The following is a guest article by John Ward, originally posted over the weekend on his website The Slog and also featured in the Doomstead Diner, about the one-track mindset of academics, politicians and bureaucrats who obsess over isolated eras of the past and fail to consider our current conditions in the context of both a dynamic past and a rapidly evolving FUTURE. The “Slogger” also discusses some alternative, more fruitful methods of understanding and reacting to these very unique conditions that we all must face – no doubt with hesitation and uncertainty.
A world terrified by impotent ghosts from the past
Like the contracts always say, the past is no guide to the future
There’s an interesting piece in the New York Times this morning (where else?) by Paul Krugman, in which he rather oddly argues on the side of the bankers (“there isn’t a structural problem really”) to make the following liberal (“let’s spend our way out of trouble”) point:
‘All of this strongly suggests that we’re suffering not from the teething pains of some kind of structural transition that must gradually run its course, but rather from an overall lack of sufficient demand — the kind of lack that could and should be cured quickly with government programs designed to boost spending.’
It’s the same one-dimensional thinking that could just as easily be applied to Merkel, Schäuble, and the 1922 Committee in its insistence on more and more cuts to services, and tax cuts for those with money to spend: it’s all about demand. But even more depressing is Krugman’s example as to how this sort of return to growth can be achieved: an article written in June 1939 saying the same thing as those (like me) who argue there is a structural problem with the model of capitalism we’re using:
‘The paper in question was published in June 1939. Just a few months later, World War II broke out, and the United States — though not yet at war itself — began a large military buildup, finally providing fiscal stimulus on a scale commensurate with the depth of the slump. And, in the two years after that article about the impossibility of rapid job creation was published, U.S. nonfarm employment rose 20 percent — the equivalent of creating 26 million jobs today.’
This is pretty cool thinking from Krugman: we’re in the mire, quick – let’s get a war going and then supply it. This isn’t what he means of course, but the argument is so narrow as to be laughable. His problem in the piece is that he is arguing within the strangulating confines of a sterile debate about theory and process…but in 2012, when he is offering 1939 solutions – comparing a debt free US with the zillion-dollar indebted America we see today. His article is the perfect quintessence of how and why we are failing to tackle what is, really, The Global Cultural Crisis: the one that should’ve begun in 2004, then was kicked down the time-line to 2008, and is still unravelling in 2012.
For people like Krugman and Buckley, the past is for shaping the future, and the present is for kicking into the future.
Think about it for a second. Wolfgang Schäuble is driven by memories of the Weimar 1923-25 hyperinflation: an event caused by direct money-printing following the draconian exconomic sanctions of the First World War. It all took place 23 years before he was born. The Tory’s ‘radical’ committee is called the 1922. The substantial proportion of votes in last weekend’s Greek election were cast in support of a theorist who died 130 years ago. Angela Merkel’s approach to life was learned in a Communist State that collapsed 22 years ago. The British Prime Minister (when he isn’t making it all up as he goes along) clings to the at least partly discredited ideas of Baroness Thatcher who, along with Reagan, let loose the dogs of banking on us. His Government is dominated by rich public schoolboys and Oxbridgers living in a fantasy world of good old days when everything was getting better and better.
The Right across the West cleaves as strongly as ever to the ideas of Milton Friedman, a bloke whose monetarist laissez-faire principles insisted that a self-correcting economy would result in the absence of regulation….as opposed to the absence of wealth apart from the rich 3%. That same rich 3% now manipulates markets from gold to Government bonds across the world….all in the name of the Mighty Milt. He proposed the idea of trickle-down wealth, which in practice works in the opposite manner. Friedman spent thirty years developing his ideas: thirty years in which there was no global internet, China was a sleeping Red, satellite communication was unknown, and Bob Diamond had reached the tender age of twelve. There were no SOL trading software packages, deep liquidity pools, Hedge Funds (beyond a tiny sector after 1949 doing what Hedgies should do) or segmented multivariate bourses.
The Left clutches the comfort-blanket of Keynes ever more closely to its one-more-heaving breast. J M Keynes, the man whose opening words in talking about State economic stimulation were “it should never be attempted unless the public finances are in good order” is presented as the man who’s ideas never failed, but he wouldn’t recognise a single element of the globalist investment banking system that is so out of control in the contemporary economic environment.
