Emily Huddart Kennedy
University of Alberta, Canada
Published online Sep 23, 2010
Emily Huddart Kennedy
Department of Rural Economy,University of Alberta,515 General Services Building,Edmonton, AB T6G 2H1 Canada (email: email@example.com)
The struggle for the soul of economics is picking up pace.
–Boyle & Simms, 2009
Consider a world where the gap between rich and poor is slight, where increasing numbers of people chose to “downshift” (work less and spend less), and where the environment is no longer threatened by demands for escalating economic growth. Welcome to the world of the new economics. The economy as we know it, with its intrinsically flawed system of values and priorities, is wreaking havoc on social capital, ecological services, and human well being.
David Boyle & Andrew Simms wrote The New Economics: A Bigger Picture in the midst of the 2008 financial crisis. It has the same spirit of excitement over the demise of growth economics (in the wake of the meltdown) of left-leaning critics the world over. For example, the authors write, “The American model of economics has failed as finally and spectacularly as the Soviet model did in 1989.” It is likely that few people would now agree that the American model of economics failed for the last time in 2008. Nonetheless, it would seem that had governments around the world adopted principles central to the new economics as the foundation for their fiscal and social policy, the crisis could have been averted.
This readable, concise, and informative book presents (for this reader), the most comprehensive account of the “new economics” written to date. In the words of the authors, the new economics is:
[E]verything that follows from the central discovery that money and wealth are not the same, that money is a means to an end…[T]he new economics subsumes the old idea of an economic science into broader ideas of the way the world works. It resumes its proper place as a subset of biology or psychology in the way it explains the planet and the way people behave. It becomes the study of how human beings, and the places they live, can reach their full potential—using the far broader assets that they have at their disposal, which are not always reducible to money.
The “new” economics is contrasted, of course, with current economics. The criticisms of modern-day economics are probably not new to those likely to buy this book: economics ignores the planet, gross domestic product does not measures “true” wealth, economics falsely assumes perfect information and rational individuals, it encourages consumption for its own sake, and it promotes and relies on debt and indenture. But perhaps most damning of all, our modern economics is without a moral compass.
The authors include an interesting discussion of morality in this book. As many are no doubt aware, the impetus for the initial establishment of the field of economics was to address moral questions. However, as the authors write, we now have:
[A]n economic system that is partially blind, has no moral compass, and is destructive of the environmental conditions on which civilization depends. It is an economics that assumes there is no morality save for supply and demand. Economics may have begun as a branch of moral philosophy, but it ignores the moral aspects of humanity, and other human aspects, as inconvenient for its theories.
One objective of the new economics is to acknowledge the interdisciplinary potential between economics, the natural sciences, and other human sciences. Indeed, “[b]y putting economics back into its proper psychological and biological context, the new economics tries to return to [economics’] moral roots.” As a sociologist, I was somewhat surprised and disappointed that the authors do not address the potential for collaboration between the new economics and sociology. The sociological perspective could provide the new economics with better understanding of long-term, large-scale socio-cultural behaviors, in particular by drawing on analyses of power relationships and imbalances. While the book certainly offers a number of interesting and technically sound solutions, the implementation of such programs is bound to meet with resistance from those who currently profit from the existing system, as well as those who expect to profit from the system in the future. The authors acknowledge some of the barriers to system change, but a sociological lens could prove quite useful nonetheless.
Boyle & Simms are extremely detailed in noting some of the changes necessary. In their words, we:
[R]equire a range of different institutional changes, including new models of financing, prices that genuinely reflect the impact of human and environmental costs, and a new kind of ownership structure that no longer overpays investors. These…need to be joined by a new global network of regulations and institutions to replace the creaking network we now have.
The solutions offered are nested within a series of easy-to-read chapters, each of which poses an “imponderable” question (i.e., Why Does Britain Import the Same Number of Waffles it Exports?). In answering the question, the authors critique certain ludicrous features of the current economic regime and conclude with “new economics solutions,” often including examples of instances where the solution has been used. In this respect, this book offers a refreshing change from the myriad books that critique capitalist economics without proffering any alternatives.
For example, in the chapter “Why are Cuban Mechanics the Best in the World?” the authors explore issues like planned obsolescence, skewed pricing (such that it is often more expensive to fix things than to replace them), and energy and resource waste. As in each chapter, the authors present several new economics solutions. In this case, the authors pose four interrelated policies to address the current failing: reward people for recycling and reusing, invest in recycling intermediaries, create new repair infrastructure, and evaluate new projects by their impact on money flows. The appendices also offer a series of short- to long-term strategies for transforming the current economic system and a number of strategies from the New Economics Foundation are briefly defined. The appendices are a highly useful resource for policy makers and others who would like to play a role in bringing new economics policies to light.
The authors see hope in our current circumstances, which they view as three interrelated crises: the ecological crisis, the human crisis, and the spiritual crisis. These broader issues are made manifest in three immediate crises: in credit, climate, and energy. Where there is hope is that the crisis represents, “paradoxically, an opportunity. Its sheer seriousness compels some response.” However, as acknowledged earlier, even the massive bailout of financial institutions was not enough of an inducement to stimulate large-scale reform to our current institutions. While it seems that was the authors’ hope at the time of writing, they also recognize that the transition to the new economics will be more effective as a slow evolution. To change the current system, they argue, the “new economics [must] provide an alternative to the system that works better and is more attractive for people and planet.” By clearly stating what some of these alternatives could be, the authors play a valuable role in advancing this transition.
Emily Kennedy is a PhD candidate in the Department of Rural Economy at the University of Alberta. She has a background in environmental sociology. Her doctoral work examines household mechanisms to reducing material consumption and the role of neighborhood context in shaping daily environmental practices.