Flushing out what's worth reading

A couple of months ago, in a post headed No Excuse for Apathy I reminded readers (and myself!)  that one of my unfinished projects has been a mapping of the different paths which various authors have suggested  in recent years we need to take in order to improve (if not replace) the mad economic system which has had the globe in thrall (and peril) for at least the last thirty years.

The project started with a short essay in 2001 (updated in Notes for the Perplexed) and moved into higher gear with the opening last autumn of a website Mapping the Common Ground which acts as a library of useful material for those keen to effect social change.

The Global Crisis – Telling it as it is  is an edited version of the posts which record the reading I have been doing in recent years – with my common complaint being the failure of writers to give credit to others and indeed to make any attempt to do what Google Scholar exhorts us to do – “stand on the shoulders of giants”.

Most books about the “global crisis” focus on the easy part of the story – “diagnosis” and “blame” – and skate over the really challenging (later) stages of the process of social change – such as prescription (“what is to be done?”); and, most of all, “coalition-building” (with what sources of power?).

Indeed I now have three tests for any book about the global crisis I look at –

- What proportion of space they devote to the later, prescriptive, stage

- What awareness they show of the “problems of agency” ie of the tenuous nature of the “toolkit of change” which the change management literature introduced us to in the 1980s

- How generous their references to other literature are

Most writing demonstrates a naïve belief in the power of persuasion – the belief that argument can mobilise change. Many people can indeed be persuaded of the “need” for change – but fewer about its precise “direction” and shape….. Robert Quinn is one of the few people who has powerfully pointed out how mechanistic is the discourse of reformist “persuasion” – with its assumption that an intellectual elite has the capacity to “mobilise” people to its way of thinking……His books talk rather of the power of example…..and the growing literature on systems theory of the “emergence” of new methods and models…

The post I referred to in the opening paragraph linked to a fascinating American project – The Next System whose short, initial publication promised to

launch a national debate on the nature of “the next system” using the best research, understanding, and strategic thinking, on the one hand, and on-the-ground organizing and development experience, on the other, to refine and publicize comprehensive alternative political-economic system models that are different in fundamental ways from the failed systems of the past and capable of delivering superior social, economic, and ecological outcomes.

By defining issues systemically, we believe we can begin to move the political conversation beyond current limits with the aim of catalyzing a substantive debate about the need for a radically different system and how we might go about its construction. Despite the scale of the difficulties, a cautious and paradoxical optimism is warranted. There are real alternatives. Arising from the unforgiving logic of dead ends, the steadily building array of promising new proposals and alternative institutions and experiments, together with an explosion of ideas and new activism, offer a powerful basis for hope.

And the last week has seen several more straws in the wind –

Democratic Wealth – being a little E-book of Cambridge and Oxford University bloggers’ takes on the crisis

Civic Capitalism – ditto from some Sheffield University academics

Laudato-Si – the latest Papal Encyclical. A summary is available here. Its entire 184 pages can be read here

We All Want the Change the World is a book which represents the mature thoughts of one (American) lefty and, for me, is a superb illustration of why the left is in such deeptrouble. The book starts brilliantly but quickly degenerates into cultural tripe

A Strange Omission

I mentioned the 41 page bibliography to be found at the back of Mirowski’s book – this is not as impressive as at it might seem to the casual reader. Indeed in anyone else’s book, I might suspect  such a list is a sign of self-doubt and a need to assert one’s status…. It’s pretty easy to compile a list – what is much more challenging is to summarise the key argument of each book or article and to make a judgement about how it compares in, for example, coherence with others. Even better if you can classify the various explanations and fit the books into such a classification – Howard Davies, for example, identified 39 different explanations of the financial meltdown

I’ve googled various phrases to try to find such an annotated bibliography of the global crisis – and cannot really find one - let alone one with a decent structure. By way of comparison, look at the annotated bibliography for “change agents” I put on my website a few years back

Two frequently referenced articles are Reading about the financial crisis – a 21 book review - a 40 page note produced in 2012 by Andrew Lo which, as he puts it in the introduction, 

“underscores the desperate need for the economics profession to establish a single set of facts from which more accurate inferences and narratives can be constructed”

And “Getting up to speed on the causes of the financial crisis” looks at only 16 docs between 2007-09

A (very short) Financial Crisis reading List is offered by a blog but one which serves a very simple E-book - “Too Big Has Failed”. The short annotated list offered by the Pluto Press simply advertises a few books in that particular publisher’s stable.

Misrule of Experts (2011) is one of a large number of papers produced by the Centre for Research on Socio-Cultural Change which offers a useful analysis but hardly a bibliography - let alone an annotated one. And the same is true of the minority report produced by the FinancialCrisis Inquiry Commission in 2011 

Responsibilities, ethics and the Financial Crisis is a useful website……part of a 3 year Arts and Humanities Research Council-funded project which brings together "philosophers, economists and social policy academics". It too has reading lists - but none of them annotated. 

So where, please, is there a real annotated bibliography of the events which are now shaping a generation – if not a civilisation ??? And can anyone offer a reason for this absence??

Never Let a Serious Crisis go to Waste - part III

I said that Mirowski was important – the man clearly knows his stuff (see the 41 page bibliography at the back of his book). It’s just that he’s undisciplined in the presentation of his arguments and assumes too easily that his readers will understand the esoteric references to theoretical disputes in economics.

Never Let a Serious Crisis go to Waste rates almost as many serious reviews as Thomas Piketty’s blockbuster - Capital in the Twenty First Century to which the London Review of Books devoted last month a quite excellent review whose opening section must qualify as one of the clearest expositions of the disputes about economic value.

