Goldmining As Our Metaphor For Economic Activity

Thursday, 11 June 2020, 5:44 pm
Opinion: Keith Rankin

Imagery: Metaphors, Symbols, Analogies

As a species, people use symbols to facilitate understandings of the complexities of the world. In the last millennium in Europe, the highest subjects of learning were 'classical studies' and 'theology'. It was because almost all of the principal explanatory stories of human life – as the priestly classes understood humanity – derived from classical and biblical texts.

Economists and finance professionals use metaphors and analogies frequently when they communicate with the public. (Look out for a variety of metaphors in this text, generally set in single quotation marks.)

There are some cultural metaphors (or mindframes) that are so deeply embedded in our psyche that we refer to them without being aware that we do so. Once such reference metaphors become explicit, then they stand to become exposed as 'empty boxes'.

The most important metaphor that I address here is that of 'goldmining' as a metaphor for 'economic activity'. I note that, however, before one deep-seated metaphor can be dislodged, another reference metaphor may be required to take its place. I have already discussed the practical and simple symbolism in economics of the 'pie', a symbol that represents both the size and composition of 'the economy' and the distribution of income.

Gold and mining metaphors go back into the mists of European time; probably to the origins of agriculture. It was thousands of years ago that it became possible for a few people to accumulate gold as a symbol of wealth. And – as kings, nations and empires emerged – gold came to be symbolic of national wealth.

Alongside this we had the romanticised work ethos, associated with mining rather than farming. (Just think the 'Seven Dwarfs'.) Mining preceded agriculture. In the pre-agricultural world, mining was a more potent symbol of work than the mere gathering of food. Early food gathering was facilitated by nature; agriculture and pastoral farming were mere extensions of this. Mining on the other hand represented winning materials from nature in systematic and labour-intensive way; it symbolised the conquest of nature.

A Working Metaphor

The gold-mining metaphor has two components: ideologies of 'money' and 'wealth', and an ideology of 'work'.

The metaphor works through the words 'as if'; we think of work as if it was mining. And we think of money as if it was wealth, and we think of wealth as if it was gold.

Imagine the goldface – analogous to 'coalface' or 'chalkface' – as an infinite rocky escarpment of gold-bearing rock. We go to work each morning as if we had miners' picks, then – through a process we call 'work' – we hack away at the rock, extracting gold, making money. In the process there are tailings, which are disposed of.

This image is very simple, it doesn't require anything as complex as a market. Everybody has unrestricted access to the (public) escarpment. So, the only possible reason why people could be unemployed would be their own laziness.

Money (gold) has value because we attribute magical qualities to it – we believe that the money we have made can be converted (spent) into something else (any 'good' or 'service') at any time or place now or in the future. We even add to the magic by creating a law of money – called compound interest – which leads us to believe that the convertible value of money increases when it is not spent. Thus, we have the embedded idea that the truest form of wealth is unspent money.

The metaphor gives us a simple story of economic growth and benign inequality. Economic growth means that the total amount of money made (gold mined) in one year is more than it was the previous year. Economic growth may arise from a mix of: more productivity, more effort, and more miners. Thus, the concept of 'retirement' is antigrowth because it means fewer miners. And the concept of multiple income households is pro-growth; the more total time that household members spend at the goldface, the more wealthy an aspirant household will be. Inequality – a result of a few very productive or industrious miners 'getting ahead' – is not accompanied by poverty; the gains of the rich are not at the expense of the poor.

The 'making money' gold-mining metaphor also gives us a story about debt. Debt is something that 'losers' resort to, and is punitive. The metaphor teaches us that borrowing and spending someone else's money should be avoided at almost any cost; indeed people in debt who need help are generally treated in an unsympathetic way. Losers, after all, are people presumed to be either lazy, or spendthrift.

The exception around debt exists when goldminers want to increase their productivity. They may borrow and spend someone else's hard-won money in order to invest in a better gold-pick, or a second gold-pick, enabling them to mine more gold than they otherwise could have. They will be able to pay interest, understood in this story as a lender entitlement. (In some alternative cultural stories, the payment of interest is called 'usury'.)

Accepted Modifications to the Metaphor

Of course, by definition, a metaphor is just a metaphor.

We understand that our particular goldface is our place of work (or, for the self-employed, places of work). And we understand that we must negotiate access to that goldface – ie we need to 'get a job'; we understand that goldfaces in the real world are private rather than public places.

