Archive for June 13th, 2012

Graeme Maxton’s “The End of Progress:” Depressing, Yet Necessary Look at World Economics

Graeme Maxton’s THE END OF PROGRESS: How Modern Economics Has Failed Us is a trenchant and often extremely depressing look at world economics.  Maxton starts with the unbridled “free” market of much of the Western industrialized world, and points out that philosopher and economist Adam Smith (author of THE WEALTH OF NATIONS) would not like much of what he sees.  Too many monopolies, says Maxton; too much money and power in the hands of too few, and too little taxation in countries like the United States of the wealthy and upper middle class (who can afford to pay) means that the world economy, in effect, is upside down: the things that should be expensive aren’t (such as televisions, calculators, and computers), and the things that aren’t expensive should be (oil, which is a finite resource; food, especially red meat which isn’t cost-effective to grow and/or sustain without a substantial price increase; water, which once again is a finite resource).

Maxton lays out many, many facts and even more opinions about why he believes the world has reached an end to any sort of substantial, sustainable technological progress to lift most of humanity up out of poverty.  Maxton believes instead that in many countries, such as the U.S., we are going backward (he is particularly censorious when it comes to the U.S.’s broken health care system, and how it leaves millions without good access — or perhaps any access at all — to health care), and that the way the world economy has gone in the past thirty years, we’re only going to accelerate this trend.

Now, the main reason this has anything to do with economics is due to how Maxton ties in his premise (that being, of course, “The End of Progress”) to the 2007 stock market/worldwide banking crisis.  Maxton points out that after the 1929 stock market crash, the world actually hit bottom some time in 1932; the world, as a whole, took nearly 25 years to recover from the damage of that stock market crash.  Yet the 2007 crash, with the worldwide banking crisis added to it, was actually worse than the 1929 crash — and Maxton believes that the 2007 crash, rather than being an end in itself as the worst-possible recent economic event, is actually a harbinger of even harder times to come.

Maxton’s prescription for economic improvement mostly depends on two things: raising taxes substantially on those who can afford to pay, and worldwide belt-tightening as there just aren’t the resources available to improve the economy overnight (or in his view, perhaps at all).  He believes that attitudes need to change, especially among the wealthy; he points out that in Smith’s time, the wealthy believed they should pay more in taxes because they could afford to do so, yet now the wealthy pay as little as they can get away with because it appears they’ve bought most of the politicians/power brokers.  This leaves everyone else with a far lesser share of the economic “pie” than we should have, and yet the wealthy do not believe they’re doing anything wrong as they believe free-market, unbridled capitalism is what Smith was talking about in 1776.

Yet the meaning of words change over time, so when Maxton points out that this isn’t what Smith believed at all — Smith believed that capitalism within moral limits was the right move, and that businesses should look at long-term gain rather than the short-term profits that may look enticing, but will ultimately hurt everyone including the business at hand — he is on to something.  And he’s also right when he points out that many of the world’s resources are finite and must be conserved as much as possible, which is something Smith would also approve of; Smith would definitely not approve of how oil company executives behave (how they get tax write-offs and economic benefits when they’re the wealthiest companies the world has ever known, for example), nor about how many economists fail to talk about the morality and ethics of how wealth changes hands while instead talking only about money as if there are no morals and ethical consequences attached.

Overall, Maxton’s premise here is that of a worst-case scenario.  But it’s a necessary point of view to take, considering much of what is heard from economists these days is only about the money rather than the ethical considerations behind the actions of those who have the money and/or power. 

This is a “. . . if this goes on” polemic that should be acknowledged, widely read, and debated, especially considering Maxton’s main premise that our attitudes need to change when it comes to dealing with worldwide, finite resources.  After attitudes change, maybe then politics and policies will finally also change to reflect a greater awareness that the world we live on is a precious resource — not to mention the only one we have — and needs to be husbanded carefully.

My recommendation is that everyone needs to read THE END OF PROGRESS, most especially writers and politicians, in order to understand the magnitude of the choices we’re making.  Yes, it’s an often depressing book that sometimes conflates opinion with fact.  But the case Maxton’s making is sound, especially when you consider it as a worst-case scenario that it’s obvious Maxton really hopes we as a species will avoid.

Grade: B-plus.

— reviewed by Barb

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