Friday, 16 March 2012

What the hell do I believe?

I wrote a piece a couple of days ago on why the resigning Goldman Sachs manager was wrong to claim that a good system was being damaged by immoral people. In short, my position is that an immoral system is damaging good people.

The piece seemed to strike a chord - it got Tweeted a lot, including by a man with 1.5m followers, and I've had some interesting conversations with some readers. One in particular was interested in my assertion that I'm a Marxist. I explained that I accept Marx's view that underlying economic structures determine cultural forms, but that while I am anti-capitalist, I don't entirely accept Marx's political solutions. She replied with the perfectly reasonable question - what do I believe?

What a thing to ask! But here goes - though I'll stick to economics and government: if I tried to cover everything, your eyeballs would be bleeding by the time we stop.

As well as Marx's cultural analysis, I accept his position that the workforce is always exploited because under capitalism there's always a gap between the value of its labour and the price charged for the product, namely profit. Profit increases as wages decline, and the gap leads to poverty, debt and economic instability. This is bad for the worker, and bad for the global economy.

The first place I'd like to go is 1930s Italy. Sitting in prison thanks to Mussolini's fascist regime, Antonio Gramsci tried to work out why the proletariat (Marx's mass of exploited industrial workers) hadn't started the revolution, despite the obvious economic injustices caused by capitalism. His explanation is that all the cultural forces of the state and society have been captured by the capitalist over-class: education, politics, religion, the media, and so on. Of course it's more complicated and messy than this, but the basic outcome is that culture limits what's 'reasonable', by making the perspectives of those at the top of the tree seem 'natural', permanent and universal.

So the challenges facing a socialist such as myself are:

1. How do we run an economy which is fair, humane and sustainable?
2. How do we persuade people to assent to this?
3. Are there ways in which capitalism's strengths (such as the capacity to innovate) can be retained while abolishing its inherent weaknesses (such as profit-taking diverting money from wages and innovation)?

Taking this last point first, I think it's possible. Modern capitalism relies on creating every more complex financial instruments to generate money from what's essentially betting, using real companies as the chips. Take 'naked short selling'. You sell some shares you don't actually possess. You hope the stock market assumes you know something they don't, so the price plummets. Then you buy the shares you claimed to have - at a much lower price than you 'sold' them - and pocket the change. If you're unlucky, you don't cause panic and have to buy the shares at the same or higher price to conclude the deal. If you're lucky, the chosen company's shares are worthless and it can't issue new shares to raise money for more staff, new machinery or whatever. But you don't care because the underlying value of the company isn't your problem: overnight price fluctuations are what makes you money.

So if I wanted to reform capitalism, I'd simply end the trade in shares and related financial products. You could buy them from the company and collect the dividends, but you could only sell them back to the company. Result: slow, stable, boring and predictable investment market.

Going further, I'd make it clear that the 'free market' is not and never has been such a thing. Capitalism leads to monopolies, enforced through law. Microsoft is one such example: its only competitors are enthusiasts producing Linux distros for free. Microsoft is dominant and hardly has to innovate - enthusiasts do it for fun. Capitalist companies do not believe in competition, nor in free markets: not a single bank accepted that it was at fault in the crash. Instead, they demanded tax-payer's assistance by threatening global economic disaster if refused. Once paid, they carried on avoiding paying their fair share of taxes, paid lobbyists to argue against regulation, and proceeded to bankrupt governments who'd spent all our money on bailing out the banks.

Establishing state investment banks and breaking up mega-banks so that they can't destabilise the economy is essential. Governments need to rediscover their purposes: to support their citizens, not to hold the ring for corporate interests. If we've learned one thing from the crash, it's that what's good for business is very definitely not good for the country.

'Free market capitalism' claims that it is efficient because possessing information leads to rational decisions. It operates through the absence of information. Getting there first is what leads to profit. Misleading investors (see Goldman Sachs, who sold their clients products it privately referred to as 'junk') leads to profit. Individuals can never have enough information to make rational choices - and are always therefore easy marks for those with privileged access. While we're on the subject of rationality, the crash was caused by several million bankers behaving rationally. They weren't, as Greg Smith said, 'immoral'. They were paid bonuses to generate quick profits. To do so, they took millions of short-term profitable decisions which collectively lead to absolute devastation. Take the sub-prime scandal. A mortgage-broker had no reason to refuse a mortgage to a poor person, because he knew that his employer wouldn't own the mortgage for long enough to be affected by a default. So it's rational to sell an unaffordable mortgage and collect his bonus. His bank packaged up bundles of mortgages in financial instruments and flogged them off to buyers who hoped (but couldn't know), that the mortgages would be repaid. Each sale led to more commissions. Looking too closely at the contents of the bundles was irrational. When the crash came and people stopped paying their mortgages, we were presented with the irrational result of millions of personally-rational decisions.

