Tuesday, 24 December 2013

Twenty-something things they don't tell you about our glorious economic system, part one

I realise I haven’t posted for a while. I’m currently engulfed in reviewing two books on Marxian economics, The Endless Crisis and The Failure of Capitalist Production – which is a bit of a challenge. In the meantime, I thought that, as this blog was originally intended to review books about capitalism in an in-depth way, I’d share some counter-intuitive and little known facts I’ve encountered along the way.

 1 Between 1980 and 2007 the global labour force grew from 1.9 billion to 3.1 billion, a rise of 63%. 73% of the labour force is located in the developing world and 40% in China and India alone. This has happened primarily because of ‘depeasantisation’ – peasants leave or are forced to leave the land and urban slums expand dramatically. 46 million workers join the labour force, across the world, every year.

2 In every region of the world, economic growth was higher between 1950 and 1973 than between 1973 and 2008. Growth more than halved in Western Europe, Latin America and Africa. Overall world growth stood at 2.9% between 1950 and 1973 and 1.8% between 1973 and 2008. (This data is gleaned from a table on page 53 of Andrew Kliman's The Failure of Capitalist Production)

3 Due to the expansion of credit, in the four years before the financial crisis (2003-2007), global growth averaged 4-5%, higher than at any time since the 1960s.

4 The 2008 crash was the second largest economic crisis in history, after the Great Depression of the 1930s. Without government bail-outs and stimulus, it would have been the largest.

6 7-8% of the labour force in Brazil and 9% of the labour force in Egypt are employed as domestic servants. In England and Wales it is 0.3%. 30-50% of the non-agricultural workforce is self-employed in developing countries, in developed countries it is 12.8%. But as proletarianisation is increasing in the developing world (see point one) and self-employment increasing in the developed world, this balance will likely change.

7  35% of the workforce in Britain in the early 1970s worked in manufacturing. Now it is just over 10%.

8 0.1% of the Chinese and Indian populations are thought to be psychopaths. In Britain and America it is between 2 and 4%

10  Life expectancy for civilians increased in Britain by twice as much during the First and Second World Wars, as it did during the rest of the twentieth century.

11 Trade union membership peaked in Britain at 13.5 million in 1979. By 2009, it was down to 6.7m.

12 Had the share of GDP going to wages in the 1970s been maintained, UK consumers would currently have an extra £100 billion at their disposal, and US consumers £500 billion.

Friday, 22 November 2013

Will the disordered always rule us? Capitalism, anti-capitalism and psychopathy revisited

“Humankind cannot bear too much reality,” said the poet TS Eliot. The shunning of discomforting truths lies at the root of various superficial explanations of financial and economic crisis. The blaming, for instance, of men, irresponsible borrowers or psychopaths all point to a refusal to accept that systemic causes are at work. Because there is a resolute unwillingness to change the economic system, culprits must be found that allow that system, capitalism, to remain uninterrogated.

The psychopath theory of financial crisis is prime illustration of this tendency. As I have written before, the fact that psychopaths are four times more common in senior management positions than the general workforce, is used to account for the destructive outcomes precipitated by the psychopathic institutions these people work for. Corporations – peculiarly selfish, manipulative, lacking in remorse or empathy, obsessed with surface image, irresponsible and grandiose – escape scrutiny because all attention is focused on the psychological flaws of some of the people employed by them.

Thus, with a wave of the ideological wand, the institutional flaws in society are glossed over in favour of the fruitless tail chasing of personal failings. A dearth of emotional empathy among senior executives, however much it can be demonstrated to exist, does not lead banks to create derivatives based on shifting sands of personal debt, it does not prompt corporations to systematically avoid tax and, as this article exposes, it does not spur pharma companies to make small modifications to drug patents in order to extend their life, thus precluding vital advances in treatments by others. In all cases, institutional interests do.

Arrested development

So it was with a distinct feeling of so what-ness that I encountered some admittedly startling statistics in the clinical psychologist Oliver James’ book, They F*** You Up. The book is about how early experiences, rather than genes, have a crucial effect on how we turn out as adults. Unempathetic early care, says James, often leads to personality disorders in later life (psychopathy is an extreme form of personality disorder). While 13% of the general population have a personality disorder, he says, it is present in a majority of high achievers be they in politics, business, the arts or showbusiness. “Early care that lacks empathy,” he writes, “creates an immature adult with arrested development, prone to the reckless and amoral acts of a young child, to the ‘me, me, me' selfishness and inflated grandiosity found in the fantasy life of the toddler.”

While many people with personality disorders do not progress in their careers, a minority, conversely, are extremely successful. “Many of the traits that accompany Disorder are also an advantage in reaching positions of power,” writes James. “Being a chameleon, with the self-monitoring, game playing distance that often accompanies dissociation, has been shown to enhance career success in organisations. If concealed well enough, an omnipotent drive to control others can motivate the industriousness that is so vital to success … ruthlessness is easier if you lack empathy for the emotions of others, as borderline people often do, and being ruthless is usually necessary if you are to reach the very top.”

The question is, does it matter? Does it matter that some senior executives have simply no remorse for the harm they cause while the mentally healthy majority rationalise it as unavoidable or ultimately for the best? It is arguable that the latter situation is far more sinister because to change it involves penetrating a highly resistant ideological carapace. However, I think what James is primarily talking about is the effect internally in the firm of so many calculating, self-obsessed, emotionally retarded managers, rather than their outward impact. And he believes that, though the problem may wax and wane, the personality disordered will always be in positions of power. “There is no obvious solution to this problem,” he writes They F*** You Up. “To run a large business or government department requires extremely hard work, and it may even be that the Disordered are the best equipped to make what others would be a sacrifice of their personal lives.” Ruling elites are always more disordered than the populations they rule over, he claims.

Ultimately, I do think the ubiquity of the disordered at the summit of society does matter, though not in ways that immediately spring to mind. There are implications here for oppositional, anti-capitalist movements.

Stalin was a psychopath

The first point to note is that the problem of the successful psychopath or personality disordered manager is not just prevalent in capitalist organisations. There is an unmistakable alignment between the aims of capitalist corporations – destroying the competition and achieving monopoly status – and the personal aims of ambitious senior managers, beating rivals and contributing to the success of the corporations, oblivious the externalities and costs to others. But other types of organisation are not immune. Speak to the employees of government departments, charities, universities, schools or quangos and you will soon realise that senior managers making other people’s lives a misery is not a malaise confined to commercial organisations. Money is not the only motivation, power is as well, and you can find power in definitely non-capitalist organisations such as,  historically speaking, ruling Communist Parties (Stalin is widely considered to have been a psychopath) or contemporary public sector institutions.

