67. Short term v. long term perspectives

The economists of this world like to divide perspectives into macro and micro; the short term and the long term. John Maynard Keynes, among the greatest of his profession, said “In the long run we are all dead,” so what is important is the short term. Inevitably, if we cannot cope with the present there is little point in focusing on either the short or long terms. Much of what is happening in the world right now may be unsatisfactory, but projections about tomorrow are truly frightening.

The most disturbing statistic coming out of the World Economic Forum in Davos this January was that 45% of jobs in the United States will be taken over by automation over the next two decades.* How is the society going to tackle this daunting “long term” challenge? By comparison, dealing with the growth of an aging population, air and water pollution and global fish stock depletion seemed slightly less threatening. But to their credit, for the first time at Davos, economists openly discussed ways in which capitalism might be saved from itself.

Looking at where we may be headed is influenced in many ways — not only by our location on this planet but by our education, employment, cultural background, social outlook (now much affected for the younger generations by the internet) and expectations. The Chinese, for example, have a different perspective on what needs to be done for the long term well-being of their nation. Their commitment to the long term was already there a couple of millennia ago when they built the Great Wall and continues to the present day. No nation has ever introduced a long term social project on the scale of China’s Birth Control restrictions in which couples were limited to having only one child. Reasonably fearful of their ever larger population, the Communist leadership never even considered the consequential imbalance of the sexes as most couples felt having a son was more important than raising a daughter.

Today this Chinese orientation towards the long term is evidenced by the development of numerous mega-projects ranging from the high-speed rail system (of which 10,000 miles have already been completed ) at a cost of $300 billion, to the South to North Water Diversion Project under construction which will cost $80 billion. I admire the incredible scale of the Chinese commitment to the long term, but recognize that in Europe or the United States such giant projects would create powerful political opposition. Very few of the projects will yield immediate returns, but China’s authoritarian rulers can set aside any social, economic and environmental critiques or any open discussion of the possible consequences.

When one considers the extraordinary long-term mega infrastructure projects of the Chinese in Africa and Latin America (like the $50 billion canal across Nicaragua to compete with the Panama Canal) one must also wish that our politicians, overwhelmed as they are by the pressure of news headlines, could hold visions which extended beyond the next election. Alas, most leaders seem at the mercy of the economic forces of capitalism. None of the incredible advances of the technological revolution (many of which were initially sponsored by the government) are now planned by the state or in any way controlled. This has created short term uncertainty which in turn undercuts social and economic stability. A prime example of this was the inability of the governments to control the banks early on in the 21st century to ensure that the extraordinary short term profits they realized did not endanger the very basis of the entire financial system.

A prime component of leadership is long term perspective. A leader must know or have a vision of where he/she and their organization are headed — not just in the next quarter, but over the next decade or more. A number of American Presidents in the 20th century had long range visions, starting with Teddy Roosevelt who moved to protect the environment and battled against corporate irresponsibility; Woodrow Wilson who worked hard on the creation of the League of Nations; FDR who pushed for Social Security legislation and banking reform, and LBJ who supported Civil Rights legislation. In England too, Clement Atlee instituted the National Health Service and many other long term social reforms following WWII.

Working against those with long term visions have been the overwhelming forces of corporations. With their focus on profits and competition, they are principally concerned with this year’s earnings and their expectations over the next two to five years. Short-termism is also a dominant theme in the financial world where the corporate results of every three months have become part of “quarterly capitalism.” Most corporate executives, although fully aware of the wisdom of long-term planning in areas like the environment, do little to encourage it. They misconceive that tackling environmental change will be bad for business.1

The long term process of giving power to an overpaid corporate and financial elite has resulted in inequalities which no one is clear on how to correct. Economic inequality is like a slow-growing cancer which one may not notice in the early stages but when there is metastasis, demands radical treatment. That is what we shall shortly be facing in both the UK and the US. However the inordinate power that economic inequality gives to the few, like the two Koch brothers in the US who will be spending close to a billion dollars on helping their approved candidates in the 2016 elections, effectively blocks even modest changes or reforms in taxation. Indeed the rich have shown their capacity to protect their ever larger holdings over the past 30 years. Somewhat rhetorically, President Obama in his State of the Union address asked how much longer the American people would “accept an economy where only a few of us do spectacularly well?”

