Popular Narratives Explain an Innovation that is Right for the Circumstances then Prevailing
and sometimes for an innovation that is not right
In his most recent Tipping Points Economics commentatary, #28 Narratives, Hans Stegeman writes:
I am not a philosopher. I am an economist.
With respect, every economist is a philosopher, a lover (philo) of wisdom (sophia) about the economy as our uniquely human way of being in an artificial world that we make for ourselves through enterprise and exchange for sharing an abundance of technology solutions to the everyday problems of everyday people living our best lives under the circumstances then prevailing, everyday, out of the world of Nature into which we each and all are born, exploring a plethora of questions about: the everyday problems of everyday people; the changing circumstances of the changing times; the suitability of technology to the problems of the times, as the times change, from time to time, and over time; and how does society choose what is fair in the sharing of abundance within the population, under the circumstances then prevailing.
Hans also writes,
A new narrative...that everyone will embrace is probably more important than innovation.
Again with respect, a new narrative will not be embraced by all unless it explains an innovation for evolving prosperous adaptations to the circumstances then prevailing.
Consider the story of Nicholas Copernicus and his sun-centered model of planetary motion that was made popular by Galileo Galilei some 100 years after Copernicus' death, and the near-posthumous publication of ?De revolutionibus orbium coelestium?(On the Revolutions of the Celestial Spheres) in 1543, during the European paradigm shift, from the Age of Discovery (beginning circa 1418) and the Enlightenment (arguably commencing with the invention of Modern Science by the above-referenced Galileo).
The idea that the sun was the center of the universe was not new (and Copernican calculations of the motions of the planets were not actually correct: Copernicus calculated a circular motion; Johannes Kepler corrected them to be elliptical a generation later), but for some 2,000 years the Ptolemaic model of earth at the center of the universe better fit the purposes of the Roman Empire, and its successor, the Roman Catholic Church.
But during the Age of Discovery, as European navigators sailed south of the Equator, the Ptolemaic model could not explain the way the stars appear in the Southern Hemisphere.
The Copernican model could.
And so, it became popular, as better fit to the circumstances then prevailing, in the interregnum in Europe, between the Age of Discovery and the Enlightenment.
Today, we are living in a new interregnum, between the failure of a Late 20th Century model of the economy as 19th Century PROGRESS through technological innovation and economies of scale within a lived experience that Nature is vast, and we were not, so that we could and should just take and take and take from Nature, without ever reckoning with the consequences of our takings, because those consequences would always just disappear into an infinitely receding geobiophyscial Frontier, reabsorbed back into Nature, without consequence to us, reduced to GROWTH as simple, numerical increases in transaction volumes measured in prices paid in money, from one period of measurement to the next, through the axiomatic assertion that more, quantitatively, will always be better, qualitatively.
Progress became popular as a narrative that explained the experience of industrialization and European geopolitical-economic expansion, especially into the American West.
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Growth became popular as a narrative that explains the experience of the capital markets financing enterprise through the securitization of large scale, long-dated financing agreements with enterprise that require longevity at scale in their financings, into large numbers of legally equal, incrementally liquid (in legalese, "freely alienable") commodity shares that can be bought and sold, opportunistically and idiosyncratically, by idiosyncratic and opportunistic buyers and sellers buying and selling shares in speculation on volatility and growth in market clearing prices in markets for maintaining market clearing prices on such shares through volatility and growth in share prices that deliver the liquidity to market participants that market participants require as a condition to their participation, and without which there would be no participants, and therefor, no markets (and no opportunity for capital markets professionals to make money making markets in the capital markets).
The popularity of the Growth narrative is (correctly) criticized by some as the financialization of the economy, but (incorrectly) diagnosed as a moral failing of bad actors acting badly in the capital markets, who can and should be punished for their bad acts, and their bad morals, by politicians enacting legislation, regulation and, if necessary, litigation, to bring the force of law to bear in forcing these bad actors to stop acting so badly (and to be more moral).
This is not working, on climate and many other challenges that we are facing, as humanity, under the circumstances now prevailing, in these, the opening decades of the 21st Century.
Which should tell us that the diagnosis of moral failings is not correct.
Another possible diagnosis? The capital markets are being corrupted by capital markets capture of fiduciary money, which is corrupting the social trusts that control that money, the enterprises being financed through capital markets capture of fiduciary money, the rest of finance, and through the corruption of enterprise and finance, politics and government, civil society, the economy, society and our shared future.
By "fiduciary money" I mean the tens of trillions in society's shared savings aggregated, collectively, worldwide, into social trusts for the social purposes of socially provisioning the social safety nets of the Mid-Century Modern Social Innovation of the Workforce Pension, mostly, and to lesser extent, the 19th Century Social Innovation of the Civil Society Endowments, for education and philanthropy.
These social trusts are legal persons constituted by the laws of their creation with the character of:
This legal character gives them the capacity to use the circa 1980s vintage technologies of spreadsheet math, desktop publishing and digital communication to negotiate with enterprise of any size, in any business, anywhere on the planet, for equity payback to an actuarial/fiduciary cost of money, plus opportunistic upside, for Actuarial Compliance as to income ongoing into a secure future, from enterprise cash flows prioritized by contract for suitability to the circumstances then prevailing, longevity of the enterprise under the circumstances then prevailing, and fairness in how the business does business under the circumstances then prevailing, prudently stewarding the connections that actually exist, between quantities of money and quality of life, for Fiduciary Faithfulness as to safety ongoing into a dignified future, as a private benefit for some, directly, that is also a public good for all of us, consequently.
Since the fiduciary stewards of these social trusts have, in law and in fact, the power to negotiate, they do not have to speculate.
But speculating is what they are doing, and what they have been doing, since the early 1970s, as Asset Owners Allocating Assets across Asset Classes, and within classes, selecting Asset Managers peer-benchmarked by Consultants for excellence in maximizing the hight possible profit extraction from other participants in the capital markets (public or private, alternative) through gain on sale in those markets, solely in the financial best interest of capital markets professionals substituting their own best interests for the aims, to invest money for income as well as safety to assure security ongoing into dignity, that the law actually prescribes for these social trusts.
This is not lawful.
It is not practical.
Arguably, it is not moral, and is, truly, an instance of bad actors acting badly.
Why are we letting it continue?