EQUALITY works. It was deeply comforting, after years of being attacked by most of our leading economists for uttering this heresy, to read in the Independent on Sunday that the latest bulletins from the major international economic think tanks have pulled the chain on 20 years of economic thought.
Within the past month, three organisations which had been to the fore in pushing the logic of free market economics have recanted. The World Bank, the Organisation for Economic Co-operation and Development (OECD), and the United Nations Development Programme (UNDP) have all published reports which come to much the same conclusions as people like myself arrived at a decade ago.
For years I have been saying that equality is not simply desirable in the interest of natural justice, but is a prerequisite of efficiency. As reported in the Independent on Sunday, the chief economist of the World Bank, Mr Michael Bruno, has written in an unpublished report that reducing inequality is not simply desirable from the viewpoint of helping the poor, but is also of "benefit to the wider economy".
The UNDP report finds that the equitable distribution of resources enhances the prospects for growth. The OECD recommends the reduction, of inequalities as a way of creating future prosperity. Equality works.
These statements bring effectively to an end two decades of economic policy based on fundamentally erroneous thinking. They state categorically that trickle down theory does not work, that Thatcherism has been a disaster, and that inequality is bad for growth. These statements amount to a serious indictment of the science of economics as practised in the western world.
For a generation we have been subjected to economic cover versions reheated and served up by show band economists without an original idea in their heads. Instead of looking to the lessons others have learned, we have persisted in implementing bad ideas in the hope of a more positive outcome. This is a working definition of madness. Britain, the home of Thatcherism, is now the most unequal society in the western world.
HAVING taken our lead from there, we are currently somewhere around the middle of the Lawson Boom, and will only face reality when we emerge, from our current delusion about being the "tiger economy of the EU. But the copyists remain beyond public call or accountability.
While the best minds in the economic profession in Europe and America are turning their attention to the reasons why the dismal science has singularly failed to explain what is happening in modern economies, the Irish branch of the profession pumps out the same old back beat.
Nothing I write is as certain to stir up nests of disgruntlement as when I write about economics. This is because any effort at illumination, no matter how timid or preliminary, nibbles at a lot of comfortable bottom lines.
And yet, nothing I have written on the subject has gone much farther than the more self critical economists are prepared to go in highlighting the limitations of their own discipline. Two years ago, for example, I listened to the Nobel Prize winning economist Douglass North give a talk in Trinity College in which he described one of the central assumptions of neo-classical economics as "clear, unequivocal nonsense".
He was speaking of the rationality assumption, the belief that people engage in transactions on the basis of their own self interest, from which many of the conclusions of the modern economic discipline follow.
The gist of what he said is that human beings are only relatively selfish. Conditioning by religion, family, community, politics, belief systems, local learning and emotional interaction all serve to dilute the primal rational impulse and modify the undedying culture.
Prof North speaks on behalf of the enlightened self interest of his profession. Having seen the writing on the wall, he was blowing the whistle to save the system from its own absurdity. The recent statements by the three international bodies tell us that the assumption that people are driven by self interest is dangerous as well as wrong.
AND yet, on a daily basis, decisions are made affecting every area of our lives which accept its logic. Moreover, decisions which would be to the good of society are not made because they do not accord with this assumption.
This is just one instance of something which ensures that economists are bound to get it wrong. But like magicians guarding their tricks, they refuse to engage in debate except to dismiss all criticism as ignorant or irrelevant. The economist is so convinced of the all knowing wisdom of the market that he has elevated it to a par with the democratic ideal.
But he forgets the consequences of existing inequality, either between countries or between citizens. He forgets that only those with money in their pockets get to exercise a full franchise. The poor have less voting power than the rich.
Because of its failure to value what is truly good over what is truly bad, economics is rapidly losing its grip on any form of reality. The arbitrary rule of the market undermines sense of place, community and humanity.
The shape of our society, in all its good and bad aspects, is increasingly decided by the nature of our economic choices. On any given day, we can hear news reports about increasing growth rates and reports about murder and mayhem in particular areas of our cities, and not make the most elementary connection between them.
In one area of our lives we place greed on a pedestal, and in another wring our hands about its appalling consequences.
If all forms of "growth" are assessed equally, regardless of values, we can hardly be surprised when the world turns out not to be as nice a place as the "fundamentals" suggest. One urgent necessity is a new system of indexing to take into account quality of life issues.
For example, the care of children, the most important function of any society, does not show up in the conventional indices unless there has been a breakdown and someone has ended up in jail. A convicted criminal serving a jail sentence registers as much on Gross National Product as 20 people on the average industrial wage.
Professional economists regard such ideas as impractical, eccentric and sentimental. But the recent recantations create a situation whereby both the global organisations and the lay person now appear to believe the same things to be true. Common sense is beginning to emerge. It is the middle ranking, political, professional and managerial classes, and their ideologues, the people who do all the damage and who refuse to engage in debate on this subject, who most urgently need to be made to face the new logic.