Schuld

I’m conscious that my big readers these past few weeks have been from Russian servers – although I’m not sure if they are from heartland Russia or, perhaps, from places like Azerbaijan, Kyrgyzstan and Uzbekistan where I lived for 7 years – ie friends who happen to have Russian servers…….

So far they don’t seem to have been turned off by my recent posts on German subjects – so let me pursue the thoughts aroused by the latest book I have been reading these last few days…….

  

Gunther Grass - writer, artist (not least gastronomic) and political activist – was a larger than life German who died last April at the age of 87. I was never a fan of his novels (I preferred Heinrich Boll) - although I did appreciate his social activism (so typical of the post-war German generation).

I found a lovely English first edition of his autobiography – “Peeling the Onion” – in Sofia’s great second-hand bookshop (The Elephant) a few months ago and was bowled over when I eventually got round to reading it. It’s not just that it charts so powerfully the trajectory of an intelligent youngster (from an area which is now in Poland) facing the monstrosities of the times – but the sheer poetry……….

It apparently caused a sensation in Germany  a decade ago when it revealed that he had been in a youth SS group for the last year of the war – something which he had carefully hidden until the last phase of his life……

But Timothy Garten Ash, the indefatigable chronicler of the 1980s central European spirit of revolution, was able to rise above that furore in the NYRB review (in the year of its English translation) entitled The Road from Danzig 

this is a wonderful book, a return to classic Grass territory and style, after long years of disappointing, wooden, and sometimes insufferably hectoring works from his tireless pen, and a perfect pendant to his great “Danzig trilogy” of novels, starting with The Tin Drum.

An account of his life from the outbreak of the Second World War in September 1939, when as an eleven-year-old war-enthusiast he collected fragments of shrapnel from the first fighting in his native Danzig, to the publication of The Tin Drum in 1959, “Peeling the Onion” repeatedly surprises, delights, and moves with passages of great descriptive power.

 He enables us not merely to see but to hear, touch, and smell life in the tiny, two-room apartment in Danzig where he grew up, with a shared lavatory on the staircase—“a stink-cell, the walls of which fingers had smeared.”1 From this suffocating narrowness the teenager longed to escape into what he saw as the romantic, heroic world of service in the Führer’s armed forces. So at the age of fifteen he volunteered to fight on a U-boat, but his offer was not accepted (although he was called up a year later to a SS brigade).

One of my favourite British blogs - That’s How the Light Gets In - picked up the story in a recent post-  

What follows after this last admission (which stunned the world) is a brilliant evocation of scenes that the teenager  witnessed when his unit was taken to the collapsing front in Lower Silesia,  passing through a burning Dresden: 

Soldiers young and old, in Wermacht uniforms.  Hanging from trees still bare along the road, from linden trees in the marketplaces.  With cardboard signs on their chests branding them as cowards and subversive elements. […]Off to the side I see peasants working their fields, furrow after furrow, as if nothing were wrong.  One has a cow hitched to his plough,  Crows following the plough.Then I see more refugees, filling the streets in long processions: horse carts and overladen handcarts pushed and pulled by old women and adolescents; i see children clutching dolls, perched on suitcases and rope-bound bundles.  An old man is pulling a cart containing two lambs hoping to survive the war. 

His first encounter with the enemy comes with a ‘Stalin Organ’ rocket attack that leaves bodies strewn everywhere. Soon he is stranded behind enemy lines, in woods with Russians close by. Twigs crack underfoot – someone is nearby; a figure approaches and, terrified, the young Grass sings a German melody which is answered in kind.  

Grass the memoirist can now only identify the man who appeared, the man who became his guardian angel, who led him out of the woods, over the fields and across the Russian front line, as ‘the lance corporal’.  He had fought with the Polish campaign, in France and Greece, and as far afield as the Crimea. The lance corporal is his saviour, but then, in a Soviet tank attack, the lance corporal’s legs are ripped to bits. The last sight young Gunter has of him is of him being wheeled past from a battlefield operating room, his eyes wide open, amazed and unbelieving – a legless torso. 

Soon the Fuhrer is no more and Grass, having been transferred to a military hospital in Marienbad finds himself, a seventeen-year-old priapic youth, under the care of Finnish nurses. Hungry for sex, he is even more hungry for nourishment. Finally freed from the American POW camp at Bad Aibling, a displaced person in the British Occupied Zone, Grass found his first officially-registered residence as a free man in Cologne,

‘a pile of debris with an occasional miraculously-surviving street sign stuck to what was left of a façade, or hung on a pole sticking out of the rubble, which was also sprouting lush patches of dandelions about to blossom.’

He scavenges ‘like a stray dog for food, a place to sleep, and – driven by that other hunger – skin on skin contact’. An encounter in the station waiting-room leads him to Hanover and his first job of work after the war is over: an encounter with ‘the eternal lance-corporal in his dyed Wermacht uniform’, his wooden leg stretched out in front of him, smoking a pipe filled with ‘an indefinable substance only distantly related to tobacco’.He looked as if he had survived not only the most recent war but also the Thirty Years’ War and Seven Years’ War: he was timeless. The veteran suggests Hanover where there is work underground in the potash mines.