I'd end this. I'd institute state investment banks that distribute QE cash to companies which a) are co-operatives b) innovate c) operate sustainably with regard to investment and environment. I'd ban companies from operating offshore tax evasion schemes (in the UK, the government's Inland Revenue arm sold its own buildings to Mapeley Steps - a company hidden in a tax haven). The state uses our money to provide services tax-avoiding companies rely on: transport, defence, legal structures, education, health, transport and social services which produce and support its workforce. No state = no business. No tax paid - no access to policymakers.

If I were an American, I'd overturn the Supreme Court ruling which held that corporations are to be treated as individuals, which has led to massive corporate political donations to tame politicians. Democracies are for its citizens: only citizens - and their mutual organisations such as trades unions - should be allowed to fund parties and campaigns, and vote. I'd also institute radical openness: every politician and civil servant would be compelled to publish minutes of all communications from pressure groups, corporations and lobbyists.

On pay, it's clear to me that highly-paid workers benefit the economy. Barclays paid its CEO Bob Diamond £17m this year, despite the bank performing poorly. From a capitalist perspective, this is poisonous: shareholder dividends suffer because élite employees are blackmailing them while not actually performing well. Rationality doesn't apply: it's an arms race based on macho pride.

Can we have a fair, sustainable and humane capitalism? I think it's possible, but unlikely. If ownership and labour are divided, exploitation is the inevitable result. Profit is simply wages and investment diverted to largely unproductive shareholders and owners. Co-operatives and collectives redistribute earnings fairly, and keep economies going: your CEO will hide his money off-shore, rather than circulating it round. Well-paid, secure workers spend their cash, creating demand. Investment in companies according to their prospects will produce innovation and stability, rather than - as is current - all our pension funds boosting and bankrupting companies overnight without any sense of responsibility.

I'd sweep all that away. I'd institute a Scandinavian model of high taxes and generous public services, allied to egalitarian social policies. No private medicine, no private education, no subsidies for the rich, no stick for the poor. Military neutrality and nuclear disarmament would divert taxes back to public services. Taxes would be reduced for the poor and for sustainable industry: polluting behaviour would be highly taxed (and that would include exporting dirty industry to developing nations). I'd end the use of property as a piggy bank, because it leads to speculative bubbles and inequality. I'd institute an economic model which doesn't require enrichment at the expense of another's freedom, dinner or environment: ever-increasing growth in a finite world is literally impossible. It leads inexorably to a tiny elite defending a single mountain against the hungry, the thirsty and the deprived on an exhausted, poisonous rock.

Governments would be agile, responsive but also intellectually responsible. I have no idea how I'd bring it about, but I'd like a government which isn't afraid to rely on science, for example, rather than pandering to the prejudices of a Daily Mail-infected vocal minority.

How would life change? We'd have to be a little more thoughtful. Cheap flights and fast fashion would disappear. Just like Norway - the world's richest country, by the way - we wouldn't compete to drive the newest car, nor display logos on our clothes. I'd promote a sense of communal responsibility for each other. We'd have fewer people in prison and perhaps more in mental hospitals. Britain would accept responsibility for the after-effects of Empire and see overseas aid as reparation. No more crusades or military escapades designed to retain the illusion of being a world power. If your credibility depends on possessing the means to turn the world to cinders, it's not moral credibility. Our state investment banks would promote green energy, clean transport and green jobs.

Would there be an economy at all under the leadership of a democratic state? Yes, of course. It just wouldn't look like the one we have. All the hedge fund traders, the futures brokers, the derivative jobbers would go, and we wouldn't miss them, because their activities at best are unproductive and at worst destructive of wealth (hence the crash) and of the social fabric. Our brightest graduates wouldn't rush to the merchant banks in search of multimillion pound bonuses: they'd do PhDs in Welsh literature, become primary school teachers, scientists or manufacturing innovators - secure in the knowledge that they'd be rewarded well for useful work, rather than a few detached sociopaths being massively rewarded for antisocial selfishness. Overseas investment would flood in, once it was realised that a stable, educated society led to productive, future-proofed industry.

