GITTINS' GOSPEL: The economics of just
about everything,
by Ross Gittins,
Allen & Unwin, 312pp.
Reviewed: 24 November
There is a welter of information and analysis, online and in print, that competes to influence our views and understanding of what might broadly be called "the economy". At least nine tenths of this is nothing to do with the underlying structures and trends that will determine our future material and social welfare. That bulk is usually about the ephemeral trivia of market speculation - will shares and bonds prices rise of fall in the short term. It is no more useful than the form guide for a horse race, and serves the same purpose - to draw in more speculative spending by those of us who are no better than punters betting blindly.
A few commentators make genuine efforts to cut through the promotional flim-flam and remind us that "the economy" boils down to a social contract underpinning all of our employment, production and trading activities. It cannot be discussed intelligently in isolation from whatever human values we see as important in holding society together and meeting the common challenges of sustaining our world.
So if you are suspicious of the economic
claims and counter-claims of our politicians and lobbyists, then you will enjoy
reading Ross Gittins as I did. If you are not
suspicious but you care about society, then you need to read someone like Gittins. For thirty years his economic
commentary columns have shone skeptical beams
through the fog and dust kicked up in the name of economics, often by
professional economists blinkered by ideology or by the need to sell their
services to somebody.
Did you know Adam Smith, patron saint of market economics, added an important qualification to his most famous observation about the
primacy of self-interest in human decision-making. Adam Smith followed it up with "How selfish
soever man may be supposed, there are evidently some principles in his nature,
which interest him in the fortune of others, and render their happiness
necessary to him, though he derives nothing from it, except the pleasure of
seeing it". Rational self-interest is the founding assumption of modern
economic modelling, but Gittins doubts any of us are predictably rational. Neither
can our perception of self-interest be taken for granted.
Gittins deplores the trite and self-serving neo-liberal assumption that governments have no role
until free markets can be shown conclusively to have failed. The Global Financial Crisis is only the
latest example of how unregulated markets tend to become corrupt, at vast cost
to both suppliers and consumers. Governments alone can set rules for "a
better capitalism" through democractic process informed (he hopes) by more
rigorous media commentary and analysis.
Gittins is not alone. There is a growing rebellion of behavioural economists who take a broader
view, embracing a range of non-monetary considerations for economic
policy – such as social equity. Is growth a genuine economic benefit, or a short-term illusion? Can any serious economic policy ignore the environmental costs? Can fairness be ignored, when all history shows that inequality imposes heavy costs on social cohesion.
