Time for a little more “stumbling towards.”
(see blog subtitle)
As we saw last week, in Krugman’s world you start by assuming that the market basically works and then you deal with exceptions — “market failures” or “negative externalities.
What if we stopped bowing down to the Market Gods? What if we stopped saying the sun revolves around the earth except on Mondays, Tuesdays, Wednesdays…?
What if we asked instead, is this jumbled mess of a system we call our economy working for us? If we think it isn’t, what values do we think it should support that it currently isn’t? A strong middle class? Justice? The survival of the human race and our responsibilities as stewards of the earth? In short, rather than starting from the market, we start from our values.
Put it another way. Right now we say, we want a strong middle class and the best way to do it is using “free markets” — except in agriculture and transportation and housing and computers and health and finance and so on. What if we start by saying, we want to have a strong middle class. Given the way the economy works now, how do we help make it happen?
I think starting from our values instead of from the market-except-on-Tuesdays-Wednesdays-etc. buys us two big advantages:
1) Debating What Really Matters to Us. Let’s take Finance. Right now, the main debate is over avoiding another massive “market failure” — not giving Wall Street incentives to push the economy over a cliff. That’s obviously a good thing.
But if instead of asking why did the market fail we were asking what values do we want to encourage, we’d be debating a much broader set of questions. What do we really want from Finance? What should its purpose be ? Is it to create good jobs for everybody who’s willing and able to work — to reward hard work? Is it to strengthen our communities over the long haul?
If the debate centered around those values, we wouldn’t just be asking how we stop Goldman Sachs from deliberately screwing over everyone who doesn’t run a powerful hedge fund. We’d also be asking how we can shift Wall Street so it rewards companies that create good jobs over companies that fire thousands of people even when the company is raking in record profits.
2) Debating Who Decides. If you start from the market-except-on-Tuesdays-Wednesdays-etc, it’s easy to avoid talking about power. It makes it easier to obscure backroom deals. And as we just saw in the healthcare debate, it makes it easier for people to successfully pretend they are against “government” that doesn’t directly benefit them — a.k.a. “keep your government hands off my Medicare.”
Or to put it another way, when you pretend negotiating over values isn’t happening, the people who lose out are the people with the least power.
If you start from a value-based approach, it’s going to push you to ask who currently decides which values should shape the economy and who should get to decide. Is it just the owners of the fossil fuel plant belching toxic fumes in Chula Vista? Or is it also the people in Chula Vista’s neighborhoods whose homes and elementary schools are in striking distance of that plant?
In turn, these questions will encourage the debate to focus on the balance of power. It will lead us to ask what we can do to create strong environmental groups, strong unions, etc. — folks who are in a position to act as a dynamic check on corporate power. You’re less likely to ask these kinds of questions about checks and balances and power if you start from Up with Markets. As Krugman said at the beginning of his pro-market based article:
If there’s a single central insight in economics, it’s this: There are mutual gains from transactions between consenting adults.
In other words, a market-based framework starts from the implicit assumption that the owners of the fossil fuel plant in Chula Vista and the poor folks in the neighborhood are on a level playing field.
You might think, isn’t this a bit much? Do I really want to imply that Krugman is rooting for the fossil fuel plant over the poor folks?
Obviously not. The point I’m trying to make is not that folks who use a values-based framework are more virtuous than those using a market-based framework. That would be stupid (not to mention unbelievably arrogant).
Deciding which framework to use isn’t about good vs. bad or right vs. wrong. It’s about focus. A value-based framework pushes the debate towards the issues that matter to us most deeply. And it makes it harder for the wealthy and big corporations to hide what they’re really fighting for.
Up next week: why a value-based framework is also more “efficient” than a market-based framework.