Obviously, this is all very idealistic. I'm enough of a syndicalist/Trotskyist/Chartist to know that governments attract power-seekers and empire-builders, and that often they don't move fast enough - but I'm confident that an informed public holding to account a transparent, accountable legislature (which means proportional representation abolishing safe seats, term limits, an elected upper house, a republic, fewer powers for the executive and more for the legislature) would transform any state.

I'm not anti-democratic in the way many of my neocommunist comrades are. It's obvious that having a single party in permanent government just leads to covert fictionalisation in place of overt party oppositions. I understand and sympathise with the claim that parliamentary democracy is a means to divert the citizens from the real and undemocratic centres of power, but once speculation is ended, corporate power curbed and the Daily Mail banned, I believe that the population will become critical, spiky and less prone to the racist, misogynist hysteria to which they're subjected. What we need is confident citizens enforcing their democratic rights: voting every few years (if at all), isn't democracy. Using the social media tools at our disposal to track, bother and bully our representatives on any issue that catches our eyes is the way forward. I am genuinely saddened that my local MP, Paul Uppal and his friends genuinely seem to believe that government is a prize to be won for his side, rather than a tool for the benefit of all: he spends his time advocating tax breaks for property developers, of which he is one. A legislature under constant surveillance by the electorate (rather than a population under the constant surveillance of the security forces, who exist to propagate elite rule) is sadly necessary: as The Miner's Next Step enunciates so well, power corrupts even the most well-meaning representative.

What of education? Easy. Free education open to all at any stage, generously supported from our bulging collective coffers. At the moment, our education system is a tool of the élites. The law, medicine and the more delightful humanities subjects are the preserve of the children of the rich and powerful. Our richest and most famous universities are finishing schools for the rich kids. There's hardly a judge, a journalist or a surgeon in the country who didn't go to private school and then Oxbridge (and isn't white and male) - hardly the conditions for an engaged and democratic system. What of the rest? They attend poorly-funded universities in huge numbers, are encouraged to take courses designed to make them uncritical, obedient consumers and workers. Under my regime, the élite universities will be compelled to take the students with the worst grades. If they're so good, they'll transform those students' lives. Courses will be designed to encourage radical, subversive thinking: it's those students who transform their fields, whether it's Welsh or wind-turbine design. We'll truly believe that education and health are public benefits, not private goods. Nobody will be able to buy their way into privilege, to jump the queue at the doctor's or avoid sharing the riches with those on whom they look down.

Conformity, in all spheres of live, will be disdained. We'll encourage risk-taking and community enterprise. We won't see the sick, the poor and the criminal as potential profit-centres. Instead, we'll take responsibility for them as citizens, not threats to our private comfort. I believe that 'market efficiency' simply cuts corners and disposes of complex problems - look at the American healthcare system. Some things cost money. Pay it and stop moaning.

To some extent, states would wither away. We'd understand humanity as a collective and disperse our goods equally. Did you know there's never been a shortage of food, water or shelter? Yet millions have starved - in Ireland, in Africa, in Russia and elsewhere. The problem has always been one of distribution. We westerners eat more, burn more, consume more because we've constructed states and economies which depend on depriving others. I'm typing this on an Apple Mac - knowing that Apple's 50% profit margin depends on denying its own workers the chance ever to need, let alone own, one of its own products. People die digging up the minerals to make it, people exhaust themselves for a pittance to put the parts together and may even commit suicide for Apple to make a fat profit from me wanting to look stylish. It's not Apple's fault entirely: the corporation exists in a moral, legal and cultural context which encourages us to outsource labour, hunger and pain to obscure factories out of sight. In my world, Apple's profits would be shared amongst its workers and states would compete for the highest standards, not the lowest. I know too that my cheap books from Amazon depend on personal friends accepting long shifts at minimum wage levels in a dangerous, paranoid, non-unionised shed, denied representation, respect and rights. Sorry, DP.

