Creative Destruction or Creative Stimulus, or …?

With the ECRI index pointing lower, an index that has quite accurately correlated with previous recessions, and with budget cuts and austerity measures being enacted across Europe (most recently Britain), we may very well be headed for another recession. This doesn’t bode well for higher education, of course, and especially the humanities which has seen its relevance decline in an environment where measurable (primarily economic) benefits reign supreme. The recent controversy and outcry over the closing of the philosophy program at Middlesex is symptomatic of the current thinking among administrators. So if we are heading for a double dip things may only get worse, and with there being very little political will for ‘spending’ the austerity measures will likely make matters worse rather than better, as Krugman has argued repeatedly. So if there is a double dip recession there will likely be a resurgence as well of the heated debate between having another stimulus or allowing for, as Schumpeter argued and as much of the Austrian school seconds, the creative destruction that sweeps away the inefficiencies and weaknesses in the economy so that it can rebuild on a more solid footing.

One thing that is not likely to be debated, however, is the faith in the self-regulating market. Even Krugman is secure in this faith. As one who thought the financial crisis of 2008 might lead to an undoing of the neoliberal faith, government bailouts have if anything heightened the sense that the government is to blame and that if its spending isn’t reduced the market will be ultimately undone as a consequence of the collapse of credit (as is the fear in Europe).

It might be helpful to return to Hume. As Hume was writing his famous essay, “On the Jealousy of Trade,” Hume noted that ‘Nothing is more usual, among states which have made some advances in commerce, than to look on the progress of their neighbors with a suspicious eye.’ In short, the mercantile system was the norm. Similarly, we could equally argue that today nothing is more usual, among states and the public in general, than to have faith in the self-regulating market and to look upon government with a suspicious eye. Hume opposes the dominant view of the time and asserts, as an alternative view, that ‘the increase of riches and commerce in any one nation, instead of hurting, commonly promotes the riches and commerce of all its neighbors.’ The question, then, is what will replace the faith in self-regulating markets. The subtitle to Mark Fisher’s recent book, Capitalist Realism, asks the same question: ‘is there no alternative?’; and the title of his first chapter drives the point home: ‘it’s easier to imagine the end of the world than the end of capitalism.’ Hume had a ready alternative, and Adam Smith, in many ways Hume’s intellectual heir on economic matters, legitimized this alternative. Do we have a ready alternative? I don’t have a ready answer to this question, but it does seem that the declining value of the humanities, and philosophy in particular, within the contemporary scene only undermines our capacity to answer this question. How can there be this generation’s Hume if Hume, and the philosophy that was his passion, isn’t deemed worthy of teaching to this generation?