The rich also have been effective in steadily emasculating the power of the trade unions and this very weakness has become an increasingly important factor in the rising global inequality.2 The unions are no longer able to give their members a voice or the power to collectively bargain for higher wage levels. As a result, wage growth is manifestly falling behind the ever higher automation-pushed global levels of productivity.

Politicians have permitted “the market” and technology to go unobstructed on the assumption that they are economically and ethically beyond the need for any public or state control. This has led to the indiscriminate, careless and even corrupt sale of many of the public assets such as the rail and postal services in the UK. The Conservatives in power in Britain appear to have no problems letting the Chinese take leading stakes in the generation of nuclear power stations. The long term consequences of such moves appear to be side-stepped, but perhaps the thinking is that if anything goes wrong in such nuclear facilities then the blame can be outsourced!

For the great majority in the US and the UK, the scope of their prospects seems to be contracting. In the sixties Americans were coaxed into believing that rising living
standards would lead to more choice, more leisure and less hard work. Instead, the corporate culture has resulted in a charged competitive environment with longer working hours.3 Similarly, great hopes were held that technology would bring liberation. Instead, Americans are spending increasingly more time on the internet and its social networks and are becoming enslaved to its demands. Thirty years ago no one predicted such results, Even now we do not know how these technological advances, so readily incorporated into young minds, are affecting the new generation.

A long term perspective can empower politicians, corporations, organizations and individuals which can enable them to affect the future. Some of the earlier writers about our future prospects had varied ideas about the general assumptions we could make.4 Wendell Bell in the Foundations of Future Studies (1997) focused on three general concepts broadly accepted by futurists: First, the future is not predetermined. This suggests that more than one future is possible, which is at the basis of the theory of alternative futures. Some of those futures will be better or worse than others, so we have the opportunity to choose. Second, while the future cannot be known, it is possible to make educated guesses with reasonable accuracy about what would be best and worst. Third, we can exercise strategic planning. This is where we design a vision of a future outcome we might want in ten or more years. The important thing is to have a destination towards which we can move, that is, a long term perspective.

A variety of planners and groups are currently proposing a number of ways to balance short term policies with plausible long range measures which would reduce the chances of boom and bust episodes. The Oxford Martin Commission for Future Generations is a group which focuses on the increasing short-termism of modern politics and our collective inability to break the gridlock which undermines attempts to address the biggest challenges that will shape our future. Pascal Lamy, then the Director-General of the World Trade Organization presented a report, “Now for the Long Term” (2013) which listed five shaping factors that make positive change so difficult:

  1. Institutions: Too many are struggling to adapt to today’s hyper-connected world.
  2. Time: Short-termism directs political and business cycles.
  3. Political Engagement and Public Trust: Politics has not adapted to new methods.
  4. Growing Complexity: Problems can escalate far more rapidly than they can be resolved.
  5. Cultural Biases: Globalization can amplify cultural differences and exclude key voices.

One voice in the Commission, Camilla Toulmin, Director of the International Institute for Environment and Development, was particularly interested in understanding why people are reluctant to consider the “long term” and in identifying ways to reward those who do. She pointed out that the banking sector remained highly skeptical of the long term efficacy of carbon cutting policies, which unfortunately translates into an aversion to change for the common good. Another, critic, Professor Paul Elkins expressed his view that the current state of politics made it extremely difficult to promote the well-being of future generations. All the large developed economies are using short term policies to help generate growth

Bjorn Lomborg, a Danish economist and futurologist, has launched the “Post-2015 Consensus” in which experts are drawing up a list of objectives for humanity on how to best spend the $2.5 trillion in international development assistance which is to be distributed between now and 2030.5 Bjorn’s group contends that providing free condoms and other contraceptive devices to all who want them would give a return of $120 for every dollar spent. Halting sub-Saharan tax evasion, which currently costs 20 African governments about 10% of their gross domestic product a year would bring in close to $50 for every dollar given in assistance.

