How do we get out of this mess?
24/10/08 14:17 Filed in: Economic Crisis
I find all the numbers about the economy that are being banded around now to be mind-boggling. There are two big numbers that stick in my mind and that is the size of the bank bailouts in the UK and the USA. In the UK, the cost of the bailout plan is estimated to be around $1 trillion and in the USA, $700 billion.
The USA is the largest economy in the world with an annual Gross Domestic Product of $13.8 trillion, that represents about 25% of the world’s total economic output. The UK is the fifth largest economy with a GDP of $2.8 trillion. Ranking at positions of 2, 3, and 4 are Japan, Germany and China. China’s economic importance is growing fast but the size of its economic output is a little over 25% of that of the USA.
These are a lot of numbers I know. I wanted to write them down so I got some perspective on what it is we are talking about.
The size of the UK bank-bail out if it was looked at on the scale of national economies would rank at 13th in the international GDP table. The amount of money that the UK is making available to its banks is greater than the GDP of some 166 other countries.
With the cost of the bailout, the size of the national debt of USA and UK has soared during 2008. Under the Bush administration, the size of the national debt as a proportion of GDP has risen from 60% to around 115%. In the UK, the national debt may reach 100% of GDP or more this year.
Another alarming statistic (Source: BBC Business news 24 October 24, 2008) is that the UK aggregate of national debt, corporate and personal borrowing is three times that of the country’s annual economic output.
So what’s happening now? We’ve had runs on banks and international markets. Now there’s a new game on the streets. We’re having runs on national economies. Banks, hedge funds and mutual funds are demanding repayment from economies that they perceive to be at risk, either because of their reliance on foreign borrowings or because they are net importers of goods and services or both.
The UK pound has fallen 20% against the dollar in the past three months. South Korea’s currency, the won, has fallen by 29%. There are some obvious candidates like Hungary, Ukraine and Iceland lining up in the financial emergency room too.
The South Korean problem is complex and again, whilst the issues are in the banking systems, they have nothing to do with mortgages, housing or sub-prime loans but wholesale capital withdrawals resulting from imprudent deals struck by banks in currency hedges (Currency hedges are intended to offset risk through the simultaneous sale and purchase of forward currency contracts).
South Korea is a strong exporter. Its trading performance and its balance of trade is healthier than UK’s and probably the USA’s too albeit on a smaller scale. It ranks thirteenth in the world in terms of economic output.
Other countries suffering substantial capital withdrawals are South Africa and Argentina.
It’s expected that the UK will announce economic contraction today or “negative economic growth” as the city boys like to call it. It will get worse, possibly much worse as the UK has moved out of manufacturing industries to an economy where its mainstay is the fast contracting financial services sector. The financial services sector in the UK while it only accounts for 4% of total employment represents 30% of the UK’s GDP.
As Mr. Bush Sr. said, “It looks like we’re in deep doo doo now.”
It’s not only about the sub-prime issue anymore. When markets start dealing in national economies, it affects us all. Historically, national instability on a wide scale has tended to result in conflict and wars. Let’s hope we’ve learned some lessons from the past.
I’ve heard lots of arguments about reducing taxation and the bailout bringing benefits from the “trickle down” effect. Trick or treat more like! The treat is that the wealthy benefit, and the trick is that the poor suffer. Trickle down has been argued since Hoover in the twenties. It didn’t work then, it doesn’t work now. There is nothing to support the argument that it has ever worked.
In principle, I am strongly opposed to the bail out now. I have changed my mind about it. I am opposed to it since it is fundamentally undemocratic. To use, Chomsky’s words, “private corporations are tyrannies who account to no one other than themselves.” They are run for their own profit, not the benefit of the world or the public. In short, they are in it for themselves and no one else. If banks want to play Russian roulette with national economies, they’ll do it if they see profit for themselves.
I don’t believe either that the rot in the banking systems is solely to blame for our current economic difficulties. I have never believed that particular story. The turmoil in our financial systems is, I believe, a symptom of underlying economic instability rather than its cause. Banks may play a big part in that system and be central to its functioning but they do not exercise any overall control of the economy itself, but supply a service to it. The service is debt, more normally called credit. The realisation or appreciation of assets, or the prospect of future earnings offsets the credit risk. Credit is at risk, when economies contract, assets depreciate and earnings do not grow or diminish. When credit goes bad, banks make losses.
