Economics catching up?

“Nature is a “blind spot” in economics. We can no longer afford for it to be absent from accounting systems that dictate national finances, or ignored by economic decision makers.”

At last, economics appears to be catching up with the real world. The Dasgupta Review, commissioned by the UK Treasury, has stated what has for long been the bleeding obvious. Our economics is not serving us well by supporting destruction of our natural environment, our home.

“Truly sustainable economic growth and development means recognising that our long-term prosperity relies on rebalancing our demand of Nature’s goods and services with its capacity to supply them.”

I’ve lost count of the number of pressure groups that have made this point over the past decades, but here is hope that at least the UK government is starting to listen, and perhaps it may influence the forthcoming biodiversity summit.

Maybe the ice is beginning to melt away – the neoliberal dogma that has ruled over the gradual destruction of nature for 4 decades.

The review quotes that modern saint, David Attenborough:

“Economics is a discipline that shapes decisions of the utmost consequence, and so matters to us all. The Dasgupta Review at last puts biodiversity at its core.”

We all need reasons to hope.

New Renaissance vision – 25 years on

I recently came across this short unpublished article I wrote towards the end of 1996, reflecting on The Knutsford Lectures 1993-1996 on Visions of a New Renaissance, previously described in this post. It was an ambitious attempt to capture the spirit and outline of the needed New Renaissance, inspired by what the 19 individual speakers had said. The limitations of my perspective and the lack of suitable outlets meant the article was never published.

Discovering this piece led me to consider, what has changed in nearly 25 years. Was the outlined vision valid? Are we any nearer to it? Here’s my brief assessment, against the categories in the Emerging Vision section of the above paper i.e.:

  • Sustainable ecology.
  • Ethical behaviour and social responsibility
  • Local economy and community
  • Appropriate scale and human scale
  • Open science
  • Soul and spirit
  • Love, compassion, nonviolence
  • Holistic views
  • Living philosophy
  • Imagination, inspiration, arts

I have to say that, despite some encouraging features, it seems as if we are further away from a New Renaissance than we were 25 years ago. Consider just three points:

  1. Dominating everything else, the failure to effectively act on environmental sustainability and climate change for 25 years has led us into an increasingly perilous situation. We, particularly governments and moneymakers, have failed the test of ‘acting as if future generations matter’. On the other hand, far more individual people are acting as if they do; the pendulum is moving.
  2. Behind this is the dead weight of materialism, mechanism and reductionism, continuing to dominate science, governance and economics, stifling the emergence of soul, spirit, love, compassion, true values.
  3. The conflict between large scale and human scale is still heavily over-balanced in favour of the mega-projects, big government, industrial-scale farming and against human communities, particularly indigenous, and local solutions. Human inequalities increase as a result of an economic/governmental system that systematically increases them.

It does not have to be thus. We are creating the new world day by day, in our thoughts and resulting actions. The New Renaissance is a spur to our forward thinking. Take at look at SciMed‘s current New Renaissance initiative!

And I have to be encouraged by the direction taken by international organisations, and particularly the forthcoming Davos Agenda, plus this year’s schedule of global conferences. Covid-19 appears to have catalysed the understanding that the current ‘system’ no longer works, and a new direction is necessary for the whole of humanity, based on working with nature, inclusion and social justice, and trust between nations. A reason for hope!

That was 2020 on this blog

It always seems a bit introspective, reflecting on your own blog. But that is one way to learn. I start with my own favourites from the 165 posts that appeared on this blog in 2020.

My favourite photo posts of 2020

My favourite wordy posts of 2020

Most viewed in 2020

WordPress stats give the top 5 most viewed posts in 2020. This appears to be a strange selection, until you realise that mostly these will be hits from search engines, of subjects not widely covered on the web.

Most liked (4 years)

The ‘most liked’ top 5 covers likes over the lifetime of this blog. What most surprised me was the top one, a recent post on psychology and astrology models – which is somewhat peripheral to the main thrusts of this blog.

I note that my preoccupation with a New Renaissance and rantings on politics/economics/science do not figure in either of these lists!

Maybe I should ask myself the question: should I have a number of different blogs, rather than this single eclectic blog?

Out of the Wreckage

I haven’t had time to read George Monbiot’s book ‘Out of the Wreckage’. This excellent post by Zoe O’Kill gives a good summary – and an excellent overview of our predicament related to the insane neoliberalism that our politics seems to be increasingly in thrall to, both sides of the pond but especially the US.