There, Gunter finds work as a coupler boy, hooking up dumper wagons laden with potash to form underground trains.  It is there in the mine that, for the first time by his own account, he entered the world of politics, albeit still only as a teenage observer.  During breaks in the intensive work routine caused by regular power cuts, the older men would sit and argue politics – the Communists, the Nazi nostalgists, and the Social-Democrats: 

Even though I had trouble making sense of the issues that infuriated them so, I realized, coupler boy and idiot on the fringe, that when push came to shove the Communists inevitably teamed up with the Nazis to shout down the Social Democrat remainder. 

One Sunday morning Gunter’s locomotive driver took him into Hanover to hear the head of the Social Democratic Party, Kurt Schumacher, speak to an open-air audience of several thousand (mull over that number for a minute). No he didn’t speak, he screamed, the way all politicians … screamed. And yet the future Social Democrat and unflinching supporter of “ontheonehandandontheother” took to heart some of the words that the frail figure with the empty, fluttering sleeve thundered down to his ten thousand adherents in the blazing sun. 

Later, of course, Grass would be a supporter and speech-writer for Willy Brandt and his ‘policy of small steps’, and in “The Diary of a Snail” would prescribe ‘crawling shoes for the ills of progress. The snail’s track, not the fast track.  A long road paved with cobblestones of doubt.’

And, finally, to the NYRB review - 

Fear and hunger are the twin sensations that permeate these pages. His chapter about seeing action with the Waffen-SS is entitled “How I Learned Fear.”

His hunger is threefold. First, hunger for food, especially in American prisoner-of-war camps. Second, hunger for sex, described in a kind of lingering, amused physical detail that reminds me of the work of the English poet Craig Raine, whose poem “The Onion, Memory” anticipates Grass’s book-long metaphor. 

The object of Grass’s final hunger, after food and sex, is art. He calls his chapter about becoming an artist “The Third Hunger.” Battling his way, alone, with a strong will and professed egoism, up the physical and social rubble mountains of postwar Germany, he becomes first a stonemason and part-time sculptor, then a graphic artist, then a poet, and only at the end, in his late twenties, a writer of prose, inspired by Alfred Döblin’s Berlin Alexanderplatz and Joyce’s Ulysses, both discovered and devoured in the library of the well-heeled, cultivated Swiss parents of his first wife, Anna. “Anna’s dowry,” he calls it.
The memoir ends with his finding, in Paris, what would become one of the most famous first lines of any novel—“Granted: I am an inmate of a mental hospital.” And the rest is literature.

The Loss of German Identity?

In the post-war period academics were about the only British writers who tried to deal with Germany – and then only historians such as AJP Taylor and Richard Evans or political scientists such as Willie Patterson. John Ardagh was the exception with his large book on contemporary German society - Germany and the Germans - which came out in the early 1990s but was quickly out of print. Those wanting to read about Germany had to make do with books about the Nazi period or knock-abouts such as Ben Donald’s Springtime for Germany – or how I learned to love Lederhosen (2007) whose German edition ("Deutschland for Beginners") I found a good read when I picked it up in a remaindered pile for 1 euro a couple of years ago.

About five years ago, things began to change with Peter Watson’s monumental German Genius and Simon Winder’s rather eccentric Germania. Now a trickle has turned into a stream with serious books such as Germany - Memories of a Nation (focusing on cultural objects); Reluctant Meister - how Germany’s past is Shaping its European Future; and Germany - beyond the Enchanted Forest (a literary anthology) vying for space on the bookshelves. Last year a long book actually appeared with the title The Novel in German since 1990 (which is actually the only one of this new stream now to be wending its way to me)

And Berlin's new role as a tourist hotspot has produced a variety of tantalising books such as Cees Nooteboom’s Roads to Berlin (2012); Peter Schneider’s Berlin Now – the City after the Wall (2014);  and Rory McLean’s Berlin – Imagine a City (2014) – all of which await on my bookshelf for my attention

Curiously, however, still nothing on contemporary Germany to vie with John Ardagh’s book of 20 years ago!

These last few days, however, I have been devouring a large book which has just appeared - Death of a Nation; a new History of Germany - a delightful and enlightening read which I could hardly put down (despite the weight of its 700 pages). The provocative title gives a clue to the author’s approach – which focuses on the loss of German identity and lands since its heyday a century ago…..

This is a real history – whereas Watson and Winder concentrate on intellectual achievement and cultural monuments respectively. But it’s not your typical dry academic stuff! It’s highly committed and doesn’t pull punches – opening my eyes, for example, to the behavior of Czechs and Poles in the early part of the last century…..

And he really makes the history of the German lands (and key actors in both Germany and Europe) come alive in a way I have not experienced with other history books. Although I lived in Prague for more than a year in the early 90s, I never real understood the remnants I saw there of its German past (despite my 2 years of German studies at university)….Unusually for an historian he doesn’t hesitate to “contextualize” German brutalities by citing the extensive history of  massacres perpetrated by Belgian, British and Soviet authorities in Africa, Russia and Asia.

