The Truth on Societal Progress: Addressing a Failing Economic Model

Herbert Spencer (1820-1903), an English philosopher and economist, believed that society was evolving towards increasing freedom of individuals and held that government intervention ought to be minimal in political and social life. Spencer’s survival of the fittest concept was believed to be natural, hence morally correct. Neoliberals extol freedom as trumping all other virtues. Their freedom is divorced from democracy, buttressed by the concept that all coercion is evil. This particular brand of freedom is not the realization of any political, human, or the ultimate aim of cultural success or progress, but rather relying on a system to harness the selfishness of people and direct it to public good, thus freeing itself from the need to depend unrealistically upon the uncertain moral virtues of its participants. Joseph Stiglitz observes, “Neoliberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience.”

Søren Kierkegaard (1813-1855), a philosopher and social critic, emphasized the importance of subjectivity, which has to do with the way people relate themselves to (objective) truths. What he means by this is that most essentially, truth is not just a matter of discovering objective facts. While objective facts are important, there is a second and more crucial element of truth, which involves how one relates oneself to those matters of fact. Since how one acts is, from the ethical perspective, is more important than any matter of fact, truth is to be found in subjectivity rather than objectivity. Truth, much like knowledge, is bound to power and similarly operates amidst the individuals and institutions that generate and sustain it. The economic elite do not hesitate to present their ideology as interpretation of truth. The “truth” the market reveals is never in actuality some eternal, given fact. The market is never a neutral arbiter of truth, so the “truth” it reveals about government practice has always required interpretation.

With regard to everything that counts in human life, including especially matters of ethical and religious concern, Kierkegaard held that the crowd is always wrong. Any appeal to the opinions of others is inherently false, since it involves an effort to avoid responsibility for the content and justification of my own convictions. Genuine action must always arise from the Individual, without any prospect of support or agreement from others. Thus, on Kierkegaard’s view, both self-denial and the self-realization to which it may lead require absolute and uncompromising independence from the group. Social institutions – embodying “the system” of Hegelian idealism – are invariably bad; only the solitary perception of self can be worthwhile. Kierkegaard observes, “Everyone one wants progress, no one wants change.” Today individuals are faced with an existential challenge in redefining their self-image and the mind-set with which they respond to the world.

Kierkegaard claims, “There are two ways to be fooled. One is to believe what isn’t true; the other is to refuse to believe what is true.” In his own oblique way, Kierkegaard maintained that more attention needs to be directed towards the issue of our personal appropriation of ideas – to the question as to whether or not we live in the ideas we espouse. Abiding by your beliefs requires refraining from the impulse to talk yourself out of them when they become highly inconvenient. Kierkegaard offers insights about the process and significance of self-deception that today we are inattentive to, if not totally blinkered. Bertrand Russell observes, “No satisfaction based upon self-deception is solid, and, however unpleasant the truth may be, it is better to face it once for all, to get used to it, and to proceed to build your life in accordance with it.”

What is the truth of the present economic model? Over 90% of jobs created since 2005 can be deemed non-traditional work. This big tent that includes contractors, call-centre employees, and individuals who work for contract companies that often hire janitors or hotel workers for large corporations. These jobs are taken up by every working age and demographic. The surge in non-traditional work presents enormous barriers for economic mobility and social stability for those already struggling. The typical American family has a lower net worth income than a typical family two decades ago. Median wages have largely flatlined since 1979, while middle-class life has become 30% more expensive in the last twenty years. The instability created by the lack of a stable paycheck means families are unable to plan ahead financially, incur unexpected health costs, unable to afford additional education or job training workdays enabling them to advance their career.1

Robert Reich observes, it used to be that economic expansions improved the incomes of the bottom 90 percent more than the top 10 percent. But starting with the “Reagan” recovery of 1982 to 1990, the benefits of economic growth during expansions have gone mostly to the top 10 percent. Since the current recovery began in 2009, all economic gains have gone to the top 10 percent. The bottom 90 percent has lost ground. We’re in the first economic upturn on record in which 90 percent of Americans have become worse off. One factor here has been a sharp decline in union membership. In the mid-1970s, 25 percent of the private-sector workforce was unionized. Then came the Reagan revolution. By the end of the 1980s, only 17 percent of the private workforce was unionized. Today, fewer than 7 percent of private-sector workers belong to a union. This means most workers no longer have the bargaining power to get a share of the gains from growth.

Another structural change is the drop in the minimum wage. In 1979, it was $9.67 an hour (in 2013 dollars). By 1990, it had declined to $6.84. Today it’s $7.25, well below where it was in 1979. Given that workers are far more productive now – computers have even increased the output of retail and fast food workers – the minimum wage should be even higher. By setting a floor on wages, a higher minimum helps push up other wages. It undergirds higher median household incomes. The only way to grow the economy in a way that benefits the bottom 90 percent is to change the structure of the economy. At the least, this requires stronger unions and a higher minimum wage. We should be paying less attention to growth and more to median household income. For Reich if the median household’s income is heading upward, the economy is in good shape – consistent with societal progress.2

GDP growth is the most widely quoted indicator of economic performance, but it may not give an accurate picture of people’s economic well-being. There is a crucial distinction between assessing the health of the economy and the well-being of the average employee – the later set of metrics paint a very different picture. Economic growth always gets a lot of attention but when trying to determine how well people are doing it is also interesting to look at indicators that highlight households’ economic activity. Real household disposable income, net cash transfers to households, real household consumption expenditure, consumer confidence, households’ savings rate, households’ indebtedness, financial net worth, and labor under-utilization rate are just a few of the indicators that can help provide a better picture of societal progress. Aggregate figures like GDP fails to sum up reality – overlooks the well-being and day-to-day lives of its citizens.

Under neoliberal subjectivity of human capital, happiness has become a prior condition to pursue the fulfillment of those social and economic needs that are no longer guaranteed, as well as increasing the odds of achieving valuable outcomes in the labor sphere. With the widening income gap between the wealthy and the rest of society, income matters to happiness as it affects the ability of how to live one’s life. Individuals, as creative beings, must reject the concept of human capital that limits their goals of freedom and happiness. The well-being of the community depends on ensuring that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. Politicians need to understand we need significant change – the role of the state needs to be transformed from that of enabler of market-based development to that of partner in the growth of the reciprocity and commons-based social economy.

Nietzsche believed, one should be conscious of the illusory nature of what is considered truth, thus opening up the possibility of the creation of new values. It is necessary to create the social environment or milieu to support good governance to control cognitive dissonance and the consequent balancing of perception that leads to misperception. The truth is that capitalism creates enormous wealth, but it concentrates into oligopolies and monopolies, to the extent that it undermines that very wealth production it relied on. Another truth is how neoliberal capitalism creates and normalizes a culture of lying to itself leading to its inherent instability. There needs to be accountability. Processes and institutions must produce results that meet needs while making best use of resources. Equity and inclusiveness require all men and women have opportunities to improve or maintain their well-being. Societal progress is about improvements in the well-being of people and households.

1 Shounak Bagchi. The New Work Economy is Failing Everyone.(12 Dec 2018)

2 Why the Economy is Still Failing Most Americans (Sept 28, 2014)

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