Zoe is lost in thought

I’d like to begin by wishing everyone a happy new year! I hope you all managed to have a lovely holiday period despite the impacts 2020 has had on all of us.

I’ve definitely had a dry patch with ideas for posts. I kept coming up with ideas that felt easy or boring and I realised that I didn’t start this website to aimlessly post without any real intention. It was to allow me to learn and to share what I’d learnt with all of you. I love to read, learn new things, and to write, that’s why I made this blog. Getting back to that root motivation has been important to me. I would rather post quality over quantity and share something truly interesting and beneficial with you all. Something I’ve put real work into learning about and producing. That is what brings on today’s post and future posts…

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Nationalism is a psychological aberration

Nationalism is a psychological abberation, driven by insecurity. This is the message of this excellent article by Steve Taylor in Psychology Today, which I recommend reading. Nations are artificial constructs, which lead to pathological effects such as wars. The basic psychology of human beings is co-operative with their fellow human beings. The problems we now face, such as the covid19, climate breakdown, species extinction transcend national boundaries. The only future for humanity is one of global co-operation.

The impulse behind Brexit, of ‘making the UK great again’, and the similar impulse behind the Trump presidency, have been going in precisely the wrong direction, driven by the insecurity of their former working populations who have been driven to feel insecure by the economic system. The US appears to have a ‘get out of jail’ card in a Joe Biden presidency, but only if he addresses that failed economic system. The UK has got itself into a more permanent mess with Brexit, but can emerge if the co-operation engendered by a fair ‘deal’ is brought to fruition. A ‘no deal’ will be a psychological disaster for not just UK, but the whole of Europe. The insecurity generated can only lead to more problems.

Of course, nations will still need to exist in some form to organise human affairs, but only within the context of the larger groupings of which they are a part. History tells us that these are largely geographically based – China, India, various European empires, USA… or more global such as the Spanish, British and French colonial expansions. And the context of the United Nations or equivalent organisation is vital.

The charismatic and the populist leader are most suspect in this whole context. I suspect they automatically come to prominence as the collective sense of insecurity rises.

As Steve says,

Nationalism is a psychological aberration, and we owe it to our ancestors, and to our descendants — and to the other species, and to the Earth itself — to move beyond it.

Will things be better in 2021? Read on…

In this post, Matthew Wright gives a sober reality check on whether things are likely to get back to ‘normal’ anytime soon. The real problem is that the neoliberal so-called ‘normal’ was not working and needs a global ‘reset’ to address sustainability of our natural world and a just economic system for all people.

Matthew Wright

I write this in December 2020, as one of the most difficult years in living memory draws to a close. Globally. It’s rare that virtually the whole planet shares a crisis. Usually it’s due to war. This time, it’s a pandemic, and the whole has been buoyed on an unprecedented swirl of social media.

The result has been a sense that 2020 has been a disaster. What surprises me is the amount of material I’m seeing which suggests that, come 1 January 2021, all will come right – I mean, 2021 couldn’t possibly be a worse year than 2020 – er – could it?

Actually, history tells me that it ain’t over until it’s over. Crises of this nature don’t shut down because the calendar’s rolled into a new year. Nor do they come out of a vacuum. If we dig beneath the surface we find that ‘2020’, in all…

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Ethics reduced to economics?

Over the years I’ve listened to many of BBC Radio 4’s short talks entitled Thought for the Day. I always found one of the most profound speakers to be Jonathan Sacks, then Chief Rabbi, who died recently. I am indebted to David Lorimer’s New Renaissance Newsletter, published by SciMed, for bringing to my attention the significant speech given by Sacks in his 2016 Acceptance Address for the Templeton Prize. The following extracts key points related to our current Western predicament. It could almost be his manifesto for a New Renaissance. Or you could just read the original at the above link.

“We have forgotten one of the most important lessons to have emerged from the wars of religion in 16/17C and the new birth of freedom that followed. A free society is a moral achievement. Without self-restraint, without the capacity to defer the gratification of instinct, and without the habits of heart and deed that we call virtues, we will eventually lose our freedom.

At some point the West abandoned this belief. When I went to Cambridge in the late 60s, the philosophy course was then called Moral Sciences, meaning that just like the natural sciences, morality was objective, real, part of the external world. I soon discovered, though, that almost no one believed this anymore. Morality was no more than the expression of emotion, or subjective feeling, or private intuition, or autonomous choice. It was, within limits, whatever I chose it to be. In fact there was nothing left to study but the meaning of words. To me this seemed less like civilization than the breakdown of a civilization.