The author states clearly in his Preface his intention to 

" put in a much broader historical context the enormous human and cultural cost to Germany and German Austria of losing two world wars and the damage that has done to their sense of national identity"

This focus becomes clear in the second half of the book - which covers the fate not only of Jews but of the people who, in 2 World Wars, suddenly found themselves (by the massive border changes) living as minorities in foreign countries – a tale which has been ignored until recently in the huge literature of the second world war. As someone who has been living in central and eastern Europe for the past 25 years, I find this is an important and highly commendable objective and one rarely attempted by an outsider.

I have to confess, however, that my focus wavered in the section dealing with the death struggle of the Nazi regime (more than 100 pages after page 400). He had carried me with him until that point – and then lost me…too harrowing????

I will complete the reading and give a final assessment in a few days…….   

The Puritan Gift

I’m always on the lookout for books which challenge how we look at the world which, I’ve realized, rarely come from the incestuous and patronizing world of academia – let alone from the battalions of cheerleaders for “new management thinking”. I should know because I chose, twenty years ago as part of a career change, to undergo a crash course of reading the literature on “change management”. It’s true that I did find some useful stuff (which I summarized on pages 145-165 of my book In Transit) – particularly the (neglected) writings of Robert Quinn – but most material was pretty superficial and I probably got more out of two devastating critiques – Management Gurus – what makes them and how to become one (1993); and The Witch Doctors – making sense of the management gurus (1996)

A month or so I read a really original book - The Puritan Gift (2009) – which told a powerful story of how and why American business had changed its values in the second half of the 20th Century. A book which one of the great management writers of the 20th century - Russell Ackoff - has called 

"one of the best books I have ever read in my long life......a social history of the American nation which doubles up as a commentary on management culture"

The argument of the book (written by brothers in their 80s) is that the mid-20th century strength of American business, and the prosperity and cultural confidence that created, was due to key characteristics inherited from the country's founding fathers, the Puritan dissenters, and reinforced by many of the subsequent waves of immigrants.

The Hopper brothers list these characteristics as:

- a sense of moral purpose in life;

- a liking and aptitude for mechanical skills;

- collegiality, giving the group priority over individual interests; and organizational ability.

As they sum up: “The Puritan Gift is a rare ability to create organizations that serve a useful purpose, and to manage them well.”

The book falls into three parts. The first is a history of the early days and heyday of US corporations, which they start with Colonel Roswell Lee's Armory in Springfield, Massachussetts. It demonstrated to many subsequent businesses the importance of technical know-how, it was innovative organisationally, it was an enlightened employer, and was collegial – including outside the boundaries of the Armory itself, sharing know-how and best practice with other gun-makers.

One fascinating chapter describes the transplantation of this American approach to Japanese business through the actions of three communications engineers employed in the MacArthur occupation. The Japanese communications and electronics industry was remade in the image of the best of America, and the Hoppers attribute the success of the consumer electronics industry to the adoption of these management practices. A war-destroyed, impoverished country became the world's second biggest economy in the space of three decades.

Decay set in early, however, and the Hoppers' first villain is Frederick W Taylor. He started the process of turning efficient organisational structures into social hierarchies, with top managers increasingly less likely to be engineers or technicians working their way up from the shop floor.

Business schools continued this evisceration of the actual process of business, creating a professional cadre of managers, superior in status in pay, and with purely financial and abstract knowledge in place of the tacit skills and experience previously displayed by management cohorts. The downfall was completed by the steadily increasing celebration of greed, sucking the moral heart out of American capitalism.

It's hard to disagree with the outlines of this argument, harder to know what to do about it. The final part of the book is a brief attempt to suggest some ideas, with a list of 25 principles of Puritan management. Most of these seem very sensible without setting the heart racing. The key aspect of the Puritan Gift seems to be the sense of purpose. As John Kay has argued (in The Foundations of Corporate Success), a good business is one with a clear sense of purpose. The profits are a by-product, but without the core purpose there is no hope of sustained profitability.

Perhaps a benefit of the crisis is that the penny has dropped with some business leaders. Of course all too many are still driven by short-term financial engineering and their own bonus, linked to the share price. But it could be changing. One encouraging straw in the wind was the declaration recently by Paul Polman, chief executive of Unilever, that shareholders after the next quarterly profit were not welcome:“Unilever has been around for 100-plus years. We want to be around for several hundred more years. So if you buy into this long-term value creation model, which is sustainable, then come and invest with us. If you don't buy into this, then I respect you as a human being, but don't put your money in our company.”
(Quoted by Michael Skapinker, FT, 24/11/10)

Hugh Stretton - polymath and social democrat - RIP

Most “social scientists” are actually narrow technical specialists – in such subjects as economics or political science – loathe to threaten their career path by taking on big issues or using clear language…

Hugh Stretton, who died earlier this month at the age of 91, was a polymath whose work should be a powerful reproof to the rubbish most social scientists inflict on us. His work ranged from The Political Sciences (1969); Capitalism, Socialism and the Environment (1976); to a 900 page anti-Samuelson textbook Economics; a new introduction (1999)

Forty years on, I still feel the tingle brought on by the clarity of his writing in the second of these books - and regret that I failed to notice his 1999 blockbuster which looks to deserve inclusion in any short list of key books about Economics.

