Opening Remarks
Every attempt at change begins with a sense of dissatisfaction with the present state of how things are. The conflict between the present state and the proposed possible future state initiates change. Given that perceptions of the present state can be numerous, so are the attempts at change and their natures. This diversity in perception and in reactions to the present state gives rise to a set of complementary as well as conflicting ideas for change.
The nature of the future state of how things will be depends on the conflict that precedes it, either in the form of conflict between the old and the new phenomena or among the many ideas for the possible new. The world of today is born out of the conflicts of yesterday, and the world of tomorrow will be the result of the conflicts of today. Therefore, to make the world of tomorrow possible, we must live in and breathe the conflicts of today, with the hope that something new and better will come out of them.
This paper is written with the spirit of confidence in the well-intended nature of the conflict of today, and is an attempt at narrating my understanding of the nature and extent of the role played by economics towards the task of explaining “what” and “why” as well as the “how” of the process of changing the world, followed by its implications on globalization, through the prisms that Professors Hausmann and Unger have offered in their debate about the nature, limits and alternative futures of economics.
As required, this paper is a collection of thoughts and reflections. It begins with a discussion about the nature of economics and its relationship with and impact on our lives. It continues with a narration of the limits that economics as a science faces or the limits that we may subject our expectations of economics as a science to, given the relationship between economics and life and the impact that the limits to human creative ability have on the process of development of ideas for change. Building further on the process of change, it continues with discussion on the causes and incentives for changing the status quo in a world inhibited by humans and characterized by their inherent trait of self interest, and finally attempts at exploring the possibilities of a role played by economics as a science in the process of change, both evolutionary and revolutionary.
Following this reflection is a discussion on the phenomenon of globalization, its nature, impact on the lives of people and the possibilities of altering or redirecting it. The aim is to weigh the incentive that is there, if there is any at all for changing or redirecting the process of globalization for the benefit of people in greater numbers.
What is Economics?
Economics is most commonly defined as a social science that is concerned with production, distribution and consumption of goods and services. And as if being Greek is equal to being credible, economics too, has its roots in the Greek word of oikonomia meaning household, where oikos means house, and nomos means laws. To put it in simple words economics has to do with the laws that govern the functioning of the household. If production, distribution and consumption of goods and services are a set of activities that make a process comprised of a number of stages, this definition does not explicitly specify the stage where economics plays a role, nor does it restrict the nature of the role played by economics at a particular stage to either science or institutional design.
A comparison of a closer look at what economics is concerned with (the processes of production, distribution and consumption of goods and services) with an analysis of what human cycle of life is about reveals how similar they are. They actually seem to be the same thing because throughout the cycle of life, every human being, in some capacity, is involved in all, some or one of these processes. I dare to conclude therefore, that life is nothing but the processes of production, distribution and consumption of goods and services in some form.
We study, we work, we network and build connections, we travel and we interact, we produce, distribute and consume, we make and we break, all for a meal at the end of the day, all for life. Our existence is a proof of life and life is a proof of our existence reflected in our efforts, which in their combined form make the processes of production, distribution and consumption of goods and services. Based on the above we may propose that economics is a social science that is concerned with the A to Z of life.[1] This concern operates in the form of economics inspired, economics driven or economics based efforts towards ensuring the continuation of life by meeting its requirements. This quality of economics renders it basic to who we are, how we think and how we act and therefore basic to our entire existence.
But does it mean that economics has an unlimited monopoly over life?
Limits: on Economics OR on Human Creative Ability
In the face of so much that economics is about, does it have an external existence of its own? Is economics an apple in a fruit basket, or a book on a desk, or a building, or perhaps a tree that changes color four times a year following the same pattern for life? Or is economics a set of ideas which are nothing but fragments, parts, shapes and elements born out of human ability to think? If we agree that economics is a set of ideas, then it is as limitless as our ideas and imagination can be.
Whether our imagination, innovative or not, is applicable in practice is a separate question, the answer to which must not limit our imaginative flight. However, it must warn us of our capacity to land on the basis of the conditions for landing. This is exactly what economics as a social science does: it demonstrates what is effective and thus guides our search into what the world is about.
But we must remember that economics as a science can only warn us of the landing conditions, and not help us alter them to match our landing capacity. Landing conditions can be understood in the light of economics, but may not be altered by it; we need technology for that. Economics may also help us in deciding whether we need to alter landing conditions or not, but will not design the tools for it. Likewise, we have a choice in appreciating or not appreciating the available tools for altering landing conditions, but we may not hold economics accountable for that merely because it helped us make a decision in the first place; our choice depends on our ethics and standards.
