Debt and Human Development

We talk about being indebted as if it were a purely negative thing, with the gap between income and aspiration normally held responsible. Yet one could equally say that people are getting a lot of credit! How can so much borrowing be warranted? The issues of debt or credit typically invoke such responses as: Financial institutions must be more tightly regulated! Neither a lender nor a borrower be! The fools have only themselves to blame!

Is this the whole story? What if this tremendous amount of borrowing is the not-yet-understood financial counterpart of a soul phenomenon: the problem of ‘creativity.’ We may not all use Gordon Brown’s ‘Golden Rule’ to measure our behaviour, but most people know that if one is borrowing money, it must be because of something in the future that will create a way to repay it - taking a college course, rather than simply funding consumption. Who decides this? Relational banking is now considered anachronistic. In the age of the credit search, it is the computer, not the person who says yes or no. The modern human being is left free to manage his own credit situation, for better or worse. Without some danger, no development! Is this the price of human creativity?

Accounting for One’s Actions
A Talking Economics Evening in Stroud – Monday 9th January 2006-01-10

Much use is made of the idea of accountability, normally understood as a kind of democratic answerability. But can the human being act in an accountable way without an external pressure acting on him? Is one person accountable to another, or to an interest group, such as share-holders, or to humanity at large? How can that be made real and what is the role of accounting in understanding what accountability entails? How is one to describe the reality of the potential in each human being to act in a way that is not only self-interested (and thereby overcome the prevailing anti-human perception that brings so many restrictive measures in its wake)? How can true and full accounting support and make objective this aim?

Such questions stand behind the subject, and in order to explore it in greater depth something needs to be said about the origin and development of accounting so that one can better see its relevance and purpose in present times. Its lifelessness may be akin to the lifelessness of the brain – best suited for making objective what it records. Just as the brain enables the human being to be individually self-conscious, so too accounting may act as a social brain, which allows human beings to become economically conscious, if they choose. Accounting is a universal language that enables human beings to communicate across cultural differences.

By forming companies which give the power neither to capital (which in reality should not be thought of so much as the interests of the shareholders, but as a purely abstract force), nor to a supervising board, the responsible human being is able to remain effective in his initiative. Through accounting he can share the narrative of that initiative (which represents the biography of a being, whose body is the company). Meeting with his financial backers and reporting, gives rise to a conversation that enables him to draw into a closer relationship with the intuition that guides the company. By becoming aware of the inherent wisdom that lies in accounting and describing the company in a new set of relationships, the potential is present to metamorphose current arrangements such that a corporate culture can arise whose behaviour does not engender the many and varied charges of anti-social behaviour.

Accounting for One’s Action
In a dream … walking along a High Street, embedded in every shop-door, a flat-screen display showing the live accounts for the business inside. Discrete but clearly indicated, one column for income and expenditure, next to it the balance sheet–each moment: the life blood of the business made visible.

Is accounting really so far from daily life? What if we informed ourselves about the economic circumstances around us, rather than leaving it to happenstance or an invisible hand? The cost of living …, next year’s pay rise …, the price of housing …it’s all to be found in the numbers. A set of accounts tells a story; the business narrative; the book in which the economy becomes visible. Some prefer not to look, thinking that life is complicated enough already. Why lift the bonnet?

The dream continues … at the end of the High Street I come to a building, it looks like a transparent temple: as I draw nearer I see the glass walls flashing up hundreds of transactions between all the businesses and showing the dynamic movement between accounts. Inside a meeting going on. I realise this is a bank.
What is accounting really about? Hiding money from the taxman? Painting a rosy picture for your financial backers? Or could it be that it is only by accounting that we can become economically awake, individually and socially.

Politics and Economics

In a nutshell, Gunnar Tómasson has managed to capture the problem with trying to bring politics into economics:
There is no guarantee that coherent monetary analysis will accommodate anybody's political views. So there are two ways to go -

1. Put political views aside while clarifying one's thinking on monetary issues;
or
2. Put analytical considerations aside to accommodate one's political views.
But one can't go both ways at once.

Making Economic Life Visible

In its relationship to economic life, humanity suffers from a condition which is akin to schizophrenia. There is, on the one hand, a near obsession with things economic, the cost of living, price-busting deals, stock values, interest rates, incomes and the like, such that one might imagine that in economics one could find the real source of human motivation and inspiration. On the other hand, economics induces a kind of phobia or soul aversion if one wants not to talk around the subject, but go directly into the concrete details. For all that one might pretend that economics is merely a technical and abstract representation of money processes, underneath we must know that it reveals something about us, as soon as it stops being ‘out there’. This alerts one to a place in human soul life that, if possible, one prefers not to visit.

Economics is not mysterious, it concerns human deeds and human relationships, represented in a financial language, bookkeeping, which is a way of making conscious what would otherwise stay in a subjective form, or not be made visible as a picture. Behind bookkeeping stand transactions and in these a whole story can be traced.
If I ask you what you think is important in life, you will probably give me an answer of a philosophical kind, wishful to some degree, but examine your current account statements through a whole year and you will find where your motivation took you, where your priorities lay. Draw up a balance sheet which records everything that belongs to you and all that you owe, your assets and your liabilities, and you will most likely be able to experience a new kind of awareness of your situation in life, a photographic financial snapshot of what kind of economic vehicle you are in, for which you are responsible. Hence at its most basic level, economics is about revealing what, if one does not attend to it, remains veiled: the world of finance, which, whether one concerns oneself with it or not, has a direct and not always welcome influence on life. To describe and make comprehensible the world of finance is the task of the economist.

Of course, one might argue that to engender such clarity, and face economic life with it, is the task not just of the economist, but of every human being responsible for a business or indeed any organisation for which accounts are produced. What is economics but such activity taken together and made visible such that the human being can come into a conscious relationship with it and give it direction?

In this sense economic life is manageable, as a shared endeavour among those responsible for it, whether they be self-employed or directing large organisations, the tools are the same, the income and expenditure account and the balance sheet; as is the technique, to forecast the budget, record the actuals and note the difference. When human beings come together to do this they bring within their ken the pulse of economic life.

Such is the logic of associative economics, making visible and conscious what markets economics keeps instinctive and veiled.

The Talking Economics weblog, a venue for musings on the associative economy.