires. Because of the internet, shopping centers that were once capital investments are now economic wastelands – or, if lucky, Amazon warehouses.
Of late we are seeing attempts to tweak the present-day economy using the economic policies/tools of capitalism that may or may not have ever worked in a capitalistic economy. Even if tax cuts once provided an incentive for investments in capital that provided more jobs; it is no longer true. Today, wealthy financialists, in pursuit of greater wealth, use such tax cuts to buy up and then liquidate going businesses for profit. They have no interest in producing anything. They might send the money from a tax cut offshore if the return is right. To date, financialization has: Pushed the prices of housing (homes and rental), stocks, rents, … to levels few can afford. Made purchasing into a financial transaction; one where you make payments forever. Given us Leveraged Buy Outs. Spawned hedge funds and Enron. Given us the 2008 meltdown. Given us $3trillion dollars of student debt. And, much more. Financialization has not improved production; the distribution of goods and services, their equitable distribution; the consideration given to human welfare and the natural environment. Given these portents, financialism may not be the best economic policy for the digital age. Appears it is little more than a variant on the rentier theme; one of wealth extracting as much as possible from the economy of a society.
Another example of using antiquated capitalistic tools to address a current economic problem: Presently, the nation, the world is experiencing significant inflation. In the United States, the Federal Reserve is intent on bringing this inflation to rein by tightening the money supply. Doing so will probably increase unemployment, and bring down wages. If there ever was a time when wage increases caused inflation, it was a long, long time ago (1950s??) It certainly didn’t this time. The policy of tightening the supply of money hurts those who can least afford it. This time, the real causes of the current inflation were the consequences of: Russia’s invasion of Ukraine, globalization, and the aftereffects of the COVID pandemic. The scale of the current inflation is, as always, much a consequence of price gouging, excess profit-taking. Tightening the money supply to corral inflation is antiquated, dumb, draconian, cruel; is so, so, Mississippi Economics out of touch with reality. Is yet another example of economic policy that is an appeasement to the wealthy at the expense of the most vulnerable. This tweaking of, adherence to, capitalism in order to deal with economic problems in digital age portends a miserable transition. Especially so when it appears that capitalism could not have survived capitalism for very much longer. It has done enough harm.
Undergoing a transition of the magnitude of this from the industrial to the digital age would be difficult at any time. At this particular time, we desperately need to: do more to avoid the impending catastrophic effects of Climate Change; address inequality and disparity, healthcare, overpopulation, …; many of which are consequences of capitalism.
Whereas capitalism was premised on consumption, required growth for survival; was exploitative of both natural resources and labor; economies for a digital age facing Global Warming cannot be dependent on growth, consumption, or the exploitation of natural resources and labor.
To date, most previous economies were constructed in a way meant to serve the interests of a few, were reliant on the ability to deceive the people into believing that those interests were accorded by some divine right handed down by the gods when, in fact, they were always constructs doing what they were intended to do — serve the interests of wealth.
We are in a situation where we cannot survive as a species if we continue making the same mistakes; if we dawdle. We haven’t the ‘luxury’ of any economy other one that efficiently and effectively provides and equitably distributes the requisite goods and services whilst giving utmost consideration to the general welfare, and to the protection of the natural environment. It is high time to recognize that an economy is a construct; that wealth and greed are not essential to an economy. High time to begin constructing economies that provide and equitably distribute the requisite goods and services whilst giving utmost consideration to the general welfare, and to the protection of the natural environment.