The financial crisis prompted people who find it difficult to count their own toes to babble about economics as if they got private lessons from an economist. I, too, have learned for the first time in my life about “junk bonds” and “venture capital funds.” Now I have good grasp of the material, and this is what I will tell my instructor when he comes to test me:
A market economy does well when people have a bit more money in their wallets than necessary to buy all the goods on offer. This difference creates higher prices and motivates producers to make their manufacturing methods more efficient, invent more goods, and convince the public that buying them will make their lives better.
The crisis stems from the undermined faith in the required and regular nature of this mechanism. As a result of the declining trust, the public minimized its purchases, and therefore there is no point in producing more and no money to do it. In the absence of shoppers, the wheels of production grind to a halt and the banks refuse to risk deposit funds by offering loans that will not be returned.
The solution, dear instructor, is a sort of stimulator that would put the wheel back in motion. Money, and plenty of it. The money will be taken from the public coffers and injected into the economy in various forms: Guarantees to banks so that they offer more loans; funds that would assist plants facing difficulties in paying their debts; tax breaks and large investments in infrastructure projects. The public coffers will finance this, and the debt will be paid by the citizens once the economy recovers.
I believe, dear instructor, that I studied the material thoroughly. And now, let me tell you what I think about this discourse of economic sages. Their theories are lovely, yet I am troubled by constant doubt akin to a bothersome mosquito. Is it possible that everything shall be fixed if only we believe it will be fixed? Will the crisis be resolved through psychological manipulations? Does “recovery” mean a return to a consumerism craze? Could it be that waste, exhaustion of natural resources, pollution, and constant growth in the gap between rich and poor characterize a healthy economy? Is there really no way to distinguish between real need and indecent desires? Is there no connection between economics and ethics?
Is there no midway?What can I tell you, Mr. instructor, my heart refuses to listen to my brain. It senses that the market, which isn’t merely a shopping arena but the essence of our life, the endless stalls which the leaders of our economy try to reconstruct, is not the best of all worlds.
Indeed, it is worse being a shepherd at the edge of the Sahara desert or a farmer in China, but with your permission I dare ask whether there is no midway between our status and theirs. Is there only a choice between hunger and thirst on the one hand and an immense selection of pasta and cellular phones on the
I dare to think, my knowledgeable instructor, that the current crisis is a symptom and not a disease. It is a symptom of a cultural crisis. The economy may recover, but within a relatively short time we shall face yet another crisis, which may be worse than the current one, and then another one, and another one – until residents of the wealthy parts of the world will learn to make do with fewer resources and adapt their desires to their real needs, and to the limits of mother nature.