A Call for ‘Ethical Capitalism’

In 2004 — just about the zenith of the “greed is good” decades-long Wall Street feeding frenzy — Cambridge economist Noreen Hertz published The Debt Threat: How debt is destroying the developing world…and threatening us all. Here’s a great article about her experiences. Since the early 90s she’s been often ignored and sometimes attacked for her views that the markets were unsustainable, and that one of the major factors in unsustainability is inequality. Ignored, that is, until everything crashed last year.

Hertz saw the financial meltdown as not only a failure of the laissez-faire market, but also — and more important — a failure in thinking. “People either ignored the unknowable or purposely disregarded the facts,” she says. Banks were encouraged not to question models that were delivering otherworldly results, and economists were perpetuating myths — that housing prices would continue to rise, for example — based on patterns of the past. But, as Hertz is quick to point out, “things are going to happen that will have nothing to do with the past. We have to admit we cannot know everything. Otherwise you’re not dealing with the real world, which is messy and complicated.”

The article is long and weirdly sexist in spots, but recommended for the presentation of Hertz’s vision for the future and for its examples of success stories that might functions as models. We might also generalize her experiences to our own, especially as we confront local governments still fraught with the same kind of denial.

We read the world wrong and say that it deceives us. ~Rabindranath Tagore