There are many who accuse the UK of being culturally in a slumber. Music produced is tired, post-modern rehashing of 80s, 60s, 70s or otherwise imported hip hop so violent and mysogonistic – in some misconceived version of a power display – it would make a suffragette blush. In art we relish the same rehashing – lauding puerile conconctions that resemble scientific propositions rather than displays of creative and aesthetic virtue. Government itself is stale and reactionary, committed to policies that disharmonise rather than the desirable opposite. Committed to targets and powerpoint displays of how things are meant to be run (by the people, for the people – anyone?).
These are adequate pointers to depict the somnolent quality of what we may call La Malaise Anglaise. However the next few years will see changes that given correct treatment could result in the flourishing of the UK culturally, socially and therefore economically.
Where do these changes have their seed? With a certain Mrs Thatcher.
At the end of the 70s Britain was experiencing the collapse of a system that had become all but obsolescent. The era of social control – the idea society could be operated by levers to produce precise results and responses – was coming to an end. The Keynes-inspired revolution after WW2 had founded a great architecture for state intervention and welfare programs. These substantial programs had a great effect in raising well-being, redistributing income and maintaining economic growth. This architecture – being the first of its kind - was made to withstand only a narrow band of external events. Outside of this band was the Middle Eastern-created oil crisis that saw oil prices rocket and Britain’s more or less continual decline in international trade standing after World War 2.
The second of these was to have a more lasting effect and required as its solution ever more extreme solutions – a discussion that concluded with Thatcherism.
Thatcherism – a dogma that reflected as well as created its reigning era – was about freedom and creative forces unleashed. And unleashed they were but in such narrow channels that Britain’s development became overwhelmingly single track. Providing, that is, for material comfort to such precise and scientific degree that all else was excluded and eventually diminished.
Thatcher was a radical and fantastically intelligent. After decades of Keynesian ascendancy, Economics was swinging back to the Austrian school of Friedrich von Hayek and now expounded by Milton Friedman (see). In this the market was king and could be relied upon to create whatever counter measures and safety valves were necessary to ensure its (and therefore society’s) survival. It was a theory enhanced by the more consistent application of statistical technique which in the large part was a process of stripping vast chaff heaps of informational content in order to refine the wheat of noble ‘economic data’ . As acceptance of these techniques grew, it became overfed to its greedy older brother – reliance. Statistics were taken as true and the society they predicted became the one to be enacted. That is, one that married virtue with material success and equated freedom with institutions that doled out power to an ever narrowing corporate elite.
Its a truism that economic power begets economic power. As such, liberated market structures allow the most powerful players involved to shape the playing field according to their wishes. A major role of government is regulate the market so that it serves the widest possible good, judged with humanness and awareness of life’s riches outside of the human sphere.
Thatcher’s regime and the theories that inspired them were antihuman. Unable to explain anything that couldn’t be quantified and reproducible on a flipchart, Thatcherism expounded a stealthy form of fascism that robbed two thirds of society of their ability to be human by letting free market dogs run rampant amongst them.
To a large extent Britain was still hanging on to 19th century industrial principles, which were steadily losing their grip. These principles still tied commodities to the area they were produced. As such entrenched economic structures had given rise to social ones in the form of settled communities relying on particular forms of industrial production. The structures themselves were becoming obsolete as the resources themselves ran out or become more cheaply available elsewhere. What was necessary at this point was to recognise this obsolescence and produce a program of steady reform that eased social pain.
The actual response met the first of these conditions and utterly failed the second. In the belief that rampant egotism would create a harmonious society, the market was unleashed so as to, as mentioned before, favour those with economic power, which it should be clear by now, serves a narrow band of human interest.
Social protection in the form of cutting welfare, education and health budgets and the breaking of the unions, were swiftly eroded and within ten straight years the market had ascendancy. The Blairite refocusing of attention on the public services only served to empower this trend – making sure public services became the plaything of corporate interests. A sign of the surrender that had taken hold nationwide.
But human nature has never been successfully suppressed for long. Recognising the deficiencies of its environment, it seeks to balance and counteract them, and it is precisely at this point that UK society, in synchronicity with much of the world now rests: the evolution of new paradigms to counteract the deficiencies of the past three decades and the move to conditions more encouraging to the human spirit.
