In 1971 President Nixon unilaterally dismantled the Bretton Woods Agreement. This multi-lateral agreement on monetary policy was put in place to help the world recover financially from WWII. It spawned the IMF and the World Bank. In the same year the UK introduced the Competition and Credit Control Act. The main effect of these changes was deregulation, which allowed private sector debt to begin to accumulate.
From 1945 to 1971 was a period of economic stability, with no notable crises. The IMF tell us that since 1970 "there have been 147 bank crises, 218 currency crises and 66 country-financing crises". In 1971 the motto of Polonious was decisively thrown out. The world began to borrow to finance consumption and to gamble on asset prices. Debt fuelled consumption and speculation, especially the latter, pushed up prices causing inflation. Inflation required pay rises, and further price rises. Until it all collapsed in a recession. Then began to pile up again. Each cycle was a little worse because some of the debt carried over. In the Third World it rapidly lead to ruin and poverty for many. In South-East Asia ruin and poverty came in the late 1990's. Now the First World faces ruin.
The response to this was to further deregulate the economy, but particularly finance. This allowed for more debt, and more risky lending. Banks, who make money from debt, were happy to oblige. Sucessive governments around the world followed similar policies.
The finance sector generated huge amounts of income but concentrated it in the hands of a tiny minority. It generated even hugher amounts of debt. Today the UK is the most indebted country in the world. Recent estimates place our private sector debt at 507% of GDP, household debt (including mortgages) at 100%, and Government at just 81% of GDP.
The most recent crisis exposed corruption in the finance sector, and the massive scale of our indebtedness. Five years later we're still going down hill, with Europe teetering on the brink (of what?). Many first world banks are technically insolvent but somehow reporting record profits. Now we learn that some have been manipulating interest rates. They are propped by government borrowing amounting to a trillion pounds. Executive pay is increasing exponentially. Unemployment is high. So much for the "free market". Many intellectuals are pointing to distrubing parallels with Europe in 1931.
The same trend has excerbated environmental problems. Governments seem paralysed by fear of the business sector. The political will to address any of these problems does not exist at present.
How did this happen?
The most disquieting voices joining the chorus of criticism come from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians. In most of these groups the movement against the system is participated in only by minorities. Yet, these often are the most articulate, the most vocal, the most prolific in their writing and speaking.
Businessmen should endow universities with chairs to teach conservative business practices, and financially support conservative institutes. Powell proposed that a number of very well resourced think-tanks be set up. These would help to create and promote a consistent, potent message. Deregulation was central to their agenda. They needed to train spokesmen in communicating the conservative message, and create booking agencies to help organise speakers. They also invested in media companies to ensure access. They did all this, and needless to say they funded conservative political parties. Nixon appointed Powell to the Supreme Court two months after the memo was published.
At the same time US conservatives began to politicise fundamentalist Christians who had been disengaged to that point, creating a whole new constituency of millions of ultra-conservative voters.
The results have been spectacular. Conservatives all over the world have benefitted from this coordinated strategy to hijack democracy in the USA, and fight a war against their own people. A steady stream of graduates with PhDs in what amounts to conservative ideology, finds jobs in universities and think-tanks to explore and publish their ideas and influence new generations of students and intellectuals particularly economists. There are close linked between Neo-Conservative though and Neo-Classical Economics. Through manipulation and control of the media a constant presence of the conservative message is maintained. Powell's memo is one of the most important documents of the 20th century, it is the founding charter of the Neo-Conservative religion.
As a result conservative ideas have been at the forefront of politics. Deregulation has wrecked the world's economy, and helped to wreck the environment. Conservatives set the agendas on which elections are fought (they are doing so again in the UK right now). Business policy became political policy; business values became social values.
Progressives tend to use the language of conservatives when critiquing conservative ideas, because they don't understand that even a negative mention helps to reinforce the idea. This is simply illustrated by saying "Don't think of an elephant". We cannot help but think of an elephant. The conservatives also manage to portray opposing views as against the common good, out of touch, or naive. Ironically self-interested conservatives gang together, and community spirited progressives are often deeply divided. Resistence has been ineffective.
Clearly the very great likelihood is that this will all continue with rather horrific consequences. This how American businessmen suceeded in changing the world, and
The question I'm asking myself is "OK, I've understood this, now what?"
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Submitted to the journal of the Buddhist Order I am a member of. July 2012
the "now, what?" I think is about finding our point of balance again. I am hoping as I work it out through my own practice, it will likewise effect the world accordingly. The areas I am currently looking at are my own habits around money, my desire for new things. finding out more about things like this (the inside job by Charles Fergusson had me throwing my pop corn at the movie screen, planet money podcast by NPR has provided useful insights) etc...
