Oeconomica: markets, COVID, and charity

Some of my neighbours put handwritten signs of encouragement up in their windows. Online stories and videos frequently attest to neighbours’ generosity at a time when uncertainty reigns and people are more isolated than ever. Such charity relies on personal kindness muted in recent years by partisan politics and growing consumerism.

The economic woe we currently face is a most urgent sign of these uncharitable forces. A social and global need to profit trickles down into our lives, just like Dwight D. Eisenhower warned it would. We now need to spend to keep a service economy alive.

A global economy has been here to stay for (arguably) centuries. It is a historical phenomenon whereby great gains are made for a few over great distances. Great losses, however, also encumber trade at a time when physical goods are less and less economically relevant. Commodities still represent the backbone of the global economy, yet the World Trade Organization reported that 75% of GDP in developed countries derived from services. This statistic means that developed economies rely on virtual exchange. An intangible product is rendered into tangible cash.

The American response to a complete loss of demand for services tells the tale. Most American companies haven’t failed, nor are they going to, even if they have drawn down massive amounts of credit. The Federal Reserve Bank has been printing money to buy stakes in pressured sectors, which prevents a meltdown. The American government issues debt on its citizens’ behalf to cure the cyclical ills of a round-trip system.

Supporting major economic indices likes the Dow Jones Industrial Average, the S&P 500, or the NASDAQ gives the illusion of security. The economy can’t tank if investors are confident. Their cash is flowing through the stock markets’ services — services like the exchanges themselves, which have made tidy profits in this latest crisis. The NASDAQ, for example, reported a 2020 Q1 profit of $247 million. Reasonable earnings, given the economic distress.

Subject-citizens don’t feel these joys. Their economies are much smaller and probably more fulfilling. International and national media emphasize a big picture. Market data skews toward macro-level analysis. The learning curve toward understanding micro-level data about companies and economic policy is steep. A sign in one’s window, or the willingness to help make personal protective equipment, is a much better manifestation of our real economies.

A real economy is felt because it manifests in the home. The greek and latin word, oeconomica, refers to the management of resources. It also refers to the management of our households, where houses are considered the pillars of society. This broader reflection of societal health does consider wealth, but it also acknowledges the emotions that truly constitute each household. The Greeks framed these exchanges in governmental terms:

Right administration of a household demands in the first place familiarity with the sphere of one’s action; in the second place, good natural endowments; and in the third, an upright and industrious way of life. For the lack of any one of these qualifications will involve many a failure in the task one takes in hand.

Of such administrations there are four main types, under which all others may be classified. We have the administration of a king; of the governors under him; of a free state; and of a private citizen.

Of these, that of a king is the most extensive, yet at the same time the simplest. A governor’s office is also very extensive, but divided into a great variety of departments. The administration of a free state is again very varied, but it is the easiest to conduct; while that of a private individual presents the like variety, but within limits which are narrowest of all. For the most part, all four will of necessity cover the same ground.

Oeconomica II.i, author uncertain (Loeb Classical Library no. 287)

Oeconomica is thus as political as it is economic, for each citizen knows their place in relation to their house and their city. Certainty exists in these local bonds. Relationships with kings and governors are more distant, and focused on the creation of currency and supervision of markets.

It is much more difficult to comprehend the web of relationships that create our society today, but the principles laid down in Oeconomica still teaches us a lesson. We turn to numbers flashing across tickers and speculate about their meaning. We do the same in national and provincial elections. Yet the tangible economy refers to our neighbours’ lives within the city.

I am reminded of those lives everyday as I walk my dog. Their care for me and mine for them isn’t part of our economic narrative, yet it is the bedrock for productive exchange when the global economy contracts. This municipal exchange doesn’t pretend to great wealth; it is indexed to our ability to appreciate one another, our skills, and our services.