The Remaking of Economics: Eric Beinhocker, Eric Liu and Nick Hanauer

I gave up my career as an economist long ago, when I decided the quantitative Rational Market Hypothesis (aka Delusion) many of my colleagues (and Alan Greenspan) were coming to believe in, was as delusional as the Stalinist central planning model that was their opposite. It is only in recent years that fertile work is being done, firstly to reclaim the legacy of Keynes, who was not a Neo-Keynesian. And secondly by applying the results of new work influenced by evolution and complexity studies. The great work of synthesis on the latter, is Eric Beinhocker’s ‘The Origins of Wealth: Evolution, Wealth and the Re-making of Economics.’ It would be hard not to change one’s view of the economic world fairly radically as a result of reading that, but it is a big book! 

And so I am delighted that someone has taken Eric’s ideas, and with his blessing, written a much shorter book, applying them to both politics and economics. Eric Liu and Nick Hanauer’s ‘The Gardens of Democracy: A New American Story of Citizenship, the Economy and the Role of Government‘ re-invents our view of all three, though it is a tad American-centric, unlike Eric’s book. But it doesn’t take much to apply it elsewhere. The central metaphor as the economy as a garden, in contrast to the orthodoxy of the economy as a machine, is very well set out and applied. I love these contrasts:

  • Machine View: Markets are efficient, thus sacrosanct
  • Garden View: Markets are effective, if well tended
  • Machine View: Regulation destroys markets
  • Garden View: Markets need fertilizing and weeding or else they are destroyed
  • Machine View: Income inequality reflects unequal effort and ability
  • Garden View: Inequality is what markets naturally create and compound and requires correction
  • Machine View: Wealth is created through competition and by the pursuit of narrow self-interest
  • Garden View: Wealth is created through trust and cooperation
  • Machine View: Wealth = individuals accumulating money
  • Garden View: Wealth = society creating solutions
They also point out that if US income distribution was still where it was in 1980, the average US family would be earning $63,495 per year which is $12,295 or 24% more than it is today.
And their solutions: well read the book, but here are some headings:
  • Grow from the middle out, making sure that the middle and working classes have the income to avoid excessive debt, and that the whole of society has good access to high quality education
  • Maximize the number of able diverse competitors
  • Break up opportunity monopolies, including those of inherited wealth
  • Promote true competition rather than using government to rig markets and serve corporate interests
  • Harness market forces to national goal

And their view on what government should look like: 

  • Self-government
  • Government provides the tools, coaching, goals and incentives
  • Polycentric, radically re-localized but not stripped of resources
  • And what they call ‘The Big What and the Small How’
I can’t do justice to this book, so read its 165 small format pages. This is Eric and Nick:
And I love the cover design:

About creativeconflictwisdom

I spent 32 years in a Fortune Five company working on conflict: organizational, labor relations and senior management. I have consulted in a dozen different business sectors and the US Military. I work with a local environmental non profit. I have written a book on the neuroscience of conflict, and its implications for conflict handling called Creative Conflict Wisdom (forthcoming).
This entry was posted in Conflict Book Reviews, Conflict Processes, Economic Conflict, Philosophy of Conflict, US Political Conflict, Ways to handle conflict and tagged , , , , , , , , . Bookmark the permalink.

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