Capitalism: an infantile disorder

Capitalism: an infantile disorder

The other night I watched Surviving Progress, a documentary shown on BBC4 that questions the standard view of progress, suggesting that civilizations are repeatedly destroyed by ‘progress traps’ – technologies that serve immediate needs, but ransom the future. In the past, civilizations could use up a region’s resources and move on. But if today the global economic system collapses from over-consumption and laying waste the planet’s resources, that’s it. There is nowhere else to go.

The message of the film seemed to reinforce a growing feeling I’ve had in recent weeks that the global capitalist system we live under (‘civilization’ seems to noble a term), far from being, as presented by the practitioners of that dubious discipline economics, one of rationally operating markets that deliver sensible and sustainable outcomes, is no more than an infantile disorder: stupid, irrational, and self-destructive.

Surviving Progress argues that the world has financed an unsustainable growth rate by essentially encouraging whole nations to take out unpayable mortgages on their own futures. In the film, Brazil is taken as an example: huge loans are advanced to the nation, which is unable to keep up the repayments, and is then encouraged to liquefy its own natural assets – the rainforests. When the assets are gone and the wealth extracted, the corporations leave behind a drained nation and the bankers move on to another loan customer.

Dumb? Absolutely.  The same sense of stupidity emerged from a piece in The Guardian recently, written by Ha-Joon Chang of Cambridge University and author of 23 Things They Don’t Tell You About Capitalism. Commenting on the eurozone crisis and the unwillingness of the eurozone leaders to alter their austerity policies, even as Greece and Spain fall apart, he noted that it is increasingly accepted that these policies are not working in the current environment. But what’s worse is that there is abundant historical evidence showing that austerity has never worked. What kind of person fails to learn the lessons of previous experience?  Ha-Joon Chang has the answer:

Perhaps they are insane – if we follow Albert Einstein’s definition of insanity as “doing the same thing over and over again and expecting different results”. But the more likely explanation is that, by pushing these policies against all evidence, our leaders are really telling us that they want to preserve – or even intensify, in areas like welfare policy – the economic system that has served them so well in the past three decades.

He concludes that the time has come for us to decide:

Do we want a society where 50% of young people are kept out of work in order to bring the deficit down from 9% of GDP to 3% in three years? A society in which the rich have to be made richer to work harder (at their supposed jobs of investing and creating wealth) while the poor have to be made poorer in order to work harder? Where a tiny minority (often called the 1% but more like the 0.1% or even 0.01%) control a disproportionate, and increasing, share of everything – not just income and wealth but also political power and influence (through control of the media, thinktanks, and even academia)?

If you want a tiny example of how a rich elite are increasing their share of wealth and running the country in their selfish interests, meanwhile threatening the environment, read George Monbiot’s brilliant piece of investigative journalism, published this week in the Guardian.  He writes that ‘the pheasant, rather than the Gini coefficient should now be the unit for measuring inequality.

As Britain heads towards Edwardian levels of inequality, the countryside reverts to a playground for the rich, in which anything that cannot be shot and eaten is shot and hung from a gibbet. The aristocracy is back in charge. … In the countryside, as in the towns, policy is becoming the preserve of the 1%. The rest of us pay the landowners to expand their estates and destroy the wildlife. That’s what they mean when they say we’re all in this together.

Worth reading, too, is Larry Elliott’s chilling despatch from Greece last week.  Elliott, along with Paul Mason of Newsnight, is always a reliable guide to the world of financial capitalism.  Just days after IMF Chief Christine Lagarde provoked fury with her outrageous comments about ‘tax-dodging’ Greeks, Elliott wrote:

Greece is broke and close to being broken. It is a country where children are fainting in school because they are hungry, where 20,000 Athenians are scavenging through waste tips for food, and where the lifeblood of a modern economy – credit – is fast drying up.  It is a country where the fascists and the anarchists battle for control of the streets, where immigrants fear to go out at night and where a woman whispers “it’s like the Weimar republic” as a motorcycle cavalcade from the Golden Dawn party, devotees of Adolf Hitler, cruises past the parliament building. Graffiti says: “Foreigners get out of Greece. Greece is for the Greeks. I will vote for Golden Dawn to remove the filth from the country.”