ReplyDeleteWe have recently formed a Retreat Team at Sudarshanaloka and one of our friends is an Economics Lecturer (at Auckland Uni) working for the Bhutanese Government. He has developed an education package for the Bhutanese kids. I am wondering how we could participate in spreading Happiness Economics and use Sudarshanaloka as a base for workshops and retreats for this subject. Is this something the Triratna Community would like to particpate in, I am not sure yet.
Hi Ākāśaḍāka
ReplyDelete(Man with the most diacritics!) Great to hear from you. My impression has been that the vast majority of my Buddhist friends and acquaintances think I've gone mad, and treat economics and politics as tapu. So I've more or less stopped expecting them to response, then you turn up. Cool.
A Centre for Happiness Economics sounds interesting. (Though sounds like Happy Sam Trucking, eh?) A lot of the people I'm interested in tie it all in with environment as well. See the Green New Deal.
I think our value of altruism must have an economic dimension and a political dimension. I have an appointment to meet my MP in about 3 weeks. He can't represent me, if he doesn't know my views. Looking for ways to get involved and make common cause.
Ian Hislop's documentary 'when bankers were good' is an interesting watch. He points out that early Victorian banks were run by Quakers who had a profound sense of morality, especially that accumulating personal wealth was an evil. They therefore had to find altruistic ways to use their cash, hence Victorian philanthropy.
ReplyDeleteIt occurs to me that deregulation on the social, economic scale is a manifestation of deregulation of the individual (breakdown of personal ethics and integrity). One of the first things you do as a Buddhist is start to regulate yourself by adopting precepts. This is to work against the painful habit we all have of exclusive self interest.
As you have pointed out previously, banking deregulation was influenced by philosophical ideas that self interest was ultimately for the common good (the works of Dostoyevsky illustrate very well characters with this attitude!). In other words we have a micro/macro manifestation of the same principle; self interest versus altruistic concern.
I'm coming to see that if one's personal vision is that altruistic concern is the route to awakening, one should also seek to support policies or promote policies that are also based on this principle.
We should recognise the danger in allowing areas of life where there are powerful energies at work (wealth) to be ruled by greed rather than by enlightened altruism. We could really do with finding ways to communicate Buddhist values on a larger scale that makes sense of current social/economic problems and for those who are up for it, engages with politics.
Hi Gambhiraḍāka
ReplyDeleteAnd there's me slagging off Buddhists for being disinterested, and two of you show up today :-) I'd forgotten that doco. But I do remember that Barclays was founded by Quakers. Yes. The Quakers were a force for good. But they are no longer involved in running banks.
I'm not sure I agree with your analysis though. Recall what I was saying in my Raves a while back about surveillance and how both over-seer gods and karma performed the same function in groups larger than the Dunbar Number 150. I see the breakdown of supernatural oversight as being very much a part of the problem. And you see this to some extent in the criticism of Bob Diamond. That as over-seer of his company he was ineffective, and therefore culpable: it's the Theodicy argument in micro. Moral tone of groups does seem to be a top down phenomena. Think of the damage done when religious leaders are found to feet of clay. Look at the chaotic feelings that arise when we find our MPs fiddle their expenses, that media moguls invade our privacy, and bankers are crooks!
The question for you, then, is where does the (so-called) individual's 'personal vision' come from? The individual is an ideological construct. In fact we are in symbiotic relationships at many levels: from the bacteria that make up each eukaryote cell, to the community of cells that make up our body; to the loosely bound bacteria and protozoa that live in and around us (and are recently found to help regulate vital body functions!); to the people we interact with. The individual is a colony within an ecosystem, with a first person perspective. And most of our ideas come from other people - which is why we value original thinkers. But even then most innovation is really synthesis.
I've written an essay about this for Renegade Economist but it won't go live for a while. And the fact is that deregulation is one group ganging up on the rest of us. The Neo-Conservative ideology required incredible levels of cooperation and coordination to achieve what it has. For all the self-reliance rhetoric, they operate collectively just like the rest of us. The battle is not one individual against the group, but one group against other group.
Their ideology is not greed per se. I see it as a mistaken identification of survival of the fittest with the top level predator, and the mixing of this up with moral philosophy. They don't see that the lamb and the hyena also fit to survive, and therefore equally moral with the lion. They're fixated on competition and coming out on top, but in fact nature isn't like that. Darwin distorted. The 1% are also altruistic, but only within their own group. Cameron and his buddies are all helping each other out in a hundred ways, but it's an exclusive club.
We're *all* empathetic and altruistic. The problem is where we draw the line between them and us. What we need them to do is include us in their troop.
BTW The latest issue of Scientific American has a very good article about the bacterial symbionts (or commensals as they call them).