The extraordinary -- indeed astonishing -- election of Barack Hussein Obama as the 44th President of the United States is a landmark in American democracy, and a justifiable cause for celebration among the leg-ions of his political fans and supporters. Among his more thoughtful admirers, however, Obama’s election is also a cause for apprehension, coming as it does in the midst of the worst world-wide financial collapse since the Great Depression. No president since Franklin Roosevelt, it seems safe to say, will enter office facing an economic challenge of this magnitude; and none since Lincoln, perhaps, will attempt to preside over the American people at a moment when they are so deeply divided on cultural and ideological lines. For all of his extraordinary eloquence, broad sympathies, and uncommon sense, Barack Obama is going to need all the help he can get navigating the stormy seas ahead.
No doubt, as President his top two domestic priorities will be to get the economy up and running again to the maximum extent possible, and to bring emergency relief to the millions of Americans who have lost, or are in the process of losing, their jobs, their homes, their health insurance, their retirement benefits, and much of the money they have set aside for old age and their children’s educations. Fortunately for him and what promises to be a very talented administration, our society has been here before and there is every reason to suppose we possess both the understanding and necessary economic tools -- in terms of fiscal and monetary policy -- to accomplish these objectives, if not right away, then hopefully before the end of their first term in office. This is the good news.
The bad news is that we have no idea how to deal with the much larger, long-term economic challenge looming before us, which precipitated the crisis in the first place. I refer to America’s rising mountain of debt. For more than a generation now the American people, both individually and as a nation, have been attempting to do the impossible: to maintain a standard of living – indeed a whole way of life -- which we can no longer afford. For three decades in a row we’ve elected to consume substantially more than we produce, borrowing the difference from countries overseas. Now, rather too suddenly, we learn that we must begin to live within our means.
How might that happen, and what will it look like? If we let nature take its course the answer is deceptively simple: it will happen automatically, through a process of inflation and economic adjustment, and the final result will be that the American people (all but a small minority) will wake up one day to discover they are now working longer hours at lower wages than they could ever have imagined, and that their real standard of living has fallen to a level not seen in this country in three or perhaps even four generations. In other words it means economic regress, the opposite of economic progress, and the opposite of everything the public has come to expect.
Is there no alternative? No way we might make more efficient use of our time and resources to better satisfy our human needs – which, after all, is the only way we or any other people could conceivably navigate such a period of adjustment without sacrificing its material happiness?
Market fundamentalists will argue that this is a theoretical impossibility, ipso facto, at least within the framework of a market economy. In the following pages I shall argue the opposite: that it is indeed possible, through a coordinated set of policy interventions, to achieve just this result; and to do it moreover without destroying the beneficent effect of Adam Smith’s Invisible Hand, or attenuating the incentive structure that is embedded in the American system of free enterprise.
I will freely admit that few if any of the ideas in this book are original with me, either singly or in combination. The most important ones were all developed by mainstream economists of established reputation, even if a few of their names – Stanley Jevons, Eli Heckscher, Irving Fisher -- have been largely forgotten. Indeed the only thing really new at this point are certain technological innovations – inexpensive high-speed computers, global tele-communications, the World Wide Web – which bring these old ideas into the realm of feasibility. That plus the current economic crisis, which supplies the impetus for reform.
The substance of what I propose is summarized on the back cover and is more fully elaborated in the introductory chapter. It is something the general public can readily appreciate, just as the public could instantly see the value in the first Model-T Ford, even if they might not have been able to understand how the damn contraption worked. Only in this case I’ve gone a step further and tried to distill the essential logic of my proposal into the form of a parable, something even a child might understand.
Once past these introductory materials, however, readers may find the going pretty rough, in certain places especially. Without a background in business and economics – a feel for the basic principles of neo-classical economics in particular is required -- the nuts-and-bolts of this contraption will be hard to comprehend. On the other hand, those of a more activist bent, who may be interested in the possibilities of organizing a democratic mass movement for change, can skip over these hard parts for the time being and go straight to the fourth chapter, where I set forth my own rudimentary -- and frankly amateurish -- views on the subject.
One question remains. Is the new way of life I am proposing one the American people would voluntarily choose for themselves, and if so how interested would they be in pursuing it? There is no way of answering this question without actually asking them. Until that happens I can only say that the American people were asked this question once, many years ago, under very different circumstances, when in a fit of youthful enthusiasm -- and with the help of a group of businessmen in the town where I grew up -- I engaged the Gallup Organization to survey the public on this very issue. The results were more than a little encouraging to me at the time (otherwise I should never have written this book) and I have therefore seen fit to include them in Appendix I.