Act Four – Knocking at the foundations of capitalism
The next speaker looked like he was on the way home from work. “It had been a quiet day,” he announced.
Mr Commerce was initially taken aback. Then he smiled with a wolfish gleam in his eye. To him this was a challenge and he was nothing if not competitive.
“Let’s sit down and chat,” he said smoothly. “You see me as a demon?”
“Your word, not mine,” I replied, “But there is no doubt in my mind that in many parts of the world today you and yours are at the epicentre of power. The cost of control is enormous and can only be funded by huge capital investment in relevant technologies that offer an equally huge return. Only capitalism provides access to the funds required and it is capitalists who, in their search for such technologies, fund the search for knowledge. As a corollary we have economy-based knowledge rather than a knowledge-based economy (Rajeswar, 2010).”
“And you see that as wrong?” asked Mr Commerce.
“Well I certainly see it as an unfortunate marriage,” I said, “bringing out the worst in both partners. For example capitalism has taken on the Darwenian, that is the seemingly scientific, notion of survival of the fittest to underwrite one of its fundamental ideologies – competition (Hinchliffe, 2007). Survival of the fittest is not even a theory in the Popperian sense – how do you disprove it? – yet capitalism promotes and uses it as a scientific discourse to bolster its own arguments. And who in the modern world is going to question science?”
“You don’t agree with competition then?” probed Mr Commerce.
“Well continuing in an ecological vein,” I said, “There are other relationships besides competition and I prefer symbiotic rather than antibiotic ones. If I were to choose a model from nature I would choose co-operation rather than competition. Working together rather than against each other is surely more productive and sustainable.”
“Where is she?” said Mr Commerce with a grin, he was referring to Mother Nature, he could be witty as well as charming. “She always turns up.”
However this time she didn’t and I continued, “Competition was promoted by the noveau riche of the industrial revolution to justify their own acquisitive nature (Hinchlifffe, 2007; Myerson and Rydin, 1996).
“But surely as rational, self-interested creatures we are bound to compete,” he countered.
“Just a minute,” I returned just as quickly, “where does this rational, self interested creature come from?”
“General observation of course,” was his confident response.
“So it’s a kind of theory then?” I asked.
“Well it’s obvious isn’t it?” he returned.
“Not to me,” I replied. “There is a discourse that would have us believe that we are rational and self-interested but it is itself grounded in rationality without any real evidence still less proof. It is based on theory and again poor theory in Popperian terms. Personally I would propose another theory or, more correctly, conjecture. A conjecture built on Levinas’s claim that we are given Self by the Other and therefore feel and owe a responsibility to the Other (McPhail and Walters, 2009). In other words we have interests and responsibilities that extend beyond our self.”
“I doubt that many would choose your theory over mine,” said Mr Commerce.
“That’s because of the power of the discourse that your theory underwrites. The discourse of economics,” I responded. “Certainly we in the western world have come to see economics as the true guiding light that will indicate when all is well and when all is not well in our society. It even offers views on what we should do when all is not well, though these are often in conflict.”
“Might it not be that this discourse, as you call it, is right?” asked Mr Commerce. “After all if so many people think it is, why should you be right?”
“I would critique economics on three grounds,” I said. “First, as I have already argued, it is based on a poor theory. A theory which is in reality a reductionist conjecture based on two axioms, rationality and self-interest, both of which can be refuted. Secondly it claims to be a science, the type of science that, in the modernist tradition, purports to know the answers or at least be in the process of determining them. Thirdly (I smiled) like the majority of science it is in cahoots with the capitalists, supporting their claims and underwriting their excesses.”
“There’s a lot to think about in that statement,” replied Mr Commerce seemingly a little thoughtful for once. “Perhaps we can start with reductionist?”
“Economics in its purest form,” I suggested, “reduces the world to a series of interactions between individuals. And even these individuals are what can only be described as parodies of the real thing, they have but two attributes – rationality and self-interest. From these gross simplifications economists purport to model the world in all its richness and provide us with advice on how to live our lives. Where are the values, the ethics, the aesthetics and all the other things that make us human?”
