Can capitalism be reimagined ?(5)

 Woke Capitalism. How Corporate Morality is Sabotaging Democracy

The Oxford dictionary’s definition woke refers to being ‘well informed’ or ‘alert to racial or social discrimination and injustice’.

Essentially, we have two opposing positions. One, from a liberal left position such as Elizabeth Warren’s, agrees that corporations should genuinely and authentically support the broad interests of society rather than just focusing on shareholders. Another, from a traditional right-wing perspective, believes that corporations should be purely economic entities and not interfere directly in social or political matters. This book has taken a third position. That is, despite how it looks on the surface, corporate engagement with progressive politics is harming democracy and preventing actual progress. What this means is that being critical of woke capitalism does have to necessitate a dismissal of  progressive politics. Waking up to the realities of woke capitalism means not being fooled into thinking that it represents any genuine underlying change to the primary interests that capitalist corporations are willing or able to pursue.

The real effects of woke capitalism are not about the success of left activism in gaining support from big business. They are about ensuring that there is no fundamental reform of the dominant neoliberal world order that has exacerbated inequality, fuelled fascist populism, and stood by as the climate crisis escalates. Dismissing woke capitalism as just another example of virtue signalling is counterproductive in that it fails to take seriously the real damage that woke capitalism can do. Laughing at corporate progressiveness as a superficial and inauthentic business practice entirely underestimates its real power. This is not simply about the short-term profitability assumed by the ‘go woke, or go broke’ credo. Going woke is about ensuring that market capitalism can continue on the trajectory that it has been on for the past 40 years. Woke capitalism is a strategy for maintaining the economic and political status quo and for quelling criticism.

Creative destruction or how to save capitalism from the capitalists

The Power of Creative Destruction. Economic Upheaval and the Wealth of Nations

This book is an invitation to a journey: a journey through economic history, more specifically a journey to explore the enigmas of economic growth through the lens of creative destruction.

Creative destruction is the process by which new innovations continually emerge and render existing technologies obsolete, new firms continually arrive to compete with existing firms, and new jobs and activities arise and replace existing jobs and activities. Creative destruction is the driving force of capitalism, ensuring its perpetual renewal and reproduction, but at the same time generating risks and upheaval that must be managed and regulated.

This is precisely what this book explains. And behind the driving force of capitalism, you'll find ideas, as Deirdre McCloskey dixit. 

From Shumpeter:

The first idea is that innovation and the diffusion of knowledge are at the heart of the growth process.

The second idea is that innovation relies on incentives and protection of property rights

The third idea is creative destruction: new innovations render former innovationsobsolete. In other words, growth by creative destruction sets the stage for apermanent conflict between the old and the new: it is the story of all incumbent firms, all the conglomerates, that perpetually attempt to block or delay the entryof new competitors in their sectors.

Creative destruction thus creates a dilemma or a contradiction at the very heart of the growth process. On the one hand, rents are necessary to reward innovation and thereby motivate innovators; on the other hand, yesterday’s innovators must not use their rents to impede new innovations. As we mentioned above, Schumpeter’s answer to this dilemma was that capitalism was condemned to fail precisely because it was impossible to prevent incumbent firms from obstructing new innovations. Our response is that it is indeed possible to overcome this contradiction, in other words to regulate capitalism or, to take the title of Raghuram Rajan’s and Luigi Zingales’ 2004 book, to “save capitalism from the capitalists.”

PS. Shelling on the strategy of conflict.

The perfect storm of surveillance capitalism

THE AGE OF SURVEILLANCE CAPITALISM: The Fight for a Human Future at the New Frontier of Power

THE DEFINITION

1. A new economic order that claims human experience as free raw material for hidden commercial practices of extraction, prediction, and sales;

2. A parasitic economic logic in which the production of goods and services is subordinated to a new global architecture of behavioral modification;

3. A rogue mutation of capitalism marked by concentrations of wealth, knowledge, and power unprecedented in human history;

4. The foundational framework of a surveillance economy;

5. As significant a threat to human nature in the twenty-first century as industrial capitalism was to the natural world in the nineteenth and twentieth;

6. The origin of a new instrumentarian power that asserts dominance over society and presents startling challenges to market democracy;

7. A movement that aims to impose a new collective order based on total certainty;

8. An expropriation of critical human rights that is best understood as a coup from above: an overthrow of the people’s sovereignty.

Last month in my post on the book: Modern monopolies I wanted to highlight the current trend towards monopolies using platforms as a business model. Now you may add a complementary perspective with the book: The age of surveillance capitalism. While the former emphasizes the business perspective, the later focus on behavioral prediction surplus and how it is generated. It provides a social perspective of the current "surveillance capitalism". In my opinion there is a lot of current economy that already confirms this view, it is not a future expectation.

