Peripheral Vision: Managers take all

what you get here

This is not a blog which opines on current events. It rather uses incidents, books (old and new), links and papers to muse about our social endeavours.

So old posts are as good as new! And lots of useful links!

The Bucegi mountains - the range I see from the front balcony of my mountain house - are almost 120 kms from Bucharest and cannot normally be seen from the capital but some extraordinary weather conditions allowed this pic to be taken from the top of the Intercontinental Hotel in late Feb 2020

Tuesday, June 28, 2022

Managers take all

More than 60 years after I first started studying economics, I still find myself utterly confused about a subject I actually taught for a few years in 1968 until I realised my mistake. From time to time, posts share my confusion in the blog which has followed with interest the various attempts made in the new millennium to bring what is nothing else than a religious/metaphysical doctrine – kicking and screaming – into the modern world. Economics is abstract and boring for a reason – Economists simply don’t want you to know their dirty little secret; that it’s all constructed on sand…on a pile of debt (for which read, equally appropriately, another 4 letter word beginning with Sh)

The proud Scottish tradition of Political Economy had been killed off only a few years after I left the University of Glasgow (proud home of Adam Smith) – to be replaced by the much more technocratic-sounding “Economic Science” which quickly threw over its flirtation with Keynesiasm and succumbed first to monetarism and then scientism. If only they had persevered with political economy, they would now belong to the new Brave Hearts who have recently hoisted once again the flag of Political Economy (such as Mark Blyth, Wolfgang Streeck, Yanis Varoufakis, Richard Wolff and Michael Hudson).

Such writers expose the fallacy of those who persevere with the nonsense that “the Market” gives us what Voltaire’s Candide more than 250 years ago satirically described the “best of all possible worlds”. Such writers like to set up 2 strawmen - “the market” and “the state” - with the former requiring a set of “heroic” assumptions such as “perfect competition” dependent on consumers having “perfect knowledge” and companies having free access to markets. In the real world, such conditions hardly ever exist.

One thing which economists try to ignore is “power” – one of the main elements of the separate discipline of Political Economy. The can’t therefore fit “Monopolies” and “oligopolies” into their schema – which is a bit awkward as they are the basic reality in our globalised world – with innovative small companies increasingly swallowed up by multinationals owing allegiance only to shareholders of conglomerate Investment Funds interested only in short-term profit. The European Union still takes competition seriously – that was the point of its “Single Market” programme which was pushed so strongly (ironically by an acolyte of Margaret Thatcher). But, thanks to Bill Clinton and the Democrats, the United States stopped taking competition seriously some 30 years ago

All this is by way of a preamble to an important book I’ve been reading these last couple of days - Winners Take All – the elite charade of changing the world by Anand Giridharadas (2018) and starts with a Leo Tolstoy quote which is a favourite of mine

I sit on a man’s back choking him and making him carry me, and yet assure myself and others that I am sorry for him and wish to lighten his load by all means possible…except by getting off his back.

and goes on to argue that –

· The image of the “market” is so powerful it has shaped our expectations of the state

· The public sector now likes to pretend that it has “quasi-markets” which set bodies with public funding up against one another in mock competition

· “Thought-leaders” receive great rewards from corporate leaders who want to hear positive stories of what can be done – not be cast down by the difficulties and problems presented by critical intellectuals

· The tech sector now offers the promise of being able to solve problems which were previously seen as too difficult or impossible

· Private companies are invited by the state to become involved in “Partnerships” which generally involve them pocketing profits and the state the sizeable losses

· Global health and educational problems are increasingly the focus of significant philanthropic funding eg the Clinton Global Initiative

· The key actors in such work are the managers of International Consultancies such as McKinsey

· Who are looked to by both the public and private sector as saviours – with their “protocols” and smart advice

· It was to McKinsey that Obama turned when he wanted to explore the future of democracy

The book is a very easy read – from a journalist well-versed, I sensed, in the social sciences since he profiled very appropriately some of the books used for his argument eg “The Ideas Industry” by Daniel Drezler. And I liked the way he brought individuals in to illustrate the story – in the opening pages a young woman vacillating between the private or public sectors who chose McKinsey; in the middle a music student who went to live in Mongolia for 5 years, joined McKinsey and ultimately helped Soros set up his new Social Investment Fund; in the chapter on Philanthropy an older guy who dared to call out the hypocrisy of the rich; and, finally, Bill Clinton.

When I think about change-agents, I’ve often wondered how we can distinguish the real deal from the fakes. But how do we ever know what’s in our hearts – and how we might change? Both the book’s sub-title and argument certainly made me think very seriously about this. As a middle-of-the-road sceptic and “mugwump”, I am myself at least potentially guilty of such charades. Also appropriately, the book includes this famous quotation from Lampedusa’s “The Leopard” which people often get wrong