Blog Post #4 Implications of the Malleability and Spontaneity of Economics

As mentioned in the last post, economics is surprisingly malleable and spontaneous. However,
during gilded ages economics tends to get stuck. Since our current political economic system is
based upon inequality, the rich having massive amounts of political influence and the
environment upon which we all depend being sucked dry, change has to come. Interestingly,
economics had not developed a model for a sustainable economy until now. Kate Raworth, a
Cambridge educated economist, came up with a marvelous framework called Doughnut
Economics. The main idea is that humanity should not deplete resources faster than the earth can
regenerate them. Society should exist in the doughnut, where humanity has what it needs to
thrive, not in the doughnut hole, which signifies us not having enough of what we need. We
should also not go past the doughnut’s outer edge, which stands for humankind taking more than
it needs.

This fits within the positive understanding of capitalism that Adam Smith conceptualized when
he wrote his two main treatises, the Theory of Moral Sentiments and the Wealth of Nations.
According to Smith, the highlights of capitalism are not overconsumption and corruption, but
rather bringing inventiveness and entrepreneurial spirit to the effort of feeding, clothing, housing
and educating the world. After all, he has a pro-labor quote on the footstone of his grave in
Canongate Kirkyard, in Edinburgh Scotland (credit Freakonomics Radio’s series on Smith,
which highlights this and other less-understood aspects of his ideas.)

In my first post, I mentioned young people’s understandable sense of despair about the economy
and the natural world. The need for change is so strong that sometimes it manifests itself as a
desire to blow up capitalism. But blowing up capitalism isn’t the way to do it. Consistent
economic experimentation, constant political pressure, and courageous politicians can get us
there.

Economic change doesn’t come easy. In fact, usually only in times of crisis, with outstanding
leadership, does it actually change. FDR began us on the path of governing for the people. In the
‘80s, our leaders abruptly left that path. As discussed in Blog Post #2, Reagan obliterated the
unspoken pact on the political right that the government should help people. But he also did
something else, in a more sinister, under-the-radar way. (The historian Rick Perlstein told me
this.). He was such a natural politician and he so diverged from the Post-WWII American
political orthodoxy that Democrats, terrified of his popularity, became less liberal and
progressive. As a result, his influence shaped our politics for over forty years.

Biden might just have blown up that political dam. Part of what makes him an effective leader is
not only that he brings all his senatorial and vice presidential experience to the table, but he also
recognizes that in order to get Americans to have more faith in democracy again, it is time to go
big or go home and pass massive legislation to rebuild the country. A hugely important aspect of
Biden’s legacy might be clearing the way for Democrats to be progressive again.

Now, armed with the opportunity of many co-occurring crises and a new understanding of how
to govern, the next challenge is framing a widely popular, practical and educated vision for
American capitalism. What young Americans don't understand is that capitalism is too
complicated and nuanced for simplistic explanations about its effectiveness. Saying it doesn’t
work is like saying religion doesn’t work. With that said, it makes sense that young people are
turned off by capitalism. They’ve only experienced it at its worst. The U.S. has been here before.
In the 1920s, 1930s and 1940s, Americans thought capitalism wasn’t going to work long-term,
but then, as Heather Cox Richardson says, FDR shaved off its sharp edges. A century later we’re
having the same conversation.

To fix our economic problems, I’m proposing a new framework for what our system could
become. Let’s redefine and reprioritize it and not turn it into any part of the amorphous
philosophy of socialism. We must leave behind the 2nd Gilded Age by combining government,
civic, business, and grassroots forces and ensuring the economy prioritizes environmental capital
first, then human capital and finally social capital. The idea of abolishing capitalism is a fool’s
errand. Instead, we must use the malleability of economics to mold our economy into a doughnut
that doesn’t leave anybody out.

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