Our lives are rendered as behavioral data in the first place; ignorance is a condition of this ubiquitous rendition; decision rights vanish before one even knows that there is a decision to make; there is no exit, no voice, and no loyalty, only helplessness, resignation and psychic numbing; encryption is the only positive action left to discuss.

Surveillance capitalists take command of the essential questions that define knowledge, authority, and power in our time: Who knows? Who decides? Who decides who decides? 

As you may imagine, this is a book that once you started it's impossible to stop reading. Highly recommended if you want to understand current hot topics and social trends.
A perfect storm is an event in which a rare combination of circumstances drastically aggravates the event. This is exactly what we have right now in front of us, and as we are inside the wave we are not able to recognise what's going on.

Anthropocene, green arithmetic and capitalocene

 Anthropocene or Capitalocene? Nature, History, and the Crisis of Capitalism

Formulated by Paul Crutzen and Eugene Stoermer in 2000, the Anthropocene concept proceeds from an eminently reasonable position: the biosphere and geological time has been fundamentally transformed by human activity. A new conceptualization of geological time—one that includes “mankind” as a “major geological force”—is necessary. This was a surely a courageous proposal. For to propose humanity as a geological agent is to transgress one of modernity’s fundamental intellectual boundaries. Scholars call this the “Two Cultures,” of the “natural” and “human” sciences (Snow 1957). At its best, the Anthropocene concept entwines human history and natural history—even if the “why” and the “how” remain unclear, and hotly debated. 

 Green Arithmetic. It is a curious term, but I can think none better to describe the basic procedure of environmental studies over the past few decades: Society plus Nature = History. Today it is Humanity, or Society, or Capitalism plus Nature = Catastrophe. I do not wish to disparage this model. It has been a powerful one. It has provided the philosophical basis for studies that have delivered a wealth of knowledge about environmental change. These studies, in turn, have allowed a deeper understanding of the what of the biosphere’s unfolding “state shift.” But they have not facilitated—indeed they have stymied—our understanding of how the present crisis will unfold in a world-system that is a world-ecology, joining power, nature, and accumulation in a dialectical and unstable unity.

 The Capitalocene. As I think the contributions to this volume clarify, the Capitalocene does not stand for capitalism as an economic and social system. It is not a radical inflection of Green Arithmetic. Rather, the Capitalocene signifies capitalism as a way of organizing nature—as a multispecies, situated, capitalist world-ecology. I will try to use the word sparingly. There have been many other wordplays—Anthrobscene (Parikka 2014), econocene (Norgaard 2013), technocene (Hornborg 2015), misanthropocene (Patel 2013), and perhaps most delightfully, manthropocene (Raworth 2014). All are useful. But none captures the basic historical pattern modern of world history as the “Age of Capital”—and the era of capitalism as a world-ecology of power, capital, and nature.

Can capitalism be reimagined?

Reimagining Capitalism in a World on Fire

A new book says that reimagining is possible. Rebecca Henderson is a well known reference for her studies on pharmaceutical innovation for decades. Beyond pharma, she is recognised by her works on innovation in general. Now, she has released a book on Reimagining Capitalism and this may sound a huge goal. Rebecca provides clear hints about what can be done, and says:

I spend a good chunk of my time now working with business people who are thinking of doing things differently. They can see the need for change. They can even see a way forward. But they hesitate. They are busy. They don’t feel like doing it today. It sometimes seems as if I’m still at the bottom of that ladder, looking up, waiting for others to take the risk of acting in new and sometimes uncomfortable ways. But I am hopeful. I know three things.
First, I know that this is what change feels like. Challenging the status quo is difficult—and often cold and lonely. We shouldn’t be surprised that the interests that pushed climate denialism for many years are now pushing the idea that there’s nothing we can do. That’s how powerful incumbents always react to the prospect of change.
Second, I am sure it can be done. We have the technology and the resources to fix the problems we face. Humans are infinitely resourceful. If we decide to rebuild our institutions, build a completely circular economy, and halt the damage we are causing to the natural world, we can. In the course of World War II, the Russians moved their entire economy more than a thousand miles to the east—in less than a year. A hundred years ago, the idea that women or people with black or brown skin were just as valuable as white men would have seemed absurd. We’re still fighting that battle, but you can see that we’re going to win.
Last, I am convinced that we have a secret weapon. I spent twenty years of my life working with firms that were trying to transform themselves. I learned that having the right strategy was important, and that redesigning the organization was also critical. But mostly I learned that these were necessary but not sufficient conditions. The firms that mastered change were those that had a reason to do so: the ones that had a purpose greater than simply maximizing profits. People who believe that their work has a meaning beyond themselves can accomplish amazing things, and we have the opportunity to mobilize shared purpose at a global scale.