You’ll note this is a cosmological view of human history; that humanity’s fate is the development of its consciousness to some supreme self aware degree. It is this force – simply described as the need to know itself – that drives evolution of the human psyche. Limiting factors are the structures in which it finds itself a result purely of inherited beliefs – and these bring about a process of natural selection. This is not the blind advancement Richard Dawkins but one underpinned and aiming towards an ideal: Humanity, as indefinable and recognisable as that concept remains.
Part 2 will now briefly describe the deficiencies brought about by Thatcherism. It is argued that remedial to these were the creative forces that are about to take hold worldwide. We should therefore not view Thatcherite developments in such a harsh light; perhaps more accurately depict them as the Harsh Winter before the Great Spring.
Sunday, October 26, 2008
Thursday, October 23, 2008
"Spending on productivity"
"The peer said public spending that did not enhance productivity would push up inflation"
Yo - spending has no relation to productivity. What matters is the structures and institutions this spending is channelled through AND their ability to change should the needs arise. Indeed sometimes we'd prefer them not to change.
Education - doesn't need more spending, just more sensibly so - community-based schools of smaller size, curricula that encourage blooming of individuals not being told repeatedly - the world's shit - this will help you cope (cf high school in Sunderland that set up a call centre training department with money from, er, a local call centre).
Health - wider view of what it is to be healthy. Again, megaoplis approach to hospitals does not work, just persuades people how much they really are sick.
Paper work - EVERYWHERE - needs to be slashed - people letting go to the extent that folk do things as they are supposed to rather than submitting to jingo as soon as anything goes wrong. Teachers, health professionals businessmen are choked beyond the point of creativity which is what propels productivity in the long run.
Innovation is the product of a solid bed (health, education) and enough fluidity. Regulation is too easy to throw in when things are going wrong. Let's try a harder way of regulation that allows things to flourish.
The more I read the above points the more I see the all-pervasive problem is a lack of spine. Principles are considered inconvenient, non-expedient. It's time we started standing up instead of submitting to lobbies and reacting to opposing dogma, which only serve to cloud our view.
Yo - spending has no relation to productivity. What matters is the structures and institutions this spending is channelled through AND their ability to change should the needs arise. Indeed sometimes we'd prefer them not to change.
Education - doesn't need more spending, just more sensibly so - community-based schools of smaller size, curricula that encourage blooming of individuals not being told repeatedly - the world's shit - this will help you cope (cf high school in Sunderland that set up a call centre training department with money from, er, a local call centre).
Health - wider view of what it is to be healthy. Again, megaoplis approach to hospitals does not work, just persuades people how much they really are sick.
Paper work - EVERYWHERE - needs to be slashed - people letting go to the extent that folk do things as they are supposed to rather than submitting to jingo as soon as anything goes wrong. Teachers, health professionals businessmen are choked beyond the point of creativity which is what propels productivity in the long run.
Innovation is the product of a solid bed (health, education) and enough fluidity. Regulation is too easy to throw in when things are going wrong. Let's try a harder way of regulation that allows things to flourish.
The more I read the above points the more I see the all-pervasive problem is a lack of spine. Principles are considered inconvenient, non-expedient. It's time we started standing up instead of submitting to lobbies and reacting to opposing dogma, which only serve to cloud our view.
In need of a new Keynes
Thanks to Anglefish for the ensuing flurry of opinion.
He's been reading about Gordon Brown's "return" to Keynesianism. Without having read the article and basing the following on pure jingo I splutter:
PPPPPPPPPHHHHHHWHAAAT!!!!!! (---tea --- biscuits - - - hitting your shirt).
Let's get this clear. Keynesianism is the doctrine that one reigns in spending in good times and plumps it up in the bad. Brown and Blair pumped in masses of money when things were on the up, increased the throttle just as things were looking really good and didn't hold back as it peaked. Brown all but claimed to have beaten the trade cycle by laughably readjusting just when it was that it would end.
The trade cycle cannot be appointed a distinct time, it's only really clear it's precise topography once it has happened. However, if GDP growth is at 3.5% when the 200 year average for the economy is nearer 2.0% you have to be a pretty massive sense of your own Divine Blessedness to think you're the one that's cracked it.
Did Brown really believe this? Let's presume he's a little clear-headed. Chances are he knew exactly what was going on - knew that the opening of international markets was keeping inflation extremely low (by essentially doubling the labour pool the West had access to in less than two decades) and knew that the balance of trade was way in Britain's favour (because of demand for knowledge products at which Britain excels) - Brown knew all of this but due to an overwhelming lack of spine (not to piss off voters) did not reign in spending or raise taxes when times were hot.
Brown operated exactly the opposite to Keynes's common sense recommendations, created at the time to rail against doctrinal madness.
