Economics and the Market Economy

An excerpt from the Passionate Earth: The Evolution of Our Relationship with the Natural World by John Del Signore. I will be posting new articles to this site on a regular basis.

“Economics is usually defined as the “social science concerned with analyzing and describing the production, distribution, and consumption of wealth”. English economist Lionel Robbins defines economics as “the science that describes human behavior as a relationship between (given) ends and scarce means which have alternative uses.” Alfred Marshall claims economics “examines that part of individual and social action which is most closely associated with the attainment and with the use of the material requisites of wellbeing.”

These definitions are limited in that they do not address human behavior, ethics or sustainability. They simply look at the attainment of the material needs of society and how to obtain them most efficiently. A more inclusive definition of economics would consider the attainment of material goods as well as the equal distribution of those commodities within a context of social justice, ethics and sustainability. It appears that our current economic philosophy is amoral and solely anthropocentric.

The philosophy of economics that has been prevalent in the world has many inherent flaws: it is chiefly oriented towards production, marketing and profit and does not consider environmental concerns adequately. A new philosophy and model are desperately needed to run our modern economies.

Our economic system appears to have been elevated to the status of infallibility by economists and has been largely accepted by the general public as well. Any attempt at change or reform that interferes with economic progress is seen as creating economic ineffectiveness and is decidedly discouraged even if it makes sense. Economic initiatives deemed to be overly expensive to address the ecological crisis are a prime example. Economic progress has come to be equated with human progress and is vigorously endorsed by a majority of counties but especially by those in wealthy developed Western nations.

The origin of economics dates back to the 17th century economic philosophy of Adams Smith who wrote a book called The Wealth of Nations. The main treatise of this work translates into the notion that individual self-interest would encourage people to behave in ways that would be mutually beneficial so all parties would benefit from selling and purchasing goods and services. Adams maintained that individuals are predominantly sympathetic for others and will moderate their behaviors to create harmony in social and business-oriented relationships. As much as this idea sounds unusual and maybe even suspicious of only self-interest, Adams actually had an optimistic view of humanity and also wrote a book on ethics entitled, The Theory of Moral Sentiments based on social psychology. Adams has been misinterpreted as endorsing economic greed by those who misunderstood his theoretical ideas about human nature.

When industry began, primarily small businesses existed, mainly farming and some light industry, and the power structure was vertical and limited to local ownership and management. There were no large corporations that had the ability to control and monopolize the market either. Although, some working conditions were poor and wages were not always adequate, there was no particular formal work ethics articulated until industry became more prominent and organized. Serious concerns about how employees were being managed and treated did become a critical concern as industries became much larger and profit motives superseded human rights issues.

Adams also was aware of the impact of larger business entities, monopolies and corruption that might result from concentrated power and hierarchical management as well. He also mentioned the ethical aspects of business and how abuse of employees would produce poverty and inequality and significant social problems. It appears his warnings were not taken very seriously or overlooked in favor of the benefits a market economy could provide to those in positions of power and influence.

Today, we see a global economy comprised of many huge corporate entities that fix and control prices, manipulate government regulations to their benefit, manage employees in a patriarchal manner and pay wages that maintain the highest profit possible. The workplace considers its employees too often as resources than as partners. Small family businesses struggle to survive and often have short life expectancies. The marketplace endorses a philosophy of cutthroat competition and controlling and manipulating all known aspects that interfere with maximizing profits.

Supplying what consumers need and want is no longer a priority. Businesses invent and decide what is to be marketed and how to sell their wares through aggressive promotion and advertising. Consumerism has become an independent goal in itself. It is even considered unpatriotic to limit personal consumption and to live with less.

Work is a substantial part of our lives and should be realized in an environment in which professional and personal fulfillment can be realized. Most people want to enjoy their work and feel that they contribute to the greater good of society by what they do. These goals are not a chief concern of the market economy and the psychological needs of people are often underplayed or ignored altogether.

Overconsumption is not sustainable and humanity is using the planet’s resources too quickly as well as too much altogether. Many economic practices are despoiling the environment as well.

Consumers do not often know adequate information about the origin and or way products are made or what environmental problems may exist. Products are also not always labeled adequately about specific dangers or problems. The consumer is basically at the mercy of many conditions they have little information about. Industries sometimes misinform the public to conceal problems with products and services. Ethical business practices are easily put on the back burner in favor of increased profit margins.

So, economics has a tremendous impact on the human condition and society at large. It is not just about the distribution of goods and services; it affects every aspect of our lives in significant ways.

It appears that economics is fundamentally concerned with short-term self-interests and does not promote the needs of society or the individual in its basic philosophy. We must ask ourselves if this economic model makes sense to an organism that is continuing to evolve to a higher purpose than merely subsistence living.

Traditional industry, technology and businesses tend to consume resources in an unsustainable manner, utilize manufacturing or other processes that pollute the local environment and treat staff as resources to be managed for the sake of the company. Human needs are often neglected, such as a safe working place, career and personal fulfillment and adequate compensation in favor of higher profit margins for the corporation, upper management and stockholders. These entities often try to hide or deny deleterious outcomes from their operations as well as shirking governmental or state regulations. Politicians are often bribed or persuaded to vote on measures that favor corporate agendas. In an enlightened economy, the above issues just mentioned must be eradicated. Human and environmental needs must take precedent over power, control and profit.

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