Tag Archives: capitalism

John McMurtry, La fase cancerígena del capitalismo, de la crisis a la cura (Valencia: Tirant Humanidades, 2016)

Las reticencias y críticas contra la globalización neoliberal nacieron prácticamente con la emergencia del fenómeno mismo, sin embargo, en los últimos años de crisis se ha venido fortaleciendo una nueva tendencia, creciente y heterogénea, de posturas críticas y acciones contestatarias contra este modelo de producción y comunicación mundial. La desconfianza y rechazo hacia una  integración global de las comunidades humanas dentro de los márgenes del neoliberalismo se dejan ver en movimientos sociales, partidos políticos y propuestas teóricas que, desde orientaciones políticas y morales distintas, cuando no opuestas, exhiben sus deficiencias y consecuencias negativas , así como el extravío e inviabilidad de su presunto horizonte emancipador.

La obra del filósofo John McMurtry, La fase cancerígena del capitalismo, se integra dentro de esta tendencia crítica, con la destacable ventaja de que su primera edición fue lanzada en 1999. En aquellos años, en los que aún predominaba un aire de triunfalismo liberal sobre las experiencias históricas que pretendieron acabar con el capitalismo, McMurtry lanzó su diagnóstico sin complejos: el sistema capitalista es un trastorno cancerígeno que puede acabar con la vida humana y con la base natural que la soporta. Es posible que hace quince años, cuando diversas regiones del planeta vivían un auge económico, esta valoración haya podido generar ciertas dudas en algunos sectores, pero con la crisis económica, política, ecológica y cultural que se ha cristalizado desde el 2008  a nivel mundial, su pertinencia es innegable. Debido a esto, el autor lanzó una segunda edición aumentada en el 2013, en la cual añade y analiza los datos y acontecimientos más determinantes de los últimos años retomando el marco analítico de la primera publicación. La edición que a continuación referiremos es la primera traducción al castellano que acaba de publicar la editorial Tirant Humanidades (McMurtry, 2016).

La investigación que nos presenta McMurtry parte de la idea de que todas las sociedades tienen una estructura de reglas subyacente, un tipo de gramática nos dice, que rige las acciones, el discurso y el pensamiento de sus miembros. Estas metareglas son la codificación del sistema de valores prevalente. Es en el metanivel  de los sistemas sociales donde el autor cree que la filosofía debe excavar para poder evaluar “su verdad y su valor en la búsqueda de su forma más completa” (p.19). Por consiguiente, en esta obra se abordan los valores que regulan, en última instancia, el mecanismo del sistema capitalista, partiendo del supremo principio que lo define: la maximización del beneficio privado monetario en detrimento de las bases naturales y civilizatorias de la vida humana.

A lo largo del texto se despliega una ontología social que postula como primer  y necesaria instancia de la existencia humana y sus sociedades el ámbito natural-material y socio-cultural, los cuales integran el life capital[1]. Éste comprendería “(…)las riquezas naturales y las creadas por el hombre que más producen en el tiempo sin pérdidas”(p.420) y estaría constituido por el capital de la tierra, el capital del conocimiento, el capital social y el capital ecológico. En esta propuesta el concepto de Capital desdobla su significado y trasciende al de la economía política clásica y neoclásica, ya que es concebido como la riqueza total –material, cognitiva y simbólica- que sostiene y garantiza la vida y, por ende, deja de limitarse al de una magnitud de valor social  tendiente a la infinita valorización del valor monetario y a la totalidad de los bienes mercantiles de los sujetos individuales y colectivos. Es así que, el life capital constituye la corporeidad y las condiciones de posibilidad reales de los sistemas sociales.

Para abordar la condición actual del sistema global y del life capital que en última instancia lo sostiene, el autor trasladara desde la medicina el marco conceptual clínico del cáncer. Pero, antes, nos aclarará que esta traslación no busca la postulación de una metáfora sino la construcción de un “modelo explicativo” (p.p.64-5) que dé cuenta de un trastorno  que invade literalmente los cuerpos orgánicos y los cuerpos sociales por igual. El principal y determinante agente cancerígeno que opera en nuestras sociedades sería las Secuencias de Dinero Privado Transancional (SDPT), aquello que la prensa mundial llama, con sospechosa neutralidad, los mercados o los flujos de capital. Estas secuencias son reproducciones monetarias anómalas de las dinámicas de intercambio y producción social que tienden a la automultiplicación sin ninguna función vital, operando igual que las células cancerígenas que invaden los organismos biológicos: “(…)Ambas se multiplican fuera de control. Tampoco tienen ninguna función  en compromiso con la vida. Ambas invaden y se extienden  al depredar y despojar al anfitrión de sus recursos. Y la clave para sucumbir en cada nivel, es la insuficiencia del sistema inmunológico en reconocerles” (p.91).

Precisamente en el no reconocimiento del trastorno radica parte de su fuerza. Al respecto, McMurtry percibe una pasividad en los economistas y los filósofos por no cuestionar estructuralmente las bases axiomáticas del sistema cancerígeno: “(…) Ningún economista hace esto porque cada paso es bloqueado a priori  por la estructura profunda de la doctrina y su modelo cientificista. Ningún filósofo moral lo hace tampoco, en la medida en que está por fuera de los límites el reconocerlo dados los tabúes metodológicos y sociales” (p.31). El cáncer capitalista se ha convertido en un tabú social, toda vez que los medios de comunicación y las instancias del conocimiento presentan profundas lagunas respecto a su análisis.  Ante esta situación nos recuerda que en la era del oscurantismo medieval :

(…)La reflexión social registrada está mas o menos confinada  a la teología moral especulativa  decretada por Roma. Las cuestiones de fondo se hacen a un lado en el plano normativo. Las relaciones sociales preestablecidas, bien se mantienen por fuera de la discusión en su conjunto, como un tabú innombrable de los medios del momento, o se les concede una mera disculpa y justificación. A esto le llamamos <<Era del oscurantismo>> por una buena razón. Pero una Era de Oscurantismo puede volver a ocurrir.(…) ¿No nos enfrentamos a una nueva teología absolutista, de las leyes eternas del mercado, en lugar de las de Dios, como los mandamientos del mundo?. (McMurtry, 2016, p. 205)

El período cancerígeno que se analiza en la obra tendría sus orígenes en la derrota estadounidense en Vietnam, el golpe de estado chileno del 73, el cambio del patrón oro por el patrón dólar en 1974 que permite la reproducción de moneda fiduciaria sin arraigo directo en la materialidad y la llegada al poder de Donald Reagan y Margaret Thatcher y la consecuente liberalización de los mercados. En los años que van de 1973 a 1999 nuestro autor observa la consolidación de una nueva “soberanía supranacional” , un tipo de “poder colectivo de secuencias monetarias” (p. 32), que circula por todo el planeta destrozando por igual las soberanías de los estados nacionales, los ecosistemas, los ámbitos culturales locales y la salud misma de los organismos humanos. A partir del 9/11  se despliega una estrategia que busca consolidar el poder global de las Secuencias de Dinero Privado Transnacional después del reacomodo que supuso la caída de la URSS y de la emergencia de varios fenómenos contestatarios que empezaban a  tomar consciencia de los impactos dañinos del sistema. Esta estrategia estaría basada en la reconstrucción de un enemigo , habida cuenta de la caída del monstruo soviético, para justificar la ampliación de la metástasis capitalista.

Pero, a pesar de el sombrío diagnóstico que nos presenta, McMurtry también se encarga de proponer unos principios mínimos, una “ontoaxiología”, que en la práctica funcionaría como “la cura” contra el cáncer capitalista. Esta “cura” estaría basada en una de las facultades naturales de los cuerpos sociales: el “(…)sistema inmune social de capacidades y competencias sobre el que todo el funcionamiento de la sociedad y cada vez más personas y especies dependen para su supervivencia y prosperidad”(p.320) . Este sistema inmune social expulsa o elimina los agentes extraños y dañinos que amenazan con desequilibrar, atacar o destruir al organismo social que supone una comunidad y estaría constituido por un conjunto de prácticas, regulaciones, prescripciones, instituciones y procesos que están orientados a proteger la vida general. Los agentes encargados de desplegar y operar la potencialidad del sistema inmunológico de la sociedad  serían los “comunes civiles” : “(…)cualquiera y todas las construcciones sociales que permiten el acceso universal a los bienes vitales” (p.497). De esta forma, “(…) el movimiento progresista, la izquierda, la comunidad, los sindicatos y las cooperativas”(p.497), explícitamente avocados a la defensa y garantía de la vida, serían los elementos operativos del sistema inmunológico social.

Mcmurtry no se limita a sostener su propuesta curativa sobre una ideal moral, sino que también lo argumenta con algunos ejemplos socio-políticos actuales que  considera saludables. Estos ejemplos serían las actuales políticas en defensa y protección de los ámbitos públicos, los recursos naturales y la vida humana que han implementado países como Venezuela, Brasil, Ecuador, Argentina y Bolivia por medio de nacionalizaciones, renegociaciones de la deuda pública, recuperación y protección de zonas naturales estratégicas, así como la revitalización del cuerpo social por medio de programas sociales orientados al fortalecimiento de la salud, la educación y el conocimiento de la población. Por ello, nos dice que “En toda iniciativa política y legislativa en América Latina existe una lógica unificadora de recuperación: la reivindicación pública de la economía al servicio de las necesidades conocidas de su gente y sus condiciones de vida.” (p.80).

En lo referente al aspecto teórico-critico de esta obra, nos parece relevante destacar que su análisis no se integra en la línea del pensamiento marxista o posmarxista. El propio autor  marca distancia con algunos aspectos de esta corriente porque que considera  que el life capital no es captado en sus postulados. Y es que Marx, nos dice, centró su atención en las células básicas del capitalismo, la mercancía-dinero p. e., sin mirar las auténticas fuentes de la riqueza , las cuales no pueden ser reducidas a la fuerza de trabajo, ya que  ésta se encuentra también sustentada sobre las mismas, es decir, sobre el life capital. A pesar de ello,   McMurtry no duda en reconocer la importancia de la obra marxiana:

(…)Lo que abre el espacio de reflexión para el análisis crítico  de los presupuestos sociales de una vez por todas, es el profundo trabajo estructural sin precedentes de Karl Marx(…) su obra rompe de forma decisiva la larga aquiescencia de la teoría con el statu quo y los privilegios de clase dominante (…) Yendo mucho más allá de Sócrates o Rousseau, él expone a la crítica sistemática la estructura de poder material de todo lo hasta hoy hay de existente en la sociedad civil(…) Ningún filósofo de la historia antes de esto se había atrevido a ir tan lejos. Desde entonces, la obra de Marx ha sido un punto de referencia fundamental en el panorama filosófico: un punto de referencia para los pensadores cuya preocupación por las estructuras subyacentes se extiende a las formas sociales dominantes, y no meramente a los ordenamientos naturales y conceptuales. (McMurtry, 2016, p.212)

Para finalizar, diremos que, al margen de las diferencias onto-epistémicas que hay  entre McMurtry y Marx, las propuestas de ambos se emparentan en el hecho de que están enfocadas en el análisis de las condiciones materiales, sociales y culturales de la existencia humana. En consecuencia, ambos toman como primer principio de referencia los hechos históricos y la estructura constitutiva y causal de los sistemas sociales que los genera. Por ello, es de agradecer que en La fase cancerígena del capitalismo las críticas y argumentos se sustentan en diversos escenarios y acontecimientos históricos actuales, con lo cual, McMurtry, como Marx en su tiempo, rompe con la endogamia metafísica de algunas corrientes de la filosofía que han decidido hacerse a un lado ante la acuciante realidad de nuestros días. Creemos que esta obra nos recuerda que, en los tiempos vertiginosos que corren, es un imperativo ético para los filósofxs  exponer  el potencial crítico de la filosofía ante un sistema desconocedor de la vida que está dominado por “egoísmos atómicos automaximizadores”.

[1] No hay traducción posible en castellano que haga justicia al concepto de Life capital, ya que capital vital y capital de vida tienen una connotación distinta en castellano

Asger Sørensen, Capitalism, Alienation and Critique (Aarhus: Nordic Summer University Press, 2016)

As concerns the main contents of the new book by prolific Danish philosopher and social scientist Asger Sørensen, they are certainly relevant and urgent, for they constitute an articulate critical reflection upon the grim reality of avoidable human degradation and suffering within the capitalist order, as well as upon their callous and hopeless acceptance therein, all of which are important features of contemporary social life worth thinking about and, possibly, acting against.

Building upon a variety of essays written independently of one another and published individually elsewhere on previous occasions (e.g. the prestigious scholalrly journal Philosophy & Social Criticism), the book is internally diverse, but it is neither contradictory nor overwhelmingly heterogeneous. Rather, the book’s structure is sensibly and comprehensibly open, for it comprises:

(A) An introduction, a presentation and an interlude that, somewhat redundantly but very usefully, lead the reader into the rich intellectual panorama to follow, highlighting above all: (1) the common conceptual threads linking together the two subsequent, admittedly uneven parts; (2) their being the result of a single process of intellectual growth and maturation lasted many years; and (3) their more or less direct impinging upon the Continental school of thought known as Critical Theory, to which the book’s author claims to belong himself.

(B) A first part, entitled “Economy” and focussing on the classic social thinkers Émile Durkheim and Bataille, whose reflections provide a profound and complex theoretical backdrop for the correct understanding of the axiological significance of the emancipatory movements emerged in capitalist countries in our young new century (e.g. the Occupy Wall Street movement in the US, the Indignados of Spain, etc.). Although admired and mined for important insights in existing realities and problems, neither classic social thinker is idealised and extensive criticism of their views, especially Bataille’s, is offered too;

(C) A second part, called “Dialectics”, covering a much wider spectrum of intellectual sources in all senses, i.e. disciplinary, geographical, historical and linguistic. It is also a more complex section, which requires closer attention to detail and serious efforts of synthesis in order to appreciate how the different notions of dialectics explored and explained in its five chapters (i.e. Aristotle’s, Hegel’s, Marx’s, Bataille’s, Tong Shijun’s, Mao’s, and the Frankfurt School’s) can be combined together so as to shed light on contemporary capitalism, its many woes and their possible solutions;

(D) A postscript that expands upon and integrates (A), developing a critique of key-aspects of liberal and neoliberal political economy, especially Ricardo’s doctrine of comparative advantage and the macroeconomic practical manifestations of the Austrian school of economics in pre-2008 developing countries and in post-2008 Europe, under the banner of austerity. Somewhat disconnected from both (A) and (B), it is per se a very interesting piece of intellectual reflection, and one that should appeal to open-minded economists as much as to social scientists at large and philosophers.

Noteworthy and original is the book’s attempt to give a better-contoured and more positive shape to the notion of cultural Marxism, which has been used very loosely in contemporary social discourse and, typically, with an almost taken-for-granted negative connotation. In this manner, the book can be useful both to the friends and to the foes of the broadly humanitarian, democratic and socialist (i.e. not liberal, as the book’s author vehemently states in his postscript) cultural tradition that goes under this name and that the book’s author identifies, investigates, interrogates and invigorates. Whether trying to promote it or to demote it, both sides can benefit from having a conceptually more refined version of it to dissect, debate and disagree upon.

From a scholarly perspective, the book is verily informed and informative. If anything, it is scholarly thorough and thoroughly scholarly. Its main arguments are sensible and sensibly constructed, but a reader unfamiliar with the classics of philosophy and of social thought that are so frequently referred to therein is unlikely to be able to grasp such arguments with ease, if at all. The spectrum of ideas and ideologies presented and toyed with in the book is immense, even if inevitably partial, and what is presented and toyed with is done so in a competent, intelligent and perceptive manner, as well as in an articulate, meticulous and subtle one. The overall style of the book is plainly academic. Positively clear and professionally tailored, no reader will find thrilling passages, stimulating wit or spiritually inspiring prose to ponder upon. Yet, it is unlikely that any reader but an academic one will purchase the book and read it.

From Piketty’s Capital to Marx’s das Kapital

Thomas Piketty’s book Capital in the Twenty-First Century has created a very new platform for a discussion of the global economy. There is possibly no other book on economy which has been published in so many languages, printed in so many copies, and has found its way to such a varied global public. Piketty’s Capital has been discussed in many high ranked academic journals, and at the same time, it has come out to a broader audience with advertisements in places like the underground public transportation in metropolises around the world. The title of the book is also very ambitious in so far as the title Capital claims to be a follow up of Karl Marx’s Das Kapital for the twenty-first century. Piketty is similar to Marx in his ambition to give a large historical, or a world historical perspective on the significance of capitalist economy for the development of global society. Given this background it could be interesting to consider the relations between Piketty’s Capital and Marx’s Das Kapital.

 

 

Main Thesis

My main thesis is that although Piketty gives a very essential theoretical and historically based prognosis and critique of the development of inequality as he expects it to increase in the twenty-first century. Ultimately, he is not able to provide a conceptual critique of capitalism which can surpass the basic market perspective in Adam Smith’s tradition of classical and neoclassical economy.

On this basis my thesis is that Marx’s conceptual determination of the capital, das Kapital, the capitalist mode of production, and capitalism in general could contribute to sharpen the outcome of Piketty’s enormous empirical and historical research on the development of inequality in capitalist societies beginning from the French Revolution. In addition, Piketty has also presented a calculated prognosis for the exacerbation of inequality in global capitalism during the twenty-first century.

According to Marx, the development of inequality is not accidental but inherent in the principle of capital and the capitalist mode of production. Therefore, Piketty’s empirically documented development of inequality should lead to a fundamental critique of capitalism. However, this is not the case.

On this background, I would like to consider a change of perspective from Adam Smith’s liberal market perspective to Marx’s productive perspective on capitalism. For Marx, capitalism is seen as an autopoietic bureaucratic and productive machinery or social system, which not only determines the production of inequality but also the basis for all social relations on a global scale.

Outline of the paper

In the following paper, I would like to substantiate this thesis with a presentation of Piketty’s theory, method and main results. I would further like to present Marx’s critical concept of the capital and capitalism. Finally, I would like to illustrate some of the consequences of Marx’s critical theory for the understanding of Piketty’s empirical work.

Piketty’s Capital

 

Piketty’s theory is situated in Adam Smith’s liberal tradition.

Piketty’s work is situated in Adam Smith’s liberal tradition. Adam Smith’s main work Wealth of Nations (1981 I-II) from 1776 is interesting because it represents the foundation of modern economy. Smith’s theory can be read in many ways and it has brought inspiration to many different perspectives on ethics, societal ethics, common moral, political philosophy, political theory, sociology and economy. Normally the economic perspective has been emphasized, but one could say the same regarding the other perspectives.

Wealth of Nations begins with a presentation of the division of labor as the basis for creation of wealth in a nation. Therefore, it should be emphasized that Smith has a general concept of work as the basis for his economic theory. Smith formulated this generalization on the basis of the Physiocrats’ more restricted idea that only agricultural work created value.

The second essential line of thought by Smith is that the products of work should be sold at a price determined in an open market, which on a larger scale implies the world market as its perspective. Therefore, the free market is essential for Smith.

The third line of thought is that the price of the commodity is determined by the work behind the creation of the product. However, Smith is not completely clear on this topic. The other perspective in Wealth of Nations is that the price is determined by the exchange in the market. In other words, Smith’s theory is ambivalent concerning the creation of value.

It is this ambivalence in Smith’s theory, which is in the center of discussion during the next two hundred years among economists, especially in the neoclassical economic tradition.

On the one hand, the work perspective leads to an internal understanding of the fundamental role of work in comprehending societal relations and institutions. This is what leads to the sociological perspective on the relationship between economy and society. Marx’s, Durkheim’s and Weber’s theories should also be mentioned here.

On the other hand, we have the price and market perspectives, which become the dominant perspectives in later economic traditions. It is in these traditions that we find the most economists having an influence on economic practice and on economic education. Thomas Piketty should be placed in these traditions.

Piketty’s research method: economy as part of the social sciences

Piketty is a market economist based in Adam Smith’s liberal tradition and the later neoclassical liberal tradition. However, Piketty has a much broader theoretical and methodical horizon, which should be understood on the background of Piketty’s French formation.

The interesting thing about Piketty’s method is that he wants to integrate economics as a sub discipline of social sciences, alongside history, sociology, anthropology, political science and even literature (Piketty 2014: 573 ff.). Piketty has his specific methodological perspective from the French Annales School and from Francois Furet’s quantitative historical method, which gives him a long and convincing historical perspective (Bouvier & Furet 1965; Piketty 1998; Piketty 2001; Piketty 2004; Piketty 2006). Piketty would not have been able to come to his results, if he had not integrated all these different perspectives.

Following this, Piketty wants to reconstruct the classical political economy as a value based science, which is connected to its political, normative and moral purpose (Piketty 2014: 573 ff.). This is the same ambition found in Adam Smith and further back in classical political philosophy by Aristotle and Thomas Aquinas. The fundamental question according to Piketty is, how public policies and institutions can bring us closer to an ideal society (Piketty 2014: 574). This was also the question raised by Aristotle, Aquinas, Adam Smith, Hegel and Marx. They had very different answers to this question, but they all had in common that the economy should be subordinated to the political, normative and moral value horizon. Economy could not be sustained independent of the moral, social and political interpretation.

According to Piketty, political economy should be a part of public discussion meaning that the shared values should be found in public democratic discussion. According to Piketty, this is not the case in most economic theory and practice in which economic models are used without regard to the political, social, cultural and historical context.

Piketty’s basic thesis: r > g – revenue is bigger than growth in a long historical perspective

Although Piketty has these critical perspectives on economy, he is in many ways still a traditional market economist based in Adam Smith’s liberal tradition and the neoclassical tradition. Piketty’s focus is price, market and equality in the distribution of goods. It is in this background that Piketty is concerned with the liberal discussion of inequality.

Piketty’s basic thesis is that revenue, r, has been bigger than growth, g, during the last two hundred years in Europe and the US, and more generally in all higher developed societies in recent history. Therefore, there has been a tendency towards a strong inequality in the last two hundred years in Europe. In general, this has also been a tendency throughout European history and in all higher developed societies. In that sense, all societies in history have been class based societies, albeit in different forms.

Patrimonial Capitalism

It is Piketty’s expectation that a new form of capitalism has been created, which he calls patrimonial capitalism (Piketty 2014: 173). It could seem to be a new form of capitalism, but in fact, it is a form of capitalism, which was known from the late 1800s until 1914. It is characterized on a huge accumulation of private wealth among a small part of the population, the upper 10%, 1%, 0.1% and 0.01%. At the beginning of the 1970s, the total value of private wealth in the Western societies stood between two to three and a half years of national income. Forty years later, in 2010, private wealth represented between four to seven years of national income in the Western world. The general evolution is clear: This is a strong comeback of private capital in the rich countries since 1970 (Piketty 2014: 173). This concentration of wealth is what Piketty calls ‘patrimonial capitalism’.

Piketty regards the new patrimonial capitalism as a repetition of something, which was formerly known in history from the late 19th to early 20th century. It is characterized by a high concentration of wealth in a low-growth environment like the nineteenth century (Piketty 2014: 237). The crisis of 2008 was according to Piketty the first crisis of the globalized patrimonial capitalism of the twenty-first century (Piketty 2014: 473). He expects that it will be followed by other crises. This is the scenario that Piketty expects for the twenty-first century.

Patrimonial capitalism, heirs and entrepreneurs

Consequently, the strong concentration of wealth can give rise to a tendency where the ‘entrepreneur’ transitions to the ‘heir’ as the basic figure of capitalism. According to Piketty, all large fortunes, whether inherited or entrepreneurial in origin, grow at extremely high rates, regardless of whether the owner of the fortune works or not (Piketty 2014: 439ff.).

Piketty gives a very illustrative example comparing Bill Gates, the entrepreneur among all entrepreneurs, and Liliane Bettencourt, the heiress of the cosmetics company L’Oréal. Between 1990 and 2010, Bill Gates’ fortune increased from $4 billion to $50 billion. In the same period, Liliane Bettencourt’s fortune increased from $2 billion to $25 billion. Both fortunes thus grew at an annual rate of more than 13 percent from 1990 to 2010.

Piketty also mentions Steve Jobs, who is regarded as a more creative entrepreneur than Bill Gates. But at the top of his career, his fortune was only $8 billion in 2011.

Piketty’s conclusion is that inheritance becomes the main access to the creation or growth of fortunes, and not the entrepreneurial spirit. Therefore, wealth is not just a matter of merit, and capital grows according to its own dynamic, when it has passed a certain size. The reason for this is the simple fact that the return on inherited fortunes is often very high solely because of their initial size.

Inequality – The economic system is the problem

It is a common discussion in liberal political theory that inequalities are acceptable if they serve the common good. This is also what has been stated in §1 of the Declaration 1789: “Men are born and remain free and equal in rights. Social distinctions may be found only upon the common utility”. It is on this basis that entrepreneurs becoming extremely rich while compared to other people becomes acceptable.

However, Piketty claims that the entrepreneurial argument cannot justify all the inequalities of wealth, no matter how extreme (Piketty 2014: 443). This is a claim that we find in Rawls’ liberal theory as well (Rawls 1971). As we have seen, the general class based inequality r > g combined with better returns on capital as a function of initial wealth makes it possible that fortunes can grow and perpetuate themselves beyond all rational limits and beyond any possible rational justification in terms of common utility.

In this way, it does even not take one generation to move from an entrepreneur to a rentier. Entrepreneurs can be transformed into rentiers in their own lifetime, and their wealth can be multiplied more than tenfold in twenty years as in the case of Bill Gates and Liliane Bettencourt (Piketty 2014: 443ff.).

The consequence is that even the merit criteria in §1 of Declaration that social distinctions are acceptable if they serve the common utility or the common good is very difficult not to say impossible to concretize. It is very difficult in praxis to sustain the distinction between the entrepreneur and the rentier when the first can be transformed into the second in a very short time as has been exemplified with the case of Bill Gates.

As I understand Piketty, he draws the conclusion that the most important problem is not to clarify whether inequality serves the common utility or not? The most important problem is that the accumulation of wealth among the 1%, the 0.1% and not at least the 0.01% tends to represent 70%-90% of all the countable wealth in global societies. It is this enormous concentration of wealth that justifies Piketty’s use of the concept of patrimonial capitalism.

Patrimonial Capitalism

The concept of ‘patrimonialism’ is situated in Max Weber’s classification as a traditional form of governance (Weber 1980: 682 ff). It has its origins in the specific patriarchal form of authority in the family. Following up, it can be broadened out to concern patrimonial forms of government in which political and or economic power can be concentrated. In this form of government, authority and power form a political unity. It is this traditional unity which transgresses into the power and authority of economic wealth in the patrimonial form of capitalism, as has been described above.

Problems with Patrimonial Capitalism

Per my observations, Piketty draws the following conclusions concerning the patrimonial form of capitalism.

Society will fall behind the French Revolution

Piketty’s perspective is overall that patrimonial capitalism will bring society back to before the French Revolution. Some of the modern institutions may formally be maintained but the reality may be different.

Suspension of basic principles of Human Rights 

The second point is that the basic values of modern society are suspended as they are formulated § 1 of the Declaration: “Men are born and remain free and equal in rights. Social distinctions may be found only upon the common utility”. In patrimonial capitalism, there are basic distinctions which are bound to inheritance and which therefore are transferred from generation to generation. This is exactly what characterizes a traditional pre-modern society. In such a society, men are not equal in rights, because wealth is the basic structuring parameter for the life chances of people in all matters concerning wealth, education, health, work, and political, social and other positions in society. In short, human rights are suspended in such a society.

Suspension of democracy 

The third point is that democracy will be strongly weakened or even suspended in such a society, and there can be no possibilities to develop democracy in such a society.

Stagnation of society 

The fourth point is that patrimonial capitalism will not be able to develop a society because the entrepreneur and innovator will lose their possibilities compared to the primacy of secure reproduction and accumulation of the inheritance.

Violence and corruption will dominate society 

The fifth point is that such a society will be built on violence and corruption instead of legal and deliberative political institutions.

The rule of war between states 

The rule of war between states will be dominant because interstate conflicts cannot be solved through diplomacy and international law.

 

Patrimonial capitalism does already exist in many societies in the world

The description of patrimonial capitalism may seem like a doomsday prophecy, a description of the last days. But in fact, the reality is that this form of capitalism does already exist in different forms in many societies in the world and maybe even the most societies with a developed economy combined with a strong authoritarian and corrupt regime. Even in the US we find signs of patrimonial capitalism, when wealthy people have enormous possibilities to influence elections, political life, allocation of resources and social decisions.

Piketty’s Capital: A platform for a critique of capitalism and its perspectives

In the end, the interesting thing about Piketty’s analysis is in the end that it is an economic analysis on the basis of the fundamental principles of the French Revolution. Piketty’s own conclusion is that the French Revolution failed and is an illusion.

With this background, one could have expected that Piketty had been critical toward capitalism as an economic system. But this is not the case. Piketty is worried about the historical consequences of capitalism, but he does not criticize capitalism in itself as an economic and social system. However, this seems to be a relevant topic as he has at least created a new platform for a discussion of capitalism, because he has uncovered some of the historical destructive perspectives in capitalism.

Marx’s Das Kapital

Introduction to Marx

It is in this background that I would like to discuss Marx’s concept of capital, das Kapital, and some of his perspectives on capitalism. Marx is such an interesting thinker in this context because no one has delivered such a strong critique of capitalism and political economy as him.

If we want to understand Marx’s critique of capitalism, we have to look shortly at his intellectual background and development. Marx (1818-1883) is a German intellectual strongly influenced primarily by Hegel’s political philosophy. Marx is a Hegelian who criticizes Hegel’s perspective on state, civil society, politics, and economy in Kritik der Hegelschen Staatsphilosophie 1844 (Marx 1841/42: 20-149). His basic critique of Hegel’s Philosophy of Law (Hegel 1955; 1991) is that Hegel ‘aufhebt’, lifts up or sublates the basic contradictions in civil society into a reconciliation, ‘eine Versöhnung’, in the State as an all-encompassing unity of the contradictions in civil society. According to Hegel, the contradictions in civil society were first of all constituted through the struggle between economic agents, who were only concerned with their own business. This is an insight Hegel had acquired through Adam Smith’ Wealth of Nations (Smith I-II 1981) and David Ricardo’s Principles of Political Economy and Taxation from 1817 (Ricardo 1996).

In his Kritik der Hegelschen Staatsphilosophie 1844, Marx mostly critizised Hegel’s Aufhebung and Versöhnung. Later on, his project became to reconstruct this political and political-philosophical critique of Hegel as a critique of political economy. Therefore, it would be right also to consider Marx as a Hegelian in this later period of his life after 1849, when he arrived as a political refugee to London. This is also what Marx remarks in his postscript to the second edition of Das Kapital (Marx 1970: 27f.). Marx comments on his method and claims that there must be made a distinction between the research (die Forschungsweise), in which the subject is taken in consideration, and the presentation (die Darstellungsweise), in which the topic is reconstructed as it has taken place. Die Darstellung, the presentation, means for Marx the same as how the subject can be developed in an idealized way which gives the impression that it could be a pure construction. One could say that it could give the impression of being a pure construction without relation to the reality in so far as it should present the essential (das Wesen) of the topic. In that sense, ‘die Darstellung’ could also be considered as a form of presentation and interpretation at the same time. Although Marx claims to be a materialist, he has such a style of presentation that it does remind us of a constructed model in the idealistic tradition of Plato and Hegel.

Marx’s Hegelian method

It is very essential to understand Marx’s Hegelian method, because it indicates that for Marx and for Hegel there are always two levels in the understanding of social phenomena. On the one hand, we have the surface, ‘die Erscheinung’; this is the empirical level, where the events happen. On the other hand, we have the understanding of the phenomena; this is the level where the essence, ‘das Wesen’, is expressed. As the third step, Hegel and Marx claim that it is only from the perspective of the essence, ‘das Wesen’, that we can understand the empirical level, where the events take place. According to Marx and Hegel, this was the meaning of dialectics.

It is exactly this phenomenological double perspective with the movement from Erscheinung to Wesen and from Wesen to Erscheinung, which is so strange for the American and English way of thinking, and is also the dominant perspective in modern liberal economy. However, it is this double perspective, which gives Marx the possibility to make a critical reconstruction of the political economy and present a new perspective on the relation between economy and society.

Marx’s project is to reconstruct the classical political economy

With this background we can discuss what Marx is concerned with in Das Kapital. Here we should remark on the subtitle of Das Kapital, which is Kritik der politichen Ökonomie – Marx wanted to criticize and reconstruct the political economy because it did not present what should be its essence, das Wesen. One could say that Marx wanted to write a new edition of Smith’s Wealth of Nations. According to Marx, political economy had moved away from a scientific project to a political project that was only concerned with price and market, the surface, ‘die Erscheinung’, because it served to hide that the dominant economy’s ‘Wesen’, the workproces, was based on exploitation of the workforce, who produced value and surplus-value.

Marx did not finish his project; he did not finish the presentation of the total reproduction of the economic system. In that sense, we cannot say that Marx has presented a model for the total reproduction of the economic system. Marx edited only the first volume of Das Kapital in 1867. Friedrich Engels edited the next two volumes with support from Marx’s remaining manuscripts. Therefore, the question is what status can Marx’s theory have, when it is not finished in the same sense as Adam Smith’s Wealth of Nations is a finished work?

The three edited volumes of Das Kapital, the collection of Marx’s preparatory work papers collected in Grundrisse der Kritik der Politischen Ökonomie (Marx 196-?), combined with the rest of Marx’s work give a sufficient basis to understand Marx’s new theoretical contribution to the political economy. Marx presented the basic principles in a critical theory with a new perspective on political economy understood as the reproduction of what he called the capitalistic mode of production or the capitalistic economic system. Broadly speaking, it gives a new understanding of the basic principles in a capitalistic society. In that sense, Marx’s theory provides the basis for a sociological understanding of the relation between economy and society, and in a wider perspective for the interpretation of history.