Now let's get this clear. The chancellor is not in charge of the economy. He's more like a shepherd in charge of a very unruly flock. One of several shepherds, acting against some vey large wolves. However his actions do matter. The conventional wisdom in economics says that a budget deficit induces a trade deficit. This is because higher spending at home means people have more money to spend on a greater amount of imports, thus creating a negative trade balance. Last week in the commons, Brown was blaming the entire credit crunch on unruly bankers while Cameron was blaming the whole thing on Mr Brown. Neither was correct but Cameron more so.
Just as the the trade deficit is influenced by government spending so are conditions of credit. If the government is spending profligately (and let's not forget this is only the spending we know about) borrowing huge sums year on year, then so will the people. Borrowing in the UK and abroad reached such hysterical levels that one has to have some sympathy for bankers given such vast amounts of debt, that they wouldn't go hog wild.
The bankers hysteria reflects that of the people and that of the government. It cannot be meaningfully separated.
The crisis is broadly the result of financial markets losing touch with reality, just as consumers and government have done. This detachment is now being made plain in the environment and social breakdown. There is a clear and honest need for the economy to re-embed itself in the workings of a more desirable world.
There are signs this is happening. Consumers are leading the way, and as elsewhere commented, the ensuing regulation of financial markets - although it may take time to get right - is a most welcome development.
There's a move towards authenticity. I heard recently of the move from an information economy to an "economy of meaning". It's a move so subtle as to be completely all-pervasive.
We are in need of thinkers of economists and thinkers to reinterpret this situation for us. Just as Keynes reconnected economic theory with the requirements of relaity, we need academics to throw off the old paradigms and see without such restricting goggles. For it's the way the world is going anyway, economics would do well to catch up.
He's been reading about Gordon Brown's "return" to Keynesianism. Without having read the article and basing the following on pure jingo I splutter:
PPPPPPPPPHHHHHHWHAAAT!!!!!! (---tea --- biscuits - - - hitting your shirt).
Let's get this clear. Keynesianism is the doctrine that one reigns in spending in good times and plumps it up in the bad. Brown and Blair pumped in masses of money when things were on the up, increased the throttle just as things were looking really good and didn't hold back as it peaked. Brown all but claimed to have beaten the trade cycle by laughably readjusting just when it was that it would end.
The trade cycle cannot be appointed a distinct time, it's only really clear it's precise topography once it has happened. However, if GDP growth is at 3.5% when the 200 year average for the economy is nearer 2.0% you have to be a pretty massive sense of your own Divine Blessedness to think you're the one that's cracked it.
Did Brown really believe this? Let's presume he's a little clear-headed. Chances are he knew exactly what was going on - knew that the opening of international markets was keeping inflation extremely low (by essentially doubling the labour pool the West had access to in less than two decades) and knew that the balance of trade was way in Britain's favour (because of demand for knowledge products at which Britain excels) - Brown knew all of this but due to an overwhelming lack of spine (not to piss off voters) did not reign in spending or raise taxes when times were hot.
Brown operated exactly the opposite to Keynes's common sense recommendations, created at the time to rail against doctrinal madness.
Now let's get this clear. The chancellor is not in charge of the economy. He's more like a shepherd in charge of a very unruly flock. One of several shepherds, acting against some vey large wolves. However his actions do matter. The conventional wisdom in economics says that a budget deficit induces a trade deficit. This is because higher spending at home means people have more money to spend on a greater amount of imports, thus creating a negative trade balance. Last week in the commons, Brown was blaming the entire credit crunch on unruly bankers while Cameron was blaming the whole thing on Mr Brown. Neither was correct but Cameron more so.
Just as the the trade deficit is influenced by government spending so are conditions of credit. If the government is spending profligately (and let's not forget this is only the spending we know about) borrowing huge sums year on year, then so will the people. Borrowing in the UK and abroad reached such hysterical levels that one has to have some sympathy for bankers given such vast amounts of debt, that they wouldn't go hog wild.
The bankers hysteria reflects that of the people and that of the government. It cannot be meaningfully separated.
The crisis is broadly the result of financial markets losing touch with reality, just as consumers and government have done. This detachment is now being made plain in the environment and social breakdown. There is a clear and honest need for the economy to re-embed itself in the workings of a more desirable world.
There are signs this is happening. Consumers are leading the way, and as elsewhere commented, the ensuing regulation of financial markets - although it may take time to get right - is a most welcome development.
