Today I had the privilege of discussing the credit crisis on Dutch public television in a special program that allows for more time and therefore more in depth discussion. I had the discussion with Bas Jacobs, a young and very talented economist at the same university where I teach. I had decided to take the difficult road and resist the usual discussion about what to do. Sure, people want to know what to do and then inevitably think of what the government should do. Should it leave the market alone, or should it intervene? It is the engineering question, or so you want, a question on governance. As if the only interest is what the politicians do, or do not do.
I tried to point out the third option. Economists usually have no idea what you mean by that, unless it is Blair’s “Third Way” with partnerships of the government and the market. No, the third way that I am stressing is everything that happens outside the market sphere and the government sphere, and that is in the third sphere, or the social sphere. Some people call this civil society. It is the sphere in which people interact, talk, share, argue, organize events, have friendships, join clubs, do politics and so forth. It is in that sphere in which the important social values come about. I am wondering not what the government should do but what is happening in the third sphere. Is the discussion changing? Are people thinking differently about extravagant rewards, about the high bonus culture, about the celebration of richness and greed, about the valuation of tough and macho behavior? We register an increasing appreciation of immaterial values. So how does this manifest itself? I suspect that people finally face a reality that makes sense of resistance towards the money grabbing that was going on. Changing values may be the result. And so becomes the third sphere another counterforce against opportunistic and selfish behavior.
Colleague Bas Jacobs had no idea what I was talking about. He kept insisting on greater clarity on government policy and I kept insisting that the important response to the crisis may be elsewhere to be found.
Bas Jacobs did a good job making the conventional economic argument. That made the contrast clear. Afterwards I got quite a few responses, most of them positive. Even so, I wish I had had more time to develop the argument.
For more on the credit crisis, see Klamer’s column Hoezo crisis?.