- Lemuel Boulware, Harvard University (11 June 1949)
Economics is an peculiar art with a semi-mystical language of its own, penetrable only to those initiated into this secret fraternity. Every now and again, especially during a lean season, a select assemblage of this usually anonymous fellowship will make a public appearance. Reading from a list of undecipherable figures and facts, their stony but certain faces are meant to assure us that everything is under control. While the substance of their message is invariably cluttered with the impenetrable verbiage of their craft, the emotional response that it is meant to elicit is as simple as it is unambiguous, 'do not worry, we are at the reins.' A minor tightening of a screw here and buttressing of the wall there will get the economy back on the road to recovery, we are told. The overall integrity of this byzantine machine has been wisely, even brilliantly saved. Trust us, we are the experts.
Very seldom, if ever, do these wizards of finance admit, not to mention, concede the possibility that somewhere along the way their calculations may have gone wrong. Most oftentimes, after the dust subsides they emerge appearing triumphant, as if to say 'the problem would have been so much worse if we weren't there to fix it.' In one fell swoop they manage to elide all the inside trading, predatory lending schemes, and high-stakes gambling that preceded the crisis and, in fact, caused it. Cocky, aloof, and ever immaculate in their custom-tailored suits, they make a final public appearance before returning to the opulent anonymity from which they -- and the crisis -- began.
To place the well-being of an entire society in the sullied hands of these power-brokers (or should we say power-wreckers?) and the political class that plays accomplice to their schemes is crazy.
Yet, while unraveling the specific ways in which this elite group subverts the social order is an important undertaking, more instructive is an examinations of the deficiencies of the economic order that underpins and, in reality, makes such antisocial behavior inevitable. Since we are dealing with the question of words and their meanings it is worth scrutinizing a few words which are indispensable to the economic lexicon, and whose problematic assumptions are seldom discerned.
Preeminent among these words is that of "interest." Amongst economists, "interest" is used to describe the fee paid by a borrower to their creditor for the money or asset borrowed.
Its apparently straightforward usage belies the malevolent assumptions that compose it. Instead of taking an "interest" in the well-being of the borrower, who may very well be in dire straits, the lender's sole "interest" is said to lie in the money that can be made out of the arrangement, i.e., the "interest." The "interest" that the creditor has in the borrower's well-being is thus framed completely in terms of the borrower's ability to cough up the money, not in the actual personage of the borrower or their dependents.
And in terms of economic productivity the lender is not concerned about the way in which this transaction strengthens or weakens business, but merely whether or not the business in which the money is invested will enable them to receive their "interest." The business may ultimately go broke but this is supposed to be of no "interest" to the borrower so long as he or she gets their "interest" in the end -- according to the science of economics, their only "interest."
This same tension is encountered in the oft-heard phrase "rational self-interest," a notion peculiar to economics which purports that by focusing entirely on one's own well-being society will benefit as a whole. By focusing on "profit-maximizing" strategies or the decisions that "benefit" one's self the most, others will supposedly reaps the benefits as well.
However embellished with glitzy graphs and theoretical flourishes, the dogma of "rational self-interest" essentially amounts to the notion that selfishness is good for the world, conspicuously overlooking the truth that most of the world's problems were created because of selfish behavior. A devotee to this confounded logic may counter that if all individuals act according to this axiom then the sum of their interactions would result in a beneficial end. Yet, to expect all people to follow this precept is an entirely unrealistic expectation (and thank God for that).
More tellingly, this theodicy neglects to factor in the huge power differential between the poor and the rich, lending the effect that this difference does not even exist. This erasure is doubly insidious, as it not only denies the existence of poverty but makes the exploitation of this suffering a cardinal value, applauding those who create it. Even if everyone enjoyed the same measure of power and acted according to this less than glorious standard the expectation that some sort of benevolent "equilibrium" would magically be reached seems less than "scientific," to say the least.
As people around the globe continue to extricate themselves from the wreckage of the Great Recession it is incumbent that all people reexamine the theological constructs that underlie the modern economic order. Washington has shown that it is perfectly happy to continue deluding itself with the belief that the cracks in this "fantastic fairyland of well-being" are not there.