In the same way, economics explains what the current mode of production is and why it is the way it is. If based on our ethics we do not appreciate the current mode of production, we are at liberty to strive for changing it. Interestingly enough, economics continues to be our aide in deciding whether it should be changed or not. However, it cannot guide us with the tools that can bring a change in the mode of production; it will not answer the “how” of the process of change. We will need to develop a technology or a combination of technologies and sets of principles in the form of a design in order to change the current mode of production into something that our ethics can be appreciative of.
Determining the nature of the mode of production and deciding in favor of, or against a process of mobilizing principles around the problem (the current mode of production) and towards a solution (our proposed mode of production) is the relatively easy part. The challenging part is the actual process of mobilizing principles around a problem and towards a solution; developing a technology for change or a design of alteration is most complicated. The difficulty here is due to our free floating, yet limited ability to imagine innovation. After all, the creative ability of human mind cannot travel beyond what it has already experienced in some form. Take the example of horror movies. The fact that no single horror movie has succeed in creating a monster that is not similar to some living being, or some part of it or a combination of some or many parts of many living beings is an evidence of the limits of human ability to imagine and create. Same is the case of inventions throughout history, where every one of them was in some form or the other, based on some previous similar attempt. The fact that one person or a group of individuals have the credit of owning the invention was only a matter of time and place.
And this is what I think Marx and Engels meant when they wrote in the Communist Manifesto that “The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness.” This means that we think because we experience, and what we think is a reflection of what we experience. Obviously, our perception of what we experience is subjective and individualistic, thus resulting into numerous forms of perception by many individuals of the same experience.
However, there could be multiple interpretations of these words. One such interpretation could be applicable to the intrinsic human trait of self interest.[2] This interpretation is based on the understanding that following the motto of “life is about us this existence is about us and therefore we should come first,” is driven by the economic conditions that we live in. We look for incentive in everything where we may invest our personal and social resources of time, energy, labor, attention and finances because the current mode of production revolves around personal interest. It further argues that while the nature of incentive may vary, from financial gains to knowledge, training, capacity development, or connections, the presence of a favorable outcome is basic to it. That our attempts at being selfless are not devoid of this trait either: we develop obsession with an idea, the fulfillment of which brings us a sense of personal pleasure and satisfaction. And therefore, it is this final outcome that drives our acclaimed selflessness and not the idea that apparently propagates in favor of interests of others, thus we continue to pursue self interest under a different name.
This makes sense, but only to the point where it comes to the discussion about changing the current state. If the intrinsic human trait of self interest is driven by the current mode of production, then it is going to stay that way for as long as the current mode of production stays. And if humans continue to happily engage in the pursuit of self interest, why and for what incentives would they want to change the current state of affairs?
The answer could continue to be the same: self-interest.
This paper began with the story of conflict and change and that is what we are returning to now.
Incentive for Change
The current state of affairs will change if an increased majority of people can no longer successfully engage in their pursuit of self-interest. The conflict between those who can follow this pursuit with success and those who cannot will be one of the forces that will drive the urge for and the process of change, but will not necessarily decide the methodology for change and the direction of change. “Change in the world comes through technology.” (Hausmann, 02/02/2011) Indeed. But technology or even a combination of technologies in the form of design does not and cannot cause the initiation of the process of change; they can only facilitate the process of change once it has started.
The answer to the “how” and “where” of this process of change comes from another conflict, this time from amongst the competing versions of institutional imagination and means and ways of achieving institutional transformation through technology and design, and not through economics. “Institutional imagination lies in technology and design and innovation, it is not in economy.” (Hausmann 02/02/2011)
However, can we say that technology and design are devoid of any influence by and from economics? The answer to this question is not easy to find because science, technology and design are interconnected. Let us study and then analyze these points of interconnection.
Economics and the Process of Change
“Science is about truth and a statement about the nature of the world as it is. It asks the questions such as why the world is the way it is, or how does it work. …Science doesn’t necessarily give an agenda to fix it. Change in the world comes through technology. Technology is based on some principle of interaction and is means we discover through interacting with what is out there to achieve the change that we desire. … At times change comes from a combination of many technologies, which is design, (which leads) to something that we find useful. The criterion for science is about truth and about whether this is an accurate representation of what is out there, technology is an effective way of achieving change, while design is about mobilizing large set of different principles to find a concrete solution to a problem.” (Hausmann, 02/02/2011)
The words and phrases in bold indicate towards some or some level of interconnectedness between the nature of what is there and what may replace it, between present truth and tomorrow’s hypothesis for change, between a problem and a possible solution, and thus between science and technology or a combination of technologies in the form of design as the facilitators of the process of change.