Philanthropists Bill and Melinda Gates, who have given billions to cut down malaria and infant mortality rates, have carefully been following many long term challenges. In their annual letter they predicted that “The lives of people in poor countries will improve faster in the next 15 years than at any other time in history.” It is hard not to celebrate long term predictions of this nature!

This September the nations of the world will discuss the adoption of a new set of long term goals which will replace the Millennium Development Goals adopted in 2000. The new Sustainable Development Goals (SDGs) will aim to end extreme poverty by 2030 as well as a range of other problems such as climate change, pollution and access to justice. The question then arises as to what really works with such a large set of long term goals? There are currently some 169 SDGs targeted on their list and such over-ambition needs serious trimming if planning for the long term is ever to be effective. Priorities also need to be applied if one searches beyond the sustainable to the achievable.


1Yorick Blumenfeld, Dollars or Democracy, (2004) p.93

2Seumas Milne, The Davos oligarchs are right to fear the world they’ve made,” The Guardian, January 22, 2015.

3Larry Elliott, “Short-termism rife as world longs for real solution,” The Guardian, October 21, 2013.

4Bertrand de Jouvenel, The Art of Conjecture, (1967); Robert Jungk and Norbert Mullert, Future Workshops: How to Create Desirable Futures (1987).

5“The economics of optimism,” The Economist, January 24, 2015, p.67

*The technology revolution is creating phenomenal changes in employment. The Gary Steel Works in Indiana, the largest such mill in the USA, employed 30,000 workers at its postwar peak in which it produced 6 million tons of steel. Today it can produce more than 7 million tons a year with only 5,000 workers!

56. Refocusing politics for a more Humane Program

What is the lesson to be learned from the highly invigorating referendum in Scotland? It is fair to say that ordinary people now feel they can express their points of view as never before. The internet has awakened the participation of millions in the political process. They want to make their country a better place in which to live. It also is evident that the exposure of the media is bringing about great challenges for political accountability.

It is obvious that enormous energy is being exercised in favor of change. Voters not only want to improve their living standards, they also want their thoughts for a better Scotland (Wales and England) to be heard. Aside from the complexities of devolution, how can the much desired improvements take place? How can hope be restored to the people?

The charge is often made that politics in the UK are “too clubby.” Instead of using primaries to select candidates for parliamentary seats, for example, the elite of the upper echelons of the Labour and Conservative parties select prospective members from individuals who have worked for them in Westminster. There needs to be far more competition and choice for the democratic process to succeed, for fresh ideas and innovation to be introduced into policy formulation.

Since coming to power in 2010, the Conservative-Liberal Democrat coalition has pushed ”Austerity” on the people and offered ‘Quantitative Easing’ to the banks, the Treasury, and the City. This kind of innovation does not enhance the social harmony of a nation.

What needs to happen now is a shift in direction. This should be focused on greater economic fairness, mutuality, social awareness and cooperation (given by creating co-operatives like the John Lewis Partnership). It also will demand halting the steadily increasing economic division between the wealthier south and the poorer north as well as calling for a stop to the furtherance of the privatization of energy, transport, health, education and even prisons! The wide ranging reductions in welfare benefits — from cuts in legal aid to follies like “the Bedroom Tax” — also will have to be reversed. Altogether that is one gigantic challenge amounting to a social revolution.

