Friday, 19 November 2010

To Uncle Bob

I'm not claiming any special expertise or originality of thought here. Anybody reading this blog who wants to dismiss me on the grounds that it's been said before or that I have missed some crucial argument or item of evidence, will have missed the point. I'm not an academic or a journalist, paid to do the research. I don't have that luxury. I'm just an ordinary bloke trying to make sense of what I see. If I've missed something genuinely crucial to the argument I'm making, feel free to let me know (politely and concisely please) and I'll do my best to include it.

Why then do I expect my views to be read and taken seriously?
Well I don't expect them to. I don't expect anything.
A) I just like writing. It's not a waste of time for me. It's what I do.
B) I have all this stuff going around in my head with no outlet. Writing a blog, although probably unread, puts it 'out there'. All this 'wisdom' I've accumulated (ha ha) need not go entirely to waste.
C) The main accusation of the question though is why do I imagine I might have anything worthwhile to add to the debate?

The answer to that is, keeping up as well as I can with current debates, I note that there are points of view, ways of thinking, strands of argument, that are never or almost never aired. I'm not talking about bizarre cultish or extremist views that are supposedly repressed or dismissed by the mainstream. I'm talking about fairly ordinary propositions that simply fall outside the received wisdom of the time, and which journalists in particular don't seem interested in pursuing. Does capitalism for instance really promote choice and diversity? Does competition really result in the best rising to the top? Does hard work and talent lead, in general, to success? How do you define success? Is popularity a sign of quality?
Some of these questions have been unfashionable since the '80s, associated as they were with the more extremist or unworldly strands of left wing politics, but, as will become obvious, I am not interested in being fashionable (or in being left wing for that matter.)

It may also be objected that much of what I propose requires changes that are considered impractical. I am not being 'realistic' they say. This leads into my fourth reason for writing:
D) I think these questions matter - not because I think they are straightforward prescriptions for action but because they might cause some of us to change our minds (or to challenge our assumptions.) In most cases I have no clear idea whatsoever how to bring about the changes that I want in how the world is run, but what I do know is that nothing can ever change until enough people believe that something should change. Everything else follows from that (think women's rights, democracy, war crimes courts, the abolition of slavery - all unthinkable before their times.) Once the moral will (or the pressure) is there, somehow, practical steps emerge, but not before. Too often powerful moral arguments are shouted down by vested interests (and the journalists reporting them unfortunately), demanding to know exactly how we propose putting our ideas into practice. The question is premature.

Finally (E) these essays (for that's what they are) are a lifelong repost to all my (mostly male) relatives who I tried to discuss with as a child and a teenager, but who, instead of enjoying the intellectual stimulation, considered me a misguided dreamer and set about 'putting me right' with their 'common sense' notions of the 'ways of the world'. Their incurious, narrow minded spirits lurk in the margins of all my writing.

This is what I'd like to have said to them but was too young to articulate at the time.
Thanks Bob.

Monday, 1 November 2010

With fiduciary duty's to be done, to be done...

The Thinker.I'm not against capitalism. It sticks in my craw to say so, but I'm not. I run a small business myself after all.
If there is anything you love doing and people are prepared to pay you for it, what could be better than earning a living at it?
But I'm suspicious of big business for the same reasons I'm suspicious of big government - because sooner or later it starts to run on it's own ulterior motives, oblivious of the rest of us, and in business, that motive is purely and simply to make money. Nothing else matters. Everything else is incidental. In fact, as I understand it, companies floated on the stock exchange are legally required to make as much money as is legally possible*. Anything else is illegal. That this should be the case is I think the gist of what Milton Friedman had to say on the subject.
This motive has become pretty universally accepted and taken for granted of late. As business people will gladly tell you whenever it is suggested they do something to help the environment or working mothers or whatever - "We're in business to make money. This isn't a charity."

For those who believe in the power of the Free Market this is not a problem. What is good for business must be good for the consumer. A well run business responds to demand, providing choice and opportunity. Furthermore, growth in the private sector creates wealth and that's got to be a good thing hasn't it.
But the experiences of the last few years demonstrate instead the power of the Law of Unintended Consquences. Briefly, Economic Reality developed a logic all its own that became so divorced from Actual Reality that a small number of individuals in the financial sector in one country could completely destabilise the economy of the rest of the world. The analysis of the current crisis has been rehearsed ad nauseum and needs no addendum from me except to say that this problem is not the result of some abstruse detail at the periphery of the capitalist edifice. It is a direct and inevitable result of basic assumptions about how the economy should be run, which is to say that making money is the only thing that counts.

