The first few minutes of the London Olympics' opening ceremony were a magnificent, awe-inspiring tableau of the power of both human co-operation and capitalist economic relations. Both in the scenes of Britain's industrialisation portrayed, and in the show iself, they demonstrated the creative destruction that could be achieved through this particular way of harnessing human ingenuity and money with political authority.
Were the herders, shepherdesses and ploughmen in the opening rural idyll contented with their lot, or were they village idiots? Did the factory-builders and railroad constructors who destroyed their countryside rescue them from their idiocy or take away their souls? Did the governments that then sent them to their deaths in two world wars defend the liberties of Europe and the future for democracy, or did they sacrifice them for the globalisation that would eventually smash those factories into dust, and leave them desperately seeking some new sense of identity and purpose in a post-industrial desert?
The show itself was staged in a glittering new stadium, part of a superb complex of buildings, public art and gardens, equidistant from the most multi-ethnic and most impoverished borough in London and the shining towers that are home to Barclays, HSBC and the rest. As the news media broadcast hourly bulletins of the latest billion pound scams by the financial sector of the City, bringing ruin and shame across the globe, those same institutions have helped to fund a development which will leave a legacy of renewal and hope for the eastern half of London.
In some ways the sport will be an anti-climax after that display. It will show that we humans can run faster and hurl further than our ancestors, and that we can harness the discipline to work in small groups to cross water or scale heights. Capitalism has not destroyed these capacities for our species, though it has refined them in the bodies of a tiny athletic elite, and consigned the rest of us to roles of passive spectators, chewing excess food in front of TV screens.
We will be inspired, for sure, but what opportunities will capitalism give us after the Games are over, either as individuals or collectively, to express that inspiration in projects for the common good? It leaves us free to do so, but it does not point the way. We must find that for ourselves.
Friday 27 July 2012
Tuesday 24 July 2012
Sport, Society and G4S
The impending Olympics and the scandal over G4S's failure to supply contract security staff present a snapshot of our society. On the one hand, we can organise a vast collective celebration of human physical prowess for the whole world; on the other, the outsourcing of our concerns about the threat to our political order to an enormous private company has made us something of a laughing stock.
Both sides of this paradox can be traced to our stone-age heritage. We survived and prospered as a species, despite our relatively puny physique and our massive need of protein for our large brains, because we were capable of conceiving and executing fairly complex forms of collective action, such as persistence hunting in groups. Here the skills of a few members complemented the ingenuity of those who planned the operations, and the patience of those who made up the numbers.
But such predatory collective forays, which also could involve conflicts with other such groups, always ended with feasts and celebratory chanting, dancing and drinking round a fire. We have been shaped by evolution, both as individuals and as groups, for these activities; yet modern society seldom supplies us with opportunities - except brifly in our teenage years - to behave as gangs of hunters, or tribes of alcohol-fuelled ravers. And, of course, the Olympic Games - for their few participants.
Instead, the majority of us are trapped in lives of quiet, conformist, domestic desperation, and many suffer terribly from the afflictions of anxiety, depression or back pain. We turn to therapists rather than witch doctors for remedies, and we would never accept a prescription of night pursuit of wild beasts or mass ritual feasting for our ills. Only one third of us take any exercise at all, a recent report in The Lancet revealed, and this is fatal for as many of as as smoking and obesity are.
Our individual worries are mirrored in our governments' concerns about the threat of terrorism by those who reject consumerism and secularism as the bases for societies. These covert forces from a bygone age of superstitious violence must be deterred by shows of strength (warships in the Thames, fighter jets overhead), and monitored by guards on the ground, especially at the Olympic venues.
Unfortunately, we cannot mobilise our citizens to defend their democratic and enlightened way of life, to take collective action against these foes. They are too busy sitting at home watching the Olympics on TV, and taking tranquilisers. Our police and army could have done it, but this would have been expensive, looked bad in the public accounts, and sinned against the prevailing orthodoxy of contractual outsourcing. So we brought in G4S to quell our fears; the rest is history.