The glorious and tragic days of Marxism have ended. Therefore, today Marx’s theory should be seen in line with other economic and sociological theories, and it should be seen as part of a hermeneutical work, which in the end determines the integration of the different possible scientific perspectives.

With this background, I would like to present some of the essential topics in Marx’s theory in Das Kapital and Grundrisse, which will be relevant for a discussion of Piketty’s Capital. I will concentrate on the first chapters of Das Kapital as it is here that we find the basis for all of Marx’s theoretical construction.

The concept of Capital – The constitution of das Kapital

It already becomes clear from the title page itself that Marx’s Das Kapital is a very special treatise. On the one hand, it is in fact very similar to Hegel’s Philosophy of Right (Hegel 1955), and on the other hand, it is very different compared to Adam Smith’s Wealth of Nations and Piketty’s Capital. Therefore, it can be enlightening to compare it with these treatises.

Smith’s theme is the nature and causes of the wealth of nations, and chapter 1 begins immediately with a presentation of the division of labor as what has mostly improved the production of wealth (Smith 1981, I: 13 ff.). All the categories here and in the rest of the treatise refer to empirical matters. All of Smith’s categories have an empirical reference.

The same could be said about Piketty’s subject, which is equality and inequality with reference to the distribution of wealth.

Marx’s Introduction does not have this character. The title of the book, Das Kapital, is an abstraction and does not have an immediate empirical reference. The subtitle is Critique of the Political Economy. This means that the treatise is concerned with a critique and reconstruction of political economy as we know it from Smith and Ricardo. The subtitle of the first volume of Das Kapital is the Capital’s Production Process. The subject in Das Kapital is the capital. This is very strange in itself. How should capital be understood in a determined form? Normally we understand capital in quantitative terms, however, in Marx’s determination of das Kapital (Marx 1970: 12) we have to do with a concept. Capital is a conceptual abstraction, and it is the production and reproduction process of this subject, which is the topic of Das Kapital. This is also, what Marx emphasizes in the introduction to the first edition of Das Kapital in 1867 (Marx 1970: 11-17). In the postscript to the second edition from 1875, Marx comes back to the same theme concerning his method, which he designates as being the same as Hegel’s method, although turned around, because Marx claims that Hegel is an idealist, and Marx claims to be a materialist (Marx 1970: 27). I think that the two methods are very closely connected, and I find it difficult from a methodological perspective to see the difference between the beginnings of Hegel’s Philosophy of Right and Marx’s Das Kapital.

Marx’s development of the concept of capital

The first chapter of Das Kapital begins in the same abstract style with an analysis of the wealth in a society dominated by the capitalist mode of production, which presents itself as an amazing collection of commodities. The skeleton, ‘die Elementarform’, the basic element of such a society is the commodity. This is the reason why Marx begins his analysis with an analysis of the commodity.

In chapters 1-3, Marx develops all the basic concepts of work such as the production of the commodity, the use and exchange value of the commodity, the equal exchange of commodities, and the invention of money as the means of exchange of equal values.

I would especially like to emphasize chapter 1, section 4, where Marx introduces the fetish character of the commodity and it’s secret. In a commodity producing society, all social relations become hidden in the commodities, which are all a product of the work process. It is the commodities that seem to be the real actors in society (Marx 1970: 86). This is the beginning of the creation of the alienation in a society dominated by the capitalist mode of production.

In the third chapter, Marx describes how money becomes the general presentation of the circulation of commodities. There is a change from the form ‘commodity – money – commodity’ to the form ‘money – commodity – money’. In this way, money comes into the center of society and becomes an aim in itself.

In the fourth chapter, The Transformation of Money into Capital, Marx questions the addition of value when only equivalents are being exchanged all the time. Marx’s simple answer is that the workforce, ‘die Arbeitskraft’, is a commodity, which has the ability to produce more value, a surplus value or ‘Mehrwert’, than it costs to reproduce it.

Marx speaks about the transformation of money into capital, when the production takes the character of a production of surplus value, ‘Mehrwert’, and in that sense a production of Capital (Marx 1970: 180 ff.). Marx speaks about society as a capitalist society when the production of capital dominates society.

The term ‘capitalism’ is a technical term, a concept for a specific form for economy and society. The concept capitalism has its origin in the Late Latin word capitale derived from caput, meaning ‘head’, which is also the origin for chattel and cattle in the sense of moveable property. Capitale emerged in the 12th to 13th centuries in the sense of referring to funds, stock of merchandise, sum of money, or money carrying interest. In English language, the word capitalism is used since the 1850s as the determination of a specific form of society, in which capital and capitalist modes of production have a determined significance.

On the basis of the concept of capital, Marx’s project is to develop an all-encompassing description of the reproduction of a society dominated by the capitalistic mode of production. As mentioned, Marx did not finish this project. In this sense we could say that Marx did not succeed. However, this would not be a correct judgement, because Marx developed the base for a new understanding of economic significance in a modern society.

I will not go in detail with a further presentation of Das Kapital, but would only like present some of the consequences of Marx’s perspective. I speak here about the abstract theory in itself and not about the specific historical forms, which are determined by many other historical and social factors. In that sense, the abstract principle of capital does only indicate the determinate productive principle in a specific historical form of society.

Marx gives a totally new perspective on liberal economy

The essence is that Marx determines a new perspective on economy and society. Das Kapital, the capital, is a driving machine or subject, which aims to produce capital in an escalating intensity and quantum. This is also determined as accumulation of capital.

Das Kapital is a critique of the liberal market economy

Marx theory is a critique of political economy. The word ‘critique’ could be mystifying. Therefore, let me first express what I think critique means in this context. It primarily means to show what is inconsistent, hidden or suppressed in the understanding of a liberal market economy, and secondarily to present a reconstruction of a basis for another understanding of economy. In the liberal economic perspective, the economy does only mediate social relations; it does not produce social relations. The basic categories are therefore price, market and commodity. In this perspective, the economy is in itself a neutral mediator. In Marx’s perspective, it is different.

Das Kapital is the productive and destructive subject of society

In Marx’s perspective, das Kapital not only produces ‘Mehrwert’ and ‘Kapital’, or is not only an economic productive force. Das Kapital forms a society, its institutions and its social relations in a specific adequate way. In this context, the following topics can be emphasized:

Commodification

Das Kapital has a tendency to create a commodification of all social relations and all human life.

Die groβe Profanierung – All pre-given norms are broken down and restructured in accordance with the new historical imperatives

All pre-given norms are broken down, because they are under pressure to be relativized and commoditized. This is ‘die groβe Profanierung’, this is the big profanation of the Holy and of all social norms. In The Communist Manifesto, it is stated in this way: “All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind” (Marx 1968b: 529).

Die groβe Verschleierung – the big concealment

The big paradox in capitalism is that its consequences are ‘verschleiert’ or veiled. The astonishing thing is that this veil is constituted through the liberal market economy, in which all distinctions are ‘aufgehoben’, lifted up and abolished in the general equivalent, money, at the market. All social distinctions are relativized and hidden on the market. In the end, there is only the distinction more or less of the general equivalent, money.

The big illusion – the liberal market economy produces the big illusion about society

The liberal market economy creates or produces the big illusion about this same form of society, because the abolishment of all distinctions becomes a hindrance for critique. We are all equalized in the general equivalent, money. Therefore, there is no internal way from the liberal market economy to a critique of the specific formation of the social relations, because these distinctions are not inherent in the economic theory. The liberal market economy is constituted through an abstraction from the possible distinctions.

Summing up – Marx has presented a specific theory which can be applied on empirical work with economy and society

What I have presented are the basic principles in Marx’s critique of the political economy. As mentioned, Marx has developed a much broader and differentiated theory compared to, what has been presented here. However, in the end, what we have from Marx is a theory with a specific perspective on economy and society, making it possible to apply it in specific empirical work.

From Marx to Piketty – From Piketty back to Marx

 

Marx and Piketty on empirical work – What is the difference?

In this context, it could be interesting to question how empirical research would be different in a Marx perspective compared to a Piketty perspective. Let us imagine that Marx had conducted similar research as Piketty on the development of inequality in France the last 200 years. What would be different? I am not sure that the concrete research method would be different. Piketty has gone down to the sources and tried to give an answer to his question. The difference would lie in how the questions are posed. Piketty poses his questions inside the horizon of the liberal market economic theory and the neoclassical economic theory. He does not pose questions to or discuss this economic perspective. It is as if it were pre-given or impossible to fundamentally question it. Consequently, we do not move outside the framework of this economic perspective.

The practical results of Piketty’s research are not very significant compared to the enormous research he has done.

The taxation card is Piketty’s only solution to the huge problems created by growing inequality. However, Piketty does not really believe that it is possible to establish the necessary taxation system. Therefore, one could say that there is a lack of critical potential in his theory although he delivers amazing empirical material. The practical results of his research are not very impressive compared to the enormous research he undertook.

Marx’s perspective on empirical economic research

On the other hand, Marx has an incomparably stronger critical theory, which can help pose many interesting research questions and could be integrated in an empirical project.

In the end the dividing line between Piketty and Marx is the following. For Piketty, the liberal market economy is regarded in itself as a neutral system. For Marx, the problems of inequality observed by Piketty are an inherent consequence of capitalism. It could simply not be otherwise because a basic principle in capitalism according to Marx is capital accumulation and capital concentration. Piketty remarks that contingent historical events, the first and second world wars combined with a strong left wing policy, created the basis for diminished inequality in the period 1945-1975, and not fundamental changes in the liberal economic system.

In Marx’s perspective, it would also have been a good idea to change inequality through taxation. However, the interesting perspectives are the basic contradictions in the economic system itself, and whether these contradictions can find a practical solution is a political question.

 

Marx and Piketty – research perspectives and strategies

What to do in a world dominated by the liberal economic perspective?

A basic question would be how one should conduct research in economic oriented topics when most research resources are concentrated around the liberal economic perspective. The strategy could be to integrate research from the liberal economic perspective in a hermeneutical horizon, which is more influenced by critical theory. In this way, it would be possible to use the given empirical resources in another critical hermeneutical perspective in which an inherent critique of capitalism could be formulated.

References

Declaration of Man and the Citizen 1789

Bouvier, Jean; Furet, François; Gillet, Marcel (1965), Le mouvement du profit en France au XIXe siècle, Paris and La Haye, Mouton & Co

Hegel, G. W. F. (1955), Grundlinien der Philosophie des Rechts, Hamburg, Felix Meiner Verlag.

Hegel, G. W. F. (1991), Elements of the Philosophy of Right, Cambridge, Cambridge University Press.

Marx, Karl (1968), Die Frühschriften. Stuttgart, Alfred Kröner Verlag.

Marx, Karl (1968a), Kritik der Hegelschen Staatsphilosophie 1841/42, in. Marx, Karl (1968), Die Frühschriften. Stuttgart, Alfred Kröner Verlag

Marx, Karl (1968b), Manifest der kommunistischen Partei, in: Karl Marx, Die Frühschriften. Stuttgart, Alfred Kröner Verlag.

Marx, Karl (1970), Das Kapital band I, MEW 23, Berlin, Dietz Verlag.

Marx, Karl (196-?), Grundrisse der Kritik der politischen Ökonomie, Frankfurt, Europäische Verlagsanstalt.

Piketty, Thomas (1998), Les hauts revenus face aux modifications des taux marginaux supérieurs de l’impôt sur le revenu en France, 1970-1996, CNRS, URA928, numero 9812. [High-Income Taxpayers’ Reaction to Marginal Income Tax Rates Changes in France, 1970-1996].

Piketty, Thomas (2001), Les hauts revenus en France au 20e siècle: inégalités et redistribution, 1901-1998, Paris, B. Grasset.

Piketty, Thomas (2004), L’impact de la taille des classes et de la ségrégation sociale sur la réussite scolaire dans les écoles françaises: une estimation à partir du panel primaire 1997, EHESS, Paris-Jourdan.

Piketty, Thomas; Valdenaire, M. (2006) L’impact de la taille des classes sur la réussite scolaire dans les écoles, collèges et lycées français – Estimations à partir du panel primaire 1997 et du panel secondaire 1995, Ministère de l’éducation nationale, Paris.

Piketty, Thomas (2014), Capital in Twenty-First Century, Cambridge Massachusetts, The Belknap Press of Harvard University Press.

Rawls, John (1971), A Theory of Justice, The Belknap Press of Harvard University Press, Cambridge, Massachusetts.

Ricardo, David (1996), Principles of Political Economy and Taxation, Amherst, Prometheus Press.

Smith, Adam (1981), An Inquiry into the Nature and Causes of the Wealth of Nations, Volume I-II, First edition 1776, Indianapolis, Liberty Fund.

Weber, Max (1980), Wirtschaft und Gesellschaft: Grundriss der Verstehenden Soziologie, 5. Rev. Aufl. Tübingen, Mohr.

Piketty’s Capital. The Revival of Political Philosophy, Political Economy and Social Sciences in the Light of the Declaration of Human and Citizens’ Rights in the French Revolution of 1789

Piketty’s Capital in Twenty-First Century has posed a totally new platform for the discussion of the economy and capitalism. Piketty has reinvented the classical political economy founded by Adam Smith in his 1776 Wealth of Nations. Piketty has shown via massive historical research how growth and inequality have developed since 1793. Piketty’s conclusion is that the French Revolution did not change the existing inequality either in the medium or in the long term. Piketty’s prediction is that a new form of global capitalism will arise, patrimonial capitalism, in which inequality will develop further and the 1% of the World population will control 95% of all wealth in the World.

Continue reading Piketty’s Capital. The Revival of Political Philosophy, Political Economy and Social Sciences in the Light of the Declaration of Human and Citizens’ Rights in the French Revolution of 1789

Social Entrepreneurship and Capitalist Crisis

 

 

1. Introduction

This paper discusses how we may understand the relation between social entrepreneurship and capitalism. In ‘classic’ Schumpeterian innovation theory entrepreneurship is a pivotal driving force in capitalist economies. Yet, social entrepreneurship presents itself as an alternative type of entrepreneurship emphasizing social change that creates social rather than economic value. In this sense, it seems to provide an alternative to classic entrepreneurship and its focus on the economic development of society. The question is how we are to understand the relation between social entrepreneurship and capitalism, and how we can understand the increasing interest in social entrepreneurship from academic as well as political quarters in light of the current crisis, erupted in 2008-9. A crisis that many have described as a capitalist crisis. Du Gay and Morgan (2013) describe the crisis as the tipping point for a set of ideas, which have gained significant influence and which go by different names, such as “neo-liberalism”, “the new spirit of capitalism”, “advanced liberalism”, or “turbo capitalism” (Du Gay and Morgan, 2013: 2).

The paper approaches this question on the basis of social entrepreneurship research literature and theory on contemporary capitalism, mainly Boltanski and Chiapello’s The New Spirit of Capitalism ([1999] 2006). Parts of social entrepreneurship literature distinguish between different trends in social entrepreneurship, which relate to capitalism in very different ways. I shall specify how by relating these trends to capitalism and market economic rationales, and also demonstrate how classic entrepreneurship is linked to the different époques of capitalism described by Boltanski and Chiapello. Lastly, I discuss how social entrepreneurship may be understood in relation to the current form of capitalism often denominated in terms of neo-liberalism. 

The idea of social entrepreneurship is relatively new and has gained increasing attention from academia since the turn of the millennium (Hulgård and Andersen, 2009; Steyaert and Hjort, 2006). As a new field of science it is characterized by diversity, vitality and competing agendas, which sometimes overlap and which sometimes pull the concept in very different directions (Andersen and Hulgård, 2008). Thus, social entrepreneurship is a contested concept, about which different actors compete for dominant definitions and strategies (Hulgård og Andersen, 2012). This also makes it a rather difficult phenomenon or concept to discuss and define in the singular, as there is a risk of oversimplifying it.

The reason for taking up the question about the relation between capitalism and social entrepreneurship is that understandings of social entrepreneurship and social enterprise have different implications for the relationship between politics and economy. These conceptions touch upon the role of social enterprise within the overall economy and its interaction with market, civil society and the public sector (cf. Defourny and Nyssens, 2010: 33). These implications are important to discuss as social entrepreneurship has gained increased interest from policymakers in the wake of the current crisis and has become a central concept in social policies in European countries. The paper may be seen as a supplement or elaboration to trends in social entrepreneurship discussed by Hulgård (2010) and Hulgård and Andersen (2012), namely as privatization of welfare or as mobilization of democracy through civil society, and as linked to a non-capitalist social economy (Hulgård, 2011).

 

Social entrepreneurship and the current crisis

It seems that the current crisis has spurred the interest in social entrepreneurship and its sister concept of social innovation, even though these concepts or phenomena have not emerged with the crisis as such. However, as societal problems have aggravated in the wake of the crisis, the political interest in social entrepreneurship has grown. In a report on social innovation in Europe, written by the European Bureau of Policy Advisors in 2011, it is stated that societal problems have been exacerbated by the crisis and that the crisis has made the social dimension of the challenges more obvious. Social innovation is then presented as a possible solution to a number of societal challenges such as climate change, ageing populations and associated health costs, rising unemployment and the many people outside of the labor market (BEPA, 2011: 7-8). Another reason for the growing attention to social entrepreneurship is the pressure and the fiscal constraints that public sectors all over Europe are affected by (BEPA, 2011: 9; Udvalget for Socialøkonomiske Virksomheder, 2013: 5). The argument is that all this calls for new solutions. In a report about social enterprises (enterprises with a social purpose) written for the Danish Government in 2013, for example, the aim is that even more societal challenges are dealt with effectively and considerately by social enterprises (Udvalget for Socialøkonomiske virksomheder, 2013: 9). I shall define social entrepreneurship further below.

That social entrepreneurship becomes the answer to these problems may have to do with a weakened confidence in the state and public sector as the institutional setting to deal with such issues. Public sectors are also often said to have problems with the “inertia of large bureaucracies, the inefficient use of staff and associated waste and low productivity” (BEPA, 2011: 25). This view on the public sector is widespread and has also had an immense influence as legitimizing certain kinds of public sector reforms, which introduce economic rationales into the public sector emphasizing efficiency, flexibility and innovativeness (Langergaard, 2011). By portraying the public sector as inefficient, bureaucratic and undemocratic, welfare state skeptics give legitimacy to other sectors of society to deal with societal problems. And these critiques have historically come from both the left and the right sides of the political spectrum. In this sense, social entrepreneurship sometimes also reflects a critical reaction to certain ideas about the state and a correspondingly larger confidence in private initiatives to deal with social problems. However, I shall argue that social entrepreneurship can also be seen as a critical reaction to capitalist rationales and thus as part of an anti-capitalist movement. And this is interesting in relation to the crisis. The problems arising from the crisis may be seen as results of an unrestrained capitalism and a neo-liberal rationality (Fraser, 2012: Du Gay and Morgan, 2013: 2) – the result of a neo-liberal experiment which let markets and money to find their own way around the world without much political interference (Hart, Laville and Gattani, 2010). The increased interest in social entrepreneurship is a reaction to the crisis, which leaves policy-makers and researchers without any well-known answers or solutions. Social entrepreneurship points toward new and innovative solutions that we may not be able to imagine or know beforehand. Solutions that involve ideas transcending our current ways of thinking and dealing with societal, economic and ecological issues.

 

 

2. Defining social entrepreneurship

Social entrepreneurship is a multifaceted concept and phenomenon. Thus, it is difficult to discuss its relation to capitalism as if this relation was an unambiguous one. There are a number of different ways to define social entrepreneurship and it is impossible to embrace all aspects of the broad concept here. Furthermore, the concept is closely related to concepts of social enterprise, social economy and not least social innovation (see for example Hulgård and Andersen, 2012).

In addition to this, there are geographical differences in the understandings of the concept, in particular between continental European and North American approaches to the concept (see Defourny and Nyssens, 2010 for comparisons between US and Europe). According to Hulgård (2007), Anglo-Saxon approaches define the social entrepreneur as a person who is driven by a motive to do good for poor and marginalized groups of people. An innovative dimension is connected to this: the entrepreneur works with innovative, new solutions to societal problems and in this sense also helps society in areas that may be stuck (Hulgård, 2007: 18). These versions of social entrepreneurship stress the role of the individual entrepreneur as a change agent and ascribe the private sector a central role (Hulgård and Andersen, 2012: 17). Continental European definitions on the other hand often link social entrepreneurship to social economy and social enterprise. From these perspectives social entrepreneurship is not primarily an individual, but rather a collective activity (Hulgård, 2007: 20-21), which includes cooperatives, volunteer initiatives and other collective efforts (Andersen and Hulgård, 2012). In the European version, social entrepreneurship according to Hulgård, is an activity with organizational and structural preconditions as well as consequences. Social entrepreneurship refers to activities in the third sector, side by side with activities in the public and private commercial sector. These activities are united by their aim to work for the common good and not merely private interests (Hulgård, 2007: 20-21). It seems, however, that individualist and private-sector-oriented understandings of social entrepreneurship are also gaining ground in Denmark and other European contexts. This implies that social innovation becomes interpreted in narrow market economic terms (Jessop et al, 2013: 110). This is all the more reason to be clear about the different implications of different conceptions.

I wish to discuss the different facets of the concept in relation to capitalism. I begin with a rather broad definition of social entrepreneurship, which encompasses central elements of the concept:

The creation of social value that is produced in collaboration with people and organizations from the civil society who are engaged in social innovations that usually imply an economic activity” (Hulgård, 2010: 4).

This definition is based on four criteria: Social value, civil society, innovation and economic activity. Social value is common to all definitions, while the other elements are more contested across different definitions. The aim of creating social value is what distinguishes social from commercial entrepreneurship and it is in this sense entrepreneurial activity with an embedded social purpose or with a social mission (Hulgård, 2010; Andersen and Hulgård, 2008; Austin et al, 2006; Dees, 1998). This is the core of the concept, which differentiates it from classic entrepreneurship. There is no consensus on how we are to understand social value more precisely, but it is often defined in terms such as: fight against poverty, strengthening of the capacity of local neighborhoods (Andersen and Hulgård, 2008), social justice, wellbeing, fighting exclusion, quality of life, solidarity (BEPA, 2011).

Civil society as criterion for social entrepreneurship is one of the elements that clearly indicate that the role of state, economy and civil society is at stake in definitions of social entrepreneurship – which then also becomes a concept with very clear political implications. Civil society is a different type of criterion than social, innovation and economic activity, because social entrepreneurship can also take place in other sectors of society. Still, civil society has historically as well as currently been an attractive partner for social entrepreneurs (Andersen and Hulgård, 2009: 8). The role of civil society is an important criterion for distinguishing social entrepreneurship from social activities in the private and commercial sector, such as CSR activities (Hulgård, 2010: 5).

Innovation is the third element of the concept, which means that social entrepreneurship implies that the approaches found to social problems are new. Social entrepreneurship is also closely related to social innovation even if the two concepts may sometimes be used differently. Nonetheless, there are many overlapping elements between the two concepts, such as the focus on social value, bottom-up drivers for innovation, the role of civil society and the attempt to deal with societal problems (see BEPA, 2011). Due to the close familiarity to other concepts, my discussion is not restricted only to social entrepreneurship, but sometimes also includes social innovation and other related concepts such as the social economy.

That social entrepreneurship has en economic element basically means that some kind of economic activity is at stake – i.e. that products or services are being produced, and that the activities are not carried through with voluntary work alone. Social innovation may sometimes have an economic impact, however not always (Hulgård, 2010). This also distinguishes it from economic innovation and entrepreneurship, which are defined by having primarily an economic impact (Drejer, 2004).

 

 

3. Three spirits of capitalism and entrepreneurship

As Eve Chiapello (2013) states, the history of capitalism cannot be separated from the history of its critiques. These critiques are important for understanding the specific ways that capitalism develops and the ways that capitalist societies are organized. Critiques and critical ideas have been particularly strong in times of crisis, where the need for alternatives intensifies and these critiques contribute to transformations in the economic system (Chiapello, 2013: 60). In Boltanski and Chiapello’s The New Spirit of Capitalism (1999/2005) they analyze the role of critique in the dynamic of capitalism (Du Gay and Morgan, 2013: 23). The ‘spirit of capitalism’, a term alluding to Weber’s Protestant Ethics and the Spirit of Capitalism from 1905, is the ideology that justifies people’s commitment to capitalism and which renders this commitment attractive. Their starting point is that capitalism is an absurd system, which only very few seem to benefit from, but which nevertheless enjoys the commitment of almost everybody. Capitalist accumulation and the maintenance of the capitalist system requires commitment from many people “although few have any real chances of making a substantial profit” (Boltanski and Chiapello (2005: 163). As capitalism is amoral the spirit cannot be predicated alone on what capitalism has to offer. Capitalism needs its enemies and critics, who want to wage war against it. These are the people who provide it with the moral foundation that it lacks and who enable it to incorporate justice-enhancing mechanisms whose relevancy it would not otherwise be able to acknowledge. A main point of Boltanski and Chiapello is that capitalism has an amazing ability to survive by endogenising some of the criticisms it faces. In recent times, this has helped it disarming some of the forces of anti-capitalism and given way to a more triumphant version of capitalism (Boltanski and Chiapello, 2005: 163). The spirit is what makes people commit to capitalism and at the same time a catalyst for changes of the spirit itself. It is central here that criticism not only questions the dominant capitalist spirit, but also lays the basis for a new spirit (Carleheden, 2011).

 

3a. The first spirit of capitalism

Boltanki and Chiapello present a development of capitalism through three different stages of capitalist spirit. The spirit has changed and been subject to transformations in definitions of what comprises a fair work situation and a fair treatment of some employees as compared to others. The first spirit is dated to the end of the nineteenth century (Boltanski and Chiapello, 2005). It is present in a classical liberalist époque, characterized by competitive capitalism with small producers organized in patriarchal family units on the basis of a pre-Fordist mode of production. The big man of this époque is the entrepreneur. It is a kind of laissez-faire capitalism with the state confined to protect the negative rights of citizens (Carleheden, 2011). Thus, we may see this as a certain type of entrepreneurial capitalism, with the ‘classic’ Schumpeterian entrepreneur as the heroic figure.

The relation between capitalism and entrepreneurship is explicit in economic theories of innovation and entrepreneurship and is a central point in Schumpeter’s theories. The early Schumpeter introduced the entrepreneur as a driving force of economic development as entrepreneurs produce innovations. And in economic innovation theory (which is the dominant branch of innovation theory), innovation is the driving force of economic development and growth (Sundbo, 1995). To Schumpeter, innovation was a central feature of capitalist development, and innovation was a term describing both discontinuous and revolutionary changes. To Schumpeter, renewal and innovation were the core of capitalism and its functional capacity (Foucault, 2009).

 

3b. The second spirit of capitalism

The second spirit of capitalism, dated around the decades from the 1940s to the 1970s, is the époque of the workers rather than the bourgeois. The welfare state, rather than the market, is here the guarantor of autonomy and security. It is no longer the entrepreneur who is the great man in this époque, but rather the ‘organization man’. Habermas and Polanyi have both described and discussed this capitalist époque. Family capitalism had transformed into monopoly capitalism (Carleheden, 2011) characterized by big companies with mass production. The firms were organized hierarchically as bureaucracies and were geared towards the realization of activities and efficiency (Boltanski and Chiapello, 2005:165-6). Schumpeter’s later works reflects this change in capitalism and connected innovation to large corporations and their R&D departments, rather than to individual entrepreneurial enterprises and initiatives as in his early works. However, the link to capitalism remains clear. In Capitalism, Socialism and Democracy (1942), Schumpeter identified the essential fact of capitalism as ‘the process of creative destruction’:

 

The opening up of new markets, foreign or domestic, and the organisational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation – if I may use that biological term – that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one” (Schumpeter, 2008: 83).

 

Looking toward innovation theory we see a shift from the entrepreneurial paradigm to a technology-based economic paradigm where the large corporations act as driving forces of innovation and of economic development (Sundbo, 1995). The quote also illustrates the dynamic understanding of capitalism central to innovation theory in contrast to neo-classical economic theory.

 

Social innovation in this époque took shape as the uprising of initiatives turned against commodification. We can here turn to Polanyi’s presentation in The Great Transformation from 1944, who presents the movement of capitalism as a double movement, in which markets were tamed by institutions that critically set the limits on their extension and application (Du Gay and Morgan, 2013: 5). The movement was characterized by forces seeking to commodify important areas of human life on the one hand, and forces seeking to decommodify and ensure social protection on the other (Fraser, 2012). We can place social innovation and social entrepreneurship as part of this critical movement. These struggles against commodification of land, labor and money involved a rise in cooperatives, trade unions, friendly societies, workers reading circles, working class building societies and so on. In line with Jessop et al (2013), we could see these initiatives as reactions to changes in functional systems that fetishize reified social logics such as competitive market exchange at the expense of human interaction and sociability. This social movement and public sphere could be seen as socially innovative initiatives aiming at human emancipation (Jessop et al, 2013:116).

Moulaert et al (2013b) also refer to social innovation as a common denominator for different types of collective actions and social transformations that fought for a transition from a top-down economy into a more bottom-up, creative and participatory society that would recognize the different individual rights of people in all segments of society (Moulaert et al, 2013b: 15). In this époque we may associate these socially innovative initiatives and movements with the artistic critique and perhaps also the social critique described by Boltanski and Chiapello (2005). They identify two types of critiques, which by being either dismantled or endogenised have had a major impact on the way capitalism transformed into its third spirit: Social critique and artistic critique. Both of these types of criticisms were important in the 1968 critique of capitalism.

Social criticism had its emphasis on inequalities, misery, exploitation and the selfishness of a world that stimulates individualism rather than solidarity. The labour movement was the most important in carrying this type of criticism forward. Artistic critique emerged first in small artistic and intellectual circles and stressed other characteristics of capitalism than did the social critique. It criticized oppression in the forms of market domination and factory discipline, the massification of society, standardization, and pervasive commodification. It vindicated an ideal of liberation and individual autonomy, singularity and authenticity (Boltanski and Chiapello, 2005:176). The artistic critique manifested itself through demands of self-management, for employees’ control of the firms, for enhanced personal autonomy and creativity, and it played a prominent role in giving legitimacy to the third époque of capitalism (Carleheden, 2011: 72). Elements of the artistic critique were incorporated into capitalism in the form of flexible workplaces, an emphasis of the autonomy of workers, a praise of creativity and horizontal organizational structures.

 

3c. The third spirit of capitalism

The analysis conducted by Boltanksi and Chiapello is particularly concerned with the transformation from the second to the third spirit of capitalism. The third spirit is characterized by network firms, which contrasted the earlier époque’s bureaucracies. Innovation and creativity are the excitement of the époque (Boltanski and Chiapello, 2005). Not restricted to corporate innovation or small business entrepreneurs, but turning the entrepreneurial spirit or attitude into a norm for all areas of human life. Foucault describes the homo oeconomicus of neo-liberalism as an entrepreneur, an entrepreneur of the self. He is a producer himself, his own source of revenue and producer of his own pleasure, rather than someone engaged in exchange. This is a displacement of features of the classic homo oeconomicus (Foucault, 2009: 259). In this sense entrepreneurialism imbues subjectivity more fundamentally and innovation becomes ubiquitous in management, policy, education and subjectivity. The new managerial order frames work relations in terms of horizontal networks and a certain form of freedom in terms of self-organization and self-actualization. The ideal-typical figure is a nomadic network-extender who is flexible, mobile and tolerant. The rejection of bureaucracy becomes the epitome of personally uncreative and socially harmful organization, which is inefficient and uncompetitive (Du Gay and Morgan, 2013:24).

 

 

4. Innovation in the third spirit of capitalism

Mainstream innovation theory has answered to the focus on networked society and flexible organizations with concepts such as open innovation (Chesbrough, 2003), democratizing innovation (von Hippel, 2005), and service innovation research has changed towards a co-production paradigm (Howells, 2007; Gustafsson & Johnson, 2003; see Langergaard, 2011). These approaches recognize that innovation takes place in collaboration between different actors and follow the move from the organization to inter-organizational networks as the locus of innovation, which is central to the third spirit. However, this is the answer from mainstream innovation theory in which the commercial and economic aspects of innovation are central. With regards to understandings of innovation, the break with the techno-economic paradigm has meant a growing belief in innovation as embedded in society, rather than in technological processes (BEPA, 2011: 15). This together with a rise in networked forms of governance (Jessop, 2003: 8) has also opened for the idea of social entrepreneurship and civil society as a major driving force of societal changes.

In relation to capitalism, entrepreneurship in some form or the other seems to have been central in the first spirit with the liberal, entrepreneurial form of capitalism, and again in the neo-liberal connectionist form of capitalism. Representations of neo-liberalism also point to entrepreneurship as integral to this ‘new spirit of capitalism’. Du Gay and Morgan (2013) describes how neo-liberalism came to provide a certain kind of rationality that ties the different brands of neo-liberalism together and link diverse developments. Terms like entrepreneurship, empowerment, market, and choice were incorporated in the rationalities which embodied a range of practices for governing economic life, public management, medical care, welfare policy and so on (Du Gay and Morgan, 2013:2). From this perspective it seems that social entrepreneurship shares some of the rationalities of the neo-liberal capitalism. Social entrepreneurship and social innovation in some variants have empowerment as a declared goal, share the presumption and sometimes the normative idea of blurring the boundaries between market, state and civil society (BEPA, 2011) and sometimes share the state-criticizing and anti-bureaucratic ideas which also characterize the neo-liberal critiques of the state and public sector (see Hulgård, 2010). There are strands of social entrepreneurship linked to privatization of the public sector, which focus on work-oriented policies and the privatization of the responsibility of welfare – what Gilbert calls a ‘triumph of capitalism’. In this sense social entrepreneurship may be seem as an element in a movement towards dismantling the welfare state and introducing more privatized and individualized solutions to social issues (Hulgård, 2010: 7: Hulgård and Andersen, 2012: 22; Hulgård, 2011: 202).  

