The Banking Executive Magazine - October Issue 2022

The Transatlantic Open Skies War progress requires that old industries, occupations, and societal patterns be regularly destroyed to make way for new creations. This process can un- doubtedly be painful. But it is also why there has been more technolog- ical change since 1870 than there was between 6000 BC and 1869. The second thinker is Friedrich En- gels, who worked out the Marxist base-superstructure model of politi- cal economy (this is, of course, Marx’s framework, but I believe it owes more to his collaborator). “Superstructure” describes all of so- ciety, with its personal networks, so- ciological patterns, and political, cultural, and – crucially – economic institutions. As important as these things are, they all rest on and must conform to the underlying techno- logical “base” of production. At every moment since 1870, whatever sociological software a society was running would inevitably become obsolete and crash within the space of 50 years, owing to changes in the underlying hardware, which in turn were driven by Schumpeterian cre- ative destruction. The third thinker is another Austrian- born economist, Friedrich von Hayek. His magnificent insight was that the market economy is an unri- valed mechanism for crowdsourcing innovation and mobilizing human brainpower to make the world richer (provided that property rights are en- forced). But Hayek warned that these benefits come at a terrible price: the market cannot be expected to provide any form of social justice. He believed in his bones that any attempt to manage or tweak the market with such goals in mind not only would fail, but also would undermine the market’s ability to do what it does best. His doctrine thus amounted to, “The market giveth, the market taketh away: blessed be the name of the market.” Anything else would put us on “the road to serfdom.” Finally, the Hungarian economic an- thropologist Karl Polanyi saw that Hayek’s vision of a market-bestowed utopia was unsustainable by dint of being inhuman. People want a say in how their society’s resources are used. They will demand that their – and others’ – incomes reach some minimum dignified level, and they will expect a certain degree of stabil- ity. People tend to resist the idea that their pattern of life can be single- handedly destroyed by some rootless profit-maximizing cosmopolite half a world away. For better or worse, that is how people are. If property rights really are the only rights that matter, politics and society eventually will unravel. All four thinkers enable us to under- stand why we have been unable to use our technological prowess to construct an equitable and happy world. But diagnosis is of course only half the battle (and probably less). The task of future generations is to figure out how to become as good at slicing and tasting the economic pie as previous generations were at mak- ing it bigger. the BANKING EXECUTIVE 50 ISSUE 166 OCTOBER 2022