Last week’s panic in commodity markets spread like wildfire. That ‘epic rout‘ of commodities reminded us all of a) the fragility of the global financial system and how close it is to breakdown; b) how little our regulators and politicians have done to manage and stabilise the system since the ‘debtonation’ of 07-09; c) how poorly economists have served both regulators and politicians, and d) how much ordinary citizens in rich and poor countries suffer from this economic dystopia.
We live in an upside-down world, where unregulated capital is good; regulated capital bad. Where
“the love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life”
is considered a very good thing, and morally acceptable, whereas it is, as Keynes wrote,
“a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease…..”
A world in which usury is taken for granted, encouraged even by the authorities. And in which our leaders (moral, political and economic) seldom express distaste for its ugly implications. Rather, they (the politicians, bankers, economists) insist on extracting every ounce of blood/suffering/loss/indignity from the Irish/Greek/Portuguese/Spanish people to meet the usurious demands of European bankers. And very few – apart from noble friends like Mark Weisbrot, in this New York Times piece – protest at the action of e.g. the ECB and EU governments.
Where government intervention is bad; and a lackadaisical, devil-may-care attitude by regulators, central bankers and politicians is good. Where high real rates of interest (as opposed to the very low rates set by central banks) are seen by some as ‘good’; and a regime of low rates of interest across the spectrum is considered bad, as in this argument by Carmen Reinhart in an IMF paper.
A world in which we, the economics profession, governments and politicians watch extreme weather events, with a passivity and resignation that is almost pathological. But, like children, become very animated and engaged by a fairy tale wedding.
We live in a world created above all, by economists, who designed the economic framework for the mess we are in; who encourage us to be passive to, and accepting of, the destructive fury of market forces; and yet who cannot admit to their role in this crisis, will not discuss it; instead blame those same, supposedly abstract, forces….and have no answers for our dazed and confused politicians.
And because I am in a dark mood today, fear that Keynes was right when he wrote that:
‘For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not.
“April was a month of historic climate extremes across much of the United States, including: record breaking precipitation that resulted in historic flooding; recurrent violent weather systems that broke records for tornado and severe weather outbreaks; and wildfire activity that scorched more than twice the area of any April this century.”
No: extreme weather events,
“Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.’
But can they? In time? We may not have one hundred years left, Mr Keynes.