To every thing there is a season, and a time to every purpose under the heaven.
Ecclesiastes 3:1 (KJV)
Anyone who has been close to the edge knows what “survival mode” is like. Small flashes of adrenaline propel you from one day to the next. Each fitful dawn is a mix of dread and possibility, all of them taken one at a time. Next week? Worry about it when it comes. Next month? Forever away.
Many people find themselves in “survival mode” through this Depression, especially those without either work or unemployment bennies. For them it is a slowly unfolding tragedy, but in great numbers they become a society, a culture, and an economy that is unable to function. That’s because a free market only reaches equilibrium in the long run, actually running on small differences in the short term. But in the very longest term the magic of market forces become something else altogether.
Everything has its own time. When we start to understand that “The only thing we have to fear is fear itself” it helps to appreciate the short, long, and very long term that are all whipping us through each day and all of our days.
It’s considered gospel only among Republicans that a free market is the only economic and social system that guarantees freedom. Democrats are never sure, living among the fruits of the free market while often criticizing its shortcomings. Both sides have extremely valid points that come together when you consider time scales.
A “market” exists when someone needs something that another person has for sale. Say you really want an apple and your neighbor has an tree that has produced a lot of them. In the very short term, things are out of whack – you have a craving and your neighbor has to move before rot sets in. But then you negotiate the price for a few apples, eat your way into craving-sated bliss, and the world is back in harmony once again.
That’s the power of a market where buyers and sellers can hook up freely. It always moves to harmony.
While that may seem like a strong endorsement of the Republican position, it’s important to note that we all have to eat. If you don’t have any money the price of an apple may be steep no matter how hungry you are. What Democrats understand, even though they are lousy at framing the discussion, is that many people live in the inharmonious short term. “Survival mode” hits all of us, at least in small doses.
This is important not simply because there is truth to both sides of the common political debate in the US. While the free market clearly works best in the long run, “In the long run, we’re all dead” as John Maynard Keynes famously observed. And in the very long term, love for the great power and freedom of a truly free market creates a different kind of problem that requires even more continuity.
We appear to still be in a long-term down cycle – call it a “Kondratieff Winter” or a “Secular Bear Market” or a “Depression” as you like. The great waves that run in cycles stretch just long enough to forget the wisdom our grandparents were trying to teach us.
I have to admit, I have been hard on “supply side” economics as put forth by the Reagan administration in 1980. But as I think about it, a lack of capital was exactly the problem back during the “Summer” phase of the K-Waves. That does not mean it’s the right thing to do now, of course, as the world is awash in both cheap capital and innovative ideas. In the very long run, there is another disharmony that sets into the system – one that has yet to even be mentioned in our politics.
There is considerable evidence that while this has been a Managed Depression, the experts managing it have been treating the symptoms far more than the underlying condition. We are running through this phase of the business cycle with no strong push forward to the future – because nothing is pushing.
Far too many people are currently in “survival mode” outside of the time scale where a free market does them much good – they need to know what they will eat tomorrow. In better times, the longer run of the free market is a wonderful thing. But in the longer run yet it breaks in ways that seem mysterious.
It all comes down to scale. Those who understand the importance of a free market would do well to explain how it can whipsaw us if we aren’t paying attention. Those who understand how hard it can be to make it through one day would be wise to understand how time scales change perspective. And all of us would do well to pay attention to the very longest time scales of all – including those that reach way back to the wisdom of King Solomon in the book of Ecclesiastes.