It is unquestionably true that the public sector has mimicked the private sector in the last 30 years. The thumbprints of right-wing economists such as Milton Friedman and James Buchanan are all over the Anglo-American public sector, evident in a disdain for the public service ethos, ubiquitous outsourcing and an obsession with measurement and targets, as proxies for growth or sales. But even a public sector cleansed of all capitalist imitations would not be rid of hierarchy or unaccountable management power.

And society itself has been psychologically remoulded. In a later book, Office Politics, James says the disordered traits of the ruthless, the calculating, the remorse-less and the narcissistic at the top of society in the US and Britain “have spread widely through those populations”. According to Professor Jean Twenge, who seems to have made a career out of tracking psychological traits over time, narcissism has dramatically increased in the US since the late 1970s. By 2006, two-thirds of American college students scored above what had been the average narcissism score in 1982.  Narcissistic people tend to have insecure high self-esteem, to be insensitive to others and to have a preoccupation with their own success. In the 1970s, the social ecologist Murray Bookchin (more of whom soon) pioneered the concept of the “market society”, the idea that the amoral, selfish values of capitalism were now longer confined to the economy but had burrowed deep into society itself. In vogue philosophers like Michael Sandel are belatedly discovering exactly the same concept and it is undeniable that western societies are more “marketized” than they were thirty years ago. The old left-wing dictum, change the institutions and you will change human nature, still holds, but the question now arises, who exactly is going to change the institutions?

What’s the cure?

If there is an “antidote” to the personality disordered executive or politician it seems to be the same as the cure for capitalism – radical democratisation. Psychopathy or personality disorder thrives in hierarchical organisations. “Triadic [personality disordered] behaviour flourishes where ruthless, devious selfishness is advantageous and where an individual is very concerned to gain power, resources or status,” writes James. Bastions of power in corporations that offer the opportunity to rule over subordinates, or niches in governments that permit the manipulation of public opinion would both be closed by radical democratisation. I have no evidence to demonstrate this, but I would hazard a very strong guess that personality disorder among managers in the Mondragon federation of co-operatives in the Basque country in Spain, where all managers are elected by annual assemblies of workers, is very much lower than in capitalist corporations. “At work there is potential for people to find a nucleus of friendships and to feel valued,” write Richard Wilkinson and Kate Pickett in The Spirit Level. “This potential is usually undermined by the hierarchical stratification of people into various gradations of order-givers and order-takers, which ensure that employees act not as a community, but as property, brought together and used to earn a return other people’s capital.”

It is no accident that contemporary oppositional movement such as Occupy and the 15m movement in Spain  endeavour to be leaderless movements, based on direct democracy, denying representatives the niches to dominate others. They embody a conception of politics which rejects the strange Janus-faced character of modern representative government. The money-saturated weakness of mainstream parties which sees them all cling like limpets to a failed consensus, allied to an adversarial practice in which, come election time, each faction tries to annihilate the other through negative campaigning and the manipulation of public opinion.

The thought of Bookchin, which pre-figures even if it doesn’t directly influence, Occupy and the Indignatos, comes from a completely different place. Embodied in Bookchin’s concept of dissensus, disagreement is not something to be frightened of or eradicated, but to be positively encouraged as a consequence of genuine, face to face political participation. Echoing the philosopher Hannah Arendt, he thought political freedom was a fraud without participation in government.  He believed that the effect of the “market society” he identified could be counteracted by new institutions, face to face assemblies of the population. In contrast to the eminently selfish institutions of capitalism, these would be selfless institutions, aiming to foster capabilities in their participants that were denied or squashed in the world outside.

But there is a problem here. These new democratic institutions, shorn of the pathologies of representative government or corporations, inevitably have another role – that of challenging for, and achieving, economic and political power. They would first espouse a minimum programme of reforms but later a maximum programme of forming a “dual power” to challenge and ultimately replace representative political institutions and capitalist corporations. We are plainly nowhere near that situation at present, but the question, I think, should be put. Would the degree of centralisation inherent in enabling these horizontal organisations to challenge hierarchical power, provide a breeding ground for exactly the psychological pathologies James speaks about? The history of the Left is replete with examples, from Lenin to Julian Assange, of charismatic individuals dominating the institutions they helped to create, and of radically democratic institutions, from the French revolutionary sections to the soviets of 1917, being perverted or destroyed to buttress hideous dictatorships. I’m not arguing for a second this happened for immutable psychological, rather than ideological, reasons, but it indisputable that the modern Left has seldom managed to oppose the status quo without lapsing into cliques and factions irrelevant to the mass of people and frequently speaking a different language. If the Left does succeed, in the coming decades, in becoming much more popular will it not be hampered by similar psychological flaws as the society from which it emerges?

Bookchin, in his later years, said it was unavoidable that vanguards, minorities of people with more knowledge and commitment, would come into existence. “The main problem of political organization is how to institutionalise the relations between those who know more and those who know less,” he argued, “and to do so in such as way that the more knowledgeable leaders – and leaders do exist even in confederal movements! – do not turn into bureaucrats or authoritarians.” This strikes me as a political tightrope from which it is easy to slip. It’s not hard to see why many oppositional movements eschew taking power in favour of activism, but to take that position is to indirectly justify current power arrangements from which you are always trying to extract concessions.

Faraway so close

This has maybe strayed from the original point of the article. What I believe should never happen is that, faced with the insights of people like Oliver James that the powerful are frequently disordered, leftists lapse into psychological explanations for systemic problems. James himself illustrates the flaws in this approach. Of all developed nations, he says, Japan is the least disordered. An attention to early infant care, a sense of connectedness and order, mean that there are far fewer psychopaths or narcissists in Japan compared to the US and Britain. Culturally, Japan is very different.

But the economic problems of Japan and the US and Britain are remarkably similar. All three nations suffer from chronic corporate and personal debt and cannot escape from economic stagnation. Japan pioneered Quantitative Easing, a policy which has now become the lynchpin of economic policy in the US and UK, and which has become more fervently practiced in Japan after earlier bouts of it failed. This similarity indicates that all three countries are in the grip of an economic system, capitalism, whose characteristics have absolutely nothing to do with national culture or levels of personality disorder. It’s still the system, stupid.