 The titles of the chapters speak by themselves. You'll get the flavour of a great book, and a personal message (in chapter 8). And don't miss chapter 4 on Aetna CEO and the purpose of the firm.

1 “WHEN THE FACTS CHANGE, I CHANGE MY MIND. WHAT DO YOU DO, SIR?”
Shareholder Value as Yesterday’s Idea
2 REIMAGINING CAPITALISM IN PRACTICE
Welcome to the World’s Most Important Conversation
3 THE BUSINESS CASE FOR REIMAGINING CAPITALISM
Reducing Risk, Increasing Demand, Cutting Costs
4 DEEPLY ROOTED COMMON VALUES
Revolutionizing the Purpose of the Firm
5 REWIRING FINANCE
Learning to Love the Long Term
6 BETWEEN A ROCK AND A HARD PLACE
 Learning to Cooperate
7 PROTECTING WHAT HAS MADE US RICH AND FREE
 Markets, Politics, and the Future of the Capitalist System
8 PEBBLES IN AN AVALANCHE OF CHANGE
 Finding Your Own Path Toward Changing the World

In search of the balance between government and market

THE LIMITS OF THE MARKET: The Pendulum between Government and Market

Thirty years ago I bought a book that was a key reference MARKETS OR GOVERNMENTS : CHOOSING BETWEEN IMPERFECT ALTERNATIVES. The focus was clear, the government should enter when there is a market failure and try to curb it. This was the message and has been the message for many years. Now we know that the approach was too simplistic. If you want to understand an updated approach to the same issue, check the new book by Paul de Grawe, THE LIMITS OF THE MARKET: The Pendulum between Government and Market. A well written and accessible book that helps to remake the arguments with the evidence of the past years. The chapters:

The Great Economic Pendulum
The Limits of Capitalism
External Limits of Capitalism
Internal Limits of Capitalism
The Utopia of Self-Regulation in the Market System
Who can Save the Market System from Destruction?
External Limits of Governments
Internal Limits of Governments
Who is in Charge? Market or Government?
Rise and Fall of Capitalism: Linear or Cyclical?
The Euro is a Threat to the Market System
The World of Piketty
Pendulum Swings between Markets and Governments

At the end of the book there are two issues that concern the author: inequality and the degradation of environment. The need for internation cooperation on taxation is critical for the first issue, and the functioning of democratic institutions for both. His final comment is a call for action:

The Myth of Sisyphus

Sisyphus was a Greek king who felt stronger and wiser than Zeus, and was punished for his hubris. He was sentenced to push a rock up a mountain every day, after which the rock would roll back down each evening. The following day Sisyphus had to start all over again, continuing for eternity. In his essay The Myth of Sisyphus Albert Camus gave an existentialist interpretation of this well-known Greek myth. Camus sees Sisyphus’s punishment as a metaphor for the absurdity of life. How should we deal with this absurdity, he wonders? One option is to commit suicide. Camus rejects this option. Instead he suggests that we should rebel against the absurdity of life by throwing ourselves into it, living intensely, and being creative. The revolutionary hero is the one who despite the absurdity and knowing that his rebellion will eventually achieve nothing, still sets the rock in motion and remains happy. ‘Il faut s’imaginer Sisyphe heureux’ (‘One must imagine Sisyphus happy’), Camus decided.
That is the position I would like to offer as a guiding principle for the end of this book. It will be extraordinarily difficult to prevent future catastrophes. It may even already be too late. (I am at least a little more optimistic than Albert Camus with his Sisyphus interpretation, which is very bleak indeed.) We have a small chance of preventing decline with the reforms I outlined above. But even if that does not work, we are left with the option of doing as Sisyphus did, of starting again each day. It is the only way of giving meaning to our existence. If we do not take action, our grand children will not forgive us for failing to try to save them. That in itself is sufficient motivation to persist.

Can capitalism be reimagined? (4)

Rethinking Capitalism lectures

From UCL Institute for Innovation and Public Purpose;

Western Capitalism is in crisis, with falling productivity, investment and living standards, widening inequality, financial instability and the growing threat of climate change. This undergraduate module provides students with a critical perspective on these ‘grand-challenges’ and introduces them to new approaches to economics and policy which challenge standard thinking.
The module draws on the book “Rethinking Capitalism”, edited by Mariana Mazzucato (Director of IIPP) and Michael Jacobs (Visiting fellow in the UCL School of Public Policy). It features guest academic lectures from some of the chapter authors which can be viewed below. These academic lectures are combined with presentations by policy makers working at the frontline of the issues under discussion

Broken markets create broken politics

THE MYTH OF CAPITALISM
Monopolies and the Death of Competition

These are some selected key messages from the book:

Capitalism without competition is not capitalism.

