Economic experience has given birth to, until now, an un-named school. This school has been created out of necessity and practical experimentation. For lack of any other appropriate title I have used the name Practicalism. Perhaps the best definition of this idea is that it is economic innovation or problem solving without adherence to ideology or dominant theories. In that sense the method or principle of Practicalism is functionality or in simpler terms – an economic solution that actually works.
Perhaps the most famous application of this idea was popularized by Keynes when he was reminded that a market system will eventually balance itself out, all we have to do is wait for the long run. Keynes replied “In the long run we are all dead,” and proposed that government spending would lift the economy out of its slump immediately, while we were still living. In essence Keynes through dismissing ideological dogma helped to define an essential concept of what I have called Practicalism.
Another example where ideology is being ignored for the sake of development is in the Peoples Republic of China. Here we have a market economic system developing in an ideologically communist state. Ideology has not caught up to the practical application of ‘doing what works’ or being practical and allowing the Chinese People to generate independent economic initiatives. This approach is similar to Keynes’s violation of the conventional balanced budget wisdom of government finance of the day.
A less spectacular example of Practicalism was the development of consumer and distribution cooperatives in the farmer’s movement of the early 1900s. This solution to their distribution and supply woes appeared to be a hybrid of capitalist and socialist but in reality was simply a group cooperating to purchase goods together. It worked. The producers were able to obtain cheaper and more reliable supplies. Ideologies were not used.
One might be unimpressed with this idea. One could say, yes, there appears to be a similarity between these events that has been pointed out – but it is not an organized school of thought or a philosophy. It appears that these developments are not really related and are simply examples of people coping in very different circumstances. You would be correct in the description but what is important about the similarities is that when they are compared a useful method or approach can be derived which is fundamental to economic progress. It is this approach which needs to be encouraged and emulated so that we can continue to solve difficult economic problems. Also, one of the most difficult hurdles that policy and economic advisors encounter is ideology, from the left or right, from religion or politics, ideology destroys practical solutions. Practical solutions generate food for the hungry, medicine for the sick and water for the thirsty. Micro-finance is an example of a wonderful synthesis of finance banking and cooperation.
So how is ideology hurting our societies?
Individualism, Communism, free trade, capitalism, government authority. We need permission to ignore these ideologies and replace them with the idea that a practical solution to our problems is not only acceptable but is our ultimate goal. This needs to become the new anti-rule rule.