Friday, 1 November 2013

Tottering on the edge but never permitted to fall into the abyss

It has become fashionable again to speak of the contradictions of capitalism. Radical geographer David Harvey is writing a book about the 17 Contradictions of Capitalism (don’t ask why but critical economic thinkers like Harvey and Ha-Joon Chang with his 23 Things They don’t tell you about Capitalism seem to have this fascination with random numbers). For example, one of Harvey’s contradictions concerns market demand. One way to ensure demand is healthy in an economy is through high wages but if they rise too much they eat into profit. So, since the 1970s economies have definitively swung the other way, suppressing labour and trade unions and trying to restore profit. But that just creates the opposite problem, with employees whose wages are being squeezed unable to afford the products produced by firms and turning to borrowing as a consequence - creating the economic problems we are painfully aware of. That’s a contradiction – whichever way you turn under capitalism (a system in which employees and employers have conflicting interests), insoluble problems rear up.

But I want to talk about another contradiction of contemporary capitalism, albeit one which has attracted less attention, but is still a contradiction in the sense of attributes being in conflict with one another. That is modern-day capitalism’s instability, indeed worsening instability, countered by the determination of business representatives, politicians and the state to always stop it from collapsing completely. That is why, I would suggest, we inhabit this strange and conservative world.

Bubble Trouble

Capitalist instability is attributed by Keynesian and Marxian economists to the business cycle: competing firms produce more and more goods which eventually outgrow the ability of workers to consume them, glutting the market and causing bankruptcies and recession. Once this process of destruction has been played out, the process can start all over again. It is one of the features of the last thirty years that this instability has become chronic. Britain, for example, has suffered three major recessions and spikes in unemployment since 1980, in contrast to none between the end of World War Two and the mid-1970s.What has happened is that the instability of the business cycle has been supplemented by the greater volatility of a financialised economy. According to the Cambridge University economist Ha-Joon Chang, virtually no country in the world had a banking crisis between the end of the Second World War and the mid-70s. Between the mid-70s and late ‘80s, 5-10% of countries did. This grew to 20% in the 1990s and then to 35% with the onset of the 2008 global financial crisis.

Another way to look at this process is as a series of financial bubbles which went the way of all bubbles. “The thing you need to realize,” wrote Paul Krugman in August, “is that the whole era since 1985 has been one of successive bubbles. There was a huge commercial real estate bubble in the 80s, closely tied up with the S&L crisis; a bubble in capital flows to Asia in the mid 90s; the dotcom bubble; the housing bubble; and now, it seems, the BRIC bubble. There was nothing comparable in the 50s and 60s.”

The bursting of these bubbles caused major real world effects. The East Asian crisis of the 1990s, referred to by Krugman, precipitated mass unemployment in the region and more foreign ownership of companies in countries like South Korea. What he modestly calls the “housing bubble” became the 2007-8 global financial crisis whose effects are still being intensely felt now. But the point to keep in mind is that action by governments prevented these crises from following their natural free market course and becoming far more destructive than they actually were.

Don’t purge the rottenness out of the system

Marxian economist Andrew Kliman has pointed out that the 1930s Great Depression was the last time there was a genuinely free market response to one of capitalism’s periodic busts. Then US Treasury Secretary Andrew Mellon wanted to “purge the rottenness out of the system” by liquidating stocks, labour, real estate and farmers. “The amount of capital value that was destroyed during the Depression was far greater than advocates of laissez-faire policies had expected,” writes Kliman in The Failure of Capitalist Production: Underlying Causes of the Great Recession, “and the persistence of severely depressed conditions led to a significant radicalization of working people. Policymakers have not wanted this to happen again, so now they intervene with monetary and fiscal policies in order to prevent the full-scale destruction of capital value. This explains why subsequent downturns have not been nearly as severe as the Depression.”

If you want to see an example of “significant radicalization” that policy-makers are so desperate to avoid, look to Greece now, where both the socialist Syriza and Fascist Golden Dawn are on the rise, and in danger of eclipsing the conventional, capitalist parties. The suffering in Greece is politically created, as opposed to just being an outcome of economic slump, but it shows what the “full-scale destruction of capital value” could look like and bring in its train and why policy-makers are so terrified of universalising it.

The economist, Harry Shutt, has said the period since the 1970s has been characterised by a “progressive postponing of the evil day” on the part of ruling elites. The 1987 stock market crash was nipped in the bud by pumping money into the banks, the Latin American debt crisis resulted in public bail-outs, the response to Russian hedge fund crisis of the late ‘90s was a recapitalisation of financial institutions by the US government to the tune of $3.6 billion and when the dot.com share bubble burst in 2000, interest rates in the US were held below the rate of inflation for three years in order to encourage borrowing and avert a recession.

All these government interventions to stop capitalist busts following their natural course are dwarfed by what happened in 2007/8. A conservative estimate puts the cost to the public at arresting the crash at $7.7 trillion in the US and £1.5 trillion in Britain. There is a consensus that this intervention had to happen, governments had to stop this “sucker going down”, in the poetic words of George W Bush. Without action, companies would have been unable to pay their staff, ATMs would have not dispensed cash, trains and buses would not have run. The system would have collapsed, with untold and unpredictable human consequences and suffering.

There was political unanimity about the necessity of government intervention. For the Right and Centre and faux-Left, intervention meant “capital value” was saved. For the Left, intervention meant that the structures on which ordinary people depend for the livelihoods were stopped from going under. Allowing everything to be liquidated, as Andrew Mellon recommended in 1929, was not regarded as an option. Referring to Mellon, the famous left-wing economist, John Kenneth Galbraith wrote in 1954: “a developing depression would not now be met with a fixed determination to make it worse”. The contemporary mainstream Left, Right and Centre would all concur.