It took me years to work out what had happened. Morality had been split in two and outsourced to other institutions. There were moral choices and there were the consequences of our moral choices. Morality itself was outsourced to the market. The market gives us choices, and morality itself is just a set of choices in which right or wrong have no meaning beyond the satisfaction or frustration of desire. The result is that we find it increasingly hard to understand why there might be things we want to do, can afford to do, and have a legal right to do, that nonetheless we should not do because they are unjust or dishonourable or disloyal or demeaning: in a word, unethical. Ethics was reduced to economics.

The consequences of our choices were outsourced to the state. Bad choices lead to bad outcomes: failed relationships, neglected children, depressive illness, wasted lives. But the government would deal with it. Forget about marriage as a sacred bond between husband and wife. Forget about the need of children for a loving and secure human environment. Forget about the need for communities to give us support in times of need. Welfare was outsourced to the state. As for conscience, that once played so large a part in the moral life, that could be outsourced to regulatory bodies. So having reduced moral choice to economics, we transferred the consequences of our choices to politics.

It seemed to work, at least for a generation or two. But by now problems have arisen that can’t be solved by the market or the state alone. To mention just a few: The structural unemployment that follows outsourcing. The further unemployment that will come when artificial intelligence increasingly replaces human judgment and skill. Artificially low interest rates that encourage borrowing and debt and discourage saving and investment. Wildly inflated CEO pay. The lowering of living standards, first of the working class, then of the middle class. The insecurity of employment. The inability of young families to afford a home. The collapse of marriage, leading to intractable problems of child poverty and depression. The collapse of birthrates throughout Europe, leading to unprecedented levels of immigration, and the systemic failure to integrate some of these groups. The loss of family, community and identity, that once gave us the strength to survive unstable times…

Why have they proved insoluble? First, because they are global, and governments are only national. Second, because they are long term while the market and liberal democratic politics are short term. Third, because they depend on changing habits of behaviour, which neither the market nor the liberal democratic state are mandated to do. Above all, though, because they can’t be solved by the market and the state alone. You can’t outsource conscience. You can’t delegate moral responsibility away.

When you do, you raise expectations that cannot be met. And when, inevitably, they are not met, society becomes freighted with disappointment, anger, fear, resentment and blame. People start to take refuge in magical thinking, which today takes one of four forms: the far right, the far left, religious extremism and aggressive secularism. The far right seeks a return to a golden past that never was. The far left seeks a utopian future that will never be. Religious extremists believe you can bring salvation by terror. Aggressive secularists believe that if you get rid of religion there will be peace.

Two historical phenomena have long fascinated me. One is the strange fact that, having lagged behind China for a thousand years, the West overtook it in 17C, creating science, industry, technology, the free market and the free society. The second is the no less strange fact that Jews and Judaism survived for two thousand years after the destruction of the Second Temple, having lost everything on which their existence was predicated in the Bible: their land, their home, their freedom, their Temple, their kings, their prophets and priests.

The explanation in both cases, is the same. It is the precise opposite of outsourcing: namely the internalization of what had once been external. Wherever in the world Jews prayed, there was the Temple. Every prayer was a sacrifice, every Jew a priest, and every community a fragment of Jerusalem. Something similar happened in those strands of Islam that interpreted jihad not as a physical war on the battlefield but as a spiritual struggle within the soul.

A parallel phenomenon occurred in Christianity after the Reformation, especially in the Calvinism that in 16/17C transformed Holland, Scotland, England of the Revolution and America of the Pilgrim Fathers. It was this to which Max Weber famously attributed the spirit of capitalism. The external authority of the Church was replaced by the internal voice of conscience. This made possible the widely distributed networks of trust on which the smooth functioning of the market depends. We are so used to contrasting the material and the spiritual that we sometimes forget that the word credit comes from the Latin credo, I believe, and confidence, that requisite of investment and economic growth, comes from fidentia meaning faith or trust.

What emerged in Judaism and post-Reformation Christianity was the rarest of character-types: the inner-directed personality. Most societies, for most of history, have been either tradition-directed or other-directed. People do what they do, either because that is how they have always been done, or because that’s what other people do.

Inner-directed types are different. They become pioneers, innovators, survivors. They have an internalized navigation system, so aren’t fazed by uncharted territory. They have a strong sense of duty to others. They try to have secure marriages. They hand on their values to their children. They belong to strong communities. They take daring but carefully calculated risks. When they fail, they have rapid recovery times.