It has been interesting, too, to read the reviews of Harvard philosopher Michael Sandel’s new book, What Money Can’t Buy.  It’s a study of ‘the moral limits of markets’ in the context of the increasing ubiquity of market ideas.

Michael Sandel

‘Over the past three decades,’ Sandel writes, ‘markets – and market values – have come to govern out lives as never before.’ Sandel is not arguing from a socialist position, and argues that markets can work in the right situation. He asserts: ‘No other mechanism for organising the production and distribution of goods had proved as successful for generating affluence and prosperity’. But Sandel is interested in what he sees as a critical loss of our collective moral compass in recent times as market thinking has swept the board in economics, and then spread to almost every area of public policy:

The most fateful change that unfolded in the last three decades was not an increase in greed. It was the expansion of markets, and of market values, into spheres of life where they don’t belong.

His central thesis is that markets have a moral impact on the goods that are traded in them. When something which is supposed to be a common good is marketised it invariably leads not only to unfairness, but, just as importantly, it corrupts and degrades the thing being marketised.

He quotes a vivid example that sums up the entire argument of What Money Can’t Buy; an Israeli daycare centre, which had a problem of parents turning up late to collect their children, introduced fines. The result? Late pick-ups increased. Parents turned up late, paid the fine, and thought no more of it; the fine had turned into a fee.  Morality had been marketised.  The fear of disapproval and of doing the wrong thing (turning up late) was based on non-monetary values, on morality. Even though the daycare centre went back to the old system, parents kept turning up late, because the introduction of market values had killed the old ideas of collective responsibility. Sandel concludes:

The question of markets is really a question about how we want to live together. Do we want a society where everything is up for sale? Or are there certain moral and civic goods that markets do not honour and money cannot buy?

The economic and social progress that has resulted in climate change raises questions of morality in an intractable form.  In a recent article in the London Review of Books, Malcolm Bull wrote:

Adam Smith once noted that we are less troubled by the prospect of a hundred million people dying as a result of an earthquake in some distant location than of losing our little finger, but would nevertheless be horrified by the idea we might allow them to die in order to save it. Climate change effectively transforms the former scenario into the latter, and so places unprecedented demands on our moral imagination. Almost every little thing we do contributes to our carbon footprint, which increases greenhouse gases, which could in turn ultimately threaten hundreds of millions of lives in some remote time and place – the uncertainty only adding to the sublime awfulness of our responsibilities.

Bull’s conclusion was hopeful, though:

Climate change does not tempt us to be less moral than we might otherwise be; it invites us to be more moral than we could ever have imagined. … Climate ethics is … a new chapter in the moral education of mankind. It may tell us things we do not wish to know … but the future development of humanity may depend on what, if anything, it can teach us.

Returning to Surviving Progress.  The film illustrates the argument of the book, A Short History of Progress by Ronald Wright. He was previously known to me as an authority on the pre-Colombian civilizations of the Americas.  Some time ago I read a couple of his books on this subject, Stolen Continents: The ‘New World’ through Indian Eyes and Cut Stones and Crossroads: Journey in the Two Worlds of Peru.  This film continues and develops Wright’s interest in how civilizations rise – and are destroyed. He coins the term ‘progress trap’ to define human behaviours that seem to amount to progress and to provide benefits in the short-term, but which ultimately lead to disaster because they’re unsustainable.

The film argues his case that the exponential growth in human numbers, the development of technologies, and the rapacious exploitation of the world’s natural resources threaten the planet, and the very existence of humanity.  ‘Progress’ – defined in terms of never-ending economic growth – could destroy us.  On population growth, he states controversially:

Between the fall of the Roman Empire and Columbus sailing, it took 13 centuries to add 200 million people to the world’s population. Now it takes only three years. A simple thing like pasteurization, the warming of milk so that the bacteria are killed and the control of smallpox. Things like that have led to a great boom in human numbers.  So, overpopulation, which nobody really wants to talk about because it cuts at things like religious beliefs and the freedom of the individual and the autonomy of the family and so forth, is something that we’re going to have to deal with. We probably have to work towards a much smaller worldwide population than 6 or 7 billion. We probably need to go down to a half that or possibly even a third of that, if everybody is going to live comfortably and decently.