Tomorrow can only come after today. While it may not come necessarily as a result of today, it definitely will be influenced by what today is. “The accurate representation of what is out there” given by science (economics) will determine the starting point from where the dynamics of the “principle of interaction” and “mobilization of large set of different principles” will come into play, and as a result will lead to an “effective way of achieving change” that we “desired” and therefore towards finding a “concrete solution to a problem.” It is by virtue of this interconnectedness that economics as a science, with “no monopoly over technology or design,” (Hausmann 02/02/2011) may still be in a position to influence the nature, the direction and therefore the outcome of the process of change. “What we know of what (the world) is, is critical to what we want it to be.” (Unger 02/02/2011)
The degree of this interconnectedness is debatable, and our understanding of it depends on many factors such as (but not limited to) our position in the process, our relation to the current state of affairs, our relation to the science of economics, our interests and role in the process of change and our understanding of the outcomes of the process of change and their impact on us.
Evolution and Revolution (NOT Evolution or Revolution)
Economics is a set of ideas and statements about the nature of the world as it is, the continuation of which is ensured through an en external existence. This external existence may find its reflection in laws, regulatory mechanisms and institutions through which and under the control of which the very boring yet basic routine of production, distribution and consumption of goods and services continue. The history of economic thought is a combination of repeated, with circumstantial variations each time obviously, attempts at adding a new or different flavor to the existing laws, regulatory mechanisms and institutions and thus to the set of ideas itself. The nature, direction and outcome of these attempts have been, time again influenced by the circumstances in which the attempts have been made, that is by the “nature of the world” as it has been at that stage. In the spirit of belief in the process of change and mutation, it would be unfair to consider science (economics) to be a species that does not undergo change, lacks dynamism or is static.
On the relation between evolution and revolution, it is important to realize that between each cycle of this complicated, lifelong and never ending process of change (change in principles of science, change in the scientific understanding of this world, change in the principles of interaction and change in means and ways of finding concrete solutions to problems) is a distance, in time and space, filled by an ideally unrestrained process of evolution. If every cycle of change is a stage, then the development from one stage to the other is change, while development within one stage is evolution. Without change from one stage to another, the internal evolution process may lose dynamism, while without the internal evolution process, the development from one stage to the other is almost impossible. The process of evolution is characterized by a series of minor quantitative changes, which in their combined form lead to a major qualitative change that enables development from one stage to the other.
Let us take a look at an example. Evolution in the life of a student means going through every year of education at high school, where as admission to college is a change in stage, after which another series of minor internal developments in the form of four years of college education will prepare the student for another major change: admission to a graduate school.
Innovative change and evolution therefore, are neither complimentary nor conflicting, because they are both. They coexist and contradict each other simultaneously, and that is how life goes on, and this is how we have reached where we are today: the age of globalization.
What is Globalization?
Like economics, there are different definitions of globalization, yet unlike economics and perhaps for a change, it seems to have no Greek roots. Globalization is a process of integration of national economies, societies and cultures into an interdependent network through communication, trade and transportation. What economic globalization has done is that it has networked world economies into a global economy through facilitating a process that involves capital flow and migration of productive labor and services and trade of goods. It is worth nothing that the role of economics remains to be the same in the process of globalization also: it continues to be concerned with the production, distribution and consumption of goods and services, only with a change in the level, extent and impact of these processes; it has only gotten bigger.
So globalization is about integration of many into one. But is that all?
While the interconnectedness with, and interdependence of world economies on each other is a demonstration of the act of integration, it also indicates towards a more developed and a more complex system of division of labor and thus sophistication of skill and expertise of production. Globalization, if on one hand brings together and unites similar sets of skills, on the other diversifies and therefore enhances their levels of complexity and sophistication. Globalization unites and makes as well as divides and breaks simultaneously. Globalization is another example of a merger between contradiction and complimentarity.
Integration is a process characterized by complimentarity, while diversification is characterized by contradiction and conflict. Integration results into an expansion of human access to goods and services produced elsewhere, while diversification ensures that the share of access to foreign produced goods and services is equally balanced by access to foreign markets for provision of home produced goods and services.