The so-called sub-prime crisis may not have happened unless the value of homes, of mortgage collateral, was called into question. The asset value of homes fell which meant that banks were unable to realise the security they had taken in return for the credit that they had extended.
My real concern is for the average person on the street. I don’t know a massive number of people, but I have talked to so many who are suffering or have suffered major economic hardship now. They have lost their jobs, their homes and in one case, I know someone who will be facing bankruptcy in the next couple of weeks. He was formerly a capable and successful businessman. I don’t need government to say, “We’re in recession. It’s official!” I know that to be the case as financial difficulties are multiplying around me all the time. I can see them with my own eyes. Everyone I know, every single person knows someone who is suffering real hardship now.
So what’s the answer? There are possibly two answers, but both amount to the same thing. It’s not that difficult. The answer is about democracy. In the dictionary definition, democracy "is government by the people in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system." In the phrase of Abraham Lincoln, democracy is a government "of the people, by the people, and for the people."
We need to decide whether democracy is what we want and be prepared to do something about it. We have to decide what we want in this world, if it’s public welfare or not. The wellbeing of banks does not and will not necessarily bring about public welfare or alleviate personal financial hardship. They will willingly take taxpayers’ money then spend it in achieving their own ends whether that’s mergers, acquisitions or anything else, so long as it feeds their own self-interest.
The free market ideology was upheld until big businesses started to flounder. Now everyone is talking about increased regulation and control of big business by government. I might ask, in order to achieve what end and for whose benefit?
The political process has become divorced from the people both in the UK and the USA. I do not know anyone who believes they have any real influence over the democratic process. Government is, therefore, no longer democratic or to use Chomsky’s words “there is a democratic deficit”. Whether it’s Republican or Democrat, New Labour or Conservative, nothing will change until we recover the essence of Lincoln’s dictum and we assume and take responsibility for public well-being.
Obama will not make a difference unless he works within some overall social organisation that restores democratically representative government. The real power structures within our society have little to do with government, but are capable of being transformed by government if it has the political will to do so. These power structures that are founded on economic self-interest will resist change by using every means at their disposal. It’s no small challenge.
I believe in democracy. I also believe in freedom, personal and social responsibility and self-determination. That’s about all.
I mentioned two options: First. we can pull out of free market economics to an extent and endeavour to restore economic equilibrium through increased government control and regulation. I am not sure it will work. Democratic government represents the will of the people. Business corporations represent their own interests. They are neither the same nor are they necessarily compatible. Our economic systems are failing. It may be that government intervention keeps the market, which is fundamentally unstable and inherently inefficient, on “life support”, but I wonder if the patient will ever recover. This is the first option. It’s about big government and government control. Nevertheless, it requires a fundamental re-alignment of the conduct of government with overall public interest and wider democratic participation.
I’ve had a number of personal crises in my life. They have all been about change and the need to change. I’ve never had a benevolent philanthropist throw money at me so I could carry on living as before. I have had to change. There is a lot of nonsense talked about the Chinese etymology of the word crisis saying that it signifies two words, “danger” and “opportunity”. This is incorrect. In fact the Chinese word crisis is derived from the something closer in meaning to “an incipient moment”, a moment in which something is in the process of becoming. I believe that a crisis is closely connected, not with catastrophe but, with the process of change itself.
My second option is also my preferred one and it involves turning the bailout on its head. It goes like this: We leave the markets and businesses alone to find their own solutions. They may or may not. It matters little. Government provides a safety net to the people and directs its resources entirely for the benefit of the people affected by any systemic economic failure. $700 billion should do it easily, and it would not be a bottomless pit either. In practical terms, this means that it would need to guarantee not the wellbeing of banks, but the safety of people’s money in those banks. It means that it would not legislate massive state initiatives to create jobs like the “new deal”, but support economic initiatives by the people themselves for the benefit and wellbeing of themselves and their own communities. It might even go further and promote work in environmental, health, education and ‘care for the elderly’ initiatives.
The key difference would be one of focus and of catering for people directing their efforts and resources for their own wellbeing, rather than for the benefit of the small minority who control large corporations. Large corporations may or may not survive in such a world. Their survival would be influenced by different factors, not by how much profit they made, but by how well they served a social need or purpose. I would vote for such a world.