“In their eagerness to be seen as scientists,” I continued, “with the kudos that attracted as the modern world developed, economists began to measure, model and theorise. To this end they measured relationships between variables such as supply and demand; they applied the atomism endemic in modern science, arriving at the individual subject; they then theorised around individual utility. The scientific approach and the simplicity of their ideas made them into the first social scientists, ideal travelling companions for the new breed of capitalism arising out of the industrial revolution.”
“And what’s your problem with rationality?” asked Mr Commerce.
“I have two really,” I replied. “Firstly we are not primarily rational thinkers, our first thoughts are instinctive, intuitive really. We only revert to rationality when our problems seem insurmountable and we are forced to slow down and think (Kahneman, 2012). Secondly rationality leads to the reductionism I have just spoken about. We build models to help us through our intractable problems and in doing so lose sight of reality (McGilchrist, 2009).
“You think we are irrational then?” asked Mr Commerce.
“An interesting word,” I responded, “which carries quite a lot stigma with it. I certainly think we are illogical at times, possibly most of the time, but I am not saying we do not have the ability to reason. What I would say though is that so-called rationality is socially constructed varying over time as discourses change.”
“Absolutment,” I heard Monsieur Foucault say (Foucault,1972).
“But surely,” responded Mr Commerce with a cunning look in his eye, “if rationality is socially constructed then so are things like values and, taking your arguments further, so is reality as we know it. In such a fluid, relativist situation I would argue our models are as real as anything else.”
I thought for a while.
“They are real within themselves and in bringing a new, albeit procrustean view on reality they will surely construct a different, new reality (Hines, 1988),” I eventually said, “but they are incomplete. They omit factors, important factors, factors that oftentimes could change outcomes or understandings derived from the overly simple model. Sometimes these factors are omitted innocently, a miscalculation, but sometimes, I think it true to say, there is intent. Deliberate manipulation designed to achieve the ends of the modeller.”
“For example?” queried Mr Commerce.
“Well staying with within the subject matter of economics,” I replied, “I would draw your attention to the work Friederich von Hayek, the doyen of free marketers. Throughout his career he was at odds with John Maynard Keynes over the latter’s use of modelling (Wapshott, 2011), essentially he continually warned against the over-simplification inherent in econometric models. As for his own attempts at modelling they were never really accepted by the economics community because they grew ever more complex and unenlightening as they tried to mirror reality.”
“His arguments and experiences underline my critique of models as oversimplifications. Deliberate manipulation is less obvious and probably less likely. However given that some scientists have not been above manipulating the evidence to support their theories, for example Cyril Burt and his research into inheritance and intelligence, then it is surely possible that some scientists might have chosen to ignore a potential variable if it detracted from the results they were looking for.”
“Hmmm,” said Mr Commerce, “You can be as suspicious as I am. And I can’t reasonably deny my own inclination towards your understanding of rationality in so far as we are not always given to rational consideration. Heaven help my advertising budget if we were.”
He smiled and continued, “And yes I even follow your arguments about the power of discourse. However I find economic models very useful in my business and I am going continue using them because they help me make money. Whether they are true or lead to some ‘right’ answer, whatever that is, I neither know nor care really. As for science, you won’t catch me detracting from that either, it too is very useful.”
“That sums up the problem with business today though,” I replied. “It underlines why I think you are the ‘demon’.
“How’s that,” he responded sharply.
“Your primary, some would say sole, concern is to make money,” I replied. “Yours is a view of the world without ethics, aesthetics or values (that is values other than financial value). It is a simple model; increase sales, minimise costs make money. In following this simple model you ignore so many variables that relate to the human condition, that impact on the environment, and the unintended consequences are frightful. It is simply not sustainable.”
“But that is the essence of business,” he returned, “to make money.”
“It is the essence of business in a capitalist society,” I said. “It is not the only possible reason for business.”
“Business,” I continued, “can be seen as a process to make society a better place. It can be seen as a way in which people work together to share resources and improve the lot of all those in their community. It can be a symbiotic, co-operative process rather than a competitive one. As such it will take into account the values and aspirations of the community and of the individuals who make up that community, not just the cost of labour and any physical resources consumed in the process of carrying out the business.”