It's time to accept that some of the things we think are inalienable rights depend on the suffering of others. You don't have the right to drive a 4x4: it poisons your neighbours, sinks islands, starves distant masses and enriches some of the most savagely repressive dictatorships on the planet. You don't have the right to pile your plate high then chuck it away. You don't have the right to burn coal or hoover the seas empty because you feel like a cod steak for dinner. You don't deserve a bonus because you foreclosed on some Detroit inhabitant's shack. Your kids haven't earned that Oxford place: you bought it for them. That £5 t-shirt poisoned its maker's drinking water and kept her hungry. Your office is clean because someone poorer than you was in there at 4 a.m. for low pay on a temporary contract. Your Wii wrecks the environment because you don't feel you should pay for cleaner generation or more efficient (or less) technology. GTA 3 is not a human right.

Just one question remains: how we persuade people to want a fairer, more equal society which might require individual sacrifices - a smaller car, fewer cheap flights, higher taxes. I don't know. I'll keep blogging, but (much to my disappointment), more people read the Mail than Plashing Vole. Are we hard-wired for selfishness? No - but we're scared of the alternative.

My Utopia would be quieter, slower, gentler. It would have more genuine public space, fewer adverts, fewer channels, better houses. We'd eat less, but better. We'd have more blazing rows about big ideas, but we'd respect each other afterwards (OK, Clarkson and Jeremy Kyle might have to be liquidated to sort this one out). We'd walk more, talk more, watch and eat less. We'd accept our limitations, but we'd also envisage society as something more than the Rand/Hayek concept of millions of temporary contractual relationships in which one wins and one loses. We'd pay people to do non-commercial science or understand Medieval Latin texts without moaning. We'd be utterly, gloriously indifferent to skin colour, sexuality or any of the other distinctions we currently make. We'd have fewer illusions. We'd all be Foucauldians, alive to social pressures and tensions, ready to resist power in all its forms, yet equally ready to wield it in the pursuit of fairness.

We'd be happier.

Welcome to my world. Obviously it's idealist, confused, partial and naive. It involves fewer mass executions and re-education camps than I'd like, perhaps because underneath my misanthropic crust, I do actually believe that most people are capable of working towards a brighter collective future. Those who don't can visit any of the 'small government' paradises they like: Somalia, anyone?

I don't know quite where I'd locate my politics. I'm not a liberal: I genuinely believe that the underlying structures of modern society need to be overthrown. Nor, however, am I entirely in favour of gulags. I admire the optimism and decentralised openness of Occupy, BoingBoing and the techno-utopianists, but I'm old-fashioned enough to know that enthusiasm isn't enough to make a new world. I like the libertarian-Trotskyism of Ken McLeod and co - but know very well that industrial interests never lead to proletarian liberation. I'm very Green - but know that that alone won't liberate the masses of China and Africa. I'd like to colonise space, but recognise that we can't even feed us all adequately.

OK - comments are open. I'm not dumb: some of this is impractical, most of it unlikely. There are huge gaps in my economic and political knowledge: that's because I'm a bloke with a blog, not a political scientist or an economist. Educate me.

1 comment:

Al Derby said...

Well, people are scared of the alternative because they've spent their lives internalising the capitalist message that there is no alternative. Pro-market drones love to derail discussion on this point with specious dichotomy (e.g. the standard assertion that because state-regulated markets failed to win a Cold War in the Soviet bloc, there is therefore no viable economic system that can possibly replace free-market capitalism anywhere, ever). It's usual, to give a more recently popularised example, for any question concerning economic systems to be reduced by politicians and the media to a choice between neoliberalism on the one hand and North Korea on the other.

The point to keep in mind is that capitalism doesn't 'succeed' according to human nature, it survives by preying on human inertia. The single biggest problem isn't even articulating a plausible alternative - it's riding out the toxic stormtide long enough to convince anyone of the possibility that there is one. The key is explaining and demonstrating how most of the supposed freedoms and advantages conferred on individuals by neoliberal economics are not actually freedoms and advantages at all - or can at best only be considered advantages in a context where the concept of progress is irrationally denied out of hand. It's worth bearing in mind that people are not naturally 'risk-averse' as we're often told - in fact biologically speaking humans are naturally inclined to take risks, even potentially mortal ones, where the likelihood of a tangible payoff plausibly appears to merit them. The challenge resides in that issue of plausibility more than anything else.