They have discipline. They enjoy tough challenges and hard work. They play it long. They are more interested in sustainability than quick profits. They know they have to be responsible to customers, employees and shareholders, as well as to the wider public, because only thus will they survive in the long run. They don’t do foolish things like creative accounting, subprime mortgages, and falsified emissions data, because they know you can’t fake it forever. They don’t consume the present at the cost of the future, because they have a sense of responsibility for the future. They have the capacity to defer the gratification of instinct. They do all this because they have an inner moral voice. Some call it conscience. Some call it the voice of God.

Cultures like that stay young. They defeat the entropy, the loss of energy, that has spelled the decline and fall of every other empire and superpower in history. But the West has let it go. It’s externalized what it once internalized. It has outsourced responsibility. It’s reduced ethics to economics and politics. Which means we are dependent on the market and the state, forces we can do little to control. One day our descendants will look back and ask, How did the West lose what once made it great?

Every observer of the grand sweep of history has said essentially the same thing: civilizations begin to die when they lose the moral passion that brought them into being. It happened to Greece and Rome, and it can happen to the West. Sure signs are: falling birthrate, moral decay, growing inequalities, loss of trust in social institutions, self-indulgence of the rich, hopelessness of the poor, unintegrated minorities, failure to make sacrifices for the sake of the future, loss of faith in old beliefs and no new vision to take their place. These danger signals are flashing now.

There is an alternative: to become inner-directed again. This means recovering the moral dimension that links our welfare to the welfare of others, making us collectively responsible for the common good. It means recovering the spiritual dimension that helps us tell the difference between the value of things and their price. We are more than consumers and voters; our dignity transcends what we earn and own. It means remembering that what’s important is not just satisfying our desires but also knowing which desires to satisfy. It means restraining ourselves in the present so that our children may have a viable future. It means reclaiming collective memory and identity so that society becomes less of a hotel and more of a home. It means learning that there are some things we cannot or should not outsource, some responsibilities we cannot or should not delegate away. 

We owe it to our children and grandchildren not to throw away what once made the West great, not for the sake of some idealized past, but for the sake of a demanding and deeply challenging future. If we do simply let it go, if we continue to forget that a free society is a moral achievement that depends on habits of responsibility and restraint, then what will come next – be it Russia, China, ISIS or Iran – will be neither liberal nor democratic, and it will certainly not be free. We need to restate the moral and spiritual dimensions in the language of the twenty-first century, using the media of the twenty-first century, and in ways that are uniting rather than divisive.”

Featured image of Sacks by cooperniall via Wikimedia Commons

We are tired of this blindness

Modern capitalism has ignored the lessons of history in the ignorant and short-sighted pursuit of individual wealth. See for example the article Economics for the People by economic historian Dirk Philipsen in Aeon magazine, from which I quote at length, due to its eloquence:

In preindustrial societies, cooperation represented naked necessity for survival. Yet the realisation that a healthy whole is larger than its parts never stopped informing cultures. It embodies the pillars of Christianity as much as the Islamic Golden Age, the Enlightenment or the New Deal. In the midst of a global depression, the US president Franklin D Roosevelt evoked an ‘industrial covenant’ – a commitment to living wages and a right to work for all. During the 1960s, Martin Luther King, Jr gave voice to the broader idea when he said that no one is free until we are all free. On Earth Day 1970, the US senator Edmund Muskie proclaimed that the only society to survive is one that ‘will not tolerate slums for some and decent houses for others, … clean air for some and filth for others’. We should call these ideas what they are – central civilisational insights. Social and economic prosperity depends on the wellbeing of all, not just the few.

Cultures that fundamentally departed from this awareness usually did not, in the long run, fare well, from the Roman Empire to Nazism or Stalinism. Will neoliberal capitalism be next? Rather than acknowledge the endless variety of things that had to be in place to make our individual accomplishments possible, it is grounded in the immature claim that our privileges are ‘earned’, made possible primarily by private initiative.

But what a claim it is: where would we be without the work and care of others? Without the food from the farmer? Without the electricity and housing and roads and healthcare and education and access to information and hundreds of other things provided to us, day in and day out, often for free, and routinely without us knowing what went into their existence? Seeing ourselves as seemingly free-floating individuals, it’s both easy and convenient to indulge in the delusion that ‘I built it. I worked for it. I earned it.’

The painful flipside are the billions of those who, through no fault of their own, drew the short end of the stick. Those who were born in the wrong country, to the wrong parents, in the wrong school district – ‘wrong’ for no other reason than that their skin colour or religion or talents didn’t happen to be favoured. The limited focus on the individual can here be seen as nakedly serving power: if those who have privilege and wealth presumably earned it, so must those who have pain and hardship deserve it.

