OPINION: A New Economic Model
OPINION: A New Economic Model
By Trevor McNeil
Standards Of Study
Strange as it might seem, there is a standard in the study of history that sources used should be the most recent. This is because new things are being discovered all the time and what we knew about a particular event or context in 2001, can be radically different than what is now known in 2021. Philosophy and more theoretical disciplines have no such standard. Which is the only way to account for the continuance of some of the less applicable ideas. Economic theory is no exception.
One, Or The Other
Looking at the modern political landscape, and one would be left with the impression that there are only two ways of doing an economy. Laissez-faire capitalism as laid out by Adam Smith in his book The Wealth of Nations and communism, as dictated, no surprise there, by Karl Marx, in several, mostly unreadable books. Wars have been fought over these ideas, and continue to be cause of strife and division to this day. Despite most people not really understanding what they are.
As evidenced by the slogan, on the communist side, “smash capitalism” without specifying which of the three primary schools of capitalism to which they are referring. On the other hand, those who support a free-market capitalism have been blinkered enough to refer to nations such as Norway as “communist.” An absolutely hilarious accusation considering the system is most accurately described as a “corporate democracy.” It is a little known fact that the main reason so many Norwegians speak such good English, roughly 80% of the population being fluent, is the nations massive export industry, the majority of the buyers being from English-speaking nations.
Old Ideas, New World
Basically both schools of thought are wrong in my humble opinion. At least in terms of modern society, root cause of their obsolescence being the time when the ideas were formulated. The Wealth of Nations was written soon after the kick-off of the Industrial Revolution, and was at least partly an attempt to explain it. The Communist Manifesto was written in 1848, and was one of the main criticisms of the effects of the Industrial Revolution and a low-key rebuke to Smith.
They are both important documents in terms of understanding basic economic theory, and how we got to where we are. Neither, however, have any real bearing on modern society. Neither Smith nor Marx could possibly predict nor comprehend the massive change technology has made in the last couple of centuries. To the point that the rise of the Information Age is largely seen as a Digital Revolution, on par with the Industrial Revolution in terms of its overall impact. The production based economies in which both Smith and Marx were writing, either no longer exist or are rapidly dying. The term “disruptor” coined specifically to refer to this process.
In the post-Digital Age, with old industry corroding into rust belts and an increasing number of people working for themselves, particularly online, how does one now engage with the new reality? Might I suggest a hybrid approach, similar to that practiced by the Calvinists. In this system, there is an emphases on service-based businesses, usually run by an individual or family, working as hard as they can to make as much money as they can to put back into the business. Paying the employees, if there are any, more, while putting money into the economy and providing a needed service to their fellow citizens, and taking care of their own needs. Just a thought.