Dark clouds over the rollercoaster economy

A letter to the Guardian sent by Colin Hines, co-founder of LWM, is being copied far and wide – most surprisingly by Hedge Analyst: 

Polly Toynbee’s assertion that it is hard to see where US and European growth or exports are to come from is a massive understatement. While the coalition’s oxymoronic call for simultaneous austerity and growth has been widely discussed, the delusion of export-led growth has received less scrutiny. 

It’s not just that our biggest export markets, Europe and the US, consist of customers who will be saving more and importing less; it ignores the fact that China and India will rapidly ascend the hi-tech ladder and will supply more of their domestic needs as well as global export markets. The UK will be left with a ragbag of niche exports like Range Rovers, Scotch and Beatles lyrics. 

Once export-led growth is recognised as a pipe dream, then the centrality of a local emphasis on rebuilding national markets can be grasped. China is doing this as it increasingly prioritises its own domestic economy to see off economic and political upheaval. 

Such an approach can improve the lot of all nations, but will first need the introduction of barriers to the damaging flow of feral capital and cheap goods. Only then can nation states help provide a more secure future for their citizens, the environment and at last see off any chance of Credit Crunch Three.

3 thoughts on “Dark clouds over the rollercoaster economy

  • August 11, 2011 at 10:30 am

    Isn’t this heresy against the Prophet Adam Smith ?

  • August 11, 2011 at 4:19 pm

    Are not Adam Smith’s teachings and moral concerns [below] consistent with those of Hines?

    The Wealth of Nations:

    As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestick industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can.

    The Glasgow edition of the Works and Correspondence of Adam Smith:

    The annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes … . [T]his produce … bears a greater or smaller proportion to the number of those who are to consume it … .[B]ut this proportion must in every nation be regulated by two different circumstances; first, by the skill, dexterity, and judgment with which its labor is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed.

    Another reader adds by email:


    A leading academic argues that Smith would have been “a disappointed father” at how modern capitalism has worked. Professor Christopher Berry is deputy dean of the faculty of law, business and social sciences at Glasgow University:

    When Smith came to write the “Wealth of Nations” he made it clear that the ‘wealth’ lay in the well-being of the people. This covered not only their material prosperity but also their moral welfare.

    On these grounds, he thought to be in poverty is to be in a miserable condition and also that to be condemned to repetitive limited tasks (like sharpening pins several thousand times a day) damaged our “social” and “mental virtues”.

    Smith never separated what we call economic behaviour from the moral context within which it takes place . . .

    For Smith the current crisis demonstrates not the intrinsic faults of the system but what happens when its moral dimension is removed or neglected.

  • August 11, 2011 at 6:27 pm

    Re: “Smith never separated what we call economic behaviour from the moral context within which it takes place . . .” – how many who are infatuated with Adam Smith’s ‘free market’ have read (or even heard of!) Mr Smith’s equally major (if more often ignored) work ‘On the Theory of Moral Sentiments’… In peace, Rianne


Leave a Reply

Your email address will not be published. Required fields are marked *