Make no mistake, this is the mistaken direction that the US and UK have increasingly taken since the 1980s, the ideology that has driven tax cuts for the well off and austerity for the public good. This is the ideology driving the right wings of both the Republican Party in US, the Conservatives in UK and similar parties across the Western world.

It is time that the direction of travel changes. Covid-19 and climate change are making this crystal clear; the system has produced these, and they are the necessary corrective. We really are all in this together, and making a good life for everyone really is the answer, and should be the goal.

The pendulum needs to swing big-time. Some call it socialism, with a derogatory tone to their voice. It is basic human dignity and the basis of civilisation.

Featured image is from the article in Aeon magazine.

Private gain must no longer be allowed to elbow out the public good

This excellent post by Wayne Woodman is an essay by Dick Philipsen, who summarises quite succinctly why ‘the system’ has gone too far in privileging private gain over the public good. Covid-19 has brought this crazy situation into sharp relief, where we absolutely depend on those who have been least well regarded and rewarded over recent years.

Adam Smith had an elegant idea when addressing the notorious difficulty that humans face in trying to be smart, efficient and moral. In The Wealth of Nations (1776), he maintained that the baker bakes bread not out of benevolence, but out of self-interest. No doubt, public benefits can result when people pursue what comes easiest: self-interest.

And yet: the logic of private interest – the notion that we should just ‘let the market handle it’ – has serious limitations. Particularly in the United States, the lack of an effective health and social policy in response to the coronavirus disease (COVID-19) outbreak has brought the contradictions into high relief.

Around the world, the free market rewards competing, positioning and elbowing, so these have become the most desirable qualifications people can have. Empathy, solidarity or concern for the public good are relegated to the family, houses of worship or activism. Meanwhile, the market and private gain don’t account for social stability, health or happiness. As a result, from Cape Town to Washington, the market system has depleted and ravaged the public sphere – public health, public education, public access to a healthy environment – in favour of private gain.

COVID-19 reveals a further irrational component: the people who do essential work – taking care of the sick; picking up our garbage; bringing us food; guaranteeing that we have access to water, electricity and WiFi – are often the very people who earn the least, without benefits or secure contracts. On the other hand, those who often have few identifiably useful skills – the pontificators and chief elbowing officers – continue to be the winners. Think about it: what’s the harm if the executive suites of private equity, corporate law and marketing firms closed down during quarantine? Unless your stock portfolio directly profits from their activities, the answer is likely: none. But it is those people who make millions – sometimes as much in an hour as healthcare workers or delivery personnel make in an entire year.

Simply put, a market system driven by private interests never has protected and never will protect public health, essential kinds of freedom and communal wellbeing.

See the full post here.

Featured image: Adam Smith.

Has neo-liberalism reached use-by date? Ayn Rand and the failure of philosophy

It has long been evident that the extreme neo-liberalism that followed Ayn Rand’s views has had a malign influence on the world economy leading to massive inequality. And the system is now like an unstable house of cards. Matthew Wright explains in this super post.

Matthew Wright

A good deal of what I’ve been seeing of late on social media – but also in mainstream journalism – revolves around the notion that the Covid-19 pandemic will be the trigger for a shift away from the neo-liberalism that has characterised leading western economic policies since the early 1980s.

That might be right. Back then this ideology was trumpeted as a ‘more sophisticated’ approach than the liberal democratic western policy mixes of the mid-twentieth century. When the eastern bloc fell over in the early 1990s its triumph seemed complete. History, Francis Fukuyama declared, had ended as a result. From then on, The Future would consist of a changeless neo-liberal nirvana.

Well, quite. It was an absurd statement, curiously built on the same faulty assumption that Karl Marx had applied to his thinking in the 1840s: that societies, by nature, move towards an ideal end-point – a meaning summed up…

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Time for the Magic Money Tree

One of the great things my children tought me was that, when you are playing a game with defined rules, if the rules are not working well you change them. The meta-game of manipulating the rules is itself of value, and extends the life of the game. This has application in real life!