Groundhog Day

But, as a result of this consensus, little attention is paid to the consequences of the fact that complete collapse was not allowed to happen, that “full-scale destruction of capital value” was prevented: the huge insolvent institutions bailed out (which, if the market had had its way, would now be in the dustbin of history), simply said ‘thanks very much’ and went on acting in precisely the same way as they did prior to the crash occurring. That is why there is a Groundhog Day quality to the UK economic ‘recovery’ based, as it is, on rising house prices and household debt; factors which caused the crash in the first place. The only purging allowed is inflicted on those at the bottom of society – the unemployed, benefit claimants, the disabled. Those at the summit are the recipients of government intervention, not laissez-faire. Nothing was solved and nothing has changed, not least declining real wages which necessitate greater household debt for consumption to go on happening.

The processes that aim to re-balance the economy, which almost all politicians say they want, cannot happen because the dominant financial institutions, which in the years leading up to the crash made the economy so unbalanced, are still dominant - because they were artificially stopped from going bust. Instead of innovation and organic growth, you get stagnation, monopoly and the unalterered ascendancy of finance. Contemporary politics is characterised by a fervent desire for the benefits of capitalism, but an equally strong aversion to experiencing its negatives.

Looked at another way, it is possible to have the advantages of capitalism - healthy economic growth, innovation, new firms replacing old - but only if you accept periodic destructiveness and all that that entails. But, of course, the last time this destructiveness was allowed unbridled reign, in the Great Depression of the 1930s, the results were not only the immediate ones of mass unemployment, hunger and destitution but the later, though no less attributable ones, of Nazism, Stalinism and the physical annihilation of World War Two. Only after this orgy of destruction had played itself out could the so-called “Golden Age” of capitalism begin.

Thus there is a determination on the part of ruling elites to perpetually put a lid on the instability of capitalism for fear of what will ensue if they don't. But this inherent instability keeps bubbling up nonetheless. The question now is: are ruling elites merely (quite literally) buying time, in a futile attempt to avert a systemic meltdown that will inevitably happen eventually? Will the next one blow the lid off?

Note: I’m indebted to this article, Forever blowing bubbles, on the UK Independent Working Class Association site, which sparked the idea for this post.

Tuesday, 29 October 2013

"Money has lost its connection with social reality." Interview with Generation Basic Income, part two

In the second part of the interview with members of the Swiss Generation Basic Income, we discuss the effects of introducing an unconditional income, how it will be financed, criticisms of the concept, inequality, and the ugly nature of current policies on welfare.

You can read the first part here

Enno Schmidt, the co-founder of Generation Basic Income, has said a basic income could be “one of the landmark historical moments, like the abolition of slavery or the civil rights movement”. What do you think will be the social effects of introducing an unconditional income?

Che Wagner: To have a right for an income that will make possible a life in dignity without condition is a landmark historical moment for sure! Primarily it represents a question to each and every one of us: do you trust others? Introducing a basic income will pose the question of trust in a fundamental way: what will you do if your income is assured?

Socially this means nothing less than that I am fully accountable for my deeds in the sphere of what I contribute to others through my work, but not in a juridical sense, because the basic income is unconditional. There won’t be a penalty for those who are not ready to contribute anything. But in the social sphere I will have to stand by the things I do for others and there are no excuses anymore, such as I have to do this because I need an income.. etc.

In the aftermath of financial crisis, we are constantly told that public spending cuts are unavoidable and that we must “live with our means”. A basic income is going in the opposite direction. To mouth a hoary old objection, where would the money come from to fund a basic income?

Enno Schmidt: This is a matter of education. Money is created where goods and services are produced that are for sale. Otherwise they could not be bought. What can be produced, can also be financed. We have no shortage of goods. There is not only enough money, there is too much money. But a lot of money has lost its connection with social reality. We do not know what the economy is, what money is, what taxes are. We think the economy is there to make money-profits, that money is a possession of which one can never have enough, and taxes should be avoided. That's just silly. The economy is there to satisfy the needs of others, to do something that benefits others. Money is a legal means to regulate the exchange between performance and need. Taxes are what we pay for the work to which we assign to the state - work, which is not paid by the individual consumer, but work we want to fund as a community. The tax is a division of the process to be generated socially, in part by the private and non-profit sectors. When you buy a computer, you don’t pay for the one you get, but the next, which is already produced. The one you took already was paid for, otherwise it could not be there. And what accounts for its price, is not the stuff that will be available at your desk, but the income of all involved in the production process, so that a computer can be made ​​and given to you. These is also the source of the income of the people who run the government and non-profit work.

All money goes into income. That's one thing. And a second is that there is so much work, as there are people. The income enables you to work. It makes you free, it allows you not to just take care of yourself but also to do something for others, and to live by what others do. This is the situation today. But we still think like it was 150 years ago. Work cannot be paid, otherwise you can buy people. Actually, slavery has already been abolished. But not in our habits.

 Where will the money come from for the unconditional basic income? It is already there. We share sufficient goods. We all have more or less an income sufficient to live on. This level of income will be made unconditional. How does it work? This is a consideration for economists. When all have an unconditional basic income, prices rise or wages fall. Most likely, wages and benefits will decrease on average to about the level of basic income. Because everyone now already comes with an income to work. Income from labour is relieved of the task of ensuring the existence of people. Wage negotiations will take place as free negotiations between free people.

There are objections to basic income from the Right and Left. Conservatives says that an unconditional income would lead most people to sleep late, drink, take drugs and not do anything useful. Some left-wingers say it is unfair to allow able-bodied people not to work while leaving the burden of producing necessary goods on others. How do you respond to these criticisms?

CW: Regarding the arguments from the Right: basic income is an arduous idea and initiative as well and is not about being lazy. The primary question for everyone is: what are you going to do when your existential income is secured? To keep up at this question will be hard and everyone has to deal with it individually. Some may go to sleep late as well but that’s within their own freedom – I don’t see a problem or even an economic issue there.

Regarding the arguments of the Left: with the basic income, people are free to contribute to society what they individually find necessary. For the first time in history that will convert to something we could call a free market situation, where everyone has the ability to say “No”, because their basic needs are unconditionally covered. To produce necessary goods is a question of the need of these very goods or services. Why wouldn’t these goods be produced anymore? It will definitely have an impact on the prices of these goods and services in the sense that quality producing will get cheaper in comparison to quantity and profit-oriented producing.

Large parts of the Left fear the shift of power to the individual who is enabled to say “No” by the existence of the basic income and thereby forget this very shift used to be the one political agenda in their initial formation a century ago. The big difference now is: it’s not a class war anymore but a simple step to empower everyone economically, whatever social class he/she may belong to.