I, however, wish to draw attention to a perspective on the relation between social entrepreneurship and capitalism from which social entrepreneurship is not merely inscribed in and affirming a neo-liberal capitalist logic. I wish to present perspectives, which represent a critique of capitalism and mainstream economic thinking. In the wake of the current crisis critiques of an economistic view on society and human existence have gained ground. The blind belief in the market has been challenged and there is a call for other understandings of value and societal development than just the economic and neo-liberal ones (see also Baruchello, 2009). In this sense, the time seems ripe for finding new ways ahead. Social value is in relation to social entrepreneurship defined as non-economic value and specified in terms like inclusion and wellbeing though collective, social and political empowerment processes and universal rights (Moulaert et al, 2013a:14). This may be seem as an approach to overcome the overly economistic criteria for understanding societal wealth and progress usually attached to innovation. Social innovation explicitly challenges the concept of technological innovation and its hegemonic status in economic, social and political discourse (Jessop et al, 2013:112). However, in the rather new theoretical field of social entrepreneurship there is room for a much more thorough and systematic discussion of the normative, ethical and political aspects of a concept of social value. But giving priority to other values of human life over economic value, like emancipation, political and social empowerment, human rights and improvements in the human condition (Moulaert et al, 2013b) is a starting point.  

Social entrepreneurs can either work within the mainstream market economy or in a non-capitalist social economy consisting of organizations in the third sector that are benefiting from the participatory capacities of citizens (Hulgård, 2011:202). According to Hulgård (2011), social economy is a certain type of social entrepreneurship, which aims to transform and innovate the mainstream economy. It is part of an emerging counter-discourse in the sense of a non-capitalist participatory economy in the areas of social service and social innovation (Hulgård, 2011:202). Social economy, or solidarity economy, organizations give priority to a shared patrimony and can be contrasted with capitalist organizations. A normative definition of social economy sees it as economic activities carried out by enterprises, primarily cooperatives, associations and mutual benefit societies, who prioritize service to its members over profits, and sets people and work over capital (Laville, 2010: 228-9). In particular, the European strand of social economy includes cooperatives and social enterprises and non-capitalist economic initiatives in the third sector (Hulgård, 2011:202). Thus, there is another side to social entrepreneurship than the privatization of welfare, and this is, according to Hulgård (2011), marked with a new type of collective responsibility, where social partners address problems and challenges such as poverty, exclusion, urban disintegration in shared arenas and networks. The social economy, which these entrepreneurs work in, is seen as an alternative to mainstream market economy (Hulgård, 2011), but it stays within the organizational model of networks dominant in the third spirit. Cooperatives, associations and mutual organizations, which are types of organizations of the social economy, are not new and do not say much about the current crisis or new reactions to the current capitalist spirit. As mentioned, these were also central initiatives of social entrepreneurship in the 1960s and 1970s and thus the second spirit of capitalism. We may, however, distinguish between an old and a new social economy. “The new social economy is a multitude of organizations including ‘new social service cooperatives, voluntary organizations and social enterprises filling new social needs’” (Hulgård, 2011:204). The new social economy is partly related to the cooperative tradition and partly to the current changes in welfare policy towards participatory and entrepreneurial approaches. Social enterprise and social entrepreneurship are cornerstones in the new social economy. Social entrepreneurship is definitely part of an alternative view on economy to the capitalist, and with emphasis on social aims, mutuality, participation, citizenship, and limited profit distribution. Social entrepreneurs can work within or on the boundaries of the social economy, and their achievements cannot a priori be said to be part of the social economy in the sense that they are always part of a non-capitalist economy (Hulgård, 2011:208). Whether social entrepreneurship can be understood as part of a capitalist critical movement depends on whether we see it as linked to this social economy, or if we merely see it as attempts to create social value through innovative efforts irrespective of its place in a capitalist economy. Social entrepreneurs in this view become change agents of the social economy (Hulgård 2011:211).

If the social economy is to be perceived as a non-capitalist form of economy and third sector, rooted in local communities and cross-sectoral partnership, how should we then understand the role of the state and citizenship rights? Social entrepreneurship is also part of the transition of the welfare state into more blended forms of social service provision, and the means of community building, citizen engagement and participatory governance. This raises important questions regarding the understanding of democracy related to this view on social entrepreneurship. Traditionally, the state and its public sector have been seen as the democratic alternative to the market – as the societal institutions through which the citizenry has been able to carry out collective decisions and solving collective concerns. The welfare state, in some interpretations, has, for example, emerged to compensate for the downsides of capitalism in terms of unequal distribution of resources and possibilities. When civil society is now granted this role as arena for democratic decision-making, it may have to do with the view of the state as a basically inhumane, bureaucratic representation of a system logic, which alienates and overlooks the real needs of the citizens (see Langergaard. 2011).

Social entrepreneurship is linked to a view of civil society as a new arena for solidarity. It is basically a bottom-up approach to democracy with a belief in the emancipatory potentials of participation from below. The re-orientation of welfare states are also generating a new role for civil society and opening a room for collective and solidary movements. It has opened a platform for new forms of social movements, collective responsibility and solidarity (Hulgård, 2010; Andersen and Hulgård, 2012). Some see this new orientation as a potential for participatory practices and social initiatives for a more inclusive and sustainable society (Hulgård and Andersen, 2012). Some researchers in the field of social innovation still stresses the importance of the public sector and the state as guarantors of rights (Moulaert, 2010), and often social entrepreneurship and civil society are presented as a supplement to and a collaboration with, rather than a replacement of, the public sector. In this sense socially creative strategies are not restricted to certain sectors of society and may also operate at the governmental level (Moulaert et al, 2013b:20).

 

 

5. Concluding remarks

Whereas classic entrepreneurship is theoretically closely connected to capitalism and seen by innovation theory as the major driving force of economic development, social entrepreneurship may be seen as linked to non-capitalist understandings of the economy and as part of a capitalist-critical movement. The ideas about classic innovation and entrepreneurship differ throughout the development of the three spirits of capitalism presented by Boltanski and Chiapello – from an emphasis on the individual entrepreneur, over large corporations’ R&D activities, to networks and horizontal organisational forms with creativity and innovation as normative ideals. 

 

Social entrepreneurship also takes different forms. I have argued for the potentials of defining and understanding social entrepreneurship in the current form of capitalism in a way, which is not underpinned by a neo-liberal understanding of human rationality, and of the roles of the state and market. We may understand social entrepreneurship in different ways, as it is a multifaceted phenomenon. Some interpretations and uses of the term clearly stay within a capitalist framework and a basic neo-liberal logic and seem to adopt the excitement of the third spirit of capitalism. The critical strand of social entrepreneurship relates to the social economy and third-sector organisations, such as cooperatives, mutual interest organizations, as well as collective and solidary movements, in the second and in the third spirit too. The current capitalist crisis has given nourishment to both strands of social entrepreneurship – the former by having exacerbated problems, which result from the contradictions of capitalism, but without looking for solutions outside of the capitalist and neo-liberal logic. Here the need for privatization of solutions to social problems is just seen as even more evident as they seem the cheaper and more efficient ones. The latter by elucidating the limits of the free market and thus the need for solutions, which rely on something else than market solutions and an economic logic that has lost some of its legitimacy. Experts claim that the crisis has paved the way for a further elaboration of the solidarity economy as an alternative to mainstream market economy (Hulgård, 2010:9).

 

This division between different strands of social entrepreneurship may not seem surprising, as it is well known that social innovation is a concept and phenomenon standing between a managerial, markets-based entrepreneurial logic and a more democratic, emancipatory, civil-society based idea of social progress (Hulgård, and Andersen, 2012). It is important to distinguish between different branches or strands of social entrepreneurship and social innovation. When the EU commission and the Danish government promote social innovation, social entrepreneurship and social enterprises as solutions to societal problem, it is fair to assert that it cannot be understood as a concept with any capitalist critical implications. As Jessop et al (2013) point out, various mainstream strategies for social innovation and social entrepreneurship often interpret it in narrowly market-economic and micro-economic terms (Jessop et al, 2013:110). The next move of social entrepreneurship research may be to specify the critical potential and the specificities of the critical edge and aim of social entrepreneurship in the new social economy – should it rely mainly in a de-commodifying logic, for instance, or should it rather aim at emancipation in other terms (cf. Fraser, 2012)?

 

 

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Mammonist Capitalism – Ubiquity, Immanence, Acceleration. And the Social Consequences

 

In this paper, I will elaborate on a conceptual sketch of nothing less than contemporary capitalism, whether we call it new capitalism, finance capitalism, flexible capitalism, or rentier capitalism, and some of its social and human consequences.

 

It is a bold undertaking. I put together concepts from both classical and contemporary social theory in order to develop images and conceptions of capitalism and what it does to society. I understand concepts as ”means of orientation”, as Weber (1988a, 536) defined his ideal types. Claims are on the one hand experimental or essayistic – an attempt, an outline that tries to approch this thing capitalism from different angles without enclosing it. I also will use the hyperbole – stretching descriptions, using generalizations. Brief, a reflection, an essay, certainly not founded on extensive research but on interest and extensions of other things I did. Hopefully, thus, the presentation will be a point of departure for an interesting discussion.

 

Some key concepts will be Mammonism, acceleration, ubiquity, self-dynamics, precariat, inertia, conformity, flexibility, specter of uselessness.

 

Among others, I will refer to classical modern thinkers like Marx, Simmel, Musil, Benjamin, and to contemporary ideas in the works of Deleuze, Rosa, Crouch, Illouz, Standing, Hochschild.

 

 

 

Mammonism

 

 

In his famous short essay on ”capitalism as religion”, Benjamin called capitalism a ”cult”, if not the cult, of modern culture. We all belong to it, and for all the differentiations it leads to, it also means a belonging – to which we cannot say no. Capitalism saturates and structures society and mentalities. It provides life with meaning – or it substitutes meaning for capitalist values and objectives. Capitalism also is the object of worship, the profit being its core ”ornament”.

 

Weber did not conceive of capitalism as a religion, not even a ”secular religion” (Voegelin 1993). But this prime manifestation of rationality, of the processes of rationalization which run through history and shape it, had one of its origins in religion – that is, in a most irrational phenomenon, if we limit rationalization to instrumental or goal-oriented rationalization.

 

Simmel talked less of capitalism and more of money – what we do with money and what money does to us. Money is an awesome instrument with which you may destroy and construct anything – ”creative destruction” in Schumpeter’s (1942) words.

 

But money emancipated itself from the mere function of an instrument a long time ago. It regulates life, it deprives everything of its inner value and attach to it an alien, quantitative value and so reduces everything to one and the same level. On the marketplace, everthing becomes a commodity, whether we talk of material goods, services, thoughts, bodies, competences, subjectivities. And money, according to Simmel (1999, 17), emerges as divinity: the Mammonism of modern, capitalist society.

 

Religion, says philosopher Hermann Lübbe (1975, 177), is first and foremost a ”praxis of coping with contingency”. Obviously, this would be a core definition of capitalism as well. Not the invalidation of contingency, but its optimal exploitation.

 

 

 

Acceleration

 

 

Capitalism and money replace society, community, religion. And they replace or at least define time. ”Time is money”, Benjamin Franklin wrote – a modern, quantifiable answer to that eternal question what is time. And inversely: ”money is time”, writes Samuel Weber (2009).

 

Time, especially when expressed through speed and acceleration, is a core element in contemporary capitalism, whether we talk of the productive or the non-productive, financial capitalism.

 

Trade with shares and other sophisticated, esoteric securities – funny label – are chiefly made by computers. Algorithms are the core component in selling and buying – not human decisions. The quicker the reactions, the more likely the profit; the closer the location of the computer to the main servers, the more milliseconds to gain. Average time of retaining shares has imploded to less than half a minute. (Who, then, is the owner of companies? Who is responsible for their business?) Wall Street rather employs mathematicians than financial analysts. Time is money. And the more resources, the more time to gain.

 

Since the financial crisis some five years ago, a financial crisis largely provoked by computers and algorithms, a number of studies have been made on this ”doomsday machine” (Lewis 2011), this ”monster” (Hudson 2010), which is financial capitalism. Frank Schirrmacher (2013) talks of the financial markets as a ”cyberwar” where players are predominantly machines and man himself has become an egoistic, narcissist machine nourished by self-interest, anxiety, distrust (bellum omnium contra omnes – also a core characteristic of Tönnies’ Gesellschaft). To understand this reality, a mere rational choice theory would do. In fact, Schirrmacher says, the influence of rational choice theories and of game theories have brought forward this new anthropological form which we call homo economicus. They are, like any other theory, especially economic theories, performative, are, in the words of Donald MacKenzie (2006, ), ”engines”, not ”cameras”. However, they change not just man, but the entire world: the world as ”arithmetical problem” (Simmel 1989, 612).

 

(Man becoming a machine…: he is attracted to machines since he resembles them, envies them, worships them – the machine as fetish. And: machines invade him, literally – drugs regulate his moods, communication devices govern his attention, channel his thoughts.)

 

German sociologist Hartmut Rosa (2003, 2006) talks of that ”acceleration” which is characteristic of a global and globalizing ”high-speed society”. Acceleration defines virtually all segments of society, but emerges as most significant in and through technology. Technology in turn, especially information and communication technology, penetrates and saturates social structures and individual lifeworlds – and occasionally invades or replaces subjectivity, ”the human factor”. Identity, Rosa says, becomes ”situative”, and actions are characterized by ”reactive situativity”. Brief, identity defined in subsequent situations and moments, actions being immediate responses to situations; identity, action and situation as elements of an immanent game without past and future.

 

Some variations of Rosa’s elaboration would be:

 

In his discussion on flexible capitalism, Richard Sennett (1998) portrays a fragmented, ”corroded” social character, by nature slow, now facing swift, permanent, uncontrolled and uncontrollable technological and organizational transformation that shapes a life in ”episodes”.

 

Philosopher Odo Marquard (1987, 126) side immediately with Rosa. Modernity is not merely permanent transformation, but permanently ”accelerated transformation”; accordingly the ”rate of obsolescence” increases. Acceleration has become the ”usance of modernity”, a modern commonplace.

 

Korean media theorist Han (2012), in turn, talks of ”hyperacceleration”: productivity and communication occur far beyond their ‘own’, ‘original’ goals and consist of ”hyper-productivity” and ”hyper-communication”. On an ordinary human level, uncontrolled behaviour in the form of ”hyper-activity” is a common characteristic. We may receive medical treatment for that. What about society?

 

Acceleration appears as a modern, contemporary category. Austrian novelist Robert Musil (1978, 402) conceived of it as ideal and ideology too as he talked of the ”accelerism” which characterized especially economic life. An ideology that promotes oblivion and undermines memory, cultural as well as individual.

 

Back in 1848, Marx and Engels in the Communist Manifesto stated that modernity turns everything that used to be solid into air.

 

 

 

Ubiquity

 

 

Does acceleration move in a linear direction, does it mean progress? If we mean technological, logistical progress – obviously. With regard to other aspects of life – not necessarily. With regard to some issues, for instance climate – no.

 

Contemporary society and capitalism take place in what appears as an eternal present. Bauman and others have varied this fundamentally aesthetic view. Activities lack collective direction. They lack origin. They occur, they happen, the entire society is in permanent movement, a mobile society where social and economic and financial mobility is praised. An endless process of trial and error, an eternal and changing loop, a ”blind flight”, as Norbert Bolz (2005) writes.

 

Time not as linear, not as evolution and not as cycles, but in the shape of a expanding and contracting ”sphere”. (Bernd Alois Zimmermann) A sphere that contains, that consists of, that expresses emergences and disappearences, immense manifoldness and multiple movements. A sphere constituted by the simultaneousness of differences and of differerent times. (Cf. Koselleck [1992, 323ff] and Blumenberg [1986, 249]: Gleichzeitigkeit des Unglichzeitigen.) A temporal expression of Durkheim’s anomie.

 

Ivor Southwood (2011) discusses this state of contemporary capitalism with regards to individuals on the job market. The individual is constantly on the move. Navigating in a world of ”unknown unknowns” (Rumsfeld), he or she is working (at best) and simultaneously working for labour (more job, other job, securing job).  It’s a 24/7 activity, a hyper-activity – a ”non-stop inertia”, Southwood writes, a furious standstill, in the words of Paul Virilio (1999) a ”polar inertia” (cf. Rosa). Immobility is for those socially excluded only.

 

Individuals on the flexible labour market have to achieve this and that simultaneously, have to be proactive, to be able to ”let go”, have to live ”on the edge” (Sennett 1998). And capitalism and its transforming logics are present everywhere, all the time – un unstoppable chain reaction of the same and of differentiations. The ubiquity of capitalism.

 

 

 

Sovereignty, autonomy, self-sufficiency

 

 

Capitalism emerges as the perhaps most viable institution in world history. No institution has changed society that much, no institution has proven so able to adapt to new circumstances (those circumstances that capitalism itself brings forth). The entire classical sociology agreed on this. And was itself a response to the transformation which capitalism generated.

 

Classical sociology observed how capitalism was not merely an instrument in the hands of capitalists, but a force in itself, instrumentalizing the capitalists, for whom only the exploitation of the workers remained.

 

Simmel (1996) developed the dual notion of ”objective culture” and ”subjective culture”. Man created money, machines, laws etcetera in order to regulate and facilitate life. Yet money and machines tended to emancipate themselves from their creators. They developed a life on their own, manifested a self-dynamics, gained autonomy and sovereignty. Man was subordinated under his own creations – ”isolated”, ”alienated” (1996, 405). Simmel spoke of ”the tragedy of culture”.

 

After Simmel, who might not have been first, we have seen many conceptual variations of this theme. Simultaneously, experiences of the self-dynamics of institutions grow.

 

The most suggestive expression today might be the banking system. Banks are absolutely necessary and relevant for the system, we are told. Without them, the system fails – society, economy, family…

 

The financial and economic crisis in 2008 meant not the collaps of banks (except for the very worst), but their momentum. Colin Crouch (2011) speaks of their survival and in general of the ”strange non-death of neo-liberalism”. Banks and global enterprises under neo-liberalism are less interested in free markets and more in dominance and support. And in that very ideology which tells us they are necessary. It is an ideology that makes it possible to exploit states and tax payers and borrowers. Banks embrace states, states embrace banks – which in turn generate ever larger profits (the states taking the losses). Banks are at the heart of that financial capitalism which is non-productive.

 

Politics grant bad banks financial support. Power and responsibility are separated: banks make profits, tax-payers take the losses, there are the fortunate ones and those plagued with misfortune. Protests have been occasionally fervent, bu no cause for alarm. Foucault (2003) might explain. He writes about the nature of sovereign power: it is not essentially brought forward from above, but from below, by the subordinated, those who fear for their lives, their well-being. They manifest a ”radical will to life” just as the child does to its mother.

 

Money (banks, financial or rentier capitalism): ”a creative, specialised manifestation of violence”, Musil (1978, 508) wrote, emancipated from society, community, those 99 per cent of the individuals.

 

And too big to fail. There is no alternative – TINA. An insult to reason, to imagination.

 

 

 

Precarious life

 

 

A new social class is emerging, writes Guy Standing (2011): the precariat. It is described also by for instance Richard Sennett, Arlie Russel Hochschild, Saskia Sassen and Barbara Ehrenreich.

 

The precariat is swelling, differentiated and universal. It is populated by people coming from the dwindling middle class, from the working class and from the remainder – ”the outer class”, which Bill Clinton spoke of, Lumpenproletariat in Marx’ vocabulary, in the Weimar Republic the Luftmenschen, scattered characters living from this and that. It consists of people who have jobs and who may have lost them soon, and of people who have no jobs and weak prospects. Of the internship generation and the post-crash generation. Of the digital bohemians. Of people who are haunted by what Sennett (2005) calls ”the specter of uselessness”. Of people in permanent suspense. Of people accustomed to continuous availability and persistent debt (study loans, mortgages). They find themselves responsible for their own life but have insufficient means to govern this life.

 

Competition is sleepless and restless, fierce and global, right down to the simplest business. (On competition as permanent state, see Simmel 1995 and Rosa 2006.) Decisions about existing and potential positions are taken elsewhere. Labour hiring companies, providers of HR solutions are the specialists in managing that contingency which is flexibility (they may have peculiar names, for instance CoCo Job Touristik GmbH). They manifest contemporary labour life as ”space of flows” (Castells 2000) or it’s ”non-place” character (Augé 1995): work disembodied from local and geographical context and meaning and rather a matter of functional, contingent networks (shopping malls, internet retailers).

 

Precarious people have but insufficient means to master flexibility’s permanent instability. The salariat, in turn, the well-paid managers, professors and government officers, lives off flexibility and knows how to manage their lives and hearts; they also manage the precariat and its hearts, its habits. The elite, the upper one per cent, the oligarchs, is emancipated from social realities. Their conspicuous wealth is created out of wealth and smartness. Reality is abstracted and emerges as investment options.

 

”Rage” is growing, writes Peter Sloterdijk (2009). It grows with uncertainty, with increased ”unknown unknowns”. It may or it may not have obvious reasons, but the potential is massive. Spain and Greece, London and Paris have seen rage in different forms, some emptied of all meaning and legitimacy, but most expressing protest or despair of citizens threatened to become ”denizens” (Standing 2011).

 

The Occupy movement exists no more, but the context that brought it forth has changed little.

 

Where is the tipping point? Is there a tipping point?

 

 

 

Human optimization

 

 

A century ago, Max Weber (1998b, 521) described modern man as ”not an integrated human being but a combination of singular useful and functional qualities”.

 

His description easily fits as ideal and ideology today. Optimization is required everywhere – swift, complete, compliant, life-long, reactive, proactive optimization. (Makropoulos 2002) And possibly happy – ”smile or die” is our recurrent daily ultimatum, writes Ehrenreich (2010).

 

Optimization concerns individuals, concerns organizations, concerns markets, concerns societies (which turn in to markets). The functional, adaptive, compatible network is the general form. Man, organization, market, society and further products and consumers constitute unimpaired continua.

 

Niklas Luhmann (197) writes about what he calls the most significant social quality or competence today: ”connectivity”. We relentlessly re-apply for jobs, demonstrating our employability and our compatibility (to men and to machines); we persistently re-apply for social roles, adapt to social settings, using our ”radar” (Riesman 1950).

 

Gilles Deleuze (1990) develops the image of the dividual: a contemporary human form divided into different parts, functions, segments and optimized for different roles and settings. For multi-tasking. The disciplinary individual, of which Foucault talked, was a specialized, discontinuous producer whereas the dividual is ”undulatory, in orbit, in a continuous network”. Contemporary man prefers ”surfing” rather than isolated, specialized sports, writes Deleuze (1990, 244).

 

No project is forever; any time is the time to move on.

 

To be undulatory, to adapt – to be conform. The large majority stay there. Some reside at the front edge of conformity. They are not the avantgarde, just hyper-active, hyper-functional, being the fittest and possessing the strongest impulses for survival. Those who are up for a career must be cunning cutting-edge conformists.

 

One indispensable quality in the optimization of individuals regards the competence to control and deploy emotions in the presentation of self and the management of impressions of the other. Eva Illouz (2007) and Arlie Hochschild (2011, 1983) discuss how emotions have become not merely elements in consumption and marketing, but a force of production to the extent that we may talk of capitalism as emotional capitalism, as capitalist emotionalization, especially in the service industry. Emotions become technically reproducible, varied, enhanced (Benjamin); they are no longer the adversary of reason and rationality, but their manifestation in the age of technology. Just as there are social and economic forms of capital, there is emotional capital, which may be individual or organizational. Emotional capitalism, capitalist emotionalization: manifestations of the collapse of the frontiers between private and public (labour life), manifestations of intimacy as means of optimization.

 

The classical modern assembly line produced material goods. It manifested standardization, routines, repetition, fragmentation, simplicity, and looked just about the same in Detroit, in Stalin’s factories and in the handbooks of the management schools.

 

A century later, an assembly line 2.0 has appeared, populated by the well-educated and continuously upgraded information engineers, project coordinators, symbolic analysts, and communicators, and below them the simple office executors. They are all functionaries absorbed in abstract processes and systems. Expected and actual results are blurred and replaced by evaluations. Informality (Informalism) is natural. Each and everyone has to be reachable anytime, everyone is armed with smartphone and laptop. Everything is temporary and everything that has been done can be, ought to be, will be made undone. The new assembly line: information processing and partial implementations, imperfection, dependence and ambiguous origins and goals, all of it ”lean”, naturally. Marx would have recognized it all: the executors of ”virtualism” (Crawford 2009) constitute a progressive derivative of the alienated working class.

 

 

 

Democracy, post-democracy, society, post-society…

 

 

At the end of these sweeping, uncompromising conceptual generalizations – a few questions.

 

How will society be possible when characterized, constituted by accelerism and fierce, increasing competition (individual, organizational, national)?

 

How will vast unemployment, insecure labour markets, and generational cleavages affect solidarity?

 

What are the alternatives when markets invade and replace politics and the public sphere?

 

What are the possibilities of civil society? (Perhaps a question most interesting in societies where previously a strong welfare state had marginalized civil society, and now neo-liberalism assumes this dominating role. I think of Sweden, for instance.)

 

How may individual lives hold together when torn to pieces by availability, employability, competition, flexibility? Relations, families?

 

What do political alternatives, alternative politics look like when established parties, from leftist to conservative parties, all embrace privatization, deregulation and new public management as both ideology and practical solution? When politics emancipate itself from responsibility and transfer it to enterprises and consultancies – none of which can be accused for having anything to do with democracy? Or when decision making actually becomes so complex that outlines of future societies are impossible?

 

What is, accordingly, the meaning of democracy, when alternatives are blurred, power diffused and responsibilities outsourced? What’s there to vote for? Are we entering a ”post-democratic” society? (Crouch 2004) What would be new forms of democracy – forms which would attract the interest of the 99 per cent.

 

 

References

 

Auge, Marc, Non-Places. Introduction to an Anthropology of Supermodernity. London: Verso, 1995

 

Benjamin, Walter, ”Capitalism as religion”

(www.rae.com.pt/Caderno_wb_2010/Benjamin%20Capitalism-as-Religion.pdf)

 

Blumenberg, Hans, Lebenszeit und Weltzeit. Frankfurt am Main: Suhrkamp, 1986

 

Bolz, Norbert, Blindflug mit Zuschauer. München: Wilhelm Fink Verlag, 2005

 

Castells, Manuel, The Information Age. Economy, Society and Culture. Volume I: The Rise of the Network Society. Malden, Mass.: Blackwell, 2000

 

Crawford, Matthew B., Shop Class as Soulcraft. An Inquiry into the Value of Work. New York: Penguin, 2009

 

Crouch, Colin, The Strange Non-Death of NeoLiberalism. London: Polity Press, 2011

 

Crouch, Colin, Post-Democracy. Cambridge: Polity Press, 2004

 

Deleuze, Gilles, ”Post Scriptum: Sur les sociétés de contrôle”, in Deleuze, Gilles, Pourparlers. Paris: Editions de Minuit, 1990, 240–247

 

Ehrenreich, Barbara, Nickel and Dimed. Undercover in Low-wage America. London: Granta Books, 2010

 

Ehrenreich, Barbara, Smile or Die. How Positive Thinking Fooled America and the World. London: Granta Books, 2010

 

Foucault, Michel, ”Society must be defended.” Lectures at the Collège de France 1975–1976. London: Allen Lane, 2003

 

Han, Byung-Chul, Transparenzgesellschaft. Berlin: Matthes & Seitz, 2012

 

Hochschild, Arlie R., The Outsourced Self. Intimate Life in Market Times. New York: Metropolitan Books, 2012

 

Hochschild, Arlie R., The Managed Heart. The Commercialization of Human Feeling. Berkeley: The University of California Press, 1983

 

Hudson, Michael, The Monster. How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America – and Spawned a Global Crisis. London: Time Books, 2010

 

Illouz, Eva, Cold Intimacies. The Making of Emotional Capitalism. London, Polity, 2007

 

Koselleck, Reinhart, ”’Neuzeit’. Zur Semantik moderner Bewegungsbegriffe”, in Koselleck, Reinhart, Vergangene Zukunft. Zur Semantik geschichtlicher Zeiten. Frankfurt am Main: Suhrkamp, 1992

 

Lewis, Michael, The Big Short. Inside the Doomsday Machine. New York: Norton, 2011

 

Lübbe, Hermann, ”Vollendung der Säkularisierung – Ende der Religion?”, in Lübbe, Hermann, Fortschritt als Orientierungsproblem. Aufklärung in der Gegenwart, Freiburg im Breisgau: Rombach Verlag, 1975, 169-181

 

Luhmann, Niklas, Die Gesellschaft der Gesellschaft. Frankfurt am Main: Suhrkamp, 1997

 

MacKenzie, Donald, An Engine, Not a Camera. How Financial Models Shape Markets. Boston: MIT Press, 2006

 

Makropoulos, ”Der optimierte Mensch”, Süddeutsche Zeitung, 26–27 Oktober, 2002

 

Marquard, Odo, Apologie des Zufälligen. Philosophische Studien. Stuttgart: Reclam, 1987

 

Marx, Karl & Friedrich Engels, The Communist Manifesto. Oxford: Oxford Paperbacks, 2008

 

Musil, Robert, Der Mann ohne Eigenschaften. Erstes und Zweites Buch. Reinbek bei Hamburg: Rowohlt, 1978

 

Power, Nina, One Dimensional Woman. London: John Hunt Publishing, 2009

 

Rifkin, Jeremy, The End of Work. The Decline of the Global Labor Force and the Dawn of the Post-market Era. New York: Penguin, 2004

 

Riesman, David, Nathan Glazer & Reuel Denney, The Lonely Crowd. A Study of the Changing American Character. New Haven: Yale University Press, 1950

 

Rosa, Hartmut, ”Social Acceleration. Ethical and Political Consequences of a Desynchronized High-Speed Society”, Constellations. Vol. 10 (2003), No 1, 3–31

 

Rosa, Hartmut, ”The Speed of Global Flows and the Pace of Democratic Politics”, New Political Science, Vol. 27 (2006), No. 4, 445–459 (http://dx.doi.org/10.1080/07393140500370907

 

Rosa, Hartmut, ”Wettbewerb als Interaktionsmodus. Kulturelle und sozialstrukturelle Konsequenzen der Konkurrenzgesellschaft”, Leviathan, Vol. 34 (2006), Nr 1, 82–104

 

Schirrmacher, Frank, Ego. Das Spiel des Lebens. München: Karl Blessing Verlag, 2013

 

Schirrmacher, Frank & Thomas Strobl (eds), Die Zukunft des Kapitalismus. Frankfurt am Main: Suhrkamp, 2010

 

Schumpeter, Joseph, Capitalism, Socialism, and Democracy. New York: Harper & Brothers, 1942

 

Sennett, Richard, The Corrosion of Character. The Personal Consequences of Work in the New Capitalism. New York, London: Norton, 1998

 

Sennett, Richard, The Culture of the New Capitalism. New Haven & London: Yale University Press, 2006

 

Simmel, Georg, Philosophie des Geldes. Frankfurt am Main: Suhrkamp, 1989 (Gesamtausgabe, Bd. 6)

 

Simmel, Georg, ”Soziologie der Konkurrenz”, in Simmel, Georg, Aufsätze und Abhandlungen 1901–1908. Frankfurt am Main: Suhrkamp, 1995, 221–246 (Gesamtausgabe, Bd. 7)

 

Simmel, Georg, Der Begriff und die Tragödie der Kultur”, in Simmel, Georg, Philosophische Kultur. Gesammelte Essais. Frankfurt am Main: Suhrkamp, 1996, 385–416 (Gesamtausgabe, Bd. 14)

 

Simmel, Georg, ”Deutschlands innere Wandlung”, in Der Krieg und die geistigen Entscheidungen. Reden und Aufsätze. Suhrkamp, Frankfurt am Main, 13–29. (Gesamtausgabe, Bd. 16)

 

Sloterdijk, Peter, Zorn und Zeit. Politisch-Psychologischer Versuch. Frankfurt am Main: Suhrkamp, 2009

 

Southwood, Ivor, Non-Stop Inertia. London: Zero Books, 2011

 

Standing, Guy, The Precariat. The New Dangerous Class. London: Bloomsbury Academic, 2011

 

Virilio, Paul, Polar Inertia. London: Sage, 1999

 

Voegelin, Eric, Die politischen Religionen. München: Wilhelm Fink Verlag, 1993

 

Weber, Max, ”Zwischenbetrachtung. Theorie der Stufen und Richtungen religiöser Weltablehnung”, in Weber, Max, Gesammelte Aufsätze zur Religionssoziologie. Tübingen: Mohr, 1988a

 

Weber, Max, ”Die Wirtschaftsethik der Weltreligionen. 1. Konfuzianismus und Taoismus”, in Weber, Max, Gesammelte Aufsätze zur Religionssoziologie. Tübingen: Mohr, 1988b

 

Weber, Samuel, Geld ist Zeit. Gedanken zu Kredit und Krise. Zürich: Diaphanes Verlag, 2009

The Hopeful Liberal. Reflections on Free Markets, Science and Ethics

[T]he idea of a self-regulating market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society

(Polanyi, 1944: 3)

Introduction

The international economic crisis following the 2008 collapse of Lehman Brothers unleashed a flood of fiat money by selectively prodigal central banks that have seen fit to plunge the world into a recession in order to keep over-indebted private banks afloat (cf. Hudson, 2012). Also, it unleashed an outburst of academic literature on the crisis itself, its causes, its effects, and its possible solutions. With this literature, a modicum of doubt has re-entered the mainstream of public discourse on topics such as globalisation, capitalism and the free market, to the point that even corporate newspapers have reported renowned liberals’ and conservatives’ statements that, until few years ago, would have been associated with leftist ‘radicals’ and ignored by mainstream media:

 

  1. “The doctrine of the dictatorship of the market is dead” (Nicolas Sarkozy, former French president, 2008);[1]
  2. “We need…  humaneness…  rules…  and abandoning the idea of… massive pro?ts” (MIT Nobel-prize winning economist Paul Samuelson, 2008);
  3. “The dictatorship of the [credit] spread… nullifies… universal suffrage… [for] those who hold economic power… have every decisional power” (former liberal MP and current head of Italy’s securities and exchange commission [CONSOB] Giuseppe Vegas, 2012);
  4. “There emerge… in civil Europe the first signs of a new type of fascism: financial fascism, white fascism“ (Italy’s liberal MP and former finance minister Giulio Tremonti, 2012).