The processes of integration and diversification are interconnected and interdependent. Diversification is irrelevant without integration and integration is impossible without diversification. It is like dividing field work for the purpose of writing a group paper, where each member of the group specializes in a set of specific skills and expertise. If the group paper is cancelled, our division of labor would be rendered irrelevant. And, if based on our specific set of abilities we do not divide work amongst ourselves, there is nothing to integrate at the end.
However, nothing is so straight forward and basic in practice. The world that existed prior to rigorous globalization was made of countries, while the world of today, in the age of globalization is made of players and not so much countries, where each player develops and follows a design of its own. Players can be countries, groups of countries or multi-national corporations. Globalization as a result is a combination of different designs followed by different players, a character that renders it further complex. “Globalization is the emerging character of the world which is not the consequence of a clear particular design but rather the outcome of a design by many players who are pursuing their interests.”
Another factor that complicates this situation even more is the difference in the level of development of players; some countries are rich, some are poor, some regions are more developed and some are less and the ratio of the difference in development is increasing as I write this and as you read it: 400:1 (Hausmann, 02/16/2011)
The difference in level of development finds its reflection in the ability of players or countries to produce and distribute their goods and services. Hausmann and Hidalgo (2007) believe that this ability to produce and distribute is a measure of sophistication of an economy which is influenced not just by the “volume of output per head” but also by the “variety of output per head,” where output is the commodities that are produced and exported. Since players differ in their level of development, their economies differ in their level of sophistication, which in return affects their ability to pursue their interest. As a result, the globalization that we have is what unequal globalization because the conditions under which each player or country is to pursue self interest are unequal.
But is this unequal characteristic of globalization enough an incentive for altering or redirecting it?
Is There An Incentive for Altering or Redirecting Globalization?
The idea of globalization is very genuine because through diversification of skills and expertise, it actually raises standard of living. When we have to produce only enough to meet our requirements, we may have an impact on our own standard of living only. Whereas, when we produce having the idea of exchange and trade in mind, we produce enough to share, and thus we positively affect the living standards of other people as well. So the impact of globalization on the lives of people can be very positive.
However, the incentive for altering or redirecting globalization also depends on the effects that it has on the lives of people. As discussed earlier, if globalization renders a majority of players unable to successfully engage in their pursuit of self-interest, then this majority has an incentive for wanting to alter or redirect the process. When and if the conflict between those who can successfully pursue their self interest under the current circumstances and those who cannot reaches a climax, it evolves into an urge for alteration or redirection. While this conflict can continue as a conflict for long, it may not continue forever. There have to be losers and winners to the conflict. But that can be possible only if we remember not to forget ourselves in this urge for change, because the general tendency is towards forgetting that changing the world is impossible without changing ourselves, and that the imagination for a changed world must begin at action towards changing ourselves first.
An unfortunate characteristic of globalization is that there are only a handful of sophisticated economies in the world and many not so sophisticated, or totally unsophisticated economies. This means that the process of globalization, no matter how well intended, fails to offer the same benefits to all the players, perhaps not because globalization is designed to be unequal, but because players are unequal in their level of development, technical capacity, capital and human resources.
Can globalization wait for the time when all the players will be at the same level of development and capabilities? Perhaps not. Can all the players ever achieve equal level of development? Seems difficult. Then, is it fair to subject unequal players with unequal resources to play on equal terms? Is globalization a fair game? Is it realistic to expect the element of fairness from this process?
The answer to the last three questions depends on how we want to answer them. Do we want globalization to be a fair game? Can we make that possible?
What Role Can Economics Play in the Process of Redirection?
The proposal that “globalization is not here on take it or leave it basis… that we may transform and redirect it,” (Unger 01/26/2011) is based on the understanding that globalization, in its current form, is unfair to a majority of players, as a result of which a majority of humans lack equal access to educational and economic opportunities.
But what would this transformation and redirection process entail and what role is expected to be played by economics in the process? Or perhaps the question should be phrased differently: What role can economics play in this process of redirection and transformation? Do we need to embark on a reshaping of economics in order to achieve a transformed and redirected globalization?
We previously explored the connection that economics as a science has with the world: it helps us depict an accurate and representative understanding of it. It simply answers WHAT. And if we want to bring change, it is critical for us to know what we have that needs change, a relationship that may appear unimportant or small, whereas it is not. How can we begin a process without knowing the truth about it, which can be explained through science? And as said before, it is this link between now and tomorrow that connects science to the business of bringing change in the world.
