The New Wealth of Nations

by John Raven

Part IV

The Way Forward


Chapter 17 - Section I

The Critique Summarised

Summary of Parts I, II, and III

and an

Introduction to, and Overview of, Part IV


This book is stocked by Co-op Bookstore, 1391 Commercial Dr., Vancouver, BC. (604) 253-6442




This chapter first summarises some of the key issues discussed earlier. Thereafter it considers some surveys which show that, at least in the UK, there is a fairly widespread, if not too articulate, awareness of some of the problems. This finds expression in the endorsement of what have been called the "New Values" - a cluster of values having to do with conservation, decentralised production, dramatic reductions in transportation, an emphasis on offering satisfying inter-personal services rather than personal advancement at work, an emphasis on quality of life rather than material progress, and concern with an equitable distribution of incomes both within the West and between the North and the South.
Unfortunately, just how serious are the environmental and social problems which confront us and just how inadequate are our economic and social institutions to the task of dealing with them is less widely recognised. Most seriously, those who embrace the New Values are generally silent on what is to be done about the societal management problems which have been highlighted.

It would seem at least arguable that it has been this inability to say how, exactly, the New Values are to be translated into effect that has prevented the "third force" which has entered the political arena of many countries - as Solidarnosc in Poland, as articulated by Dubcek in Czechoslovakia, the Greens in Germany, and as the Social Democratic Party in Britain - from attracting sufficient electoral support to command a significant say in government.
There is widespread support for the aims of these movements. That the requisite policies are neither Right nor Left but radically different along a third "dimension" is also widely recognised. What is missing is clarity about, first, the institutional arrangements required to run the radically different kind of society which is required to give effect to the New Values and, second, how the huge international, capitalistic, military-industrial-banking complex is to be brought under control.
The necessary arrangements include new structures of democracy and bureaucracy, new mechanisms for the exchange of goods and services, and new procedures to obtain feedback, evaluate the short and long-term effects of what is being done, and thereafter to take appropriate action. The aim of the remainder of this book is to help to clarify what those arrangements are. Only when this has been done will it be possible to think realistically about how to get them into place.

One interpretation of recent history is that it was dissatisfaction with the ability of either old party to meet the need which combined with a recognition that the new Third party did not yet have a viable alternative to create in Britain the vacuum in which the minority government of the Conservative party - with its lowest-ever proportion of the vote - was able to enact policies which eroded the very forms of democracy, open government, access to information, civic participation, personal and financial security, and freedom to think and publish that are necessary to find a way forward.
Thus it has been the inability of Third Way politicians to articulate the arrangements needed to run the necessary new social and economic order that has allowed the mythology of Neo-classical economics, first to gain a foothold, and then to sweep the globe in such a way as to legitimise policies which are ecologically and socially disastrous.


Summary of Parts I, II, and III

Readers who have recently read the book from the beginning will find this summary redundant and may skip to the next main heading: "The Way Forward: The New Values".

We have reviewed evidence showing that, despite its appearance of prosperity, our society is quite conceivably on the verge of collapse: Our biosphere, food base, soils, seas, atmosphere, industrial base, and financial system are all being seriously degraded or actually disintegrating. We have reiterated the dangers of destruction of the planet as we know it from global warming on the one hand and a nuclear winter on the other.

The question we face is whether we can take the steps needed to avoid this fearful trajectory. Anticipating future trends of this sort and taking effective action on the basis of forecasts is not something humankind has been very successful in doing in the past.

Contrary to the belief of most of our colleagues in the New Economics Foundation (whose attention is focused on money and the marketplace with a view to finding ways of making them work better), the evidence we have reviewed shows that there is little hope of making significant progress by tinkering with market mechanisms. Prices are social constructions which (i) bear little relationship to costs of any kind, (ii) are incapable of providing meaningful feedback concerning the merits and demerits of alternative forms of provision, and (iii) are incapable of recognising or encouraging worthwhile contributions from members of society.

Market mythology has merely legitimised the creation of almost unlimited busy-work based on inordinate consumption of energy. The products resulting from the consumption of this energy are endlessly destructive. Societies, like the USA, which are lauded as "efficient", are, in reality, the most inefficient and destructive societies the world has ever known. Their apparent efficiency depends on exploiting the stored riches - and especially the energy - of the Earth, the peoples of other lands, and future generations in ways which cannot continue, let alone be generalised to other countries.

