Tag: capitalism

Will Adam Smith’s Invisible Hand Fade Away?

Posted on by Michael Liss

by Michael Liss

Portrait of Adam Smith, artist unknown. National Galleries Scotland. Given by J.H. Romanes 1945.

Nearly 250 years is not quite Shakespeare, but if The Wealth of Nations were a play, we would say it has had a pretty good run. Is it a dusty old warhorse, to be read while sitting in a winged-back chair with a snifter of brandy, or still relevant today? Can it solve the (deep) problems of the present and future? Is our almost faith-bound devotion to market forces still justified, or are new approaches needed?

A heavy topic requires heavyweights, and I found them at this past November’s “Center on Capitalism and Society,” at Columbia University’s 20th Anniversary Conference. The topic: Economy Policy and Economic Theory for the Future

The two-day event assembled a formidable crew of speakers, headlined by three Nobelists for Economics: Joseph Stiglitz (2001), Eric Maskin (2007) and Edmund Phelps (2006). They were joined by a “supporting cast” of 15 others, also heavyweights in their field, including the sociologist and urbanist Richard Sennett, the financial journalist Martin Wolf, Finnish philosopher Esa Saarinen, Ian Goldin of Oxford, economists Roman Frydman and Jean-Paul Fitoussi, Carmen Reinhart of the World Bank, and Jeffrey Sachs of Columbia and the UN.

In short, there were a lot of credentials in the room (either in person or remotely) and a number of extremely compelling presentations, but it is Sachs whom I want to talk about. He spoke first, after opening remarks by the extraordinary Ned Phelps (nearing 90, still writing, still speaking, and still mentoring and inspiring), and I assume that the choice was a tactical one. The organizers clearly anticipated that Sachs would do what Sachs does: devote his time to lobbing a little hand grenade into the proceedings: Capitalism, to his way of thinking, particularly the Anglo-Saxon version of Capitalism practiced in the United States, was no longer capable of taking on the big, global challenges. Read more »

How the pandemic exposes irrationalities in our social system

Posted on by Emrys Westacott

by Emrys Westacott

The current Covid 19 pandemic is undoubtedly a disaster for millions of people: for those who die, who grieve for the dead, who suffer through a traumatic illness, or who, suddenly lacking work and income, face the prospect of dire poverty as the inevitable recession kicks in. And there are other bad consequences that one might not describe as ‘disastrous” but which are certainly significant: the stress experienced by all those providing care for the sick; the interruption in the education of students; the strain put on families holed up together perhaps for months on end; the loneliness suffered by those who are truly isolated; and the blighted career prospects of new graduates in both the public and the private sectors.

No-one knows what the long-term, or even the short-term consequences of the pandemic will be, either for any particular country or for the world as a whole. It’s conceivable that in some places things could eventually tilt toward the sort of apocalyptic break down of civil society often depicted in dystopian fiction. Perhaps more plausibly, it could lead to the further erosion of democratic rights in at least some countries. This has already happened in Hungary, where the parliament recently voted to give the Prime Minister, Victor Orban, the power to rule by decree for an unlimited period, during which time there can be no elections. But it is also possible that the current crisis will be the occasion for a fundamental rethink about the character of the society we wish to live in. Let us hope so.

This hope could, of course, be just naïve wishful thinking. History offers plenty of example of well-intentioned pledges to learn from the past being buried beneath forgetfulness, indifference, incompetence, prejudice, ideology, and vested interests. But the pandemic is undeniably effective at exposing some of the most obvious flaws in the socio-economic organization of countries like the US (and, to a lesser extent, other modernized capitalist societies). And by “flaws,” here, I don’t mean minor inefficiencies that can be removed with a bureaucratic tweak, but profound irrationalities linked to objectionable values. Read more »

Why aren’t we working less?