Both sides of this paradox can be traced to our stone-age heritage. We survived and prospered as a species, despite our relatively puny physique and our massive need of protein for our large brains, because we were capable of conceiving and executing fairly complex forms of collective action, such as persistence hunting in groups. Here the skills of a few members complemented the ingenuity of those who planned the operations, and the patience of those who made up the numbers.
But such predatory collective forays, which also could involve conflicts with other such groups, always ended with feasts and celebratory chanting, dancing and drinking round a fire. We have been shaped by evolution, both as individuals and as groups, for these activities; yet modern society seldom supplies us with opportunities - except brifly in our teenage years - to behave as gangs of hunters, or tribes of alcohol-fuelled ravers. And, of course, the Olympic Games - for their few participants.
Instead, the majority of us are trapped in lives of quiet, conformist, domestic desperation, and many suffer terribly from the afflictions of anxiety, depression or back pain. We turn to therapists rather than witch doctors for remedies, and we would never accept a prescription of night pursuit of wild beasts or mass ritual feasting for our ills. Only one third of us take any exercise at all, a recent report in The Lancet revealed, and this is fatal for as many of as as smoking and obesity are.
Our individual worries are mirrored in our governments' concerns about the threat of terrorism by those who reject consumerism and secularism as the bases for societies. These covert forces from a bygone age of superstitious violence must be deterred by shows of strength (warships in the Thames, fighter jets overhead), and monitored by guards on the ground, especially at the Olympic venues.
Unfortunately, we cannot mobilise our citizens to defend their democratic and enlightened way of life, to take collective action against these foes. They are too busy sitting at home watching the Olympics on TV, and taking tranquilisers. Our police and army could have done it, but this would have been expensive, looked bad in the public accounts, and sinned against the prevailing orthodoxy of contractual outsourcing. So we brought in G4S to quell our fears; the rest is history.
Cold Calling and the Arts of Resistance
Maybe I don't read the right journals, but I have never seen a guide to getting rid of unwanted cold callers on the phone. As I am frugal and seldom exposed to hard selling techniques, I therefore have to rely on strategies derived from a previous age.
In the 1980s, when unemployment was even higher than it is now, young people sometimes came to the door to ask if I would 'sponsor' them by buying a fire extinguisher or other durable commodity. My reaction was to invite them to sit down while I explained Adam Smith's distinction between the functioning of a market economy and that of the social order.
On Adam's account, markets can benefit all who take part in their processes of exchange of money for goods and services, without any one having any sense of responsibility or obligation towards each other. Societies, on the other hand, need moral standards, communicated through cultures and practices, to achieve fairness between their members.
The idea of 'sponsoring', if it belongs anywhere, is appropriate for the moral or social sphere. If markets and capitalism functioned to the benefit of all, as Adam claimed, then I should want to buy the fire extinguisher for its utility, not to save the salesperson from destitution.
I found that this always caused the rapid retreat of the commercial apprentice, and that none of his or her colleagues called in the immediate aftermath of the encounter. Whether this was because the unfortunate explained Smith's theory to the others, and convinced them of its validity, I do not know.
None of this seems to apply to the case of telephone cold calls. Perhaps I am paranoid, and too much of a technophobe to know how to check this out, but I have always imagined that many of these would allow the caller, in possession of some sophisticated device, to gain access to various bank accounts and pensions of mine if I spoke for more than a few moments. I would hardly get beyond the preliminaries of Smith's Theory of Moral Sentiments before these were completely stripped out.
So I am reduced to the very crude resort of saying, 'I am a police officer, and I only speak to criminals when I am on duty'. It seems to work.
In the 1980s, when unemployment was even higher than it is now, young people sometimes came to the door to ask if I would 'sponsor' them by buying a fire extinguisher or other durable commodity. My reaction was to invite them to sit down while I explained Adam Smith's distinction between the functioning of a market economy and that of the social order.
On Adam's account, markets can benefit all who take part in their processes of exchange of money for goods and services, without any one having any sense of responsibility or obligation towards each other. Societies, on the other hand, need moral standards, communicated through cultures and practices, to achieve fairness between their members.
The idea of 'sponsoring', if it belongs anywhere, is appropriate for the moral or social sphere. If markets and capitalism functioned to the benefit of all, as Adam claimed, then I should want to buy the fire extinguisher for its utility, not to save the salesperson from destitution.