In the UK, Labour is led by two men who seem incapable of getting beyond Keynes, and thus fail to land even a kid glove on the Friedmanite economic thinking of Camerlot’s right wing. All they need to do this is some Lesson 1 maths, but they’d rather support (and be supported by) a trade union movement representing a mass workforce that’s been devoid of the mass thing for two decades. The most powerful woman in the Party believes every word of socio-psycho-gender theories put forward between 1968 and 1971, and then proved completely wrong a quarter of a century ago. In the States, even Ron Paul – by far the most thoughtful and inventive of the Presidential candidates – can’t get beyond the idea of currencies based on the gold standard. Why gold in 2012? Because that’s what was used in 1926?
Francois Hollande in France represents a soft-left view that has failed wherever it’s been tried. Even in Greece – where the Establishment Parties are being deserted in droves – the successful breakthrough has occurred among those Parties admiring the ideas of a dictator who shot himself in 1945 after reducing Europe to rubble, and a Soviet system that imprisoned and killed more of its citizens than any other State in history – including the one run for forty years by a mad paedophile in Beijing.
Why is this? The explanation varies depending on which tribe one is talking about at any given time; but basically, it’s a species thing largely involving a terror of the future, and a suspicion of The New Idea. We are all haunted by the ghosts of economies past.
Bankers quote the past purely from sociopathic greed. They point to it as a track record…while noting, in half-point type at the bottom of every investment contract, ‘The past is no guide to the future’. I think this is what folks call hedging.
Bureaucrats in general (and Brussels in particular) stick rigidly to the past as a form of self-preservation. They are The Preservatists I’ve written about previously: like all contraceptives, they stop unexpected things from happening. But then they happen anyway, and so the functionaries defend themselves by saying that the event was unforeseen.
Economists have only ever worked with a rear-view mirror while driving through the fog. It’s tough to be a visionary while driving like this, but Marx managed it, basing his dialectical materialism on the idea of socialism being the synthesis of the agrarian and capitalist systems. This really was using the past as a predictor of the future, and it failed – as Marx himself accepted in his fading years. Free marketeers of the Friedmanite School admire the work of Adam Smith, a Scottish mercantile theorist who died 222 years ago, when half the global producers of 2012 hadn’t been discovered let alone exploited. Well vivat professores and all that, but could they at least have been alive in the 20th century please?
Large multinationals recite the theories of Ted Levitt ad nauseam. Levitt is the man who invented globalism, and then rationalised it with a stream of assertions, very few of which bear any interrogation at all. Yet his ideas continue to evoke hero-worship among the bollocks-school of global marketingspeak. Just a few weeks back, Michael Hiles put this on his blog:
‘I re-read this book almost yearly, and it reminds me again and again what an advanced thinker Ted Levitt was and how his ideas continue to shape business today.’
They sure as hell do, Michael. You and I may have noticed the mercantile zero-sum disaster that is now upon us, but not Mr Hiles. To be fair, Levitt’s early ideas were right on the button: focus on the customer, not your ability to extrude stuff in a certain way. But his most enduring and nihilistic theory was that of the unstoppable inevitability of the dictates of Globalism. This has given us, among many other putrid things, a Newscorp with every British Government and both houses of Congress in its pocket, an AOL that behaves like the Moonies, a Microsoft that keeps unstable software on sale by shoving eveyone else out of the way, a Goldman Sachs perverting the actions of well-near every Government and investment market on the planet, and above all, ISPs dishing out joke service and poorly designed products from the safety of a million silos – the diametric opposite of the customer-facing model espoused by Ted Levitt.
I haven’t bothered to study the political class at length in the above analysis, because as I sit here and type in May 2012, the fact that they too are devoid of ingenuity, spine, independence, or concern for the Citizen is almost completely irrelevant now. The Executive (and much of the legislature) are the kept whores of media moguls, oilcos, bankers, trade unions, and in fact any interest group offering enough money to get them elected or work with the security services. We clearly are not going to get any new ideas from that direction. Equally, we won’t get any new blood from there either, because the system acts as a blatant and blunt weapon to repel even the most latent of new Party structures or approaches.
So I fear we must look to other disciplines – and other forms of pressure – to invent and then effect change. The detail of that process requires an essay – if not a book – all to itself. Suffice to say here that there are many pointers….and there is nothing wrong at all in being eclectic about sources of inspiration.
The internet has proved itself on several occasions to be something politicians transmit on, but never listen to. This is not so of multinational business. Large globalist concerns react vey swiftly to bad publicity and online pressure groups. The evidence thus far suggests that making life uncomfortable for anti-social business online is a far quicker and more effective thing to organise than the standard lobbying routes…all of which are crowded out with people who have far larger sums of bribe-cash than any of us. Today’s agents of change are outside, not inside, the legislative assemblies of the world.