More subtly, we understand that, as workers, we make tailings (goods and services), rather than winning money/gold directly from the goldface. We actually make our money by selling those tailings, and receiving money in return. Thus, the marketplace – understood as a process of 'selling' – becomes a fundamental extension to our metaphor of money (gold) and work (mining). We might be a loser, either because we are lazy or spendthrift, or because we are stupid; with 'stupid' meaning that, if we cannot read the market, then we may get very little money (or none) in return for the tailings we have sold (or tried to sell).

We note that the market is very important, because for most of humankind's historic era (as opposed to the prehistoric era) it is the market that has, by and large, created the 'magic'. Money has been readily converted into goods and services in the past, and is readily converted into goods and services in the present (despite Covid19-related disruptions to supply chains). The market is the apparent magic. But there is no law of science that assures us that saved money will always be able to be converted into an amount of goods and services that we consider represents that money's value. The magic will only continue if we have well-functioning economic markets in the future; we expect that money saved today will be able to be exchanged for goods which do not yet exist.

With market goldmining, the goldface switches from an imaginary escarpment to groups of people – especially foreigners – who are essentially mined for money. Thus, for example, businesses compete to mine young people of limited means by selling them fast food and fizzy drinks. Informed by this metaphor, economic success is winning money from people, through selling them whatever we can persuade them to buy. Consumers are treated – through 'hard sell' (thought of as hard work) – 'as if' they were goldmines; modern market goldmines.

(In economics, it is consumers – not businesses – who are in the driving seat, with businesses responding to households requirements for goods and services. Further, in economics, the saying 'my/your spending is your/my income' applies; this is quite a different mindset, circular rather than linear economic nous.)

The basic goldmining metaphor supports the notion of 'equality of opportunity'. This concept is quite distinct from having the equal rights of economic citizenship. (In this case, it is the publicness of the goldface that's important.) 'Equality of opportunity' represents the idea that 'we make our beds and lie on them'. Economic failure becomes one's own fault; it is failure to take opportunities, making some bad choices. Such failure is a result of laziness, spendthriftiness, stupidity, or maybe just being insufficiently aspirational. A very kiwi manifestation of the 'equality of opportunity' ethos is a belief that we should all have access to the 'property ladder'.

The goldmining metaphor leads to a tension between the advocates of 'equality of opportunity' (a leftish application of the metaphor), and the (rightist) advocates of 'private property rights'.

Cultures of Miserliness

Through the goldmining metaphor, we have created deeply-embedded prescriptive cultures of individual and collective miserliness. Goldmining is a normative metaphor, cased in a set of miserly values which few of us would associate with ourselves. The alternative 'pie metaphor' is, by contrast, a positive metaphor, meaning that it offers a social scientific description of growth, distribution and debt; the pie metaphor is a 'could' rather than a 'should'.

(Unlike the goldmining metaphor, in which the economy is all about production – indeed production for its own sake – the pie metaphor follows the ethos of modern economics; namely that the economy is about consumption, about the needs and wants of people. Under the pie metaphor, economic prosperity is these purchased goods and services themselves, and not the money made from selling them.)

Most of us – at least in New Zealand – do not live our lives by the precepts of miserliness. We are – for the most part – generous, warm-hearted, and sharing. Yet when have discussions about 'the economy' – or, especially, economic policy – the goldminer metaphor almost always bubbles just under the surface.

Miserly Policymaking

The goldminer metaphor strongly informs all present policymaking that involves public finance. There is a deeply set view that money is wealth, that money must be hard-won, and that the spending of money represents a loss of wealth. This creates a powerful mental aversion to governmental debt and budget deficits. States pursue cruel policies towards their own people, in the name of sound public finance. Homelessness is accepted in the name of public finance. Another example is 'the sin of cheapness' whereby government contracts routinely go to the lowest bidder. Then there is government's 'bouncer' rather than 'usher' mentality when it comes to providing monetary help to people in need, or when people with a stake in a country are routinely treated without compassion if they do not meet narrowly rigid criteria such as 'permanent residence'. When rulers have a money-first mentality, a country's denizens are abandoned to their fate; duty-of-care does not extend to them.

These attitudes favouring balanced budgets can place governments at odd with their own countries' central banks. At times when there are many lenders and few borrowers in the financial marketplace, the people who actually create money – central bankers rather than goldminers – come under pressure to allow interest rates to fall close to zero (or below zero) when governments refuse to respond to the 'carrot' of very low interest rates. Economic orthodoxy says that borrowing money, and spending borrowed money, is sensitive to the rate of interest. Governments prefer to respond to the requirements of the goldminer metaphor for work and wealth, than to respond to market incentives as set by their own central banks.