There is a nice vignette of his work in this paper which stresses the social democratic essence of the man and should shame those of us who come from that tradition to do more to reassert it….(Craig Murray has a recent post about the present UK Labour leadership contest in that vein)

Sadly, Stretton’s work does not seem to have impacted beyond Australia although Steve Keen (of Debunking Economics fame) carries on the tradition.

JK Galbraith is one of a handful of social scientists who has been able to surmount the ostracism and ridicule generally heaped on those who challenge what he called “the conventional wisdom” with superb clarity of writing……

While googling for more material on Stretton, I came across this fascinating 734 page Biographical Dictionary of Dissenting Economists which, curiously, fails to include him…….not specialist enough??????

For those wanting more on Debunking Economics – there are a couple of freebies here and here

Culinary and cultural delights despite the Sofia heat

I don’t remember such heat as I’ve experienced this past week in Sofia – although I lived through 4 Tashkent summers; 2 Baku ones and 2 Bishkek ones. 

The saving graces for the latter 2 were the sea (Caspian) and the mountain respectively. And Vitosha mountain does give Sofia delightful breezes……

The afternoon trips to the (indoor) pool also help. The (ageing) body needs such compensations – which is why I look forward to returning shortly to my (Carpathian) redoubt which was still in June a bit cold and damp…..

In the meantime I’m enjoying the culinary delights of Sofia in my new neighbourhood – Papa Joe’s and a great street café with very tasty Czech beer….And a great Chardonnay from a new winery in Svilengrad – Santa Maria, for only 3 euros….courtesy of Sofia’s best little wineshop (at the Russian Monument) owned by young Asen Tsekov

Sofia’s big event a couple of months ago was the opening of its new art complex in what was its Museum of European Art. It took me 4 hours to do it all justice – but I am a copious note-taker (for my ongoing project about Bulgarian art - Memory’s Veil – lifting the shroud concealing Bulgarian Art)

I shall shortly create a new folder about this on my Flickr file

In the meantime, here's a little paintings we were gifted this week by Yuliana Sotirova.....

German Musings

Tourism is one of the biggest global industries and yet gives us few real opportunities to fathom the soul of a country – although a retired generation with time and education is now beginning to experience some of the treasures which Europe offers…..and can access books from such publishing houses as The Collected Traveler, The Intercultural Press and Cities of the Imagination which offer great cultural insights not only into countries but even to a few cities  

Readers will know that I recently started my own contribution to this genre when my daughters started to visit me in Romania and Bulgaria – see the list of E-books at the top-right of the blog…..

Now I want to announce a little one on……..Germany based mainly on posts I made during a 10 week stay in Koln in 2013. The booklet is called German Musings

I have been out of the UK for 25 years – spending about 2 years apiece living and working in about a dozen countries on projects designed to improve the capacity of their state institutions. I was in Bulgaria in early 2013 when I was diagnosed with prostate cancer and had to decide where to go for appropriate treatment.

But first I had to learn more about the condition and its treatment – which helped me understand that the surgical treatments which had become routine were now being questioned – not just because of their invasive nature but because there was every probability that the symptoms would reappear after a few years….

 

As an expat Brit I quickly ruled out that country – partly for the delays trying to go as a citizen without medical records would entail but also because the French and German health systems were performing better (in general terms) in the various international league tables (not least WHO). But I did want to go to a country whose language I spoke.

I narrowed the internet search to hospitals in those two countries which seemed to have a good record for treating prostate cancer and E-mailed off some queries….The French hospitals were quickly ruled out for two reasons –

-       Their focus seemed to be on surgery and I was determined to avoid that

-       They required bureaucratic paperwork which annoyed me

The West German Prostate Centre (Koln) simply asked me to send electronic copies of the diagnosis I had received and quickly gave a detailed commentary which persuaded me that this was the place to go. A few weeks later, on the first of May I touched down in Koln and remained there until mid-July – undergoing initially daily radiation treatment and then three minor operations…….

Time weighed - but Daniela and I were lucky in the choice of flat we had made – even although it involved a couple of moves….

We were in the outskirts - with great parks to walk in (the cemetery was our favourite); trams to ride; and bookshops to visit…..Unhappily. however, we found few people to talk with – apart from our last landlord……

When I eventually was able to connect with the internet, I started to blog and surf again (the habit had started in 2009) and that is what forms the core of this little offering….

I hardly mentioned Koln in the posts – let alone the treatment I was undergoing. This was rather an opportunity to sink into another culture – using the immediate environment as a trigger for questions and casual insights…… One of my delights, for example, was the open-air charity stall near my treatment which offered free second-books……..

I think you'll find the booklet an interesting read - and the annotated reading list is, I think, quite original.........

Why are most of us Financial Illiterates?