Posted on by Emrys Westacott

by Emrys Westacott

Back in 1930, the economist John Maynard Keynes predicted that the continuous increase in productivity characteristic of industrial capitalism would lead within a century to much more leisure for everyone, with the typical working week being reduced to about fifteen hours. UnknownThis has obviously not come about. To be sure, in virtually all relatively prosperous countries the average number of hours worked annually has fallen over the last few decades. Between 1950 and 2010, in the US, for instance, this number dropped from 1,908 to 1,695, in Canada from 2,079 to 1,711, and in Denmark from 2,144 to 1,523. Even in Japan, famed for its workaholism, the average number of hours worked per year went from a high of 2,224 in 1961 to 1,706 in 2011.[1] But even the lackadaisical Danes are still working twice as hard as Keynes predicted.

Given the increases in productivity and prosperity in the industrialized world, one could have reasonably hoped for more. People in the UK are now four times better off than they were in 1930, but they work only twenty percent less, and that is fairly typical of other advanced economies. The rich, who used to relish their idleness, now boast about how hard they work, while for many of the poor unemployment is a persistent curse.

Moreover, according to economist Staffan Linder, economic growth is typically accompanied by a sense that we have less time available for the things we wish to do. This feeling is not mistaken, but the lack of time is in large part due to the fact that members of affluent societies will opt for more money over more leisure if given the choice. They then start to carry the mentality and values of workplace productivity into every part of their lives, resulting in what Linder calls the "harried leisure class."[2]

So why was Keynes wrong? According to Robert and Edward Skidelsky in How Much Is Enough? his mistake was to underestimate the difficulty of reining in the forces unleashed by capitalism, particularly people's desire for ever increasing wealth and the things it can buy. Our natural concern for improved relative status, hardwired into us by evolution, is inflamed by the capitalist system, complete with incessant advertising and free market ideology, so that we always want more than we have and more than we really need.[3]

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The conflict between competition and leisure

Posted on by Emrys Westacott

by Emrys Westacott

ScreenHunter_590 Apr. 14 11.15In 1930 the economist John Maynard Keynes predicted that increases in productivity due to technological progress would lead within a century to most people enjoying much more leisure. He believed that by 2030 the average working week would be around fifteen hours. Eighty-four years later, it doesn't look like this prediction will come true. Most full-time workers work two, three, or four times, that: and many part-time workers would work more hours if they could since they need the money.

So why haven't we come closer to realizing the expectations of Russell and Keynes? In their recent book, How Much Is Enough? Money and the Good Life (Other Press, 2012), Robert and Edward Skidelsky offer an interesting answer. According to them Keynes' mistake was his failure to realize that capitalism has unleashed forces that can't be brought under control. Specifically, it has greatly inflamed a natural human desire for recognition and status, turning it into an insatiable desire for ever more wealth—wealth being the number one determinant of status in our society. If we could just settle for a modest level of comfort, we could work far less. But the yearning for more wealth and more stuff now leads people to spend far more time working than they need to. The same insatiability characterizes our society as a whole. Every politician and most economists take for granted that we should be striving with all our might to achieve economic growth without limit. The wisdom of this relentless, endless pursuit of economic growth is rarely questioned.

The Skidelskys' explanation of why we still work much more than Keynes predicted isn't entirely wrong, but I don't think it's the whole story or even the most important part. It's no doubt true of some people that they are driven to work more than they need to by insatiable greed. But I suspect that far more people work the hours they do because of circumstances beyond their control. For instance, many people work long hours simply because their hourly wage is quite low, so they work overtime, or perhaps take a second job, just in order to have enough to live on. Some live in expensive metropolitan areas like Boston or San Francisco, so even though they make a good wage, they actually need a full time job even to secure a fairly modest level of comfort, given the cost of housing. Many people keep working full time, even though they'd like to retire or go part time, because only a full time job will provide indispensible benefits like health insurance and a pension. And lots of people would like to cut back the hours they work but can't for a simple reason: their boss won't let them.

But there's also another factor preventing us from achieving a more leisured and balanced lifestyle, and that is the intensely competitive social environment in which we live.