“Well, where to start?” said Mr Commerce. “Do I critique your co-operative model first? Or do I explain how you have misrepresented modern business and how business today is so very different from the picture you have painted?”
“In what way is modern business different?” I asked.
“Well take ethics,” he replied, “it is a well known axiom in today’s world that bad ethics equals bad business. Businesses today know the value of behaving ethically.”
“Actually we would disagree with that,” said two voices in unison from a nearby table, “we would say that after reviewing numerous studies on this subject the empirical evidence is mixed. Improved corporate social performance does not necessarily lead to improved financial performance, indeed in some cases there is a negative correlation. It is also difficult to support the case for your ‘axiom’ philosophically.”
“Who are you?” asked Mr Commerce.
“We are American academics,” replied one of the young men, “and we carried out a study which was published in 2009. Perhaps we should add though that it seems likely there is some sort moral floor, some minimum standard of behaviour that is expected in business. Again though there are numerous cases of this not being met. Also there is some evidence of what might be called reputational capital, born of a good reputation, which might lead to higher revenues (Burton and Goldsby, 2009).”
“So business is not an ethical free for all, there are standards,” concluded Mr Commerce.
“Minimal,” I responded.
“But improving all the time,” he countered. “As these young fellows pointed out businesses today know the value of a good reputation and work towards it. They have ethical codes for example.”
“So did Enron,” I counter-countered. “Eighty-five pages long I believe (McIntosh and Quattrone, 2010). Just because a company ticks the right boxes does not mean it is behaving the right way. Managers are no fools, they are very adept at discerning trends and discourses. They quickly realise what is required of them and take steps to ensure they have covered the minimum requirements to keep society, regulators and the like happy without impacting too heavily on their primary aim – to make money. Over time they might even capture the agenda and turn it to their advantage (O’Dwyer, 2002, O’Dwyer, 2003).”
“You truly are a cynic,” said Mr Commerce, “but surely you accept that today managers are more aware of their social role, their commitment to stakeholder engagement and the like?”
“I wish I could be,” I said. “I am sure there are many managers out there who would like to be more responsible to their stakeholders but the prevailing discourse is “make money” that is increase shareholder value, and they are compelled to give that their first consideration.”
“You are impossible,” said Mr Commerce. “Today we have international standards for stakeholder engagement such as AS1000SES not to mention the Global Reporting Initiative which effectively requires engagement. Yet you still deny business has ethical standards.”
“I’m afraid these standards are voluntary and the take-up is poor, just a few thousand out of tens of thousands of multi-national enterprises,” I responded, “and even when they are adopted many companies cherry-pick the parts they will complete or undertake. The overwhelmingly vast majority of businesses do not actively integrate ethical or stakeholder considerations into their business.”
“Even when they, that is the managers, might try,” I continued, “they meet resistance from the shareholders. I am thinking now of the attempted take-over of AstraZeneca by Pfizer in the Spring of 2014. The board and the managers worked alongside stakeholders such as the employees and the scientific community to fight off the first bid but were pressured all the way by some major shareholders who saw a large increase in the share price coming their way.”
“Well I think you are downgrading the effort business is making,” returned Mr Commerce and I think I detected a hint of sincerity, he really thought business was making an effort.
“The commitment made by firms such as Unilever (Guardian Sustainable Business, 2012), Patagonia (Guardian Sustainable Business, 2013) and even Puma (Guardian Sustainable Business, 2011),” he continued, “is truly admirable.”
“And truly rare,” I interrupted. “It’s too little, too late! I have the utmost admiration for the business people in those organisations, they are brave and they are far-sighted. But theirs is a trickling stream trying to reshape a roaring river, a river that is flowing in the opposite, and wrong, direction. It’s a river that flows to greed and inequity, to conflict and torment.”
“What is required,” I continued, “is for that river to be halted, damned, and a new channel forged in a new more equitable direction.”
“I know you are talking about the co-operative movement,” replied Mr Commerce, “but I think you are giving up on capitalism too easily. I still maintain that capitalism can be ethical; and, to pick you up on another point, it can be sustainable too. Businesses today are aware of their impact on society and the environment. They know resources are finite and they are thinking long term about how to operate within those finite resources.”