Over one-half century ago Lemuel Boulware pioneered the field of human-relations, most notably during his tenure with General Electric. He believed that most people were simply too stupid to understand sound economic practice and, consequently, needed to have it drilled into their heads by saturating the media with business-friendly propaganda and work-place controls. In particular, Boulware was concerned about rising interest in alternative forms of economics, since many Americans were questioning the failed policies that had resulted in the Great Depression, a wound still fresh in the nation's memory.
Oblivious to the faults of the economic order that he cherished as a "fairyland of well-being," Boulware instigated what became a decades-long corporate campaign to control the minds of the American public. Drawing on his salesman sensibilities, he suggested that "there is just no sense in having the slightest hesitancy in taking on the selling of whatever our study teaches us to be the sound, and honest, and good, and richly rewarding economic program that's really the one for all of us here in America." In other words, the business elite were literally going to market their idea of economic orthodoxy to the public in a manner no less relentless than that of the most dogged salesman.
The 2007 meltdown once again awoke the public from the unquestioning stupor into which they had fallen, an ignorance that was assiduously cultivated by corporate largesse over the past decades even while income inequality reached unprecedented levels. We are now at a pivotal point in history akin to that in which Boulware proposed his vision for society, which to him meant a docile and unthinking workforce. Right now principled people can either choose to reject the tortured logic upon which the morally bankrupt economic order is premised or choose again be deceived by the snake-oil salesman pitch of those from Wall Street and Washington.
Examining the inherently destructive ideas that underlie the present economic lexicon is a powerful means of reevaluation that can only encourage constructive engagement with the economic problems we currently face. For if we do not discern the selfish and self-justifying notions that imbue modern economics then these notions can only be perpetuated.
"Gross profit" must understood to be not simply "gross" but grotesque when it is accumulated on the backs of sweatshop workers and the labor of children.
"Negative externalities," or the negative side-effects of economic activities must be understood to be considerations that are eminently important rather than as something "external," and thus implicitly irrelevant to the big picture. The degradation of the environment and increased human conflict due to the production of armaments are but two weighty examples.
The orthodox mantra of "scarcity" which assumes that a perpetual lack of resources drives economic problems is equally hollow. As the United States throws away one-half the food it produces and pursues a deliberate policy of starving countries of aid unless they integrate themselves into Pax Americana, the idea of scarcity seems antiquated if not simply mendacious. Wall Street can bemoan "scarcity" all day long, but when consultants from Goldman Sachs talk about it they are in actuality referring to the wreckage they cause by taking from everybody else. The problem is not "scarcity," it is greed.
Lastly the idea that the Great Recession had to occur at all needs to be questioned. No major famine, natural disaster, or unforeseen disease decimated the nation's productive capacity or the skills of its workers. What did occur was far more prosaic and far more imbecilic.
After toying with other people's money the professional gamblers on Wall Street and Washington encountered imaginary numbers on a screen that told them an imaginary problem had been encountered. Because the imaginary flow of paper, which signified an imaginary value, had not taken the proper imaginary course, they decided that we were now in a crisis. Because of this imaginary crisis, real people were evicted out of real homes, and real people lost real jobs which made real products for what is rightly called the real economy (finally, an economics term that bears a simulacrum to reality).
Thus the imaginary crisis became a real one. Then the government decided to "bail-out" the gamblers, an ironic term seeing as their crimes should have landed them in jail, while the other people got "evicted," a sterile phrase that belies the violence inherent in being torn from one's home.
In short, the crisis was a man-made conflict and, in response, the government's policies were premised on the same fatuous logic that had created the crisis in first place. This man-made crisis was quite literally created and justified with fantastical words that concealed a terrible logic underneath, nothing more.
The language of economics is riddled with contradictions, circumlocutions, and the "fairyland" promises of snake oil salesmen. Independent-thinking economists, policymakers, and civilians must strive towards an economics of equality, social justice, and simple human decency. Solutions need not be guided by a logic that defies it (logic). Before this happens the disembodied principles common to contemporary economic discourse must be subordinated to the reality of the Great Recession, even as millions struggle to keep their heads above water amidst its poisonous flotsam.
It is only by paying attention to the sublimity and terror of language that we can hope to not be fooled again.