I found that this always caused the rapid retreat of the commercial apprentice, and that none of his or her colleagues called in the immediate aftermath of the encounter. Whether this was because the unfortunate explained Smith's theory to the others, and convinced them of its validity, I do not know.
None of this seems to apply to the case of telephone cold calls. Perhaps I am paranoid, and too much of a technophobe to know how to check this out, but I have always imagined that many of these would allow the caller, in possession of some sophisticated device, to gain access to various bank accounts and pensions of mine if I spoke for more than a few moments. I would hardly get beyond the preliminaries of Smith's Theory of Moral Sentiments before these were completely stripped out.
So I am reduced to the very crude resort of saying, 'I am a police officer, and I only speak to criminals when I am on duty'. It seems to work.
Saturday 7 July 2012
Fixing Interest Rates? Of course
Shock horror! The Barclays scandal reveals that the banks fiddle and lie to fix interest rates. Some government ministers and the Bank of England may even have been in on the scam. And we are supposed to be surprised by all this.
Banks, including the Bank of England, create money out of thin air, and make their profits from doing so.
This has been most obvious during the Quantitative Easing programme. The government and the Bank were worried that people were paying down their debts, and the banks weren't lending to businesses, so there was less money circulating. Solution: print some more. Commercial banks do the same thing when they make a loan, or give a customer credit.
The whole credit bubble that brought the banks down happened because they were rash about lending, and we were rash about borrowing. QE means that, to pay for the bail-out of the banks and their customers, people who have savings have to see them inflated away. Money is not a commodity; bank staff don't make it like factory workers make laptops or lingerie. It is a means of exchange, and its 'price' (the rate of interest on a loan or credit card debt) is whatever the banks can get away with charging for something that they have costlessly created. But because the financial sector is so significant a part of our economy, the Bank of England and the government want us to believe that the quantity of money and the interest rate are sacred numbers that emerge from international competition between London, New York and Tokyo, Frankfurt and Paris, through global money markets. We are supposed to swallow the idea that our bankers and politicians never tip each other the wink, or meet to set rates, but always accept the will of these markets as Holy Writ.
So this agonising about the Barclays scandal is mostly obfuscation and hypocrisy. We are supposed to believe that bankers deserve to have been bailed out, because they earned their salaries and bonuses by the brilliance of their dealings against the brute facts of international competition, in a risky and unstable environment. In this way, we will not notice that we are being ripped off - though not as badly as the Irish, Greeks, Portuguese and Spanish are, still paying for bail-outs that didn't even save their brilliant banks. Bob Diamond and his mates have let the side down by allowing the public to glimpse that all this is a fiction. Interest rates will always be set by bankers and others in concert, because the rest of us can't influence them in the way we can other prices, by voting with our feet. More's the pity.
This has been most obvious during the Quantitative Easing programme. The government and the Bank were worried that people were paying down their debts, and the banks weren't lending to businesses, so there was less money circulating. Solution: print some more. Commercial banks do the same thing when they make a loan, or give a customer credit.
The whole credit bubble that brought the banks down happened because they were rash about lending, and we were rash about borrowing. QE means that, to pay for the bail-out of the banks and their customers, people who have savings have to see them inflated away. Money is not a commodity; bank staff don't make it like factory workers make laptops or lingerie. It is a means of exchange, and its 'price' (the rate of interest on a loan or credit card debt) is whatever the banks can get away with charging for something that they have costlessly created. But because the financial sector is so significant a part of our economy, the Bank of England and the government want us to believe that the quantity of money and the interest rate are sacred numbers that emerge from international competition between London, New York and Tokyo, Frankfurt and Paris, through global money markets. We are supposed to swallow the idea that our bankers and politicians never tip each other the wink, or meet to set rates, but always accept the will of these markets as Holy Writ.
So this agonising about the Barclays scandal is mostly obfuscation and hypocrisy. We are supposed to believe that bankers deserve to have been bailed out, because they earned their salaries and bonuses by the brilliance of their dealings against the brute facts of international competition, in a risky and unstable environment. In this way, we will not notice that we are being ripped off - though not as badly as the Irish, Greeks, Portuguese and Spanish are, still paying for bail-outs that didn't even save their brilliant banks. Bob Diamond and his mates have let the side down by allowing the public to glimpse that all this is a fiction. Interest rates will always be set by bankers and others in concert, because the rest of us can't influence them in the way we can other prices, by voting with our feet. More's the pity.