Readers know that, despite my 4 years of economic studies (and some years actually teaching it to others!), I make no claim to understand the nature of the global plague that has befallen us in the past few decades. I buy the books to help me clear the confusion those studies gave me – but find that my eyes soon glaze over….a list of books I pledged to read some 9 months ago lies almost untouched – ditto others I mentioned 3 months back.

Economics was like a snake for me – I was fascinated but scared by it. I toiled in the early 1960s to make sense of its focus on marginal calculations and “indifference curves” and probably took only the following lessons from my four years engrossed in economics books

- the strictness of the preconditions which governed the notion of (perfect) competition;

- the notion of profit-maximisation;

- the belief (thanks to the writings of James Burnham and Tony Crosland) that management (not ownership) was the all- important factor

- trust (thanks to Keynes whose work was dinned into me) in government to deal with such things as “exuberant expectations”  

- the realization (through the report of the 1959 Radcliffe Commission) that cash was but a small part of money supply. Financial economics was in its infancy then.

For someone with my education and political motivation and experience, however, my continued self-confessed financial illiteracy is almost criminal but not, I feel, in any way unusual. 
Most of us seem to lack the patience to buckle down and take the time and discipline it needs to understand the operation of the system of financial capitalism which now has us all in its thrall.
We leave it to the "experts" and have thereby surrendered what is left to us of citizenship and political power.
A future post will hopefully try to explore this phenomenon .

Two rare books which survived the “glaze-over” test were –

-       The Financial Crisis – who is to blame (2009) by the ex-Chair of the British Financial Services Agency (Howard Davies) which identified and explored 39 different explanations of its possible cause. You can see some overheads and videos from his various presentations here, here and here

-       Rebalancing Society (2014) by Henry Mintzberg

Writing about the Greek crisis tends to be governed by tomorrow’s headlines but there is one blog which gives a consistently strategic perspective and its latest post gives some useful graphs and analysis -

Greece’s public and private debt burden is just too large for the Greek economy to service, despite already squeezing Greek labour to the death – literally. The Greek public debt burden arose for two main reasons. Greek capitalism was so weak in the 1990s and the profitability of productive investment was so low, that Greek capitalists needed the Greek state to subsidise them through low taxes and exemptions and handouts to favoured Greek oligarchs. In return, Greek politicians got all the perks and tips that made them wealthy too This weak and corrupt Greek economy then joined the euro and the gravy train of EU funding was made available and German and French came along to buy up Greek companies and allow the government to borrow and spend.
The annual budget deficits and public debt rocketed under successive conservative and social democratic governments. These were financed by bond markets because German and French capital invested in Greek businesses and bought Greek government bonds that delivered a much better interest than their own. So Greek capitalism lived off the credit-fuelled boom of the 2000s that hid its real weaknesss.

But then came the global financial crash and the Great Recession. The Eurozone headed into slump and Eurozone banks and companies got into deep trouble. Suddenly a government with 120% of GDP debt and running a 15% of GDP annual deficit was no longer able to finance itself from the market and needed a ‘bailout’ from the rest of Europe.

But the bailout was not to help Greeks maintain the living standards and preserve public services during the slump. On the contrary, living standards and public services had to be cut to ensure that German and French banks got their bond money back and foreign investment in Greek industry was protected. So through the bailout programmes, foreign capital was more or less repaid in full, with the debt burden shifted onto the books of the Greek government, the Euro institutions and the IMF – in other words, taxpayers.

Greece was ultimately committed to meeting the costs of the reckless failure of Greek and Eurozone capital.The Troika’s plan was to make the Greeks pay at the expense of a 25% fall in GDP, a 40% drop in real incomes and pensions and 27% unemployment rate.
·         The government deficit was turned into a ‘primary surplus’ within the shortest period of time by any modern government. Greece has reduced its fiscal deficit from 15.6 percent of GDP in 2009 to 2.5 percent in 2014, a scale of deficit reduction not seen anywhere else in the world.
·         Total public sector employment declined from 907,351 in 2009 to 651,717 in 2014, a decline of over 255,000. That is a drop of over 25%.
·         Greece has gone from one of the lowest average retirement ages to one of the highest. In this sense, Greece had undertaken the most significant pension reform in Europe even before the latest demands of the Troika.

This was austerity at its finest.But the horrible irony is that this policy failed. Far from recovering, the Greek capitalist economy went into a deep depression.…….That the debt cannot be repaid is now openly admitted by the IMF in its latest debt sustainability report on Greece (here). The IMF now recognises that it got its forecasts of recovery hopelessly wrong

….. Whether there is now a deal with the Troika or alternatively, Grexit, the Greek economy needs to grow. Only this can make any public or private debt burden disappear. Take the US. The US public sector debt is huge at nearly 100% of GDP. But the US can service that debt easily because it has nominal GDP growth of just 4% a year. And the interest costs on its debt are very low at just 3% a year. As growth is higher than the interest cost on the debt, the US government can run a deficit of taxes versus spending (before interest) of 1% of GDP a year, and its debt ratio will still stay stable (but not fall). 