 

Aims and methodology

International crises and their dramatic outcomes notwithstanding, certain long-lived, deeply rooted beliefs are hard to die. Thus we keep hearing leading politicians and revered economic advisors who call for a return to growth and assert that structural reforms are imperative so that market confidence may be re-established and increased competitiveness achieved, without ever pondering upon the fact that these aims are precisely those that guided the global economy before the crisis. Could it ever be that endless growth, market confidence or competitiveness are misguided aims for the world’s economies?

In these reflections of mine, I wish to address one of these resilient beliefs. Specifically, in the traditional philosophical way initiated by Socrates, I shall assess some logical knots arising from a hypothesis, that is, the commonplace liberal notion that the so-called “free market” possesses a unique capacity to generate prosperity.

This hypothesis is highly generic, diversely instantiated and potentially vague. Nevertheless, it pervades the whole spectrum of the liberal conceptions of the economy, such as Adam Smith’s “invisible hand”, whereby the individual’s pursuit of self-interest results often into collective wellbeing (1776, IV.ii.9), or the textbook category of “market imperfections”, according to which explaining is needed when the outcomes of market transactions are not optimal (e.g. Sloman, 2006). There exists an extensive literature for each of these conceptions, which I could address in a book, but not in a short piece like the present one. Rather, I shall select one representative liberal formulation of the hypothesis at issue and deal with those logical knots that I deem most likely to be of interest to a scholarly audience.

 

Rhonheimer’s formulation

The formulation that I now refer to is a recent book chapter written by the Swiss liberal thinker Martin Rhonheimer (2012),[2] who claims that the “free market” is “a necessary condition” of human prosperity (9; emphasis in the original). In his eloquent account of Eucken’s ordoliberalism and the related critique of laissez-faire liberalism, Rhonheimer offers in support of his claim:

 

(A) one elucidation; and

(B) one generic token of empirical proof.

  

(A) The elucidation is that no central planner would be able to coordinate all economic activities as efficiently as the “free market”, in which individual agents pursue their own particular self-interest and, by so doing, unintentionally produce prosperity, in accordance with Smith’s principle of the “invisible hand” (9-10). Though not all conditions for prosperity may arise this way, none would arise without it. The “free market” is a necessary condition for prosperity, albeit not a sufficient one, which is what more trenchant laissez-faire liberals believe. States must also be involved, according to ordoliberalism and many other streaks of liberalism, to secure fair market transactions, enforce beneficial rules, correct market distortions, and redress socially and morally harmful market outcomes. However, to think that “central planning and state regulation… through several government-run agencies” could ever achieve any prosperity without the “free market” is discarded at once (5).

 

(B) The generic token of empirical proof is that “history teaches” all this: “a capitalist economy based on a free market, entrepreneurial activity, and free trade without tariff barriers is more realistic and in the long run beneficial for everybody” (24). In this respect, the unrealised failure of Roosevelt’s New Deal and a passing reference to Soviet Union are the two cases of “socialism” that the author utilises to give strength to his point (4-7).

  

The critique

1. Indemonstrable necessity

Rhonheimer’s elucidation, though very commonly heard, is not much of an empirical proof. At best, it is an enthymeme, i.e. a rhetorical proof. To make it stick more convincingly, it would require itself many empirical proofs for adequate scientific substantiation. Yet here emerges a severe and unflinchingly by-passed methodo-logical issue. How can anyone prove a thesis as comprehensive as the one presented in Rhonheimer’s essay and, in general, upheld by the liberal community?

The necessary character of any economic system cannot be determined in a scientific way, for we have only one planet, one humankind and one very short historical span at our disposal for any empirical verification and/or falsification of the “free market” and, for that matter, of “socialism”. Apart from mere logical possibility, which cannot exclude a plurality of ways to prosperity, it should be observed that for any claim of such a necessary character to be ascertained, we should investigate a set of entirely alternative and separate systems over a certain period of time, probably a very long one, so as to determine that only the ones operating upon the “free market” produce prosperity, whatever this may be like. Unfortunately, to this day, such a test has been impossible to perform.

Moreover, focussing onto the “market” versus “socialist” dichotomy can be misleading, for it shifts the gaze away from what is undeniably necessary for the meaningful survival of our species, i.e. the continued satisfaction of human needs across generational time. That is the prime end, whatever additional feature we may wish to add to the notion of prosperity. Economies are the means to attain in primis this prime end.[3]

As the past is concerned, we know that some civilisations have made it this far. In this connection, we might think of prehistoric, ancient and medieval Earth, let us say before the age of European exploration, as a plausible set of sufficiently separate and alternative economic systems to conduct a comparative study. Yet, apart from the fact that hardly any of the known ones would count as a free-market system, we know far too little, if anything, about most of them to make any valid scientific comparison, whatever notion of prosperity we may wish to employ (cf. Boldizzoni, 2011). If we look at what history has produced until now, we may be in a better position to determine which system has been the most ruthless, hence the one that has imposed itself over the others. However, that would be a banal and, I suspect, rather degrading notion of superiority, not to consider the very thin or quite absent link that such a superiority may have to human needs or prosperity (cf. Castoriadis, 1997).

As the present is concerned, there may be alternative but no separate systems, given that even the most isolated indigenous communities in the world are being affected by the environmental changes produced by the advanced economies of the planet (e.g. Itkadmin. 2007).

As the future is concerned, unless we deny the ability of humankind to change creatively its collective organisation, which has varied enormously throughout the known history of our species, we cannot even begin to fathom what awaits our descendants: a Star-Trek-like society without money, need and greed; or a Mad-Max-like post-atomic age of barbarism? But this is the territory of science-fiction, not of science.

 

2. Lack of prosperity

If we follow Rhonheimer’s representative formulation and understand prosperity as “consumption, that is, the satisfaction of the needs of all the persons living in a determinate territory” (19; emphasis in the original), we quite simply lack information about most human communities in most parts of the world throughout most of human history. Presently, the past is closed to us; and so is the future, for we cannot predict what will happen on our planet tomorrow, not to mention in two years or two centuries.

As the history of today’s world is concerned i.e. the so-called ‘global market’, which is usually claimed to be an imperfect instantiation of the “free market”, we know for sure the following: it fails regularly to satisfy the needs of all the persons living on the planet, as the UN’s annual statistics on death by malnourishment and starvation regularly report. And while failing these persons’ needs, the current imperfect instantiation of the “free market” also caters to artificially instilled wants of others, including the desire for carcinogenic cigarettes and life-shortening junk food. In other words, the global market fails not only to secure planet-wide need-satisfaction, which is what Rhonheimer appears to be taking as genuine consumption, but also to distinguish between, say, the need for bread of the starving paupers and the desire for golden toilets of oil tycoons, so as to prioritise the former above the latter. What sets in motion the “free market” in both theory and practice is money-backed demand, i.e. preferences or wants of market agents endowed with pecuniary means, not the genuine needs of humans or other living beings, whose possession of pecuniary means may be nil. Money, not need, is what determines consumption in today’s world, pace Rhonheimer’s noteworthy equation (cf. McMurtry, 1999).

Revealingly, many liberal economists and, above all, the actual economy treat both bread and golden toilets as marketable ‘goods’. No axiological compass is present for basic distinctions between that which is of real value and that which is not, or that which is good and that which is bad. Neither any economic ‘good’, nor all economic ‘goods’ are good. Some are bad. For example, financial speculation over the price of staples such as rice and wheat may be deemed “rational” and a form of “wealth creation”, but it does increase malnutrition and illnesses. In other terms, the invisible hand seems to possess an invisible brain, which is why ordoliberals à la Rhonheimer, unlike libertarians and radical laissez-faire liberals, have long recognised the importance of at least some State intervention.

 

3. Imperfect imperfections

In connection with the importance of State intervention, Rhonheimer introduces a number of additional qualifications that cause the “free market” to come across as more inefficient than initially stated in the thesis. Albeit a necessary one, this mechanism is not a sufficient condition for prosperity or consumption. It is said that it “frequently” leads to prosperity, i.e. not always (10). It is incapable of providing many “public goods” (14). It is prone to “failures” (13). If the State does not intervene, it generates “cartels” (15). Indeed it possesses “a tendency to destroy itself” (15), given also that it causes major social “problems” such as “inequality” (25).

These qualifications are unlikely to sound surprising to most liberals, for, in varying degrees, the near-totality of them acknowledge that some imperfections do affect the market system. However, it is perplexing to notice that, under their perspective, qualifications of the actual market economies such as the ones listed by Rhonheimer are not seen first of all for what they are, i.e. features of the existing markets. On the contrary, they are seen as exceptions to the implicit rule, which assumes markets to be perfect, even if they are clearly not perfect. Indeed, a few years before his death, liberal economist John Kenneth Galbraith (2004) stated the very talk of “free market” to be nothing but a “fraud” (in the title) aimed at hiding the historical fact of capitalism, that is to say, a much more fitting term to describe Western economies, inside which there has always been a dominant group planning the economy to its own advantage (e.g. merchants, industrialists, absentee owners, managers, financial managers), conspicuous market manipulation (including creating demand by operant conditioning techniques) and extensive conditions of monopoly and oligopoly.

Textbooks often refer to methodological convenience when explaining why economists assume perfect markets. Though understandable, such a prioritisation of methodological convenience over empirical evidence is a grave departure from standard scientific methodology. Galileo may have invited the scientific inquirer to reason ex hypothesi, but he never maintained that contrary evidence should be systematically side-stepped in order not to change the starting hypothesis. In the natural sciences, hypotheses are meant to be tested and revised in light of empirical evidence. Only the formal sciences content themselves with coherent theoretical constructions (cf. Hintikka et al., 1981).

 

4. Vaguer and vaguer referents

The absence of exact instantiations of the clearly unempirical “free market” is only the beginning. If we allow for some State intervention, as Rhonheimer does, what should count then as truly “free market” and “socialist” economies? Where should we draw the line of demarcation?

These two terms are almost omnipresent in both recent political history and scholarship, yet their actual separation is far from obvious. Indeed, from a 19th-century conservative perspective, liberals and socialists were hardly distinguishable from each other, as the political critiques by Pope Pius X or Friedrich Nietzsche exemplify. Furthermore, before the 19th century, most societies in human history had not been market societies. They may have contained some markets (e.g. slave trade in the ancient Mediterranean), but most of their members did not participate in them (cf. Boldizzoni, 2011). As far as we can ascertain, subsistence and reciprocity were their main features, as reflected also in their culture, which kept the analogues of today’s economic rationality as limited secondary instruments to other primary social goals, such as community status, personal honour, or the salvation of each believer’s immortal soul.

Great achievements were possible in these older societies, whether in the arts, philosophy, mathematics, law, engineering or religious life. Such human accomplishments seem to have little to do with “free markets” or the size of a country’s GDP, and perhaps may be unrelated to whatever prosperity the hypothesis at issue implies. Still, it is not aimless to ponder upon the fact that even the great scientific discoveries that led to the technologies whereby 20th-century human populations boomed worldwide, in both self-proclaimed “capitalist” and “socialist” economies, were made in countries with smaller GDPs than today and limited “free markets” (cf. Galbraith, 2004). Moreover, modern societies, in which commercial and financial markets have become much more extensive and influential, have often retained—sometimes up to the present day—significant elements of subsistence and reciprocity (e.g. small-scale farms in Scotland, Poland and India), as well as many development-spurring elements of public ownership and public planning (e.g. Venice’s publicly owned merchant and military fleets; George C. Marshall’s post-WWII ERP; Germany’s, Brazil’s, North Dakota’s and China’s public banks).

Additionally, it should be noted that Ronheimer himself claims that genuine free markets existed worldwide only for a brief period of time, i.e. “between 1850 and 1870”, and that self-proclaimed “free market” post-WWII USA has resembled post-WWI Germany in maintaining the State-centred structures inherited from their war economies, which still allow the State, for example, to bail out bankrupt private firms (21). In short, the issue of identifying genuinely “free-market” and “socialist” economies is not an easy one. Not even post-war USA may count as a decent token of the former type of economy, at least according to Ronheimer, who compares them to the historical champion of cartel-friendly organised capitalism, i.e. Germany (cf. McGowan, 2010).

Any firm, trenchant scientific evaluation of the historical experience of concrete societies seems therefore less and less likely, at least if we take Rhonheimer’s considerations seriously, for we lack clear referents for the key-terms of “market” and “socialist” economies.

 

5. Non-existence

The distance from concrete societies increases further whenever liberals like Rhonheimer assert that the “free market” is an ideal, i.e. something that does not truly exist in reality (I shall not dwell on the contradiction entailed by the claim that he makes about free markets having existed worldwide only for a brief period of time). In other words, it is a purely theoretical construct, an empirical impossibility, for the human being is actually incapable of operating according to it. Perfect markets as such, in whatever Hyperuranus they may be located, are therefore not to be blamed for crises, unemployment or whatever other misfortune may befall upon us. People are. The former are not around. The latter are.

Liberals seem not to notice the troublesome logical implications of such an approach, for not only does it mean that there is no clear empirical evidence that free markets are the one and only way to prosperity, but also that there cannot be any, for they have never been truly present, since they are not suited to “the human condition” (15).

Moreover, liberals do not seem generally to notice that their approach is analogous to that of many 20th-century Marxist zealots who, when confronted with the failures of Eastern Europe’s “real socialism”, argued that their theory was correct, since its practice alone had failed, given various and varying human flaws. In short, no amount of contrary evidence could disprove their stance.

 

6. Unfalsifiability

The Marxist zealots’ case leads us to the most fundamental and most intractable logical knot of the liberal position with regard to the markets’ unique ability to generate prosperity.  If (a) the genuine “free market” cannot be established, for it is a theoretical construct inconsistent with “the human condition”; and if (b) the actual historical experience of what is commonly referred to as the “free market” or “capitalism”, i.e. the history of mostly Western developed countries over the past three centuries, is one of considerably imperfect applications involving significant elements of State intervention and ownership (e.g. post-bellic Germany and USA), why is the market necessarily responsible for wealth and, to some extent, well-being, whereas significant State intervention and ownership are not? Why not the two of them together, on a par? Or why not either of them, depending on the specific circumstances of each particular case, duly investigated by means of close historical, economic, medical, sociological, anthropological, environmental and axiological analyses? Principled comparisons are possible, but they must rest on solid empirical ground. And why should we ignore other factors altogether, such as gifted individuals, fortunate circumstances, scientific discoveries, cheap energy sources, literacy levels, or religious dispositions? Must it be always the markets that save the day?

By his own account and qualifications, Rhonheimer has no real answer to these questions. Quite simply, he states his thesis and uses it to read history so as to be allowed to state it. In other words, Rhonheimer is assuming a priori that the “free market” produces necessarily wealth and, to some extent, wellbeing. By means of that assumption he then proceeds to read human history as its verification—State-led development, recurrent crises, environmental degradation and social tragedies notwithstanding. Verification is open; falsification is not. This is a profound methodological flaw not just in Rhonheimer’s essay, but also in much economic thinking. In fact, it does begin with Adam Smith’s Wealth of Nations and reaches its highest peak in laissez-faire economics, which argues that the “free market” is the necessary and sufficient condition for human prosperity. In all of its forms, it is an example of scientific unfalsifiability, or pseudo-science, for such an assumption, whereby “free markets” are bound to generate prosperity, admits of no counterevidence. Let me explain better how this unfalsifiability is the case:

 

  1. In the first place, insofar as it is assumed that unhindered markets bring about prosperity, if we do not have prosperity now, then we must simply wait and abstain from causing undue hindrance. As Christians and Marxists have long known, eschatology calls for patience; hence the recurrent phrases commonly attached to so-called “market reforms”: “in the long run”, “future generations”, “long-term benefits”, etc.
  2. Secondly, if waiting is not a credible option and we do not have prosperity yet, then we can always blame the government (e.g. ‘corruption’, ‘red tape’) or some dishonest private actors (e.g. ‘crony capitalism’, ‘State capture’ by special interests) for being unfaithful to the actual spirit of “free markets” and therefore causing hindrance. Markets fail not, people do—although one can legitimately wonder what markets may be if not people transacting with one another within a certain normative setting (cf. Barden & Murphy, 2010).
  3. Furthermore, insofar as Smith’s followers and ordoliberals à la Rhonheimer argue as well, though often reluctantly, for the desirability of some, however limited State intervention (e.g. Smith’s progressive taxation, Presbyterian-style education of the youth, public regulation of banks and mentally destructive working conditions; Eucken’s redressing of socially detrimental unfavourable market outcomes), they corner public authorities in a hopeless argumentative position. Given the starting point, growth and prosperity can always be seen as the result of the markets’ enduring degree of freedom—i.e. not of the State’s intervention—while crisis and misery can always be blamed onto the State—i.e. not onto the markets being actually unable to generate growth and prosperity.

 

Operating under such an assumption, markets can never be wrong, whatever environmental or social ills may have arisen. Thus, not only can prejudicial favour for the free market go on unchallenged. Also, if the markets do not deliver the promised bounty, the cure can be said to be only more of the same. Unsurprisingly, this is exactly what happens in Rhonheimer’s essay: “markets”, he writes, are “normally and as a matter of principle the solution” (12; emphasis in the original). And equally unsurprisingly, many leadings statesmen and politicians seek too more of the same (e.g. Italy’s PM Mario Monti, 2012).

 

Conclusion

Rhonheimer’s essay is fallacious, given the self-contradictory confusion that results from insisting upon the markets’ necessary beneficence whilst also piling up observations and qualifications that point precisely to the opposite conclusion. Like all analogous liberal assessments, it is built upon an unfalsifiable hypothesis that makes liberals highly unlikely to:

  

(a) Read historical experience in ways that may render more complex or contradict the original assumption (e.g. Earth-wide ecologic collapse, recurrent crises, continuing unemployment, the wasteful failure of most enterprises and products launched every year, successful development by public planning of industrial production or strategic public subsidies), so as to acknowledge that capitalism à la Galbraith is at work and, though driven by the same principles of the “free market” (e.g. growth, market confidence), it is not necessarily beneficial to societies at large and must be therefore integrated, constrained and/or contrasted by other principles (e.g. sustainability, human rights; cf. Polanyi, 1944)

 

(b) Avoid engaging in pseudo-scientific ad hoc explanations, or de facto exculpations, so as not to revise the original assumption (e.g. people fail markets and not vice versa; the State’s pro-market legislation, liberalisations and privatisations are to blame, for they were erroneous, corrupt or insufficient; State institutions are to blame for financial crashes, because of some minor change in the laws that unleashed an otherwise impossible flood of private greed; Mexican, Korean, Russian, Icelandic…, X culture or human nature itself is not suited for the actual application of the “free market” and therefore leads to its historical failure)

 

(c) Envision different, hybrid, pragmatic, contingent or case-specific solutions to economic problems (e.g. mixed economies; voluntary communes, cooperatives and social enterprises; State ownership of crucial assets qua cost-abating fourth factor of production; Georgist taxation of economic rent from natural resources; constructive cooperation with cartels and oligopolies; ecologically sound rationing in view of gradual retreat from the environment and life-sustaining de-growth)

 

(d) Conceive of possible major alternatives, whether based on past experiences (e.g. monastic communities, the Israeli kibbutzim) or untested and novel ones. Human freedom entails creativity and change that cannot be predicted in advance. (cf. Castoriadis, 1998)

 

(f) Realise clearly that by assuming the markets’ beneficence as necessary, promoting freedom to trade as paramount and reinforcing scepticism vis-à-vis public intervention and regulation, liberals make it more difficult, if not impossible, to discriminate effectively between good and bad growth, good and bad market confidence, good and bad markets, and good and bad goods. Thus, ecologically and biologically destructive economic growth keeps being pursued instead of growth in life-capacity alone; wealthy investors’ desiderata keep being prioritised over the life-needs and related demands of deprived local communities; and cigarettes, junk foods, armaments and speculative assets keep being traded because profitable (cf. McMurtry, 2013).

In nuce, the fictional notion of free markets impinges upon reality by buttressing in theory and fostering in practice unfettered capitalism, which has led to disastrous results on economic, social and environmental levels. Yet none of them is blamed upon free markets, since free markets are already assumed to be the paramount way to prosperity, with all good results numbered as proofs of this assumption and all bad results blinkered out—the self-enclosing frame of mind behind all possible interpretations of past and present experiences. Blame for the disastrous results is, in turn, shifted onto other agents, especially the State, on which the near-totality of free-markets adherents first of all depend and the limited intervention of which, albeit grudgingly, they require. It is then easy to use the State as the scapegoat whenever things do not work out as the doctrine assumes they must. And since things do not work out the way they should, then more free market, hence more unfettered capitalism, can be the only answer within such a closed metaphysical circle, which reduces from the beginning all possible solutions to itself.

Yet there is more. Given how pervasive the hypothesis at iusse has been, it follows that politics, policies and entire academic programmes have been built upon a fundamentally unscientific assumption. I do not object to having unscientific assumptions. Indeed, some of the most important dimensions of human existence are built upon unscientific assumptions, such as intimate love and religious life. I do object to doing so, though, and not admitting it. Were liberal economists to state that they offer an essentially religious interpretation of reality, based upon some successful partial instantiations—analogous to the proofs of reasonability of scholastic theology—and the hope that the markets left largely unhindered may provide us with prosperity, then they would be intellectually honest. They could follow in the steps of Richard Rorty (1998), who advocates political liberalism qua civil religion of democracy. They would be consistent with Friedrich Hayek’s (1992) characterisation of the market order as “transcendent” and analogous to the religious one in assuming that its own unfathomable will, “not mine” i.e. humankind’s, “be done” (72). They would be reminiscent of the likely Providential character of Adam Smith’s (1776, IV.ii.9) “invisible hand” (e.g. Oslington, 2011).

But economic liberals do not. Economics textbooks say nothing of the sort. They assume the free markets’ existence, which is itself empirically doubtful and at best historically limited, assume away any flaw by way of a priori methodological perfection, and ascribe to them the necessary generation of human prosperity, whatever contrary evidence there has been in human experience, such as State-led development (e.g. Communist China), prosperous cartel-intensive economies (e.g. Bismark’s Germany), the collapse of the first age of market globalisation (1870s-1914) and the ensuing Great War and Great Depression, the booming populations of 20th-century socialist nations (e.g. USSR), or the on-going worldwide depletion of natural and human systems upon which “the life and health of the billions [are] supported” (Hayek, 1992: 75). Their reticence and assumption are not only unscientific; they are also unprofessional. In truth, they are a nothing less than a lie. And lying is, under normal circumstances, unethical.

 

 

References

 

Barden, G. & Murphy, T. (2010), Law and Justice in Community, Oxford: Oxford University Press.

 

Baruchello, G. & Johnstone, R.L. (2011), “Rights and Value. Construing the International Covenant on Economic, Social and Cultural Rights as Civil Commons”, Studies in Social Justice, 5(1), 91-125.

 

Boldizzoni, F. (2011), The Poverty of Clio, Princeton: Princeton University Press.

 

Castoriadis, C. (1997), “The ‘Rationality’ of Capitalism”, Figures of the Thinkable, available at http://www.notbored.org/FTPK.pdf

 

Castoriadis, C. (1998), The Imaginary Institution of Society, Cambridge, Mass.: MIT Press.

 

Galbraith, J. K. (2004), The Economics of Innocent Fraud, Boston: Allen Lane.

 

Hayek, F.A. (1992), Collected Works, vol. I, London: Routledge.

 

Hintikka, J. et al. (eds. 1981), Theory Change, Ancient Axiomatics, and Galileo’s Methodology, vol. I, Leiden: Springer.

 

Hudson, M. (2012), The Bubble and Beyond, Dresden: Islet.

 

Itkadmin (2007). Inuit Recommend Changes to Canadian Environmental Protection Act, Inuit Nunangat: Inuit Tapiriit Kanatami.

 

McGowan, L. (2010) The Antitrust Revolution in Europe: Exploring the European Commission’s Cartel Policy, Cheltenham, UK & Northampton, MA, USA: Edward Elgar.

 

McMurtry, J. (1999; 2nd ed. 2013), The Cancer Stage of Capitalism, London: Pluto.

 

Monti, M. (2012, 10 September) “Italy to return to growth in 2013”, Reuters, available at http://www.reuters.com/article/2012/09/10/italy-gdp-idUSL1E8KAH6720120910

 

Oslington,P. (2011), Adam Smith as Theologian, London: Routledge.

Polanyi, K. (2001/1944), The Great Transformation, Boston: Beacon. 

Rhonheimer, M. (2012), “Capitalism, Free Market Economy, and the Common Good: the Role of State Authorities in the Economic Sector”, first chapter in Martin Schlag & Juan Andrés Mercado (eds.), Free Markets and the Culture of Common Good, Dordrecht: Springer.

 

Rorty, R. (1998), Achieving Our Country, Harvard: Harvard University Press.

 

Samuelson, P. (2008), “È’ l’ultimo regalo dell’era  Bush“, La Repubblica, retrieved from http://rassegna.governo.it/testo.asp?d=33912628

 

Sarkozy, N. (2008, 23 October), “Morta ideologia della dittatura dei mercati”, La Repubblica. retrieved from http://www.repubblica.it

 

Sloman, J. (2006), Economics, 6th ed., Upper Saddle River: Prentice Hall.

 

Smith, A. (1776/1904), An Inquiry into the Nature and Causes of the Wealth of Nations available at http://www.econlib.org/library/Smith/smWN.html

 

Tremonti, G. (2012), Uscita di sicurezza, Milan: Rizzoli.

 

Vegas, G. (2012, 14 May), “Vegas: ‘C’e’ il rischio dittatura dello spread’”, Il Sole 24 Ore, retrieved from http://www.ilsole24ore.com/art/finanza-e-mercati/2012-05-14/relazione-consob-vegas-lancia-110722.shtml?uuid=AbXHvNcF

 

 

 



[1] All translations are mine, unless stated otherwise.

[2] I have published a critical essay of this volume in the fourth 2012 issue of Economics, Management and Financial Markets.

[3] On this point, the UN’s Committee on Economic, Social and Cultural Rights has long espoused an aim-driven approach: the specific economic system of each member nation is not important, as long as human rights are protected, respected and fulfilled (cf. Baruchello & Johnstone, 2011).

Responsibility and Capitalism. A Phenomenological Way to Approach the Economic Crisis

1. Capitalism as the economic expression of onto-theology

 

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages[2].

 

The words of Adam Smith, originally used to justify liberalist economy, presently sound like an act of accusation. Classic capitalism encourages pure egotism, relying on an ‘invisible hand’[3], which should promote the public interest together with the individual one. However, the hand of the market is not invisible, is pitiless. Capitalism in nothing but a pursuit of money, of more and more money. Then, as time goes by, wealth accrues in the hands of fewer and fewer people[4]. Marx already predicted the concentration of capital as a necessary consequence of free competition. However, he could not predict the birth of financial capitalism. Neo-liberalism spread over Western countries, leading to financialization, that is ‘the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies’[5].

 

 

While classic capitalism links money to production, financial capitalism is based on uncertainty[6]. Money increases or decreases according to the Stock Exchange prices. Since they are unpredictable, people could gain or lose fortunes in a day: a risky investment is nothing but gambling. In this way, the concentration of capital in a few hands comes faster. Those who are not successful go broke and damage other people: bankers and brokers lose the money of whole companies and families, shopkeepers and businessmen close their activities and dismiss people who work for them. There are not only employers and workers who pay the price, but also small capitalists. Unemployment increases and consumes decrease. In this way, even production decreases and the system itself collapses.

 

This is a devastating situation, depending not so much on the structure of the system, as on its moving principle. Capitalism, in its classic definition, should stimulate production and consuming, appealing to individual interest. But the course of egotism is one-way: it aims to individual affluence, regardless of its impact on the others.

 

Capitalist economic systems are characterized by the private ownership of property and the consensual exchange of goods and services in a free market.[7]

 

According to this recent definition, common both to classic and financial capitalism, egotism reveals to be their driving force. The expression ‘private ownership’ refers to individual possession and power, while ‘free market’ indicates liberty of action.

 

Philosophically speaking, capitalism is nothing but the economic expression of onto-theology. Exactly like the Ego of Western philosophy[8], it is regardless of the Other. The theoretical I subjects everything to its structures and the practical I cares only about its freedom. In the economic case, the Ego subdues the Other to the main category of capitalism, that is profit. The practical consequence of this philosophical statement is that an indiscriminate pursuit of money causes the exploitation of environment, animals and people. The Ego prevails on the Other, but would be powerless without Him. Profit has to be made at the expense of somebody, who cannot be too weak, otherwise he will die or become a slave. The free market disappears without a certain balance: money can circulate only among people who produce, work, and consume. This is why, if the Ego takes too much power, then will lose everything.

 

The current economic crisis could be seen as a critical moment when, philosophically speaking, the I is capable of annihilating the Other. The next step would be the following: a few people with a high concentration of money, laying down the law to the majority and spoiling the environment of its resources.

 

There are two solutions to avoid this disaster: the first is destroying capitalism and adopting another economic model, communism for instance; the second is putting limits to capitalism itself. The former corresponds, in philosophy, to the annihilation of both the I and the Other, and to the birth of an anonymous subject; the latter would be the introduction of a different relation between identity and alterity, that is responsibility. If neglecting ethics is destroying capitalism, adopting ethics will save it.

 

 

2. A general lack of ethics

 

The present economic crisis is the symptom of a disease. Capitalism could be seen as a living organism, whose childhood, adolescence and youth were quite healthy. Some temporary illnesses, as the crisis of 1929 and the post-war situation, did not destroy it. Capitalism is, at the moment, in its maturity. After a fast and flourishing growth, it took a definite shape: at the top there are the investors (individuals, private and public institutions), who finance with their money the whole system; they fund producers and providers of services, who distribute their products and services through mediators and sellers; in order to produce, sell and put in operation, a great amount of manpower (workers and employees) is necessary; at the end, there are the consumers, who buy products and services. Every element of capitalism has to work correctly, like the organs in a living system. If one of them has problems, it affects the other elements and the system collapses.

 

Capitalism is presently affected by a disease and is in great danger. The most acute stage passed away, but the organism is not regaining its health. First of all, it is necessary to identify the illness and the affected parts of the organism. Fortunately, the diagnosis is not difficult: the crisis started from financial institutions and companies (Lehman Brothers and Bernard Madoff Investment Securities, for instance). Their collapse created a sudden lack of money and damaged producers, providers and money savers in general. In this way, there were indirectly affected also mediators, sellers, workers and employees, who saw their revenues decreasing or vanishing. And, since every member of the system is a consumer, products and services were bought to a lesser extent. The crisis of consumption caused, on the other hand, a new crisis of production and service-providing[9]. It is a vicious circle generating a gap between the majority of people, who progressively lose their wealth, and a few people, who hold money and power. This gap already exists, but is becoming greater and greater.

 

The crisis is due, primarily, to the heads of financial capitalism, but it would be a mistake to blame only them. There are also other people who are responsible in a similar way, people who hold a great amount of money and power: executives and owners of national and multinational companies, big traders and mediators. In Italy it happened, for instance, that Calisto Tanzi, President of the food company Parmalat, was guilty of bankruptcy fraud and criminal association. His immoral policy, nourished by the connivance of some politicians and bankers, led to the ruin of a great number of investors. The bankruptcy happened in 2003, four years before the collapse of the subprime mortgage market in the United States. Then the current crisis came, as a product of a diffused malpractice. When powerful people do not behave in a responsible way, they create a great damage to society. The crisis is not the disease of capitalism, but a serious symptom of it: the disease is what produced the crisis itself, that is a general lack of ethics.

 

Before giving a definition of what ‘lack of ethics’ means, it is necessary to define ethics itself. Capitalism is seen, in this paper, as the economic expression of the Ego of onto-theology. According to Levinas, the guiding principles of the Western I are intentionality and freedom: the former is a grasp of what is external to the subject; the latter is the ability to act through free will. Levinas takes position against Husserl, the father of phenomenology and of conscience as intentionality[10]. Even if his criticism could be considered exaggerated (Husserl had no intention to theorize a ‘tyrannical subject’[11]), the author of ‘Totality and Infinity’ is extraordinary in delineating ethics.

 

Morality is not added to the preoccupations of the I, so as to order them or to have them judged; it calls in question, and puts at a distance from itself, the I itself […]. The “vision” of the face as face is a certain mode of sojourning in a home, or […] a certain form of economic life. No human or interhuman relationship can be enacted outside of economy; no face can be approached with empty hands and closed home. Recollection in a home open to the Other –hospitality – is the concrete and initial fact of human recollection and separation[12].