It seems not long since UK politicians were proclaiming that the magic money tree does not exist, and there was no alternative to austerity. Yet it turns out that it does indeed exist, and is being deployed by central banks to help governments to handle the financial crisis erupting in the wake of covid-19. Money is created, by the central bank, at the stroke of a key on a keyboard, is used to solve the problem, and may get paid back eventually. There is now no alternative to the magic money tree.Read More »

Chickens coming home

It has long been apparent that free market capitalism, as currently practised, is running into the buffers of climate breakdown, species extinction, pollution and gross inequality. A system that favours profit maximization at the expense of all else, including nature, cannot expect to go on and on without consequence.

Similarly, globalisation of finance, tourism and product supply with consequent massive movement of people, products and living beings around the world is foundering on the sands of the coronavirus panic and the apparent inability of the system to withstand shocks, and the human fears that follow.

Further, the overemphasis on sovereignty of nation states, with the related rise of populism, and with a weak United Nations, means that collective attempts to resolve these problems is easily nullified by powerful actors.

The chickens are indeed coming home to roost. Yet this process seems to be necessary before humanity can build up the collective will to make the necessary changes.

Change there will be, but only when the consequences have effectively forced it. Human nature seems to work that way.

The coronavirus outbreak – the economic impact

This fascinating post by Matthew Wright explains why the world financial system is so vulnerable to shocks to the system like COVID-19. The world economy is indeed a reflection of the collective psyche. Collective confidence and fear play very real roles in the direction of the economy. And this is without further considering the increasing effects of climate breakdown.

Matthew Wright

What worries me about the COVID-19 coronavirus outbreak isn’t so much the virus itself. It’s the economic effects of the way people – and societies – have been reacting to it since the outbreak began. Because of the way western economics has gone in the past forty-odd years, what economists call a ‘shock’ can have real-world effects that run far beyond the scale and nature of whatever that ‘shock’ might be.

In economic terms, a ‘shock’ refers to an unexpected shift, usually to do with pricing associated with a commodity. The classic western example is the 1973 oil shock, which sent oil availability plummeting and prices skyrocketing. The resulting economic impact was significantly greater than the scale of the oil embargo that provoked it.

These days, world economies are far more fragile. It’s not just the fact that the ‘General Financial Crisis’ of 2008-10 wasn’t actually resolved. It’s the fact…

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Trade Deals

Trade deals are bandied around by its supporters as one of the advantages of Brexit. We will be able to do all these wonderful trade deals which will make us better off.

Let’s just take a reality check. Now I’m no expert in trade deals, in fact few people in UK are, because we were part of the EU team. That’s maybe the point.

UK is joining the big league of trade dealers. Let’s just suppose it’s a league of the 10 top world economies. All the other teams are highly skilled and proven in the world trade dealing. The UK is just putting together a team to compete with the others, all at the same time.

If it were football, where do you think UK would finish at the end of the season, with a cobbled-together team playing against the best in the world, with a highly congested fixture programme? Bottom, obviously.

History tells us that trade deals are used by rich and powerful countries to control and exploit other countries. The British Empire, for example, is replete with examples, from cotton to salt. The current trade war between US and China is part of that pattern.

But the UK is rich and powerful, you say, the 5th or 9th largest economy in the world. So we can deal on equal terms with the others. Maybe. At the end of the day, sheer numbers mean that the smaller economy will usually have more to lose by not reaching a deal.

I’m not betting that we’ll have any deals any time soon, and the prospect of a ‘no deal’ exit from the EU is as real as ever.

However, all is not necessarily negative. The impinging of reality on the Brexit project may result in Prime Minister Johnson agreeing to a deal that keeps us reasonably close to the EU. Of course, this would annoy the hard Brexiteers, just as he annoyed the DUP with the withdrawal agreement. We live in hope!

Featured image of President Trump attending agreement of beef deal with EU,
by The White House from Washington, DC via Wikimedia Commons.

Stakeholders and Davos

It was around 1985/6 that I became aware of shareholder capitalism. Up to that time, our company had been a business that designed, produced and sold computers, and was proud of its contribution to the local economy. Then along came these ideas of shareholder value, and suddenly the accounts became oriented to optimising the share price. My area, software, became ‘capitalized’ and included in the sums.

It was not evident to me at the time where this was headed, and indeed in the early years of the Blair government (late 1990s) I remember quite an excitement at the idea of stakeholder capitalism, whereby the purpose of a company was not just to make money but to be concerned with all its stakeholders – customers, suppliers, employees, shareholders and the surrounding society. Unfortunately, this idea gradually seemed to disappear and full-blooded shareholder capitalism resumed – all that mattered was to make money for shareholders.