Competition matters because it prevents unjust inequality, rather than the transfer of wealth from consumer or supplier to the monopolist. If there is no competition, consumers and workers have less freedom to choose. Competition creates clear price signals in markets, driving supply and demand. It promotes efficiency. Competition creates more choices, more innovation, economic development and growth, and a stronger democracy by dispersing economic power. It promotes individual initiative and freedom. Competition is the essence of capitalism, yet it is dying.

Competition is the basis for evolution. An absence of competition means an absence of evolution, a failure to adapt to new conditions. It threatens our survival. There are fewer winners and many losers when there is less competition. Rising market power by dominant firms has created less competition, lower investment in the real economy, lower productivity, less economic dynamism with fewer startups, higher prices for dominant firms, lower wages and more wealth inequality. The evidence from economic studies is pouring in like a flood.

As you may imagine, what the authors do is precisely to show the evidence of the monopolist and oligopolist activities in the US markets. Our close markets are in the same situation and antitrust authorities are failing to preserve competition. Unfortunately, recent legislation has not helped to reverse the trend. Higly recommendable book.

The author 6 years ago at TV3:

Can capitalism be reimagined? (2)

Capitalism at Risk: Rethinking the Role of Business

Ten years after its first release, a new and updated edition of this book is available. Let me say that the book by Rebecca Henderson is better than this one. Anyway, this is an additional reference to take into account.

WHAT, THEN, should be done about the challenges facing market capitalism? And what, specifically, is the role of business in this effort? In our conversations, we heard answers reflecting a spectrum of views. Although executives in our forums did not use our terminology, their positions clustered into four broad categories that we term business as bystander, business as activist, business as innovator, and business as usual.

Ten years after, the same views...(?)

Can capitalism be reimagined? (3)

The future of capitalism

Martin Wolf said that this book was one of his main references. And I agree, it contains many well structured messages. Specially, it links economics with politics, quite a difficult issue:

 Our political systems are democratic, but the details of their architecture have increasingly inclined them to polarization. Most of our voting systems favour the two largest parties. So, the menu of choice facing voters depends upon what these two parties offer. The key dangerous step has been that, in the name of greater democracy, in many countries the major political parties have empowered their members to elect their leaders. This has replaced a system in which the leader of a party was drawn from among its most experienced people, and often chosen by its elected representatives.

Leaders can promote new narratives, but the decline of trust in political leaders has inverted authority; people pay more attention to those at the hub of their social networks than to the talking heads on the television. The networks, however, have become self-contained echo-chambers and so we even lack the common space in which to communicate. This is enormously damaging because participation in a common network constitutes the common knowledge that we all hear the same narratives.

 Reduced to a sentence, shared identity becomes the foundation for far-sighted reciprocity. Societies that succeed in building such belief systems work better than those based on either individualism or any of the revivalist ideologies. Individualist societies forfeit the vast potential of public goods. The revivalist ideologies are each based on hatred of some other part of society and are culs-de-sac to conflict. In a healthy society, those who become successful have been reared into acceptance of that web of reciprocal obligations.

 In contrast to the Utilitarian vision of autonomous individuals, each generating utility from their own consumption, and counting equally in the great moral arithmetic of total utility, the atoms of a real society are relationships. In contrast to the psychopathic selfishness of economic man restrained by the Platonic guardians of social paternalism, normal people recognize that relationships bring obligations, and that meeting them is central to our sense of purpose in life. The toxic combination of Platonic Guardians and economic man that has dominated public policy has inexorably stripped people of moral responsibility, shifting obligations to the paternalist state. In a bizarre parody of medieval religion, ordinary people are cast as sinners who need to be ruled by exceptional people – the moral meritocracy.

He is in favour of inclusive politics. Me too. Definitely, capitalism can be reimagined.

Inequality in the winner-take-all society

A recent op-ed by Joseph Stiglitz on "Innovation enigma" brought me to retrieve a book of 1995 by Robert H. Frank, "The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us". Nowadays, the issue of raising inequality is on headlines, and often it is considered as a consequence of economic crisis. 
Frank argued two decades years ago that more and more the current economy and other institutions are moving toward a state where very few winners take very much, while the rest are left with little. He attributes this, in part, to the modern structure of markets and technology. It was written before the impact of internet on business and it was a clear alert about what has happened.
Now Thomas Piketty in his book "Capital in the 21st century" argues additionally that when the rate of capital accumulation grows faster than the economy, then inequality increases. And inequality is not an accident but rather a feature of capitalism that can be reversed only through state intervention. The book thus argues that unless capitalism is reformed, the very democratic order will be threatened.
If you combine both perspectives, you must be convinced that it is not only an issue of state intervention, I can't imagine certain parts of global markets ("winner-take-all" ) being abolished or reformed without a global government. That's why I'm not sure about the size of the current threat and when it will explode.
Stiglitz adds an uncertain landscape for innovation, and therefore for future dynamic efficiency of markets (Shumpeter style).
Taking all these pieces together, there is no clear recommendation. Today I just want to state again that correlation is not causation. Inequality and crisis are a contemporary fact, though the trend goes back a long way and it is very much deeper. Avoiding reductionist perspectives is my first suggestion.

