Remember the bigger picture

ROGER STEARE questions the meaning of economics and highlights what really matters in life.

I’m not an economist, at least not in the conventional sense. My problem with neo-classical economics is that that it isn’t a science, it isn’t even a “dismal science” as Thomas Carlyle described it. It’s a religion based on a number of beliefs about the nature of humanity, several of which are simply false. The first is that human beings always act out of rational self-interest. The problem here is that, yes, human beings sometimes act out of rational self-interest and sometimes they don’t. Human beings also act out of emotional self-interest, rational altruism and emotional altruism.

In fact the scientific disciplines of neuroscience and evolutionary anthropology clearly demonstrate that the human species is fundamentally an empathic species where individuals will sacrifice their own interests for the good of the community. If this wasn’t true, then we as individual human beings just wouldn’t exist. We only exist because our parents, other family members, friends, teachers, neighbours and strangers love and care for us – and we love them back. This truth is the basis not only of life, but also of ethics, sustainability and of true economics.

Another problem I have with economics is that it is hung up on the value of money. In neo-classical economics and therefore also in conventional business wisdom, anything of value only has value because it can be expressed in monetary terms. Whilst I would agree that some things can and must be described in cash terms, the most important things we value can’t be described in monetary terms.

Can love, fairness and wisdom, for example, be ascribed value? Well, in my view, they cannot because money itself only derives its value from these fundamental moral values. In a previous column I have already talked about “money simply being a promise we trust”.

Money has no intrinsic value if the human beings who issue these promises break them and can no longer be trusted. The examples of Iceland and Greece are plain to see. But what concerns me now is that every global currency now seems to be based on promises that can’t be kept because both governments and banks have created so many promises in the system we call “credit”. In a recent broadcast on Bloomberg, the Peruvian economist Hernando de Soto estimated that US$700 trillion of credit in the system is worthless as it simply has no debtor name or asset as security. This sum of “money” is 1,000 times larger than the US government banking bail-out in 2008-9. It is also about 10 years of global GDP. Oh dear.

So as a philosopher, my economic forecast is that not only is our banking system unsustainable in its current form, but our financial and economic system is unsustainable, unless we rethink what really has value in this world. No it’s not gold. Gold is useful in jewellery but not in economics. What has real value is what keeps us alive. These are land, water, food, energy, minerals, shelter, community, education, healthcare, security, justice and culture. But ultimately what keeps us alive is not how much each of us has of these things as individuals, but how much of these things we share with each other. Love is the lender of last resort.

Roger Steare is a Corporate Philosopher and Professor of Organisational Ethics at Cass Business School, London. He can be contacted at: roger.steare@ethicability.org You can try his integrity test at www.ethicability.org

Back to Regulars contents
Back to Magazine contents