 

Levinas points out the ‘separation’ between the Ego and the Other: the latter is not an alter-ego, another subject, but someone radically different. The other person is irreducible to the Ego. Notwithstanding this separation, there is an original relation between them: the subject approaches the other person in a particular ‘economic’ way. Since ‘economy’ means ‘management of a household’ (from the Greek words oikos, ‘house’, and nomos, ‘law’ or ‘rule’), every relation with something or somebody has to do with interiority. While the objects are included in the domestic dimension of the subject (as nourishment, tools or furniture), the other person cannot be grasped. The interhuman relationship is hospitality, is opening one own’s doors to the other.

 

According to Levinas, ethics is not only reception, but also responsibility. The identity of the subject is orientated to the alterity of the other, ‘without a prior commitment’[13]. Responsibility precedes freedom, it is independent from every choice. One is responsible of the other ‘despite oneself’[14], thus nobody can avoid responsibility.

 

From the economic point of view, it is a very important principle: it is not based on what one ‘chooses’ to do, but on what one ‘is’. Applying Levinas’ statements to capitalism, one could say the following: if one ‘is’ richer and more powerful, then one ‘will be’ more responsible, despite one’s choices. It does not mean that freedom is not important, but that responsibility founds freedom. Responsibility is the moving principle of ethics, while freedom is what makes it concrete. Behaviour depends on free will, which acts ‘according to’ or ‘against’ responsibility. This is the reason why a single action or a whole behaviour is responsible or irresponsible. Shortly, if ethics is based on responsibility, then moral activity will be responsible and immoral activity irresponsible.

 

Adapting Levinas’ phenomenology to economic analysis, one could state the following: intentionality and freedom exactly correspond to the ‘private ownership’ and ‘free market’ of capitalism. They are based on egotism and on an instrumental relation to the other. If egotism coincides, in capitalism, with obtaining profit, the other will be seen as a mean to make money. This relation to the other is absolutely unethical. Ethics, instead, is moved by responsibility and sees the other as the main addressee of action.

 

However, Levinas’ thought is too radical to be concretely applied: according to him, the subject should give itself unconditionally, because it is guilty from time immemorial[15]. Levinas’ ethics is oriented to non-reciprocity and, economically speaking, it is inapplicable. In order to move the market, a balance between one’s needs and the others’ needs is necessary. It would be better, in this case, to follow Ricoeur’s reciprocal ethics: one should see ‘oneself as another’, that is an intimate implication of otherness in identity[16]. Ethics requires both an original relation to the other (Levinas) and a practical bi-directional attitude (Ricoeur).  

 

The Golden Rule and the imperative of the respect owed to persons do not simply have the same field of exercise, they also have the same aim: to establish reciprocity wherever there is a lack of reciprocity[17].

 

The keyword is ‘respect’: respect of every person as the aim of morality, respect of oneself and the other in the same amount (it recalls the Christian principle ‘love your neighbour as yourself’[18]). ‘Reciprocal’ does not mean ‘claiming something in exchange’, since the logic of ‘exchange’ is based on egotism. Reciprocity is seen as a bi-directional respect, towards oneself and towards the other.

 

At this point, if ethical behaviour is respectful, unethical behaviour will be disrespectful. Unethical behaviour could be defined as a certain number of actions, fulfilling one’s aims and directly damaging (or putting in danger) the other. ‘Directly’ means that there could also be indirect consequences of one’s own action, not imputable to the agent. Unethical behaviour means betraying one’s responsibility towards the other. Phenomenology usually considers the other as ‘the other person’, but human actions do not effect only people. The other could be a human being, as well as an animal or the environment. They cannot do anything ‘in exchange’, but it does not matter, since reciprocity, in this case, does not involve exchange.

 

A concrete example of what unethical behaviour means is given by various bankers in the United States and United Kingdom. During the economic crisis, they violated ethics in this way: through ‘deception’ and ‘half truths given to authorities’ (lying), ‘violation of securities legislation’ and ‘allegations of fraud’, ‘misleading balance sheets’, promoting an ‘excessive bonus culture’, ‘ignoring internal corporate risk controls’, ‘conflict of interest’, ‘undue short-terminism’, ‘excessive risk-taking’, ‘callousness towards impoverished home owners’, ‘over-concentration of economic power by large banks’[19].

 

These actions are directly imputable to bankers, who violated both ethics and law. In this way, they caused a great damage to society, especially when financial institutions collapsed. Having an over-concentration of economic power gave an enormous amount of responsibility to the bankers, who used it, paradoxically, to escape responsibility itself.

 

Marx thought that the crisis of capitalism depended on over-production and concentration of money in a few hands[20]. The evolution of capitalism through financialization, together with globalization, changed the economic situation. The current crisis is not due to over-production, but to an indiscriminate pursuit of money. Capitalism is in danger not for its dialectical movement, but for a lack of ethics. The moving principle of ethics is responsibility, so ‘lack of ethics’ means ‘violation of responsibility’. Moreover, everyone is responsible of oneself and other people, and more power means more responsibility. For this reason, a lack of ethics is worst in powerful people than in common ones, because the consequences are more serious. An ethical revolution is then necessary and has to involve, primarily, the higher levels of the economic system.

 

 

3. A Phenomenological perspective on ethical revolution

 

An ethical revolution could be considered from several points of view. In this paper, a phenomenological perspective is adopted. ‘Phenomenology’ is here considered as an equivalent of ‘egology’: everything is considered, perceived, and felt ‘in first person’, from the point of view of the subject. On the ethical side, it has some interesting consequences. First of all, phenomenology claims an original responsibility towards the other.

 

The knot tied in subjectivity, which when subjectivity becomes a consciousness of being is still attested to in questioning, signifies an allegiance of the same to the other, imposed before any exhibition of the other, preliminary to all consciousness […]. This allegiance will be described as responsibility of the same for the other, as a response to his proximity before any question[21].

 

Ethics does not ‘proceed’ from consciousness, but ‘precedes’ it. The human subject has a moral character, so that he cannot avoid responsibility. The latter is part of his ontological (Levinas writes ‘pre-ontological’[22]) constitution. The subject is introduced, from its birth, in a relational world. When it lives distant from people, it is related with animals and nature. Loneliness is nothing but an abstraction. Using Sartre’s words, ‘the fact of the other is incontestable and touches me to the heart’[23]. Human beings are then relational (not only social) beings. The way in which they interact is based on responsibility. From the economic point of view, it is very important, because it implies the following: no one can avoid responsibility towards the other. An economic subject is responsible of the strategy chosen, of its application, and of its consequences. Violating responsibility implies paying for one’s own mistakes.

 

A second consequence of a phenomenological perspective is the singularity of both the ego and the other. Every subject has a common core[24], typical of human knowledge, perception, and feeling, but a concrete ego is absolutely unique. Moreover, it relates to an other who is absolutely unique as well.

 

Reason presupposes these singularities or particularities, not as individuals open to conceptualization, or divesting themselves of their particularity so as to find themselves to be identical, but precisely as interlocutors, irreplaceable beings, unique in their genus, faces[25].

 

Ethics refers to singular beings, either subjects and addressees. Every ego is different and relates to a different other. From the ethical point of view, no one can be replaced in assuming responsibility. Every person, here and now, is called to an original relation to the other. This relation does not consist in universal principles, belonging to universal subjects, and applied to universal addressees. Phenomenology does not theorize either norms, or rules. It does not matter ‘what’ the subject does (‘this act’, ‘that act’), but ‘how’ it does it (‘respecting’ or ‘not respecting’ the other). An ethical behaviour is that which follows one’s original responsibility towards one’s concrete neighbour.

 

In capitalism, it means that every single member of the system (executive, trader, worker, employee, customer) is not responsible for what the others do, but for what he or she does. The amount of responsibility is greater according to the amount of money and power one has. If, for instance, an employee behaves in a bad way towards a customer, he or she will have to pay for his or her single action. If an executive adopts an irresponsible strategy, he or she will have to pay not only for the action, but also for all that follows. In the case of people with great power, a single mistake has many consequences and involves many people.

 

Thirdly, phenomenology avoids two kinds of danger: anonymity and alienation. The uniqueness of both the ego and the other preserves them from the tyranny of universality. From the philosophical point of view, the singular avoids a subordination to the Same (or Being, or Spirit)[26]. In economy, it gets away from Hegel’s ethical State and Marx’s socialism. The difference between the former and the latter is that Idealism maintains private property, while communism abolishes it. In both cases, the ‘good’ of individuals is established by State institutions, which manipulate everything, from the economy to private life[27]. Equality is guaranteed, but at the price of making individuals anonymous beings.

 

Phenomenology also helps against alienation. In this case, it is better to adopt Ricoeur’s version: the thought of Husserl is inclined to alienate the other (‘all that which holds for myself holds, as I know, for all other human beings’[28]), while Levinas risks to alienate the subject (‘the-one-for-the-other goes to the extent of the-one-being-hostage-for-the-other[29]). According to Ricoeur, oneself is seen as another, implying respect on both sides.

 

This ethical principle is necessary to heal the plague of capitalism, that is the alienation of a part of the system. Marx thinks that there are only two classes, oppressors and oppressed. The former are capitalists, the latter proletarians. Workers are alienated by owners of companies, who make profit with the exploitation of proletarian labour[30]. However, financial capitalism is characterized by a more complex structure. Alienation usually concerns the parts of the system who own less money: workers, employees and small businessmen, for instance. Phenomenology leads, in its ethical and reciprocal form, to a balance between stronger and weaker members of the system.

 

Ethical capitalism, that is capitalism passing through ethical revolution, is a third way between communism and classic/financial capitalism. The former reduces all subjects to anonymity, the latter is a source of alienation. Phenomenology theorizes uniqueness (Levinas) and reciprocity (Ricoeur) between the ego and the other.

 

Fourthly, a phenomenological perspective warns against a pseudo-ethical behaviour. ‘Being ethical’ does not mean ‘having an ethical coat’. There are companies who put ‘something ethical’ in their product or in their policy, in order to attract investor, partners or customers. For example, an enterprise produces part of its eggs, breeding hens in open air. In this way, it attracts people who are sensitive to the living condition of animals. These customers will pay a higher price to buy this kind of eggs. However, there are also people who are content if hens are not in cages, even if they are bred indoor. And there are customers who do not care about animal conditions, but only about price. The latter will buy eggs produced by hens bred in batteries. This is exactly the case of the Italian company AIA:[31] its executives understood that better conditions for animals attract more customers. But the company is not moved by ethical reasons, otherwise it would limit the whole production to free-range eggs. Companies like AIA purely act for profit.

 

If the purpose of a behaviour is other than ethical, such a behaviour will be not really ethical. However, a moral appearance is useful to make money: being good pays. An ethical film enhances profit, even if the substance is unethical. First of all, not all the people are sensitive to moral behaviour, because most of them rather prefer to avoid an immoral behaviour. Secondly, they pay willingly an higher price up to a certain threshold (30%, 50% of sustainable production, for instance). This threshold is not clearly determinable and is different case by case.[32] This is why companies do something ethical, as much as it does not hinder profit.

 

Phenomenology rejects such a kind of behaviour. ‘Being ethical’ means ‘acting responsibly’. When a company follows a moral conduct, it does not limit itself to some good actions. Ethics is neither charitable, nor instrumental. An ethical producer of eggs, for instance, breeds chicken in open air, provides them with healthy food, leaves them space enough to live comfortably, heals them when they are sick, avoids to raise too many hens if good conditions cannot be guaranteed. This kind of behaviour is ethical because it respects both customers and animals: it provides buyers with eggs of the best quality and, at the same time, allows chicken to have a good life. This kind of behaviour is, philosophically speaking, oriented towards the other.

 

If moral behaviour is, on the contrary, money-oriented, it will not be moral at all. Since current capitalism aims to profit, it meets ethics only by accident. Ethics is usually a limitation to profit: the “obsessive materialism which capitalist economy promote is one of the weaknesses of capitalism when it is considered from an ethical point of view”[33]. An ethical behaviour is not necessarily ascetical and includes material goods and pleasures: in order to avoid alienation, the ego has to preserve itself. Capitalism does not purely promote self-preservation, but an indiscriminate pursuit of materialism. As the economic expression of onto-theology, capitalism is ruled by egotism.

 

Phenomenology goes beyond the tyranny of the Same, of the universal subject, of indiscriminate property and freedom. Stating the importance of ethics, of original responsibility, of uniqueness, phenomenology does not destroy the subject, but makes it ‘singular’. Definitely, it has to renounce to its tyrannical power, but not to itself. What is here suggested is not to alienate the ego in behalf of the other. Building one’s own identity is necessary to self-preservation and, moreover, to have ‘something to give’. If the subject is alienated, it cannot offer anything to the other. Ethics should not imply a fission of one’s identity[34], but an equilibrated inclination to giving.

 

The economic consequence of such a perspective is not the end of capitalism. If capitalism is based on egotism and egotism is ‘partially’ preserved by phenomenology, then capitalism will be ‘partially’ preserved by phenomenology. Phenomenology does not accept capitalism in its current form, because it is ‘wholly’ based on egotism, that is indiscriminate freedom and property. However, it accepts a different form of capitalism, which is only ‘partially’ ruled by egotism. This new kind of system is called ‘ethical capitalism’ and is based on respectful freedom and property.

 

Defining what is and what is not ‘respectful’ is the most difficult task to accomplish, due to the open character of phenomenology. Phenomenology is not a normative system, but a perspective. For this reason, it does not suggest a precise behaviour, but a different way to approach the world. Classic and financial capitalism are based on individual interest; ethical capitalism is based on responsibility. One’s freedom and property are not destroyed or ‘limited’ by the other’s freedom and property. One’s freedom and property is directed both to self-preservation and preservation of the other, that is the environment and its inhabitants. Ethical capitalism is not self-oriented, but other-oriented: it is directed both to the other and to the self as another. Responsibility is opposed to alienation, because it is bi-directional. This is why a responsible behaviour, on large scale, could save capitalism from its gaps and from its ruin.

 


[1] Cf. Hein, E., The Macroeconomics of Finance-dominated Capitalism and its Crisis, Cheltenham: Edward Elgar Publishing, 2012, p. 1.

[2] Smith, A., The Glasgow edition of the Works and Correspondence of Adam Smith, vol. 2a, edited by R.H. Cambell and A.S. Skinner, Oxford: Claredon Press, 1976, pp. 26–7.

[3] Cf. ibid.,  p. 456.

[4] ‘It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals’ (Marx, K., Capital [Cap.], Volume 1, London: Lawrence and Wishart, 1954, p. 586).

[5] Epstein, G. A., ‘Introduction: Financialization and the World Economy’, in Epstein, G. A. (ed.), Financialization and the World Economy, Cheltenham: Edward Elgar Publishing, 2005, p. 3.

[6] In 1938, George Edwards already individuated finance as an element of instability: the current form of capitalism converts real equity in financial one. Edwards was even afraid of a conspiracy by financial institutions. See Edwards, G. W., The Evolution of Finance Capitalism, London: Longmans Green, 1938.

[7] Bishop, J. D., ‘Ethics and Capitalism. A Guide to the Issues’, in Bishop, J. D. (ed.), Ethics and Capitalism, University of Toronto Press Incorporated: Toronto-Buffalo-London, 2000, p. 4.

[8] ‘Ontology as first philosophy is a philosophy of power’ (Levinas E., Totality and Infinity: an Essay on Exteriority [TI], Duquesne: Pittsburgh, 1969, p. 9).

[9] For a specific description of this mechanisms, see Hein 2012.

[10] Levinas criticizes the thought of Husserl in several writings. Cf., for example, TI, pp. 109-110, 121-126; Id., Otherwise Than Being or Beyond Essence [OB], Dordrecht: Kluwer, 1981, pp. 8, 33, 63-66; Id., Discovering Essence With Husserl, Evanston: Northwestern University Press, 1998, pp. 74-75, 124-126, 176-177.

[11] Husserl considers the Other as an Ego-subject, but neither identical, nor subject to the Ego. ‘Each has its place from which he sees the physical things present; and, accordingly, each has different physical-things appearances. Also, for each of the fields of actual perception, actual memory, etc., are different, leaving aside the fact that intersubjectively common objects of consciousness in those field are intended to as to having different modes, different manners of apprehension, different degrees of clarity, and so forth’ (Husserl, E., Ideas Pertaining to a Pure Phenomenology and to a Phenomenological Philosophy, First Book  [Ideas I], The Hague: Martinus Nijhoff, 1982, pp. 55-56).

[12] TI, p. 172.

[13] OB, p. 153.

[14] Ibid., pp. 51, 54-56, 74.

[15] Ibid., pp. 26, 51, 87.

[16] Cf. Ricoeur, P., Oneself as Another, University of Chicago Press: Chicago, 1992, p. 3.

[17] Ibid., p. 225.

[18] Matthew 22:39; Mark 12:31; Luke 10:27.

[19] Thomas, R., ‘Ethics – or the Lack of Ethis – in the Global Financial Crisis 2007-2010’, in Rosamund M. Thomas (ed.), Business Ethics, Cambridge: Ethics International Press, 2011, p. 75.

[20] Cf. Cap., p. 587.

[21] OB, pp. 25-26.

[22] Ibid., pp. 43-44, 78.

[23] Sartre, J.-P-, Being and Nothingness. An Essay on Phenomenological Ontology, New York: Philosophical Library, 1956, p. 367. Even if Sartre is better known as an existentialist, Being and Nothingness can be considered as a phenomenological masterwork. Anyway, the constitutive inter-subjectivity of human beings was first stated by Heidegger, according to which ‘being-in-the-world’ (in-der-Welt-sein) is also ‘being-with’ (Mit-sein). Cf. Heidegger, M., Being and Time, State University of New York Press: Albany, 1996, p. 112.

[24] The phenomenological epoché, theorized by Husserl, searches for a pure consciousness, abstracting from the concrete Ego-subjects. ‘It therefore remains as the “phenomenological residuum,” as a region of being which is of essential necessity quite unique and which can indeed become the field of a science of a novel kind: phenomenology’ (Ideas I, pp. 65-66).

[25] TI, p. 252.

[26] Cf. TI, pp. 46-47, 143, 269-271.

[27] Cf. Hegel, G. W. F., Elements of the Philosophy of Right, Cambridge: Cambridge University Press, 1991, §§ 257-258; Marx, K.- Engels, F., The Communist Manifesto [Manifesto], New York: Russell and Russell, 1963, Chap. 2. According to Hegel, the State is the reality of reason and will, which coincides with individual freedom. According to Marx, communism implies centralization of credit, means of communication, production and education in the hands of the State. Both authors theorize, in order to guarantee equality, a strong Statism.

[28] Ideas I, p. 55.

[29] OB, p. 141.

[30] Cf. Manifesto, pp. 25-26; Marx, K., Economic and Philosophic Manuscripts of 1844, New York: International Publishers, 1964, pp. 108-111.

[31] Products numbered B5110, for instance, come from hens farming to barn, while B5114 are free-range eggs. The other products come from hens bred in batteries. This is why, in 2001, AIA was condemned by the Italian Antitrust. The company showed on its egg-packages images of hens eating on lawns and the proposition ‘uova fresche allevate a terra’ (‘fresh eggs bred ashore’). It could led customers to think that they were free-range eggs, while hens were crowded into big barns (intensive livestock farming).

[32] Cf. Trudel, R.- Cotte, J., ‘Does It Pay To Be Good?’, MIT Sloan Management Review, vol. 50, 2, 2009, pp. 66-68.

[33] Groarke, L., ‘Can Capitalism Save Itself? Some Ruminations on the Fate of Capitalism’, in Bishop 2000, p. 204.

[34] Cf. OB, pp. 49, 104, 141, 180, 185. 

 

Olof Palme: One Life, Many Readings

In short, historiographic reflections have been penalized by a kind of personality cult, even if reversed in the case of Palme’s opponents.[1]

 

1. Literature on Olof Palme

 

His spectacular political career, on the one side, and his tragic end, on the other side, have nourished – already when Palme was still alive – a thriving and deplorable literary genre made up of speculations on his demoniac nature, his crimes, or at best his inadequacies;[2] as well as conspiracy theories of all kinds and hundreds hypothesis on the murder.[3] . In the end of the 1980s the first biography came out, written by the journalist Björn Elmbrant:[4] it is still an unavoidable reference. It was followed later by the purely political biography written by the journalist Peter Antman and by the Social Democratic politician Pierre Schori,[5] who was State Secretary for Foreign Affairs in the second Palme government. Collective volumes[6] followed too, including contributions that focused on particular aspects of Palme’s politics/policies (first and foremost the foreign one)[7], and memoirs by representatives of the Social Democratic Party.[8]

Due partly to the awareness that much was left to be studied with regards to Palme’s life and political role, and partly to the approaching 25th anniversary of his tragic death, recent years have witnessed a renewed biographic effort, thanks first of all to the monumental work (nearly 900 pages) by Kjell Östberg, a historian who has devoted great part of his scientific production to social movements and to the relationship between intellectuals and politics. One could wonder what was left to be said about Palme after this two-volume biography, published between 2008 (1. I takt med tiden. Olof Palme 1927-1969 – Behind the times. Olof Palme 1927-1969[9]) and 2009 (2. När vinden vände. Olof Palme 1969-1986 – When the wind turned. Olof Palme 1969-1986[10]). Nevertheless, in 2010 two more works were published: the short Palme, by Klas Eklund,[11] who was one of the economic advisors of the second Palme government; and the impressive (more than 700 pages) Underbara dagar framför oss. En biografi över Olof Palme (Wonderful Days in Front of Us. A biography of Olof Palme)[12] by Henrik Berggren, historian but above all leading writer of “Dagens Nyheter”, the most influential Swedish newspaper, which typically endorses “independent liberal” stances.

The aim of this article is not to review the last three biographies mentioned above, but to try to identify their methodology, so to speak, then singling out – in a way which may come across as arbitrary – some of the controversial points in Palme’s political career (leaving out both scandals and vulgar attacks), as they will prove to be good opportunities for comparing the interpretations given by their authors.[13]

2. Different ways to tell a life

Eklund’s book differs from the other two works for it is part of a series devoted to the Swedish Prime Ministers in the last hundred years (i.e. from Karl Staaff to the present PM Fredrik Reinfeldt). Each volume is meant as a quick introduction to a specific PM, and in fact Eklund’s Palme is a fairly simple political biography (with only a limited attention to Palme’s private life). Nonetheless, its final section (Arvet efter Palme, Palme’s legacy) makes it different from a flat list of facts and dates. In a few pages, the author takes indeed a stock of Palme’s outcomes and failures and then even goes so far as to try to imagine what could happen if Palme had not been murdered — a kind of counterfactual history, in other words.

Östberg’s and Berggren’s biographies show at first glance a similar structure, not only due to their remarkable length, but also insofar as both aim at an in-depth reconstruction of Palme’s life and role, as well as of the world around him (i.e. 20th-century Sweden and international, history). The title of the first volume of Östberg’s biography, Behind the Times, summarizes very well the author’s starting point, as it is made clear in the Introduction: first of all, the idea that Palme went across several ages during which history turned more than once to a new direction; secondly, the acknowledgement that Palme showed an extraordinary talent for grasping the Zeitgeist and the changes affecting it, and therefore was in the best position for exerting an effective influence on what was going on.

Östberg’s approach is not at all individualistic.[14] His biography is rather a history of Palme within the history of the Swedish labour movement and of its changing relationship with Capital, with a swinging from collaboration to conflict that took place exactly under Palme’s political apex. That does not imply that Palme’s individuality is sacrificed in the end, but rather that the dilemmas which he had to face and the choices which he made are understandable only in the view of the power relations between classes and of the pressures upon the labour movement and its organizations coming both from the Right and from the Left. That explains why the two volumes of Östberg’s biography represent an imposing picture of 20th-century Swedish political and social history.

To sum up Berggren’s work is a trickier task, because of a kind of paradox which somehow undermines it. The main perspective is definitely individualistic, with regards both to the methodology – Palme’s behaviour (as a person and as a politician) is often, too often perhaps, interpreted from a psychological and philosophical point of view – and to the interpretation – Berggren portrays Palme, whom he states to have voted for in 1982 and 1985,[15] far more as a liberal than as a socialist. On the other hand, it is exactly Palme who disappears eventually in the demanding history of Swedish culture and, in a way, Swedish civilisation in the 20th century, which constitutes the actual core of the book. Though fascinated by the gallery of poets, artists, film-makers, theorists and journalists – besides politicians – that Berggren recalls and outlines with great skill, the reader can not help wondering: “where has Palme gone?”

3. “Class treason”

One of the more investigated turning points in Palme’s life are the reasons that led a talented offspring of one of the most influential families in Stockholm to join the Social Democratic Party (SAP) in 1951 – after drawing attention to himself as student leader on an international scale –, only to be appointed two years later as secretary of the then prime minister, Tage Erlander, at the age of twenty-six years.

All three authors stress the formative impact on the young Palme – until then holder of the conservative vision (even if with social and international openings) inherited from his family – of the journeys made around the USA (1948), Eastern Europe (1949) and Asia (1953). These experiences meant the dramatic discovery of a reality made up of misery and oppression.[16] All three authors refuse the common yet misleading explanations focusing on Palme’s opportunism: a young man with his background could have chosen far more promising careers. Besides, that the Social Democratic Party, in power since 1932, would have kept its position until 1976 was something that no one in the beginning of the 1950s could expect. On the contrary, many took for granted the forthcoming end of the Social Democratic age, as the party, perhaps as a consequence of being so successful, seemed unable to renew itself.[17] Why the labour movement then?

Eklund puts forward the easiest explanation: Palme joined the SAP because of his ideology: anti-colonialist, reformist, anti-communist.[18]

Östberg’s thesis is summarized in a few words in the very last page of the second volume, but his whole work illustrates it. Two were the driving forces which turned Palme into a Social Democrat: the awareness that the world was about to change – and that he was in the best position, with his talent and his social and intellectual network, to contribute to a new age – and what Palme himself called the “joy of politics”;[19] a feeling, the latter, that evokes the portrait of the politician by vocation outlined by Max Weber:

Politics is a strong and slow boring of hard boards. It takes both passion and perspective. Certainly all historical experience confirms the truth – that man would not have attained the possible unless time and again he had reached out for the impossible. But to do that a man must be a leader, and not only a leader but a hero as well, in a very sober sense of the word. And even those who are neither leaders nor heroes must arm themselves with that steadfastness of heart which can brave even the crumbling of all hopes. This is necessary right now, or else men will not be able to attain even that which is possible today. Only he has the calling for politics who is sure that he shall not crumble when the world from his point of view is too stupid or too base for what he wants to offer. Only he who in the face of all this can say “In spite of all!” has the calling for politics.[20]

As to Berggren, he argues that one could expect that Palme would choose a career in politics, due to his interest in social problems, as well as in journalism or research, due to his strong liking for intellectual life; but in the former case, siding with the Right; while in the latter keeping a more distanced approach to the public debate. What Palme did was to combine these two alternatives by turning to political engagement in the ranks of the Social Democratic party. Palme’s unexpected choice was therefore twofold, as both an active role in politics and even more so a left-wing position did not belong to his social background, even if Berggren often insists on the continuity between Olof and his grandfather, Sven, the founder of the family fortune, who advocated social reforms.[21] It is noteworthy that Palme’s political radicalism and the reformism that both Eklund and Östberg point out as one of Palme’s main features (with Östberg referring to it in a double meaning: the awareness that reforms were needed and the talent for bringing forth reforms), are kept in the shade in Berggren’s work. Yet, what comes in the spotlight is an overall attitude of cultural radicalism that, in Sweden, is traditionally associated with the Liberal party.

4. Radicalism abroad and compromise at home?

 

 

One could be tempted to wonder whether the biographers’ conclusions as to Palme’s joining the labour movement have influenced their interpretation of his politics as a whole; or whether on the contrary the opinions on Palme’s place in Swedish history, developed at the end of their works, have favoured a retrospective reading of Palme’s first controversial step, that is to say, “going over to the enemy”, as his decision was perceived by many of his class peers. Whatever the answer, it is most interesting to see what kind of connection is established in the three biographies between the talented upper-class young man who committed himself to the struggle for the labour movement and the worldwide-known politician who displayed his radicalism in foreign affairs and was nevertheless inclined to compromise in domestic politics, both with the opposition parties and with the business community. What the biographers face here is the debate about Palme’s position within the party, and his role within the history of Swedish Social Democracy as a whole.

4.a Foreign policy

Palme’s radicalism in foreign policy has been related above all to his firm condemnation of the Vietnam War, which created considerable troubles to Sweden in its diplomatic relations with the USA. This was an irony of fate, given that Palme has been defined by many — Östberg and Berggren among them[22] — as the most American among Swedish politicians, due to his education, his journeys and his contacts in the USA.

Palme expressed his contrariety to the American military intervention in Vietnam in a few well-known speeches and articles: the so-called “Gävle speech” delivered in 1965, when Palme was minister of Transport and Communication;[23] the speech held at the Vietnam demonstration on February 1968,[24] when Palme was minister of Education and Culture and marched close to the North-Vietnamese ambassador in Moscow – and the picture came out in hundreds of newspapers all over the world; the article on Song My (a Vietnamese village destroyed by 19-20 years-old US soldiers) published in 1970,[25] when he was already prime minister; and finally Hanoi, Christmas 1972, a speech broadcast on the Swedish Radio and which is worth being quoted:

We should call things by their proper names. What is going on in Vietnam today is a form of torture.

There cannot be any military justification for the bombings […].

People are being punished, a nation is being punished in order to humiliate it, to force it to submit to force.

That’s why the bombings are despicable.

Many such atrocities have been perpetrated in recent history. They are often associated with a name: Guernica, Oradour, Babi Yar, Katyn, Lidice, Sharpeville, Treblinka.

Violence triumphed. But posterity has condemned the perpetrators.

Now a new name will be added to the list: Hanoi, Christmas 1972.[26]

Östberg presents the reader with the diverse reactions raised by Palme’s statements. For most of his party fellows his engagement on such an issue not only was absolutely sincere, but also in line with the labour movement tradition of internationalism; right-wing representatives complained his home (ab)use of foreign policy, aiming at opposing the growing influence on social movements gained by the New Left in the 1960s; others have seen in his position a sign of his opportunism and careerism: he benefitted from the solidarity movement with the Vietnamese people and strengthened his position within the party and/or consolidated his reputation as international politician.[27]

Eklund maintains that thanks to Palme’s Gävle speech “it became legitimate to criticize the USA”, and that his statements shifted the whole Swedish debate on international affairs to the Left. At the same time, he notes that the Vietnam issue strengthened Palme’s political identity, anointing him once and for all as an icon of the new time; because of his age (38 when the War started), no one among the Social Democratic representatives was more suitable than him to undertake the task of competing with the New Left for the “hegemony” on the new social movements.[28] Berggren shares this analysis, emphasizing furthermore Palme’s skill in awaking a kind of national feeling, a sense of honour which moved a little country like Sweden to express its indignation in an unusually plain language. The words “Swedish neutrality” – which under the Second World War had got a quite bitter taste – came to be related to the solidarity with the struggle for independence of Third World nations. That is why Berggren refers even to a paradigm shift, as Palme introduced an interpretation of what was going on in Vietnam which challenged the one up to then prevailing, i.e. that the USA fought always and only for democracy, yet without embracing a Communist perspective.[29]

The home impact of the debate on the Vietnam War is also the focus of Östberg’s chapter Vietnam!.

The starting point whereby to explain Palme’s behaviour is the same, i.e. the Social Democrats’ awareness that they were in danger to lose support from the Left, and that the person in the best position to try to resist that trend was Palme, whose anti-communism was well-tested. Unlike Eklund and Berggren however, Östberg is more sceptical about the outcomes of this strategy: if Palme succeed in keeping the party together around the Vietnam issue, the SAP lost nevertheless the battle for the hegemony on the Vietnam movement. It was not devoid of significance that business – including trade of military technology – and intelligence relations between Sweden and the USA were not affected by the turbulence roused by Palme’s vehemence, and that did not increase the SAP’s credibility among the New Left activists. Östberg’s conclusion is that the Vietnam War did not ruin at all Palme’s attachment to US liberalism, with its belief that the best way to resist Communism was to gain influence on radical social movements. But Palme was in no way a pure pawn in the party’s hands (as Eklund and Berggren, too, acknowledge); he did not hesitate to make statements that in few hours could compromise years of careful diplomatic relations. It was not Palme to create the Vietnam issue; but his role in putting it on the agenda can not be underestimated.[30]

On the occasion of the Portuguese Revolution (1974) some of the core values in Palme’s view of international affairs came again in the light, according to Östberg: colonialism vs liberation struggles, poor countries vs rich ones, democracy vs fascism as well as communism, great powers vs small States. In the neutralization of the pressures aiming at questioning the Western Order, the Socialist International played a crucial role, and Palme, thanks to the influential example of his country, was in the forefront – in his own way: not by clash but by dialogue, favouring a reformist outcome of the Portuguese revolutionary phase.[31] Eklund discusses shortly the event, by writing that Palme contributed to avert the danger of a too radical shift to the Left and secure the establishment of a Democratic government;[32] while Berggren puts the accent on the rapproachement that took place on that occasion between Sweden and the USA, as both countries feared  revolutionary developments in Europe.[33]

 

 

4.b Home politics

It is a widespread opinion that Palme, in spite of his radicalism in foreign policy — which however, as we have seen, is to be understood in the light of his effort to put forward Social Democracy as a successful alternative to Communism — showed a willingness to compromise when domestic policy was concerned that often aroused dissatisfaction in his own ranks. If there is a wide consensus on the wave of reforms passed by his first government (1969-1976) – on gender equality, Welfare State, labour markets – that consolidated the notion of Sweden as a “model” country, other issues were highly controversial, both within the labour movement and in the relationship with the opposition. Here the focus will be on Palme’s line with regard to the wage earners’ funds, a cross which went along with him from the middle 1970s to 1983, and the so-called “Third Way”, the economic policy introduced by Kjell Olof Feldt, minister of finance in the second Palme government (1982-1986). By examining these issues it will be perhaps easier to understand Östberg’s, Eklund’s and Berggren’s concluding remarks on Palme’s role in the history of Swedish Social Democracy.