PS. Since the implications of wealth inequality and health are huge as I explained in this post, my today comment maybe adds more shades instead of light.

PS. "Health inequalities result from social inequalities. Action on health inequalities requires action across all the social determinants of health." The Marmot Review: Fair Society Healthy Lives

PS. If you want to know why Messi's salary has increased this week, have a look at Frank's book, the answer is there.

The failure to find the laws of capitalism

The Rise and Decline of General Laws of Capitalism

Acemoglu and Robinson provide the best review - to my knowledge- of Piketty's work in a recent article. Their conclusion is widely shared by many people:

Thomas Piketty’s (2014) ambitious work proffers a bold, sweeping theory of inequality applicable to all capitalist economies. Though we believe that the focus on inequality and the ensuing debates on policy are healthy and constructive, we have argued that Piketty goes wrong for exactly the same reasons that Karl Marx, and before him David Ricardo, went astray. These quests for general laws ignore both institutions and politics, and the flexible and multifaceted nature of technology, which make the responses to the same stimuli conditional on historical, political, institutional, and contingent aspects of the society and the epoch, vitiating the foundations of theories seeking fundamental, general laws. We have argued, in contradiction to this perspective, that any plausible theory of the nature and evolution of inequality has to include political and economic institutions at the center stage, recognize the endogenous evolution of technology in response to both institutional and other economic and demographic factors, and also attempt to model how the response of an economy to shocks and opportunities will depend on its existing political and institutional equilibrium.

They offer an easy proof of the most salient Piketty failure: his inability to provide any correlation between the rate of growth of the economy and the real interest rate and its impact on inequality. Acemoglu and Robinson do that and no conclusions arise.

I do have the impression that confirmatory bias is working hard. I could say, I really believe really that Piketty has provided the argument that people wanted to hear. This is precisely the root of his success. You may read additional rationale in The Guardian. Unfortunately, there is no clear, easy and successful measure to tackle inequality - like taxing the rich, as he proposes- . I have already explained it in a former post.

Can capitalism be reimagined? (6)

Capitalism: The Story behind the Word 

The claims of reason and the imperative of power

The Professor and the Politician. For Max Weber, only the most heroic figures could generate meaning in the world. Does his theory hold up today?

Charisma and Disenchantment: The Vocation Lectures

For Max Weber:

The professor and the politician are not figures to be joined. Each remains a lonely hero of heavy burden, sent to ride against his particular foe: the overly structured institution of the modern mind, the overly structured institution of the modern state.

 The politician needs to convert effort into effect, to “make an impression” on the world. But there’s a fine line between molding the world into a shape and needing to see one’s signature at the base of it. The politician is always at risk of swapping out “actual power”—power tethered to purpose—for “the brilliant appearance of power”—power untethered from purpose. The first is the aim of the true politician; the second, the temptation of vanity, which is “the deadly enemy of any commitment to one’s goals.” When a politician gives in to vanity, amending or adapting his aims in order to perform effectiveness, his power is drained of its design.

 The spectre haunting Weber is neither bureaucracy nor capitalism (although capitalism does play an under-remarked role in these lectures). Instead, it’s an ancient tension between hero and fate, transposed to modern life. Where classical tragedy sees the hero felled by a destiny that he resists, the nemesis of the Weberian actor is absorption in the institutions that he’s meant to oppose. Society is a siren, forever tempting us to forsake our tasks and seek the smaller goods of reputation and status. The scholar becomes a scribe; the politician, a hack. The danger is not defeat of the opposing self from without but corruption of the self from within, where the self’s diminishing desire to oppose comports all too well with society’s needs.

Great op-ed by Corey Robin at The New Yorker.

Joana Biarnés

 

What is the alternative to Friedman’s capitalism?

