Posts Tagged ‘globalisation’

News From George Soros’ Berlin Conference – Economists Discover Human Beings!

by Lynn Parramore
 
Could economists be leaving behind their mechanistic paradise for the messy, unpredictable human world?

  
Economists are peculiar creatures. Last week a large posse of them descended on Berlin for the third annual conference of the Institute for New Economic Thinking (INET), a think-tank co-founded by investor and philanthropist George Soros in 2009 in the wake of the global financial crisis.

As I roamed through the various sessions and gatherings, pointy-headed folk squinted at me and rattled off facts and figures that gave them the sort of thrill I get from seeing spring flowers in bloom. The field of economics is known for attracting Asperger’s-spectrum wonks better at formulating financial models than the flow of human interaction. But if the Berlin forum is any indication, the field is now fitfully reorienting itself: it wants to understand those fascinating and often irrational beings known as “people.”

Tellingly, the title of the conference was inspired by Milton. Not Milton Friedman, but John Milton: “Paradigm Lost: Rethinking Economics and Politics.” Intriguingly, the brochure opened with a passage from Book XII of Paradise Lost describing Adam and Eve’s expulsion from Eden — the moment when they look back wistfully on their former paradise, but then, teary-eyed, forge ahead, knowing that “the world was all before them.”

Early on in the program, economist Rob Johnson, INET’s executive director, pointed out that the old economic paradigm, so beautiful in its mathematical modeling, was destructively narrow and dogmatic. Its journals were like so many temples — if you didn’t follow the prescribed religion, you were out on your ear. The new economics would have to be broad, interdisciplinary and open to disagreement. And it would no longer be having a conversation solely with itself. Johnson announced his conviction that the new economics must be firmly grounded in the humanities.

Wow. At a time when undergraduates increasingly choose business majors and obtaining an English or history degree is widely considered a cultural affront, that was exciting news. Such a refocusing could certainly help economists become better able to describe reality, and just as importantly, consider the needs of human beings in their prescriptions.

Back in the late ’90s, when I was studying for a doctorate in English at NYU, my friend at the Wharton School of Business used to tell me about his lessons in rational behavior, perfect information and the pure motivation of self-interest. When I noted that a single exposure to Shakespeare or a page out of Freud’s oeuvre could relieve him of such fantasies, he got defensive and complained that all we did in the English department was sit around and read fiction. “Well,” I shot back, “That’s what you seem to be doing. Only you don’t call it that.”

I worried a lot that he and his colleagues, ignorant of human psychology and alarmingly shallow in their understanding of traditional Western values and ethics, would leave business school and go on to run large companies. 

I had reason to fear: They went on to help blow up the global economy.

In the humanities, we had our postmodern excesses, but they didn’t tend to wreak havoc on the word’s most vulnerable people. But free-market economics, in the words of INET panelist Paul Davidson, was a “weapon of math destruction.”

In his address to the conference, George Soros made it clear that economic obtuseness had helped produce the euro crisis, and that the failure was more profound then generally realized. Economics, he noted, had tried hard to imitate Newtonian physics and set itself on establishing timeless laws for reality. But, Soros insisted, it’s really a social science, and it was high time practitioners stopped pretending otherwise. (I would urge scientists to realize the same thing, but that’s a matter for another piece.) The famous financier emphasized that economic activity is based on the behavior of human beings who act on imperfect information and are driven by a wide variety of motives. They think. They are, by turns, rational, silly and euphoric. They have a will of their own. And they are definitely not inanimate objects whose movements can be neatly summed up in an equation.

If you consider economics this way, then you have to realize that markets, as Soros pointed out, are just as likely to produce horrifically damaging bubbles as they are to create equilibrium. So you’d better damn well understand that when you’re thinking about regulation and political frameworks like the eurozone. If the Europeans can’t wake up to this, Soros warned, they can pretty much kiss Europe goodbye.

I was struck by the idea that just as religious elites had once created an elaborate system based on “Divine Will” to justify their power and oppression, the obstinate free-market economists had created their own supernatural entities, referred to as “The Market” and “The Invisible Hand” in order to pretend that their policies were inevitable and natural. Was a Reformation now in the works?

Throughout the week, I heard economists (certainly not all, but many) talking as if human beings mattered. Chinese economist Jiahua Pan mentioned the need for an ethical foundation and ecological principles. James K. Galbraith discussed the human costs of inequality. Arjun Jayadev of the University of Massachusetts, Boston, talked about why people needed debt forgiveness. Speeches centered as often on what humans think and feel as they did on what financial models could predict. There were lectures on neuroscience and social values.