Between 1975 and 1983, under the influence of the radicalization of society and of the debate of the perverse effects of the solidarity-focused wage policy[34] – a cornerstone of the Rehn-Meidner model, i.e. the Swedish model for economic policy from the late 1950s onwards – the Swedish labour movement discussed the proposal put forward between 1975 and 1976 by the leading economist of the General Labour Confederation (LO), Rudolf Meidner, so as to establish employee funds (löntagarfonder) that would gradually shift the ownership in medium to large companies from employers to workers.[35] The principle “equal pay for equal work”, aiming at avoiding inequalities among employees, caused that profitable companies, not being required to pay wages commensurate with their higher profits, found themselves with a surplus that was not being redistributed among the workers, thus ultimately widening the gap between capital and labour.[36]

The debate on Wage Earners’ Funds turned into a hot potato for the Social Democrats, who were about, in 1976, to face an uphill general election. Certainly, these funds did not help; the right-centre parties and the Employers’ Association charged the labour movement with the will to introduce in Sweden a socialism of the Eastern kind.

The question which is interesting to raise when comparing different interpretations of Palme’s politics is not so much why he was against the funds – his whole political education and experience led him to oppose socialization – but rather why the prime minister managed the issue in a way which has been blamed either as ambiguous (by the supporters of the Meidner plan) or passive (by his opponents). Eklund and Berggren focus on the latter problem, the more “tactical” one, though not leaving out entirely the ideological dimension. Eklund’s starting point is his own personal thesis, whereby Meidner’s plan went far beyond what up to then had been discussed within the labour movement – and what in fact was needed – in order to resist the concentration of property; as it aimed at socializing the Swedish economy, it was not consistent with the Swedish model, which – as Eklund recalls – has identified in taxation, legislation and the Welfare State the counterbalance to Capital. On the other side, however, Eklund acknowledges that Palme was aware of the discussion which was going on within the LO, even if he expected that at the end the Union leadership would invite its activists to a realistic approach. But it did not go this way. As to the party leadership, after the 1973 general election, even if still in power, it had to face the “lottery-parliament” (the seats in parliament were equally divided between the two blocks) and it seemed not particularly interested in the issue; that is why Palme and his colleagues in the government did not follow it close up from the beginning.[37]

Berggren agrees on the idea that Palme, reluctant to interfere in the debate within the union, relied on the LO chairman, Gunnar Nilsson, in order to neutralize the funds; the latter nevertheless had to take into account the appreciation which the funds enjoyed among the workers. Furthermore, the personal relationship between the two labour leaders was not so good. Berggren points out as well that Palme had difficulty in understand the plan’s core in itself. It seems that Palme said, referring to the LO’s support to the plan: “They have gone further than what I had thought in my most unrestrained imagination!”[38]

Eklund discusses also Palme’s political calculations: besides the workers’ support to the project, it must be borne in mind that when the confrontation on the funds actual set up took place, between 1978 and 1980, the SAP was in opposition and for the first time Palme’s leadership was questioned, not so much because of the electoral defeat in 1976, but due partly to his “flirt” with the Liberal party (then in power by a minority government), and partly to his intense engagement in international affairs (e.g. the Socialist International, the commission on disarmament, the Iran-Iraq war). Additionally, his upper class background could expose him to criticisms from the labour movement, if he dared go against the union on such a crucial issue. Finally, though against the funds on principle, he could not but support them in the face of the opponents’ attacks: the enemy was not allowed to settle the labour movement’s programs.[39]

Compared to Berggren’s and Eklund’s, Östberg’s work devotes more attention to the ideological implications of Palme’s dilemma. In the author’s view, the wage earners’ funds were the major issue among those which forced Palme to take a definite position between market and planning: it was unthinkable under that circumstance to keep the balance peculiar to the Social Democratic Third Way. Meidner’s Plan was – this is Östberg’s view – perhaps the most ticklish question Palme had to face. Paradoxically, the challenge – to question private property – did not come from the Left, but from the pillar, together with the SAP, of the Swedish way to reformism, that is to say, the union.

Whose influence on society was, in the first half of the 1970s, at its peak; but at the same time, the Swedish Employers’ Confederation started right then its ideological and political counterattack. Palme’s strategy was first to postpone the issue (after the 1976 general elections) and then to neutralize the most “subversive” elements in the plan, stressing from the beginning its compatibility with a market economy. And at last the aim – to reassure the business circles – was achieved by adding a fourth goal to the three formulated by Meidner (to transfer a quote of profits from capitalists to workers; to oppose property and wealth concentration; to establish workers’ influence on the economy through property): to favour capital formation, for the benefit of industrial investments. This was not exactly what had aroused, in 1975-1976, the union activists’ enthusiasm. In the early 1980s, the Meidner plan, then completely perverted, came to be incorporated into the program against the economic crisis worked out by the SAP.[40]

Noteworthy is that while the three biographers agree that the law on funds passed by the parliament in 1983 and introducing a pension funds scheme, had nothing to do with Meidner’s original plan, they differ as far as the effectiveness of Palme’s line is concerned. For Eklund, the whole discussion on the wage earners’ funds was one of Palme’s worst failures from an ideological point of view, as he stayed all the time on the defensive and contributed to a deep demoralization in the labour movement’s ranks.[41] On the contrary, Palme’s strategy seems to Östberg to have been successful, in terms of impact on the public opinion: he could neutralize the plan, without provoking too serious inner splits.[42] Berggren is more neutral, just joining under the category of “symbol-politics” the impressive demonstration against the funds held by the Employers’ Confederation on October 4, 1982 and the passing of the law few weeks later.[43]

The program against the ongoing economic crisis implemented by the second Palme government and to which, as we have seen, the wage earners’ funds were utilized, is considered as well one of the most controversial chapters in his political career.[44] In 1982 the minister of finance Kjell Olof Feldt presented three alternatives: an expansionist policy; a restrictive one; and what he called “the big bang”, that is to say, a policy aiming at stimulating investments and production, but at the same time squeezing domestic demand by means of devaluation. The last one was accepted. On this point, it is of particular interest to read Eklund’s points, as he was one of Feldt’s staff members. According to him, Palme and Feldt failed in the task of curbing the spiral of inflation, provoked by unrestrained wage claims by the unions. Palme showed once again – this is Eklund’s thesis – his weakness before the unions, portrayed by the author as a short-sighted organization, unable or unwilling to grasp the requirements of the economic system.[45] However, in the pages dealing with the “war of the roses”, that is to say, the unions’ dissatisfaction with the SAP’s profit-oriented economic policy, the author recognizes that the labour movement had to accept major changes in the Swedish model yet with no return (e.g. an active industrial policy or wage earners’ funds worthy of the name).[46]

Berggren is content with reporting Palme’s satisfaction for the economic recovery, which he comments upon in an interview given on February, 28 1986 (mind the date) when he declared, with a tragic irony of fate, that 1986 was a year full of opportunities,[47] thereby acknowledging that Feldt’s policy was effective and that the Social Democrats had once again fortune on their side.[48] Yet, the long-term consequences, both economic and political, of the shift begun under Palme are not deepened by Berggren. They come instead in the forefront in Östberg’s work, where it is pointed out that the real nature of the ”Third way” (as the new economic policy was called, i.e. neither expansionist nor restrictive) was bound to be widely discussed. Was it consistent with a Social Democratic orientation or did it mean the surrender to Neo-Liberalism? Certainly Palme supported his minister of finance, and he did so by arguing that the new economic policy was a condition for preserving the Welfare State.[49] Nevertheless – and this is one of the crucial points in Östberg’s biography – Palme accepted it as a necessary evil, while to Feldt’s eyes the policy was dictated by a long-term adaptation, perceived as unavoidable, to a more market-oriented political climate. As a sign of the ideological disagreement between the two leading Social Democratic politicians, Östberg brings forward Palme’s disappointment when Feldt made a statement in favour of the privatization of Swedish pre-schools; also in his last interview, few hours before being murdered, Palme confirmed his strong support to the public sector, which he regarded as a key aspect of modern civilisation.[50]

Berggren too reports Palme’s firm reaction to the openings to neo-liberalism made by his minister of finance, but the interpretation of their relationship is definitely different. Palme was moved, Berggren argues, not so much by the concern of safeguarding a distinct Social Democratic platform, but rather by tactic calculations: a breakdown in the labour movement tradition would have caused inner splits and favoured the building of a competing party on the Left. Berggren agrees that Palme was against privatization, but at the same time the author believes that the prime minister shared many of Feldt’s viewpoints and perhaps that is why he reacted so firmly. With a member of the government staff Palme indeed seems (Berggren unfortunately does not refer to any source) to have made clear his awareness that increased competition, effectiveness and freedom of choice within the public sector (a condition that Berggren should have emphasized) were needed.[51]

Eklund’s version is somehow in the middle: he recognizes an ideological gap between Palme and Feldt, but reduces it essentially to a matter of make-up: the former kept a more traditional rhetoric when arguing in favour of the new economic policy, while the latter made no secret of the fact that the “Third way” was part of a process of “modernization” of the national economy.[52] Palme’s early and vehement condemnation of the dangers inborn in Neo-Liberalism – social atomization, destruction of the environment, democracy turned into an empty box – is not mentioned here.

5. Continuity or breakdown?

Maybe Palme was only tired or even depressed because of the long time in the frontline, the many troubles that he had to face from the very beginning since coming back in power in 1982 (the U-boat affair, the Bofors and the Harvard scandals, incessant union unrest), and the many personal attacks that he suffered from; maybe he was planning to leave, perhaps accepting an appointment as United Nations (UN) Commissar on Refugees, or staying on for a while.[53] What is certain is that everything was shattered by the shots which echoed in the evening of February 28, 1986.

Berggren, with a choice that can be disappointing to the reader and nonetheless reveals some elegance, stops his long story then, when the Swedish prime minister died in the heart of the city where he had spent all his life, not far from his childhood home, close to the SAP building, next to the wife he had been married with over nearly thirty years.[54] Nothing is said on the inquiry that followed.

Eklund shortly summarizes what happened in the aftermath: the widespread belief that a murder of a prime minister can not but be the outcome of a plot; the only person ever charged with the crime (and then released) being a single and violent individual, Christer Pettersson; the kind of private investigation (backed by the SAP leadership) which did its best to confirm the PKK (the Communist party of Kurdistan) hypothesis.[55] Eklund writes nothing about the tremendous failure of the Swedish justice in an inquiry that has exceeded even the one on the murder of US president John F. Kennedy.

Östberg’s second volume takes up in the end an epic style: on the one hand we follow a man and a politician who was fed up, worried for the world and for his own safety, getting older and no longer as unquestionable as he had been in the 1970s;[56] on the other hand, we enter the opaque area of hate campaigns arranged by a blend of different groups, ranging from the extreme right of the Employers’ Confederation to unaffiliated anarchic psychopaths, affecting Palme in his last years more than ever before.[57] In other countries the relationship between a murder and the preceding hate campaign against the victim has been regularly scrutinised, apart from the person who materially committed the murder; in Sweden this scrutiny has been less common. Under this perspective, Östberg definitely contributes a significant study. Besides, his chapter devoted to the murder and the ensuing inquiry is a useful and involving reconstruction of what happened and what ought not to happen, yet without trying to add one more Truth about the murder to the long list of hypotheses – some of them pretty fanciful – formulated until now.[58]

After twenty-five years the murder is still unresolved, the SAP has lost two elections in a row (2006 and 2010), and Palme remains a controversial issue. Who was Olof Palme? Which was the connection between the Olof Palme who made the US government fly into a fury due to his condemnation of Imperialism and the Olof Palme who backed the business-friendly “Third way” in economic policy?

It has to be noted here that the three biographers are all fascinated by his talent, meant both as intellectual brightness and as ability in problem-solving (hence Palme’s success in bringing forth actual reforms); yet they acknowledge too that this talent could turn into a double-edged weapon in the relations, both political and personal, with others.[59]

In Eklund’s final remarks, Palme appears as the highest expression in Sweden of the 1950s and 1960s Zeitgeist: the commitment to achieve demanding and long-term reforms; nevertheless he is also described as unlucky, for his appointment as prime minister in 1969 took place at the same time when the Golden Age ended, and he was not inclined to face a downward age.[60] What has been perceived by someone as Palme’s ambiguity or contradiction, or, worse, opportunism, depended instead on a diverse approach to the different fields of reality: Palme was left-wing as far as social, educational and foreign policy were concerned, but he was right-wing as to economic and security policy. He personified the unending swing in Swedish Social Democracy between Democratic Socialism and Social Democracy.[61]

Berggren’s interpretation is equally continuity-oriented: Palme was a democrat, moved to politics more by an “existential” choice than by an ideological conviction; along his whole life, he remained a pragmatist. As such, his role can not be defined either as a Cold War soldier (under the 1950s standard banners) nor as an anti-imperialist (under the 1960s and the early 1970s ones). Rather, Palme showed the typical Social Democratic ability to achieve viable arrangements. After tracing Palme’s relationship with politics back to his existentialist philosophy – a puzzling thesis broadly developed in the book– Berggren goes further in his accentuation of Palme’s individualistic dimension – and in the removal of the socialist one. The other distinguishing features that he singles out are indeed, besides the international perspective, Palme’s belief that the individual has a duty to pursue what he maintains to be Truth and Justice, and Palme’s strong volunteerism.[62] In the end, according to Berggren’s biography, Palme seems to have shared with Swedish Social Democracy only an attitude to compromise, on one side, and to modernization, on the other side; the latter element implied also to improve people’s living conditions, but more in a liberal perspective (i.e. to give everybody the chance to lead his own existence) than in an endeavour to make society more equal.[63] According to Berggren’s analysis, Palme’s awareness that society can safeguard freedom only by securing equality (and in a substantive meaning) is negligible.[64]

Östberg’s conclusions are more complex with regard to the dilemma continuity vs breakdown. Palme was behind the times until the Golden Age went on; in the mid-1960s he was able to understand, thanks to his good relationship with intellectuals and young people, that the Zeitgeist was changing. That favoured the portrait of him as a radical, but also the disappointment of those who had misunderstood Palme’s position. He was not a radical, Östberg stresses; rather he took his place in the party centre-wing. His condemnation of colonialism and violence was sincere, and at the same time perfectly consistent with his reformism: he hoped and believed indeed that sooner or later the countries fighting for their liberation would have followed the Swedish way, that is to say, the achievement of political, social and economic democracy by reformist politics. Somehow he contributed to the radicalism of that age without being a radical.[65] The impact of the reforms passed under his first government was such as to raise in many (both sympathizers and opponents) the question: are the Social Democrats about to reverse the Swedish system?

To this climate Palme contributed by the radicalism accompanying the passage of the reforms. But – Östberg insists on this crucial passage – when the borders of Swedish reformism were questioned, e.g. on the occasion of the debate on the wage earners’ funds, he refused to go over. He lost touch with the Zeitgeist, as the historical phase when he had developed his ideas and approach – the age of the trust in never-ending economic growth and therefore in an increasing Welfare State– was over. This loss was not Palme’s failure, but the result of the challenge issued by the ongoing economic crisis and the spreading of Neo-Liberalism to the whole Swedish Social Democracy. From the 1950s to the 1980s Palme maintained a unitary vision, although trying to tailor it to changing conditions: the task was to extend democracy from the political dimension to the social and economic one, yet without questioning private property.[66] Such was Olof Palme in fact: when blaming the USA and the USSR for their arrogance and oppression, when putting gender equality on the agenda, when flirting with the Liberal Party, or neutralizing the more demanding union claims; he was a Social Democrat, who experienced the shift from an age when everything seemed possible to a crisis undermining all the certainties and requiring new answers.

How and whether Palme’s heirs have succeeded in this hard task: to be up to the new challenges without getting rid of the Social Democratic tradition – hence of Palme’s legacy too – is today, at least apparently, matter for discussion, in one of the toughest phases of the party’s history.


[1] See Å. Linderborg, Socialdemokraterna skriver historia. Historieskrivning som ideologisk maktresurs 1892-2000, Stockholm, Atlas, 2001, pp. 108-111.

[2] See B. Östergren, Vem är Olof Palme? Ett politiskt porträtt, Stockholm, Timbro, 1984; Claes Arvidsson, Olof Palme. Med verkligheten som fiende, Stockholm, Timbro, 2007. Noteworthy is that the publisher of both these highly polemic works, come out at a distance of twenty-three years, is the same, the new-liberal think-tank “Timbro”.

[3] Among the many possible references, K. and P. Poutiainen, Inuti labyrinten: om mordet på Olof Palme, Stockholm, Grimur, 1995 (on the domestic track); J. Bondeson, Blood on the Snow. The Killing of Olof Palme, Ithaca, Cornell University, 2005 (on the track related to the traffic in arms); H. Hederberg, Offret & gärningsmannen: en essä om mordet på Olof Palme, Stockholm, Atlantis, 2010 (guilty: Christer Pettersson, the only person sentenced, yet then released, for the murder).

[4] B. Elmbrant, Palme, Stockholm, Fischer&Rye, 1989.

[5] P. Antman, P. Schori, Den gränslöse reformisten, Stockholm, Rabén Prisma/Tiden Debatt, 1996.

[6] See E. Åsard (ed. by), Politikern Olof Palme, Stockholm, Hjalmarson & Högberg, 2002, focusing on Palme’s view of politics, massmedia, foreign policy and rhetoric.

[7] See for instance A. Kullenberg, Palme och kvinnorna, 1996; U. Larsson, Olof Palme och utbildningspolitiken, Stockholm, Hjalmarson & Högberg, 2003;  A.-M. Ekengren, Olof Palme och utrikespolitiken, Umeå, Boréa, 2005; G. Björk, Olof Palme och medierna. Umeå, Boréa, 2006.

[8] See I. Carlsson, Ur skuggan av Olof Palme, Stockholm, Hjalmarson & Högberg, 1999 and T.G. Peterson, Olof Palme som jag minns honom, Stockholm, Bonnier, 2002.

[9] K. Östberg,  I takt med tiden. Olof Palme 1927-1969, Stockholm, Leopard, 2008; see, on this e-journal, IV, 2009, 1, my review.

[10] Id., När vinden vände. Olof Palme 1969-1986, Stockholm, Leopard, 2009; I have reviewed both the volumes in Olof Palme e i venti della storia, “Meridiana”, 2008, 62, pp. 233-243.

[11] K. Eklund, Palme, Stockholm, Bonnier, 2010.

[12] H. Berggren, Underbara dagar framför oss. En biografi över Olof Palme, Stockholm, Norstedts, 2010.

[13] In order to accomplish such a task, I will profit by the “confrontation” among the three biographers arranged by the “Liberala Klubben” at the ABF (Arbetarnas bildningsförbund, Workers’ Educational Association) in Stockholm, on December 8, 2010, which I attended to.

[14] See K. Östberg,  Inledning, in Id., I takt med tiden cit., pp. 13-14.

[15] See H. Berggren, Underbara dagar framför oss, p. 8.

[16] See K. Östberg,  I takt med tiden, pp. 61-68 (on the USA), pp. 74-76 (Eastern Europe), pp. 104-106 (on Asia);. H. Berggren, Underbara dagar framför oss, pp. 111-141 (USA), pp. 156-159; K. Eklund, Palme, pp. 22-23.

[17] See K. Östberg,  I takt med tiden, pp. 108-112; K. Eklund, Palme, p. 24.

[18] See K. Eklund, Palme, p. 24.

[19] See K. Östberg, När vinden vände, p. 421.

[20] M. Weber, La politica come professione, in Il lavoro intellettuale come professione (1919), Torino, Einaudi, 1983, pp. 120-121; for the English translation, see www.sscnet.ucla.edu/polisci/ethos/Weber-vocation.pdf.

[21] See H. Berggren, Underbara dagar framför oss, p. 109.

[22] See K. Östberg,  I takt med tiden, p. 394; H. Berggren, Underbara dagar framför oss, pp. 313-315.

[23] One month after the speech, the USA embassy in Stockholm sent a report to the State Department in Washington where the event that Palme would be appointed as the next prime minister was faced with anxiety. Cfr. K. Östberg,  I takt med tiden, p. 279.

See the English translation in http://www.olofpalme.org.

[25] See O. Palme, For My Lai in our hearts… (1970), and a partial English translation of it in Olof Palme speaking. Articles and Speeches, ed. by G. Banks, Stockholm, Premiss, 2006, pp. 137-141.

[26] See O. Palme, Hanoi, Christmas 1972 (1972), in Olof Palme speaking, pp. 141-142.

[27] See K. Östberg,  I takt med tiden, pp. 165-166.

[28] See K. Eklund, Palme, p. 43.

[29] See H. Berggren, Underbara dagar framför oss, pp. 355-357.

[30] See K. Östberg,  I takt med tiden, pp. 309-311.

[31] See K. Östberg, När vinden vände, pp. 131-139.

[32] See K. Eklund, Palme, p. 64.

[33] See H. Berggren, Underbara dagar framför oss, pp. 517-518.

[34] See H. Berggren, Underbara dagar framför oss, p. 527.

[35] See the English translation of the 1975 Report, R. Meidner (with the assistance of A. Hedborg and G. Fond), Employee investment funds : an approach to collective capital formation, London, George Allen & Unwin, 1978.

[36] See K. Eklund, Palme, p. 72.

[37] See K. Eklund, Palme, pp. 72-75.

[38] See H. Berggren, Underbara dagar framför oss, pp. 529-532; Palme’s quotation p. 531 (the Author yet does not refer the source of Palme’s statement).

[39] See K. Eklund, Palme, pp. 76-77.

[40] See K. Östberg, När vinden vände, pp. 247-256.

[41] See K. Eklund, Palme, p. 78.

[42] See K. Östberg, När vinden vände, pp. 258-259.

[43] See H. Berggren, Underbara dagar framför oss, pp. 627-628. The confrontation on the wage earners’ funds, that is, the inner splits between the LO and the SAP and within the SAP, and the bourgeois mobilization, is however reconstructed quite hastily by the author.

[44] According to Östberg, it is one of the most controversial issue in the whole Swedish contemporary history. See K. Östberg, När vinden vände, p. 299.

[45] See K. Eklund, Palme, pp. 91-92.

[46] See K. Eklund, Palme, pp. 103-104.

[47] See H. Berggren, Underbara dagar framför oss, p. 655.

[48] See H. Berggren, Underbara dagar framför oss, p. 617.

[49] See K. Östberg, När vinden vände, pp. 301-304, within the chapter on The War of the Roses.

[50] See K. Östberg, När vinden vände, p. 312.

[51] See H. Berggren, Underbara dagar framför oss, pp. 639-640.

[52] See K. Eklund, Palme, p. 93.

[53] Eklund’s idea is that Palme would have left in 1987, or perhaps two years later (after the 1988 general election), and that his successor would have been Anna-Greta Leijon; in other words, the SAP would have elected its first female party leader in the late 1980s, and not in 2007. Paradoxically, Leijon’s political career was damaged due right to a scandal involving the party leadership which had to do with the inquiry on the murder of Palme. See K. Eklund, Palme, p. 123.

[54] See H. Berggren, Underbara dagar framför oss, p. 657.

[55] See K. Eklund, Palme, pp. 106-107.

[56] See K. Östberg, När vinden vände, pp. 366-385.

[57] See K. Östberg, När vinden vände, pp. 362-365.

[58] See K. Östberg, När vinden vände, pp. 386-405.

[59] See K. Eklund, Palme, pp. 108-109; K. Östberg, När vinden vände, passim; H. Berggren, Underbara dagar framför oss, passim.

[60] See K. Eklund, Palme, pp. 108-109 and 113.

[61] See K. Eklund, Palme, pp. 120-121.

[62] See H. Berggren, Underbara dagar framför oss, p. 179.

[63] See H. Berggren, Underbara dagar framför oss, pp. 333-334.

[64] See P. Antman, Arvet efter Palme , in P. Antman, P. Schori, Den gränslöse reformisten, pp. 45-48.

[65] See K. Östberg,  I takt med tiden, pp. 394-396.

[66] See K. Östberg, När vinden vände, pp. 417-418.

Emergence of a new paradigm: Towards a post-crisis cosmopolitanism

1. Introduction

The current, tense “post-crisis” situation is considered by many intellectuals, politicians and citizens to be a simultaneous aggravation of much older financial, political and environmental crises that have been challenging the international community. At the same time, it has also been described as a perhaps unexpected hope for the emergence of a real cosmopolitanism based on a genuine possibility of emancipation and dialogue about world problems in the international community.

We will begin by discussing briefly the causalities of the recent financial crisis, which can be seen as a crisis of neo-liberal capitalism following the original mortgage crisis in the USA and the following economic depression in many countries. In this context we can also mention political elements of the crisis and further explore its threatening relation to the environment. Finally, the same crisis can be considered as a crisis for cosmopolitanism. Some pundits have interpreted the crisis as a crisis of cosmopolitanism of human rights, where it has not been possible to create a new world order of strong international governance.

On the basis of these causalities the paper will discuss whether we can see a potential “new beginning” or qualitative shift towards a new regime of a social ethics including: (1) the emergence of a community economy, e.g. state intervention and civil society responsibility in connection with corporate citizenship and business ethics; (2) the emergence of a new ethical cosmopolitanism including a paradigm shift towards a renewed conception of justice as concerns the common good in the world community.

2. Crisis causalities

What happened? Why did this world crisis come around and how should we explain the crisis causalities? There have been many arguments or diagnoses trying to explain the worldwide financial crisis. I can mention the following, very different, but mutually dependent explanations:

1. The crisis is due to neo-liberal capitalism.

This explanation focuses on the financial breakdown based on the American mortgage crisis and the following depression in many countries. It was the neo-liberal processes of globalization (e.g. privatizations, liberalizations, financializations) that led to the development of risky financial products and the resulting credit crunch, for they were based upon the dogma of the neo-liberal economic system, whereby the paramount goal is quite simply to increase economic gains in the business at all costs. This model for risky business did not only concern banking and economic investments. The most important factor that played a pivotal part in the economic crisis was the emergence of the use of houses for sales and risky mortgages of houses, so that houses became primary objects of investment. The dominant narrative in this explanation is neo-liberal “greed”, as exemplified by Madoff’s pyramid Ponzi scheme, which resulted in his imprisonment and so well symbolizes the basis for this kind of explanation of the crisis. The narrative of “greed” involves that the crisis is due to a brutish conception of human nature as a kind of profit-maximizing individual, who lives only or mostly according to his or her own narrowest self-interest. This explanation is based upon taking into account the fact that neo-liberalism was the dominant economic ideology after the end of the cold war. With this explanation of the crisis we have an explanation that is conceived exclusively in economic terms, and primarily as a breakdown of the international financial system.

2. The crisis is due to changed relations between major powers in the world.

This explanation focuses on the relation between the US and other countries, notably China. In this context the crisis may be considered as a shift in world powerhouses. We may argue that such a shift is the real reason of the credit crunch and the ensuing economic depression. It can be argued that the Chinese, after the massive economic crises in the east of Asia in the 1990s, realized that they would have to build up a strong financial system. After longer than a decade, the savings of China were so large that the country was able to resist the 2008 financial crisis, which showed instead the real vulnerability of the US and Europe. In addition, the crisis can be explained as a result of the economic problems of the US after the Asian wars in Iraq and Afghanistan since the early 2000s. It can be argued that the result of the wars was the weakening of the US as a superpower and that the credit crunch was just a symptom of this changed situation of the West in relation to the East in economic terms, where China is emerging as the main power in the world. With this explanation of the crisis we move from a purely economic explanation towards an explanation in terms of international politics too.

3. The crisis arises from a clash of civilizations.

Here we can focus on the confrontation between world cultures, in particular the tensions between radical Islam and the West, leading to the wars of Iraq and Afghanistan. How can we interpret the crisis in terms of the “clash of civilizations” described by Samuel Huntington? Since 2001 and 9/11 in particular, the confrontation between civilizations has been very present in international politics. The concept of the clash of civilization was developed as a response to Francis Fukuyama’s idea of the end of history, i.e. the end of the struggle of recognition, when the liberal world order has been victorious. We may say that the clash of civilizations is a response to this situation, where the end of the struggle for recognition is not ending in dialogue, but exactly in a clash between civilizations. In fact we may say that a challenge for a post-crisis situation would be to develop a kind of intercultural philosophy building upon a dialogue between civilizations, as opposed to the clash of civilizations. The clash of civilizations is in particular a challenge to the belief in the universality of the Western values of democracy and human rights. We can argue then that the recent crisis is a crisis of these values, following the events of 9/11 and of the wars in Iraq and Afghanistan.

4. The crisis is a crisis in the policies to respond to an environmental crisis.

We can argue that the recent crisis was a crisis of the realization itself of the climate problem. The question is: have recent agreements led to hope for environmental justice or do we only experience new inequalities between developed and developing countries? In the neo-liberal paradigm before 2008 the climate issue was dealt with as a matter of utility and sustainable use of resources. It can be argued that the recent crisis is a crisis for the utility-based conception of the environment, for it appears that CO2 reduction is more than utility, but something that is fundamental with regard to the possibility of life in the world. We can argue that the crisis is a crisis for a civilization that has no understanding of the climate issue as fundamental for human survival. The Danish environmental sceptic Bjørn Lomborg may be considered as a representative of this view. In fact it can be argued that the opposite view of Al Gore, who stresses that the climate issue is about the continuation of the human species, represents an alternative to the view of Bjørn Lomborg, which emerges out of the crisis of the neo-liberal conception of the environment as utility: rather than admitting defeat in front of overwhelming evidence, blind denial is preferred.

5. The crisis is a crisis for cosmopolitanism.

Some have interpreted the recent crisis as a crisis of cosmopolitanism of human rights, where it has not been possible to create a new world order of strong international governance. In fact, it can be argued that the dream of the neo-liberal position was a world order with universal governance. As described by Michael Walzer, we can say that we need a new world order where we have to find the right balance between world government and total anarchy. It may be argued that the concept of the world order as a universal order with a world government is in crisis with the global crisis. What is needed is a new conception of the global order that is both beyond state sovereignty, but also beyond the idea of a world government. We may argue that we have to look for models of cosmopolitanism that deal with world politics without referring to a concept of a global world government as the basis for international politics.

3. The cultural and social background of the crisis

On the basis of the five causalities described above, the issue may be addressed as follows: how really should we define the recent crisis? What does the crisis imply and what does it relate to?

From a phenomenological point of view, we meet the crisis in our own lives when our family, ourselves or our friends lose their job or have to go from their houses because the mortgage rent is too high. In fact, the pre-crisis atmosphere in the Western world was marked by a strong narrative of greed and of spending, in particular a raise of luxury spending. We can then use the concept of hyper-modernity in experience economy, as proposed by the French sociologist and philosopher Gilles Lipovetsky, to take into account this pre-crisis, but indeed also the crisis atmosphere.

Hyper-modernity or hyper-modern society is conceived as an escalation of modernity, i.e. a kind of creative construction of experience where the creativity of human beings as makers of metaphors and symbols moves in the forefront of capitalist production. We are searching for more than maximization of pleasure preferences in the cultural industry. We want to become new human beings when we eat at restaurants, travel, go to the theatre, read magazines or books, or even when we buy ordinary products in the grocery store or in the supermarket. We want to experience happiness and authenticity in all aspects of our lives as consumers. Consumption shall help us to construct our identities. I shop therefore I am. It is the creativity of the producers and designers of experiences that is needed to fulfil this search for meaning in the experience economy. The conditions of possibility of the experience economy are based on the historic changes of the meaning of creativitiy in human societies. Today, with a hyper-modern society of creativity, creativity means something else than it was the case earlier in history. What is essential is that creativity no longer is based on a higher divine reality, but instead it refers to the entrepreneurial genius of the human creative spirit. With no divine meaning left, it is therefore the job of the creative class to fill the empty space of the loss of meaning in post-modernity or hypermodernity, and because there is no pre-given meaning dependent on a metaphysical reality, also the consumer must be creative and create meaning through experiences. Human beings are now primarily defined as hyper-consumers and their appearance as citizens is derived from this condition of consumption.

Hyper-modernity expresses a metamorphosis of liberal culture. We live in a consumer society that has become global and international. In the hyper-modern society we can talk about a new system of consumption that has become universalized. What characterizes hyper-modern society is the development of a world culture of consumption. We can talk about universalization of the brand market economy: the West, Asia and China, South America and Africa. The global market culture is a culture of global media and of global commercial culture. Hyper-modern society is made possible with the neo-liberal ideology of the free market and private happiness through consumption, and it was accelerated with the global revolution of information technologies.

In his 2006 work on hyper-modernity Le Bonheur paradoxal (Paris: Gallimard), Lipovetsky describes the three phases of the development of hyper-modern consumer society:

1. the period from 1880 to the second world war

2. the period from the 1950s to the 1970s

3. The time starting with the 1970s-80s (where we really see that consumer society fully developed).

We have been facing hyper-modern society since at least the 1980s. This is a society where consumption is democratized and made available to nearly everyone. Whereas the first phase of industrial society is signaled by the the emergence of industrial society for an elite, the second phase is marked by the increased generalization of consumer society as well as by increased individualization of consumption, for example by the generalization of luxury products like perfumes, media appliances, etc. However, it is only with the emergence of hyper-modern society that we really face the individualization of products.