Useful reviews of the Mirowski book can be found in The Times Higher Education Supplement; Jacobin Magazine; and Logos Journal. One of the most balanced of the reviews is this one

Overall, therefore, this book may be tough going for many, but it also rewards the reading. The looseness of structure combined with the sense in which each element depends on the others means that the reader shouldn’t worry too much if they didn’t get it the first time. I certainly do not expect this to be everyone’s cup of tea: the way Mirowski approaches neoliberalism through a combination of polemical investigation into institutional and organisational connections between finance, government, and economics, as well as his tendency to give mostly ideological and psychological explanations for political phenomena, sometimes comes uncomfortably close to ‘conspiracy thinking’. I think Mirowski mostly stays just on the right side of that fine line, but then I am already an opponent of neoclassical economics – those who are more ambivalent about it will perhaps find this work too much.
For the politically more radical but less economically knowledgeable layperson, there is a wealth of insight to be gained here in the inner workings and thinking of some of the major players of the Western neoliberal order, especially in the United States, but you’ll have to earn it with hard work. There are some fascinating moments in the book where Mirowski contrasts the reality of the crisis with the utter refusal on the part of the economics discipline to view it as imaginable before the fact (we were supposed to be in ‘the Great Moderation’) or of any theoretical significance after the fact (in striking interviews with Chicago school economists). 

On the other hand, he sometimes overdoes the pervasive power of neoliberal thought: when he sees social networks as inherently neoliberal, or sees protest movements such as Occupy as hopelessly co-opted by neoliberal ways of thinking from the start, it seems a bit too much in the style of grandpa telling the kids to get off his lawn. Neoliberalism isn’t, and cannot be, all-powerful – even if the opposition has to date indeed been ineffectual.
For the purposes of economic thought, the takeaway from this book should be that “the relationship between the immunity of finance and the imperviousness of change in economic ideas has been direct” (357).

For the political left, the central message is that the strategy of neoliberalism to a crisis – any crisis – can be summed up as “short-run denialism… medium-term imposition of state-sponsored markets, and long-term recruitment of entrepreneurs to explore scientific blue-sky projects to transform human relationships to nature”, all of which “can only be imposed in those special moments of ‘emergency’ by a strong state” (357-358). These lessons, combined with Mirowski’s vision of neoliberalism as contrasted with merely ‘small government, free market’ thinking, are important to learn.

Mirowski has been fairly caustic about Wikipedia – and perhaps this is why his entry there is so brief and uninformative. I managed to find this overview and interview

Certainly the book has encouraged me to pull off the shelves some so far unread items such as the Penguin History of Economics; The Romantic Economist; and Ha-Joon Chang’s Economics; the User’s Guide

Never Let a Serious Crisis Go To Waste - part 2

Reader – while you have been busy this last 24 hours or so, I have been sweating blood on your behalf! A few minutes ago, I reached (with a great sigh of relief) the last page of Philip Mirowski’s Never Let a Serious Crisis Go To Waste and its pages will forever bear witness to my reactions and interactions – with savagely pencilled circles and slashes on almost every page.

The subject of this book could not be more important – the process whereby a doctrine (neoliberalism), assumed in 2008 to have been totally discredited, has managed not only to survive but to become the only game in town…

On your behalf I have (carefully) read 358 pages of text; glanced at 52 pages of notes; and noted with interest a 41 page bibliography. And I have also turned up at least a score of fairly long reviews – indeed even one special issue of a journal devoted to the book (available at the hyperlink of the book’s title) which, usefully, contains an author’s reply. The book's (mercifully short) conclusion poses these questions-

·         What were the key causes of the crisis?

·         Have economists of any stripe managed to produce a coherent and plausible narrative of the crisis, at least so far? And what role have heterodox economists played in the dispute?
·         What are the major political weaknesses of the contemporary neoliberal movement?
·         What is the current topography of the Neoliberal Thought Collective?
·         What lessons should the left learn from the neoliberals, and which should they abjure?
·         What would a vital counternarrative to the epistemological commitments of the neoliberals look like?

But the book touches (and briefly at that) only on the second and fourth of these questions – the others he suggests “demand lavishly documented advocacy and lengthy disputations” and maybe an alternative left project.

His book, he concludes with surprising modesty for such a pyrotechnic writer, simply “dispels some commonplace notions that have gotten in the way of such a project”.

He then goes on to a final one-page summary of the 6 reasons why “neoliberals have triumphed in the global economic crisis” -
·         Contrary evidence didn’t dent their world view
·         They “redoubled their efforts to influence and capture the economics profession”
·         “everyday neoliberalism” which had “taken root in our culture provided a bulwark until The  “Neoliberal Thought Collective”  (NTC) could mount further responses”
·         The NTC developed the black art of “agnotology” (see below) and -
·         “coopted protest movements through a combination of top-down takeover and bottom-up commercialisation and privatisation of protest activities and recruitment”

and… finally…..wait for it…..
·         ”The NTC has displayed an identifiable repeating pattern of full-spectrum policy responses to really pervasive crisis which consists of short-run denialism, medium-term imposition of state-sponsored markets and long-term recruitment of entrepreneurs to explore scientific blue-sky projects to transform human relationships to nature”…….

GOT IT?

I really am trying to be fair to this guy – but he really does hoist himself with his own petard.

And, dear reader, you should know that I studied economics for 4 years at university – and then attempted to teach the subject to students….

