In the Short Run We Are All Dead. Or, How Financial Volatility Conceals Environmental Signals
by Ivan Ascher
The English economist John Maynard Keynes made no secret of his irritation with his neoclassical colleagues who insisted that if left to its own devices, the market would reach an equilibrium, optimum point. While such an equilibrium might be achieved in the long run, Keynes conceded, "the long run is a misleading guide to current affairs." As he famously quipped, "in the long run we are all dead."
Nearly a century later, the neoclassical paradigm retains a remarkably strong hold on much of the policy establishment, and Keynes's phrase has lost none of its poignancy. If anything, it may even have to be amended to reflect a new urgency and a changing temporal order. Not only is the threat of environmental collapse greater than ever, but the time horizon of today's economic actors seems to be growing shorter by the day. In the short run, it seems, we are all dead.
There are those, admittedly, who still trust that the market and its price signals can provide agents all the information they need to allocate their resources optimally and thus incorporate information about environmental trends. But in an age of financialized capitalism and derivative markets, that is simply not the case. If anything, today's financial markets can be shown to conceal environmental trends, and to pretend otherwise would be both mistaken and politically irresponsible.