In this individualist society we see how individuals are able to organize their space and time on the basis of their individuality. Accordingly, we can argue that with the individualization of consumption, combined with the focus on individual experience, makes immaterial experience and pleasure the focus of product promotion and product content. This new society of hyper-consumption is marked by a break with the conformities of class society. Although the class differences still exist, there is no specific class culture. In this sense, the consuming individual is utterly liberated from the traditional institutions and from the cultural bonds of society. We can say that the consumer of the experience economy is a “turbo-consumer”, a capitalist consumer who is no longer regulated by strong ethics and who is free to consume as much as he or she wants.

A very good example of this “Turbo-consumer” in hyper-modernity is the consumer of great international brands. The brands are expressing the global logic of hyper-consumption. Through global marketing brands appeal to the dreams of having authentic experiences. Consumers of hyper-society are not particularly loyal to one particular brand, but they are loyal to the promise of happiness in the brand economy that activates their dreams and emotions. The global brand economy expresses the logic of experience as emotional rather than bound to the materiality of the products. Hyper-consumption is a continuing renewal of the sensations. It is travel in experience. The turbo-consumer wants the most intense experience and in order to get this experience the turbo-consumer overcomes traditional limits of time and space that are taken over by the commercial logic. There is a close link between the brand economy and the search for happiness as the ultimate imperative of hyper-consumption society.

Together with Jean Serroy in La culture-monde. Réponse à une société désorienté (Paris: Gallimard, 2008), Lipovetsky discusses globalization of culture in the perspective of hyper-modernity. We can mention fashion, advertisements, tourism, art, the star-system from Hollywood as aspects of a world culture that has become dominating in hyper-modernity and manifests itself as a cultural hyper-modernity aiming at satisfying the search for satisfaction of experiences by consumers in hyper-modern society. But at the same time this globalization of culture in the framework of an experience economy is marked by the paradoxes of increased complexity and increased collective and individual disorientation.

The capitalist market experience economy is supposed to respond to the dark sides of increased individualization and narcissism. Because of individualist mass society with less common references to give a sense of meaning and community, the world culture of brand consumption is supposed to be the compensatory device that can give individuals meaning and fullness in their individual lives, which are increasingly devoid of meaning. World culture promoted through experience economy is the only tool left to give meaning and sense to individual lives, yet it is far from certain that it is succeeding in its task.

4. Towards a new beginning: Emergence of a new cosmopolitanism

With an economic crisis in the middle of hyper-modern consumer society, we can see how the whole foundation of this society is shaken. Therefore it is also interesting to ask the question about what happens after the crisis. Can we see a “new beginning” or qualitative shift towards a new regime of social ethics of responsibility as a kind of new event emerging out of the crisis, or should we just say that the crisis is nothing more than a confirmation of the logic of hyper-modernity, or alternatively is it possible to argue that the crisis opens for new meanings that help us to move beyond hyper-modern society? What does it mean to speak about paradoxes of a post-crisis situation that challenge the pre-crisis relations? We can observe the following aspects of a post-crisis situation that helps to mark qualitative breaks with the pre-crisis situation.

1. The emergence of a community economy

State intervention and civil society responsibility in connection with corporate citizenship and business ethics signal the emergence of a community economy. We can argue that the business ethics movement based on corporate responsibility and corporate social responsibility replaces within this context the confrontation from the cold war between communism and capitalism. Moreover, the end of neo-liberalism shows that we need a better relation to the economy and a better conception of the content of the economy. Business ethics and corporate social responsibility represent a response to the situation of crisis of business organizations in the sense that it is a new way to deal with the capitalist system.

Business ethics deals not only with ethical responsibilities of corporations but also with a responsible way to deal with economic and legal activities. Therefore we can talk about the economic, legal and ethical responsibilities of a corporation. The different responsibilities must be integrated into the strategy of the corporation, according to the new paradigm of corporate social responsibility and in close coherence with the strategy of the corporation. Business ethics can be considered in close interaction with the idea of hyper-modern society because in hyper-modern society ethics and corporate social responsibility are integrated into the experience economy. This means that ethics is considered as a virtue that is closely related to the self-construction of the individual. Accordingly, the individuals in the business corporation want to have a meaningful work and they want to be accountable and trustworthy as a part of their personal identity. Therefore business ethics is not in contrast to hyper-modernity, but rather a consequence of the culture of this kind of society. So the post-crisis scenario of intensified business ethics and corporate social responsibility is not necessarily in contrast to the culture of globalized hyper-modernity.

In this context we can argue for a movement towards an ethical cosmopolitanism within the field of business, as I have argued in my book Responsibility, Ethics and Legitimacy of Corporations (Copenhagen Business School Press, 2009), which the reader can find reviewed in the present issue of Nordicum-Mediterraneum. An important aspect of this movement is the idea of republican business ethics, defined as involvement of corporations in and for the common good, the res publica, which are expressed in the concept of corporate citizenship with integrity and responsibility. Integrity matters as the self-imposed norms of international corporations can ensure accountability and trust. Integrity is analyzed as a function of the business ethics of corporations, especially in the normative guidelines for international business.

With this cosmopolitan approach I have argued that the corporation can contribute qua world citizen to solve the important problems of hyper-modernity. This can be viewed as the application of the important concepts of the virtues of responsibility and cosmopolitanism. As actors at the global level in a time of interstate interdependence with regard to world ecological, economical and political problems, it is a challenge of the corporation to contribute to building up an international community of virtue and protection of basic rights.  We can define this vision of universal corporate citizenship as the World ethos of business ethics. The corporations shall not only protect universal human rights, but they shall also give those rights meaning in relation to the particular cultures in the countries where they operate.

2. Cooperation replaces conflict.

We may ask the question whether the post-crisis scenario is opening for a new era of cooperation that is in contrast with the idea of conflict that was dominating in the cold war times and in the times immediately after the cold war. An argument from globalization is that the financial crisis has been a reminder of how we now really live in “one world” in economic, cultural, social and political terms. In this sense it can be argued that we need scenarios of cooperation with new interactions between major powers in the international community, which is establishing a regime of problem solving rather than confrontation.

With Hannah Arendt, we can argue that we are searching for a political conception of international relations that move beyond the legalistic conception of the international community. Hannah Arendt’s work after the second world war presents a critical discussion of Kantian cosmopolitanism. She offers novel views on human rights and the rights of citizens and she discusses the possibility of an international tribunal to deal with crimes against humanity. Also, her philosophy implies a critical reply to a naive “juridification” of international relations as marked by legal structures alone. Arendt proposes a solution for the reintegration in the political community after the fight with the wrongdoers. The international political community needs a dimension of civil society, as proposed by Arendt, to find a possible mediation of the double edge of cosmopolitanism. We can argue that Hannah Arendt understood the importance of a political foundation of the respect for the naked human being beyond the political relations of the nation state. This is what Arendt argued for when she coined her famous term of the foundation of human rights as the “right to have rights”.

In her 2006 book Another Cosmopolitanism (Oxford: Oxford University Press), Seyla Benhabib seems to propose a new version of Arendt’s older position. According to Benhabib, modern cosmopolitanism is not only about hospitality but also about the political and legal institutions to govern our world in order to deal with circulation of persons, capital, commerce, pollution, information, labor, goods, viruses, etc. Cosmopolitanism is about building political relations at the international level, so that people can enjoy the right to have rights in the international community. In particular, Benhabib defines human rights as universal ethical obligations that go beyond national sovereignty and are formulated within a form of law.

Benhabib argues that the challenge we face today is the construction of a jurisprudential theory that is able to reconcile the universality of human rights with the partiality of positive law. She deals with the problem, as Hannah Arendt also did, by focusing upon the rights of persons who reside within a state but who are excluded from its polity, i.e. legal and illegal aliens. Thus, Benhabib takes up the challenge of the double edge of cosmopolitanism by arguing for the search of a legal foundation of cosmopolitan citizenship beyond positive law alone.

When Benhabib deals with the double edge of cosmopolitanism she answers this question by drawing on Kant’s doctrine of cosmopolitan rights, which she attributes to Kant’s thesis that ”The law of world citizenship shall be limited to conditions of universal hospitality” – hospitality covering the relationship between states and strangers. With Benhabib we can argue that the double edge of cosmopolitanism lies within the confrontation between republican national law and international relations, because the law of hospitality intersects with the positive law of the state. Specifically, Benhabib focuses upon the point of intersection between these two dimensions. On the one hand we have the Republican opening towards the international community in the republican public sphere; on the other hand we have the mediation between the cosmopolitan norms and the republican community.

Benhabib argues that we can propose a solution to the tension of the double edge of cosmopolitanism by means of a cosmopolitan law that emerges from increasingly conscious public debates in democracies, where the norms of cosmopolitanism are accepted as basic human rights into the positive constitutions of republic societies. In this sense universal norms are mediated into the will formation of democratic societies, so that cosmopolitan norms are becoming integrated into the republican framework of democracy.

An illustration of this kind of democratic development of the cosmopolitan norms and of the “democratic iteration” is for example the European Union, where citizenship is expanded in a cosmopolitan direction. However, the contradiction between the universality of ethics and the particularity of law can never fully be overcome and there is always room for national sovereignty where laws are made.

When we talk about a civil justification for the emergence of cosmopolitan norms, we can argue that this justification of cosmopolitan hospitality emerges within the framework of democratic community because people are becoming more and more acquainted with others beyond their national borders and cultures with norms of reciprocity and respect. In this perspective there is a genuine hope that cosmopolitan norms are internalized in local cultures, democracies and populations. However, this is not enough according to legal theorist Seyla Benhabib. Cosmopolitan norms must also be based on a legal framework. In Another Cosmopolitanism, for example, Benhabib discusses the case of European citizenship as a token of the increased movement towards the development of such cosmopolitan norms.

Still, there remains the danger of a cosmopolitan stateless future. Benhabib argues that we should imagine a future where ”civil, social and some political rights” are not related to national belonging. In this context, universal cosmopolitanism is situated between law and ethics, universality and particularism, nation and international community. When we search for a philosophical foundation of these cosmopolitan norms, we can look back at the philosophy of Hannah Arendt who argued, as we have already said, that the most important thing is the right ” to have rights”.

We can say that Hannah Arendt’s book about the Eichmann trial — Eichmann in Jerusalem. Essay on the Banality of Evil (London: Penguin Books 1964/1981) — was fundamentally a book about cosmopolitanism and international law. This is true in particular when Arendt deals with crimes against humanity, where genocide is conceptualized as the crime against humanity, or rather the crime against humanness or the right to be human. The issue of the cosmopolitan double edge, i.e. how to mediate between national legal structures and moral universalism, can be answered by reference to the Eichmann trial. This trial marks the beginning of cosmopolitan norms. It is a trial for crimes against humanity that goes beyond the traditional boundaries of legal positivism.

If we look more closely at Arendt’s book about Eichmann and follow Seyla Benhabib at the same time, we can argue that cosmopolitanism is not only the Kantian horizon that as we may infer from Arendt’s letters to Karl Jaspers — Jaspers being himself a Kantian cosmopolitan — but an ideal of civic republicanism combined with a vision of political self-determination as the foundation of true hospitality in cosmopolitanism. So the emergence of global civil society as the movement from international to cosmopolitan norms of justice can only be accomplished as long as it draws with it principles of civic republicanism.

Concepts such as ”the right to universal hospitality” and ”the right to have rights” are certainly Arendt’s legacy of Kantian cosmopolitanism. Yet she adds a normative force that can emerge only within a republican, democratic framework of legal norms. These concepts, in other words, should have a binding power. The idea is that the ”right to have rights” indicates rights of universal hospitality that triumphs over positive law, but can also be within positive law, because it is founded on republican self-governance and autonomy.

We need more than the formal political construction of the cosmopolitan norms of human rights. The international human rights regime, crimes against humanity, humanitarian interventions and transnational migration norms should all be based on civic republican recognition of the right to have rights. So cosmopolitan justice must be based on a kind of nationally sanctioned international law of peoples, where the tension between sovereignty and hospitality is overcome through the act of self-legislation as an act of self-constitution under a cosmopolitan perspective.

Benhabib says that ”Liberal democracies must learn to negotiate these paradoxes between the spread of cosmopolitan norms and the boundedness of democratic communities”: according to her, the development of cosmopolitan norms is characterized by democratic Iterations between the local, the national and the global.

5. Conclusion

Following Hannah Arendt and Benhabib, we can argue that cosmopolitanism emerges as the power of democratic forces within a global civil society and this helps to a construction of international norms that goes beyond the tension between cosmopolitanism and national sovereignty. What is characteristic of the new cosmopolitanism, at least according to this view, is that citizenship and political membership are no longer based on culture and collective identity. As exemplified by the case of the European Union, the conflict between sovereignty and hospitality is no longer so important. Accordingly, a new discussion of politics implies the search for new forms of political agency in cosmopolitan times, where we recognize what Benhabib calls the “democratic iterations” of the concept of democracy and citizenship. And this recognition will help to develop new foundations of democracy in international politics.

Moreover, by protecting universal rights that are dependent on the charter and declarations of the United Nations, corporations can act for good international relations that go beyond the interests of particular communities of republics and nations. By doing this, corporations, when they really want to appear as good citizens, can help to build a world community that implies the universalization of the procedural virtues of liberal society. Corporations can at the same time be cosmopolitan and situated in particular societies, in the sense that they foster universal principles while making those principles work in concrete practice. In this sense, the post-crisis scenarios can be a development of a new cosmopolitanism in both international politics and in the activities by corporations and other organizations and institutions helping to build up an international civil society.

Eight Noble Opinions and the Economic Crisis: Four Literary-philosophical Sketches à la Eduardo Galeano

I.

Until control of the issue of currency and credit is restored to government and recognised as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile… Once a nation parts with control of its credit, it matters not who makes the nation’s laws… Usury once in control will wreck any nation.

            William Lyon Mackenzie King

Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.

      Albert Einstein

Philosophers are often and rightly accused of dealing too much with the past, pondering endlessly upon origins, reasons and causes, and too little with the future, leaving hardly any room to proposals, solutions, or calls to arms. To prove myself capable of the latter kind of activity, and despite the unavoidably old noble opinions quoted above, I shall keep Minerva’s owl nailed to a perch. Though Pythonesque, this little cruelty should delay any backward-looking blathering of mine, which is to come eventually in the other sketches.

After all, we are facing a dramatic twofold crisis, ecological and economic, which even uninfluential public figures like the current UN Secretary and US President have acknowledged and denounced as deadly. As for the title under which I allow myself to do so, I shall be content with declaring myself a professor of philosophy who has studied value for some time, i.e. what is important and what is not. In this pursuit, which I regard as valuable, I have reached a fairly simple conclusion: that which keeps all of us and our descendants alive and well is very, very important indeed. Those who deny it or claim my claim to be unscientific can do so because they are tacitly doing all that is necessary in order to stay alive and well enough to be able to talk a lot of nonsense.

But let us dwell no further on this simple subject, about which I have written around fifteen complicated essays in the past ten years—I need another nail… Worthy of Epicurus, I can offer a tetrapharmakos to today’s world, confident to be received by no-one in useful time, for that seems to be the fate for all who dare criticise—as I am going to do—large-scale private banking, the profit motive as paramount,  the private ownership of strategic resources, deregulation, and the managerial mind. Some may even call me a “socialist”, as though it were a derogatory and disqualifying term, similar to “criminal”, “pervert” or “rascal”. Probably, given the notoriety of Italians and academics, “old pig” or “bore” would be more fitting insults. Politically, however, I would describe myself as “life-grounded”, not “socialist”. Still, I shall not mind and endure the epitaph with grace, even gratefulness. I shall keep company with Claude Henri de Rouvroy, Comte of Saint-Simon, Albert Einstein, and Bertrand Russell. An aristocrat, a physicist, and a logician…

(1)

First, fundamental medication, upon which all else depends: nations should establish, or in most cases re-establish, good public banks. Why? Well, here is something that should have become obvious to anyone who has eyes to see and a fat wallet. As stated by Russian President Vladimir Putin when speaking last year at the World Economic Forum in Davos, the economic crisis that we are witnessing today has destroyed, in about one year, approximately twenty-five years of pecuniary wealth, i.e. the sort of wealth that our intrepid yet “virtual” capitalists were aimed to produce in the first place. Private banks and financial institutions, left to their own devices by prolonged tidal waves of worldwide deregulation, brought themselves down and, with them, much of the world’s “real” economy. Do you remember the real economy? If it goes down, down go also the starving children of unemployed sub-Saharan family fathers. Down into the earth they go, whilst shareholders moan for lost profits and fire a few more people to ease their pain.

Clearly, many private banks cannot do their job unaided. As they were busy concocting mathematically byzantine derivatives and variously vehicled securisation packages in the deregulated shadow of global finance, they forgot about honest bookkeeping, sound reserves, mutual trust, and other basic old-fashioned principles of chronically anachronistic banking. They even forgot about that primitive slave invention, morality. Alas! Such is the genius of the invisible hand free from State direction or, as Icelandic philosopher Mikael Karlsson dubs it, “the invisible brain.” This is not meant to be an insult to anyone, unlike “socialist” or “pervert”. The so-called “Free Market” promoted by “deregulators” has no visible brain, insofar as State-centred social and public planning is regularly rejected as anathema. Still, who came to the rescue of self- (and other-) destructive private banks? The State.

Turned into the banks’ pork-barrel, the State has thrown trillions at the banks in order to keep them afloat—in the Land of the Free, in Great Britain, in Benelux. Was it necessary? No, for the State could have simply taken over the banks. Was it desirable? No, for public banks, still run in communist countries such as China and North Dakota, can spur development, employment, and take far fewer risks than private ones.

It must be emphasised that it is not enough for the State to own the banks; these must be run like public banks i.e. banks for the public good. Some morality is required in the process. Prudently restricted by various strings, these public banks can respond more easily to the needs and aims of actual populations, rather than to the whims and fancies of absentee owners or of their volatile servants, that is to say their bonus-benefitting managers.

What am I saying? Have public banks and run them as such. They must spur real development, not inflate bubbles that transfer wealth from the bottom to the top. Will it hurt the shareholders and wealthier customers of private banks? Certainly. They have already enjoyed the State’s helping hand; it may be time to repay the State with gratitude. Doesn’t anyone remember how to do it? Read history books, study the European Payments Union of the 1950s, ask retired Italian or French bank managers, use your imagination. A few rules of thumb may assist those who lack enough imagination:

(a)  Ban financial and currency speculation, at least within and via public banks: the casino belongs to “competitive” gamblers. Yes, people who used to claim that they would succeed or fail like Promethean heroes… Before they all asked for help to the Great Nanny, of course, lost as they were on their er-rand. And please, let the State never again salvage these hypocrites from their own myopic greed. They are now trying to wash their guilty conscience by returning one hundredth of what they have received from the public purse, whilst re-filling their pockets at the State’s expense, with fierce bearish appetite

(b)  Lubricate the real economy, if forward-looking, so as to launch much-needed public works, create long-term employment, and generate steady streams of income within the nation. Public banks can do so, at low interest rates: they must be profitable, but not at all costs

(c)  Monitor inbound and outbound capital flows, so as to direct investments to socially beneficial areas, and counter tax evasion as well as tax avoidance: far too much has been denied in the past to the very public purse that has then saved the incompetent affluent from themselves. And remember that a stable currency and genuine economic sovereignty can only be secured by abandoning the disastrous freedom of capital flows that has flooded the world with crisis upon crisis since the 1980s: tequila, vodka, whiskey or brennivín, ouzo, they all taste the same

(d)  Secure reserves by compelling the capitals of public bodies, pension and social security savings, and the revenues of public banks to be invested in the public banks themselves. The State must be as free as possible from the bondage and the blackmail of its current masters i.e. foreign direct investment and international bondholders

(e)  Pay bank managers State salaries comparable to those of other leading promoters of public wellbeing—surgeons, health-&-safety inspectors, judges—and avoid attracting the covetous, self-indulging, big-jet and big-penthouse penis-length-comparing “best and brightest” who plunged the world into a massive crisis. Communities need not such beastly best and brittle brightness. Forget them and their barbaric macho ethos—made of turrets of money, performance-enhancing bonuses (as though they alone were working), fee-demanding buddies-consultants, and PR companies using invariably words like “aggressively” and “targets”.

Finally, do not underestimate the fact that it is difficult to deal with cronyism by voting new governments into office. Yet it is much more difficult to do the same thing by waiting for anonymous and short-lived shareholders to reform their servants, who are so free from supervision as to jot down any number they like in the books without anyone finding out. As Adam Smith forewarned us some time ago, the corporation is amongst the least competitive and the most corruptible of human institutions, hence amongst the most damaging to the proper functioning of capitalism.

And inflation? Don’t worry. Nobody talks about it—a sudden silence. After all, common people are no longer able to buy anything, not even on credit. If anything, the real problem to come will be deflation. Besides, more than 90% of the money circulating around the globe is the result of financial leverage by private institutions. Still, old-fashioned, knee-jerk reactions may be reoccurring soon: pensions and salaries must not go up, for the poor must repay the money lost by the rich; States must rein in public expenditures, which they have been doing for thirty years, unless there was a war to be fought; public assets must be privatised, so as to further enrich the incompetent and further weaken their only saviour; cheap money must stop (now), lest we tax the wealthy to give some jobs to the restless youth, etc. By the way, how is it that bonuses for bank managers could always go up? It must be the same people who think that only private firms can be valid multipliers…

It is ironic that, after two decades during which we had been told that the State and, for that matter, its independent Central Banks could not issue money for schools, hospitals, public works and social projects, quite mysteriously they started printing so much money. Sure, they now tell us that we need private banks to keep credit flowing, for credit is the life-blood of the economy. Without it, there shall be no green-spanning across the meadows. And yet, enterprises and households worldwide are still struggling to get the credit that they need. In truth, the selectively generous Central Banks’ cheap money benefits financial speculation, which is where the trouble started in the first place. How could ever a heartless economy pump any actual life-blood?

Indeed, in California, the local government is at risk of being terminated by the refusal of private banks to subscribe local public bonds because “unsafe” i.e. the State of California could go bankrupt. “What a cheek!” my mother would say, and she has dealt with banks for most of her life. The banks refusing to purchase these sunny bonds today are the same banks that were saved by public money yesterday, when it was raining. But there is more.

Were even these banks to provide enterprises, households and public authorities with the credit they need, they would not do it for free, for the common good, or for a little interest; they would do it for profit, and for as much of it as they can get. Thus, things would be so arranged and, sadly enough, they are being so arranged, as to have public money given very prodigally to private banks, so that these banks may give it to the public far less prodigally.

What is more, in order to be worthy of the bailed-out banks’ money:

  • Enterprises have been reducing their workforce to be more “competitive”
  • Households have been returning their homes to banks that had sold highly reliable mortgages towards the purchase of… homes
  • The State has been thinning out its already skinny body in order to be attractive to the banks, which the State has just rescued from themselves

After decades of TINA-like reduction of all that is public, public money is being given to glaringly incompetent private banks so that their losses be made public and their profits, which were always private, recover and be still private. In the process, public money is not used to counter dwindling employment, secure houses, and, say, fund hospitals, schools, university research, care for the elderly and the mentally ill, public gardens, public football fields, archaeological preservation programmes, amelioration of penal institutions, better garbage collection, sanitation and, why not, aid to starving children. How many tramps will get trapped in the revolving doors of the wealthy’s tower?

That the State may have money for the bankrupt banks but not for its own social functions, it is something that defies imagination, morality, and even legal obligations. Many of them ratified the International Covenant on Economics, Social and Cultural Rights, didn’t they?

(2)

Second, life-saving medication: if you skip the middle man, operate good public banks, and have money to use for the common good, then launch a vast programme of green public works. More severe and threatening than the economic crisis itself is the ecological crisis. Ask the United Nations about that. The former crisis threatens fat wallets at the top and starving children at the bottom, yet at different degrees of dangerousness. The latter crisis threatens all equally with death. The grim reaper is the great leveller. Since so much private enterprise has caused the ecological crisis in the first place—the smoky days of the Industrial Revolution—and has continued it in the face of scientific alarm calls as old as Britney Spears, then it is advisable that the State be able and willing to step in and, both by regulation and by direct economic action, reverse the tide.

Forget speculative carbon emission quotas and reduce carbon emissions; ban outright or force rapid conversion of the most obvious forms of life-destructive economic activity; tax the remaining polluting activities and de-tax non- or less-polluting ones; have a major public company undertaking proper refitting of houses on a massive scale so as to make them less energy-consuming; create large public recycling facilities so as to counter illegal dumping of waste at large; found and fund new public research centres for the development of green technologies, free from the yoke of short-term corporate desiderata; ration carbon-based power and use it only for vital and life-enhancing activities…

There are so many tokens of environmentally constructive planning, yet so few that have not been resisted as “too costly”, “too rigid”, “too much for us, who have already done so much”, etc. Were only the people uttering such phrases to consider seriously the fact that they can be so garrulous because the environment is still, barely, able to support them, their bodies, their minds, and the natural and social infrastructures that have allowed them to grow, socialise and, limitedly, mature…

In addition to a life-enabling aim and a counter-cyclical alternative to depressing austerity, politics would also regain its dignity by having a green mission. Strangled by powerful yet incompetent lobbies, and fettered by incompetent yet powerful central banks, politics has been reduced for far too long a time to day-to-day management of production costs in the domestic market and salesmanship in the foreign ones.

(3)

Third, important medication: since some neighbours may not like your policies and your currency, then they might respect your resources. States should increase or secure public control of strategic assets: water, oil, gas, the knowledge of its own population—this knowledge having been fostered by public education, healthcare provision, and cultural activities.

Whether by safeguarding the revenues originating in natural resources that would otherwise enrich few and often foreign shareholders, or by reclaiming a knowledge-based industry that would otherwise be outsourced by corporate giants, the State must secure a steady source of income for itself and for the nation’s economy. This income alone should help democratic governments to respond to their constitutional sovereigns, not to rating agencies and “markets” whose lords regularly reside offshore.

As Norway’s long experience in State-run oil extraction and refining illustrates, it is the one and only “trickle-down” strategy that has produced tangible results for an entire nation. States’ assets are not a factor of market distortion, but a factor of production—and one that can help businesses to grow by providing cheap goods and services, as opposed to the endless and costly bloodsucking of postmodern privatised economies. Ideally, it would be good for States to regain control over money-creating central banks, but there are limits even to one’s dreams.

Incidentally, even the many wars paid by the American public purse to secure control over other nations’ oil, or at least force its trade in US dollars, indicate that the public control of strategic assets is not so foolish an idea. And yes, also that getting bombed may be a risk for the nations pursuing the path recommended hereby. Apart from the landowners, cunning agents and financial moguls who have charged prices well over any real cost of production, for all others there is no such thing as a free lunch—Miltons have always known the devil very well.

(4)

Fourth, integrative medication: since some powers-that-are may not be pleased with your plans, make sure you can deal with them. Create a just fiscal and regulatory framework, which empowers the population at large and weakens the usual lobbies: close tax loopholes and tax breaks for the usual lobbies; withdraw passports and freeze assets of tax fugitives; tax rents (land, inheritances, capital gains) and de-tax hard work, so as to reward merit and distinguish sharply between earned and unearned income; end subsidies, legal privileges (e.g. limited liability) and tax-breaks to private companies, lest they never compete in a truly free market; nationalise the companies that are too big to fail, as John Kenneth Galbraith advised us to do long ago; reclaim research and development grants and whichever other public credit given to private firms leaving the country; confiscate the assets of companies outsourcing to countries with lower labour and environmental standards; put regulatory agencies and grassroots associations on the boards of private and public companies to fight corruption; inspect constantly and reward those inspectors who discover illicit activities.

Taxes matter. Especially when there is an ever-richer tiny elite of super-rich whose fortune comes as a long free lunch over accumulated wealth, whether in property or capital. They hardly ever pay taxes. They pay fewer than most, since someone else paid taxes before them: those who actually earned that property or capital in the first place. In truth, they may quite simply avoid taxes by shoring their assets off to tiny islands or Alpine valleys. The members of this tiny elite are above and beyond the common citizen, whilst their trusted and highly paid managers rarely go to jail when guilty of fraud or cheating. Above-and-beyondness is a transferrable asset too. If and when hijacked by this elite, States are likely to commit suicide by taxing those who work instead. And if the people sweating and bleeding don’t have enough money, then State activities are to be reduced in the name of, say, the Big Society–of the hopeless and of their hopeless resilience.

In brief, internalise costs that have been externalised regularly and mercilessly at the expense of natural and societal well-being; and effectively re-regulate the disastrously de-regulated playground of the free enterprise–especially but not exclusively of the virtual type–whose only known freedom is that which cages every possible aspect of reality into the life-blind logic of profit-making.

Will anyone undergo this cure? History will tell. And history is full of surprises. Who would have ever thought, for example, that little furry animals could outlive giant dinosaurs and become the first species ever capable of destroying the ecological structures that allow them to live!

II.

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation.

         John Maynard Keynes

There are two ways of conquering a foreign nation. One is to gain control of its people by force of arms. The other is to gain control of its economy by financial means.

       John Foster Dulles

In the year 2003 I published a review of Value Wars, written by Canada’s leading value theorist John McMurtry. In it I provided an account of the stunning whistle-blowing by World Bank Chief Economist Joseph Stiglitz vis-à-vis “deregulation” and “globalisation”, two terms that had been dominating economic and political discourse for some time. Quite unexpectedly, and rather shockingly, a well-connected, mainstream, Nobel-prize-winning economist denounced the World Bank and the International Monetary Fund for implementing over a period of at least twenty years a merciless four-step process of re-colonisation of independent nations by international private capital. This was the sort of suspicion that radicals like pop singer Bono Vox and Polish actor Karol Woitila, better known as Pope John Paul II, had been voicing for a long time. As for John McMurtry, he took due notice, since Stiglitz’s revelation was consistent with his own description of world affairs as directed by the profit-motive of the few versus the vital interests of all others. Preferring truth to originality, I endeavoured to spread this description of world affairs around me. In fact, I had given lectures about it, also in Iceland, before 2003.

Nobody seemed to care, however, at least here in the north. Stiglitz’s views were not widely discussed and even less were they taught at the university level, except by a few—sometimes foreign—eccentrics. McMurtry’s views, hadn’t it been for the same eccentrics, would have been left to gather dust in local libraries. Meanwhile, the policies of deregulation and enthusiastic participation in globalisation were not halted. On the contrary, in the year 2003, the three largest public banks were privatised. Immediately, they started to sail the seas of international speculation, never seen before in Icelandic history. “Carry trades” and “financial leverage” became mantras recited on the first page of all newspapers, whilst the businessmen who were dubbed the “new Vikings” set out to raid foreign banks, enterprises, supermarkets, and football clubs, with money that they did not have. But such is late- (or post-) modern capitalism, or “the Icelandic way of doing business”, as I was told back then. Besides, it would appear that only professional economists are entitled to teach about why they, unlike a mere philosopher like McMurtry, got it so wrong. And there’s so much to learn!

What did Stiglitz’s whistle-blowing describe? And how does it apply to the Icelandic case?

First, the permeability of the nation’s borders to private foreign capital is increased by deregulating capital trade and privatising strategic national assets. Barriers, bottlenecks, and “obsolete” protections are removed, whether material or immaterial. Nobody quite remembers why they were there, and even fewer wonder why. Above all else, money must flow. That’s the consensus, at least in the district of Columbia, which is obviously populated by zealous reformers. Their principles are crystal-clear: “public is bad, private is good.” They believe in “The Free Market”, whatever that may be thought to be; and they believe in it so ardently and unflinchingly that Stiglitz and others refer to them as “market fundamentalists.” They even set complicated rules at roundtables to force dissenting markets to be free. Anyhow, this very first step, which may take some time, is achieved by lubricating slow-moving and slow-thinking local politicians, business leaders, present and future ideologues with adequate amounts of grease. Grease, yes, such as co-opting these people into the international jet- and yacht-set, promising or securing that they will have their own golden toilets, washing their brains at spectacular conferences and exclusive think-tank meetings, baptising their best and brightest first-borns in the sacred founts at the sacred shrines, stirring their simmering jingoistic sentiments, or bribing them straightforwardly—indeed Stiglitz talks of this process as “briberization”.

Secondly, money flows into the country. A bubble ensues; in fact, a cyst. Depending on the country’s economic conditions, the cyst can take different forms, but all of them eventually become painful. In the case of a reasonably well-off country, glittering streams of foreign capital inundate the land, turning modest entrepreneurial fields into a glorious harvest of unprecedented projects. Thus refreshed, the local currency and the local shares pupate into surprisingly light-winged and seemingly fertile young fairies, whose well is said to be full of diamonds. Moreover, the nation’s financial institutions become large fountains that can quench the thirst of anyone who is eager to drink from them, including those who do not need it, but have the misfortune to possess a belly. New buildings spring up like mushrooms in the vast new wetlands, luxury and consumer spending—mostly dependent upon credit—fly high like gleaming droplets out of a geyser’s mouth. So mesmerising is this sight, that more permeability is actively sought.

Then, the cyst bursts. As swiftly as it flew in, so does the money flow out. A rumour, a token of gossip, an unfortunate diplomatic incident, a well-paid expert report, or a speculator’s premeditated signal to his colleagues rapidly reverses the tide. The flood ends. A drought follows. Projects—and buildings—remain unfinished, half-mast, like flags at a funeral. The wombs of local currency and local shares reveal themselves sterile; it was all make-up, they now say, even the wings; you should never trust the books. The well in the garden is dry, and full of stones. Moreover, the fountains are dry too. Around them, stunned, jobless, emaciated peons, indebted up to their eyeballs, drown into whirling sand clutching their plasma TV sets. And their TV heroes have not come to save them, be they crusading party leaders or Viking raiders. Who will?

