Why social transformation is not a job for the market

Auteur: Michael Edwards, 26 January 2010

Oorspronkelijk gepubliceerd op OpenDemocracy’s Open Economy

In 2007, I experienced one of those fork-in-the-road moments that seem to occur when you least expect them. It was another day at the office, sifting through e-mails in the Ford Foundation’s glass palace in Manhattan, where I worked as one of the organization’s six directors. As usual, half of my inbox was filled by advertisements for books, conferences, and consultants promising to solve society’s problems by bringing the magic of the market to nonprofits and philanthropy — the masters of the universe, it seemed, also wanted to be saviors of the world — and the other half was filled by complaints from those experiencing the negative consequences of doing exactly that.

It suddenly struck me that this was more than a simple clash of cultures — it had potentially profound implications for the success of our efforts to transform the world in the image of love and justice. And in the rush to embrace new approaches to philanthropy, some very important older questions were in danger of being buried under hype and adulation — questions of deep social change and social transformation, of democracy versus plutocracy, and of people’s willingness to work together on common problems as full and equal citizens, not as clients or consumers. Continue reading

Creativity not markets by Karl Heinz Brodbeck

Published on OpenDemocracy 11 feb 2009, Original full article in  PDF (in German)

Author: Karl-Heinz Brodbeck,

In 2007 Alan Greenspan said that economists’ forecasts are no better than anyone else’s. He added that econometrics is no science. Why?

The underlying reason is the nature of economic models. First, they assume economic agents to be mostly rational; secondly and more importantly, they assume that the rational agent maximises calculable outcomes – the assumption of the homo oeconomicus. Since Adam Smith economists have understood the economic system as a vast machine. That implies it should be predictable, but on the evidence it manifestly is not.

Is it even possible to forecast human action? Sometimes it is, when one is dealing with habitual behaviour. But non-habitual behaviour, including innovation, is not at all predictable. Classical economics does not explain how innovation comes about, nor the implications of this for economic theory and calculation.

Innovation is a creative process. A product or process is creative if it is both new and valuable.

Creative activity is hard work. It involves the production of and selection from many ideas and prototypes. Most are discarded. It is emotionally and personally difficult and relies greatly on self-motivation. The grounds on which ideas are produced and selected depend on their worth from the point of view of ethics, aesthetics, technology, and many individual psychological factors, all sifted by experience and ability. Continue reading