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Why Amazon Reminds Me of the British Empire

Posted on by Emrys Westacott

by Emrys Westacott

“Life—that is: being cruel and inexorable against everything about us that is growing old and weak….being without reverence for those who are dying, who are wretched, who are ancient.” (Friedrich Nietzsche, The Gay Science)

ScreenHunter_562 Mar. 17 10.40A recent article by George Packer in The New Yorker about Amazon is both eye-opening and thought-provoking. In “Cheap Words” Packer describes Amazon's business practices, the impact of these on writers, publishers, and booksellers, and the seemingly limitless ambitions of Amazon's founder and CEO Jeff Bezos whose “stroke of business genius,” he says, was “to have seen in a bookstore a means to world domination.”

Amazon began as an online book store, but US books sales now account for only about seven percent of the seventy-five billion dollars it takes in each year. Through selling books, however, Amazon developed perhaps better than any other business two strategies that have been key to its success: it uses to the full sophisticated computerized collection and analysis of data about its customers; and it makes the interaction between buyer and seller maximally simple and convenient. It also, of course, typically offers lower prices than its competitors. Bezos' plan to one day have drones provide same-day delivery of items that have been stocked in warehouses near you in anticipation of your order is the logical next step in this drive toward creating a frictionless customer experience.

Amazon's impact on the world of books has been massive. Over the past twenty years the number of independent bookstores in the US has been cut in half from four thousand to two thousand, and this number continues to dwindle. Because Amazon is by far the biggest bookseller, no publisher can afford to not use its services, and Amazon exploits this situation to the hilt. Publishers are required to pay Amazon millions of dollars in “marketing discount” fees. Those that balked at paying the amount demanded had the ‘Buy' button removed from their titles on Amazon's web site. Amazon used the same tactic to try to force Macmillan to agree to its terms regarding digital books. And of course Amazon's Kindle dominates the world of e-books, another major threat to traditional publishers and booksellers.

The argument for viewing Amazon in a positive light is not difficult to make.

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In Defence of Valentine’s Day

Posted on by Tara* Kaushal

by Tara* Kaushal

In-Defence-of-Valentines-Day-Sahil-Mane-PhotographyDespite the criticisms in the Indian context, I explain why I'm a huge fan of the day of love. Conceptual image by Sahil Mane Photography.

Call me a romantic fool, but I love Valentine's Day. In college in New Delhi, I'd laugh and say, “Why not? It's just another excuse to celebrate and get presents!” Now, 10 years, awareness and much consumer fatigue since, it isn't about the gift economy at all. For days before, love is literally in the air (and on the airwaves, TV and everywhere). Consciously ignoring advertising suggestions of what we should be giving-receiving, where we should be going, what we should be doing, Sahil and I celebrate without spending. Last year, we just cooked for each other over music and laughter; this year, we're planning a party. I also wish my mother, family and friends.

When I speak of my love for Valentine's, it tends to spark debate with a whole range of people. I've had the religious and cultural traditionalists play the ‘Against Hinduism/Islam' (India's two major religions) and/or ‘Against Indian Culture' Card, say it is a cultural contamination from the West. Friends who are nonconformists and anti consumerism are, well, anti its consumerism, the nauseating marketing blitz and the pigeonholing.

And the many arguments of those coming from a postcolonial perspective are best summed up on Wiki: “The holiday is regarded as a front for ‘Western imperialism', ‘neocolonialism' and ‘the exploitation of working classes through commercialism by multinational corporations' (Satya Sharma in ‘The Cultural Costs of a Globalized Economy for India', Dialectical Anthropology). Studies have shown that Valentine's Day promotes and exacerbates income inequality in India, and aids in the creation of a pseudo-Westernized middle class. As a result, the working classes and rural poor become more disconnected socially, politically and geographically from the hegemonic capitalist power structure. They also criticize mainstream media attacks on Indians opposed to Valentine's Day as a form of demonization that is designed and derived to further the Valentine's Day agenda.”

And, surprisingly, I agree with most of these criticisms.

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