Exuberance and scarcity

An extract from Chapter 8 of the book Transcending Politics:

8. Exuberance and scarcity

Let’s set aside for the time being the subject of the previous chapter, namely the threat of an environmental meltdown triggered by reckless human activity. Instead, to start this chapter, let’s consider a different kind of meltdown, in which financial systems cease working around the world.

In such a scenario, ordinary citizens might try to withdraw cash from bank teller machines, sometime in the next few years, only to find they’ve all stopped working. The funds in savings accounts may be significantly reduced overnight. Payment requests using credit cards may be declined, causing chaos in shops and restaurants. In an atmosphere of profound uncertainty, corporations will avoid taking risks. Business contracts will be cancelled, with growing numbers of employees being made redundant. Supermarket shelves will become bare. Populist politicians and newspapers will be quick to blame bankers, businessmen, overseas cabals, the so-called “elites”, reds-under-the-bed, or whoever. Tempers everywhere will flare. Soon, people will be trying to take matters into their own hands. The few “survivalists” who have been able to hoard scarce resources will find their stashes under attack. It won’t be long until law and order breaks down.

That’s a possible disturbing future which has echoes in many past upheavals. History bears witness to a long series of financial crashes, each ugly in their own way. Simpler times saw simpler kinds of crashes, but the effects were still often catastrophic for the individuals involved.

In this chapter, I’ll explore the likely effect on future financial stability from the trend that underpins all the others discussed in this book, namely the acceleration of technological innovation. Should that acceleration make us more apprehensive about forthcoming financial crises? Or will it instead diminish the importance of money? Indeed, if economics is the study of the allocation of scarce resources, and accelerating technology delivers a sustainable abundance of all the basic necessities of life, where will that leave economics? Will the displacement of scarcity by abundance transform the so-called “dismal science” (economics) into an unnecessary science?

To give my answer in advance: that’s not going to happen any time soon, contrary to the apparent expectation of various techno-utopians. Technological innovation, by itself, isn’t going to free society from the risk of financial meltdowns. Instead, we’re going to need better politics: technoprogressive politics.

Lost fortunes over the centuries

One example from each of the last four centuries will set the scene for the question of: what next?

The South Sea Bubble investment craze of 1720 saw thousands of investors losing huge chunks of their personal fortunes…

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There’s more to democracy than voting

Suppose that the UK held another referendum on the subject of Brexit. Suppose that the numerical result was essentially the same as before: around 52% voting for the UK to leave the EU, and around 48% voting for the UK to remain.

In that case, would that referendum prove to have been a massive waste of time and money?

My answer: not necessarily. Such a vote could actually lead to the healing of the nation, rather than to continued divisiveness and chaos.

politics chaos or healing

It all depends, not on the numerical result, but on the calibre of the arguments raised during that referendum.

If supporters of Leave came forward, during the campaign, with arguments that were less contestable and more compelling than before, this could lead to a healing of the nation. People who voted for the other option in the referendum might still feel disappointed. But they could accept that there were sound arguments in favour of the side that won. And, unlike the case of the first Brexit referendum, they could move forward, reconciled to the outcome. They could tell themselves they had lost a fair battle.

A similar conclusion could apply if, in a variant potential future scenario, it were Remain that won the second referendum, even if just by a narrow margin. Again, there’s no inherent reason why that conclusion would lead to ongoing bitterness. Again, it depends, not on the numerical result, but on the calibre of the arguments raised during the campaigns.

Not just a re-run

Various critics of the idea of a second referendum are doubtful that anything positive could arise from a new round of campaigning. It would just be a re-run of the previous campaign, they say, perhaps with a few people changing their minds. Nothing essentially new could arise. Forget healing. We would just get more chaos.

But I give a much more positive assessment to the idea of a second, better, referendum.

For one reason, people have learned a great deal in the intervening 30 months. Opinions which could be seen as plausible two years ago, have long since been shown up as deeply wrong. As an example, consider the now thoroughly discredited claim that it would be “the easiest deal ever” to negotiate Britain’s exit from the EU (witness “EU trade deal ‘easiest in human history'” and “All the times David Davis said that Brexit was simple”.) On such matters, we’re all wiser now.

But more fundamentally, it’s now widely recognised that it’s in everyone’s interest to cool down the debate, rather than letting matters be inflamed further.

The falsification principle

As a step away from ideology to objectivity, participants in the debate should start by reflecting long and hard about which circumstances would cause them to change their minds. This is in line with the falsification principle of science: people aspiring to scientific methods should set out in advance which experimental findings would cause them to seriously rethink their currently favoured theories.

Therefore, people favouring Remain should describe the circumstances that would cause them to consider switching to Leave instead. In this way, they would identify the potentially strongest arguments in favour of Leave. For example, to my mind, the strongest argument in favour of Leave would be if the structural weakness of the eurozone were shown to be likely to lead to huge financial chaos, of a sort that the UK could best hope to escape by being outside of the EU altogether.

Likewise, people favouring Leave should describe the circumstances that would cause them to consider switching to Remain instead. For example, they might be prepared to alter their vote if they gained confidence in the flexibility and genuineness of EU reform proposals.

Debate participants unable to set out such a “falsifying circumstance” would have to acknowledge they are driven by ideology, rather being open to new findings.

Preparing to build bridges

In parallel, participants in both sides of the debate need to set out proposals for how the UK could unwind from any state of internal hostility after the campaign was concluded.

To this end, supporters of Remain need to acknowledge that many on the Leave side are profoundly ill at ease with what they see as the direction of social development. More than that, Remain supporters need to be ready to commit to a credible programme to address key causes of this alienation, including the bitter perception many people have of being “left behind”.

Similarly, supporters of Leave need to acknowledge that many on the Remain side are profoundly ill at ease with the potential unravelling of processes of multilateral decisions, in a post-Brexit race-to-the bottom world of increasing deregulation.

Towards superdemocracy

That’s the vision – the vision of a better politics being expressed in a better referendum.

It’s a vision that goes beyond democracy-as-counting-votes. It’s a vision of emerging superdemocracy (to use a term that has featured in the last two Transpolitica books – Transcending Politics and Sustainable Superabundance).

Is this vision credible? Or are we doomed to a politics dominated by feelings of vengeance and obliteration?

That is, is a second referendum likely to lead to even greater chaos, or to healing?

Personal leadership

To an extent, the answer will be influenced by the personal qualities of the people leading each side of the debate. Do these people have high personal integrity? Are they open to learning? Are they able to build bridges? Do they have high emotional intelligence? Or are they, instead, obsessive and self-serving?

The answer (chaos or healing) will also depend on how the media conducts itself. Is the media looking for high drama? Will it seek out and amplify the most inflammatory soundbites? Or will it show restraint and care?

To my mind, everyone who cares about the future of the UK has to get behind the processes of healing, rather than the processes of chaos.

That means a commitment to debating honestly – to considering the merits and demerits of different arguments fairly, rather than with a partisan spirit.

This also means a commitment to building bridges – to discovering shared common values, even with people who express views very differently to our own.

It won’t be easy. But the cost of failure would be enormous.

Image source: “Big Ben at Sunset” – Photo by M N on Unsplash

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