Furthermore, I pride myself on my vocabulary…..but I was stumped by so many words –

Ambagious, apophenia, “all the Finnegan that is needed”; perfervid, quiddity (a favourite); astralobe, scofflaws, epigones, fugleman, lucubrations, bombinate, deliquesce, Nascar, echolalia, echoic, ukase, catallactic, hebetude, cunctuation, coadjurancy, snafus, non-ergodicity, defalcation, hazmot, political donnybrooks

He was, however, kind enough to proffer (at page 226) a definition of“agnotology” (to which an entire section is devoted) - namelythe “focused study of the intentional manufacture of doubt and uncertainty in the general populace for specific political motives”.

And he does also explain a couple of other neologisms – “murketing” and “buycott” (both of which my automatic speller annoyingly tries to correct)

“Dissention” at page 243 presumably is “dissension”. You see, Reader, the efforts to which I have gone for you!

I am glad to report that I am not the only reader to be appalled at Mirowski’s style – a year ago an Economist columnist took issue with the book for this reason and sparked off quite a discussion thread

The reader is still entitled to expect something better than the following (from Philip Mirowski's new book "Never Let a Serious Crisis Go to Waste"): Yet the nightmare cast its shroud in the guise of a contagion of a deer-in-the-headlights paralysis. 

That is not just a mixed metaphor; it is meaningless and pretentious at the same time. One would nominate it as the world's worst-written sentence but it is only the opening clause. After a semi-colon, the author drones on for a further 32 words, from which Economist readers should be spared. Just a few pages later, Mr Mirowski produces another monstrosity:The nostrum of "regulation" drags with it a raft of unexamined impediments concerning the nature of markets and governmentality, and a muddle over intentionality, voluntarism, and spontaneity that promulgates the neoliberal creed at the subconscious level.

What happened to the editing process at Verso, which allowed this book to be published? All authors benefit from a trimming of their stylistic excesses. The odd flourish is fine and an attempt at humour in a work of financial analysis is usually welcome. But this does not consist of adding one clause after another, or piling adjective upon adjective.  Such leaden prose weakens any hope that the author might have of persuading the reader to slog through his 467-page attack on neoliberalism. George Orwell's rules of writing (which introduce The Economist's in-house style guide), are always worth repeating

One of the discussants in the subsequent discussion thread suggested four reasons for verbosity:

1) Try selling a one-page book. This despite the fact most of what I have read on economics in recent years, and indeed ever, could comfortably fit - too many books are just one interesting insight smeared over 400 pages ("Black Swan" anyone?).

2) Obscure language can hide deficient or trivial underlying thinking (think academic prose, esp. in the humanities)

3) Author's pseudointellectual wankerdom, and halo effect of "clever" language intended to boost persuasive effect. This is patently counterproductive.

4) Attempted argument by verbosity - while single-sentence phrasing would be just as informative, droning on about it from different angles for twenty hours of reading is intended to be more effective in helping the ideas (or lack thereof) sink in. 

The perversities of modern power

Over the past year or so, I have been coming back to some questions I first posed a decade ago – namely how people of my age (disgusted as we are by the behaviour of our corporate and political elites) might best focus our energies and resources to help nudge the systems of which we are part to a more hopeful future - and who were the people we could support in that venture . 
My initial - if rather tentative - answers were contained in a 30 page paper Draft Guide for the Perplexed. (The link gives the pdf file of the Guide which, unfortunately, doesn't allow the access to the links in the body of the text (the footnote links are OK), You can find a word version linked at the end of the post Draft Guide for the Perplexed – its about 20 titles up from the end of the list which that website link gives)

Breaking Out from an Insane World was one important recent post in that series.

The last post in the series had a summary of my recent reflections about the subject which I’ve now amended to read -

• The “mixed economy” which existed from 1950-1990 was a healthy and effective system for us in the West (The UK, as always, is an exception)  
• It worked because power was diffused. Each type of power – economic (companies/banks etc), political (citizens and workers) and legal/admin/military (the state) – balanced the other. None was dominant.
• Economic globalisation has, however, now undermined the power which working class people were able to exercise in that period through  votes and unions
• Privatisation is a disaster – inflicting costs on the public and transferring wealth to the few
• Neo-liberalism has supplied a thought system which justifies corporate greed and the privileging       (through tax breaks and favourable legislation) of the large international company
• All political parties and most media have been captured by that thought system which now rules the world
• People have, as a result, become cynical and apathetic
• Two elements of the “balanced system” (Political and legal power) are therefore now supine before the third (corporate and media power). The balance is broken and the dominant power ruthless in its exploitation of its new freedom
• It is very difficult to see a “countervailing power” which would make these corporate elites pull back from the disasters they are inflicting on us
• Social protest is marginalised
• Not least by the combination of the media and an Orwellian “security state” ready to act against “dissidence”
• But the beliefs which lie at the dark heart of the neo-liberal project do need more detailed exposure
• as well as its continued efforts to undermine what little is left of state power
• We need to be willing to express more vehemently the arguments against privatisation - existing and proposed)
• to feel less ashamed about arguing for “the commons” and for things like cooperatives and social enterprise (inasmuch as such endeavours are allowed)

But how do we go about re-establishing some sort of balance of power?

How can social forces be strengthened; and political and state systems of power reformed - so that the wings of corporate power can be properly clipped??