Greece, on the other hand, in 2011, had interest costs of over 4% on its debt and nominal GDP of -5% a year, so it needed a government surplus of 9% of GDP just to keep the debt from rising. The government was applying austerity but still a deficit. Even the small debt restructuring of 2012 in the second bailout program did not stop the rise in the debt ratio. It is still rising.

Also have a look at this very clear discussion - involving someone whose name has been cropping up in the Real Economics website - Michael Hudson. Also this 2012 discussion - how finance capitalism leads to debt servitude

Libraries and writers

It was some decades ago I first realised how few books are produced to help people understand a subject. Publishers need to make their books stand out in a very crowded market – they therefore select books which can claim to distinctiveness, for which read "market niche" or "narrowness".

Of course we have the “Dummy” and the Very Short Introduction series catering for those who wish to get the big picture. Sadly, however, they tend to be regarded with some disdain by publishers, writers and readers alike. Personally I have found the few books I have read in the latter series both original and clearly-written - and one of the authors actually has a blog which gives practical examples of the issues his book explores.

In the past 6 months, I’ve produced 4 E-books (see top right of the blog for the list) three of which have are my posts of the past 4 years or so on a subject I was trying to understand - with the posts separated into a logical structure and prefaced by an introduction. 
I find it both salutary and stimulating to reread them with a fresh eye and to ask, in editorial style, “what is this actually trying to say…how can I express it better?.....where is the narrative - and how can it flow better??”  And, to help identify such things, I have to print and bind the book – I find I can’t edit onscreen…..

Each of the books retains the structure of the original blog – which I like to think is more user-friendly for the reader…..I hate these books which consist of endless pages of text, unrelieved by headings….I need to get a fix on the writer’s thinking by seeing some headings…..

But somehow I can’t complete the work. I know that I need to be even more disciplined in my questioning of each post. Ideally I should actually attach to each post a brief summary and identify the inconsistencies, repetitions etc But that’s too much like work!!!

So for past few days have been mooching in the library here in my mountain house…. which has a wide range of subjects and titles. I was reading recently that Susan Sontag’s library consisted of 25,000 books – and Umberto Eco’s famous library must consist of the same number….My nomadic life has meant that I keep losing my library – but the last few years has allowed me to develop quite a respectable library here in the mountain house which must amount to about 2,000 books 

Amazingly, as I have prowled amongst its shelves (which cover shelves on the top of each door and cascade over stairs) I can’t find anything to grab my interest – although I was moved this past couple of weeks by some books about economic ownership (see the last 2 posts); a highly original account of the source of American economic strength and decline written by a couple of 80-year old Scottish engineer emigres - The Puritan Gift; and Patrick Leigh-Fermour – an Adventure.

But I just couldn’t find anything else to whet my appetite…..Typically, I assume the grass is greener elsewhere and duly sent off for the books which had been languishing on my Amazon wishlist.

The first three are by authors who have given me much pleasure in the past - the first 2 being new

The Hidden Pleasures of Life: A New Way of Remembering the Past and Imagining the Future by Theodore Zeldin

The Second Curve: Thoughts on Reinventing Society by Charles Handy 

The Proper Study Of Mankind: An Anthology of Essays (Vintage Classics) by Isaiah Berlin – whose scintillating essays I first came across at University.

Despite my disillusionment with economics and management, I am always a sucker for a new “take” on the subjects and was intrigued by -

Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness by Frederic Laloux

Economics of the 1% (Anthem Other Canon Economics) by John Weeks

I am always intrigued by material on Germany (see my posts of May and June 2013 when I spent 10 weeks there) and found the idea of a history written by a non-academic very appealing and therefore look forward to -

Death of a Nation: A New History of Germany by Stephen R A'Barrow; as well as a collection of historical reviews - In Defence of History by Richard Evans

Finally The Net Delusion: How Not to Liberate The World (2012) by Evgeny Morozov whose writings I find very stimulating; and the only novel, another of the rediscovered books by Hans Fallada - Iron Gustav: A Berlin Family Chronicle (Penguin Translated Texts)  

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

Beacons of Hope

Employee-ownership is not the most obvious of subjects to set one's spirits soaring  - but two books I’ve just been reading on this subject are positively inspirational and probably the best guides available for those of us who have been searching for a plausible challenge to the amoral corporate power tearing our societies and planet apart. The  books are -
Beyond the Corporation: Humanity Working by David Erdal (2011); and 
Owning Our Future: The Emerging Ownership Revolution by Marjorie Kelly  (2012)

Each complements the other beautifully - Erdal’s book uses the story of the employee buy-out he led in the 1980s of his family’s Fife-based paper business (Tullis Russell) as an introduction to employee-owned businesses the world over (amongst many others, the John Lewis Partnership in the UK, the Mondragón group in Spain and the US supermarket chain, Publix) – and then examines the history of the legal structures that underpin modern capitalism and convincingly exposes the gross errors in the conventional models economists use to describe people and businesses (which he labels ‘just-so stories’) - showing how and why employee-owned businesses are superior to publicly listed companies in every way.