 Milton Friedman 50 Years Later

Angus Deaton says:

“Milton Friedman was one of the foremost thinkers who challenged the post-war Keynesian consensus. He was immensely successful in arguing the pro-market case, and questioning the ability of government to improve on market outcomes. Today, we need to reopen these questions, using new economic thinking and new evidence; is the market bringing the unalloyed benefits that Friedman thought it would? This book is an important contribution to that reevaluation,”

And this is the capitalism that Martin Wolf expects:

“in which companies would not promote junk science on climate and the environment; it is one in which companies would not kill hundreds of thousands of people, by promoting addiction to opiates; it is one in which companies would not lobby for tax systems that let them park vast proportions of their profits in tax havens; it is one in which the financial sector would not lobby for the inadequate capitalisation that causes huge crises; it is one in which copyright would not be extended and extended and extended; it is one in which companies would not seek to neuter an effective competition policy; it is one in which companies would not lobby hard against efforts to limit the adverse social consequences of precarious work; and so on and so forth.”   

 

Prophets and self-fulfilling prophecies

 The Corona Crash. How the Pandemic Will Change Capitalism

Always you may find a prophet around the corner. Fukuyama predicted the end of history, the triumph of liberal democracy and the arrival of post-ideological world. Recently Y. N. Harari predicted the end of liberalism and the arrival of a post-humanism and nothing happened. The history goes on and some of them only may expect that their predictions transform into self-fulfilling prophecies. This is the case of today's book. It distorts reality to adjust to the ideology and desires of the author. I must say that some parts may be true, but on the whole, reading it is a waste of time in my opinion. Just some pieces, and you may judge:

In this context, the suggestion that governments must refrain from ‘interfering’ in the forces of free market competition to create jobs, reduce inequality and increase environmental sustainability is laughable. We do not live in a competitive economy – we live in a planned economy. But the planning is not democratic – it is being undertaken by central bankers, senior politicians and their advisors in big business and finance.

For the rich world, the lesson of the coronavirus crisis is that states can spend to meet the needs of their populations without limit. For the vast majority of the world’s population, this crisis will simply reinforce what they already knew: that the poorer, less powerful members of the international ‘community’ most certainly can’t. Socialists in the Global North must learn the right lesson: that the limits of fiscal policy are determined by political power. International solidarity requires us to return to the issue of debt forgiveness and push for relief for Global South states when this crisis is over.

The free market ideology which serves to legitimise forms of government intervention that support the interests of capital and prohibit state interventions that might increase the power of workers has been placed under significant strain in the period since the financial crisis. As we have seen, the foundation of this ideology is the separation between politics and economics.

You may remember that with the great recession there were voices saying that capitalism was in crisis and there was a need to rebuild it. And?. Any system lives in continous unstability. This is not the end, it needs an urgent fine tuning right now but absolutely different from the book proposal.

 

Populist health politics, the ultimate nightmare in the post-truth society

What is populism?

Nowadays populism is on the rise, unfortunately. Politicians embrace such option because we are in the post-truth society. As far as truth or facts are not relevant, populists may create false frames without any scruples. A worrying trend, and this is the reason why some people disconnect from public affairs, since it is so difficult to accept such exposure to ficticious reality. In my country, the health minister created a false frame (and he succeded on that, at least up to now). He said that he would "deprivatise" hospitals while hospital privatisation had not occurred formerly, only exceptional contracting out was necessary in certain situations with unattended demand. You can't undo what you have not done before.
Anyway, if you want to know the basis of populist strategists you should read this book :

Populism's core is a rejection of pluralism. Populists will always claim that they and they alone represent the people and their true interests. Müller also shows that, contrary to conventional wisdom, populists can govern on the basis of their claim to exclusive moral representation of the people: if populists have enough power, they will end up creating an authoritarian state that excludes all those not considered part of the proper "people." The book proposes a number of concrete strategies for how liberal democrats should best deal with populists and, in particular, how to counter their claims to speak exclusively for "the silent majority" or "the real people."

Two comments:

"Populism is not just antiliberal, it is antidemocratic—the permanent shadow of representative politics. That's Jan-Werner Müller's argument in this brilliant book. There is no better guide to the populist passions of the present."—Ivan Krastev, International New York Times
"No one has written more insightfully and knowledgeably about Europe's recent democratic decay than Jan-Werner Müller. Here Müller confronts head on the key questions raised by the resurgence of populism globally. How is it different from other kinds of politics, why is it so dangerous, and how can it be overcome? Müller's depiction of populism as democracy's antipluralist, moralistic shadow is masterful."—Dani Rodrik, Harvard University

Sadly, populism is on the right and on the left, they adopt the same strategies and they finally will undermine democracy. Now is the moment to keep away from populism, to fight against populism.

PS. In the last chapter you'll find the right strategy to fight populism, 10 actions:

6. Populists should be criticized for what they are—a real danger to democracy (and not just to “liberalism”). But that does not mean that one should not engage them in political debate. Talking with populists is not the same as talking like populists. One can take the problems they raise seriously without accepting the ways in which they frame these problems.

