Really Nominal !

Really Nominal!

GangaPrasad Rao


For some time now, the schizophrenic me has been debating the implications of nominal laissez-faire and real designs in the economic policy sphere (stoked by ‘Faith in an Unregulated Free Market? Don’t Fall for It’: New York Times). We learn at school the virtues of Schumpeterian innovation within a laissez faire economic paradigm - a paradigm in which entrepreneurs stake their technologies, goods, services and strategies against each other, and let the market-comprised of consumers, intermediate producers and investors- decide the winner. Seemed a very logical, and even a just resolution. Why rein the innovative zeal of entrepreneurs when creativity flows from unbridled competition engendered by the laissez faire under the Nominal paradigm? Remove barriers to entry, lower corporate taxes, permit free flow of capital, and what you have is a nominal utopia that serves the masses and elevates their immediate state of happiness.

But has the reality of laissez faire conformed with expectations? Well, Yes, if happiness is about the time one expends on Twitter and Whatsapp; if life is about conforming to the gizmos of the day and maximizing current social acceptance with little regard to the cumulative social burden of the past, or its temporal and cross-sectional impacts, some in zero-sum; if society is about perpetually growing the wealthy by reducing national resources, exploiting the Commons, pandering candies to the masses, and usurping all rents of technological innovation into the estates of the Rich; if the Real impacts of the Nominal such as global warming and climate change, export of hazardous waste to developing nations, irreversible sea-level rise, the fouling of the oceans, the nurturing and expansion of economically vulnerable political constituencies, the strategic leveraging of the per-capita to institute a Subsidy economy, or the politicization of social issues, turn either into mere phrases, or worse, instruments for political and financial exploitation; if excellence is about shredding any issue to the analytical iota and the mathematical 1s and 0s, and competition about hogging the airwaves until the masses substitute the TV- jingle for the Mozart symphony in town, until competitors turn bankrupt and either lean on their creditors, or worse, exploit the investor community in Group Vice to escape their obligations.

Should we, as we have for decades, continue with the unholy nexus between multi-party ‘democracy’ and the nominal paradigm, aware it will exacerbate social inequities, turn it unsustainable and aggrandize the Privates by decimating the social future of the Public at large? Must we, in this day and age of rapid technological innovations, yet trade off employment for a cleaner society? Must we await a generation that is repulsed by the environmental damage from earlier generations before real remediation policies are implemented? Or, must we wait until those who enriched themselves by permitting environmental excesses to occur, turn around over the decades and preach to us the virtues of environmental sustainability while they, in correcting the damage they caused in a previous ‘avatar’, laugh all the way to the bank, all over again? If competition, free markets and democracy haven't neutralized the ever-perpetuating and exacerbating excesses of the nominal paradigm, what can?

Politicians, much less economists, are loathe to admit that the Real paradigm is a natural and credible alternative to the Nominal. The Real is more than a complement of the Nominal; it represents an contra perspective that seeks long-run social sustainability over private profit maximization, that believes in anticipatory planning and strategic policies over laissez faire, cooperative management over competition, and an investment-infrastructure driven fiscal-economy over a technology/export-driven monetary paradigm and consumerist economy. Though conceived to be complementary to the Nominal, it could run parallelly, albeit if administered by an extra-/super- jurisdictional authority with a distinct currency to execute its strategies and goals.

Consider then, a paradigm in which a nation runs its Nominal through democratically-elected Government and contracts its Real out to multilateral international organizations such as IMF with a global Sustainability currency that monetizes an aggregate ‘Social Aural FV ESH 20% Realty 100%’ around a Global Sustainability Cause Bond across nations. The Real would run parallel to the Nominal, boasting its own Bond-backed and Land-collateralized currency; the trade-offs, arbitrages and exchange rates from a Real-Nominal dual currency system permitting decentralized and informed policies and decision-making that further the Cause as relevant to each society. It would operate through deliberate and long-term planning in the ’aural economy’ - macro-prudential causes, social welfare, service and externality sectors with low returns and large consumer surplus, and upon those nominal-neglected issues with inter-generational and extra-jurisdictional impacts.

What would such arrangements obtain the peoples of various nations? The freedom to choose between a domestic nominal economy operating parallel to an internationally-mediated, real society, albeit nationally-differentiated. The opportunity to unabashedly pursue the Nominal aware that it's excesses would be countered, if not anticipated, by the Real. And in realtime! The opportunity to make a difference to the people of a trading partner, while simultaneously pursuing nominal opportunities in that nation. But more than anything else, the means to pursue their social and strategic, long objectives unobstructed by nominal designs of the Private within the ambit of traditions, religion, culture and principles - a goal subverted by the Nominal.

Economists have, for long, been the friends of the Private, the Nominal, and the laissez faire, and the results of such subservience to the Rich and powerful are all around us - diabetic economists including! It's time we as a profession own up to our short-sightedness and selfish pursuits bordering on greed, and advise those politically-empowered to pursue a socially-efficient, and environmentally just paradigm.