Blog of John Cassidy

We’re lucky. Since the end of September, someone’s really making a remarkable job. No, I don’t mean the GDP team… even though. I mean John Cassidy. He’s not only pulling his economic analysis through, he’s also sharing it with us. In his brand new blog Rational Irrationality, he discusses economics, money and more.

Don’t get me wrong here. I’m not saying I agree with all he’s saying. All I’m rejoicing about is his public interest analysis, which sheds some new light on heavy matters.

Although mostly concentrating on U.S. thinkers and the debate about the future of the economy south of the border, he frequently monitors the international economics and financial blogosphere. The good thing about his writing, is that he constantly moves from Wall Street to Main Street and back via Harvard Square. He pours dry economic concepts over lively everyday stories. The result: Economics you and I can actually chew on and, even use.

In his latest blog post, he offers hard-hitting critique of the latest Nobel team’s pick, in the field of economics : “I don’t wish to sound mean-spirited, but come on, people: this is 2009, the year after the biggest financial crisis since the nineteen-thirties. If the Nobel Prize is about marking the moment, it should have been awarded to some of those economists that for decades have been engaged in the fractious debate about market efficiency. I nominate Eugene Fama and Richard Thaler, [...] Robert Shiller [...] and Sanford J. Grossman.”

He goes on explaining that although he respects the works of Oliver E. Williamson and Elinor Ostrom – the two awardees of this year’s Nobel Prize in Economics – the central debate in economics is about the proper role of markets which, in his view, remains unresolved.

Nevermind the reframing of the debate that Cassidy is trying to achieve, I must say that I was particularly relieved to see that this year’s Nobel Prize has gone to a women. A first it is. That taken alone, is already a big change and salutary move. Interestingly, this doesn’t come alone. In times of the Great Crunch, the Nobel jury recognizes the importance of community-based economic models.

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In Boston last week, I didn’t manage to get a hold of Deborah Frieze. But I did call her once back at my office in Montreal. Deborah’s a wonderful person presiding the Berkana Institute, a community-driven network that works with people who are building healthy and resilient communities.

“Whatever the problem, community is the answer” is Berkana’s mantra. When I heard about the Nobel Prize winner, I immediately looked for someone I could interview that know’s something about community economics, while living in the heart of financial economics, the U.S. So my question to Deborah was: Do you think that “whatever the economic problem, community is the answer“?

Deborah’s answer:

(laughing at first) I think it is. The solution is not exclusively with the people living in the place, but the local community needs to be part of the problem-soving.  You see, what generally happens, is that we ask the experts and download solutions in the communities. Inevitably, it fails. A solution can be informed, broadened, but it can’t be imposed. And this is what’s wrong with the franchise model, which is the dominant model in our economy.

Think of a community as you would of an ecosystem. At Berkana, we think that the ecosystem of a community implies that people have context, knowledge and ideas. All of those are rooted in ancestry, history and nature. When looking for economic solutions, what’s needed is what we call trans-local learning. We believe all changes are local, but learning can be shared from one community to another.

Here in Boston we have a multicultural district called Dudley Square. It has been successful with transforming the local community. They have set up a land trust, activated neighbourhood initiatives, engaged local schools. What they did cannot simply be replicated in another city. You can only transfer the process–how things got started, who joined the conversation, what worked well and what didn’t. Coming back to ecosystems, you plant a seed and watch it grow in a different climate. You need to let local people cultivate it.

Deborah’s words resounded beautifully with what I read about Elinor Ostrom’s theories on communal management of resources. Her theories rely on economic thought and concept. Deborah’s words are a fresh reminder that Ostrom’s thinking can only work if the community takes part in the identification and implementation of the economic solutions. So much for putting Nobel Prizes in context.

Frédéric Dubois, web coordinator