In the process of explaining why things are the way they are, science may identify factors that have resulted in things being the way they are. In doing so, it indirectly may also point out towards the factors that are absent from the present design. Could the presence of absent factors change the design in a certain way and to a certain degree? No doubt “economics did not create wages and prices,” but by helping us “make a sense of why they are there,” it can also help us understand what may cause them to not be there.
An impoverished human in a globalization-hit corner of the Mother Earth does not wait for a miracle, he only hopes for some change. Monopoly over conditions may be a requirement for a miraculous event, but it is not a condition for the ability to merely influence. All that is expected of economics as a science is to influence globalization and processes like it for the benefit of a higher number of people, than only a few powerful ones. No doubt the trend of development of the world has been for the better, there is improvement in the overall picture of things. But the pace of this development towards the better is too slow for many and longer than a life time for most. There is urgent need for a catalyst, and while economics may not be that catalyst, can’t it help us find its formula?
We must remember that it is not about the nature of globalization or its principles. It is about access to globalization and its benefits. Globalization has achieved what governments and systems of governance could never achieve: decentralization. One would expect that universal access to the benefits of globalization must be a direct and immediate consequence of decentralization, but unfortunately it is not. Globalization is like computer software where access to its benefits comes through a tab with a code. It is critical for everyone to have access to the code in order to be able to access the tab and therefore be a true part of globalization. We must note that access to the code does not translate into involvement of everyone in the business of innovation. It only means that everyone will get a fair chance at competition.[3]
We have two options, we either must get rid of the code, or we must make it available to all at their level of understanding and technical capabilities. The first is not a possibility, the second is difficult but worth giving a try, mainly because for as long as access to the software is limited, the design of future software will be devoid of inclusive participation and therefore accurate representation of all. Absence of greater participation by most –if not all- means that there will always be “they” and “us” where “they” is growing in number drastically and “us” is shrinking over time.
Besides, it is only fair to allow and ensure that the benefits of globalization reach everyone. After all, human ability to create and invent is a product of the collective brain of humanity, and therefore must be shared with all. Can one person produce all that he requires for a living? Never; it takes an entire humanity to help him meet his needs.
Concluding Remarks
Miracles are called miracles because they are not commonplace. The goal of achieving “socially inclusive economic growth based on broadening of opportunities for (all) men and women through institutional innovation” (Unger 01/26/2011) may not be a miracle, but in a world filled with humans and their inherent trait of self-interest, finding players to let go of their self-interest voluntarily is a miracle. Running after changing the entire world is a race that will never end, but trying to influence how the world is and what, as a consequence of how it is, it will become in future is worth trying. It is only this must of an effort that is expected of economics. With greater power comes more thirst for more power, but with greater power also comes greater responsibility, and economics, as a science has a responsibility by virtue of its truth telling ability.
Globalization and the consequences of globalization for the world at large are important phenomena. They cannot be ignored or taken lightly, by anyone, anything or any science including economics. And if economics is incapable of influencing the consequences of globalization then we must enable it. If we need to reshape economics, then we must reshape it. After all, we are not confronting an alien species that we know nothing about. We face our very own economics, a science that was born out of our imagination and understanding of the world. How difficult can it be to mold our ability only slightly and for the better? If there is a time when every one of us has to decide where we stand, it is now. Now is the time to make our mind on where we are in present and how we want to be remembered in future. Our position will depend on our ability to see the connection between today and tomorrow, between science (economics) and technology for change.
[1] The word “life” is inclusive in nature, and covers all forms of life on earth. Animals and plants do not have a direct hand in decision making, but they certainly are an essential part of our economic system and the processes of production, distribution and consumption. They are also a major part of what we call goods and services. The fact that they are used by humans is only a matter of history and of dominance of one form of life over the other at one stage of it. It does not hurt to have a rather broad perspective of life, as history is a constantly changing phenomenon, and so are the dominant forms of life.
[2] Though this characteristic is not limited to human beings alone; every form of life on earth lives to ensure its interest in life, where for some the interest is the life itself.
[3] Though we live in different times now, where media has increasingly become more social and human expressive ability has increased to an unprecedented level in the history. Thanks to the internet and social media, today, in most parts of the world, every consumer of information can also be a producer of information. The ability to connect not only helps people realize, at a much faster rate, that they are together in something, but it also helps innovation move more easily and quickly from one location to the other. It may not take long for everyone and not just elite, to be involved in some form of innovation at some place.