Economy is a fascinating word. It is rooted in the Greek oikos, which means the home. Think of home economics and you'll remember this. It is also the root of ecology, which speaks to us of sustainability and the future. So I was excited to receive a copy of Diane Coyle's new book, The Economics of Enough; for me a title that promises to re-unite the deep-rooted meaning of economy with ecology.
The book opens with a story from the dark days of the banking crisis in October 2008, when, as we have since discovered, the global financial system almost completely seized up, to the point when ATMs were nearly shut down. Coyle herself admits to withdrawing her cash maximum on a daily basis until the scale of the crisis became clearer. We are then taken on a journey that knocks on some increasingly familiar doors, including chapters on happiness, nature and trust.
Then we return to more traditional territory in terms of the government and corporate institutions that have historically 'managed' (or failed to manage) the world's economies. We visit issues of measurement and values and then, quite rightly, Coyle outlines a solution - a 'manifesto of enough'.
So far, so good. The book has a shelf-appeal cover. The content, agenda and first chapter draw you in. You then begin to absorb Coyle's evidence, analysis and conclusions. There is much here that I both liked and agreed with. But there is also something incomplete about this manifesto.
The economics of happiness, values and measurement are the first themes that hold promise. An increasing number of economists are calling for a complete re-assessment of how and why we measure GDP and its components. Coyle discusses these challenges in some depth and concedes, for example, that it is clearly fallacious that any economic model can assume that people always act out of rational self-interest. But she then appears to contradict this argument by saying that the mathematical models of the economist work because people 'will act in their own self-interest on the basis of the information available to them. There is nothing in this that runs counter to human nature - on the contrary, it's in the genes.'
Unfortunately, for Coyle, the mounting scientific research being conducted by neuroscientists, evolutionary biologists and moral psychologists demonstrates that while humans can be individually selfish, the default nature for human beings is that we are in fact soft-wired to be empathic and altruistic.
A second example that concerned me is the hypothesis that it is only 'institutions', defined by 'rules' that must drive this economic and social change. Coyle cites the Nobel Committee's note on the 2009 Economic Sciences prize to Elinor Ostrom and Oliver Williamson to support this view.
However, there is no real challenge in the book to the hypothesis that human well-being must be founded on the governance of rules-based institutions. Again, the evidence being accumulated by social psychologists and anthropologists is that the best-functioning human forms of association are based on shared values, devel-oped through social learning and decision-making. As the Roman historian Tacitus remarked: 'The more rules, the more corrupt the state.'
To her credit, Coyle does go on to describe the potential of social networking in developing more effective, local and mutual self-government. This is indeed the ethos being promoted by ResPublica, the cross-party thinktank of which Coyle and I are both fellows. But I'm disappointed that, on this occasion, the author has not explored some of the other scientific disciplines that can help us redefine our understanding of what we want economics to be.
Given the almost total collapse of our banking system, which led to one of the worst economic recessions in history, I was hoping that Coyle would take this opportunity to deconstruct and rebuild our mainstream, but failing, economic philosophies, theories and models. The author does identify the opportunity to do just this when she notes the prosperity-without-growth school of Herman Daly and Tim Jackson, but then dismisses this prospect because it would be just too difficult to do. There's no review of ecological systems thinking. There's no exploration of the impact of growth on bio-diversity. This for me sounds like the refusal of the smoker to stop smoking after a stroke, because it's just too hard to give up. Understandable, but potentially lethal.
There is much good thinking and plenty of good ideas in the Economics of Enough. For many readers, this book will be a revelation in just how far we have moved from economics as a 'dismal science'. For the business reader, Coyle opens up a range of broader perspectives that will on the one hand challenge the neo-classical economic purist and, on the other, will encourage those who want their children to have more than a dismal future, to do something about it.
I'd like to conclude with this thought. For those with nothing, more means enough, and more for those with enough means nothing.
The Economics of Enough: How to run the economy as if the future matters
Princeton University Press £16.95- Professor Roger Steare is the corporate philosopher in residence at Cass Business School