ES: The Left and the Right are used to talking about others and to judge without touching their own heads. Perhaps the conservatives would only sleep late and take drugs, and the leftists live by the actions of others. Today, many have switched off at their workplaces, today more and more people are mentally ill and take legal drugs that are already prescribed to children. There is no way forward, without thinking again.

Does Generation Basic Income have any other objections to capitalism or conventional Parliamentary democracy? I note that you are working directly through a referendum, rather than through the Parliamentary system. Is a basic income sufficient or does society need other changes as well?

CW: I do not want to generalise here because every nation and cultural sphere has its own history. But the idea of the discussion or even implementation of an unconditional basic income is not limited to any borders; it’s a global idea in a globalised world.

I don’t object to capitalism in general because I don’t see a problem in concentrating forces by raising capital to be able to make things and ideas possible – that’s a great thing! But we’re in a situation now, where capital has too much weight and people are controlled by it and can’t live in dignity anymore. The unconditional basic income is able to change this situation not by destroying capitalism but by humanising it.

As you can easily observe, in many countries within the EU plus the USA, Parliamentary democracy is stuck in a deep crisis. In my opinion, the idea of a basic income doesn’t work in a top-down setting and it is only natural that the movement is diverse and carried by people like you and me. Strongly Parliamentary systems and political spheres controlled by parties won’t be able to keep up with such a movement. If people are able to take into consideration individual economic power and self-determination, the question of political rights and power is never far away.

There is another forthcoming referendum in Switzerland, on whether to limit pay differentials in companies to a 12:1 ratio. Does Generation Basic Income overlap with the people behind the “1:12 initiative”?

CW: The “1:12 initiative” is an interesting but rather conventional leftist proposal. We are in contact with some of the initiators and talking about similarities and differences but from the basic mindset, the two initiatives are still very far from each other. The basic income does not want to take anything away from anyone by law. On the one hand, “1:12”, like our initiative is the attempt to socialise our society. But the basic income asks: can you trust your neighbour enough to give him an unconditional income without forcing him to work for it? It can be seen as a very liberal initiative because it does not dictate by law as to what you're going to do with that income in any way. It is not predictable what will happen with this new freedom and that’s the root of all the fear of opponents, including the leftists behind “1:12”. Still, I would definitely count the “1:12” group as part of the Basic Income Generation because they are doing something they really want to do out of an inner decision – in that case being politically active!

Marilola Wili: Those two ideas are not standing in concurrence but do not overlap either. They are two totally different approaches. The “1:12 intiative” wants an income upper limit and to set a ratio by law. The idea of an unconditional basic income wants to empower everyone and ask herself/himself what she/he wants and what she/he is able to do.

ES: Also, the difference is that 1:12  just throws a stick into the gearbox. The thought is good. It is very easy to say this is justice. But nothing moves, because income is only reduced and comes from the side of an isolated regulation. It is one measure. The basic income doesn’t come from the side of a regulation, a measure, a smug sense of justice. As Che said, the basic income is not directed against capitalism, it is just better than that. It allows people to do better and to develop it further.

I wanted to ask about the 1:12 initiative because there is growing recognition, in the UK (as well as in other countries) of the damage caused by inequality. There was book published in the UK a few years ago, called The Spirit Level, that showed that social problems such as mental illness, poor educational attainment, violence, obesity, teenage conceptions etc were invariably worse in countries of high inequality. Also, I think you can trace a lot of causes of financial crisis to too much money at the top of society – money that goes into restructuring companies, mergers and acquisitions, and speculation in shares or commodities like food. Is not inequality – as opposed to solely providing an unconditional income for people – a problem that needs to be addressed?

ES: Yes, inequality has all the effects you mention. But why does nothing change? We know everything. While I am writing these words 20 children will die of hunger. Why do all the good intentions change nearly nothing? We have organisations for everything but something is missing. The old forms of justice do not apply, they have brought us to this point.

It will take a lot more than proposals such as the 1:12 Initiative. It is a distraction and not just because those in power will prevent it. But because the thought has no substance. You might think you could reach 1:12, it is so simple and direct, but it has no reality. The unconditional basic income looks like it is just imagination, but it is very real. Basic income is not against anybody or anything. It eliminates poverty, it does not stick to hatred of the rich. It’s a trap, to always look on the rich. With a basic income, a lot more people can work to ensure that inequality decreases. Then you can look at why some people are so rich, then you can go to the source. Then you can look at the causes and see what to do differently. But that only works if people are strengthened.

In the UK and elsewhere, the political debate on “welfare” is fixated on imposing ever more punitive penalties on benefit claimants, and that includes disabled people, for not seeking work with enough ardour. Hunger and destitution are resulting and more and more people rely on food banks. Does a basic income have the potential to bring about a paradigm shift into this ugly debate?

CW: You’re speaking of one of the core shifts that has to take place, whether a basic income is introduced or not. The problem here is a lack of income and not a lack of work or employment. People need an income in order to be productive and to contribute for others by work. It’s a simple rule you can test on yourself: when is it you’re more productive? In a state of pressure and stress or rather in a state of ease and security?

MW: If the basic needs of everyone are met unconditionally, the stigma of being poor, unemployed or providing care-work would swiftly disappear. That’s only one reason why the unconditional basic income would change a lot in these problems.

ES: We are now in a time of old, outdated thinking and old ideas are becoming more violent because they feel they are no longer correct. But this thinking wants to stay with all its might. It tortures people, it can only assert itself at the expense of others in its falsehood. The backlash can be bloody. We hope not. The unconditional basic income is a way to channel the pent-up energy in a positive and creative track. That way,  the contempt for the people, the misanthropy loses its power.

What does the future hold for Generation Basic Income? If you don’t win the forthcoming referendum, will you continue to campaign?

MW: Generation Basic Income is the main source of this initiative in Switzerland but we’re not bound to the results of the initiative or to borders. We are living the idea of an unconditional basic income. It’s a lifestyle. We are going to continue to engage with the idea and to make it sensible for as many individuals as possible.