Since then, the dysfunction of this system has become apparent, in that companies have become global, relocate operations at will, produce obscene inequality, and avoid paying local taxes that enable governments to adequately function in their sphere. And the corporate world does not appear to accept responsibility for addressing the social and climate breakdown they have caused, indeed some actively try to avert action.

Now, the World Economic Forum and the annual Davos gatherings do not have the greatest of reputations, but their founding ethos is undeniably good – seeking to provide a forum where corporations and governments can discuss key issues and the way ahead.

The Davos Manifesto 2020 outlines what I’m sure most of us would like today’s corporations to be like. If only they were, we could all have more confidence that humanity was at last headed in the right direction.

The companion page why we need the Davos manifesto articulates well why such stakeholder capitalism is desirable and why it is better suited to addressing today’s challenges than is either current shareholder capitalism in the West or state capitalism in the East. The thing is, it allows its management to act as moral agents, rather than as self-interested accountants.

It will take a long time to convert all the diehards, but all power to Davos for its annual meeting 21-24 January.

It might help if we each hold them in mind, send positive thoughts, or pray for them!

The Narrative

What is Brexit but a clash of stories, or narratives. In the first, UK is a part of a collaborative European Union that arose out of the ashes of the World Wars to establish an island of peace and commerce that is a beacon to the rest of the world. In the second, UK frees itself from the tyranny of an overseeing and threatening superstate, and goes forth free again to trade on its own terms with the world, as in some mythical past times.

These two stories are so completely incompatible that the country is now riven. We are in the midst of a narrative war. Of course, we always are. The conventional left-right prism in politics is a characterisation of two stories – we are all in it together, or we are self driving and independent individuals that owe nothing to anyone.

These thoughts were provoked by Tim Jackson’s review of Robert J. Shiller’s book Narrative Economics: How Stories Go Viral and Drive Major Economic Events – well worth reading (the review, that is). I quote from Tim’s review:

“Stories are more powerful than statistics… The irrationality inherent in financial exuberance (and despair) defies the neat territory of numbers and demands a deeper excursion into the decidedly unruly world of narratives”

Tim goes on to quote economic historian Deidre McCloskey in 1990:

“Economists are tellers of stories and makers of poems”

As in economics, so in politics and other areas of human affairs. Our world is really a world of meaning and story, not a world of atoms and molecules, as materialists would have us believe.

In recent years social media have clearly increased the ability for the stories accepted by large sections of a population to be manipulated by unknown actors, and beneficiary politicians appear reluctant to do anything about it. The battle of narratives is the battle of our times.

Tim’s conclusion:

“We must all choose carefully which stories we live by.”

 

This Is Not A Drill

this is not a drillThese days, daughter is much more clued up about the latest ‘must read’ books on green issues than I am. So this book, subtitled An Extinction Rebellion Handbook, was kindly left for me to read. And an incredible book it is, outlining the thinking and practicalities behind the recent phenomenon of Extinction Rebellion.

The premise is that we can no longer continue to ignore the issue of climate breakdown, as argued so many times in this blog. So we cannot continue with ‘business as usual’, which has been the response to pretty well all climate change protests and initiatives so far. The first part of the book presents evidence of climate breakdown and its consequences from all over the world – you can be in no doubt that change is needed after reading this. This leads to the conclusion that the needed system change will only come about though some sort of non-violent revolution/rebellion, whereby the status quo is disrupted sufficiently to evoke and force through the necessary changes. And non-violent it must be, enabling peaceful and democratic change; violence always begets more violence and leaves the wrong sort of people in control of societies.

It is a handbook, in that it outlines the approach that was taken recently in the London protests, and the experience of many of the protestors. It really was a quite incredible operation.

This is needed to evoke the necessary economic and political change needed for continuation of human societies on the planet in a form that is a recognisable continuation of today’s societies. Otherwise, the status quo is driving us towards increasing disasters, wars and breakdown of societies and ecosystems.

Yes, this book outlines a vital aspect of the needed New Renaissance of humanity. It is not the whole story, but a vital part of it, comparable to that played by Mahatma Gandhi and Martin Luther King in their struggles for justice.

Read This Is Not A Drill, and you might even be inspired to become an essential part of the necessary change that is ever more pressing.

 

 

An idea whose time is coming?

“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”

Milton Friedman

This quote by economist Milton Friedman is used by John Lanchester in his recent article in London Review of Books on Universal Basic Income. As one of the most influential economists of the 20th century, Friedman probably has a point.

