This was initially meant as a response to the point that came up in comments to my previous post – but then I thought it would be worth giving the topic a more prominent airing, as it relates to many opinions that I have voiced here in the past, and will probably be voicing in the future. In his comment, a friend of mine referred to an interview with Ken Moelis in Financial Times. There is one particular place in the beginning of interview where Moelis says “I don’t believe the economy is fixable, just like the weather. We don’t send anybody out to fix the weather. We put on a raincoat.”
We live in times where our needs have come to include such things as italian sports cars, luxury condos with a sea view and adjacent golf course, paintings by modernist masters and a three piece suite on hire purchase in a range of fucking fabrics. By the same token, our economy has grown incredibly complex and is covering not only the exchange but also the production and provision of goods and services, allocation of capital and other resources, and is dictating the operation of areas like education and culture. The weather metaphor is certainly useful in depicting the level of complexity of our current economical establishment – as there is a huge number of different forces and influences shaping both our meteorological and economic environments.
However, I think it is important not to lose track of the fact that economy, at its’ core, is a system of reciprocity: we do stuff for other people and they do other things for us. Economy is meant to facilitate that kind of a reciprocal exchange, to provide with an infrastructure and proper incentives. This infrastructure and incentives are not a given – they are designed, reproduced, legitimised and maintained the way they are only because we have collectively, either implicitly or explicitly, agreed so. This is a fundamental difference between economy and the weather (where it rains or shines quite independently of what we mutually agree) – and meaning that not only we can, but also that we should change them, once the system currently in use fails to serve the broader objectives of the society, rather than just “look for the raincoat”.
There is of course a wide array of opinions what precisely should those “broader objectives” be and what exactly constitutes a fair reciprocal exchange – and this is all fine. However, it is important not to confuse means for ends and start thinking, that economy is something transcendent, that there exists an ideal, pure form of it (which usually tends to mean “free market” in its unfettered best). There quite simply is no such thing – market is a human invention and not a discovery. Of course, some systems of reciprocal exchange work better than others and of course, we can’t agree on anything that comes into our collective mind and simply wish it to working. There are rules in economy that are almost as stringent as laws of physics but, unlike in physics, the reality that laws of economics deal with is 100% man made. As far as we do realise this it is very hard to justify the point of view that as we do happen to have a certain kind of an economic system it should follow that we simply have to accept the outcomes the way we have to accept the rain or cold.