The cultural contributions of capitalism?

February 21, 2011 by · 2 Comments
Filed under: Credit crunch, Politics, The RSA 

Until I heard Radio 4’s Last Word yesterday evening I didn’t know about the recent death of Daniel Bell, the pioneering sociologist and futurist (although he didn’t like that label).

As someone who is both an internationalist and enthusiastic about decentralising power, I have been fond of quoting Bell: ‘the national state has become too small for the big problems of life, and too big for the small problems’.

But the phrase for which Bell will probably be most remembered comes in the title of his book ‘the coming of post-industrial society’. Bell was both fascinated and troubled by changes in the nature of capitalism and the culture which those changed spawned. He returned to those themes in 1978 a book – which despite its mixed record in terms of prediction – I would strongly recommend.

In ‘The cultural contradictions of capitalism’, Bell argues that the values such as industriousness, responsibility and deferred gratification necessary for the emergence of industrial capitalism (an idea taken from Weber) are now being undermined by the ‘naughty but nice’/'because your worth it’  (neither campaign existed in 1978 but you know what I mean) culture of consumerism  

Glancing this morning at Bell’s foreword to the book, I came across this statement:

‘I am a socialist in economics, a liberal in politics and a conservative in culture’.

In the early nineties an American political strategist (I have never been able to source the quotation) said something like ‘in modern politics the left has won the social argument, the right has won the economic argument and the centre the political argument’. This may have seemed true through the nineties as the Democrats and New Labour embraced the free market and the right reluctantly endorsed social liberalism, but in 2011 I suspect Bell’s combination of perspectives may look a lot more enticing.

The credit crunch, the slow and uneven recovery, high levels of economic inequality, and our continued dependence on the naked and unaccountable interests of finance have all undermined the popular legitimacy of modern capitalism.  The excesses of statism under the last Government have led to a reassertion of liberalism in the political sphere shown for example in support both for strengthening civil liberties and decentralising power. Meanwhile concerns about the weakening of social norms and bonds and clashes of cultures and religious values in a shrinking world have given new voice to social conservatives on the left and right.

These thoughts touch on the emerging topic for my 2011 annual lecture. Bell’s values triptych provides part of the background against which companies are facing higher expectations – and in some cases setting themselves more ambitious objectives – for social engagement.  The hypothesis is that citizens need in aggregate to change their ways and companies can use their brand-based relationship with customers to encourage better ways of living.

I suggested last week that ‘organisations need to be aiming for a sweet spot…which combines their competitive edge with levering their brand and relationships for social good. I then came across this piece in the Guardian

I suspect a hard headed scholar like Bell would have been quite sceptical about the ability of consumer capitalism to foster individual and civic virtue. Whether the benign behaviour change encouraged by Flora or Nike can be real and long lasting, whether it’s a strategy open more generally to companies and what such a strategy means for the way a company organises itself are issue I intend to explore further.  Perhaps as a tribute to Bell I should think about calling my lecture ‘the cultural contributions of capitalism’?

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The contradictions of capitalism

September 2, 2010 by · 7 Comments
Filed under: Credit crunch, The RSA 

It’s lazy, I know, to make my readers do the work but here are three things you should be read and watched together: 

Robert Peston on the revival of financial trading, in currencies and various forms of derivatives. Once again, he suggests, a small number of people are getting very rich by pursuing activities which are of dubious value to the wider ‘real’ economy. 

LSE Director Howard Davies on the failure of attempts at international reform of banking and financial trading.    

David Harvey’s RSA Animate, arguing that the growing power of finance in capitalism is not an accident or a coincidence, nor is it simply a reflection of human frailty, it is an inevitable development of capitalism. 

Two years ago there was much talk of regulating financial transactions and rebalancing the economy towards manufacturing. There is very little of that talk now. Arguably for good reasons, the Coalition Government is sceptical of the role of Government in supporting industry, and anyway there’s no money. 

So, in a very short space of time, after the most dangerous and far reaching crises in the history of global capitalism, this country and others, like America, are going back. Back to being highly dependent on a finance sector many of whose instruments are good at making some people rich, but which mortgage the future and carry major risks of contagion, and which seem to have little or no effect on the wider economy or the livelihoods of those outside finance (apart perhaps from people who sell fine wines and yachts). 

For an economic layman like me, it is difficult to avoid the conclusion that capitalism has become dominated by finance because its underlying logic dictates so. I am sure there is a way of achieving a more balanced and fair economy without abolishing capitalism but at the moment it doesn’t look like anyone knows what it is.   Fortunately, my ignorance may be dispelled this evening with our fascinating event this evening with the development economics expert, Ha-Joon Chang, chaired by Larry Elliott.

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The (many) unacceptable faces of capitalism

January 23, 2009 by · 11 Comments
Filed under: Credit crunch, The RSA 

I defy anyone to read the following without wanting to kick something or somebody. 

There is the tale of former Merrill Lynch boss John Thain who has just resigned from Bank of America. You might have thought that his disastrous management of the former investment bank might have been enough to persuade Mr Thain quite some time ago to retire quietly to one of his mansions. In fact, the reason for his hasty departure is the growing outrage not only at his decision – in the face of the imminent demise of his bank – to bring forward and increase bonuses to senior staff, but also the allegation that while Merrills slipped deeper into trouble, the Bank spent several hundred thousand dollars refurbishing his personal office, including one of the most expensive waste paper baskets in history. 

Then try Jonathan Guthrie’s piece in yesterday’s FT. He describes the growing practice of company owners opting for so called ‘pre-pack’ insolvencies. By putting their companies into administration they can shed all unsecured debts, and obligations to existing and former staff. Then, sometimes just hours later, the previous owners turn up and repurchase their former assets at a knock down price. Guthrie gives an example: ‘David Charlton, founder of the Officers Club, recently bought 118 of the garment chain’s 150 stores out of administration’.

As Guthrie says ‘the morality of pre-packs becomes questionable if owner directors use them to cherry pick the best bits of their struggling business. A director who agrees with secured lenders to shed his unsecured obligations is treating his suppliers, his pensioners and the tax man [that’s me and you] prettily scurvily’. Quite apart from the morality, this practice will increase distrust and fear in the market as suppliers demand immediate payment worried that otherwise they might be ‘pre-packed’. 

Finally, read a brilliant article by Alice Thomson in yesterday’s Times which exposes the myth that those who created the economic nightmare are also suffering the consequences. If I were a Northerner reading the piece I would get a train to Mayfair and start picking fights. Thomson’s piece has one flaw – she says that Sir Fred Goodwin, the disgraced former boss of RBS and one of the dozen or so people most individually responsible for the mess we are in, is Chair of the Prince’s Trust (but surely this can’t be true!). 

One day, enterprise, driven in large part largely by the pursuit of wealth, will help us get out of the mess we are in. Occasionally, we hear the CBI and the IoD making more demands from Government. How about these august institutions – or perhaps the British Bankers Association – taking a stand for ethical business practice. As John Kay told a packed RSA Great Room last night, this crisis is not one of capitalism but of the stupidity and greed of a cadre of overpaid and under-regulated bankers. If the champions of business are to save the reputation of wealth creation they might usefully start by loudly distinguishing good business from its many unacceptable faces.

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