Capitalist Myopia: For a Sustainable Economy, We Can't Miss the Forest for the Trees
"I am glad there is no God. If there were, I cannot imagine that we rampant, myopic, and insatiably self-centered creatures should be allowed to survive a single day more." -- John Fowles (1926-2005), British novelist
In a Wall Street Journal article in August, Jean-Philippe Delsol, a trustee of the Paris-based non-profit Institute for Research in Economic and Fiscal Issues, suggested that "the denizens of the Dow, Nasdaq, CAC and DAX floors may be speculators and myopics."
He may be right, but as many Occupy Wall Street protesters have pointed out, the myopia that helped lead to the financial crisis wasn't limited to the trading floors. Nearsighted policies have pervaded board rooms, Capitol Hill and the Federal Reserve. Of course, there were a few clear-eyed souls who perceived the warning signs -- notably economist Nouriel Roubini and former Commodity Futures Trading Commission chairperson Brooksley Born -- but for the most part, the financial crisis took most by surprise.
SHORT-TERM FOCUS, LONG-TERM TROUBLE
Former S.E.C. chief William Donaldson even foresaw the rise of public distrust in the corporate world that would eventually lead to the worldwide Occupy Movement. And he blamed myopia. In a speech to the business research group Conference Board in October 2004, Donaldson said that his agency was "waging an 'uphill fight' against the corporate malfeasance and may be reaching the limit of its legal responses. Too often, certain business organizations, structured to represent 'the business of community,' are dedicated in deed and rhetoric to perpetuating a myopic focus on the status quo. Too many are still intent on maintaining corporate prerogatives and preserving a narrow focus on short-term financial performance."
"Our free market, democratic system will gradually erode, and inevitably suffer grievous harm, if remedial efforts are not undertaken and endorsed by a broad cross-section of our business and financial communities," said Donaldson, "This erosion of trust in business is a serious and worrying development, and there's no guarantee the problem will automatically get resolved."
THE OTHER GDP: GROSS DAMAGE TO THE PLANET
While myopia may be a reason, it is by far a justification for actions that are ultimately irresponsible, says Tim Jackson, Economics Commissioner on the UK Sustainable Development Commission who teaches sustainable development at the University of Surrey.
"Just because humans suffer from myopic choice and find it hard to make a sacrifice now even for the sake of something better later doesn't justify taking a view of prosperity based on more or less instant gratification," writes Jackson in his book Prosperity without Growth: Economics for a Finite Planet, in which he argues that while gross domestic product (GDP) may measure economic growth, it does not take into consideration the ecological ramifications of that growth. He contends that it is critical to find "a credible vision of what it means for human society to flourish in the context of ecological limits."
CAPITALIST MYOPIA: "THE IDEOLOGICAL PARADOX OF OUR TIME"
But could the problem be deeper than a deregulated financial system, dark markets, opaque financial vehicles and asleep-at-the-wheel regulators? Could the whole system be rotten? Former dean of the MIT Sloan School of Management and co-founder of the Economic Policy Institute Lester C. Thurow thinks so.
"Capitalism is myopic and cannot make the long-term social investments in education, infrastructure, and research and development that it needs for its own future survival," Thurow wrote, describing what he calls the "central economic problem" in a review of William Greider’s 1997 book One World, Ready Or Not: The Manic Logic of Global Capitalism. "It needs government help to make those investments, but its own ideology won't allow it either to recognize the need for those investments or to request government help. That is the ideological paradox of our time."
Medically speaking, there is no way to prevent nearsightedness. But if we hope to one day have a sustainable global economy, the power elite must put on some glasses and have a look around, especially the ones who have been quick to dismiss the Occupy Movement. As Michael Prell, a strategist for the Tea Party Patriots, recently told The New York Times, "last generation’s protesters are today’s leaders." However, that doesn’t mean that clarity in one’s youth always remains: myopia develops with age.
Hollender, Jeffrey and Stephen Fenichell. What Matters Most: How a Small Group of Pioneers Is Teaching Social Responsibility to Big Business, and Why Business Is Listening. New York: Basic Books/Perseus Publishing, 2004: 322.
Jackson, Tim. Prosperity without Growth: Economics for a Finite Planet. New York: Routledge, 2009: 43.
Ibid., p. 3.
image: Dori, Wikimedia Commons