But the film also tackles the more significant aspect of this problem: the footprint of the individuals at the top of the social pyramid who are consuming the most. Somebody in the United States or Europe is consuming about 50 times more resources than a poor person in a place like Bangladesh.  And to sustain the lifestyles of the planet’s rich, the banks and big corporations plunder the natural capital of our home, planet earth.  In the film Wright sums up the problem as he sees it:

Some people have written about natural capital, the capital that nature provides, which is the clean air, the clean water, the, the uncut forests, the, the rich farmland, and the minerals, the oil, the metals. All of these things are the capital that nature has provided. And until about 1980, human civilization was able to live on, what we might term, the interest of that capital, the surplus that nature is able to produce, the food that farmland can grow without actually degrading the farmland or the number of fish you can pull out of the sea without causing the fish stocks to crash. But since 1980, we’ve been using more than the interest, and so we are in effect like somebody who thinks he’s rich because he’s spending the money that has been left in his inheritance, not spending the interest but eating into the capital.

Margaret Atwood appears in the film, and underlines its message with these words:

Instead of thinking that nature is this huge bank that we can just, this endless credit card that we can just keep drawing on, we have to think about the finite nature of that planet and how to keep it alive so that we too may remain alive. Unless we conserve the planet, there isn’t going to be any ‘the economy’.

Surviving Progress argues that faith in progress has become a kind of religious faith, a sort of fundamentalism, rather like the market fundamentalism that has just recently crashed and burned. Wright says:

The idea that you can let markets rip is a delusion, just as the idea that you can let technology rip, and it will solve the problems created by itself in a slightly earlier phase. That, that has become a belief very similar to the religious delusions that caused some societies to crash and burn in the past.

The anthropologist Jane Goodall puts it this way:

Unlimited economic progress in a world of finite natural resources doesn’t make sense. It’s a pattern that is bound to collapse. And we keep seeing it collapsing, but then we build it up because there are these strong vested interests, we must have business as usual. And you know, you get the arms manufacturers, you get the petroleum industry, the pharmaceutical industry and all of this feeding into helping to create corrupt governments who are putting the future of their own people at risk.

Towards the end of the film, Ronald Wright sums up his case in these words:

All the civilizations of the past, and I think our own, only seem to be doing well when they’re expanding, when the population is growing, when the industrial output is growing, and when the cities are spreading outwards. Eventually you reach the point at which the population has overrun everything, the cities have expanded over the farmland, the people at the bottom begin to starve, and the people at the top lose their legitimacy. And so, you get, you get hunger, you get revolution.Now, one kind of scary thing about the moment we’re in is that for the first time there’s kind of only one system. So, if the whole thing goes down, you won’t have what you’ve had in previous eras of epic collapse, which is that even a one civilization goes down, and it may take a while to recover, there are other robust civilizations that are kind of the guardians of progress.

As I listened to Margaret Atwood say, ‘all we’ve got is planet Earth, and we are destroying, we are polluting, we are damaging the future of our own species’, I thought of Banga, the new album from Patti Smith that I’ve been listening to this week.  In part, her theme is  environmental crisis and the destruction of the beauty and mystery of the natural world.  The album concludes with her own haunting take on Neil Young’s visionary account of planetary collapse from the 1970s, ‘After the Gold Rush’, which has ‘Mother nature’s silver seed’ setting off in spaceships to a new home.  Only – there is nowhere else to go.

On the previous track Patti Smith explores ideas that touch on the discussion here. ‘Constantine’s Dream’ is a ten minute improvised, half-sung, half-spoken meditation that weaves together Columbus’s voyage to the New World, the life and work of Renaissance painter Piero della Francesca, the pastoral ideals of St. Francis of Assisi, and environmental cataclysm.

In Arezzo, Patti has a dream in which Saint Francis weeps at the current state of the environment,then, in the dawn, she leaves her room, ‘stepping down the ancient stones, washed with dawn’ and enters the Basilica of San Francesco:

I saw before me the world of his world
The bright fields, the birds in abundance
All of nature of which he sang
Singing to him
All the beauty of nature surrounded him as he walked

But Patti is senses ‘the call of art, the call of man’ and is drawn to the beauty of Piero della Francesca‘s ‘Legend of the True Cross’, a series of tableaux that includes ‘The Dream of Constantine’, Francesca’s representation of the moment when the crusading Emperor Constantine converts to Christianity after seeing the vision of the True Cross: ‘with this sign shall thou conquer’. In her poem, Patti has Francesca cry out on finishing his painting:

Oh lord let me die on the back of adventure
With a brush and an eye full of light.

