‘The part played by orthodox economists, whose common sense has been insufficient to check their faulty logic, has been disastrous to the latest act.’ - John Maynard Keynes (1936).

An economist in a local paper recently urged people not to stop spending money. Sound strange to you? Check out what he said:

‘Consumers should be frugal in their spending to be in a better financial shape in the event of a recession. RAM Consulting Services group chief economist Dr Yeah Kim Leng said people could car pool, postpone buying that extra car and travel domestically.

‘Don't make unnecessary purchases but don't stop spending (italics mine). If everyone stops spending, it won't be good for the economy.’

Consumers should be frugal. Yes, that's wise advice. People should car pool and travel locally. Again, a reasonable and prudent call. But the last piece of advice is beyond belief. ‘Don't stop spending’?

And how do I stop making ‘unnecessary purchases’ and at the same time not ‘stop spending’? Of course, I will need to spend to buy basic necessities such as food and fuel, that goes without saying as I can't cease all spending and let my family and I starve to death, can I?

What if I don't need to spend beyond the basics? What if I don't need that fancy new watch or shoe or what if I cut down on cellphone usage to save money and what if I have enough groceries in the fridge and everything at home is taken care of, and I do not need to and do not want to part with my money at the shopping mall?

Is that wrong? Is that bad? Can I not be careful about how I spend my hard-earned money and save more money for the future, for a rainy day, for when I truly need to purchase something?

Why this fear-mongering to get me to spend?

The ‘spend’ mantra is central to the preaching of mainstream economists for the following reason. To sustain the economy, economists say, we have to keep producing and consuming. Even if we don't really need to.

Produce and sell something as useless and inedible as a ketupat that's made of gold if you can, just so long as it creates economic growth (and so long as money circulates). Irrational, but true. (I can vouch for it because I am myself an economist). Observe also how the economy is slanted in such a way that we are influenced to buy, throwing things out (even if they still work) and buy anew, continually.

Advertisements play a part in inducing us to buy even though we may not need the advertised product. This phenomenon was highlighted by two eminent economists, John Kenneth Galbraith and Nicholas Georgescu-Roegen. In encouraging us to habitually spend and consume, mainstream economics propagates a morally bankrupt and environmentally destructive cycle and attitude.

We are psychologically moulded to derive ‘happiness’ from consuming more and more consumer goods rather than from talking a walk in a beautiful park or meeting good friend or the like. The economist Tibor Scitovsky described this condition as the ‘joyless economy’.

Environmentally, can we really consume and forever ‘grow’ an economy when we are bound by the environment? Imagine our bodies continuing to grow bigger and bigger while the house we are inside is fixed in size.

The economist's worldview is that the human economy is the universe (or the universal set, mathematically speaking) while the environment is a component of it. In reality, we know that the economy is a part or the larger environment that contains and supports it.

This faulty paradigm of economists is not dissimilar to the ancient idea that the Earth was at the centre of the universe. The astronomer Copernicus later showed that the Earth is not in any central or specially favoured position in the universe.

The misconception pertaining the relationship between the economy and the environment is at the heart of why we are facing unprecedented environmental challenges such as rapid resource depletion, climate change/global warming and the dramatic loss of natural green space.

We need nature because it provides vital life-support services to humans (clean and cool air, enough rainfall and fresh water, healthy soil for growing food, numerous resources, recreation, and others).

But the human economy is overexpanding and impinging on the environment at worrying rate. This is the alarming message of a United Nations research programme and report on the environment called the Millennium Ecosystem Assessment — a consequential report not entertained by economists.

Overspending is also one of the reasons why we are experiencing the current global financial crisis; people have been borrowing money (and were lent money) that they didn't have or couldn't really repay - on credit and as risky loans - to spend on things with little or dubious value.

Money is a virtual commodity that is detached from the real economy; money can be created or destroyed (‘money supply’ can be increased and lowered magically by central banks) and money can continue to balloon at compound interest rate whereas real resources and their values do not adhere to that ever-increasing rule (interests on a home loans can keep mounting but the property's essential value or worth remains the same).

The laws of physics and thermodynamics govern the behaviour of material and energy in the real world. The concept of money does not recognise these natural laws. Does abstract and exponentially-growing money in banks have meaning or value when its value or meaning is ultimately underpinned by non-growing (fixed) real-world resources?

See why people are cashing money out and converting it into gold? Herein is a very fundamental disconnect between the virtual economic system and the real world.

To conclude, (1) economists seek to ‘satisfy unlimited wants’ by exhorting ever-increasing consumption in a world with resource and assimilative limits. The inconsistency is obvious to anyone who cares to think it through.

(2) The proclamation of mainstream economists should not be taken as gospel truth, even if they are endorsed by governments. If economists say spend, don't jump into your car and go on a wild spending spree. If they say buy or sell, don't blindly buy or sell. Think. Question. Discuss. Act.

(3) Live within budgetary limits. Keep an eye on your wallet and bank balance. Be cognisant of the moral hazards of wanton spending and its environmental consequences. This applies during bad economic times as well as good ones; don't justify splurging cash because it’s ‘the good times’.

(4) Read this short and interesting article about over-consumption. You might learn a thing or two that you didn't know before. Take my word for it — I am, after all, an economist.