Somehow I missed the release of a new collection of essays by Wendell Berry in 2010, What Matters: Economics for a Renewed Commonwealth. The introduction is by Herman Daly, whose clarification of how scale limits transform economics remains the most important idea still not acknowledged in mainstream economics today.
When two of my heroes collaborate on a book following the economic collapse, I order several copies sight unseen — one for me, a few to give away. Several of the essays are Berry classics on economic thought, such as “Total Economy,” several are new, most notably, “Money versus Goods” and “Faustian Economics.” Together with Daly’s introduction, in which he expands upon Aristotle’s prescient distinction between “oikonomia” which is about the “use value” of products in the real economy, and “chrematistics” which is about the maximization of exchange value measured by money (what our speculative financial system has become),they should be required reading and the subject of deep study by anyone even considering opining on economic policy today.
Of course this is not likely to happen. Those in positions of power, liberals and conservatives alike, who are “managing the debt crisis” in Europe, or “managing the budget crisis at home,” delude themselves with the notion that if we can only stabilize the economy, get it back on the growth track that the economic collapse “interrupted,” economic life and “job creation” can return to normal.
They are wrong.
Berry’s What Matters flows directly from the “full world” premise of our work at Capital Institute. As usual, Wendell cuts right to the heart of the matter, fortifying me to push harder in my own thinking.
…our economy has become an anti-economy, a financial system without a sound economic basis and without economic virtues.
This is so fundamental it is worth pausing and reflecting simply on this idea alone. “Our economy has become a financial system without a sound economic basis.” As if that’s not enough, it is also an economic system “without virtues.” The searing truth we have come to expect from this “simple farmer” sits there quietly on the page.
It is not uncommon to hear talk of the financialization of the economy, yet it is often unclear what value judgment if any is attached to this statement of fact. Is this a good thing, a bad thing, or just an observation about technological “progress” with no value judgment at all? Wendell’s challenge to the present system is clear:
Among its other wrongs, usury destabilizes the relation of money to goods. So does inflation. So does speculative trading…By destabilizing the relation of money to goods, a financial system usurps an economy…Money, instead of a token signifying the value of goods, becomes a good in itself, which the wealthy can easily manipulate in their own favor…
At this historic moment at the beginning of the Anthropocene, when we are experiencing symptoms of natural resource limits worldwide, and can see, in the immediate future, the exponential expansion of biting limits and their implications on our “way of life,” the financialization of the economy is deadly serious. It is not value free. It will be catastrophic if not arrested.
The economy is not simply a monetary phenomenon. The economy is first and foremost a physical phenomenon, dependent upon and now, at current scale, integral to the physical systems of the biosphere. At its core, the economy is grounded in our food systems, which means it is grounded, literally, in the soil and the water cycle as Wendell has been teaching us but our “leading economists” have been ignoring for decades. In stark contrast to our belief system, particularly the American “manifest destiny” expansionist ideology, our economy must respect physical limits even if doing so proves to be horribly inconvenient to our short-term desires.
In “Faustian Economics,” Berry reminds us that in all dimensions of our humanity, including the economic, coming to grips with limits has always been a precondition to our health and prosperity. He draws on Christopher Marlow’s Tragical History of Doctor Faustus in which the learned and powerful Faustus longs to possess “all nature’s treasury.” Mephistopholis explains to Faustus that (only) “hell hath no limits.”