The Dream of Constantine by Piero della Francesca in the Basilica of San Francesco, Arezzo

Francesca dies in October 1492, just as ‘a world away, on three great ships, adventure itself’ Columbus arrives on the shore of the ‘New World’. Patti imagines the ecstatic vision of Columbus as he sees the New World for the first time:

And as far as his eyes could see
No longer blind
All of nature unspoiled, beautiful

Columbus set foot on the New World
And witnessed beauty unspoiled
All the delights given by God
As if Eden had opened up her heart to him
And opened her dress
And all of her fruit gave to him

Columbus falls into a swoon and a vision of his own:

The 21st century advancing like the angel
That had come to Constantine
Constantine in his dream

Oh this is your cross to bear …

All shall crumble into dust
Oh thou navigator
The terrible end of man
This is your gift to mankind
This is your cross to bear
Then Columbus saw all of nature aflame

The apocalyptic night
And the dream of the troubled king
Dissolved into light.

The album closes with Patti, accompanied by small children, singing:

Look at Mother Nature on the run
In the 21st century…

Where are we headed?

Greek trade unionists block the entrance of the Greek Labour ministry in Athens

It’s the strangest sensation – for week after week, watching as the global financial system inches steadily closer to the abyss and the world’s politicians repeatedly kick a resolution to the European debt crisis a few weeks or months down the road.  Today, the Greeks are on general strike, battling to resist  measures that have pushed Greeks to the brink of penury. How bad can things get?  Your salary halved (if you’re a public sector worker)? The imposition out of the blue of a property tax of €1,500, payable this month, and if you don’t pay your electricity gets cut off (everyone)?

Larry Elliott’s piece in today’s Guardian was jaw-droppingly apocalyptic:

Welcome to the new normal. Billions of pounds were wiped off the value of shares in London on Tuesday 4 October. Dexia, a bank jointly owned by the French and the Belgians, teetered on the brink of collapse. One of the main barometers of Wall Street sentiment slid into bear-market territory. An emergency press conference called by Greece’s finance minister was delayed because the building was being picketed by civil servants. […]

The panic-stricken reaction of the markets over the past few days reflects a growing mood in the financial markets that the default will not be managed and orderly but messy, with knock-on effects not just for the rest of the eurozone but for the entire world economy.

Banks will go bust, credit will dry up, trade will wither, jobs will be shed. Greece, Lehman Brothers 2.0, will be the prelude to the second Great Depression, something policy-makers were congratulating themselves on avoiding only a few months ago. […]

Hence the concern about the alternative, much darker scenario in which the financial market pressure on Greece becomes intolerable and triggers a default for which the politicians are not prepared. Market interest rates for the other struggling eurozone countries go through the roof. Banks in the US refuse to extend lines of credit to Europe, where the banks go down like ninepins. Greece decides that the only long-term solution to its problems is to leave the euro, thus triggering a rapid unravelling of monetary union. As in the 1930s, deep economic distress has profound political consequences, fostering the growth of extreme nationalist parties.  This is the doomsday option, and over the coming weeks and months finance ministers and central bank governors will do all in their power to prevent it from coming to pass.

Who is to blame for this crisis?  Politicians?  Banks?  Speculators? Regulators? It surely isn’t your ordinary joe or josephine, Greek, American, Irish, Italian, or a citizen of wherever.  There was a clue, maybe, in an interview the BBC broadcast last week with some sort of trader, Alessio Rastani, who spoke with such brutal honesty from the perspective of a speculator, that his interview was initially suspected to be a Yes Men hoax (it appears it wasn’t):

The governments don’t rule the world, Goldman Sachs rules the world.

The savings of millions of people are going to vanish in less than a year

For most traders we don’t really care about having a fixed economy, having a fixed situation, our job is to make money from it. Personally, I’ve been dreaming of this moment for three years. I go to bed every night and I dream of another recession.

When the market crashes… if you know what to do, if you have the right plan set up, you can make a lot of money from this.