Lanchester takes us through many experiments in Universal Basic Income from across the world. The evidence is that it works, that it reduces stress among poor people, reduces drug and alcohol use, reduces crime, etc etc. Depending on the level set it can also remove the need for much other public spending on benefits for the poorer sections of society.

The direction we are moving, in terms of increasing disruption due to climate change and robotic technology, suggests that some such solution is going to be inevitable unless we are willing to revert to Victorian approaches of almost washing our hands of the problem of the ‘undeserving poor’, and leaving it to charity.

What is not clear is what would be the optimum level for such a basic income, how fraud and coercion could be avoided, etc. Which is why it is suggested that it be introduced at a low level and gradually increased.

Of course, the question is how to pay for it. The inertia in the current taxation system suggests that it is unlikely to come through ‘steady as she goes’ political change. But Lanchester suggests that with the coming crises the situation will be ripe for just such a change.

The article does not mention the possibility of more fundamental change to the underlying money system to ‘pay’ for such a system. What if money were created as basic income for people, rather than as debt to fund the banking system? Or some hybrid of the two. I.e. we change the nature of banking and money itself to be more in the interests of the people. Now there’s a thought. See Positive Money.

Utopia for Realists

It’s surely obvious that the current economic system is not working, what with increasing inequality, increasingly low wages at the bottom, squeezed public finances,  financial crashes, resulting populism, ever-increasing automation, ineffectively-addressed global warming and so on. And it seems equally clear that the global elite haven’t a clue what to do about it and plan to just let it run while they continue their comfortable lives.

utopia for realistsRutger Bregman’s book Utopia for Realists: And How We Can Get There brings up the heretical suggestion that we can do something about it, all we need are the visionary ideas and the determination to follow them through.

There is no reason why we cannot end poverty, give free money to everyone (basic income), move towards a shorter working week, pay important workers like nurses and bin men a commensurate salary, and open borders once the imperative to move anywhere but home is removed.

That sounds like a Utopia, you say. Yes it is. But we need a stretching vision of where we want to get to and then maybe we’ll start moving there.

Bregman cites the fascinating story of how neoliberal free market ideas moved from being the interest of just a few economists in the years after WW2, when Keynes dominated economic thought, to becoming the dominant force behind world economics from the 1970s to the present. These ideas have now run their course and are actually the cause of the predicaments we increasingly find ourselves in.

We desperately need these new Utopian ideas to gain momentum. So go read Utopia for Realists.

What human energies could be freed up for a New Renaissance!

 

 

Gödel, Maths and Physics

Edmund M. Law has some fascinating posts on his blog. A recent one had the following quote from Freeman Dyson.

Fifty years ago, Kurt Gödel, who afterwards became one of Einstein’s closest friends, proved that the world of pure mathematics is inexhaustible. No finite set of axioms and rules of inference can ever encompass the whole of mathematics. Given any finite set of axioms, we can find meaningful mathematical questions which the axioms leave unanswered. This discovery of Gödel came at first as an unwelcome shock to many mathematicians. It destroyed once and for all the hope that they could solve the problem of deciding by a systematic procedure the truth or falsehood of any mathematical statement. {53} After the initial shock was over, the mathematicians realized that Gödel’s theorem, in denying them the possibility of a universal algorithm to settle all questions, gave them instead a guarantee that mathematics can never die. No matter how far mathematics progresses and no matter how many problems are solved, there will always be, thanks to Gödel, fresh questions to ask and fresh ideas to discover.

It is my hope that we may be able to prove the world of physics as inexhaustible as the world of mathematics. Some of our colleagues in particle physics think that they are coming close to a complete understanding of the basic laws of nature. They have indeed made wonderful progress in the last ten years. But I hope that the notion of a final statement of the laws of physics will prove as illusory as the notion of a formal decision process for all of mathematics. If it should turn out that the whole of physical reality can be described by a finite set of equations, I would be disappointed.

— Freeman J. Dyson, Infinite in all Directions, 1985

Law presents this under the heading ‘Inexhaustible Mysteries’. To me, it’s just important to be reminded of Gödel’s Theorem from time to time. Mathematics is inherently open-ended, and I believe the implication is also that physics is also open ended. We can never have a model that fully describes reality. There will always be more for mathematicians and physicists to do.

Equally, we will never have a perfect economic system. There will always be space for economists and politicians. And those who seek single solutions to complex problems (e.g. ‘free markets’) are inherently misguided.

See also my post on Godel’s Theorem.

Picture of the tomb of Kurt Godel in the Princeton, New Jersey, cemetery by Antonio G Colombo, from Wikimedia Commons. What a legacy!