The Purpose of the Economy

Here's a long but thought-provoking post from Angry Bear, addressing the difference, which we have ignored, between having a society which serves the needs of the economy and an economy which serves the needs of society.

Angry Bear quotes Sir James Goldsmith at length, from testimony Sir James made before a U.S. Senate committee in 1994 regarding GATT and NAFTA. Rather surprising stuff coming from a billionaire financier and legendary anti-socialist:

We have convinced ourselves that there exists only one valid economic and social model: our own. By attempting to impose it universally, we have exported to almost every corner of the world our diseases: crime, drugs, alcoholism, family breakdown, civil disorder in urban slums, accelerated abuse of the environment and all the other problems that we experience daily.

and:

The economy is a tool to serve us. It is not a demi-god to be served by society.

and a big one:

Senator, when I was young I was taught, as we all were, that if we managed to create extraordinary material prosperity we would solve our problems. And we were brought up in the belief that there was an inevitability of progress: progress of wealth, progress of stability, progress of civilization. Well during the last fifty years, since I've been more or less an adult, we've had the greatest period of economic prosperity, economic growth in history. We have succeeded beyond our wildest dreams...And what has happened? Have we solved our problems? Are our towns more stable? Are our families more stable? Is there less crime, less people in prisons? Less people in--are there more people in permanent and noble employment? What have we done? We have profoundly destabilized our communities. We have done everything that was wrong in social terms; we've deracinated, we've uprooted people from the countrysides, we've shoved them into towns, we haven't given them jobs; we've created ghettoes and underclasses; we've increased crime and drug addiction and family break-down--all this in a period of maximum prosperity. Why? Because we were only interested in economic indices. We forgot that the purpose of the economy is not just to improve the index; it is to improve prosperity along with social stability and social contentment. And GATT is typical of the economic instrument, whose purpose is to increase corporate profits; whose purpose is to increase gross national activity; and whose result will be the destruction of the stability of our society, a continued break-down in family life, a continued increase in crime, impoverishment and all the other ills that we are now suffering.