MoneyVsSociety

My comments on the debate about Europe vs. the US in economic terms at UmairHaque's.

Ultimately, it's about "what you can measure you can manage" or "indexes become policy targets". They're truisms. And anti-patterns. Everyone recognises them, but no-one takes them seriously.

So, yeah, there are some kinds of capital that you can measure, and manage, and because it has a lot of liquidity and plasticity you can do cool tricks with it. You can build civilizations; co-ordinate global process networks of thousands of suppliers; get lots of new cheap stuff.

That kind of capital is a good thing.

But there are other kinds of capital you can't measure, you can't manage, and that don't have the fungability to do these kind of tricks with. Neighbourhood, family, religion, friendship, security, freedom from stress and risk.

If you can't measure them or compare them does that mean they have no value? Not at all.

But if you start with an axiomatic assumption that everything must be comparable in the same unit then it looks like that.

But that assumption is wrong. It's no more sensible to assume you can recognise social capital in financial terms than it is to say that music must be translatable into colour for it to be beautiful even though, sometimes the two arts conflict with each other for the same resource. Will I spend my time / money on painting or music? Yes, I have to choose, but no, that still doesn't mean music's beauty can be represented in colour.

Nor is it meaningful to claim that the US "chooses" one way of life over another when it shops at Walmart. By definition, all financial transactions at Walmart are part of a rationality which is wholly independent and incomensurable with our preferences for social capital. (Interesting how Hernando de Soto invokes Donald Davidson at the end of "The Mystery of Capital") even though, once again, the different needs of the different kinds of capital will come into conflict.

So, to say that people are "unwillingly" subsidizing the higher quality of life in Europe, may or may not be true, but that willingness sure isn't divinable simply by looking at their shopping behavior.

If anything, only the political process offers a chance to translate between the incomensurable spheres of financial capital and social capital. When I vote for a government I am making a decision between one party which will put the measurable (money, jobs, growth) ahead of the unmeasurable qualities of life. Or vice-versa.