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Orthodox Economics Gone Mad

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The mantra of growth as a cure to the economic malaise that is engulfing Europe and the US is repeated ad nauseam by economists and political pundits.   My training is in engineering science, not economics, so let us not be encumbered by economic dogma or theory. Let us go back to first principles to examine some of the prevailing economic axioms.

If we insist that western economies must continue to grow year after year for poor people even to have the basics for life, and since we know that only little of the wealth created trickles down, then before too long we will end up devouring the whole planet.   Of course, well before we reach that point, we will have degraded our environment to the point where life becomes unsustainable for all of us, rich and poor, and certainly for future generations.

How can this growth be achieved anyway? If most of the wealth created finds its way to the top 10 % (UK figures: the top 1% own 21% of wealth, and the top 10% own 53%) where is the demand going to come from?   I hope no one is suggesting we fuel it by unsustainable debt and usury, which is what brought us to this crisis in the first place.   Those at the top already have more money than they know what to do with; there is a limit to how much an individual can consume. How many cars and gadgets does an individual need?  

Yet in America 47 million people live in poverty, 50 million with no health insurance, and 1.5 million children are homeless. In the UK, 13.5 million people live in poverty (22% of the population, 29% of all children), 65,000 households are classified as homeless. We have to substantially change wealth distribution in our societies for the economic system to be sustainable.

As rich western societies, don't we have a moral duty to do something more imaginative than simply trying to create a bigger cake in the hope that the share for the poor will increase by a sliver more?   Wouldn't it be fairer and more effective to divide the existing cake, which is big enough, more equitably?  

Globally, Justin Forsyth, CEO of Save the Children, explained on Radio 4's Today programme that in the next 15 years 500 million children worldwide will be physically and mentally stunted because they do not have enough to eat, due to soaring world food prices.   This statistic diminishes us all as human beings.

Capitalism is grinding to a halt because the market is confined to the rich, who are over indulged and cannot consume any more. It is enlightened self interest to help those poor at home and worldwide who need the basics of life to get them onto their feet; they will then need more goods and services, demand will increase, and thus get the engine of capitalism working to supply it.  

Will any of this happen? At present I do not think so. Why? Because nobody is prepared to think outside the straightjacket imposed by the elite. Fresh thinking can only happen if we widen the pool of opinion beyond that of the "experts".  How about creating a multi-disciplinary team and tasking it to look at the problem, with no solution no matter how outlandish, ruled out?  

In the developing world some 1.6 billion people have no access to an electricity grid. Stand alone photovoltaic systems could provide quick decentralised electricity to these people.   Even if these systems are provided at discounted cost or free, it is still a good investment, as such systems help lift people from crippling poverty, increasing their demand for essential goods and services thus widening the pool of consumers. The west has the expertise to make a real difference; moreover, it is a sustainable growth that reduces our dependence on fossil fuel. Cutting greenhouse gas emissions is beneficial to everyone, rich and poor.

As a species we have tremendous talents. Our scientific achievements are incredible; our advances in medicine and technology are stunning.   Our social development however is still almost at Stone Age level.   We squander an enormous amount of our wealth and talent on armaments, the equivalent of "my club is bigger than yours" for our Stone Age ancestors.

We do not quite see the humanity of others; we do not care enough for other human beings to share the resources of this planet and the talents of its people. Oh, we talk the good talk but take little action.   We are territorial in our thinking, creating artificial borders where our compassion does not significantly cross them. There are, of course, charities that do valuable work beyond borders, but the investment in these is minute compared with the money we spend on weapons of death and destruction.   Even within our own borders we have allowed a situation to develop where enormous wealth and power are given to the select few, impoverishing the rest.  

Somehow, we seem to be paralysed by dogma and tunnel thinking into concluding that the only way out of the economic mess we are in, created by greed, unsustainable debt and usury, is austerity programmes across Europe and the U.S, that hurt those most vulnerable. There are better ways if only we could give our ingenuity and talent a free reign beyond the orthodoxy that has stifled our intelligence and inventiveness as a species. Creating more equal societies (in the UK , the top 50% own 93% of the wealth) and growing the economy sustainably, with a much bigger slice going to the poor and middle classes is the way.

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Dr Adnan Al-Daini took early retirement in 2005 as a principal lecturer in Mechanical Engineering at a British University. His PhD in Mechanical Engineering is from Birmingham University, UK. He has published numerous applied scientific research (more...)
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