I’ve been encouraged to return to this theme by the summary of and papers from this very recent Conference on the Restructuring of the Corporation 

The papers are certainly fascinating – but suggest (with the exception of Henry Mintzberg) that change will come from within the system. Most people involved in these arguments about social and economic change focus on one or other of the three parts – political, legal or commercial ie stronger, more focussed protest; or different voting systems; or more social enterprise; or more corporate social responsibility; or stronger legislation against lobbying for example. Few so far seem to see Mintzberg’s point that we need a mixed cocktail!  

The illustration is a woodcut by the marvellous Hans Masserel

What is to be done?

The discussion thread to the David Simon article is worth looking at. It confirms my view that few people are taking the time or trouble to explore the feasibility of the various paths which are open to those of us appalled with the behaviour of our commercial, financial, media and political rulers and systems.

Let’s try to set out what most thinking people would probably agree with (after some argument)–

• The mixed economy we had for almost 40 years after the war was a good system for us in the West
• It kept power in check
• Economic globalisation has, however, now undermined the power which working class people had in that period – probably irretrievably
• Neo-liberalism has supplied instead a thought system which justifies corporate greed
• All political parties and most media have been captured by that thought system and the elite which now rules the world
• Privatisation is a disaster
• It has undermined both the capacity of western states – and the trust people had in the public sector of those states
• It is no longer possible to see a “countervailing power” which would make these corporate elites pull back from the disasters they are inflicting on us
• Bricks are perhaps part of the answer (also “suicide missions” of the elderly!)
• The ruling elite understand this threat – which is why it has been building up an Orwellian “security state” ready to act against “dissidence”
• But the beliefs which lie at the dark heart of the neo-liberal project do need more detailed exposure
• We need to be willing to express more vehemently the arguments against privatisation – to feel less ashamed about arguing for “the commons” and for things like cooperatives and social enterprise (inasmuch as such endeavours are allowed)
• to feel less ashamed about arguing for “the commons” and for things like cooperatives and social enterprise (inasmuch as such endeavours are allowed)
• to take more strength from appropriate points in history and 
• to take the time to find and talk with those who can distill the essence of what others have been saying..........We don't need to reinvent the wheel - and should beware those with ready answers!

By comparison have a look at what some Germans were saying in June 

Breaking out from an insane world

It’s highly appropriate that, at the end of the week during which I have been thinking and about blogging the difficulties what, for lack of a better phrase I have to call “social reform”, a blistering article appears.

I won’t spoil the effect by revealing, for the moment, the identity of the writer. What is important for me is that the author gives central place to the notion of a “re-balancing” of power and systems. Have patience – the excerpt is a long one! So I’ve taken the liberty of adding some headings……

The notion that capital is the metric, that profit is the metric by which we're going to measure the health of our society is one of the fundamental mistakes of the last 30 years. I would date it in my country to about 1980 exactly, and it has triumphed.
The great irony of it is that the only thing that actually works is not ideological, it is impure, has elements of both arguments and never actually achieves any kind of partisan or philosophical perfection. It's pragmatic, it includes the best aspects of socialistic thought and of free-market capitalism and it works because we don't let it work entirely. And that's a hard idea to think – that there isn't one single silver bullet that gets us out of the mess we've dug for ourselves. But man, we've dug a mess….

 Some history
A working class that had no discretionary income at the beginning of the century, which was working on subsistence wages was turned it into a consumer class that not only had money to buy all the stuff that they needed to live but enough to buy a bunch of shit that they wanted but didn't need, and that was the engine that drove us.
It wasn't just that we could supply stuff, or that we had the factories or know-how or capital, it was that we created our own demand and started exporting that demand throughout the west. And the standard of living made it possible to manufacture stuff at an incredible rate and sell it.
And how did we do that? We did that by not giving in to either side. That was the new deal. That was the great society. That was all of that argument about collective bargaining and union wages and it was an argument that meant neither side gets to win.
The unions actually mattered. The unions were part of the equation. It didn't matter that they won all the time, it didn't matter that they lost all the time, it just mattered that they had to win some of the time and they had to put up a fight and they had to argue for the demand and the equation and for the idea that workers were not worth less, they were worth more.

 The big mistake
Ultimately we abandoned that and believed in the idea of trickle-down and the idea of the market economy and the market knows best, to the point where now libertarianism in my country is actually being taken seriously as an intelligent mode of political thought. It's astonishing to me. But it is. People are saying I don't need anything but my own ability to earn a profit. I'm not connected to society. I don't care how the road got built, I don't care where the firefighter comes from, I don't care who educates the kids other than my kids. I am me. It's the triumph of the self. I am me, hear me roar.
And so in my country (the US) you're seeing a horror show. You're seeing a retrenchment in terms of family income, you're seeing the abandonment of basic services, such as public education, functional public education. You're seeing the underclass hunted through an alleged war on dangerous drugs that is in fact merely a war on the poor and has turned us into the most incarcerative state in the history of mankind, in terms of the sheer numbers of people we've put in American prisons and the percentage of Americans we put into prisons. No other country on the face of the Earth jails people at the number and rate that we are.

 I’m no pansy!
I'm utterly committed to the idea that capitalism has to be the way we generate mass wealth in the coming century. That argument's over. But the idea that it's not going to be married to a social compact, that how you distribute the benefits of capitalism isn't going to include everyone in the society to a reasonable extent, that's astonishing to me.
And so capitalism is about to seize defeat from the jaws of victory all by its own hand. That's the astonishing end of this story, unless we reverse course. Unless we take into consideration, if not the remedies of Marx then the diagnosis, because he saw what would happen if capital triumphed unequivocally, if it got everything it wanted.