To suggest otherwise might be considered heretical these days but I can't help thinking that there are other things business should be about. A couple of things spring to mind:

One is that business should be primarily about providing us with reliable and affordable goods and services. This seems self evident until you listen to business people talking about 'product' as if it signifies nothing more than profit (or loss) to them. The feeling seems to be that none of this 'product' really matters in itself. Each and every product is interchangeable with every other product, and ultimately with money. But a quick look at Actual Reality shows that this isn't the case. In the absence of nationalised industry or backwoodsman style self-sufficiency, we are totally dependent on businesses to provide almost everything we have and use in our lives. This is not just trinkets and treats - optional extras and investments that may or may not come good at some time in the future - this is food and clothing, health and education, home and heating, and yes, the pleasures that make life worth living. Shopping is no mere leisure activity. It is where we get the things we need to in order live. We 'consumers' lose sight of this, dazzled by novelties and fashion accessories, but business provides the things that make life possible. I emphasise - life would be impossible without it. It's not like we have a choice to go elsewhere. And it's not a game. Business has the immense responsibility of making life possible, of providing the things we need to stay alive. They should be taking that extremely seriously, rather than just worrying over their next bonus.
"But surely that is what businesses do" I hear you cry. If they didn't, all those products would not be exchangeable for all that money. The business may not care precisely what products it produces as long as it turns a profit but the customer will, and if the product is wrong it will not sell. Surely?
Not necessarily. If the primary goal is to maximise returns rather than to produce the best possible goods and services, all sorts of unintended consequences follow. It pays for instance to use the cheapest materials and labour you can get away with. You get a better return if your goods don't last very long, can't be repaired and thus have to be replaced often. And you can sell more of these shoddy goods if reliable advice is hard to come by.

A second and equally important thing is that business provides jobs. Again, this seems obvious until you realise that most of the people who run businesses regard work as something of a game or a personal statement, to be traded or invested in for the future and workers as another commodity, to be bought and sold. For most of us though, work is quite simply the only way we have to be able to afford those things we need. Having a job is a matter of life and death. But that's not all. Because most of us spend up to a third of our lives either at or preparing to get to work, work that is not as intrinsically meaningful and satisfying as possible drains life of much of it's meaning.

In short, business's (and therefore capitalism's) first priorities should be to provide the best possible goods and services at an affordable price and the best possible work for a fair wage. Only once those basic requirements are met should 'wealth creation' for its' own sake be an option. Only then can the executive justifiably look to his bonus.

As it stands though, we have the reverse. Things that used to last a lifetime last on average only slightly longer than the length of the warranty. 'Retail outlets' are staffed by people taken on mainly for their ability to sell stuff rather than their expertise and experience. Production is mechanised and manned by unskilled and near destitute workers in 'developing' nations. Legal and technical documentation is unreadable and interminable. (Have you ever wondered why small print is small?) Legal costs discourage litigation.
Many might regard this last paragraph as unnecessarily paranoid or cynical but the bigger businesses leave nothing to chance and you can be sure they'll have done the maths.

To see the alternative all you need do is look at small artisanal businesses. Unbeholding to shareholders, these can choose the best affordable materials and make the best possible job of whatever it is they do, simply because they consider the thing worth doing. They can also take the time to talk directly to their customers to give expert advice and support. Obviously such a business will never make the kind of profits the bigger business does but as long as it makes it's staff a fair living wage and covers it's costs it's perfectly sustainable. Only in competition with big business does such an operation come to look unworkable. Then the smaller business is generally either bought out or undercut into oblivion, or else it's products become luxury goods, available only to the wealthy.

Thus, contrary to popular belief, the Free Market tends inexorably and inevitably toward lower quality and less choice as companies become fewer in number and larger in size.
To the extent that smaller businesses provide better than necessary goods and services, they do so in spite of capitalism, not because of it. Gradually our globalised capitalist civilisation will be served by fewer and fewer, larger and larger corporations and we will have to put up with whatever menial jobs and shoddy (but no doubt fashionable) products they care to offer us, and we will not have the option to shop elsewhere.
This is not some dystopian fantasy. The imperative to maximise returns to shareholders* above all else makes this inevitable.
The difference between big business and big government though is that we get the chance to vote the latter out.
What do we do when we don't like the former?
And how long before business is so big that no government can afford to challenge it?

*unless the shareholders opt for some sort of ethical investment, and how often does that happen?