John Maynard Keynes’ biggest disservice to the profession is to not start with the open economy.
Of course, this is not only due to Keynes, although as the founder of macroeconomics, he can be claimed that he started it. Most macroeconomists still begin with focus on the nation since macro is based on national accounts.
I have been saying for some time, along with Ramanan and others, that economists need to start focusing chiefly on the global economy as a closed economy, that is, a complex system with entangled webs of elements and relationships in overlapping groups, and a vast network with many nodes. Nation state play an important part in this, of course, and since the time of Keynes, so do international institutions developed subsequently. In addition, owing to advances in communications and transportation technology, the world is "shrinking" and becoming more integrated, with interdependence rising. The combined role of the social, political and economic is also being increasingly recognized as institutions play a greater part, with the result that those who control these institutions set the institutional arrangements that become socially, politically and economically influential if not determinative.
The balance of payment issues to which Ramanan has been pointing for some time is just one of many issues and issue types that need to be taken in account, just in economics. There are many others, as we are becoming woefully aware through the advent of climate change and the threat of pandemics, for instance.
The closest thing to a comprehensive view that I can think of historically is
Bucky Fuller's World Game (I've adjusted the paragraphing for easier reading here).
In the 1960's Buckminster Fuller proposed a “great logistics game” and “world peace game” (later shortened to simply, the “World Game”) that was intended to be a tool that would facilitate a comprehensive, anticipatory, design science approach to the problems of the world. The use of “world” in the title obviously refers to Fuller's global perspective and his contention that we now need a systems approach that deals with the world as a whole, and not a piece meal approach that tackles our problems in what he called a “local focus hocus pocus” manner.
The entire world is now the relevant unit of analysis, not the city, state or nation. For this reason, World Game programming generally used Fuller's Dymaxion Map for the plotting of resources, trends, and scenarios essential for playing. We are, in Fuller's words, onboard Spaceship Earth, and the illogic of 200 nation state admirals all trying to steer the spaceship in different directions is made clear through the metaphor - as well in Fuller's more caustic assessment of nation states as “blood clots” in the world's global metabolism.
The logic for the use of the word “game” in the title is even more instructive. It says a lot about Fuller's approach to governance and social problem solving. Obviously intended as a very serious tool, Fuller choose to call his vision a “game” because he wanted it seen as something that was accessible to everyone, not just the elite few in the power structure who thought they were running the show. In this sense, it was one of Fuller's more profoundly subversive visions.
Fuller wanted a tool that would be accessible to everyone, whose findings would be widely disseminated to the masses through a free press, and which would, through this ground-swell of public vetting and acceptance of solutions to society's problems, ultimately force the political process to move in the direction that the values, imagination and problem solving skills of those playing the democratically open world game dictated. It was a view of the political process that some might think naive, if they only saw the world for what it was when Fuller was proposing his idea (the 1960s) - minus personal computers and the Internet.
The playing field was not to be so much as leveled, or expanded, but the good 'ol boy political process was to subverted out of existence by a process that brings Thomas Jefferson into the twentieth century. In order to have this kind of power, the game needed to have the kind of information and tools for manipulating that information that empowers. It needed a comprehensive database that would provide the players of the world game with better data than their politically elected or appointed counterparts.
They needed an inventory of the world's vital statistics--where everything was and in what quantities and qualities, from minerals to manufactured goods and services, to humans and their unmet needs as well as capabilities. They also needed an information source that monitored the current state of the world, bringing vital news into the “game room” live.
None of this existed when Fuller began talking about a world game. And then something funny happened on the way to the twenty-first century: CNN, personal computers, CD ROMS, the Internet and worldwide web, supercomputer power on personal computers and reams of data about the world, its resources, problems and potential solutions started to bubble to the surface and transform the world and the way we communicate, do business, research and govern.
The World Game that Fuller envisioned was to be a place where individuals or teams of people came and competed, or cooperated, to:
“Make the world work, for 100% of humanity, in the shortest possible time, through spontaneous cooperation, without ecological offense or the disadvantage of anyone.”
Economist
Kenneth Boulding proposed something similar as his emphasis shifted from focus on economics to general systems theory, of which he was a co-founder. The title of his book,
The World as a Total System, is indicative of this, but as a committed Quaker, Boulding was, like Fuller, committed to world peace and distributed prosperity as an end-in-view. Another of his books is
Human Betterment, for example. Conflict resolution was also high on his list. He was under no utopian illusions. But he believed that humans hold their destiny in their hands collectively as a species, if they would take ahold of it.
Foundationally, the quest comes back to the enduring question of ethics and social & political philosophy that was first proposed in the West by the Ancient Greeks — What is a good life in a good society? In order to deal with this comprehensively in an integrated fashion, all disciplines need to be brought to bear in a open and ongoing debate over the future of humanity as a species.
There's a saying, "Don't sweat the small stuff." But that does not mean that apparently small stuff can be overlooked. As Aquinas said at the outset of
De ente et essentia, paraphrasing Aristotle, "A small mistake in the beginning is a big one in the end, according to the Philosopher in the first book of On the Heavens and the Earth."
The Case For Concerted Action
Interest Rate, Growth And Debt Sustainability
Ramanan