The situation in which money, the marketplace, and efficiency are not what they seem to be is supported by a web of mythologies perpetuated by an "educational" system which, on the one hand, inculcates the most important myths associated with them and, on the other, lauds and promotes those who are least able and willing to challenge and question them and develop alternatives (whilst, as part of the system, both generally claiming - and being generally thought - to do the opposite).

Although many valuable suggestions have been made for using human, biological, and physical resources less wastefully, little action has been taken. This is mainly because there is currently no effective way of ensuring that politicians and public servants initiate the collection of information which is likely to have implications for the future, sift it for good ideas, and act on it in an innovative way in the long-term public interest. The expansion of the role of government has grossly overloaded our public management structures, which are inadequate to the task of stimulating and encouraging innovation. Put another way, our central problem is not an economic one. It has to do with the way we run - manage - our society. What we need to do is re-structure democracy and bureaucracy and adjust our expectations of public employees. We need better control over the three-quarters of our national income which is, in some sense, spent by the government and the public service. We need better means of monitoring and controlling the so-called "private" organisations (which do so much damage to society) and especially the TNCs and the international banking, insurance, and pensions system.

Fortunately, many of the mechanisms needed to run society more effectively already exist. We have public service departments specialising in the evaluation of public provision, numerous committees to oversee the workings of public and private sector activities, and we have debates in the media. All of these need to be improved.

A central problem has to do with stimulating innovation in public provision and, in particular, legitimising and further developing our mechanisms for creating, providing, administering, and evaluating variety in public provision. The false belief that the market provides the only viable means of doing these things has been cultivated and strengthened by ill-founded assertions about the sources of the problems of Eastern Europe. We have also seen that most innovation, even in the so-called private sector, has in fact been initiated and introduced by the public sector. More significantly still, both the improvement in the overall quality of provision in health care, education, urban planning, and the provision, administration, and evaluation of variety in these areas has functioned - and must function - without reliance on money-based market mechanisms. Our task must be to improve these mechanisms and then generalise them to areas where nothing has worked in the past.

We have seen that one cannot avoid managed economies: One can only manage them better or worse. Governments manage their national economies and their relationship with the rest of the world. A government can abdicate responsibility for management, but it cannot avoid it. It will, rightly, still be seen as responsible for the quality of its management. This is one reason why governments attach so much importance to controlling the way they are presented, and why they seek to prevent others from presenting alternative views. This is why the Thatcher government took unprecedented powers to control research, information, debate, and the media.

It should be noted that - whereas Friedman and Seldon fail to acknowledge the gross defects in the operation of the marketplace they so strongly promote - we acknowledge that effective public management poses severe problems. Our view is that money and markets have become such chimeras that we can see no way of reforming them to make them "work"17.1. On the other hand we can - along with such authors as Sampson17.2, Ekins17.3, Bellini17.4, and Thurow17.5 - see ways of reforming public management to make it work better.

Far from denying the problems of public management, we are aware of even more serious defects than are Seldon and Friedman. Public sector activity often fails to deliver the desired benefits; it fails to make the required connections between different areas of policy; it does not pay sufficient attention to long-term effects or effects in areas of provision far from the centre of attention - and, most importantly, it does not pay sufficient attention to the ecological and the social.
The public sector has not done enough to jettison the remnants of expensive accounting procedures derived from faith in the market economy; it is not sufficiently innovative; it does not do enough to gain control over the international forces which so much constrain what can be done within individual societies; it has not done enough to generate alternative voting mechanisms to replace market mechanisms - to diversify the political feedback mechanism; it is insufficiently responsive to public opinion and the results of surveys that are carried out.

Perhaps one of the most striking things we have noted is the frequency with which image does not conform to reality. The modern world is neither the kind of world in which Adam Smith lived or that which he hoped to create.
His ideal was a world in which economic transactions took place in the context of enforceable moral and ethical codes - in which people did what was right despite what purely economic considerations indicated. It was a world of small competitive traders, of individual customers, and decentralised production. It was a world in which prices reflected the cost of land, labour, and capital, where the same accounting conventions were applied to the costing of different producers' products.
The world in which he lived was one where costs externalised to the environment and the future were, if not negligible, much less than they are today. It was a world in which it was still expensive to extract energy from the soil and in which the movement of goods was therefore still costly.
It was a world in which money was (with a few conspicuous exceptions) made from producing goods and services rather than from playing the stock market, a world in which most borrowed money was obtained from someone who had an alternative use for it, instead of being conjured up out of thin air, a world in which there was much less information about the consequences of actions, and much less capability, with the aid of computers, of managing that information.
It was a world in which companies were not as wealthy as all but the largest countries and a world in which the well-being of old people was still dependent on support from their children instead of commercialised insurance.

