BOB DOUGLAS: Is our current economic model fit for the purpose of human survival?

If we humans are to survive the catastrophic threats that now confront us, we must urgently rethink the way we live and care for our planetary home. In turn, that demands that we examine the role that economic theory and practice play in the way modern societies operate. There is a case for moving outside the economics profession for a frank discussion of the way the current economic model affects us all.

Geoff Davies, a prize winning ANU geoscientist has been researching the economy-for about 20 years and has written a series of books about the way economics impacts on the way we live. His most recent contribution, “THE LITTLE GREEN I’m afraid of ECONOMICS, but I want save the world, BOOK” summarises his conclusions and I think they require broad discussion and debate.

Davies claims that the theory of neoliberalism, with its unconstrained markets, that continues to dominate public policy around the world, is an “irrelevant fabrication.” He points out that the Australian government creates money; it doesn’t borrow it and that the so-called budget deficit problem is a “misunderstanding and a beat up.” He says that the actual performance of the economy has been well short of official claims for it and that it has led to citizens carrying huge debts, while the productive part of the economy has been hollowed out. He argues that there are far more sensible ideas available, which would allow us to “stop trashing the land and stop ruining the planet before it is too late”.

Davies vigorously rejects growth in GDP as an appropriate measure of human progress. He claims that it is a measure of the quantity of “stuff” we consume, as well as all the money we spend on trying to fix things that have gone wrong: that it is seriously muddled and doesn’t really qualify as accounting.

I have carefully reviewed four of Davies’ economics books and am firmly attracted to his ideas and conclusions. And of course, he is not alone in his rejection of the centrality of neoliberalism as the driving force for the global economy and its contribution to the way we live.

Canberra science writer, Julian Cribb, has documented the range of threats to human civilisation and argued in his book, “Surviving the 21st Century” for drastic rethinking of the central assumptions for managing the human world. Cribb has played the leading role in the development of a website, and has argued in John Menadue’s Pearls and Irritations blog , for the development of a new Earth Standard Currency, which would be pegged to the real value to humans of the planet’s resources. To quote Cribb: “It is self-evident that, if you use an infinite commodity, money, to exploit a finite Planet, you will run out of planet long before you run out of money.That is the greatest flaw in the present global monetary system. It looks only to the present need for ‘wealth’ and makes no investment in the long-term need for human and biotic survival. In economic terms, it treats life itself as an externality. In other words, through our monetary system, humanity currently prizes ‘wealth’ above its own survival. That is a worry.”

The bushfire crisis that is now dominating Australian thinking has given many Australians pause to think about the nature of the climate change threat and how we can address climate change. But dealing with climate change will not be enough. We must simultaneously confront the other threats that we humans have now crafted, which threaten the survival of our descendants.

Now is surely the time for us to rethink the central assumptions that dominate the way we live. It is time for us to reconsider the ideas that underpin economic policy and to question, as do both Davies and Cribb the appropriateness of current economic orthodoxy.

Bob Douglas is a retired public health academic and a Director of Australia21 for which he leads a project entitled “Survival Matters”.


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6 Responses to BOB DOUGLAS: Is our current economic model fit for the purpose of human survival?

  1. Wayne McMillan says:

    Thanks Bob for a well written piece that should have all thinking Australians concerned.

  2. Allan Kessing says:

    One certainty is that GDP will rise as a result of the current fires because of all the new building activity to replace 1,000+ homes and “other structures” destroyed.
    Then there will be a major boost in retail spending – hailed as a “good thing” – when the furnishings & white goods to fill them are acquired, mostly on credit.
    The vast majority of these items will be imports but that’s another story – the destruction of domestic industry and globalisation.
    The northern NSW town of Lismore experienced this miracle of false accounting after the floods of March 2017.
    Whether it is flood or fire, this will be the new norm.
    Won’t someone think of the beleaguered domestic insurance industry?
    Look at the recent, very brief, federal plan to subsidise cyclone insurance in FN Qld which quietly disappeared down the memory hole.
    MunichRE & ZurichRE are charging vastly increased premiums to cover national disaster insurers the world over and there is no end in sight.

  3. Rob Stewart says:

    Interesting article Bob. I haven’t read Davies work but will familiarise myself with it. However, on some of the points you raise Davies work doesn’t seem all that new to me. For example, real, intelligent and honest economists (a rare commodity) and just about everyone else, have long known the inappropriateness of the GDP measure in measuring genuine economic progress. That was never really the intention of it. It has been misused and bastardised by economists and other assorted apologists for capitalism and its rancid variant, neoliberalism, in particular, for a very long time. Similar story about neoliberalism being about free markets, rugged individualism and small government. Ayn Rand fantasy stuff. Ditto fiscal deficits, austerity and the role of money. It’s all bullshit. It’s actually about big government for big powerful interests and to hell with everyone else. Ideology of Orwellian standards honed and polished in the Mont Pelerin Society and other assorted think tanks for decades.

    Time to have a discussion about the economic model from outside it? Methinks that has been happening already, but no one in power is listening. Look at the great so-called economic “externality” of carbon emissions and climate change. Fiddling for 50 years while we cook the planet. I’ve been choking on bushfire smoke for 6 weeks, doesn’t seem like an externality to me. And the best Scomo can do is tell us that there’s always been fires.

    Neoliberalism is only just getting started. The way the big end of town was bailed out in the GFC (around $26 trillion in the US alone) simply allowed neoliberalism to bare its fangs. It knows all governments have its back, because it owns them. There is no need to pretend anymore. And the next massive collapse is on the very near horizon and the result will be the same – bailouts for the rich and powerful while the masses get sacrificed…..again. There will be outrage, disgust and protest but, in the big picture, it won’t change a thing. So, nothing wrong with a good critical discussion about the economic model but I don’t think anything will change the course we’re on now.

    • Don Macrae says:

      Apt comment, Rob, all of it. Especially ‘no one in power is listening’. It turns out that effective democracy depends upon good faith from the elites, and this is in short supply. Mendacious electoral marketing has given us a Prime Minister who believes that some greater force is in control, always rewarding those who deserve it. So no responsibility rests with him, and certainly no increase to Newstart. As has been observed by so many, we have elected a government of the morally bankrupt lead by a deluded confidence man.

      The hard problem is not the evolution of new economic concepts, but how to reclaim our democracy from our current bad faith government.

  4. Evan Hadkins says:

    I’ve been looking for a metric to replace GDP.
    A single figure that could be reported at the same time as quarterly GDP.

    I suppose the simplest would be GDP of planet destroying industries, subtracted from the GDP of human-sustainability promoting ones.

    Does anyone know if such a metric exists?

  5. Stephen Saunders says:

    We all observe Australia’s surpluses of Fire and shortages of Water. Equally clearly, we see the response from Morrison and Albanese: Business As Usual.

    I don’t mean that as a casual sarcasm. It refers specifically to the targets for Jobs And Growth in the Treasury Budget. That’s what our leaders care about most.

    If Jobs And Growth requires exceptional 21st century levels of population growth, ramps up land-clearing and fossil-fuel extraction, and pays only casual regard to Australia’s uniquely variable biodiversity and water regimes, so be it. GDP Rules, OK?

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