It may be that the right solution is a hybrid of these two options. I would not rule out the direct intervention by government in a bank's administration or in facilitating a take-over in order to act in the public interest. My problem is in government using taxpayer's money to buy banks out of a problem that achieves little by way of improving corporate responsibility, and offers no obvious social benefit.
Sadly, I doubt if the answer will come with Barrack Obama, but he does offer the best chance of change. I hope he's not just different icing on the same old cake. There isn’t a hope in hell of getting out of this mess with McCain and Palin.
In conclusion, here’s today’s economic update from Europe. Shares in Europe’s main markets are down between 7% and 8% this morning.
The Bank of England deputy governor, Charles Bean said, "This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history."
The price of gold, typically, the place people put money in times of crisis has fallen by five per cent.
The USA is the largest economy in the world with an annual Gross Domestic Product of $13.8 trillion, that represents about 25% of the world’s total economic output. The UK is the fifth largest economy with a GDP of $2.8 trillion. Ranking at positions of 2, 3, and 4 are Japan, Germany and China. China’s economic importance is growing fast but the size of its economic output is a little over 25% of that of the USA.
These are a lot of numbers I know. I wanted to write them down so I got some perspective on what it is we are talking about.
The size of the UK bank-bail out if it was looked at on the scale of national economies would rank at 13th in the international GDP table. The amount of money that the UK is making available to its banks is greater than the GDP of some 166 other countries.
With the cost of the bailout, the size of the national debt of USA and UK has soared during 2008. Under the Bush administration, the size of the national debt as a proportion of GDP has risen from 60% to around 115%. In the UK, the national debt may reach 100% of GDP or more this year.
Another alarming statistic (Source: BBC Business news 24 October 24, 2008) is that the UK aggregate of national debt, corporate and personal borrowing is three times that of the country’s annual economic output.
So what’s happening now? We’ve had runs on banks and international markets. Now there’s a new game on the streets. We’re having runs on national economies. Banks, hedge funds and mutual funds are demanding repayment from economies that they perceive to be at risk, either because of their reliance on foreign borrowings or because they are net importers of goods and services or both.
The UK pound has fallen 20% against the dollar in the past three months. South Korea’s currency, the won, has fallen by 29%. There are some obvious candidates like Hungary, Ukraine and Iceland lining up in the financial emergency room too.
The South Korean problem is complex and again, whilst the issues are in the banking systems, they have nothing to do with mortgages, housing or sub-prime loans but wholesale capital withdrawals resulting from imprudent deals struck by banks in currency hedges (Currency hedges are intended to offset risk through the simultaneous sale and purchase of forward currency contracts).
South Korea is a strong exporter. Its trading performance and its balance of trade is healthier than UK’s and probably the USA’s too albeit on a smaller scale. It ranks thirteenth in the world in terms of economic output.
Other countries suffering substantial capital withdrawals are South Africa and Argentina.
It’s expected that the UK will announce economic contraction today or “negative economic growth” as the city boys like to call it. It will get worse, possibly much worse as the UK has moved out of manufacturing industries to an economy where its mainstay is the fast contracting financial services sector. The financial services sector in the UK while it only accounts for 4% of total employment represents 30% of the UK’s GDP.
As Mr. Bush Sr. said, “It looks like we’re in deep doo doo now.”
It’s not only about the sub-prime issue anymore. When markets start dealing in national economies, it affects us all. Historically, national instability on a wide scale has tended to result in conflict and wars. Let’s hope we’ve learned some lessons from the past.
I’ve heard lots of arguments about reducing taxation and the bailout bringing benefits from the “trickle down” effect. Trick or treat more like! The treat is that the wealthy benefit, and the trick is that the poor suffer. Trickle down has been argued since Hoover in the twenties. It didn’t work then, it doesn’t work now. There is nothing to support the argument that it has ever worked.
In principle, I am strongly opposed to the bail out now. I have changed my mind about it. I am opposed to it since it is fundamentally undemocratic. To use, Chomsky’s words, “private corporations are tyrannies who account to no one other than themselves.” They are run for their own profit, not the benefit of the world or the public. In short, they are in it for themselves and no one else. If banks want to play Russian roulette with national economies, they’ll do it if they see profit for themselves.