 But things can’t go on like this!
Unless we take stock of the fact that maybe socialism and the socialist impulse has to be addressed again; it has to be married as it was married in the 1930s, the 1940s and even into the 1950s, to the engine that is capitalism.
The idea that the market will solve such things as environmental concerns, as our racial divides, as our class distinctions, our problems with educating and incorporating one generation of workers into the economy after the other when that economy is changing; the idea that the market is going to heed all of the human concerns and still maximise profit is juvenile. It's a juvenile notion and it's still being argued in my country passionately and we're going down the tubes. 

OK at this stage I have to tell you that the author is the guy who created and wrote one of television’s best series - “The Wire” – one David Simon who has delivered this amazing blistering address  He goes on the say -

And that's what The Wire was about basically, it was about people who were worth less and who were no longer necessary, as maybe 10 or 15% of my country is no longer necessary to the operation of the economy. It was about them trying to solve, for lack of a better term, an existential crisis. In their irrelevance, their economic irrelevance, they were nonetheless still on the ground occupying this place called Baltimore and they were going to have to endure somehow.

 The great horror show
That's the great horror show. What are we going to do with all these people that we've managed to marginalise? It was kind of interesting when it was only race, when you could do this on the basis of people's racial fears and it was just the black and brown people in American cities who had the higher rates of unemployment and the higher rates of addiction and were marginalised and had the shitty school systems and the lack of opportunity.
And kind of interesting in this last recession to see the economy shrug and start to throw white middle-class people into the same boat, so that they became vulnerable to the drug war, say from methamphetamine, or they became unable to qualify for college loans. And all of a sudden a certain faith in the economic engine and the economic authority of Wall Street and market logic started to fall away from people. And they realised it's not just about race, it's about something even more terrifying. It's about class. Are you at the top of the wave or are you at the bottom?

 So?
So how does it get better? In 1932, it got better because they dealt the cards again and there was a communal logic that said nobody's going to get left behind. We're going to figure this out. We're going to get the banks open. From the depths of that depression a social compact was made between worker, between labour and capital that actually allowed people to have some hope.
……..Or we're going to keep going the way we're going, at which point there's going to be enough people standing on the outside of this mess that somebody's going to pick up a brick, because you know when people get to the end there's always the brick. I hope we go for the first option but I'm losing faith.

 Looks like we have to throw bricks
The other thing that was there in 1932 that isn't there now is that some element of the popular will could be expressed through the electoral process in my country.
The last job of capitalism – having won all the battles against labour, having acquired the ultimate authority, almost the ultimate moral authority over what's a good idea or what's not, or what's valued and what's not – the last journey for capital in my country has been to buy the electoral process, the one venue for reform that remained to Americans.
Right now capital has effectively purchased the government, and you witnessed it again with the healthcare debacle in terms of the $450m that was heaved into Congress, the most broken part of my government, in order that the popular will never actually emerged in any of that legislative process.
So I don't know what we do if we can't actually control the representative government that we claim will manifest the popular will. Even if we all start having the same sentiments that I'm arguing for now, I'm not sure we can affect them any more in the same way that we could at the rise of the Great Depression, so maybe it will be the brick. But I hope not.

This emphasis on the importance of balance was the focus of a very good (but neglected) paper which Henry Mintzberg published in 2000 about the Management of Government which starts with the assertion that it was not capitalism which won in 1989 but "the balanced model” ie a system in which there was some sort of balance between the power of commerce, the state and the citizen. Patently the balance has swung too far in the intervening 20 years! Mintzberg is a very sane (Canadian) voice in a mad world – ás is obvious from this article on managing quietly and his ten musings on management. 

I mentioned his paper on the blog a couple of years ago when he seemed to be writing a book about the need for re-balance but his website contains now only a promise of a pamphlet. Mintzberg is one of the few people familiar with the relevant literature who could develop an appropriate typology to help us move forward from the desparate shouting......

Draft Guide for the Perplexed

Some 12-13 years ago I drafted a paper with the rather odd title “Living for Posterity” which was -

"one man’s attempt to explore how he might “make a difference”; or at least feel that what he is doing is improving the human condition rather than compounding its problems. For I was at the enviable point in my life where I didn’t need to work full-time and could choose what I did with my time and life.
The first half of the paper still has the form and content it had when it was originally written (in Tashkent) in 2001 some 10 years after I had left political life in Scotland and started the nomadic life of a consultant in countries which were assumed to be in some sort of transition from a form of communism to capitalism".

How – was my question – should I use my energies and resources (time, skills, knowledge and money) in the future to best public (rather than private) advantage?

My 2001 note was structured around 5 questions -

• why I was pessimistic about the future and so unhappy with the activities of the programmes and organisations with whom I dealt – and with what the French have called La Pensee Unique, the post 1989 “Washington consensus”

• who were the organisations and people I admired

• what they were achieving - and what not

• how these gaps could be reduced

• how with my resources I could help that process

One friend responded and I returned to the questions 10 years later and tried to update my thoughts.

On Sunday I had a stimulating chat – over a white wine - with a new acquaintance about the issues and have been encouraged to do a minor update which you can find on my website with the title - Draft Guide for the Perplexed

I’ve been very lucky in my life – having a position of considerable political influence in the West of Scotland for 22 years from the age of 28 – and then having responsibility for a variety of capacity-building projects in central European and Central Asian governments for another 20 odd years.

