Varieties of national economy


…be cheerful, sir. Our revels now are ended. These our actors, As I foretold you, were all spirits, and Are melted into air, into thin air. — The Tempest IV: I, 147

There is a shop near our local park that sells little girls’ ballet dresses. The yellowing models in the window do not speak of a thriving enterprise. When I tell English or American visitors that there are still lots of specialist shops like this in Paris, they invariably ask, “Yes, but do they make money?” Wrong question. The family of the old lady who runs this one is happy to subsidize her – it gets her out of the house; it grants her the company of children; it is what she likes to do; and she may even contribute something towards expenses. It doesn’t matter if she makes a profit or not.

We know several people who also maintain lives of genteel decline. Their apartment is provided by family money, they collect the dole, win the occasional short-term contract and have a major project like a book on the go as evidence of their professional commitment. They devote great care to their interior décor, cook fabulous meals for their friends and go to the movies in the afternoon. No-one here draws attention to their unemployment. It’s not a bad life when compared with being crammed in the Métro at rush hour.

Some years ago, President Chirac had the bright idea of offering 5,000 francs to any citizen who bought a French car. The competition bureaucrats at the European Commission were outraged. He replied, in effect, “I’m the president of France – who are you?” The latest example is the government’s decision to create a French pharmaceuticals monopoly in the face of a Swiss takeover bid favoured by German stockholders. France’s health system is the best in the world, offering twice as many hospital beds per capita as Britain’s NHS; but it is billions in the red. The partly state-owned bank, Crédit Lyonnais, “mislaid” a sum equal to the deficit on the national social security fund. But the recent triumph of the left in regional elections has reinforced the unpopularity of trying to reform public finances.

Everyone knows that French national culture delivers superb food and wine, world-class intellectuals, fast trains that run on time and an incredible variety of terroirs that together attract more visitors than any other country in the world. They have something to feel superior about and they do, much to the chagrin of some Anglo-Americans. I am just one of a continuing stream of settlers from across the channel who thinks that the way of life here is unbeatable. But can they afford it? That bottom line again. How can their economy survive on such massive and chronic indebtedness? The question is particularly poignant for the British who have witnessed the destruction of their public services in recent decades, all in the name of the need to balance the books. “You can’t buck the markets.” Try telling that to any French politician, even to the right-wing government of the hapless Raffarin that is currently trying to stem the drain on the public purse.

For half the year I commute to London to teach. It’s often a trial. Signals have failed near London Bridge yet again. One day I suffered five breakdowns of the tube in a row. Desperate workers and tourists use their mobile phones to reschedule appointments. How can efficiency or even a wish to be on time survive this routine assault by the infrastructure? There must have been a period when the English were committed to the public interest — Victorian Britain would not have been built otherwise – but privatization has eaten away at the people’s soul.

Still, London’s booming. Everyone says so. The city entertains the world’s rich, many of whom have decided to park themselves and their money there. The British themselves haven’t got much to sell. But never mind, there is always the housing market. As long as prices rise, people feel affluent enough to borrow and spend. The present bubble looks ready to burst, as it did in 1973 and 1989; but, if enough people believe it will stay up forever, perhaps it will. One pundit says that the British housing market is “walking on air”. Sound familiar? And, despite all the cuts in public expenditure, the West Coast railway line to Glasgow will cost a fortune, more than it will take for Bush to send Americans to the moon again.

The US economy is something else. By issuing the world’s currency, the Americans can run up huge trading deficits. At first it was the Europeans and Japanese who kept them afloat, being afraid to lose the value of their dollar assets if they pulled the plug. Now it is the Chinese and some other Asian countries. Last year 40% of world economic growth was attributable to China alone. Americans every month buy cheap manufactures worth billions more than they sell to them. Bush and Greenspan seem confident that no-one will call their bluff. Normally, the exchange rate would resolve the imbalance, but the Chinese have pegged the yuan to the dollar and refuse to budge, so they are amassing a lot of dollar credits. What will they do with them? Some oil money has already been switched into euros and don’t forget that the offshore market for dollars was started when Russian and Chinese deposits were seized in New York. Revenge is sweet.

There is a saying, “What goes up must come down”. But does it? Maynard Keynes, who married a ballerina, founded the Cambridge Arts Theatre and thought writing was rhetoric, told us that states should spend money they don’t have in order to get us out of a hole dug by the markets. Everywhere we look in this world, we see rich and powerful societies living beyond their means and their would-be replacements holding the credit lines. Paul Samuelson’s best-selling textbook, Economics, used to begin with the remark that every night ten million New Yorkers go to sleep confident that the market economy will still be there in the morning. But how do they know?

This is not just a speculative exercise for me. I want to understand the world I live in so that I can hedge against disaster. I have already made my bet on the housing market by selling up. “All that is solid melts into air”, says the Manifesto of the Communist Party. But what if things weren’t solid in the first place? What if the economy, far from being a force of nature, is something we all make up, like the French? This seems to be the great question that will be settled soon. Are we heading for the mother of all deflations, the next Great Depression, or will we make the economy we want, as Keynes said we could?

I became an anthropologist in order to learn how to cope with society more effectively. I have been lucky enough to be paid for doing this. But, when I wrote a textbook on anthropology’s relevance to the modern economy, I found that I could not place myself in it. So I wrote another from a more personal angle. In the process I discovered that, if anthropology is to teach us something about living
in the world, we must be more respectful towards fiction as a method. If we want a better world, we have to make it up, to extend the actual to the possible. Maybe, without ever letting on, the leading societies of the West have already recognized that. And we, for lack of faith in our ability to imagine, teach our students how to misunderstand society and themselves. It might help to recognize William Shakespeare as our greatest social thinker, instead of Karl Marx or Adam Smith.

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Category: Economy | Europe