“Yes and they think in terms of efficiency, win-win and competitive advantage and how they will survive and grow at the expense of the other players in the market,” I returned. “They still think in terms of money, growth and competition.”
“All of which will detract from thinking about the important issues in life like community and spirituality (Crompton and Kasser, 2009).” It was the Religious Man. He had just joined us.
“And win-win and efficiency can only go so far,” I added, “the resultant reduction in cost simply draws in additional demand and absolute consumption ultimately remains unchanged (Milne, 1991; Milne, 1996).”
“And your latest scheme,” added another voice, that of Mother Nature, “is the most tasteless yet. To attach a monetary value to all the priceless treasures in our world (Sullivan, 2014); how can you do that, contemplate it even, it is impossible (Hines, 1991). Only a being without a soul; a being devoid of yin, that is yang in its totality, could imagine such a solution (Hines, 1992).”
“Oh you’re back,” said Mr Commerce, “A matter of time I guess, you are never far away.”
“I am always here,” said Mother Nature, “it is just that sometimes you are not aware of me.”
“Ditto,” said the Religious Man.
“I am going to give up trying to convince you,” sighed Mr Commerce. “Despite all the innovations, all the freedoms and comforts that capitalism has brought you, you are determined not to be convinced.”
“I am not convinced,” I returned, “for I see a world where human suffering has increased in absolute terms, and where the ecosystems are being torn apart to the point that we face mass extinctions (WWF, 2012). We are tearing apart our planet with no concern for the other creatures we share it with.”
“Well I can only say that your proposed alternative is no better,” suggested Mr Commerce. “In 2014 we saw the co-operative for the clumsy, directionless, inbred mode of organisation that it is. The Co-operative Bank of the UK imploded revealing a complete lack of governance as ‘friends and colleagues’ took over the running of the business and watched as it sailed into the rocks taking the rest of the UK Co-operative Society with it.”
I smiled at his bitterness interwoven as it was with a sense of victory, capitalism was on the ropes and here was a brief moment when he could land a flurry of punches and raise hopes of a comeback.
“There is no doubt that co-operatives and other mutual societies will suffer, like capitalist organizations, as a result of human failings,” I responded, “but the key point is that in a co-operative society the underlying purpose is different, and hence the outcome. In a world that believes in man’s humanity to man, and indeed the rest of creation, we would see a restorative process commence. People would come together to fix the problem, repair the broken limb and get it working again. In a capitalist society the limb is amputated, thrown to the dogs and the world doesn’t care. Mutuals are far more resilient than you suggest (Hazlehurst,2014).”
“You are an idealist, plain and simple,” returned Mr Commerce, “the world doesn’t care and co-operation as an MO will simply never work.”
“Well I accept that ‘the force’ is with capitalism,” I smiled, “The economic discourse of self-interest and rationality certainly has the upper hand at the moment, or at least in the developed world it has. But out of interest there are more members of co-operative movements in the world than there are individual shareholders (Williams, 2007) so maybe the capitalist position isn’t as strong as you think. And maybe there is a greater sense of community in many of the developing nations with less emphasis on individual self-interest, perhaps even some disapproval of the concept.”
“One thing I know though,” I continued, “is that you and I will never agree. We have different concepts of the world and humanity in particular. As a result we hope for different types of future. And ultimately all any of us have is hope, we cannot know the future just as we can’t really know the present, we can only try and make sense of it for ourselves.”
There was a murmur around the room, “Amen to that,” though not everybody was convinced. Mr Commerce and Professor Science were noticeably quiet.
“Let’s have a chat,” said Mother Nature.
The man on his way home was finishing, “we did see a kingfisher and a peregrine falcon but they hardly seemed noteworthy. Amazing to think that only 20 years ago I used to visit the site of the last peregrine breeding in Yorkshire up on the moors towards Huddersfield. And views of kingfishers were almost equally rare.
Now there are at least two pairs of peregrines breeding in Manchester and I can see kingfishers on the River Medlock in Clayton, a couple of miles from the city centre. So there have been some biodiversity success stories. Indeed there have been many, there are salmon in the River Mersey and otters have been seen in its tributaries. Provided we keep the natural environment clean there are many creatures that can live alongside man.”