From these very different vantage points (and my constant reading) I have developed some views about what we might call social/political interventions…..Unfortunately I find that my attempt to communicate these gets perverted by language – not just my own imperfections but, I suspect, the verbal infrastructure itself. Hence the pleasure I got from drafting a “Devil’s Dictionary” to warn people about language – entitled Just Words

I readily confess to being one of these annoying people who “takes stock” every few years of what has been going on in a place for which I felt some affinity and offers some uninvited (and generally unpalatable) comment. I started the habit in the mid- 1970s and was allowed to indulge the habit by my various positions. I might say that it made few friends!

Although I continue to write a blog I now use it mainly to pass on what I consider to be useful perspectives of others who are better skilled than  -, whether by virtue of their more felicitous language, their experience, reading or understanding. 

The Crisis on screen

It’s not easy to transfer ideas and argument about financial and economic crises onto the big screen. Sure we had Rollover with Jane Fonda and Kris Kristofferson – an amazingly prescient film in 1981 about financial speculation which I only recently came across in a pile of remaindered DVDs.

In 1987 Michael Douglas played Gordon Gekko (“Greed is good”) in Wall St - Money Never Sleeps

In 2010 Michael Moore gave us Capitalism – a Love Story

And, in 2011, Matt Damon starred in Inside Job 

But, for various reasons, the big money which decides which films sound to be box-office winners doesn’t readily support a pitch for a film which sounds to be a glorified lecture. And agit-prop stuff rarely translates into good cinema. But Robert Reich now looks set to become the first American academic to take economics successfully into the movie halls

Reich has been rated as one of the top 10 business thinkers in America. You don’t forget him easily – he is less than 5 feet; was Secretary of State for Labour in Clinton’s first administration; coined the phrase "symbolic analysts" in his 1992 book Work of Nations; has been one of the few self-avowed American “liberals” (which is now a term of abuse in America) consistently to take on the neo-Cons there; wrote in 2010 an aggressive book about the global crisis - Aftershock; and was, again, one of the few American academics to have strongly and visibly supported the Occupy Now movement.

Today’s Guardian has an excellent story on the success at Sundance film festival of the film Inequality for All - based on his Aftershock book

Reich charts the three decades of increasing median income after the second world war, a period he calls "the great prosperity" and then examines what happened in the late 1970s to put an end to it. The economy didn't falter. It kept on growing. But wages didn't.
The figures that Reich supplies are simply gobsmacking. In 1978, the typical male US worker was making $48,000 a year (adjusted for inflation). Meanwhile the average person in the top 1% was making $390, 000. By 2010, the median wage had plummeted to $33,000, but at the top it had nearly trebled, to $1,100,000.

"Something happened in the late 1970s," we hear him tell his Berkeley class. And much of the rest of the film is working out what happened.
Some inequality is inevitable, he says. Even desirable. It's what makes capitalism tick. But at what point does it become a problem? When the middle classes (in its American sense of the 25% above and below the median wage) have so little of the economic pie that it affects not just their lives but the economy as a whole.

Reich's thesis is that since the 1970s a combination of anti-union legislation and deregulation of the markets contrived to create a situation in which the economy boomed but less of the wealth trickled down. Though for a while, nobody noticed. There were "coping mechanisms". More women entered the workforce, creating dual-income families. Working hours rose. And increasing house prices enabled people to borrow.
And then, in 2007, this all came crashing to a halt. "We have exhausted all the options," he says. There's nowhere else left to go. It's crunch time
 In the film, he tells how he made strategic alliances with older boys who could protect him from the bullying he suffered by virtue of his small size (He is less than 5 ft) . And years later, he discovered that one of them had travelled down to Mississippi to register voters and had been tortured and then murdered. "That changed my life," he says.
"He has never cashed in," says Kornbluth, the film's Director. "He's an incredibly smart guy and he could have found a way to correlate that into money as so many people do. But he never has. He has absolute integrity. It's almost shocking now for someone not to do that. I mean one of the film-makers I admire is Mike Leigh. And he does McDonald's commercials and I was like 'Whoa!' when I found out but I can't hold it against him. You can't hold it against anybody who's trying to make a living. But it makes Rob all the more amazing. He doesn't sit on boards. Or on think tanks. He draws a modest salary. He has this absolute moral compass. And he's still trying to change the world."

In the 60s and 70s, this wasn't such a surprising thing. Reich recounts how he grew up "in a time of giants". His first job was working for Bobby Kennedy. Changing the world was what everyone wanted to do.
The world has changed. Just not in the way many thought it would. We fell victim to what Reich calls "the huge lie". That the free market is good. And government is bad. Government makes the rules, Reich keeps on reminding us, over and over. And it decides who benefits from those rules, and who is harmed. And increasingly, that boils down to the rich and the poor.

Perhaps the most surprising voice in the film is Nick Hanauer's. He's just your ordinary, everyday billionaire. One of the 1%. Except that he believes – like Warren Buffett – that he doesn't pay enough tax. And that hammering the middle class, the ones who buy actual stuff, who create demand, which in turn creates jobs and more taxes, is simply bad for the economy. "I mean, I drive the fanciest Audi around, but it's still only one of them… Three pairs of jeans a year, that will just about do me."
The system simply isn't working, he says. It's put the millionaires and the billionaires, the Nick Hanauers and the Mitt Romneys – the people that Republican rhetoric describes as job creators – at the centre of the economic universe, rather than what Hanauer calls the true job creators – the middle classes.
The problem is, he says, is that they've been attacked from every side. He was one of the initial investors in Amazon, a business of which he's "incredibly proud", but he points out that on revenues in the last three months of 2012 of $21bn (£13bn), Amazon employs just 65,600 people. "If it was a mom and pop retailer, it would be 600,000 people, or 800,000 or a million."
Globalisation and technology have played their role. But so has the government. For decades, under both Republicans and Democrats the highest rate of tax didn't dip below 70%. Now, Hanauer says he pays 11% on a six-figure income. Hanauer believes that if he was taxed more, he would be better off, because his company – he's a venture capitalist and his family own a pillow factory – would sell more products, and he would, therefore, make more money.