There's a move towards authenticity. I heard recently of the move from an information economy to an "economy of meaning". It's a move so subtle as to be completely all-pervasive.
We are in need of thinkers of economists and thinkers to reinterpret this situation for us. Just as Keynes reconnected economic theory with the requirements of relaity, we need academics to throw off the old paradigms and see without such restricting goggles. For it's the way the world is going anyway, economics would do well to catch up.
Writing elsewhere
Monday, October 13, 2008
Fluffy's verdict on the financial crisis
...it's going to get a whole lot worse for the better.
The flee from capital invested in stocks and dodgy derivatives is not a temporary slip in trust - this is a systemic shift in how people use their money. With banks nationalised, hitherto profligate highly leveraged practics will no longer be possible, politicians will remind banks just how much they owe them (ie the public) their lives.
Why are people fleeing high finance and what will replace it?
We're moving into an economy that no longer wishes to be decoupled from the world's real goings on. People are very much in anguish at what they see the current system is doing to the Earth and their fellow humans. Financial instruments will have to more closely track the movements of not only resources but also values and this is why the nationalisations are so important (and they will become more complete as it is found that this round of measures has not worked).
People are looking for values to be dealt into their economy. Witness the boom in Fair Trade, Organic produce, CSR in just the last FIFTEEN YEARS and you'll see how folk desire to do good with their dollars. But they don't want a return to socialism. They relish the freedom the market brings, socially and economically, but are getting wise to the fact that it only deals in the values that are built into its infrastructure by the powers that be (ie the players and institutional rules).
So the new market economy is going to look a lot shinier. Governments will less likely reign in financial practices but make sure they run along friendlier lines.
A large part of the change will come from the people that run these companies - a more socially, environmentally and globally aware generation there has never been and board rooms, governments and populations worldwide will see very different complexion in the next 10-15 years as baby boomers die, become less politcally relevant.
I can't say what these changes will be like but we can imagine stocks traded with an environmental, social component rolled into each one. These latter two will be assessed and priced just as the market does today and the very act of doing this will increase knowledge in these areas which is still painfully thin (see how much the credit crunch has attracted column inches compared to the food crisis which has thrust 44 million more people into malnourishment taking the world total to just under one billion).
The key is that wider concerns are dealt in to every transaction. We're not going back to mud huts but neither will people tolerate the run away recklessness of the last 28 years since dear Reagan came to power. Making sure the market economy continues to function by including as much of what we value as possible will go a long way to bring the benefits of its efficiency to a wider social and environmental base.
The flee from capital invested in stocks and dodgy derivatives is not a temporary slip in trust - this is a systemic shift in how people use their money. With banks nationalised, hitherto profligate highly leveraged practics will no longer be possible, politicians will remind banks just how much they owe them (ie the public) their lives.
Why are people fleeing high finance and what will replace it?
We're moving into an economy that no longer wishes to be decoupled from the world's real goings on. People are very much in anguish at what they see the current system is doing to the Earth and their fellow humans. Financial instruments will have to more closely track the movements of not only resources but also values and this is why the nationalisations are so important (and they will become more complete as it is found that this round of measures has not worked).
People are looking for values to be dealt into their economy. Witness the boom in Fair Trade, Organic produce, CSR in just the last FIFTEEN YEARS and you'll see how folk desire to do good with their dollars. But they don't want a return to socialism. They relish the freedom the market brings, socially and economically, but are getting wise to the fact that it only deals in the values that are built into its infrastructure by the powers that be (ie the players and institutional rules).
So the new market economy is going to look a lot shinier. Governments will less likely reign in financial practices but make sure they run along friendlier lines.
A large part of the change will come from the people that run these companies - a more socially, environmentally and globally aware generation there has never been and board rooms, governments and populations worldwide will see very different complexion in the next 10-15 years as baby boomers die, become less politcally relevant.
I can't say what these changes will be like but we can imagine stocks traded with an environmental, social component rolled into each one. These latter two will be assessed and priced just as the market does today and the very act of doing this will increase knowledge in these areas which is still painfully thin (see how much the credit crunch has attracted column inches compared to the food crisis which has thrust 44 million more people into malnourishment taking the world total to just under one billion).
The key is that wider concerns are dealt in to every transaction. We're not going back to mud huts but neither will people tolerate the run away recklessness of the last 28 years since dear Reagan came to power. Making sure the market economy continues to function by including as much of what we value as possible will go a long way to bring the benefits of its efficiency to a wider social and environmental base.
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