The 1:12 referendum was defeated, sadly, by a margin of 66-34 - http://www.independent.co.uk/news/world/europe/swiss-voters-reject-112-proposal-to-cap-top-executives-pay-in-latest-referendum-8960669.html 

Wednesday, 23 October 2013

"We're facing a shift in what work means and it is this generation that can express this shift." Interview with the group behind the Swiss Basic Income referendum

Orson Welles was wrong. While most of Europe labours under the strictures of a failed and destructive economics, Switzerland shows independence of mind. The country will soon hold two referendums. One will ask whether the pay differential in companies should be set at no more than 12 to 1. The other proposes that all Swiss citizens receive a monthly unconditional, basic income, whether they are in or out of work.

We are not the Beautiful interviewed Enno Schmidt, co-founder of Generation Basic Income, the group behind the basic income initiative, as well as two of its members, Marilola Wili and Che Wagner.

Here is the first part of the interview:

There will be a referendum in Switzerland soon on whether every citizen should receive an unconditional income of 2,500 Swiss francs (£1,711) every month from the government. When will the vote take place and will a basic income be introduced if you win?

Enno Schmidt: How high the basic income will be is not fixed in the initiative. The amount of 2,500 Swiss francs is only an example. The actual amount will be the result of another discussion and vote in the population. What amount allows a life in dignity? These are questions for the democratic process.

It’s not right to say the basic income will come from the government. The government has no money. It will come from everyone in the community and will be transferred through a levy or tax. The government manages money from the population in order to do what the people have entrusted them. We live in illusions. We live in the idea that we are going to work for ourselves because we get an income on which we live. But, in truth, we go to work to do something for others. And we need an income, regardless of that, to live. Basic income means a new look at everything, not a simple belief in what appears in the newspapers. Today, we pay all the taxes in the prices of goods and services. All taxes on income, on corporate profits and so on are included in the prices. But invisible. The tax or duty for a basic income will be paid in the prices of goods and services too. But visible. Perhaps the process is carried out on behalf of the population by a federal office, but it is quite wrong to say that the money comes from the government.

The vote will take place in two to four years. At present the Federal Council is considering the proposal and examining the consequences. Then the Parliament will do the same. Then the vote will be fixed. If a majority of people vote yes, the federal government is mandated to implement a basic income. But that will be many steps, processes of consciousness and votes, away. This is a long journey in which everyone participates. It is not a shock, not a regulation from above.

We offer this idea and make it clear. It is not our gain if the majority wants it.

 Is the idea that this monthly unconditional income will replace all welfare benefits?

ES: The principle is that each person receives this basic income, unconditionally, regardless of how one lives and what one does. It is set to be high enough to live on and to last a lifetime. What happens then? Today’s benefits, up to the amount of the basic income, fall away. The principle of social assistance or welfare benefits remains. But it will be much less necessary.

What else will happen? Income from labour will be renegotiated. With a basic income, I can say no to a bad deal. And yes to what I really want. With a basic income I already bring an income to employment. Earned income is supplemented with the amount of income that secures my existence. Good work that people like to do, will be cheaper. Poor work that people do not like to do, will be better paid, because no-one can be blackmailed with their existence to do it. Basic income does not necessarily mean more money. It is the unconditional nature of the income that is important. Only someone who has little today will have more money in their pocket with a basic income.

Your group, “Generation Basic Income” has submitted 100,000 signatures to force the referendum to happen. Did it take a long time and a persistent campaign to collect them?

Marilola Wili: It did take a long time to actually get the collection of signatures started. The collecting campaign started in April 2012 and, after the first few months, there was not too much happening on the streets. That’s why we founded the Generation Basic Income in September 2012:  to spend all of our energy on the most important part of the Initiative’s history: collecting those 100,000 valid signatures. Due to the fact that almost all of the work related to collect Swiss citizen signatures was voluntary, our most important virtues were fun and focus on the beauty of this process. We designed little competitions or the format “100 times 100”, where 100 people assured to collect 100 signatures within a certain timeframe and invited them to celebrate those 10,000 signatures in the best hotel in town.

In December 2012 Generation Basic Income decided to get the signatures by April 21st, half a year before handing them in. With that, a boost of engagement was set free and on the day, accompanied with a live-ticker, all of us energetically collected signatures to reach this goal. One of the keys of our success lies in our name: not only is it a political question but we’re facing a shift of the paradigm what work means to us, and it is this generation who is ready to express this shift.

ES: Many people have collected signatures, many older people too. And some, very bravely, alone. Generation Basic Income has put the salt in the soup. It was not easy to find this many signatures. We are not many but we have persevered and continued with a strong will. In the end, we have collected 142,500 signatures, 100,000 are necessary. But only 126,000 are valid [the population of Switzerland is about 8 million].

Is there a groundswell of support for a basic income in Switzerland?

Che Wagner:  For the collecting campaign we always talked about 500,000 people who would sign as soon as you asked them directly. Our job was to reach them in the streets, at railway stations, public squares, on festivals or within families. My experience during all these thousands of encounters was often a spontaneous support. But after a while I met all the arguments, which insist that a basic income is impossible. Nobody is capable of ignoring this idea because it is pointed towards every single person. So, by collecting the signatures I had the impression that the more someone knows about the idea, the more he is empowered to support it, too.

“Generation Basic Income” is the generation that already feels what it is to live a life in the mindset of an unconditional income: to actually do what you want to do and to insist on what you want to stand for. Those are the people who are our groundswell and this is a fast-growing generation.

ES: I don’t think there is a greater groundswell of support than in other countries, but in Switzerland there is direct democracy and therefore we have a good cultural conversation. In Germany, for example, when one speaks of the unconditional basic income, many people immediately think that once again something will be decided over their heads. In Switzerland, people listen and think about it because nothing will happen if they do not want it. They are politically sovereign.

There is a great deal of international interest in the Swiss referendum. Can you say in which countries this is strongest and whether you know of others that are likely to follow the Swiss lead?

CW: With our money pile performance we wanted to provoke the media and the international community to acknowledge this historical moment with a unique picture. But I am still amazed about the strong and enduring reaction the handing in of the referendum had. Apart from Switzerland and other central European countries, there was a big interest coming from the East, with Russia Today (RT) broadcasting directly on site as well as Chinese media. Then, there was response from the Arabic press, which was surprising. The strongest response I felt was coming from some Balkan states, especially Croatia, Slovenia and Macedonia, where the idea of a basic income turned into quite a national debate a week after the performance. These debates were also boosting the European Initiative to collect 1 million signatures within the EU with the aim of having a debate all over Europe.