The caricature is by a Romanian painter of the inter-war period - Joseph Iser

The best writing on the global crisis

The intuition of the older generations beats hands-down the arrogance of the post-war generations. They shunned debt – and knew that the products of manufacturing industry were the real thing. My generation thought that it knew better. At any rate it wanted better and made a Faustian deal. It’s payback time now – and few writers are able to explain what has happened, let alone how we cope with the new world.

Some of my previous posts have referred to the accounts of people such as Howard Davies and Robert Skidelsky – the first of whom looked briefly at 39 possible explanations (!!) for the recent global collapse. I've also given space to the more radical accounts of Paul Mason and Yanis Varoufakis who put the events in a deeper context; and covered the more apocalyptic writers such as William Greer and Dmitry Orlov who not only give their own explanations but also spell out the scale and details of the changes we need to make in our own personal lives if we are to survive. 

It should be noted that only 2 of these writers could be designated an academic (Skidelsky and Varoufakis)

But this week I came across perhaps the most impressive bit of analysis and writing – from Tim Morgan who writes strategic papers for a consultancy. They are all clear, challenging and well worth reading. The latest is called Perfect Storm and basically attributes the global crisis of the past 4 years to four factors -

• The madness of crowds
• The "globalisation disaster"
• Self-delusion (eg statistical lying)
• Seriously diminishing returns from the exploitation of fuels on which our growth has depended for the past two centuries

I’m only half way through the paper but let me share some excerpts from his gripping introduction -

With 24-hour news coverage, the media focus has shifted inexorably from the analytical to the immediate. The basis of politicians’ calculations has shortened to the point where it can seem that all that matters is the next sound-bite, the next headline and the next snapshot of public opinion. The corporate focus has moved all too often from strategic planning to immediate profitability as represented by the next quarter’s earnings.
This report explains that this acceleration towards ever-greater immediacy has blinded society to a series of fundamental economic trends which, if not anticipated have devastating effects.
The relentless shortening of media, social and political horizons has resulted in the establishment of self-destructive economic patterns which now threaten to undermine economic viability.

We date the acceleration in short-termism to the early 1980s. Since then, there has been a relentless shift to immediate consumption as part of something that has been called a “cult of self-worship”.
The pursuit of instant gratification has resulted in the accumulation of debt on an unprecedented scale.
The financial crisis, which began in 2008 and has since segued into the deepest and most protracted economic slump for at least eighty years, did not result entirely from a short period of malfeasance by a tiny minority, comforting though this illusion may be.
Rather, what began in 2008 was the denouement of a broadly-based process which had lasted for thirty years, and is described here as “the great credit super-cycle”.
The credit super-cycle process is exemplified by the relationship between GDP and aggregate credit market debt in the United States (see fig. 1.1 of the report). In 1945, and despite the huge costs involved in winning the Second World War, the aggregate indebtedness of American businesses, individuals and government equated to 159% of GDP. More than three decades later, in 1981, this ratio was little changed, at 168%. In real terms, total debt had increased by 214% since 1945, but the economy had grown by 197%, keeping the debt ratio remarkably static over an extended period which, incidentally, was far from shock-free (since it included two major oil crises).
As figure 1.1 shows, this changed dramatically in the 2 decades following – with the percentage of debt hitting almost 400% in 2008.

Good old political economy

Yanis Varoufakis’ recently published The Global Minotaur – America, the true origins of the financial crisis and the future of the world economy arrived here in the mountains a few days ago and has provoked a lot of thoughts. 
First about the light which such a political economic (and historical) approach throws on the matter – an honourable American elite which had experienced the financial breakdown of 1929 and the savagery of the 2nd World War was determined to create the conditions to ensure it never happened again. 
Most of us (think we) know about the 1944 Bretton Woods Conference and its institutions and the Marshall Plan. Not so well-known is the (behind-the-scenes) American role in establishing the Coal and Steel Community (leading to the EU); and in setting Japan on its path to post-war success. 
And, until I read this book, I had, frankly, not really understood the significance of the 1971 American decision to break the dollar link with gold. As the Far East has supplanted the US and Europe as the productive powerhouse, the American deficit (and capital inflow) has mounted to stratospheric proportions – thereby creating the conditions for new and toxic financial mechanisms. 

At the heart of Varoufakis’ writing (including his incisive blog) is the danger of a common currency (whether at global or european level) without a recycling mechanism. There are quite a few summaries and interviews in the internet about the book – eg this one from Naked Capitalism - 

Philip Pilkington: In your book The Global Minotaur: America, The True Origins of the Financial Crisis and the Future of the World Economy you lay out the case that this ongoing economic crisis has very deep roots. You claim that while many popular accounts – from greed run rampant to regulatory capture – do explain certain features of the current crisis, they do not deal with the real underlying issue, which is the way in which the current global economy is structured. Could you briefly explain why these popular accounts come up short? 

