For me, the whole conversation is ultimately self-defeating, because the *nature* of the economic system is still assumed to be mechanistic and closed when the Keynsians fight on those terms.

‘The economy’ is not a machine; it is a complex, adaptive system. *It is social*, it is very dynamic, and it is an open system.
Consequently, it behaves more biologically than mechanistically; IMVHO, the more we enter the digital age with ‘instant’ communications, the more clear this becomes.

And as research examines how humans behave with respect to reciprocity and punishing ‘cheaters’, the more clear it becomes that economies are social ecosystems.

In this view, wealth and prosperity are created by *trust* and cooperation.
I believe this to be true, because I’ve seen it.
I have seen trust and cooperation create tremendous wealth.

Tragically, conservatives continue to insist that the economy is some kind of ‘Mechanical Thingamajig’ and that “competition creates wealth”. These assumptions lead to policies that, over time, generate increasing levels of distrust; this policy process creates negative social feedback loops that manifest as: (1) increasing levels of political corruption, (2) economic inequality and stagnation, (3) personal tragedy and lack of security, and (4) concentration of wealth and power among elites.

I would be shocked to learn of any great wealth created by distrust or corruption — apart from the bogus wealth created via accounting tricks and tax havens. But I would call that ‘pseudo wealth’, or ‘financialized wealth’ — because it increases inequality (exponentially), which is socially destabilizing. As inequality increases, trust is further eroded; this process is iterative and the economic ecosystem adapts by becoming increasingly corrupt, sterile, and stagnant.

We have now seen this in the US for the past thirty years, and it grows increasingly worse. The longer the conservatives prevail in framing ‘the economy’ as some kind of ‘engine’ with no social or psychological components, incapable of adapting to new information, the longer we’ll continue to spiral into disarray and instability.

IMVHO, the conservatives are caught in a doomed feedback loop, basically claiming that, “The Economy is a Mechanical Thingamajig. Conservatives, mistaking themselves for mechanics rather than gardeners, stubbornly refuse to plant seed by investing in education or social infrastructure. They lack trust in their fellow citizens.

And when, in Aug 2011, they refused to pay the public debt, they essentially shouted, “Watch us conservatives pour salt on your collective economic soil! We’ll make it harder for America to grow future economic prosperity — watch our distrust lead to more sterility! Wheeee!”
We all know how that worked out for the ancient Carthaginians: dessertification.

An ‘economic ecosystem’ can be badly damaged by terrible metaphors that generate tragically misguided policies Especially by mechanics who have not the first inkling of how to treat soil, nor plant seed (!).

In a mechanistic view, ‘the Deficit’ is a big stick to whack others into submitting to your hysterical demands that things are in a terrible state and everyone must kowtow to your demands. Right Now! Because it’s an e-m-e-r-r-r-r-g-e-n-c-y!
That’s absolute hogwash.
Personally, I’ve lost all patience with the kind of Deficit Hysteria that seems to be the current fad.
I wonder what their claims to power would be if they didn’t have ‘the deficit’ to scare us all with — I really hope the entire sane part of the US adult population laughs back with a Jon Stewart like “booga! booga! booga!”

The deficit is a symptom, IMVHO, of how badly we have mis-metaphored ‘what an economy is’.
IMVHO, ‘the deficit’ represents important information.
It’s an invitation to rethink.

American economic policy has been out of whack now for a very long time, and the primary metaphors of ‘what an economy is’ have described it as a big Mechanical Thingamajig that needs to be better tuned by this or that tax loophole, or tax shelter, etc, etc.

What hogwash.

‘The deficit’ is a symptom that our understanding of ‘what an economy is’ has been simplistic and not nearly social, nor dynamic, enough.

‘The deficit’ should be an opportunity to take a deep, calm breather and rethink how we might rebuild trust and cooperation, which are the basis for prosperity.
To do that, however, government would have to become more transparent (at all levels) and also more competent and accountable.
So it’s an opportunity, if we can see it that way.

I truly see tons of economic opportunity around me, but to get it to work will require more trust and cooperation, and a lot less hysteria and politicized nonsense out of D.C.

I just wish we had a president who understood this, rather than saying households are cutting back, therefore government should tighten its belt too.

My main criticism of you in this regard is not winning the policy argument when you were in the administration. Summers and now Sperling are the more natural targets, but only you have a blog and are kind enough to respond to us snipers.