Marjorie Kelly’s book helps us understand the “financialisation” which has overtaken companies in the last thirty years – I was able to download the first draft of the book (minus a couple of the chapters) by simply tapping the title and author’s name and the preface and first chapter can be read here   

The first section of Erdal’s book demolishes the predictions made by traditional economists about the supposed efficiency of the Market (a word that Erdal capitalises) and the supposed flaws of employee-owned concerns: 

Very little of the money raised by public shares is invested in strategically building businesses – most of it is used for (often destructive) acquisitions and lining the pockets of shareholders and top management.For companies to flourish in the long term, employees must have a real sense of ownership. No management techniques can substitute for the rights and benefits of genuine ownership, but even the managers of employee-owned concerns need to work hard to ensure workers feel involved.

Communication is key: managers must make information fully and openly available, must listen, and must allow employees to make contributions to improving how things are done.Although employee-owners need leaders, given the same quality of leadership employee-owned businesses always outperform those owned by outsiders. The former are more productive, they survive better in bad times, they have lower employee turnover and absenteeism and they give better service (the top-rated companies for service in both the UK and the USA are employee-owned).

Employees in employee-owned companies learn more participation skills, they are better trained, they contribute more innovative ideas, they implement change quicker, and they are wealthier, with communities in which they live benefiting from both money and skills.Many economists are blind to all the above, repeatedly citing old papers based on nothing but theory, and falsely claiming that such organisations will be overwhelmed by free-riders, that decision-making will be impracticably slow, and that employee-owners will forever be falling out with each other. These unevidenced views of economists place significant obstacles in the way of those hoping to set up employee-owned concerns.

As he ironically puts it -

‘Ironically, capitalism itself is built on the idea that owners will work more energetically and creatively, and with greater commitment, than people who are employed by others. Instead of following through [this] logic […], the owners of capital […] have built company structures in which employees have none of the participation of ownership: they have no right to influence the choice of leader or the policies set, and no right to participate in the wealth that they create together. The vast majority of people are systematically deprived of any ownership stake. It is as if they are seen as coming from a different species, insensitive to the galvanising effect of ownership.’

The second section describes the horror of working for publicly traded companies subject to so-called ‘market discipline’ and contrasts this with the experience of employee-owners, and shows why ‘market discipline’ is powerless to curb excessive executive pay and does nothing to promote stability and innovation. It also relates the jaw-dropping history of the employee contract (which Erdal contends violates what should be inalienable rights) and of the present economic system – rigged from the outset in the favour of the rich and powerful.

The impact of asset-stripping by private equity investors on the employees and customers of Debenham’s, as well as its suppliers, is powerfully conveyed. After all but destroying staff morale, delaying payment for suppliers, decreasing investment in new stores and the refurbishment of old ones, and making various cut-backs and redundancies, investors left the company nearly £1 billion in debt. 

.........Crucial to the success of all employee-owned businesses are consultation and keeping employees informed: ‘If it feels to the managers like overkill – as if they are giving out too much information – then they may be close to giving out enough’. People must also be allowed to make a difference, and increased efficiency should not result in people being sacked – they can be redeployed or given further training. Although hierarchies do exist in employee-owned concerns, their purpose is simply ‘to enable the front-line workers to be wholly effective’.

Sustaining employee ownership requires some thought: ‘The structuring of the ownership is of crucial importance in ensuring longevity. When all the shares are held by the individual employees a substantial ‘repurchase liability’ – the need eventually to find the cash to buy back the shares – builds up.’ Erdal discusses this topic in some depth, suggesting various alternatives and criticising US ESOPs (Employee Stock Ownership Plans, where shareholding trusts take the form of pension funds) as being ‘vulnerable to Wall Street types’. He champions the capital account system used by Spain’s Mondragón group, and urges tax concessions to support this.
However employee-owned businesses are structured, Erdal believes that in the end they can ‘be made effective only through the courage, energy and personal ethics of those involved’. Nonetheless, he maintains that they are certainly less vulnerable to abuse of power by CEOs than public corporations where ‘CEOs are running away with the loot’.......

.......Contrary to economists’ predictions, reinvestment is not a problem for employee-owned concerns as people generally ‘want to keep the company strong for their own sakes and they want to pass it on strong to the next generation’. As Erdal says, ‘They are much more than the money-grubbing automata of economists’ models’.

If by this stage you are still not persuaded of the virtues of employee-ownership, perhaps you will find Erdal’s measurement of the wider effects of employee ownership on communities in Italy convincing. Erdal compared three similar towns, differing only with regard to the proportion of their residents working for employee-owned concerns. He found that where many people worked for such businesses, residents lived a lot longer, they enjoyed larger and more supportive social networks, they perceived political authorities as being more on their side, more voted, they believed that domestic violence was less prevalent, they donated more blood, their children stayed at school longer and did better, and, ‘to a radically greater extent’, they continued being trained and educated throughout their lives. Most intriguingly, they apparently didn’t bother buying big cars to show off their wealth, despite having higher disposable incomes! Employee-ownership kills conspicuous consumption?