Now, several weeks after the event on October 4th, the media response is shifting to the English-speaking world including Great Britain, Australia and the US. There, you can sense that it’s rather an intellectual sphere that is willing to discuss such an issue rather than the broad public.

From the beginning, Germany was the strongest ally in our Swiss initiative. Throughout the campaign, there were Germans involved. I have the hope that not only will basic income become stronger as a topic, in Germany and elsewhere, but also the great tool of direct democracy will attract attention, because it is definitely the key to this whole process. 

ES: I think the most important message of this successful initiative for unconditional basic income in Europe is: direct democracy through referendum – so that the population can implement ideas and it is democratic. Governments in Europe are divorced from the population. You have opinion polls but the population has nothing to say. The lobbies have something to say, however, and money rules. False ideas of economy apply the thumb screws. Basic income is Enlightenment, it is an evolutionary revolution. We are always told we have democracy, but we don’t. Politicians do not want a direct democracy because they will lose power. The basic income strengthens the individual because it speaks to him. It dares a person to think for themselves, to take seriously what one perceives and feels.

Why do you think a basic income is necessary now?

MW: Never in world history were there more products produced, or services delivered and money circulating, than in present times. In Switzerland, and in all western countries, we live in total abundance rather than in scarcity. There is way more than we actually need for consumption. At the same time people live often in fear not to get enough or even are forced to live in poverty. This is a paradoxical situation: Large parts of the people in western societies are living far from the actual reality in their mindsets.

The idea of unconditional basic income helps to uncover this big misunderstanding of our current reality and helps to let go this unproductive and even dangerous fear of scarcity. This idea is able to make things visible and then unpredictably sets human forces free in ways one may have never thought about.

ES: With a basic income people get to what they really want and find important. So much of life is wasted and so many talents remain untapped if we hold to the old ideology of gainful employment and full employment in gainful employment. Lives have fractures; you do not stay in one job all your life. There is a lack of attention, of time for people. This rationalisation puts a limit on living. “We cannot solve today’s problems with the thinking that has brought on these problems,” said Albert Einstein. Basic income is new thinking.

Here is Part two

Friday, 4 October 2013

The blinkers of liberalism: why collaboration is not cause

“I don’t think it helps anyone to see the current imbroglio as simply a function of late capitalism in its most aggressive aspect,” wrote Will Self a couple of months ago in an essay about the success of big pharma in enlisting the cooperation of the psychiatric profession in its demonic bid to sell billions of anti-depressant pills around the world. “I’m afraid,” he went on, “I have to mouth the old lily-livered liberal shibboleth at this point and observe that, yes, we are all to blame.”

Pardon me, but I’m going to be unhelpful. I’m returning to Will Self’s article, not only because I've got OCD and will devote the next 28 posts to it (including his use of the phrase ‘late capitalism’ which really gets my goat) but because it illustrates a ubiquitous misconception in understanding how the problems of our society arise.

Self, who essentially defines himself as a liberal, makes a mistake emblematic of that world-view, in confusing collaboration and cause.

Broadly speaking, reactions to the flaws or problems produced by contemporary society that become impossible to ignore (the financial and economic crisis is a prime example), fall into three camps:

1. Conservative. The economic system, said the free market think tank, The Institute of Economic Affairs, at the dawn of the neo-liberal era in 1978, has no impulses of its own aside from the desires of the people that comprise it. Conservatives emphasise personal responsibility and believe that our economic system merely mirrors our own desires, so any malfunctioning or perverse outcome, is ultimately our own fault. The UK Conservative Defence minister, Philip Hammond blames the economic crisis on “consenting adults” who went on an unsustainable debt binge. Another English conservative, Tim Montgomerie, responds to calls for more regulation by asking ‘how do we put limits on ourselves?’ However, this diffusion of responsibility is only invoked when things go wrong. Success, by contrast, is attributed to the efforts of a talented few. “You have the courage to tell the masses what no politician told them,” wrote the post-war free market economist Ludwig Von Mises in a letter to Ayn Rand. “You are inferior and all the improvements in your conditions which you simply take for granted you owe to the efforts of men who are better than you.”
2. Liberal. It is here that we first encounter the idea that corporations may have a share, even quite a large share, of responsibility for society’s ills. “If you aren't familiar with the fact that almost all drug trials are funded by those who stand to profit from their success,” says Self in his essay, “… well then you jolly well should be.” But corporations are not alone when it comes to apportioning responsibility. They have a willing accomplice – people. “Although it’s nice to reserve the blame for banks which made lending too easy,” asserts John Lanchester in Whoops!, a book about the credit crunch, “the great British public is just as much to blame.” The insatiability of wants and power relationships, say Robert and Edward Skidelsky in their book How much is enough?  combine to produce “an ethic of acquisitiveness, which dooms societies to continuous, objectless, wealth creation.”

3. Leftist. The problems are systemic. To blame individuals, be they consumers, men or bankers, for disastrous outcomes is just finger pointing and a way of distracting attention from what is actually happening. Employees and consumers, rationally following the paths set out for them by this economic system, will inevitably generate booms and busts and seemingly intractable social problems. As an example, consider how consumer borrowing leapt up in Britain after 2000 just as earnings growth slowed to a trickle. The cause of the financial crisis of 2007/8 was not “reckless banks” or irresponsible borrowers but too little money at the base of society, leading to the implosion of derivatives such as mortgage backed securities, and too much money at the summit, destined for speculation. “Few recognise the system as the problem,” says Marxian economist, Richard Wolff, “rather than this or that group reacting to the system’s demands and pressures.”  According to this systemic approach, consumerism is not a regrettable quirk of human nature, but the glue holding the system together, and a glue that has lost much of its adhesiveness.

Consuming ants

The criticism of this perspective is that it robs people of a sense of their own volition. “Even if consumer preferences can diverge from real needs, they cannot be entirely independent of those needs; they cannot be simply “instilled” in us by the “productive apparatus” or some other such monster,” say the Skidelskys in How much is enough?  “To assert this is to deny individuals all agency, to reduce them to ants or drones”

At a common sense level, the liberal perspective conforms to what we intuitively know. “It might seem as if it is the average citizen, you and I, who are the main problem,” says a writer for social ecologist magazine, New Compass. “Who else is driving polluting cars, buying plastic toys or eating food grown on the other side of the planet?"

