Bounded by or bonded to will?

February 2014

At this time in history perhaps more than any other we stand between the distant and receding past and the distant but advancing future. That is always the case, of course, but nowadays we depend especially on looking forwards rather than backwards. Economics in particular is almost only about that; it is essentially a way of looking, even stepping into, the future. Naturally, much is made of the road we have already travelled, but that really has little relevance.

The deeper foundations of economic life rest on the unfolding will of countless human beings – nowadays acting in splendid but illusory isolation, but more and more needing to learn to cohere with one another. Indeed, this is one meaning of associative economics. Association not collusion. Economics is only about anticipating and facilitating this unfolding will. What else does ‘expectations’ (rational or otherwise) refer to than what we hope, even intend will happen? Admittedly, we tend to look outward to what others or the rest of the world will or should do. But it is more concrete to look inwards; to look to one’s own unfolding will, however difficult that may be. Not only because to look at one’s own behaviour and modify it is not easy, but also because what lives in our will, what drives us, is often not visible until we have acted. And then often to others in the first instance. 

Of course, much that lives in the will is coming from the past, but equally much is informed by some goal ahead of us, towards which we will ourselves. The goal may be immediate – going to the grocers. Or it may be far distant – as Leonard Cohen wryly puts it, democracy is coming to the USA one day. But we are more called forward than driven.

If we do not appreciate this we will misread much of modern economics. For example, we will seek predictability in models or we will second-guess the future in terms of probability. Better would be to take seriously what we envisage when undertaking a project or business. Forecasting – making a forward image of our actions – is not an abstract thing. The French word, prevision, says it all. For what we ‘foresee’ is not some distant mirage on the horizon yet to come into focus; it is an intimation of what lives in us to do.

Another very important example is bond finance. If one strips out the past-looking use of bonds, where the bond-holder or lender of money sets the interest rate, and imagines instead a future in which bond rates derive from the user’s (bond issuer’s) profitability, then one can see their (the binds) most important feature: they are a call on future income streams. Of course, today’s neo-liberal paradigm makes of this a ‘wedding cake’, many-tiered system that ‘captures’ this income stream (commodifying water, for example, in the process) then ‘taxes’ it with all manner of professional charges linked to finance, taxation, legal fees, and so on, so that in the end the price of water is generally unaffordable.

But the principle is in the right direction. If we had an economy based on meeting real needs, such as the need for water, this will never cease. It comes out of the future consumption needs of people throughout time. As such, the income from this, the price water is sold at, if done profitably, will enable the infrastructure needed to be capitalised. Then indeed, the hard assets can be financed without them becoming what the investor wants as security for his income. But the cost of capital and provision will be far less and so the water, or rather the delivery of the water, will become affordable.

Similar could be said of urban railways like the New York metro; bond finance belongs to, gives expression to the future. But only if it brings the capital with it, as it were. If instead we begin with past capital and the intention, moreover, to preserve it in both quantity and value, then we introduce an unaffordable element, which in the end will mean only the rich will be able to afford water, whether that be rich countries or rich sections of countries. (Therein, too, lie the seeds of tomorrow’s increasingly overt economic wars.)

In the end, it is a question of what we intend. Do we or de we not want - that is, will - an economic life that is equitable in fact, not in theory? The neo-liberal approach is not at fault in that it believes its philosophy will bring, trickle down fashion, increased prosperity for all. It is at fault only if one gives a timeframe to when this promise will be realised. Arguably, this has now been long enough. In the 25 years since the removal of the Berlin Wall there has only been one game in town. In terms of its own theory we should by now be crisis free; one cannot forever say the problem has been inherited. 

The question is whether we can take a next step, not backwards into a universe perennially, but unnecessarily split between right and left, but forwards into a landscape in which economic life is truly and wholly, not only misleadingly and therefore partially depoliticised.