With Covid19, our governments, subject to cultural miserliness, necessarily find themselves asking people to spend more. This is despite past messaging – through exhortation and example – that people should save more, and be averse to financial risk. Indeed, we see that meanness playing out this week, in the New Zealand government's reluctance to extend present economic freedoms to 'realm' nations such as the Cook Islands and Niue. And in the government's shutting out of residents currently legally employed in New Zealand, but who just happened to be out of the country in mid-March 2020. And through treating those of 'us' living and employed in New Zealand on working visas, who lost their jobs as a result of Covid19 restrictions, 'as if' they are not us at all. The government has a duty of care towards all five million of us who are at present normally resident in New Zealand. (Refer Immigration Minister on the government's plans for migrants for a carefully-measured account of government's financial priorities.) We can understand these attitudes by examining our deepset economic metaphors; mining metaphors that value – to the near-exclusion of all else – money and paid work.

Paying money to denizen 'foreigners' is understood as an economic loss to a nation. This is an example of 'mercantilism' in action.

Economic Nationalism and Mercantilism

As discussed in a previous article, the political, business and economic orthodoxy of the third quarter of the last millennium, was a systemic way of thinking that has been since dubbed mercantilism. This mindset, and the political practices of mercantilism, are quite obviously derived from the goldminer metaphor. The mercantilist mindframe did not disappear in 1750 or 1776 whenever. It remains very much with us today, and to a large extent flourishes in Asia as well as in Europe. The problem is that we would be lucky to find one person in 1,000 who has any understanding of what the word 'mercantilist' means; further, even economists and public policy professionals have had minimal educational exposure to this important historical concept. In part through ignorance, countries' policy elites have become slaves to an unexamined set of assumptions about statecraft.

Mercantilism is often defined as economic nationalism. Certainly, classical mercantilists – ie from the 1500 to 1750 era – would be regarded as economic nationalists. But the devotion to money and paid work continues to be central to the thinking of many people we would not regard as economic nationalists. Further, there have been forms of economic nationalism; for example the American Confederacy (of the 'pro-slavery' South) – which fought the US Civil War in the 1860s – was less mercantilist than its Northern (Unionist) opposition.

The essence of classical mercantilism – as a form of nationalism – is that exports are good and imports are bad; that nations 'make money' through exporting, commercial tourism, and any other activity that involves extracting money from foreigners. It's just a geopolitical variation of the goldminer theme, that money-making is good and spending money is bad. If we consider the global armaments industry, mercantilist success might be exporting lots of weapons to foreign governments. Or 'big pharma' selling tranquilising drugs to foreign consumers. The criterium of success is the money made.

In a New Zealand context, the New Zealand First Party comes closest to advocating a mercantilist foreign policy framework. But, in other respects the most mercantilist issue in New Zealand maybe that of New Zealand Superannuation. And New Zealand First is the most 'dovish' party on this issue. So, while I would define New Zealand First as a nationalist party, it is not as deeply committed to the goldminer metaphor as are many people in the insider policy community. (I heard an exposition of 'domestic' mercantilism today, on Radio New Zealand: Economic recovery must tackle tax reform and super - PwC report.)

Those with a mercantilist mindframe – that what matters most is having money and doing paid work – assert strongly that the age of entitlement to New Zealand Superannuation must be raised; it would mean more money saved by the government, and more work done (by older people) on the goldface. For these modern mercantilists, New Zealand Superannuation is a 'sacred cow' that needs to be dealt to, in the name of 'sound public finance'.

Those however with an economist mindframe (eg Geoff Bertram) – and excluding most practicing economists who try to operate simultaneously with two contradictory mindframes – it is 'sound public finance' that is the sacred cow, and not New Zealand's universal superannuation. NZ Super is arguably world's most effective and efficient pension system, widely envied by knowing people in other countries who understand the problems associated with targeted and insurance-based retirement incomes.

Conclusion

We cannot resolve our economic problems unless we address the embedded goldmining metaphor head-on, just as many of us are now trying to address the historical and cultural problem of embedded racism. Ultimately the goldminer economic model will have to go the same way as Robert E Lee's statue; both should be important exhibits in the museum of western cultural history.

© Scoop Media

Keith Rankin

Political Economist, Scoop Columnist

Keith Rankin taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s.

Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like.

Keith retired in 2020 and lives with his family in Glen Eden, Auckland.

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