No Brakes

[This is an automatic translation of the original post in Spanish and has not been edited yet.]

Those who are used to stopping to read the economic section of newspapers will have noticed that world stock markets fell dramatically two weeks ago (what experts called a “market correction”) and then rebounded to net a noticeable but not catastrophic loss. For a couple of days the news even managed to transcend the headlines of the first pages and get on the radar of people who usually do not come or go what the market does. Some columnists wrote again about the fragility of our capitalist system, some close friends on Facebook sarcastically pointed out the similarity between the markets and the casinos, and some concerned friends asked me if they should move their investments.

A natural and fairly widespread perception is that this kind of thing shouldn’t happen. Clearly something must be profoundly wrong if we are periodically subjected to these collapses, and even more so if the economy as a whole is vulnerable to the whims of the stock markets. Shouldn’t we aspire to a system in which these lunches simply do not occur? Perhaps some of us hope that all those well-meaning officials from central banks and finance ministries are working to solve those problems. Possibly these crises are simply damage to the well-oiled machinery of capitalism and as time goes by it is going to be more robust, less susceptible to breakdown.

The truth is a little different. Crises and collapses are inherent in the current design of the free market. The plethora of decentralized forces operating at any time in the economy, each pulling to a different side, are not centrally coordinated to ensure a slow and steady pace. On the contrary, the free market is designed to reward accelerated growth and punish any source of stagnation. This chaotic character of the market is more like the unpredictable British climate than a precise German machine, and waiting for there to be no more crises in the future is like waiting for there to be no more rains or hurricanes.

We could conclude then that this whole exercise has been a total failure if we cannot even get rid of these recurring collapses. And we do not know when, or how, or why, but surely what we saw a couple of weeks ago we will see again sooner rather than later. Furthermore, I do not believe that there is anyone willing to blindly bet that in the coming decades an apocalyptic crisis such as that of 2008 will not recur.

However, the free market has been a resounding success at least as far as its central objective is concerned: the economy driven by free supply and demand has only grown at breakneck speed. Every day it seems that we break new records in the number of products we produce and consume, while the indices that measure the value of companies or debt advance to unprecedented heights. Despite the long list of economic meltdowns of the past hundred years, the economy always manages to rise again, hungry and desperate for more growth.

It is hard to recognize that we are living the best possible alternative, of course, if what we are looking for is that peaceful well-being that provides paid work, access to quality health and education and the many goodies of capitalism. Furthermore, as a real force for change, the industrialization that has accompanied the free market has no competitor, having been the main engine to lift hundreds of millions of people out of poverty, particularly in China and India.

In our current system we are yielding stability for the promise of freeing the spirits of the economy, which will make it ever greater and more universal. And so far, all the evidence points to that promise being formidably fulfilled. To say that this free market has not worked for the interests of humanity because we periodically undergo untimely falls is unaware that these are exceptions and that the norm is an absolute state of calm and expansion.

And yet the free market is in existential conflict with humanity, but this is for other reasons. Because precisely that primary, perhaps unique, objective of growing and growing has been achieved with such perfection that it has carried the entire planet forward. The systematic and large-scale destruction of the biosphere is a natural consequence of our riding in a vehicle without brakes. And the quest for greater efficiency and growth can only open the gap between a handful of super-rich and the rest. In the optimization exercise that the free market implies, neither the balance of nature nor the reduction of inequality is sought. Here it is about growing.