Distillation is familiar from other areas of science – the discipline to which economics aspires. In chemistry, too, we are invited to look beneath the confusion of physical reality to uncover a mere 118 elements which underlie matter and can, with an almost artistic grace, be ranked according to their chemical properties, atomic numbers and electron configurations into the columns of the periodic table.
Everything out there (the trees, your spouse, the office) is, at heart, this.
3.
ECONOMIC DATA CAN rupture the sense of scale we ordinarily rely on to make our lives feel meaningful or hopeful. Our sense of purpose can be crushed by the unimaginable dimensions of the system in which economics reveals us to exist: one where world GDP stands at $70,000,000,000,000, where the global bond market is worth $100 trillion and the derivatives market $791 trillion, where world debt is measured at $50 trillion, EU debt at $17 trillion and US debt at $16 trillion (spending a dollar a second, a trillion dollars would take 31,000 years to run through); where a billion people live in poverty while an elite made up of the wealthiest 2 per cent owns more than half of all wealth. Such figures have some of the numbing quality of the statistics of astronomy, when it informs us that the Milky Way contains 400 billion stars or that it would take 93 billion light years to cross the universe. Our minds are not well fitted to contemplate our condition from such perspectives. Our aspirations become laughable, if not absurd, played out against such a canvas. We grow newly humble and supine before a sense of our utter nothingness.
4.
IT ISN’T ONLY the scale of the economic machine that can silence us, but also its complexity. Only a minuscule percentage of the populations of developed economies have any solid understanding of the workings of the economic system they exist within. Most of us will struggle to grasp quite what might be going on within essential terms like arbitrage, Basel 1 and 2, cyclically adjusted current budgets, price/earnings ratios or quantitative easing. As we follow financial events in the news, we may ask, and not for the first time: ‘What is the growth rate of money?’ ‘How do hedge funds operate?’ ‘What does the LIBOR rate determine?’ ‘What is liquidity?’ ‘How does inflation targeting work?’ ‘How can a government “print money” and what are the long-term consequences?’
Those kindly commentators occasionally employed by news organizations to help us with our confusions certainly try hard to offer us explanations, but perhaps because the concepts that dizzy us lack connection with anything in our day-to-day lives, their explanations have a habit of leaching from our minds just hours after we have heard them.
If we really want to take matters in hand and educate ourselves about the details, we must have steady nerves. Consider, for example, the rationale normally given for the equation of exchange, a concept that is situated in the gentlest foothills of economic science but that already asks us to contemplate a scenario in which
and where:
pi and qi are the respective price and quantity
of the i-th transaction
pT is a row vector of the pi
q is a column vector of the qi
– by which point most of us will be itching to run away, perhaps back to the tragic news story of the couple who jumped off the Golden Gate Bridge.
In certain moods, we may feel almost agreeably small before the majesty and intricacy of economics. In their field, theologians sometimes describe a feeling of awe that can result when the tiny human ego is confronted by the divine presence and experiences what is termed in Latin the mysterium tremendum, the mystery of the divine. There may be comparable moments of mysterium tremendum when the mind comes up against a dispersion output graph:
Dispersion output graph.
5.
WHILE WE MAY sometimes willingly defer to the greater intelligence of economics, in other moods it can be hard to quell certain rebellious questions which arise when we contemplate the economic arrangements of the planet as they are relayed to us by the news.
Lying awake at night, for instance, some of us may wonder, in a sincere and yet inarticulate way, why it is that the world built by capitalism is not (bathos intended) nicer. Why is there still so much suffering all around? Why do some have so much and others so little? Why are most jobs mindless? Why can’t there be more security and leisure? Why do anxiety and fear persist almost everywhere? Aren’t we destroying the planet for no particular reason or reward? (By this time it may be getting very late, and only a stubborn few will continue to press on.) Couldn’t we start again in some new way, rejig things, perhaps pass some laws and experiment with bold new ideas in order to create a freer, less anxious, happier world?
6.
WE KNOW WELL enough that these aren’t serious questions; they are the sorts of things that fourteen-year-olds write poems about or argue with their parents over. In the morning, we’ll put them firmly away. They don’t belong to the standard narrative of economics in the news. We may blanch to think of what any properly intelligent and sensible person might make of them – someone like, say, the chairman of the Federal Reserve, the most powerful economist in the world today.
If our questions seem immature, it is because we associate maturity with a sober acceptance of a great many things that are painful but necessary for the functioning of economic life, whereas our musings sound like the reality-denying ravings of a utopian dreamer. Adulthood involves learning to conclusively bury a great many of our hopes. Standard economics honours this process of growing up and the accompanying masochism required; it is mostly a story of pain, teaching us a lot of complicated but sound reasons why a great many nice things aren’t possible: why we can’t wave a magic wand and make poor countries rich; why competition and therefore anxiety are necessary in a market economy; why total job security makes people lazy; why a country has to reward its winners and punish its losers; why rich people can’t be proportionately taxed; why we can’t all live more simply yet still with dignity; why governments can’t limit the free market in the name of higher values; why inane consumer goods are an indispensable part of a flourishing economy; why it’s good for growth if people don’t generally share and recycle their belongings and why we can’t afford too intense a concern for making the world beautiful and clean.