Social anthropology is a highly pertinent discipline: most economic and fiscal theories ignore it completely, imagining that a ‘model’ somehow doesn’t have any real people to take into account. Social anthropology is completely absent from the mindset of supranationalism in general and the EU in particular. It makes zero impression on the thinking of the current German political executive, and roughly the same amount on the actions of Brussels bureaucrats. The fact that the FT’s Gillian Tett talks more sense about Japan, the US, China and regulation than most other commentators put together demonstrates the power of a mind looking first at people, and why they do what they do. Ms Tett, before she become a sought-after financial journalist, was a social anthropologist. Her Book ‘Fool’s Gold – How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe’ is the best book about financial culture and mores ever written. I’d be willing to lay odds that nobody in the UK Coalition or the Obama White House has read it.
Neuroscience in general (and Cognitive Behaviour Therapy [CBT] in particular) offer enormous insights about the effects of testosterone and the learned response that dominates so much of Bourse activities.
Eckhart Tolle is a Buddhist-influenced writer on social and personal equanimity whose slim volume The Power of Now is one of the largest-selling books in history. Devoid of fluffy psychobabble and offering a profound insight on almost every page, it should be required reading for any market trader trying to get past tricks and monthly targets out of the mind – instead to focus solely on the circumstances of right now…and the consequences of any and all actions in the long term.
The key point about this tiny fraction of suggestions (that any practical Renaissance brain could arrive at with the application of even minimal thought) is that they are out of the ordinary, and designed to make the future better – not rationalise the ridiculous and time-wasting process of clinging to a piece of wreckage called the Past. This applies to nothing more tragically than the model of capitalism we have in 2012.
We have tried State command and we have tried Every Man for Himself. Neither worked – except for a corrupt and privileged minority. For a time we tried mutualist capitalism for a limited number of product fields and services, and on the whole it has worked – as the CIA’s website records clearly and with the necessary numbers to make it stick. But even that is not the entire answer or anywhere near it: the development of a bigger and better mutual business sector is really a form of fine tuning. Only facing up to the reality of failure and thinking within different criteria across the piece of capitalist endeavour and finance will get us to a better future – what I’ve been pushing as Radical Realism for some eighteen months now.
To get to bold solutions we need to start asking brave questions and attacking shibboleths. I ask questions like those below all the time. They usually evoke helpless laughter from the Preservatives, but they have a validity that is inflating with every year. Perhaps from here on in, the Masters of the Universe should think of the whole as an exam paper:
3rd GRADE ECONOMIC REALITY, MODULE ONE.
Answer ALL Questions. Answers without workings-out shown will be scored zero.
1. The production/mass demand circle is looking increasingly vicious – what other criteria for success should we use to replace it?
2. When is a siege-economy (boo-term) just self-sufficiency (hooray-term) by another name?
3. If investment banking largely moves indigenous jobs offshore, starves the entrepreneurial sector, and creates unrepayable sovereign debt, why are all these heavily-bonused, tax-avoiding jerks necessary?
4. Should every G20 member have a large mutual-trust bank that encourages cutting-edge new business sectors and low-cost social housing? If not, why not?
5. ‘Enlightened self-interest is an oxymoron in today’s Western culture’. Discuss with examples.
6. ‘The health of society is more important than the wealth of shareholders’. True or false?
7. ‘Those who dislike Milt Friedman’s ideas are closet Communists’. Discuss with the use of your left brain hemisphere.
8. ‘Sustained growth, near-full employment, and social stability of the kind seen in the mixed economies of the West between 1952 and 1965 has never been equalled’ (CIA website). To what extent is this past judgement relevant to the future, if at all?
9. ‘The purpose of capitalism is to maximise the healthy employment of society’s law-abiding citizens and thus reduce the cost of government’. Would you agree with that? Give reasons and quantify why they are relevant.
10. List FIVE positive benefits for society as a whole deriving from obligation and derivative leveraging. (NB none of them should include your salary or options growth).
Good science and philosophy is not about the past, but rather the eternal. Until such time as Homo sapiens evolves (which it won’t do without geographical isolation or huge climate change) the eternal species truth is that we have succeeded by genetic competition within the pack, and cooperation between packs. We are doing neither of those jobs properly at the moment. New ideas about how to do it are vital if we aren’t to blow ourselves to smithereens at the end of a globalist game nobody can win.