Monday 2 July 2012
Social Justice according to Dude and Big Boy
We are witnessing the final collapse of the fantasy on which New Labour built its social policies. With the revelations about Barclays staff lying to fix the LIBOR rate, and that they and other banks mis-sold insurance against interest rate rises to small and medium-sized businesses, the idea that equality and justice could be built on the greed of City financiers has been decisively blown away.
As Chancellor of the Exchequer and Prime Minister, Gordon Brown, an avid student of the latest economic orthodoxy, praised the City for its outstanding contribution to prosperity, jobs and tax revenues. He believed that the declining employment levels and earnings of ordinary workers could be bolstered in a fragmented labour market on the back of this success. As the majority of working families with children had their wages subsidised by tax credits, and those claimung benefits were herded into low-paid part-time work under threat of losing eligibility to claim, Tony Blair was arguing for this new marriage of efficiency and equity. Growing inequality was not an issue, he maintained, as long as the least advantaged citizens could be nudged above the poverty line. Our international comparative advantage lay in financial services, and we should consolidate this, for the sake of our whole population.
Even before the scandal broke, the crash had exposed this as a daydream. In the boom years, our banks owned 10 per cent of global financial assets, and made 10 per cent of global profits. Today they own the same proportion, and earn 5 per cent of profits worldwide. Contrast this with Chinese banks, which now earn 30 per cent of global profits. So much for the UK as the world's financial hub, and China as a mere assembly line for its manufactured products.
The Tories never fully swallowed this fantasy or idealised the City, perhaps partly because it was some of their school friends who were inventing these fiddles. But they too favoured light regulation. Now they have to find ways to clean up the cesspit. And they are no closer to finding an alternative direction for the economy. More even than New Labour, they rely on compelling benefits claimants to accept work which makes them no better off. And they are compromised by their close relationship with A4e as the chief instrument of the Work Programme. It placed only 30 per cent of its clientele in jobs lasting more than 3 months last year, and is being investigated for systematic fraud and malpractice. At least Ed Miliband is indicating a renunciation of New Labour's City links, and has given Jon Cruddas a leading role in policy development. That is much-needed good news.
As Chancellor of the Exchequer and Prime Minister, Gordon Brown, an avid student of the latest economic orthodoxy, praised the City for its outstanding contribution to prosperity, jobs and tax revenues. He believed that the declining employment levels and earnings of ordinary workers could be bolstered in a fragmented labour market on the back of this success. As the majority of working families with children had their wages subsidised by tax credits, and those claimung benefits were herded into low-paid part-time work under threat of losing eligibility to claim, Tony Blair was arguing for this new marriage of efficiency and equity. Growing inequality was not an issue, he maintained, as long as the least advantaged citizens could be nudged above the poverty line. Our international comparative advantage lay in financial services, and we should consolidate this, for the sake of our whole population.
Even before the scandal broke, the crash had exposed this as a daydream. In the boom years, our banks owned 10 per cent of global financial assets, and made 10 per cent of global profits. Today they own the same proportion, and earn 5 per cent of profits worldwide. Contrast this with Chinese banks, which now earn 30 per cent of global profits. So much for the UK as the world's financial hub, and China as a mere assembly line for its manufactured products.
The Tories never fully swallowed this fantasy or idealised the City, perhaps partly because it was some of their school friends who were inventing these fiddles. But they too favoured light regulation. Now they have to find ways to clean up the cesspit. And they are no closer to finding an alternative direction for the economy. More even than New Labour, they rely on compelling benefits claimants to accept work which makes them no better off. And they are compromised by their close relationship with A4e as the chief instrument of the Work Programme. It placed only 30 per cent of its clientele in jobs lasting more than 3 months last year, and is being investigated for systematic fraud and malpractice. At least Ed Miliband is indicating a renunciation of New Labour's City links, and has given Jon Cruddas a leading role in policy development. That is much-needed good news.
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