We can blame advertising, but advertising cannot shape desires out of nothing, protest the Skidelskys. It cannot, they point out, persuade us to buy dog turd. Advertising has to have something to latch on to in the first place and that something is “intrinsic” human wants.

But the liberal perspective is, in my opinion, a gigantic red herring, a major stumbling block that needs to be overcome to understand the society in which we live. Of course, humans are to blame - our intrinsic desires make this economy function. But you can say the same of any social system; potential human desires are not just consumerist. Nazism rested on human desires, just as this neoliberal capitalist society does, just different desires – the desire to belong, to merge into a larger whole, not to think,  and to blame others for things that are not their fault (a facet of “human nature” which never went away and is returning with avengance). The question that needs answering is not why human nature is always so corruptible, so weak, so easily directed, but why certain “intrinsic” human desires are encouraged endlessly, in particular societies, but others are left to rot. In short, what drives this society, the one we inhabit and are so loath to seriously interrogate?

A cracked mirror

 Will Self embodies the liberal capacity to see and yet not see. In his Guardian essay, he refers approvingly of James Davies’ book, Cracked: Why Psychiatry does more harm than good. “The sections of his book,” he writes, “that deal in particular with the way big pharma has moved into markets outside the English-speaking world and effected a wholesale cultural change in their perception of sadness (rebranding it, if you will, as chemically treatable "depression"), simply in order to flog their dubious little blue pills, make for chilling reading.”

Yet, at the same time, Self insists, “we” are to blame, even though we find it hard to acknowledge this uncomfortable responsibility – we go to the doctor feeling awful and we acquiesce in whatever they suggest (in this case swallowing SSRIs) will make us feel better. To add weight to what Self is saying, consider the opinion of Dr Ramin Mojtabi, a professor in public health in the US. “It’s not only that physicians are prescribing more [anti-depressants], the population is demanding more,” he says. “Feelings of sadness, the stresses of daily life and relationship problems can all cause feelings of upset or sadness that may be passing and not last long. But Americans have become more and more willing to use medication to address them.” This is the perfect encapsulation of the liberal case; pharma companies may be pushing the anti-depressants on to us with machine-like eagerness but we are only too happy to oblige. In fact we are biting their hands off to get them.

On closer inspection, though, the liberal case does not add up. There would be no need for pharma companies to effect a cultural change in non-English speaking countries if the demand were already present. They have to first create the demand, effect the cultural change and then watch the profits roll in. Secondly, there is an obvious reason why anti-depressants are the current drugs de jour.  They are eminently suited to our neo-liberal, capitalist societies because they have a reputation (merited or no) for enabling people to go on functioning through mental illness. And to function, to hold down a job, is exactly what people must do. They can’t afford to take time off to be ill. In this way, anti-depressants are remarkably similar to the very popular flu “remedies” which ameliorate flu symptoms. But the only cure for flu is rest. The concept of rest now has unmistakable air of decadent forbiddenness.

But the cart before horse logic of liberalism is irresistible to some. “Americans’ appetite for cheap clothes is one of the strongest of the economic forces that led to a boom in Bangladesh,” says an article in the Wall Street Journal, referring obliquely to the building collapse in Dakar which killed 1,129 garment workers “with the resulting race to add manufacturing capacity,” the article continues, “setting the stage for a series of horrific accidents.” The problems are demand-led, in others words. Western consumers’ apparently insatiable demand for cheap designer clothes means that people on the other side of the world are paid peanuts and work in terribly unsafe, sweatshop conditions and are sometimes left buried under tons of rubble. Corporations are merely the middle-men that reflect this insatiability.

But this has it precisely backwards. Consumer demand in the West didn’t inspire corporations to relocate production in China, Bangladesh or Vietnam. The prospect of a massive hike in profits, based on dirt poor wages, did. The technical term is global labour arbitrage, defined by the neo-liberal Economist magazine as “taking advantage of lower wages abroad, especially in poor countries.” According to economist, Charles Whalen, “The prime motivation behind offshoring is the desire to reduce labor costs … a US-based factory worker hired for $21 an hour can be replaced by a Chinese factory worker who is paid 64 cents an hour [and Bangladesh is even cheaper] … The main reason offshoring is happening now is because it can.” (it should be pointed out, in passing, that the transfer of enormous profits back to the US, Europe and Japan, enabled by global labour arbitrage is a prime cause of the financialisation and speculation that lie at the roots of economic crisis).

 Fake plastic flowers

I am not denying for a second that many consumers in Britain and American are hooked on cheap designer clothes. Or that, in the words of George Monbiot, we have entered a state of “pathological consumption” that successfully hawks silver plated ice cream tub holders or talking Darth Vader piggy banks. Or that many people unhappily munch anti-depressants at their own behest. I am not reducing people to ants or drones. But consumerism, not matter how enthusiastically or mindlessly it is practised, is an outcome, not a cause. To try to understand the world without taking into account the seminal role of institutionally selfish entities called corporations, dedicated to maximizing profit and sales, growing and achieving, if possible, monopoly status, is not to understand it at all.

And it is this deficit of understanding that means there is something missing in liberalism, no matter how perceptive it is in other ways. The book mentioned above, How much is enough?, is an extremely interesting, historically nuanced, thought-provoking book about how rich societies have not actualized John Maynard Keynes’ prediction that they would slow down, and enable people to enjoy the good life, and not spend their days solely dedicated to producing and shopping and competing with others. It is co-written by renowned Keynesian economist, Robert Skidelsky. Yet it contains the following assertion: “Experience has taught us that material wants know no natural bounds, that they will expand without end unless we consciously restrain them. Capitalism rests precisely on this endless expansion of wants.” I can’t be the first to notice that this logically makes no sense. Wants will naturally multiply unless some outside agency representing wisdom or the good life (the state?) doesn’t suppress them. But capitalism exists to expand these want ad infinitum for its own benefit. So why should wants expand exponentially of their accord without capitalism? (and I mean capitalism, not the misleading pseudonym, “market economy”) What evidence is there that they will?

This is not to minimize the immense difficulty of changing this society, the fact that, in the words of one commentator, “capitalism has buried itself deep into our psyche by the consumerisation of our lives”. But the task is rendered impossible by misunderstanding the problem in the first place.

To misquote the anarchist Emma Goldman: “capitalism gets the human nature it deserves”.