Such basic reforms will require politicians and civil servants to rethink in ways which would be sensitively responsive to public opinion. The Tory writer, Roger Scruton, has written that “Conservatives are exposed to the complaint that they have no positive vision, and nothing to offer us, save the status quo — with all its entrenched occupation.” But then he wryly admits that “Thinking is an unusual and precarious exercise for Conservatives.”1

The opposition may “think” more deeply but have yet to light a spark in the electorate. The mass of voters — in both the United States and much of the European Community — have become singularly disaffected by the failures of the traditional political parties. In the United States the Republican strategy of bringing the Congress into a state of gridlock, and its politically driven refusal to cooperate with the executive branch, has resulted in public disaffection with the whole system. Alas, except for their goal of reducing the size of government, the Republicans lack a coherent outlook for the future. Like the Tories in England, they are deeply attached to preserving a way of life — which, in effect, is a Hollywood-style interpretation of the past.

Class solidarity, a modern version of tribalism, was important in the UK until Margaret Thatcher broke both the mining industry and the power of the unions. She replaced the public good with private greed, social justice with corporate capitalism, and society (whose very existence she denied) with a “me first” version of individualism in a toll-booth economy. Rather than halt this anti-social trend, the Labor party under Tony Blair simply furthered the power of the banks, the City and the private sector. This resulted in a dangerously unbalanced enrichment of a small sector of the population. When the Tories then returned in coalition with the Liberal-Democrats, they continued with the privatization of almost everything from the post office to transportation, energy, prisons and even children’s homes — all at the unwanted expense of the taxpayers.

The younger generation has become disaffected and deeply disillusioned by the “politics as usual practice” of both parties. They have been offered no solution to their job crisis and continuing housing shortage. The older generation is more vocal in expressing their weariness and disappointment with politicians, bankers, economists and even the police. Some have described the reaction as part of the “post-democracy” phenomenon.2 Both these groups sense that in combination with globalization and the amazing technological advances, their world is being swiftly transformed into a dislocating, if not an alien, planet.

Language itself reflects the rapid and camouflaged changes in socioeconomic perspective: “reform” now means privatization, “partnership” means selling out to big business, greater “efficiency” means cutting the workforce while “downsizing” generally means replacing workers with automation. “Rationalizing” suggests following the strictures of market fundamentalism. All reveal a degree of embarrassment with the harsh realities of capitalism.

There are groups in both the US and the UK, like the Social Economy Alliance, which are looking at how the best ideas from left and right could be joined together to provide a social alternative in economics. They are asking questions such as, how can social-based economics reduce unemployment and how can it work to create a more responsible economic sector? This Alliance is being launched amid evidence that not-for-profit companies and co-operatives are outperforming their profit-making counterparts.

A decade ago I spelled out at considerable length the ways our faltering economy could be changed. I proposed the end of money as we have known it, the transformation of corporations into cooperatives, and the introduction of universal “credits” for all citizens. You can find the prescriptions for in-depth reform in my book, Dollars or Democracy,3 which I plan to place on the internet in the near future. I have selected a short section of the concluding chapter to whet your desire for more!

1Roger Scruton, How to Be a Conservative, (2014)
2John Harris, “…politics as usual is finished,” The Guardian, September 12, 2014
3Yorick Blumenfeld, Dollars or Democracy,(2004)



Faced with an untenable world economy, I have tried to imagine and project a plausible scenario for a workable alternative. The revolutionary ideas I have outlined present an enormous challenge, but then, risk-taking always has been at the core of our present system. I believe that the incentive economy is based on such long-term principles as are most likely to effect human well-being and happiness.

We are not the captives of capitalism. We do have a democratic choice. We have it within our power to change the economy to suit our needs without resorting to violence or coercion. But this demands careful thinking, vigorous discussion and debate, followed by planning and decision-making. This book has offered you choices, not destiny.