PS. In London Review of Books, Jan-Werner Müller says:

Populists aren’t just fantasy politicians; what they say and do can be in response to real grievances, and can have very real consequences. But it is important to appreciate that they aren’t just like other politicians, with a bit more rabble-rousing rhetoric thrown in. They define an alternative political reality in which their monopoly on the representation of the ‘real people’ is all that matters: in Trump’s case, an alt-reality under the auspices of the alt-right. At best, populists will waste years for their countries, as Berlusconi did in Italy. In the US, this will probably mean a free hand for K Street lobbyists and all-out crony capitalism (or, in the case of Trump, maybe capitalism in one family); continual attempts to undermine checks and balances (including assaults on judges as enemies of the people when they rule against what real citizens want; and life being made extremely difficult for the media); and government as a kind of reality TV show with plenty of bread and circuses. And the worst case? Regime change in the United States of America.

La crisi del capitalisme (3)

Selecciono l'article d'en Samuel Brittan i destaco el que m'interessa quan comenta sobre un llibre seu Capitalism and the Permissive Society  i el que es va oblidar d'escriure aleshores:

The real shortcoming of my book was that, like many others, I did not discuss the financial sector and how its activities could undermine the capitalist order even if there were no overt inflation or deflation of consumer prices. Any working market order requires there to be some way of marrying savings with the desire to borrow; a market for investible funds and some way of insuring against the vicissitudes of life as well, of course, as a better way of keeping ready cash than storing it under the mattress. But none of this justifies the threat posed by masses of invented money to institution after institution and country after country. Capitalism is a means to freedom and prosperity, not an end in itself. Improvement here may justify not merely international regulation but the retention for quite a long time in public ownership of banks and other institutions that have had to be rescued by government.

Podeu seguir la sèrie sencera a FT.

PS. Aprofiteu per veure Margin Call, una pel.lícula que explica prou bé els fonaments de la crisi, l'excés d'apalancament i el que passa després. El comentari de FT paga la pena. Si no sabeu que és una margin call, ho trobareu a la investopedia.

PS. Per cert, el naked short selling encara que prohibit aquí, podria seguir utilitzant-se i el regulador segueix de vacances. L'article sobre terrorisme financer a The Economist m'ha impactat sobre aquests temes. Intueixo problemes potencials propers.

Podem reimaginar-nos un nou capitalisme? (6)

The crisis of democratic capitalism 

En aquest blog he escrit anteriorment sobre reimaginar el capitalisme i realment fa molts anys que se'n parla però qui dia passa any empeny. Ara en Martin Wolf, cap d'opinió de FT acaba de publicar un llibre il·lustrador. Ho és perquè explica amb tot detall com hem arribat fins aquí, i què caldria fer per avançar en les institucions democràtiques i econòmiques, i evitar així més d'un ensurt.

Aquest llibre argumenta que quan la gent no veu cap esperança i perd la confiança en les institucions democràtiques, tant la democràcia com els mercats poden fallar i fallaran. En resum, cal una reforma radical i valenta de l'economia capitalista i hem d'enfortir els vincles econòmics de la ciutadania alhora que s'aprofundeix la cooperació internacional.

El llibre es llegeix magníficament, està molt ben escrit. Destaco alguns paràgrafs clau:

A market economy that operates under trustworthy rules, rather than the whims of the powerful, underpins prosperity and lowers the stakes of politics. In turn, a competitive democracy induces politicians to offer policies that will improve the performance of the economy and so the welfare of the people. Beyond these practical reasons for the marriage of liberal democracy and market economy, there is also a moral one: both are founded on a belief in the value of human agency—people have a right to do the best they can for themselves; people have a similar right to exercise a voice in public decisions. At bottom, both are complementary aspects of human freedom and dignity.

Els objectius de reforma del capitalisme democràtic haurien de ser:

• Un nivell de vida creixent, àmpliament compartit i sostenible
• Bona feina per a aquells que poden treballar i estan preparats per fer-ho
• Igualtat d'oportunitats
• Seguretat per a qui ho necessiti
• Acabar amb privilegis especials per a uns pocs

Removing harms, not universal happiness, is the objective. The approach to reform is that of “piecemeal social engineering,” as recommended by Karl Popper, not the revolutionary overreach that has so often brought calamity.

Behind these specific proposals is a wider perspective. A universal suffrage democracy will insist on a citizenship that is both economic and political. This means that business cannot be free to do whatever it wishes. It means that taxes must be paid, including by the economically powerful. It means that the state must be competent and active, yet also law-governed and accountable. All of this was the clear lesson of the twentieth century.