In the modern world, the quality of life is primarily dependent on public management - on what public servants do - and not on the marketplace. Furthermore, current mechanisms for social and economic accounting fail to recognise the contribution which vast numbers of people make to the quality of life. Indeed, they tend to eliminate such activities.

We have seen that our present economic system is sustained by three great systems of myths:

  1. The myths of the market place. These lead us to employ numerous people to carry out simple transactions - especially in transportation, banking, and insurance - and help us to create differentials which have the effect of inducing participation in the system.
  2. The myths surrounding "defence". These lead us to generate endless employment inventing and producing rapidly obsolescent goods, and in international finance.
  3. The myths of the "educational" system. This system occupies the time of countless students and lecturers, authors, printers, publishers, and bus drivers, and creates differentials which compel participation in the system.

Clearly it would be possible to re-direct human energies into less energy-intensive and destructive and more quality-of-life-enhancing activities, but doing so involves undermining the myths which most importantly bind society into a system.

The basis for the claim that work could be re-directed into more quality-of-life enhancing activities merits fuller discussion. In the first place, the way in which most work in modern society is organised fails to contribute directly to the quality of life of those who perform it17.6.
Next, the products and services which are produced do little to enhance the quality of life of those who receive them17.7. This means that the money people earn does not usually enable them to purchase important life satisfactions17.8. In other words, the market process - to the administration of which so much work is directed - does not - and is unable to - engage with the main determinants of life satisfaction and dissatisfaction17.9. Put another way, the "wealth" produced by the market - which provides the basis for the most widely used economic indices - does little to enhance the quality of life of the community.

Stated even more baldly: Much of the work which is currently being undertaken is entirely useless from a human - as distinct from sociological or institutional - point of view. It follows that, were it not for the systems processes with which we would have to engage, it would be easy to dramatically reduce our consumption of natural resources and energy without seriously reducing our quality life.

We have seen that there would really be no difficulty finding alternative jobs for those who would become "unemployed" if we disbanded our present system. Work is required in energy-positive agriculture, in community support networks, in the provision of genuine health care and security - such as assistance in time of need (insurance), in alternative accounting systems, and in public management.

The greatest difficulties we face arise from that fact that it is almost impossible to conduct a rational discussion about the most serious issues we face because the sources of those difficulties are not the most obvious ones and the words in which the discussion has to be conducted do not stand for what they seem to stand for.

Because the referents of many of the words we use are other than what they are thought to be, developing an understanding of the persistent tendency of humankind to develop such misrepresentations of reality is - very surprisingly - one of the priorities for research if a way forward is to be found.

Because those who advance such misrepresentations tend (as in the mediaeval church) to gain positions of personal prestige and wealth, finding a way forward also involves developing ways of handling the powerful - magicians skilled in wordcraft. Although the most likely explanation of the growth of such things as market activity, the "educational" system, and media depiction of a false reality is that politicians found that all these developments reduced unemployment and increased short-term "prosperity", the question still remains: "How were the myths which supported them generated?" Why have these beliefs so rarely been questioned? And why were other possibilities - such as community projects - scorned?
The myths and arrangements seem to have a "life of their own" - an organism-like tendency to grow and develop without outside intervention. Answers to all of these questions are pre-requisites to the introduction of obviously desirable and entirely feasible changes in our society.

What are these desirable changes? What prevents us introducing them? And how can we overcome the problems?


This book is stocked by Co-op Bookstore, 1391 Commercial Dr., Vancouver, BC. (604) 253-6442

Continue to Chapter 17, Section II
Return to NWN Introduction    
Chapter 1 which provides a sketch map of where the book is going and an overview of its contents similar to the final, summary chapter of many books.
Continue to Chapter 4  Some Observations on Money
Top of Page    
This page is hosted by Canadians for Direct Democracy    

Further information from John Raven