No Immune System

Got the idea from a recent post on Evonomics.com by Prof. John M. Gowdy — two new ideas, actually, that triggered some old thoughts.

First of all, noting President Trump’s slogan of America First, Prof. Gowdy claims it’s no less a problem than the individual moral failing of Me First. But more than that, he claims it is actually a greater problem because of its social context. For this, he uses an analogy of biological systems.

In a normal organism, each cell has a function in the matrix and is bound to that role. Cancer cells selfishly break free of such constraints and grow wild. But the body’s immune system is lying in wait to recognize and rout out selfish cancer cells before they can wreak havoc on the body as a whole.

An economy has no such defences. It lacks an immune system.

Prof. Adam Smith, however, proclaimed 240 years ago that — yes, the economy actually does have an immune system. It’s called competition and it disciplines everyone. Every economic agent plays a role in the matrix. If any one of them breaks free of the discipline, like a cancer cell, and sucks away too many resources from the body economic —  aggressive competition will quickly jump in to undercut its markets and grab its revenues.

Over the following centuries, an entire discipline of Economics was developed to milk that theory dry. With exquisite mathematics, they proved that, under perfectly competitive conditions, nobody can possibly suck out of the system one whit more than they need in order to complete. Competition drives out economic cancer.

But here’s the problem. It’s not only that anything even close to perfect competition is unachievable, even in theory. But worse than that — if you’re far from perfect completion, you have no way to get back to it. Any competition policy is so saturated with massively complex unintended consequences — that its just as likely to worsten the situation as improve it. There ain’t no path to get there, folks.

Now here’s the cognitive dissonance. Even though knowing even how to move one step in the direction of perfect competition is an impossible fantasy — let’s pretend we can! Let’s tell governments that promoting competition is the only legitimate policy, and discourage them from doing anything else. The cheshire cat is grinning.

That’s mainstream economics. Forget social policy. Just let the holy grail of perfect competition be our immune system — even if it doesn’t exist. It’s sacred. Have faith — just abolish all trade barriers, and we’ll be magically cured.

Obviously my message is that we have only a pretend immune system in competition. It’s basically dysfunctional, and produces far more atrocities than solutions. Not that we should abandon competition. Short of its messianic pretensions, the market is actually totally essential for organising life. You want barter instead? Fix it, don’t scrap it. But it’s not an immune system, dammit.

But then we’re still stuck with a problem. We still have no economic immune system. Parasitic elements can still run rampant, with nothing to check them.

Well, not really — at least not necessarily. We have ethics. We have conscience. We have an underlying culture of fairness. It’s just under the surface, but that’s the problem. Predatory culture has centre stage nowadays, and kindness is on the defensive.

But if a culture of caring for others were to become the norm — every individual conscience would be a check on rampant greed. We’d have better things to do than swallow their consumer fantasies, and we wouldn’t be giving them markets. We’d stop turning a blind eye to abuse, and we’d stop buying our affluence on the backs of the oppressed. We’d cut big finance off at the trough — and we’d have a social immune system in utero.

But omg, we’re such a long way from there. Yet, there are enough of us raising questions to keep the hope alive. So do your tiny bit — every tiny bit is a move toward the healthy.

 

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