What does it mean to ‘forge a new economy’?

This opinion piece appeared in the Business Day on 7 May, 2020. The original can be viewed here.

Since the beginning of the lockdown phase of the government’s response to the Covid-19 pandemic, President Cyril Ramaphosa has repeatedly stated that SA needs to build a new, inclusive economy after the crisis. On April 21, for example, he said: “We are resolved not merely to return our economy to where it was before the coronavirus but to forge a new economy … our economic strategy going forward will require a new social compact among all role players — business, labour, community and government — to restructure the economy”.

These are bold words, but it is not clear what they mean in practice. Is Ramaphosa suggesting the wholesale reorganisation and reimagining of the economy and society as suggested by advocates of so-called “wellbeing economies” or “doughnut economies”, or is he talking about merely shuffling the chairs a little and diffidently regulating the rapaciousness of the “market” with a little more timid welfarism?

History shows us that world-altering events such as this pandemic can lead to systemic changes, so let’s assume the president is suggesting the former. If he is, it is clear that it will take an enormous effort to unravel the whole network of beliefs, many held with fundamentalist zeal, that inform conventional market-based thinking about what the economy is and what it can and cannot become. These beliefs are often fanatically held in direct contradiction to available evidence, which can only be explained with reference to the psychological phenomenon of cognitive dissonance.

Before any of us can begin to think about the economy differently we need to realise that the economy is not actually a thing. You can’t go and visit it. More importantly still is the fact that what the economy is not set in stone. The economy is no more than a socially constructed set of rules, meaning that, as political economist Lorenzo Fioramonti of the University of Pretoria says, “the economy can be whatever we want it to be”. Despite the claims of classical economists and their modern-day acolytes, there are no economic laws; economics is not, and there never has been, a science (Yanis Varoufakis describes economics as “theology with equations”). Therefore, how the economy functions, and for whom, is a question of choice.

This is an important step in our thinking because it compels us to ask not only what the economy is but, critically, what it is actually for. When was the last time that you asked yourself what the economy is for, if you ever have? When we ask we open ourselves up to a web of interconnected questions about why we live the way we do, and why we value certain things over others.

Many will perhaps answer that the economy exists to create wealth. But what is meant by wealth? Should the economy we choose be concerned, as it is now, only with the creation of monetary wealth? Evidence overwhelmingly demonstrates that the pathological pursuit of monetary wealth has resulted in catastrophic inequalities and the real potential of our extinction as a species. Can we not conceive of wealth in different ways? We can have a wealth of culture in society, a wealth of friends, a wealth of time on our hands to experience the world outside the anomie of work and shopping malls.

Some will say the economy exists to create work. But what has work become? George Orwell stated that most workers experience “the enormous treadmill of boredom” every single day. Millions more, especially here in SA, yearn to join this treadmill. But why? Acclaimed economist JK Galbraith argued that work is now simply “endured to have the necessities”, in the same way it is sought as a means to “have the necessities”. But is this all that work should be? Can we not create an economy were work plays an entirely different role and has an entirely different meaning?

Inevitably other people will find alternative explanations for why the economy exists, meaning that there are a host of important questions that must be asked as we interrogate what it means when the president says we must “forge a new economy”.

It is critical that this reimagining is not simply left to economists, because as political theorist Timothy Mitchell reminds us “economists are specialists in questions of representations”. Economists should participate, but must not be allowed to prescribe the parameters of the debate as they relate to what the economy is or what it has the potential to become. It is vital that all of us participate meaningfully. It is a debate that may well shape the very survival of humanity.

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