How Much is Enough?

Tuesday, February 9, 2016

The real world has its limits; the imaginary one is infinite.


Given our consumption and production patterns (global material extraction has nearly doubled over the last thirty years) there is growing concern that our economic system may be leading us to serious environmental and economic damage, if not worse. So, we need to ask ourselves if our obsession with commodities and economic growth isn’t reaching a natural limit.

In addition we might wonder whether the inability to think about limits-how much is enough?-doesn’t lead to a diminished idea of what it is to be a human being. For it could be that, as Thomas Merton informs us, “Man needs to find himself where he is, in his own proper time and place, in the history to which he belongs.” This notion of a restricted but good life stands radically opposed to the notion that we are inherently, uniquely and exclusively transgressive creatures who always want more than we have. The evidence suggests just the opposite, since for vast stretches of time humans have lived with a subsistence ethic and the idea that some form of limitation is inextricably bound with both the human condition and our notions of goodness. The limitless, on the other hand, often suggested chaos and “hell hath no limits”.

Markets, it is supposed, are global in their reach and so limitations in the form of state regulation or attachments to identity, place and perhaps even principles can be thought of hindering the smooth flow of capital, growth, creativity and progress. The state, culture, family, norms and religion are often seen in this light as imposing limits on our endless desire for freedom or happiness. What is freedom if not to be ‘free from’ and what is happiness but the pursuit of it?

Underlying market behaviour and economic analysis is the foundational assumption of scarcity: human beings have infinite or unlimited desires and only limited means of achieving them. That sounds like an unsolvable problem! But not to all ears.

Back in 1930 Keynes wrote a fascinating paper predicting that cumulative productivity growth would result in his grandchildren living without having to face the “economic problem” (scarcity). For him there was a natural limit to our economic needs and so working hours would drastically fall as we devoted more of our freed up time to ‘higher’ pursuits (art, friendship, literature). As it turns out Keynes was correct in his productivity estimations but woefully off the mark otherwise. It seems our desire for more and more economic goods and services knows no bounds and so we still, on average, work longish hours to attain them.

But why did Keynes get it so wrong on scarcity? Partly, no doubt, he underestimated the possibility that for some people work is associated with meaning and purpose rather than disutility. The work ethic becomes an end in itself. Also, if we have endogenous preferences then individuals’ initial preference for consumption over leisure may morph over time as their experience of consumption gives shape to an ever-  progressive intensification of that preference ordering. Consumption, in some sense, can become addictive.

Crucially, what Keynes failed to take into account is that even though needs may be absolute our desires are not. Emulation, rivalry, competition and envy may play a role in explaining the paradox that we are always left wanting more even in an age of abundance. But in addition to that he did not recognize that an individual’s desires might be indefinitely extendable, not least because human imagination is so open-ended. Coupled with those factors, Keynes couldn’t have foreseen the declining role of social, traditional, moral, cultural and religious constraints on consumption and greed. Nor, perhaps, could he have envisaged the sheer power of markets to generate new desires through innovation, novelty, advertising and marketing.

So, we are destined to always live with scarcity because our desires are supposedly infinite. And they’re infinite because, at least in part, our emphasis on individual sovereignty and instrumental rationality precludes us from judging them as “good” or “bad”. Pushpin is as good as poetry, Bentham famously said.  Furthermore, desire is no longer determined by a specific telos of man that would limit desire along the lines of what is appropriate (Ruskin) or what is reasonable. Instead, we have the inverse thesis: because we desire something it is good (a view shared by most economists).

The economic point of view, in distinction from economists’ views, only exacerbates the problem. In addition to claiming that our desires are infinite economists usually assume that desires/preferences are aimed to maximize ‘the good’ (well-being). Or, in other words, that we are ‘constantly moving happiness machines’. But from Lionel Robbins in the 1930s onwards the economic point of view stresses something altogether more peculiar: we aim to maximally satisfy our preferences/desires given our constraints. What those desires are and how they are formed the economic point of view has nothing to say. We simply have, by definition, an abstract ‘desire for more’.  Under those circumstances it is not hard to see how we can become slaves of our desires.

It appears, then, that neither economic theory nor markets themselves are able to answer the question: how much is enough? When more is axiomatically always better the economist is likely to reply: enough for what?

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