Introducing the Romanian Realists

I’ve been stuck this past week on the hot Bucharest plain - so not exactly fizzing with ideas. I took the opportunity to pull together some of the material which has been lying on my PC about the Romanian Realist painters of the late  19^th and early 20^th Century

Introducing the Romanian Realists is 200 pages long – and excludes the well-known work of TheodorAmman, Nicolae Grigorescu, Ion Andreescu, Camil Ressu, Stefan Luchian and Nicolae Tonitsa!!

Why are the Brits schizophrenic?

The British public remains proud of its National Health Service – although electors have shown little apparent concern at the non-stop organisational upheavals to which it has been subject over the past 30 or so years. The latest survey showed that 89% of adults in Great Britain support a national health system that is tax-funded, free at the point of use and provides comprehensive care for all citizens.

Oddly, however, 43% of those polled didn’t seem to care whether the service was provided by the NHS or another provider (e.g. private company or not-for-profit body such as a charity or social enterprise). 39% expressed an active preference for this care to be delivered by the NHS.

Although I’ve been out of the country for 25 years I understand this apparent schizophrenia.

I was heavily influenced by the anti-institutionalism of the post ‘68 period – seeing with my own eyes the complacency and protectionism of local bureaucracies. I avidly devoured the critiques of The Local State and the works of Ivan Illich (of Deschooling Society and Medical Nemesis fame)

I belonged to that small wing of the Labour Party which regretted that the party had, in the 1940s, turned its back on its “voluntarist” tradition and opted for the centralisation model (Egalitarian thought and labour politics – retreating visions; Nicolas Ellison (1994) nicely sets out the three strands (or “visions”) of Labour thought) 

Presented, however, with a choice between professional or managerial power, I opted for the latter - consoling myself that the “new managers” being promoted in the 1970s in the wave of enthusiasm for corporate management would challenge the complacency I saw. 

I never imagined that the managers would take over – and pave the way for the privatisation and commodification of everything!

At a personal level, I have always been wary of the “health system” – seeing its overworked doctors as too much as the prey of the pharmaceutical industry; and the fashion for monstrous new “factory” hospitals as horrific expressions of gigantism. Hence my activity in the World Health Organisation’s Healthy Cities Network – with its emphasis on health promotion and prevention.

And, from a distance, I have followed with distaste the various scandals which have erupted whether about medical malpractice or hospital mismanagement….

And yet I have never supported the neo-liberal project of privatising health care.

My partner challenged me yesterday on this apparent contradiction – how could I still support “the British model” given the views I have expressed over the years (let alone my own rejection of the idea of ever being hospitalised)?

I knew that the French health system represented one of the world’s best – and the US one of the worst but had been getting conflicting signals recently from the various international league tables with which we are now assailed. One table (in 2007) told me that the NHS was only 17^th globally for healthcare systems. Another (just a few months ago) focused on health and wellbeing (ie outcomes) and put Britain in 27^th place. But a survey conducted by The Commonwealth Fund last year ranked the UK first overall, scoring it highly for its quality of care, efficiency and low cost at the point of service, with Switzerland coming an overall second.

What are mere mortals to make of such contradictory reports? Fortunately there is help to hand – for example from something called “The Health Foundation” which published earlier in the year this short pamphlet which shines light on both the strengths and weaknesses of the British system. Knowing the scale of money from dubious sources behind Think Tanks, I checked out their website which gives reassuring answers to the obvious questions. Of course there are other, even better-known places where such analysis is conducted (such as the King’s Fund)…..  

But perhaps the most interesting find was this survey commissioned by the Health Care Commission

Views of the NHS and Healthcare have to be viewed at three levels.
Views of the NHS as a whole are often very different from, and influenced by different issues, than public perceptions of local health services, and different again from patient perceptions.

- The NHS as a whole, and in particular the principles it embodies, remains a huge source of latent pride. It is still perceived by the British general public to be one of the best of its kind in the world. People also see the NHS as critical to society, and despite concerns about its management, they feel it needs to be protected and maintained rather than re-invented.

- Despite this, the NHS regularly features as one of the biggest issues facing Britain today for the public. In early 2006, levels of optimism about the future prospects of the NHS reached their lowest recorded levels since 2002.

- However, public satisfaction with the NHS at a national level, and patient satisfaction, have remained relatively stable since 2000 and have recently shown signs of improvement. Patient ratings of their treatment are always far higher than ratings of the NHS as a whole.
 Our analysis highlights the impact of media coverage and politics on the NHS at a national level, where people rely on media coverage to form judgement.

Not surprising that the barrage of hostile comment about health care from those in the pay of corporate power (waiting to pick up rich pickings) has been having an affect.

I remain an unrepentant “mutualist” – believing that healthcare is too important to be left to commercial, managerial, political or medical interests on their own. It needs to be locally owned – with citizen interests balancing the others…..

I appreciate that this is a minority position which may indeed be seen as positively "cavalier" (Don Quixote) these days - so will try in future posts to explore what might be involved.....