I don’t believe either that the rot in the banking systems is solely to blame for our current economic difficulties. I have never believed that particular story. The turmoil in our financial systems is, I believe, a symptom of underlying economic instability rather than its cause. Banks may play a big part in that system and be central to its functioning but they do not exercise any overall control of the economy itself, but supply a service to it. The service is debt, more normally called credit. The realisation or appreciation of assets, or the prospect of future earnings offsets the credit risk. Credit is at risk, when economies contract, assets depreciate and earnings do not grow or diminish. When credit goes bad, banks make losses.
The so-called sub-prime crisis may not have happened unless the value of homes, of mortgage collateral, was called into question. The asset value of homes fell which meant that banks were unable to realise the security they had taken in return for the credit that they had extended.
My real concern is for the average person on the street. I don’t know a massive number of people, but I have talked to so many who are suffering or have suffered major economic hardship now. They have lost their jobs, their homes and in one case, I know someone who will be facing bankruptcy in the next couple of weeks. He was formerly a capable and successful businessman. I don’t need government to say, “We’re in recession. It’s official!” I know that to be the case as financial difficulties are multiplying around me all the time. I can see them with my own eyes. Everyone I know, every single person knows someone who is suffering real hardship now.
So what’s the answer? There are possibly two answers, but both amount to the same thing. It’s not that difficult. The answer is about democracy. In the dictionary definition, democracy "is government by the people in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system." In the phrase of Abraham Lincoln, democracy is a government "of the people, by the people, and for the people."
We need to decide whether democracy is what we want and be prepared to do something about it. We have to decide what we want in this world, if it’s public welfare or not. The wellbeing of banks does not and will not necessarily bring about public welfare or alleviate personal financial hardship. They will willingly take taxpayers’ money then spend it in achieving their own ends whether that’s mergers, acquisitions or anything else, so long as it feeds their own self-interest.
The free market ideology was upheld until big businesses started to flounder. Now everyone is talking about increased regulation and control of big business by government. I might ask, in order to achieve what end and for whose benefit?
The political process has become divorced from the people both in the UK and the USA. I do not know anyone who believes they have any real influence over the democratic process. Government is, therefore, no longer democratic or to use Chomsky’s words “there is a democratic deficit”. Whether it’s Republican or Democrat, New Labour or Conservative, nothing will change until we recover the essence of Lincoln’s dictum and we assume and take responsibility for public well-being.
Obama will not make a difference unless he works within some overall social organisation that restores democratically representative government. The real power structures within our society have little to do with government, but are capable of being transformed by government if it has the political will to do so. These power structures that are founded on economic self-interest will resist change by using every means at their disposal. It’s no small challenge.
I believe in democracy. I also believe in freedom, personal and social responsibility and self-determination. That’s about all.
I mentioned two options: First. we can pull out of free market economics to an extent and endeavour to restore economic equilibrium through increased government control and regulation. I am not sure it will work. Democratic government represents the will of the people. Business corporations represent their own interests. They are neither the same nor are they necessarily compatible. Our economic systems are failing. It may be that government intervention keeps the market, which is fundamentally unstable and inherently inefficient, on “life support”, but I wonder if the patient will ever recover. This is the first option. It’s about big government and government control. Nevertheless, it requires a fundamental re-alignment of the conduct of government with overall public interest and wider democratic participation.
I’ve had a number of personal crises in my life. They have all been about change and the need to change. I’ve never had a benevolent philanthropist throw money at me so I could carry on living as before. I have had to change. There is a lot of nonsense talked about the Chinese etymology of the word crisis saying that it signifies two words, “danger” and “opportunity”. This is incorrect. In fact the Chinese word crisis is derived from the something closer in meaning to “an incipient moment”, a moment in which something is in the process of becoming. I believe that a crisis is closely connected, not with catastrophe but, with the process of change itself.