Some will say this is all just talk. You don’t get an insurrectionary adrenaline rush at an economic conference the way you do at an Occupy Wall Street protest. But such talk, particularly among those who teach tomorrow’s leaders and act as policy advisers at high levels of government, is critical to any chance of changing the paradigm. Do we want a society that is people-driven, rather than profit-driven? Then Johnson is right: economics must reacquaint itself with the humanities. Do we want an economy that serves society rather than a society that serves the economy? Then we have to keep insisting on the social nature of economics.

There’s reason to think that the effort coming from INET will be long-term and influential. During the week, the announcement came of a $25 million gift from William Janeway, senior advisor at Warburg Pincus and INET governing board member, and his wife, Weslie Janeway. Along with that donation, the governing board of INET has launched a $75 million fundraising campaign, and Soros, in response, has pledged $50 million. Conference attendees also learned of a joint project (INET@Oxford) with the Martin School at Oxford University focused on visionary interdisciplinary approaches to economics, equity and curriculum reform.

After half a century of free-market orthodoxy, the field of economics is not going to produce a new paradigm overnight. As a woman and an English major, I can be forgiven for hoping that more women and more English majors will be joining the conversation. The need for diversity is strong, and the call for a vigorous examination of values urgent. But there’s a whiff of change in the air, and you could feel its electricity in Berlin. The economists were beginning the painful and exciting process of leaving the old fantasies behind.

And the world was all before them.

Lynn Parramore is an AlterNet contributing editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of ‘Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.’ Follow her on Twitter @LynnParramore.

The Precariat – The new dangerous class

by Guy Standing

For the first time in history, the mainstream left has no progressive agenda. It has forgotten a basic principle. Every progressive political movement has been built on the anger, needs and aspirations of the emerging major class. Today that class is the precariat.

So far, the precariat in Europe has been mostly engaged in EuroMayDay parades and loosely organised protests. But this is changing rapidly, as events in Spain and Greece are showing, following on the precariat-led uprisings in the middle-east. Remember that welfare states were built only when the working class mobilised through collective action to demand the relevant policies and institutions. The precariat is busy defining its demands.

The precariat has emerged from the liberalisation that underpinned globalisation. Politicians should beware. It is a new dangerous class, not yet what Karl Marx would have described as a class-for-itself, but a class-in-the-making, internally divided into angry and bitter factions.

Read more ...

A Year of Revolution

by Thomas McDermott

In a year of revolution, causes have been easier to identify than consequences.

In 1989, following the end of the Cold War, the American political scientist Francis Fukuyama wrote in The End of History? of the “unabashed victory of economic and political liberalism”, marking “the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government”. In the decades since Fukuyama’s landmark essay, the very concept of revolution – at least in the context of the rich, Western world – had itself come to be seen as an almost anachronistic idea. That is, until this year. In 2011, revolution has returned to the center of global geo-political discourse.

Read more ...

Super terrorism after Osama bin Laden

by Marko Beljac 

From the end of the cold war to the death of Osama bin Laden the prospect of acts of super or mass casualty terrorism, by means of weapons of mass destruction, has been one of the most salient global security issues.

The death of the founding emir of al Qaeda serves as a useful reference point to review just how significant this prospect really was. Much could be said in any such analysis, but surely a discussion of the terrorists own ideology and grand strategy would figure highly.

The interesting thing here is that the existing literature on the topic is dominated by works coming from the arms control and non-proliferation community. Unsurprisingly this literature focuses on the analytical strength of non-proliferation studies, namely nuclear and biological security. What it does not focus on is the terrorists themselves.

Read more ...

The Arab Spring, One Year On

by Christine Lagarde

Rejecting the Past, Defining the Future

Let me start with the context. As we all know, almost one year ago, everything changed for the people of the Middle East. The region embarked upon a historic transformation. But at the time, few realized where this journey would lead. When Mohamed Bouazizi, the Tunisian street vendor, set himself on fire last year, who could have predicted that his tragic death would herald a whole new Middle East?

Who would have foreseen that this act of desperation against a violation of human dignity would ignite a flame that would eventually illuminate the entire region, toppling governments and leading to mass awakening of social consciousness?

This much is clear: The Arab Spring embodies the hopes, the dreams and aspirations of a people yearning for a better way of life. Yearning for greater freedom, for greater dignity, and for a more widespread and fairer distribution of economic opportunities and resources. Basic human yearnings.

Read more ...

Connect now

Subscribe

Subscribe to LAWCRIMEPOLITICS.COM

Email address:

Search

Progressing the Social Democratic Agenda