I sobre el concepte de ciutadania, el que no és i el que és:

Here are things this does not mean.

It does not mean that democratic states should have no concern for the welfare of noncitizens. Nor does it mean that it sees the success of its own citizens as a mirror image of the failures of others. On the contrary, it must seek mutually beneficial relations with other states.

It does not mean that states should cut themselves off from free and fruitful exchange with outsiders. Trade, movement of ideas, movement of people, and movement of capital, properly regulated, can be highly beneficial.

It does not mean that states should avoid cooperating closely with one another to achieve shared goals. This applies above all to actions designed to protect the global environment.

Yet there are things it clearly does mean.

It means that the first concern of democratic states is the welfare of their citizens. If this is to be real, certain things must follow.

Every citizen should have the reasonable possibility of acquiring an education that would allow them to participate as fully as possible in the life of a high-skilled modern economy.

Every citizen should also have the security needed to thrive, even if burdened by the ill luck of illness, disability, and other misfortunes.

Every citizen should have the protections needed to be free from abuse, physical and mental.

Every citizen should be able to cooperate with other workers in order to protect their collective rights.

Every citizen, and especially successful ones, should expect to pay taxes sufficient to sustain such a society.

Those who manage corporations should understand that they have obligations to the societies that make their existence possible.

Citizens are entitled to decide who is allowed to come and work in their countries and who is entitled to share the obligations and rights of citizenship with them.

Politics must be susceptible to the influence of all citizens, not just the wealthiest.

Policy should seek to create and sustain a vigorous middle class, while ensuring a safety net for everybody.

All citizens, whatever their race, ethnicity, religion, or gender are entitled to equality of treatment by the state and the law.

The West cannot go back to the 1960s. It cannot go back to a world of mass industrialization, where most educated women did not work, where there were clear ethnic and racial hierarchies, and where the Western countries still dominated the globe.

Missatge contundent pels qui el vulguin sentir, no podem tornar als 60s, i de vegades penso que hi anem de camí.

I per aquells que no els agrada el capitalisme i el voldrien fer desaparèixer, unes paraules de recordança: 

There are, it is true, alternative ways to seek power under democratic capitalism. All will fail. One extreme is to offer a fully socialized economy. But the economy will founder, and the rulers will be forced out of power or seize it undemocratically, as happened most recently in Venezuela. An opposite extreme is to marry laissez-faire economics to a populism founded on anti-intellectualism, racism, and cultural conservatism. Such pluto-populism is also likely to end in an autocracy in which even plutocrats are insecure. A still faster route to autocracy is via a blending of the two extremes in nationalist socialism (or national socialism). This combines a welfare state with arbitrary rule by demagogues. This, too, will ultimately ruin both the economy and democracy, as the unaccountable gangster in charge rewards cronies and punishes opponents.

 Human beings must act collectively as well as individually. Acting together, within a democracy, means acting and thinking as citizens.

If we do not do so, democracy will fail, and our freedoms will evaporate.

It is our generation’s duty to ensure it does not. It took too long to see the danger. Now it is a moment of great fear and faint hope. We must recognize the danger and fight now if we are to turn the hope into reality. If we fail, the light of political and personal freedom might once again disappear from the world.

L'alerta és clara per qui la vulgui sentir, és el deure de la nostra generació, ens hi juguem la llibertat. Ho diu ben clar. Actuar depèn de cadascú de nosaltres i de tots nosaltres col·lectivament. 

Per tant, si que és possible reimaginar el capitalisme i en Martin Wolf dona algunes pistes. Molt recomanable la lectura i relectura pausada. Malauradament em temo que a molts dirigents els passarà per alt i ni se'n adonaran que s'ha publicat.

 

Capitalism and morality

Market Reasoning as Moral Reasoning: Why Economists Should Re-engage with Political Philosophy

I found this article. Have a look at the abstract:

In my book What Money Can't Buy: The Moral Limits of Markets (2012), I try to show that market values and market reasoning increasingly reach into spheres of life previously governed by nonmarket norms. I argue that this tendency is troubling; putting a price on every human activity erodes certain moral and civic goods worth caring about. We therefore need a public debate about where markets serve the public good and where they don't belong. In this article, I would like to develop a related theme: When it comes to deciding whether these or those goods should be allocated by the market or by nonmarket principles, economics is a poor guide. Deciding which social practices should be governed by market mechanisms requires a form of economic reasoning that is bound up with moral reasoning. But mainstream economic thinking currently asserts its independence from the contested terrain of moral and political philosophy. If economics is to help us decide where markets serve the public good and where they don't belong, it should relinquish the claim to be a value-neutral science and reconnect with its origins in moral and political philosophy.

There are health economics implications, with a little effort you can find them.