My second option is also my preferred one and it involves turning the bailout on its head. It goes like this: We leave the markets and businesses alone to find their own solutions. They may or may not. It matters little. Government provides a safety net to the people and directs its resources entirely for the benefit of the people affected by any systemic economic failure. $700 billion should do it easily, and it would not be a bottomless pit either. In practical terms, this means that it would need to guarantee not the wellbeing of banks, but the safety of people’s money in those banks. It means that it would not legislate massive state initiatives to create jobs like the “new deal”, but support economic initiatives by the people themselves for the benefit and wellbeing of themselves and their own communities. It might even go further and promote work in environmental, health, education and ‘care for the elderly’ initiatives.
The key difference would be one of focus and of catering for people directing their efforts and resources for their own wellbeing, rather than for the benefit of the small minority who control large corporations. Large corporations may or may not survive in such a world. Their survival would be influenced by different factors, not by how much profit they made, but by how well they served a social need or purpose. I would vote for such a world.
It may be that the right solution is a hybrid of these two options. I would not rule out the direct intervention by government in a bank's administration or in facilitating a take-over in order to act in the public interest. My problem is in government using taxpayer's money to buy banks out of a problem that achieves little by way of improving corporate responsibility, and offers no obvious social benefit.
Sadly, I doubt if the answer will come with Barrack Obama, but he does offer the best chance of change. I hope he's not just different icing on the same old cake. There isn’t a hope in hell of getting out of this mess with McCain and Palin.
In conclusion, here’s today’s economic update from Europe. Shares in Europe’s main markets are down between 7% and 8% this morning.
The Bank of England deputy governor, Charles Bean said, "This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history."
The price of gold, typically, the place people put money in times of crisis has fallen by five per cent.
|
O Brave New World!
09/09/08 13:34 Filed in: Social Change | Future
Where to from here? My answer is that I’m as unsure as the rest of us.
I do believe in freedom, autonomy and voluntary association as human values in which to aspire.
It surprises me how many people I talk to about freedom who appear terrified of it. I know many people are frightened of freedom, perhaps in the same way that they are frightened of responsibility. I’m not altogether sure where that fear comes from. In psychological terms, it may be from anxiety about maturation, from the desire not to leave the succour and the emotional sustenance of the providing parent. I’m not sure that is right entirely. We live in a world where we do as we’re told, and where we often conform to an infantilised state of mind. Psychologically, I wonder too what this fear of responsibility is about. Is conformity and responsibility an antithesis? It may be. Conformity is the easy way out too. It means copying someone else because another says it’s the right thing to do, rather than feeling or thinking for oneself. It is easier not to think.
There are two aspects of freedom, I believe, and they are “freedom from” that is a negative connotation and “freedom to be” which is its positive opposite. This is a little like the infant growing up. The “freedom from” is a freedom from oppressive and overbearing institutional way of life where we are told how to act, think or feel, rather than do it for ourselves. The “freedom to” part is to experience ourselves as loving, creative, constructive, responsible, actualised, and sometimes fulfilled, human beings. Resisting freedom in social terms may be the same as resisting growing up in human development.
And what of autonomy, how does that differ from freedom? Autonomy is simple. It’s the exercise of responsibility for oneself. It means taking responsibility for one’s own actions and moral decisions.
Perhaps there is a little more than that in our economic world to consider: There is the difference between “having” and “being” and how we define ourselves as human beings. If we define ourselves in economic terms, by what we have, then we lose our identity, our autonomy, if we lose our possessions. We become nothing if we have nothing.
As the psychologist and philosopher, Erich Fromm wrote: Being is about nothing more than the productive use of our human powers. “(Being means)…to give expression to one’s faculties, talents, to the wealth of human gifts with which every human is endowed. It means to renew oneself, to grow, to flow out, to love, to transcend the prison of one’s isolated ego, to be interested…to give.”
Freedom does present problems to humankind that have been overlooked by many individualist liberal philosophers. The major problem with freedom is that it requires individuals to exercise a high degree of personal, social and moral responsibility, rather than have someone else tell them what to do and take decisions for them.
There’s a favourite quote of mine by Nobel Prize winning American economist, James Buchanan, that I have mentioned elsewhere. He is talking about the “parental” role of government and the state:
“With parentalism…we refer to the attitudes of persons who seek to have values imposed upon them by other persons, by the state, or by transcendental forces. This source of support for expanded collectivization has been relatively neglected by both socialist and liberal philosophers, perhaps because philosophers, in both camps, remain methodological individualists.