Yanis Varoufakis: It is true that, in the decades preceding the Crash of 2008, greed had become the new creed; that banks and hedge funds were bending the regulatory authorities to their iron will; that financiers believed their own rhetoric and were, thus, convinced that their financial products represented ‘riskless risk’. However, this roll call of pre-2008 era’s phenomena leaves us with the nagging feeling that we are missing something important; that, all these separate truths were mere symptoms, rather than causes, of the juggernaut that was speeding headlong to the 2008 Crash. Greed has been around since time immemorial. Bankers have always tried to bend the rules. Financiers were on the lookout for new forms of deceptive debt since the time of the Pharaohs. Why did the post-1971 era allow greed to dominate and the financial sector to dictate its terms and conditions on the rest of the global social economy? My book begins with an intention to home in on the deeper cause behind all these distinct but intertwined phenomena.

PP: What, then, do you find the roots of the crisis to be?

YV: They are to be found in the main ingredients of the second post-war phase that began in 1971 and the way in which these ‘ingredients’ created a major growth drive based on what Paul Volcker had described, shortly after becoming the President of the Federal Reserve, as the ‘controlled disintegration of the world economy’.
It all began when postwar US hegemony could no longer be based on America’s deft recycling of its surpluses to Europe and Asia. Why couldn’t it? Because its surpluses, by the end of the 1960s, had turned into deficits; the famous twin deficits (budget and balance of trade deficits).

Around 1971, US authorities were drawn to an audacious strategic move: instead of tackling the nation’s burgeoning twin deficits, America’s top policy makers decided to do the opposite: to boost deficits. And who would pay for them? The rest of the world! How? By means of a permanent transfer of capital that rushed ceaselessly across the two great oceans to finance America’s twin deficits.
The twin deficits of the US economy, thus, operated for decades like a giant vacuum cleaner, absorbing other people’s surplus goods and capital. While that ‘arrangement’ was the embodiment of the grossest imbalance imaginable at a planetary scale (recall Paul Volcker’s apt expression), nonetheless, it did give rise to something resembling global balance; an international system of rapidly accelerating asymmetrical financial and trade flows capable of putting on a semblance of stability and steady growth.

Powered by America’s twin deficits, the world’s leading surplus economies (e.g. Germany, Japan and, later, China) kept churning out the goods while America absorbed them. Almost 70% of the profits made globally by these countries were then transferred back to the United States, in the form of capital flows to Wall Street. And what did Wall Street do with it? It turned these capital inflows into direct investments, shares, new financial instruments, new and old forms of loans etc.
It is through this prism that we can contextualise the rise of financialisation, the triumph of greed, the retreat of regulators, the domination of the Anglo-Celtic growth model; all these phenomena that typified the era suddenly appear as mere by-products of the massive capital flows necessary to feed the twin deficits of the United States.

PP: You seem to locate the turning point here at the moment when Richard Nixon took the US off the gold standard and dissolved the Bretton Woods system. Why is this to be seen as the turning point? What effect did de-pegging the dollar to gold have?

YV: It was a symbolic moment; the official announcement that the Global Plan of the New Dealers was dead and buried. At the same time it was a highly pragmatic move. For, unlike our European leaders today, who have spectacularly failed to see the writing on the wall (i.e. that the euro-system, as designed in the 1990s, has no future in the post-2008 world), the Nixon administration had the sense to recognise immediately that a Global Plan was history. Why? Because it was predicated upon the simple idea that the world economy would be governed by (a) fixed exchange rates, and (b) a Global Surplus Recycling Mechanism (GSRM) to be administered by Washington and which would be recycling to Europe and Asia the surpluses of the United States.

What Nixon and his administration recognised was that, once the US had become a deficit country, this GSRM could no longer function as designed. Paul Volcker had identified with immense clarity America’s new, stark choice: either it would have to shrink its economic and geopolitical reach (by adopting austerity measures for the purpose of reining in the US trade deficit) or it would seek to maintain, indeed to expand, its hegemony by expanding its deficits and, at once, creating the circumstances that would allow the United States to remain the West’s Surplus Recycler, only this time it would be recycling the surpluses of the rest of the world (Germany, Japan, the oil producing states and, later, China).

The grand declaration of 15th August 1971, by President Nixon, and the message that US Treasury Secretary John Connally was soon to deliver to European leaders (“It’s our currency but it is your problem.”) was not an admission of failure. Rather, it was the foreshadowing of a new era of US hegemony, based on the reversal of trade and capital surpluses. It is for this reason that I think the Nixon declaration symbolises an important moment in postwar capitalist history.

Immediately after reading the book, I turned to Howard Davies' earlier (2010) book The Financial Crisis; who is to blame? which looked (briefly) at 39 different explanations of the global crisis. Astonishingly - although that book's opening pages mention (positively) the 1980 Brandt Commission's call for reform of the monetary system and other critiques of growth and neo-liberalism, they are then put to one side with the comment that "those arguments go beyond the scope of this book"!!! 
Of course root-and-branch critiques are more difficult to translate into the instantaneous and headline-grabbing policy-making political elites now seem to require. But for someone of Davies' calibre to dismiss proper analysis in this way is quite shocking - and tells us so much about the "commentariat" on whom we depend for our understanding. 
There is, perhaps, a lot to be said for elite, behind-the-scenes manoeuvring!! Except that all elites have their snouts in the swill.

The Global Minotaur makes us think about the different ways we try to make sense of the world; how seldom we change our thinking; and what it takes to make us do that. It will be interesting to see how seriously his analysis is taken by other economists or whether (as I suspect) he will be written off as a .....Greek....bearing intellectual gifts....