There is no doubt that we are, in every way, living beyond our means. Not only is capitalism driving us head over heels into personal and national debts, but we are destroying the very carrying capacity of the Earth. The U.S. Academy of Sciences estimates that ever since the 1980s, human beings have been taking more natural resources from the living planet than the Earth can replenish.* In the very short term all of us are going to face up to the situation where capitalism’s so-called positive-sum game of growth gives way to the zero-sum game of dwindling spoils, deflation, and stagnation; where brother fights brother over limited water, air, dwindling oil supplies, and land. We are talking here about the survival of the human race on this planet—a provocative subject which laissez-faire market capitalists desperately try to avoid. The environment concerns each and every one of us. “Climate change is no respecter of national boundaries,” writes David King, the British government’s chief scientific adviser. Most of the important aspects of the environment are public goods. No one individual can enjoy a cleaner or healthier environment unless others do. The exclusion principle cannot be applied here. “What we do unto others, we do to ourselves.”

Theorizing about economics is one way of eventually making the seemingly impossible economically plausible. It can be a way of presenting economic configurations, which the experts do not want to take into account and which challenge the given truths of an era. The failings of the economics profession has been a recurrent theme in this book. Dishonest economic drivel, such as the “trickle-down theory,” “the Laffer curve,” and “Fedspeak” as practiced in Washington, have tended to give economics itself a foul name.

Yes, some economists have had good ideas for reform: the Brandt Commission in the 1970s proposed a global armaments tax the revenues from which would go to help the development of third world countries. Such a tax would also have cut down the murderous and steadily expanding trade in small arms. In the eighties, the Brundtland Commission proposed a tax on pollution both to save the environment and to promote third world education. In the 1990s James Tobin, a Yale economist and Nobel laureate, promoted the idea of a minimal tax on speculative financial transactions, like derivatives. Even a tax of a tenth of 1 percent would raise hundreds of billions of dollars a year for use in the underdeveloped world. But not one of these hopeful ideas has come into being, and no new reformist plan is likely to be more successful in the near future.

Despite strong opposition by John Maynard Keynes, the Bretton Woods economic conference some sixty years ago framed the victory of corporate and commercial property over human rights. For example, it was determined that foreign exchange reserves of other nations will be held in dollars. Instead of the poverty trap of debts which was being foisted on the less developed nations by the United States, Keynes tried to outline the possibilities of a world without debt which would depend on an international clearing union. But Keynes was blocked by Washington and damned the fundamental hypocrisy of capitalism writing: “We must go on pretending that fair is foul and foul is fair; for foul is useful and fair is not.” Governance rules were rigged against the poor countries. Washington used the dollar as a weapon to control the world’s weaker economies. This modern version of dollar diplomacy was described almost a century earlier by President William Howard Taft as “substituting dollars for bullets.”

Apart from the incertitudes of globalization, among the multitude of fundamental questions that most economists of the past generation have refused to ask are: Where is our economic world headed? What is economic life all about? Is “growth” truly the only way to create jobs? Do we really want to increase the GDP in order to convert the planet into a man-made environment of cars, roads, housing estates, industrial sites, favelas, and shopping malls? Can we be both economically fair and efficient? Is any kind of stability possible in a capitalist world? When will economic success be measured in terms of leisure time, environmental quality, and economic security? Could we stop using up our real capital—such as timber, oil and top soil—in such a way that future generations also have a chance? What will we have to pass on to our children? I should like the answer to that last question to be: a cleaner, greener, more secure, more cooperative, and generally more mutually satisfying world.

Personally, I reject an unjust world divided between a few billionaires living in guarded communities and billions of people living in deprivation. Money, banks, multinationals, shares, and even capitalism are all our collective creations, and we have both the ability and the duty to change these if they do not serve us well. The moral aspects of providing fairness and better distribution (particularly of food and water) are as important as those of technical advance. In giving the vast brushstrokes for a new economy, I believe the credit system and the incentive economy present the chance for marked improvements all around—particularly in ways to keep a society vibrant, spiritual, creative, and consciously aware of its desired direction.

* Due, in part, to industrial farming and the burning of tropical forests, more than 24 billion tons of top soil, or the equivalent of 4 tons for every human being on the planet, is now washed off into the sea every year.