The Locust and the Bee
Fables have been in the politico-economic air of late. The FT’s Martin Wolf considered the locust part of a master metaphor for the future of the global economy. He concluded that “the financial crisis was the product of an unstable interaction between ants (excess savers), grasshoppers (excess borrowers) and locusts (the financial sector that intermediated between the two).”
Now Geoff Mulgan has entered the fray with the excellent book The Locust and the Bee: Predators and Creators in Capitalism’s Future. As Mulgan observes,
If you want to make money, you can choose between two fundamentally different strategies. One is to create genuinely new value by bringing resources together in ways that serve people’s wants and needs. The other is to seize value through predation, taking resources, money, or time from others, whether they like it or not.
The more one reads about failures and exploitation on the financial front, the more squarely the industry appears to be positioning itself as destructive (albeit dominant) caste atop the real economy. Brandeis’s words ring as true in 2013 as they did a century ago: “though properly but middlemen, these bankers bestride as masters America’s business world.”
Commentaries on the finance sector from both ends of the political spectrum bring home the huge importance of Wolf’s and Mulgan’s work. Bruce Bartlett, an official in both the Reagan and Bush pere administrations, has discussed financialization as a “cause of economic malaise.” Brad DeLong, a former Clinton Administration official, has “suggested that the world paid financial institutions roughly $800 billion every year for mergers and acquisitions that yielded about $170 billion of real economic value.” Both of these experts on political economy compile shocking figures about the sheer economic waste that our burgeoning finance sector represents. As one of its leading members insisted last year, there is indeed a sharp divide between makers and takers in today’s economy.