Nobody is without friends, especially after having become part of the international jet- and yacht-set, educating his own children in the best schools, or attending eye-opening conferences and meetings. Not to mention those friends who have already proven so generous in the past. In truth, after having advised on how to render the country prosperous, they now spare no saliva explaining what can be done in order to rescue it from its unfortunate plight. Thus, money is poured back into the nation. High interest rates are, however, de rigueur. One does not give much to drink too easily to a friend who has already drunk too much. What kind of a friend would he be?

The third step is therefore to make up for the mistakes of the past and repay one’s generous friends. Whatever wealth remains must be scrupulously collected so as to honour the debt—or so as to secure further loans. Debt gives salvation from debt, as gamblers understand so well. Certainly, the wealth of the wealthy is better left untouched: they are the producers, the life-givers, blessed fountainheads of the nation’s wellbeing, which needs them so badly under the burning sun of the new sad day. They must be treated kindly, lest they or their wealth be forced to flee by too rapacious and visible a hand—some have already fled, they whisper. The wealth of the poor—or of the poor-to-be—is a better starting point. After all, they may have little, but there are many of them. Besides, since they have little, they cannot flee as easily as the rich, nor can their wealth flee. And whereas the wealthy can go bankrupt and be resurrected cleansed of their debt, like the imperishable Phoenix, ordinary mortals honour their debts, willingly or not. They may protest, but law and order are the last two public sectors whose resources are cut off, unless successful ways are found to privatise them too.

Finally, as the nation struggles in debt and turmoil, groaning so loudly as to disturb its neighbours, the generous friends come back to help. They cannot remain untouched in the face of so much poverty and violence. They have new “plans”, “strategies” and “packages” to sort things out. Yet, to implement them, national borders must be removed completely and an iron framework of conditions for investment and development must be imposed in order for the nation to become a proud participant in fully liberalised, multinational free trade. For example, its tax environment must be suited to foreign investors—may God bless them—and its population as flexible as unthinking reeds in gushing new brooks, to which they contribute sweat and tears.

By the way, where does Iceland stand now? Probably it stands at the threshold of deciding whether to plunge headlong into step three, with signs of the fourth step already lurking behind the waterfalls harnessed for hydropower.

III.

In all normal civilisations the trader existed and must exist. But in all normal civilisations the trader was the exception; certainly he was never the rule; and most certainly he was never the ruler. The predominance which he has gained in the modern world is the cause of all the disasters of the modern world.

  Gilbert Keith Chesterton

The economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable, and we should face up to that.

  Lawrence “Larry” Summers

It has been long known that Europe catches a cold whenever the United States sneezes. Yet things get even worse when the immune system of rules and restrictions to international capital and currency trade has been removed altogether. Iceland and some young, yet already former, free-market miracles on the Baltic Sea did catch pneumonia this time. Ironic indeed, as they are just another group of market miracles turned into meltdowns—Asia had a few of them in the 1990s. Miracles seem short-lived these past few decades… Though if truth be told, even Lazarus died, after having been brought back to life.

Historians of the future, if there shall be any and if they will be honest, are going to wonder and ponder upon how such intelligent and highly educated “knowledge economies”, capable of the finest mathematical-financial wizardry via the fanciest computer technologies, could bestow upon themselves so much avoidable pain, destroying in the process not solely further scores of planetary life support systems, but also man-made social infrastructures that have generated, depending on the country, genuine welfare for up to three or four generations. These future historians will be at pains to conceive of powerful, well-off, democratically elected representatives who listened to foreign bankers, and not to their own citizens, rushing to implement, whenever they could, multilateral agreements on investment robbing their own cabinets of much of their power.

These future historians will probably fail to empathise with and understand such bizarre people, very much like Voltaire, who could not really explain why our forefathers were willing to slaughter one another over the correct interpretation of the Holy Trinity. After all, they had never seen it (or them?) and Jesus himself had never said anything clear, if anything, about it (or them?). Not to mention the centuries that humankind spent warring, raping, disembowelling, burning, maiming, chaining, flogging and excommunicating one another because of errors of interpretation. Obtuseness is incredibly resilient. And we are not so different today. Check the Athenian cradle of our civilisation if you don’t believe it.

Yes, embodied and expressed by the very same conventional people at the helm of the world’s public and private financial affairs, the wisdom arising from the ashes of the current crisis is astoundingly similar to the one that caused the crisis. Are you indebted? Take on another loan. The private banking sector has betrayed you? Restore it with public money and run it as before. The world’s economy is a gilded cage run on behest of under-taxed oligopolists, tax-evading rentiers and idle absentee owners that squeeze money out of the real economy through banking charges, debt repayments, service fees, monopoly and land rents? Keep it going and call it a “free market”. People are suffering, jobless, and with their tax money siphoned to the creditors that inflated the bubble? Show them tough love and deprive them of further healthcare, education, culture, wages, pensions, childcare, subsidised water and power. Austerity measures turn a crisis into a depression? Implement more of the same measures. The environment is running amok in the so-called free-market environment? The market will fix it; in the meantime, profit will keep being extracted from increased prices in oil, gas, polluting consumer goods, and cancer treatments due to the ecological collapse of the planet. Apparently, the only green rules acceptable are those that transfer further money from the public purse into private pockets. All others are resisted as “costly”, “distorting”, “rigidifying”, “liberticidal”, which may be true—and good. The one and only truly binding international environmental regulation that, so far, has saved us from extinction, preventing excessive UV-irradiation, was a top-down imposition from Montreal.

But life, not to mention a happy and healthy life, has never been the paramount goal of the pursuit of profit. War was and still is a major source of profit, towards which public subsidies to private firms are given generously… Well, they call them “research & development” grants or “national security” strategies… Disease-causing pollution has been mostly an externality that had nothing to do with profit, until pharmaceutical conglomerates found a way to exploit that too. Slaves and their children were most profitable for many, many centuries. Wage slaves… Oops! The flexible working poor and their children are very profitable today too.

And for what must all this wisdom be endured? To give money to people who have money. They have enough, one would believe. They should start communicating it to those who have nothing… little… less. Jesus and Aquinas regarded this as obvious. No, it is not obvious. Money is never enough, especially to those who need yet another fancy dress. But why are these people non-satiable? Why do they complain, lobby and shift electoral allegiance whenever taxation on capital gains is vented? Why do they transfer their fiscal residence to tax havens, whilst benefitting from handouts of the State they are deserting? Why do they outsource productive structures to countries squeezing labour out of turnips, if youngsters are not available? Why do they say that “they have already done enough” whenever life-saving regulation is discussed? Why do they care more about the interest rate they can get, than they care about how their money is invested? Why do they oppose healthcare, old-age pensions, education and culture for all, while they enjoy it for themselves?

It is competition, they answer. There isn’t enough around for all of us, only for the really tough ones, who can then live in much-deserved luxury. But why do people compete for having more for themselves, instead of, say, competing for beauty, generosity, selflessness, equal distribution, full employment? There can be so many different and more constructive competitive aims in life: just look around. Nuns, school teachers, barefoot physicians, rocket scientists, marine biologists, old fishermen, young artists… They may not all dislike some cash, but they do not live for it, or at least they try not to. Since Divine Will is out of fashion, and if you press them long enough, the luxury-deserving competitors are going to tell you, eventually, that we are cruel wolves. How naïve was I! I thought that they were cruel wolves… The world is a cruel place—those ferocious nuns… Nobody waits for those left behind—and they don’t. The market forces accept no barrier. As one of their fairest ideologues so frequently stated, there is no alternative; it is human nature. A hidden philosophical anthropology…

And yet, none less than their poorly understood hero Adam Smith taught us long ago something very different in the opening page of his greatest book, The Theory of Moral Sentiments:

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrow of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous and humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.

This is certainly not the one and only betrayal of Smith by current capitalism. After all, his market was meant to be free from rentiers, who now run the show. Anyhow, why so much mercilessness, then? Have we become worse human beings? Have we lost our humanity? Have we found ways to outcruel the cruel, underfed, superstitious peasants, who, when not breaking skulls in the name of God or King or Country, killed and maimed animals on a farm? Well, as modern and proud of our science-technology as we can be… Well, yes… Overall, subtly, we have. The thinning of solidarity that embraces the whole humankind, which a German-sounding French warmonger studied in depth, is a weaker barrier to the undergoing evil drives.

Or, at least, we have done our best to train impressionable young minds to being ordinarily callous and participating in the most spectacularly life-destructive economic system ever seen on Earth—a system that, as denounced by the scientific community for the past thirty years, has turned the survival of our species into a big question mark. Much is done in this direction, routinely, thousands of times a day, so that our youth may become more beastly than ruffians and more abrasive than criminals. But how? Simple. We (mis-)educate them, and we have tools for (mis-)education that no emperor or church of old has ever owned or mastered. Only a couple of totalitarian dictators gave it a go or two in the blood-drenched century of Charlie Chaplin and Woody Allen… But how, where? Open your eyes. Watch.

Our TVs and media are replete with commercials. They are meant to accompany you from the cradle to the grave. Selectively and scientifically trained marketing strategists, creative psychologists and advertising gurus are paid to induce desires in the subtlest and most effective manners, starting with our children’s delicate souls. These desires will blossom into poisonous “new needs”, as these “experts” call them. These weed-like flowers being sheer wants perceived as genuine individual needs, the delayed satisfaction of which is to generate a sense of inadequacy, anguish, frustration, isolation, or envy towards those who do satisfy them. And these are the only flowers that must grow; hence they are everywhere. Children no longer need an imagination. Marketing strategists make sure that the only pictures that children can have in their mind are those that sell. They speak already like TVs: why shouldn’t they replicate TVs in their brain? Eventually, as grown-ups, these children will be branded, like slaves of old, or cattle still is today. Perhaps, like the slaves of old, they will enjoy freedom one day a year. Or maybe all the days will have been taken away by marketing strategists, who wish to celebrate the sales of Valentine’s Day, Mother’s day, Father’s Day, Marketing Strategist’s Day…

You don’t believe me? Go to any primary school and you will meet hordes of little creatures dressed according to the latest fashion code, or pestering their parents to be so dressed. Those who are not there, because they are busy sewing the actual fashion items, may well try to rob them from the horde one day. These little brats! They want and want and want scores of items that they do not need, the possession of which, moreover, does not grant happiness at all, despite the glittering promises. Were it so, no new purchase would be “needed”, and that would be bad for business. Certainly, one may learn to control such a powerful impetus, but it takes years of self-re-training. Not even hunger and utter destitution placate it. Not even the full awareness of not being able to afford those consumer goods. Nothing will ever erase the deep-rooted psychological mechanisms implanted into our souls when we were little. Is this enough? No, there is more to it.

Our TVs and media are replete with role models—and the medium is the message. Rich and wanna-be-rich people of all sorts shine even when performing the most ordinary activities, such as shaving or concealing their stench with perfume. From slutty heiresses to pimping rappers, from cosmetically mummified bad actors to ignorant footballers, from divorce-addict hair-died tycoons to soon-to-be-millionaires answering questions or showing their private parts in public—these are the saints and blessed inspirers of the modern secular creed. They may be confessing their own sins to a TV host, confident that their words will be forgotten. What remains, instead, is the scent of money that perspires through their placenta-creamed pores. A powerful aura.

The same aura surrounding the action hero, who fights, kills and kidnaps for the sake of justice, peace and freedom…  There he comes! Dressed in an Armani suit, he jumps out of a Mercedes, talking briefly on his Nokia. He checks his Rolex, then gets into a Ferrari and drives to Chez Maxim’s. There, he meets a beautiful young lady, whose Valentino dress will soon be ripped at the Hilton’s. And there he’ll kick the guts out of the villain, smashing his Patek Philippe and ruining forever his Dolce & Gabbana jacket… Justice is served. Peace is conquered. Freedom triumphs. That’s the message, isn’t it? And if not much of the beautiful young lady is shown, then children can watch too.

Poor people are less frequently shown. They don’t sell as well as our hero. Moreover, they don’t buy. There exist notable exceptions, though. Poor men and poor women are sometimes on display, like animals at the zoo, to be observed, mocked and, on Christmas day, to feel sorry for. Other times, they are actively humiliated on screen by policemen, judges and other masters of entertainment. Crime, ignorance, savagery: what a show! Once again, as long as it sells, keep it up. There, in the spotlight, for less than fifteen minutes and amidst commercial ads, the poor can shine like greasy piglets on spits, or like the tin their most unfortunate children collect in garbage dumps.

What is the result of this Blendungsroman? Go to any secondary school and you will meet cell-phone-talking walking replicas of the rich, parading themselves in the corridors. Give them an opportunity to put down a “loser”, and they will savour it like their own parents, whose SUVs and triple-mortgaged houses are punches into the Joneses’ stomachs. Even poverty is a risk worth taking to cast the rich’s aura.

The silent walking replicas of the poor are usually in other schools, unless they have dropped out of school already to find a job that will secure their poverty. Some are hiding in the toilets. They are poor and they know it. They look poor. It is not only their clothes that say it, but their bodies. They have bad teeth, small tits, big noses. Their parents have wrinkles. They can’t get fixed, like those people on TV, or their replicas and the replicas’ parents. To cope with this obvious inferiority, they breathe in. In Italy, they sniff cocaine to think that they too are rich. In Rumania, they sniff glue to think that they too are sniffing cocaine.

Either way, none of these kids must worry about being politically active. It is too dangerous. Yes, youngsters still remember how to bark: they haven’t been beaten up into silent submission, yet. Some will have to be locked up, so that trade be free. Don’t give them any wrong ideas. That’s socialism—or any bad “ism” of the day. Don’t give them hope. That’s socialism. Politics is best left to corporate employees, who siphon public money to their shareholders and, God be gracious, to their own bank accounts. That’s the free market. These employees alone are capable of understanding why unemployment is natural and inequality good. They’ve got talent. They’ve got the degrees that get you good jobs. Therefore, unless they are corporate employees, not even the kids’ parents have to worry about politics. Like these happy few, the kids’ parents can take happy pills too or, if pills are too expensive, drink themselves out blind.

Drunk, the poor parents can cope better with the trauma of seeing their children die. Each country has its own special way of sending new winged angels to God. In high-tech market-miracle India, they die of cholera in open-air sewers, where they were looking for edible scraps. In coup-idity-ruled Honduras they die poisoned by pesticides in a free-market plantation, so that the bananas people eat in Canada be not too pricy. In revolutionary France they die stabbed by an angry pusher in a dark alley, but they were not really French after all. In peace-loving America, they die fighting for human rights in another country, since their own country denied them a future. How was it possible? They had trained them at killing people since they were three, on a stolen X-box… Maybe they should have trained them at doing something else, but there is no videogame that teaches you how to free a political party from corporate diktats or join a trade union… Is this enough? No, there is more.

Our TVs and media are replete with experts telling us that greed is good. They are the most interviewed and consulted members of the intelligentsia of our community. Sometimes they even become our presidents, ministers, mayors and godfathers. Go to any university. Some of them feed on tenure and enjoy healthcare and pension benefits, whilst arguing that you shouldn’t have them. You will discover that there is an entire discipline built upon that notion.

If truth be told, a few of its adherents do remind their students, on leap years, that the profit-motive of the homunculus œconomicus is just one drive amongst many. This drive becomes one and insatiable for the sake of toying with mathematical formulae, not for the sake of describing reality, which never works quite like the models do. Facts can be so obstinate. Theory is much more flexible. Occasionally, on elective days, these beautiful souls mention even mysterious, metaphysical, unscientific words: “ethics”, “morality”, “duty”, “respect”, “goodness”, “virtue”, “governance”, “responsibility”… They don’t fully grasp them, though, for they slip out of books and balance sheets. Sometimes they even get their students to learn some history, thus half-stuttering what sort of devastation this homunculus and its leit-motive have caused. Still, these are exceptions, divagations, and the students, between the end of their studies and the beginning of their careers, know it very well.

Our MBAs and the many branches of science and engineering dependent upon private sponsors and future corporate employers are the convent-barracks where our crusading novices, more or less geeky and asocial, are told that only numbers really matter. The fate of a paterfamilias and of his family does not. They are told that persons are not persons: they are costs, opportunities, capital, markets… They are all sorts of things that can be converted into monetary units—numbers, in fact—though most definitively they are not persons. In fact, such things, be they free individuals or free communities, can turn into dependent variables. And if some of these things are laid off by a firm that rationalises an otherwise irrational workplace—what a madness it must have been!—then it may be time to invest money in that firm. If the right numbers go up, then things are just as they should be. If they don’t, they can be massaged. If they still don’t, they can be fixed. If they still refuse to go up, then a couple of hospitals plus half a university, as long as they are public, can be sacrificed to a return to growth.

In the streamlined world there can be recoveries without jobs, business opportunities in famines, increased flexibility via insecurity of employment and future bread, full employment at the natural unemployment rate, goods that do a lot of bad things, and market miracles that melt into destitution because of something bad but the pious market. What lesson is learnt? Everything in the world exists in order to maximise the money of investors and/or their managers. Even old, wrinkly countries must be attractive to such people or face their own demise. Make the rich richer. That is the one and paramount commandment. Such merciless homunculi are no fiction; they are science-fiction: they drive around in Dalek machines. Indeed, to those who do not simply rob and run, being merciless is a fiduciary duty. Apart from this, everything else goes.

Yes, everything else, unless you get caught and cannot pay the best lawyers—what a shame. Business words of the business world tell no lies: lack of scruples is “determination”, mercilessness is “having balls”, inhumanity is “being committed”, callousness is “professionalism”, locust-like behaviour is a “hedging”, stealing traditional knowledge is a “patent”, depriving people of knowledge is a “copyright”, poisoning the destitute is “mutually beneficial trade”, taking public-sector resources to guarantee private profits is “hard work”, threatening employees with unemployment is “personnel management”, gambling is “trading futures” and other cabalistic formulae “over the counter”, oligopolies are “economies of scale” and cartels are “free markets”, sending knowingly drivers to die because of a few faulty cars is a “cost-saving measure”, sending knowingly air passengers to die because of reduced safety controls is a “cost-saving measure”, corruption of inspectors is a “cost-saving measure”, corruption of politicians is “lobbying”, and rent-exacting parasites are “the productive class”. The list goes on and on. Read the news and enjoy the game: destroying peoples is “restructuring”, keeping them poor is “preventing inflation”, colonising a nation is “opening markets”, withdrawing rights is “reform”… By the end of it, you almost believe what they say.

Has any student still doubts or feels uneasy? Then he is told that all is well, for all ends well. Yes, those things that we unscientifically call “people” may seem to be suffering, poor things. And the others, crony criminals who have nothing to do with the free market, are the exception, though the rule just wants to be like them. After all, those exceptional exceptions were on the cover of glossy magazines like Capital, the Cosmopolitan of people who “have balls”… Don’t worry. Everything will be alright. Just wait—that’s what my old priest and the party commissar would say… The invisible hand of the self-regulating market is going to look after all of them. Free from State intervention and from trade unions—for only capitals may associate and go on strike if they don’t like a government—the invisible hand is to generate endless bounty for all—the invisible bounty? Most of the world’s trade is virtual, after all…

Such is orthodoxy today, for which even a Pope’s distribution chests are heresy, utter hilaireous bellocs… If you claim that small is beautiful, the giants get angry: go make your shoes elsewhere! Today, you no longer need to be red to be a danger. It is enough to be as white as a dove. The Market God likes hawks, whose endless preying is the source of all that is good. His transparent hand turns into water all the blood that these hawks spill. As to the tallest shrines, they are no longer erected for the glory of the Sun, Athena or Almighty God, but for the likes of Morgan Stanley. Behind all this, a hidden theology… Maybe Divine Will should be in fashion again.

IV.

The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

   Franklin Delano Roosevelt

 To avoid glaring inequality or widespread misery I am ready to sacrifice some, or all, of my freedom… I should be guilt-stricken, and rightly so, if I were not.

Isaiah Berlin

 

The child empathises with the dying bird. The adult empathises with the starving child. The nurse attempts to ease the pain of the terminal patient. The teacher smiles patiently at the pupils playing in the courtyard. The schoolmaster hides his unease as the ancient oak is felled. The gardener watches wildlife documentaries on the TV. The mayor goes on holyday to his cottage on the lakeside. None of them likes to be ill. All of them fear death. All of them experienced curiosity or elation as they held a newborn creature in their arms. All of them have been compassionate at some point. All religions have praised divinity as the fountainhead of all that is. Whether physically, emotionally or mentally, all of the above have exemplified the ultimate source of all values.

Years of research about value have led me to conclude that nothing is more valuable than that which allows value itself to emerge: life. Without life—biological, emotional and mental—there can be no value, whether ethical, aesthetic, economic or political. Those that deem life’s value instrumental acknowledge its value nevertheless. Besides, none of them seems likely to prefer beauty or other values to eating every day and being in good health: take away their bread, and they will sell their dearest painting… Of all crazy philosophers ever alive, only a handful rejected life as a value and one alone behaved in a way that denounced actual indifference to life: Pyrrho the sceptic, whom his friends prevented from walking under carts and falling off cliffs. One. As for the few who told us that life is a valley of tears and an endless stream of horrors, none of them ever stopped eating, drinking, and philosophising, i.e. one of the activities that they clearly enjoyed the most. But what can the lives of crazy philosophers teach us about economic matters?

As usual, philosophy can reveal the heart of an issue. If life is so crucial, indeed the source of all values, then it can be inferred that a successful economic system provides universal access to vital goods across generations. Economic efficiency means that the lives of all benefit from it and nothing is spoiled to the point that those who come after us may not benefit too: resources are left for others the way in which we would like to have them left for us, if not better. Improvement is a possibility. An economic system that achieves its vital aims more effectively, thus opening the door to a richer fulfilment of planetary and human potential, is yet a better system. On the contrary, an economic system that does not fulfil its vital aims, either because access is limited to few or some, past or present, or because it delivers goods that are deadly, detrimental to life or irrelevant to life needs, whilst leaving some of these needs unanswered, is a failure.

The current economic system is a failure. As repeatedly denounced by the international scientific community at its highest and most representative levels, human civilisation has become for the first time in its history a threat to the planetary environment that allows for humanity’s own existence. There is no aspect of the Earth’s environment that has not been depleted in the three centuries that have seen the affirmation of capitalism worldwide: the biosphere-protecting Ozone-layer, breathable-air-producing and reproducing pluvial forests and oceanic life-systems, self-regenerating water aquifers, nourishing-food-producing arable spaces, and natural-equilibrium-maintaining and science- and technology-inspiring biodiversity. The continuation of life as we know and enjoy it is at risk.

Much has already been destroyed beyond repair, to the point that bioengineering is being discussed as a tool to cope with the most tragic consequences of “development” awaiting us. Emblematically, one nation of the world is planning already the purchase of land in India in order to transfer its entire population there upon the day when the ocean will have swallowed their ancestral islands. And yet, in the face of current profit losses, all this is treated as secondary. Just read the news and you shall see that the focus of collective action is upon a “return to growth”, as though the sad and deadly harvest of greed were not still vivid before our eyes.

What is more, the mantra of competition goes on unchallenged. But competition for what? To generate profits? And why? Why should rich people become richer? There’s more than enough to go around. Even more ludicrous is the idea that schools, healthcare, free time, old-age security, peace of mind and all those gains for life that people acquired in decades of blood and humanity should be dismantled so that competition be won. By whom? What sort of victory is the augmentation of the money heaps of people who already have it, whilst the quality of life and the living conditions of most are worsened?

F.D. Roosevelt told us seventy years ago that greed is not only bad morals, it is also bad business. When business’ sole purpose is to make as much money as possible as soon as possible, then the somewhat constructive role that business may play in society disappears altogether. It doesn’t matter if any private business actually makes a lot more money, gets bigger internationally or pervades even more diffusely the lives of millions: the standards of evaluation and appreciation for the constructive role of private business belong to the sphere of public wellbeing. And public wellbeing cares about long-term indicators: happy workers retiring in good health, healthy mothers making plans for their children’s education, educated youngsters looking forward to playing on the beach with their grandchildren. If this horizon disappears, then you’d better start to worry. Private business is known to have played far too often a destructive role, as everything, the long-term survival of private business included, can be sacrificed to man-eating Baal.

Short-termism, combined with the relentless pursuit of profit, characterised roaming Goths, wooden-legged pirates and cigar-loving gangsters. The entrepreneur, the glorious creation of modern capitalism, has always been expected to be something different. Restrained by family and personal pride, religious morals, annual dividends, trade unions and other 20th-century legal suasions, his horizon has been defined as a somewhat distant future, his playground the real world of flesh-and-bone persons like him, his reward the admiration of affluent or fully employed fellow citizens that participate in and benefit from his endeavours.

As long as alternative economic systems were either widely discussed or experimented with, the entrepreneur had to justify his existence by creating some tangible, albeit sometimes debatable, token of social worth, such as employment, community networks, or nice new gadgets. Only the speculator, hardly distinguishable from fraudsters, trotted relentlessly upon a different path. But speculators were said to be the exception, not the rule…

Yet the day came when Gordon Gekko and his friends got to control more than three quarters of what is still incautiously dubbed “world trade”. The decades of my life, infested by Maggies, yuppies and wall-less oligarchs, launched “The Financial Revolution”, a pivotal process in contemporary history that no historian has yet so baptised: let this label be my grand legacy to international scholarship.

An equally bombastic historian used this term in the 1960s to describe the emergence of public creditors in 18th-century England… It doesn’t quite compare, I’m sorry. We’ve just witnessed thirty long years of national barriers coming down—and how long it took for both nations and their barriers to come into existence!—so as to allow for a gigantic flood of miraculously leveraged liquidity springing out of… books and vast pools of capital formed by privatising public money in all of its shapes, squeezing profit from de-unionised workforces threatened by—what a coincidence!—unbarred international competition, and such ingenious tokens of financial engineering that only professional mathematicians could make sense of them. All this money travelling much faster than any good or service ever before: computers have replaced the pens and ink of old. The world of Gekko and other reptilian inhabitants of city hedges and wall streets is indeed a very bizarre world.

Originally, these creatures were meant to trade pieces of paper granting a share of the profits made by fairly large private companies. It is something that had begun in Genoa a long time ago and that their trading partners, the Dutch, had brought to the North Sea around the year 1600, sailing thence to the New World, another Genoese discovery… But a share of the profits may be less remunerative than profiting from shares. Gekko’s forefathers started betting on rises and falls in the price of those pieces of paper, sometimes causing them by moving massive amounts of money or dropping a few words into the nearest ear…

In the days of poor old Nixon, in the Big Apple, they traded about 20 million stocks every day. Today they trade 1600 million or so—and there’s more fruit in the basket than just a big apple. Also, as of Nixon’s time, they started playing games with the world’s currencies, namely the money with which common people buy their bread. Again, they started slowly, about 20 billion USD a day, but now, after “freeing” trade worldwide, they are up to 2 trillion. It is by far the largest chunk of trade in the world and it has one severe drawback: it makes the form of trade that normal people think of when they hear the world “trade”—buying and selling bananas, timber, cars, computers, etc.—much more complicated. Not to mention buying bread. But the reptiles don’t worry: they own the future. They buy and sell it.

Actually, they take bets—only a tiny fraction of trade in existing “futures” fulfils the official excuse that these are ways to hedge against risks on purchases of actual goods—on nearly anything that can be grown, mined or brought into existence, influencing the price of all sorts of goods, including the bread that common people wish to buy. Still, since even this casino was not big enough, the reptiles added onto the table the so-called “derivatives”, which are pieces of paper whose value is derived—hence the name—from something else, whether another piece of paper or a price arising from combining a few of them. Anything goes. Also because you can buy or sell these pieces of paper any way you like—over the counter, under the counter, beside the counter… You can actually buy and sell the option to buy or sell them, for short-termism can be so short that, to spare time, it allows certain persons to sell what they don’t have.

Is this too complicated? Too silly? Well, today, around the globe, there’s an ocean of derivatives, for a value of about 500 trillion USD. It is a lot of money… Strangely enough, however, the reptiles that invented them also felt the need to insure themselves against any risk that may ensue from trading in… derivative paper. So they started buying “credit default swaps” from insurance companies and let their friends and colleagues, the bankers, pile them up as assets, claiming that these “swaps” were as sound and good as gold itself. Probably they would have started taking major bets on them as well, had the entire mathematically engineered and economic-science-backed system failed from collapsing under its own virtual weight. Too much genius had been spent for the business world to bear. Under so much talent and foresight, the reptiles’ joints felt suddenly empty of market force. Amazingly, the invisible hand was nowhere to be seen. Fortunately, the State ran to their rescue and gave them a visible, reinvigorating bailout with other people’s money, lest the bank’s own mouthpiece uttered “BBB” or some other silly rating. And that’s where we stand today. The real suffering surrounding us, from the unemployed Spanish worker to the starving Senegalese farmer, is due to a virtual catastrophe. And if the starving Senegalese farmer tries to move to Spain, he shall meet a wall and possibly drown in the sea, while frustrated unemployed Spaniards, trained by modern corporate journalists, will hate guts those that didn’t. Strangely enough, these migrants are to be loathed, not the freely migrating virtual capital that cannibalised both Senegal and Spain.

Like all human endeavours, business can be either good or bad. To know what makes it good or bad, what is nobler than money, means to know how to measure real growth, real development, real utility, real goodness. Who, though, after Pareto’s Protagorean reinvention of economics, is allowed to know what real value is? Certainly not serious economists, who can only acknowledge preferences… The Pope may know, perhaps. He claims to be right like no-one else and that’s maybe why so many people cannot stand him: who likes an old moralising grandpa, in an age in which we are told by our media gurus to give into any juvenile urge of ours that can make them a buck?

Or maybe any living creature knows: they’re all God’s creatures, after all. Yes, even by watching slugs and bugs we can evince something important, which degree-honoured geeks may have neglected while sitting in front of an inanimate computer screen. They are not forgivable, though: no matter how much you masturbate, avatars are not human beings. Here comes the slap; Zen masters should love it: entomology can rescue economics from its value slumber. Vade ad formicam. What a twist! Or maybe not. It all started with Mandeville’s bees, to be honest…

Let me be brief and clear on this. What consistent pattern of behaviour can be observed amongst slugs and bugs? Watch them in your garden, if you have one. Or go and watch them in a public garden, if it hasn’t been sold to developers. As small and allegedly stupid as they are believed to be, all invertebrates try to do their best to survive at all times. And when they take risks, it is because they either look for food, shelter, safety, or attempt to ensure the survival of their species. As economically irrational as animals can be, these small beings can even sacrifice individual utility—one’s safety, food or head—for the sake of keeping, indeed at times just making, their young. Future generations matter, to them. Some seem even to care for their fellows in the anthill, hive or nest in which they live… Life, in truth, matters to living creatures, and yet life can be sacrificed, for more life may thus ensue. The only higher value that life acknowledges is, in fact, life.

And yet, in today’s world, money is still prioritised over life. Listen to our leaders, and with the exception of a pair of Caribbean politicians that corporate media describe regularly as lunatics, what matters most to most who matter most is to keep “growth” going. Capitalism or the “free market”, as they like labelling it despite its dictatorial logic, must keep generating profit, free from State intervention, which does not serve that one paramount end. All this is held, despite the well-known biocide implications of such a process. Yes, capitalism is responsible for the ecological degradation that we are living in with, and leaving to, our children. Has nobody really put together the Industrial Revolution and the collapse of the planet’s life support systems?

I shall help you: the causal link between the pursuit of profit and environmental degradation becomes visible every time environmental regulation is resisted as “too costly” or by-passed by illicit behaviour or by off-sourcing to countries that have actually little such regulation or none at all. Unless business is forced forcefully to comply with existing regulation, which is much more difficult in a barrier-free worldwide market, common praxes show that the primacy of profit persists over, say, not killing other people by dumping toxic waste onto them.

Indeed, in economics, it is methodologically impossible to address the environmental preconditions that make life possible and can secure its long-term flourishing. To the eyes of the economic observer, bread is as much and legitimately a “good” as nuclear waste, as long as a lawful market exists for both of them. It is only through direct State intervention that a bad “good” becomes officially what it is: a bad—and that is just the first step, for enforcement is yet to be secured from lobbying and bribes.

States alone can ban slavery, organ trafficking, child labour, exploitation, air pollution or aquifer poisoning as the bads they are. States alone can make the real economy and earned income primary, and the virtual economy and unearned income secondary. There is nothing intrinsic to market mechanisms leading to that and we have known it for nearly two hundreds of years. Read Charles Dickens’ subversive novels to get a clearly bleak picture. Also, ecosystems are “externalities”, as the language of economics reveals, at least as long as they are not turned into a cost by environmental legislation, into a loss of profit by reduction in reputation and actual sales, or into a market opportunity by persistent spoliation of it—see the oxygen cans sold in the subway in Tokyo.

Protecting life and the environment is something that runs against the logic of profit, even if some business leaders may themselves desire it ardently. Profit can only relate to the value of life instrumentally: as a means to further profit. Money is a fetish, and one that eats living creatures and their dwelling spaces if that generates revenue. Nothing leads profit-driven “rational” agents to doing that which is necessary for planetary survival and, for that matter, for a decent social life on a vast scale. Even public health, the most obvious case of socially beneficial public agency, is opposed as unprofitable hence bad. Not to mention all the money that is made by “growth” via sales of carcinogenic “goods”.

As the world’s money is controlled by gargantuan private institutions and managed to enrich their rich shareholders, even if it means strangling debt-ridden public authorities and diverting resources from public sewers to private coffers, there is little hope that the dominating logic may change. Some used to argue that money should be controlled by public authorities and managed for the public good, as written in certain constitutions… But we have already talked about such a peculiar notion. For the moment, let’s see whether the Philosopher-Kings of Greece will crumble because of the Goths, after being failed by Chelsea-resident haven-seekers and the advice of Goldmen-sackers.