Almost subconsciously, those scientists-scholars-academics who have tried to look at the “big picture” have assumed that, other things being equal, persons want to be at liberty to make their own choices, to be free from coercion by others, including indirect coercion through means of persuasion. They have failed to emphasize sufficiently, and to examine the implications of, the fact that liberty carries with it responsibility. And it seems evident that many persons do not want to shoulder the final responsibility for their own actions. Many persons are, indeed, afraid to be free.”
Without either freedom or responsibility, one cannot have existence by voluntary association, since voluntary association requires that humans collaborate and cooperate freely and responsibly to achieve their common goals. An intelligent observer of my writing suggested that we might need leaders since we are not necessarily capable of acting consensually, collaboratively and cooperatively. She makes a very good point.
It’s true that our present social systems are based on an authoritarian hierarchy that purports to be democratic. It is far from being truly democratic since other than deciding on the election of the “haves” or the “have mores” there is no general participation in decision-making. I have no influence over issues around health, poverty, education, social welfare and defence, other than those prescribed by alternative candidates. It’s token democracy where strong government is synonymous with state authoritarianism. The combination of the authoritarian state and multi-national capitalism means that I am told how to act, behave, think, work and consume. It erodes my humanity, since I am no longer free, but a thing, a means to someone else’s end. I am homo consumens, the consumer man.
My friend also makes an important point too indirectly about knowledge and belief. We have only very limited knowledge and experience of freedom and the exercise of personal and social responsibility since all aspects of our society are organised around leadership hierarchies where leaders take responsibility for telling others how to act. We might believe that we need leaders, since we have no experience of being without them.
I have two experiences of leadership experiments, both where, at least notionally, I was the leader.
The first was a quirky accident of fate. I was invited to join the board of a large mental health project based in London. They had a problem. They had too much money and were at risk of losing some very large government grants unless they got rid of a lot of cash quickly. Rather unflatteringly, at least so I thought at the time, I was asked to go there since their treasurer (a CPA known to me from university) felt I would know how to spend money "creatively"!
I joined the board of trustees, and within about six months, I was asked to stand to be chairman of the board. It was a trustee's voting nomination that I accepted. I accepted and was appointed.
It was an executive chairman's post and part of my job was supporting its management and staff. Within the trust, there was a deeply democratic ethos. Any employee, could attend a board meeting, and exercise voting rights in common with a board member. The only rights I had as chairman were the exercise of a casting vote in a deadlock, or a veto vote that deferred a decision to the next board meeting (that could be exercised only once).
My commercial training, and by day I worked as a chief executive of a computer software company, might have told me that this was a recipe for disaster. On the board, we had legal, financial and medical advisers, experts whose views and advice might theoretically be overturned by a junior employee.
It never worked that way, since there was a deeply respectful management style. Management’s role was not perceived to be one necessarily of leadership, control or authority, but of support, and access to the resources (including human resources) that enabled staff to undertake their work.
In theory, the employees through access and contribution to the board decision process might have caused a manager to be discharged or appointed. It never worked that way, because the role of management was to support and facilitate, rather than control.
What was even more rewarding was that not only did this odd management style that was properly democratic work, but it was enormously successful! It was so successful, in fact, that the Trust was appointed by the UK National Health Service to be its principal adviser and consultant on projects of its type. On a personal note, it was also the most alive and enjoyable place I have worked in my entire life. One of the things that distinguished this special project was the enlightened and involved attitude of its entire staff who cared deeply for what happened in their organization and jointly took responsibility for its wellbeing and its purpose.
In the nineties, I also had the experience of attempting to turn over a technology business to employee ownership and broader management participation. It could not have been more different. Some managers and employees had such profound difficulties in taking on responsibility that they teetered on the edge of sanity. Destructive sub-cultures formed who tried to usurp, seize or break off parts of the business that they could steal for themselves. In the end, I put a stop to it and returned it to its previous paternalistic management style that was, at least, largely benevolent and benign.
Of course, there was a major difference between these environments. The staff of both organizations were well paid, that much they had in common. The mental health organization had growth in its sights, but it was not its main purpose. The mental health project functioned as a trust for the benefit of those in its care; the company was a capitalist enterprise run for the benefit of its shareholders.
