They’ve vehemently resisted it throughout their careers, but now Lawrence Summers, Nobel Prize winner Paul Krugman and most mainstream economists are embracing public spending as a way to repair our broken economy.
They say that if we pump a few hundred billion dollars into the system and tighten up regulation a bit, consumer confidence will start building and we’ll pull out of this recession within a year. They warn us not to tinker too much with the fundamentals of free market capitalism, pointing out that the past 40 years have been some of the most prosperous in history after all. What they don’t point out – and don’t seem to understand – is that this prosperity came at a staggering price. We got rich by violating one of the central tenets of economics: thou shall not sell off your capital and call it income. And yet over the past 40 years we have clear-cut the forests, fished rivers and oceans to the brink of extinction and siphoned oil from the earth as if it possessed an infinite supply. We’ve sold off our planet’s natural capital and called it income. And now the earth, like the economy, is stripped.
In the aftermath of the market crash of 1929, we were able to recover because we still had the earth’s natural wealth to fall back on. What have we got now? Derivatives? Oil futures? Gold bullion?
Only a radical rethink of our economic paradigm can save us now.
Lawrence Summers, Obama’s pick to lead his economic recovery team, has a reputation for being an original thinker – an economic wunderkind of sorts – but closer scrutiny reveals him to be a traditional thinker still firmly stuck in the past. Just a few years ago, he declared: “There are no limits to the carrying capacity of the earth that are likely to bind at any time in the foreseeable future. . . There isn’t a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit is a profound error.”
Can an orthodox practitioner of neoclassical economics like Summers really be an agent of change? Hey President Obama, why are there no seats at your table for true out-of-the-box thinkers like Herman Daly, Joshua Farley, Robert Nadeau and Mathis Wackernagel?