The Yes Men later issued a statement:

Who in big banking doesn’t bet against the interests of the poor and find themselves massively recompensed – if not by the market, then by humongous taxpayer bailouts? Rastani’s approach has been completely mainstream for several years now; we must thank him for putting a human face on it yesterday.

If  we don’t know who caused this whole mess, we certainly know who are getting it in the neck: the 99 percent.  That’s the number (the 99% of Americans who together own only twice as much wealth as the other 1%) that is now galvanising a movement that began with the Occupy Wall Street sit-in (now three weeks old) and is now spreading worldwide.   They say:

We are the 99 percent. We are getting kicked out of our homes. We are forced to choose between groceries and rent. We are denied quality medical care. We are suffering from environmental pollution. We are working long hours for little pay and no rights, if we’re working at all. We are getting nothing while the other 1 percent is getting everything. We are the 99 percent.

The 99 percent website features lots of images like this one – handwritten summaries of lives devastated, held up to the camera by the victims of what may turn out to be the second Great Depression.  They say:

Who are we? Well, who are you? If you’re reading this, there’s a 99 percent chance that you’re one of us.

You’re someone who doesn’t know whether there’s going to be enough money to make this month’s rent. You’re someone who gets sick and toughs it out because you’ll never afford the hospital bills. You’re someone who’s trying to move a mountain of debt that never seems to get any smaller no matter how hard you try. You do all the things you’re supposed to do. You buy store brands. You get a second job. You take classes to improve your skills. But it’s not enough. It’s never enough. The anxiety, the frustration, the powerlessness is still there, hovering like a storm crow. Every month you make it is a victory, but a Pyrrhic one — once you’re over the hump, all you can do is think about the next one and how much harder it’s all going to be.

They say it’s because you’re lazy. They say it’s because you make poor choices. They say it’s because you’re spoiled. If you’d only apply yourself a little more, worked a little harder, planned a little better, things would go well for you. Why do you need more help? Haven’t they helped you enough? They say you have no one to blame but yourself. They say it’s all your fault.

They are the 1 percent. They are the banks, the mortgage industry, the insurance industry. They are the important ones. They need help and get bailed out and are praised as job creators. We need help and get nothing and are called entitled. We live in a society made for them, not for us. It’s their world, not ours. If we’re lucky, they’ll let us work in it so long as we don’t question the extent of their charity.

We are the 99 percent. We are everyone else. And we will no longer be silent. It’s time the 1 percent got to know us a little better. On Sept. 17, 2011, the 99 percent will converge on Wall Street to let the 1 percent know just how frustrated they are with living in a world made for someone else. Let us know why you’ll be there. Let us know how you are the 99 percent.

Three weeks ago, a few hundred people rolled out their sleeping bags in a park in New York’s financial district in a protest against corporate greed and corruption, now there are thousands, and they are gaining the backing of trade unions.  A union-backed coalition will today rally in support of the protesters, and they are being joined by supporters in cities across the US and beyond.  The core group, Occupy Wall Street (OWS), claims people will take part in demonstrations in as many as 147 US cities this month, while the website lists 47 US states as being involved. Around the world, protests in Canada, the UK, Germany and Sweden are also planned.

And it looks like the movement is heading this way: Liverpool will host its own protest, Occupy Liverpool,on Saturday 15th October.  Wonder if the financial system will have crashed by then?

Freedom’s just another word…

Here’s a good column from today’s Guardian by Larry Elliott:

It’s not bankers Labour is watching, it’s you

Once the party curbed the market to benefit the people – now the opposite is true

Here’s how things stand. The follies of the big banks have caused the ­steepest plunge in output since the second world war. The economy is showing signs of stabilisation, owing largely to emergency cuts in interest rates and taxpayers’ billions being used to prop up a ­financial system on the brink of collapse. Unemployment is rising, and it is rising most rapidly for the blameless, not the wretched bankers.

Even before the recession began, incomes for those at the bottom of the pile were below the level of three years ago. The longer Labour has been in power the slower incomes have grown. Inequality is higher than under Thatcher. Child poverty has increased in the past three years and the public finances are shot to pieces.

According to the prime minister, we are now living in a different world. The crisis of neo-liberalism has ushered in a new age in which there is a new and more important role for the state.

That is true, but only up to a point. The state is rather keener on controlling the people than the markets.