Despite a massive investment in culture change programmes, the underlying culture of the company was difficult to change. All that extended ownership achieved was to make manifest the unhealthy, political, opportunistic and often dishonest dynamics that existed in the workplace at almost every level. The ethos was that people worked in order to make its shareholders rich. People were a means to an end. When it was proposed to change ownership, it was seen as an opportunity by some to do to others, what had been done to them.
I’ll continue to think about this dilemma. I am unsure as to whether freedom and capitalism are contradictory forces. In my past, I had thought that, in a way, capitalism might embody freedom, but now I’m undecided. I’ll go away and think about the human values that underpin our capitalist societies. By the way, I’m opposed to socialism in all its previous manifestations too. Capitalism may be the lesser of two evils, where socialism represents authoritarian, and often totalitarian, state control.
More soon…
I do believe in freedom, autonomy and voluntary association as human values in which to aspire.
It surprises me how many people I talk to about freedom who appear terrified of it. I know many people are frightened of freedom, perhaps in the same way that they are frightened of responsibility. I’m not altogether sure where that fear comes from. In psychological terms, it may be from anxiety about maturation, from the desire not to leave the succour and the emotional sustenance of the providing parent. I’m not sure that is right entirely. We live in a world where we do as we’re told, and where we often conform to an infantilised state of mind. Psychologically, I wonder too what this fear of responsibility is about. Is conformity and responsibility an antithesis? It may be. Conformity is the easy way out too. It means copying someone else because another says it’s the right thing to do, rather than feeling or thinking for oneself. It is easier not to think.
There are two aspects of freedom, I believe, and they are “freedom from” that is a negative connotation and “freedom to be” which is its positive opposite. This is a little like the infant growing up. The “freedom from” is a freedom from oppressive and overbearing institutional way of life where we are told how to act, think or feel, rather than do it for ourselves. The “freedom to” part is to experience ourselves as loving, creative, constructive, responsible, actualised, and sometimes fulfilled, human beings. Resisting freedom in social terms may be the same as resisting growing up in human development.
And what of autonomy, how does that differ from freedom? Autonomy is simple. It’s the exercise of responsibility for oneself. It means taking responsibility for one’s own actions and moral decisions.
Perhaps there is a little more than that in our economic world to consider: There is the difference between “having” and “being” and how we define ourselves as human beings. If we define ourselves in economic terms, by what we have, then we lose our identity, our autonomy, if we lose our possessions. We become nothing if we have nothing.
As the psychologist and philosopher, Erich Fromm wrote: Being is about nothing more than the productive use of our human powers. “(Being means)…to give expression to one’s faculties, talents, to the wealth of human gifts with which every human is endowed. It means to renew oneself, to grow, to flow out, to love, to transcend the prison of one’s isolated ego, to be interested…to give.”
Freedom does present problems to humankind that have been overlooked by many individualist liberal philosophers. The major problem with freedom is that it requires individuals to exercise a high degree of personal, social and moral responsibility, rather than have someone else tell them what to do and take decisions for them.
There’s a favourite quote of mine by Nobel Prize winning American economist, James Buchanan, that I have mentioned elsewhere. He is talking about the “parental” role of government and the state:
“With parentalism…we refer to the attitudes of persons who seek to have values imposed upon them by other persons, by the state, or by transcendental forces. This source of support for expanded collectivization has been relatively neglected by both socialist and liberal philosophers, perhaps because philosophers, in both camps, remain methodological individualists.
Almost subconsciously, those scientists-scholars-academics who have tried to look at the “big picture” have assumed that, other things being equal, persons want to be at liberty to make their own choices, to be free from coercion by others, including indirect coercion through means of persuasion. They have failed to emphasize sufficiently, and to examine the implications of, the fact that liberty carries with it responsibility. And it seems evident that many persons do not want to shoulder the final responsibility for their own actions. Many persons are, indeed, afraid to be free.”
Without either freedom or responsibility, one cannot have existence by voluntary association, since voluntary association requires that humans collaborate and cooperate freely and responsibly to achieve their common goals. An intelligent observer of my writing suggested that we might need leaders since we are not necessarily capable of acting consensually, collaboratively and cooperatively. She makes a very good point.
