The Economist is Wearing no Clothes

a hint toward new ways of doing things

‘We need some kind of new form of government / social organisation’.

Assertions along these lines are increasingly voiced by both public figures and our own day to day acquaintances. Fertile ground, surely, for a publication like World in Transition, proceeding as it does from the view that “we have now entered the most dramatic phase of cultural shift for 500 years.”

A friend of mine in Chicago always used to say:

‘If you always do what you’ve always done, you’ll always get what you’ve always got.’

It means that if you want different results, you have to do different things. And that means that any serious thinking on how to overcome the dysfunctionality that is developing requires a move into the deep and difficult task of revising the principles on which our cultural, political and economic thinking rest. Moreover, that task must be developed outside of established frameworks of thinking, since those will always tend toward variations on ‘what they have always done’ - and we will get variations on ‘what we’ve always got'.

One place that a small start might be made is in looking at the general failure of the economics profession - because if economics were the science it claims to be, the economies of the world would be stable. And, irrespective of capitalist or socialist flavours, they are not. (It is true that prosperity and living standards have increased enormously in recent times - but that perhaps has more to do with technological development than it does with the theory and practice of economics). In light of what the ‘economic scientists’ have been achieving, I propose that perhaps a ‘naive’ view is needed - one that hasn’t got decades of unlearning to do in order to see things clearly. One that hasn’t got its career invested in defending the status quo.

Let’s leave for another day the implications of complexity theory and its by now unequivocal (though mostly ignored) evidence that attempts to predictively control economies through various interventions are inherently futile, and that new ways are needed. Today, let’s start much more simply than that - let’s start with a simple and provable observation which, properly considered, must lead things in new directions. The observation is this:

The principle of competition does not bear equally upon all types of work.

That’s it. And if you stay with me, I’ll demonstrate both the truth of it, and the greater-than-expected implications which flow from it. My line of thinking here starts from a basic assertion that goods and services are entirely different categories. I mean different enough that everything about the way they are perceived, practiced, managed and regulated should be different.

There is no single agreed view on the difference between goods and services. One professional commentator for instance tells us that “A service is nothing but a commodity, to which value addition is done and can be differentiated”.¹ I propose that there are much more useful ways to make the differentiation. Ways that ultimately lead to profoundly different ways of doing things. I propose that commodities are most fundamentally those things which are created by gaining access to natural resources, extracting or harvesting them, and reshaping them into pots and pans, clothing, fuels, telephones, medicines, cameras, food, sports equipment, make-up and so on. Tangible ‘stuff’, in other words. And that, in contrast, services are most essentially ‘human to human’ activity - teaching, legal services, caring, psychology, banking, music, a haircut, maintenance and repair work (which might be done on a piece of equipment, but for a specific human being, or group of human beings).

Defined that way, the principle of competition bears differently upon the two. Or at least it should. Why? Because the more unconstrained competition is in matters of the use of natural resources:

• the more vulnerable, because of market dynamics (and marketing dynamics), the use of raw materials is to being misdirected

• the greater is the amount of unnecessary environmental damage

• the greater is the potential exploitation of human beings

None of those apply for human to human services, which can be produced in unlimited quantity without doing such harms.

There are, no doubt, other ways yet in which goods and services can be defined and differentiated. But the one I have just offered, while not the common one, is not an imposed or theoretical one. It is inherent in the nature of things. And the value of recognising it is precisely that we can see that the two must be treated differently.

Services can and should operate with maximum freedom. But commodities firstly are about directly sustaining life. Secondly they require long-term planning and complex physical processes. And thirdly, they have a very direct impact on the natural world. People need commodities. They are the essence of our physical survival - hence the word ‘commodity’, which has its origin in ‘comfortable’. Production (as well associated distribution and retail activities) must be driven as directly as possible by real need. At present however, corporations decide what to make and then persuade the public that it is what they need. Which seems rather reversed.

To put it another way:

There is a difference between manufacturing FOR needs, and manufacturing needs.

Some will perhaps say that putting this right is too idealistic. Yet surely, if we are not going to tackle the question of having resources applied to real needs, rather than squandered on things that are frivolous (or that, following a present fashion, are pseudo-environmental, but in reality geared to the on-going interests of the corporations) then all the endless talk about sustainability is B.S.

Next question: Who should define what those ‘real needs’ are? That one is easy. The people who have the needs. Otherwise known as ‘the people’. The Greeks once had an idea about them (us) determining their own affairs, and it was a fashionable idea for quite a while. Lately however, the project seems to be losing its way a bit. We must conceptualise new forms for it, and use of shared resources is one of the places we can start: Natural resources in their raw state - meaning before any investment or effort has been applied to their harvesting and reshaping - are rightly the heritage of all humanity. That seems not only a reasonable point of departure, but the only point of departure that makes any sense at all. If we don’t accept that, then all the currently-fashionable talk about ‘a just world’ is also B.S.

We need then, to evolve toward a means by which the population can say ‘please use our shared heritage to make us the commodities that we ask for, not the ones you want to make’. With such input, competition is limited to who meets the needs in the most innovative and cost effective way. (Innovation and reward for effort do not go away - I am not advocating for anything that looks like communism). For services, competition remains unconstrained.

By contrast, the current proposition is that unconstrained competition plus the principle of ‘demand’ ensure alignment with needs. That is clearly a fantasy.

All this of course represents no small aspiration, implying fundamentally different institutions and laws with regard to commodity production compared to those for other kinds of activity (services). Making progress will require us to examine which aspects of the existing system allow - or in fact cause - product innovation to go off on flights of fancy, while real needs are frequently neglected. It will call for far-reaching changes in democratic process, in education (so that people are better fitted to participate actively rather than passively in democracy), and more. Such changes however, are not beyond the boundless capacity for creativity and change which has been the hallmark of humanity for as long as it has existed.

Let’s try crossing the difficult bridge of how such things could be achieved for another day. For now, my focus is the not the ‘how’, but the ‘what’. If we don’t take that ‘what’ seriously, then we must stop pretending to be interested in both social justice and sustainability. And if we do take the ‘what’ seriously, we will, over some timescale, begin to find a ‘how’. Especially when the ‘old ways’ are beginning to disintegrate anyway.

Nonetheless, a few hints ahead of future articles:

1. ‘Determining need’ does not in any way imply the State. The State is, by definition, not the population. Need cannot be determined by anybody but those who have it.

2. Serious suggestions have been made in recent years² that consumers should sit on the boards of big companies. For various reasons I really don't think it is the right solution - but anyway it suggests that there is an emerging recognition of the imperative of getting real input on needs.

3. For those who would like to look ahead a little to the potentials of such thinking, some clues might be found in my previous articles ‘Why Culture Must Lead’ and ‘The Failed Mantra of the French Revolution’.

Finally, let me say that even more than I always welcome comments, I would especially invite feedback on this piece - affirmations, extensions, questions, disagreements, whatever. It’s time to move the public debate beyond the assertion that ‘new ways of doing things are needed’, and into the more difficult realm of dialogue on what those changes might actually look like.

1. Tracey Fieber, Chief Strategy Officer at Acquired Insights Inc.

2. This was proposed by Theresa May, in 2016 while she was British Prime Minister