The evidence for this? Well, in the past month, the Treasury has announced that it is “not persuaded” that the most profound financial crisis of the past 100 years should result in reform along the lines of the Glass-­Steagall act of 1933. This is a sensible idea that would cut the banks down to size and create a legal distinction between retail and investment banks.

Meanwhile, the government is ­pressing ahead with the part-­privatisation of the Royal Mail and made conditions for financial support for ­Jaguar Land Rover so tough that they were bound to be rejected. This is not interventionism: it is neo-liberalism lite. The aim, as it has been all the way through this crisis, has been to return to Labour’s comfort zone – the economy as it was before 9 August 2007.

In other respects, though, the state has bared its teeth. Labour is ploughing ahead with identity cards; it intends to keep the DNA records of innocent people on its database for up to 12 years; it sanctioned the aggressive policing of the G20 demonstrations. Britain already has more CCTV cameras per head than any other western industrialised country and the weakest laws on privacy and data protection. We have a surveillance society and prisons that are bursting at the seams.

Not a problem, some say. Only the innocent have anything to fear from having their details on a DNA database or by having their movements tracked on CCTV cameras. Personal liberty and privacy have to be ceded for the smooth and effective functioning of the state.

This is turning the idea of a liberal state on its head. A liberal state demands that its citizens give up only those freedoms that are vital for the benefit of the common weal; it doesn’t aggrandise to itself the maximum amount of power and then hand back limited freedoms grudgingly and only when it sees fit. The notion that nobody has anything to fear from a powerful yet well-meaning state has been the cry of the totalitarian down the ages.

Today’s policy is the polar opposite of what it was in the 1950s and 1960s. Then there were strong curbs on the market – exchange controls, import controls, credit controls, full employment policies, strong unions, a large state-run sector – and less interference in the day-to-day life of the individual. The state saw its role as ensuring that people had a job, a decent income and a pension in their old age. It trusted parents to bring up their children and saw no need to employ a small army of professionals to enforce guidelines on smoking, drinking and obesity. Professionals were trusted to do their jobs without onerous, and often ineffective, regulation.

It was no golden age: Britain was stuffy, class-bound and riddled with prejudice. Economic inefficiency gave Thatcher plenty to get her teeth into as she set about reversing the post-war orthodoxy. Henceforth, the market would be unshackled but controls on individuals tightened.

The costs of this new approach are now apparent. Britain has experienced six successive years in which real incomes have barely grown, and even these modest increases have been concentrated at the very top of the scale. Two-thirds of individuals live in households where the weekly income is lower than the national mean of £487 a week. The economy grew at a respectable rate during those six years, but most of the fruits of that growth went to capital rather than labour.

Britain is a country where millions of workers are employed in insecure jobs, where poverty pay is topped up by means-tested benefits. And where, clearly, the government no longer trusts us to behave properly. Hence the surveillance and the targets for doctors, teachers and the police that manage at one and the same time to be rigid and ineffective. The City, of course, had a special dispensation from all this. It was allowed the benefit of light-touch, even no-touch, regulation.

There is little evidence, despite all the bluster about a new age, that this is going to change. We are assured that lessons have been learned and that the 50% tax rate on those earning more than £150,000 is a sign of the government’s get-tough approach with business. But this is window dressing. Real change would involve questioning some of the deep-seated trends of the past 30 years – the imbalance of power between capital and labour, the declining influence of the trade unions, the concentration of economic power in ever bigger financial and non-financial companies and the impact of globalisation and free trade on those on the lowest incomes.

The government’s approach is that the changes in the economy over the past three decades were inexorable. But even if ministers thought otherwise, they would still do nothing, since they are true converts to the main tenets of neo-liberalism. And as a result Labour is on course for a crushing defeat.

The three years after 2005 saw the economy hum along at about 2.5% a year on average, with house prices surging and the City booming. But it didn’t deliver for those in the bottom four-fifths of the income distribution.

Little wonder, then, that Labour’s old working class support is being lost to the BNP or apathy, and that middle-income voters are swinging back to the Conservatives. Those of a liberal bent are appalled at the authoritarianism that is apparently required to keep the lid on a society where the gap between material desires and weak income growth has for years been bridged only by debt. Professionals loathe the target culture. Only the functionaries of the Big Brother state remain loyal, and even now there are not enough of them. The party’s over.