It’s true that our present social systems are based on an authoritarian hierarchy that purports to be democratic. It is far from being truly democratic since other than deciding on the election of the “haves” or the “have mores” there is no general participation in decision-making. I have no influence over issues around health, poverty, education, social welfare and defence, other than those prescribed by alternative candidates. It’s token democracy where strong government is synonymous with state authoritarianism. The combination of the authoritarian state and multi-national capitalism means that I am told how to act, behave, think, work and consume. It erodes my humanity, since I am no longer free, but a thing, a means to someone else’s end. I am homo consumens, the consumer man.
My friend also makes an important point too indirectly about knowledge and belief. We have only very limited knowledge and experience of freedom and the exercise of personal and social responsibility since all aspects of our society are organised around leadership hierarchies where leaders take responsibility for telling others how to act. We might believe that we need leaders, since we have no experience of being without them.
I have two experiences of leadership experiments, both where, at least notionally, I was the leader.
The first was a quirky accident of fate. I was invited to join the board of a large mental health project based in London. They had a problem. They had too much money and were at risk of losing some very large government grants unless they got rid of a lot of cash quickly. Rather unflatteringly, at least so I thought at the time, I was asked to go there since their treasurer (a CPA known to me from university) felt I would know how to spend money "creatively"!
I joined the board of trustees, and within about six months, I was asked to stand to be chairman of the board. It was a trustee's voting nomination that I accepted. I accepted and was appointed.
It was an executive chairman's post and part of my job was supporting its management and staff. Within the trust, there was a deeply democratic ethos. Any employee, could attend a board meeting, and exercise voting rights in common with a board member. The only rights I had as chairman were the exercise of a casting vote in a deadlock, or a veto vote that deferred a decision to the next board meeting (that could be exercised only once).
My commercial training, and by day I worked as a chief executive of a computer software company, might have told me that this was a recipe for disaster. On the board, we had legal, financial and medical advisers, experts whose views and advice might theoretically be overturned by a junior employee.
It never worked that way, since there was a deeply respectful management style. Management’s role was not perceived to be one necessarily of leadership, control or authority, but of support, and access to the resources (including human resources) that enabled staff to undertake their work.
In theory, the employees through access and contribution to the board decision process might have caused a manager to be discharged or appointed. It never worked that way, because the role of management was to support and facilitate, rather than control.
What was even more rewarding was that not only did this odd management style that was properly democratic work, but it was enormously successful! It was so successful, in fact, that the Trust was appointed by the UK National Health Service to be its principal adviser and consultant on projects of its type. On a personal note, it was also the most alive and enjoyable place I have worked in my entire life. One of the things that distinguished this special project was the enlightened and involved attitude of its entire staff who cared deeply for what happened in their organization and jointly took responsibility for its wellbeing and its purpose.
In the nineties, I also had the experience of attempting to turn over a technology business to employee ownership and broader management participation. It could not have been more different. Some managers and employees had such profound difficulties in taking on responsibility that they teetered on the edge of sanity. Destructive sub-cultures formed who tried to usurp, seize or break off parts of the business that they could steal for themselves. In the end, I put a stop to it and returned it to its previous paternalistic management style that was, at least, largely benevolent and benign.
Of course, there was a major difference between these environments. The staff of both organizations were well paid, that much they had in common. The mental health organization had growth in its sights, but it was not its main purpose. The mental health project functioned as a trust for the benefit of those in its care; the company was a capitalist enterprise run for the benefit of its shareholders.
Despite a massive investment in culture change programmes, the underlying culture of the company was difficult to change. All that extended ownership achieved was to make manifest the unhealthy, political, opportunistic and often dishonest dynamics that existed in the workplace at almost every level. The ethos was that people worked in order to make its shareholders rich. People were a means to an end. When it was proposed to change ownership, it was seen as an opportunity by some to do to others, what had been done to them.
I’ll continue to think about this dilemma. I am unsure as to whether freedom and capitalism are contradictory forces. In my past, I had thought that, in a way, capitalism might embody freedom, but now I’m undecided. I’ll go away and think about the human values that underpin our capitalist societies. By the way, I’m opposed to socialism in all its previous manifestations too. Capitalism may be the lesser of two evils, where socialism represents authoritarian, and often totalitarian, state control.
More soon…