Tue 10 Mar, 2009
There is much talk about the economic doldrums that have slowed global economies to a crawl. People are suffering. Tent cities have surfaced in Sacramento, California and Seattle, Washington. In Indiana, people wait in long lines to received donations of food. These are images that hark back to the dark days of the Great Depression. My parents lives through tough times, and the struggles they experienced forever shaped their view of the world. They managed their money with great care. They were loath to waste resources.
How have we come to these dire economic crossroads yet again? There are numerous economic theories that suggest the hows and whys of economic downturns. Some people suggest there is no rhyme or reason for economic downturns; they simply come and go in cycles. Other people blame lack of government regulation and laissez-faire neoliberal beliefs about economic processes. There are sophisticated economic theories about rational choice s well as the ramifications of government stimulus packages.
No one really knows, as far as I can tell, if one theory truly explains the irrationalities of the stock market or the dynamics of housing’s free fall into a deep bottomless pit. Maybe the economists who are planning our recovery really haven’t any idea of how we got here or how we extricate ourselves from the morass. They talk a lot of mumbo jumbo and this process and that and sometimes they seem like oracles, speaking in a language that seems to make little sense. Maybe all economics has become Voodoo-like, a smokescreen that gives us the illusion of control of a set of seemingly uncontrollable processes.
Although I usually don’t understand their professional pronouncements, I like most of the economists I know. They are pleasant people who have maybe lost their way. From the perspective of classical economics, economic behavior is about macro and micro-processes that can be modeled and re-modeled into predictive theories. The problem is that economic processes are not essentially about abstract models; they are about social relationships that involve relations of trust and fears of betrayal, which depend upon ongoing economic and social relationships built up over many years of transactions. From my vantage as an anthropologist, economic relations are about relations of exchange between trading partners. How do you establish that relationship? Once it is established, how do you reinforce and build that relationship? How do you maintain trust between trading partners? How do you reassure a person who is nervous about extending credit or accepting credit? These are not abstract matters; they are central elements in the construction of social relationships. The human element is missing from our economic thinking, and until it is re-established, our economic ideas and our economic policies will be misguided.
In my next post, I will discuss my recent experiences of West African traders, who believe that economic success can only occur through the construction and reconstruction of viable social networks.
Barbara says:
On CNN today they showed the “Edar,” a “portable home” for homeless people. Here is the link: http://www.cnn.com/2009/LIVING/wayoflife/03/10/homeless.tents/
Here’s another link, for the Edar site: http://www.edar.org/news.html
“Brenda Gardenhire shows off her new home with pride. It looks like an oversized shopping cart covered with a khaki canvas.” (CNN excerpt)
Economists may have sophisticated theories about “rational choices” that have contributed to the current depression, but let’s face it, there just aren’t that many choices open to the 20-25% of Americans who live below the poverty line, if they want an “American” standard of living. People don’t normally choose to live in oversized shopping carts, and CNN can’t convince me they are “proud” of their “new homes.” They are at the mercy of a system that’s greedy to the bone, and their social networks have eroded, in large measure, as a result of their marginalization and the stigma attached to homelessness and the nomadic life.
Bernie Madeoff (Ponzi scheme 2008) says he’s going to plead guilty on Thursday to all 11 counts, which entitles him to spend as much as 150 years in prison. It will be interesting to see what comes of it. Will his penalty be reduced to 5 months and an ankle bracelet, like Martha Stewart (securities fraud, 2001)?
Those with resources have well-established networks of trading partners. Is the solution for the downwardly mobile and poor in America to build viable social networks? What else would be necessary?
niger1 says:
Hello Very good Mr Stoller, very good teach them some social skills
http://www.niger1.com