Sunday Review on Tuesday: “The price of civilization” by Jeffrey Sachs; “Betterness: economics for humans” by Umair Haque

by Anthony Painter

The most infuriating aspect of recent political history is the way in which the old regime has reasserted itself so quickly. There is little doubt that the downside of neo-liberalism has been demonstrated in spectacular fashion. What is the response? Neo-liberalism.

A different way of doing things is desperately needed. It is not just about a different ideology, but also new institutions, a different way of thinking, of doing business, and of running an economy. At this time of enormous opportunity for change, the left has responded with sanctimonious triumphalism and off-the-shelf Keynesian social democracy. And so default neo-liberalism is winning. It doesn’t have to be this way.

Both Jeffrey Sachs and Umair Haque have constructed a credible alternative argument – one is aimed at US politics, though is relevant this side of the Atlantic too, and the other is aimed at business. Haque challenges business to be better; not more profitable but more meaningful. Sachs challenges society to be more “mindful” and politics to adhere to a greater ethic of good. This is all well and good, but it is in their practical arguments that both succeed – and make a contribution to helping us understand how we can shift our economy and society away from neo-liberalism.

The price of civilization is a game of two halves. The first half is a canter across well trodden ground. The failure of the unregulated free market, political corruption and Washington’s capture by corporate interests, inequality, the decline in wages and hollowing out of the middle-class through globalisation, and hyper-consumption and the “low attention” society. It’s a mainly good collection of the relevant data and research. Some of it is massively over-interpreted, such as when Sachs claims that American politics doesn’t follow the values of its society. The internal contradictions of attitudes data is well-documented and there is a bit of pick and choose going on here.

However, it is in the second half of the book that things really start to get going. There is a false start: a detour that takes in Aristotle and Buddha. Such is the fashion of the times, but I’m not sure “mindfulness” is going to be a big winner when it comes to making a case for change. Where this book triumphs though, is in the argument it makes for shifting the US budget towards long-term investments and an expansion of social provision. He doesn’t do this by ignoring the budget deficit. In fact, he argues that both stimulus spending and unaffordable tax cuts are, “gimmicks that distract us from the deeper reforms that are needed in our society.” He proposes reducing the deficit in the US to 2% by 2015.

Instead, Sachs argues for tax increases: a new value-added tax, reversal of the Bush cuts, and a new wealth tax. He seeks to divert spending from bombs to roads and childcare. The focus is the long-term. His case for new welfare outlays reflect a different baseline for the US compared to the UK. There are several wrong turns: for example, down the “happiness” street. Overall though, this a powerful case for institutional, political and economic reform. And, dare I say it, it is very “in the black Labour” in its approach: fiscal consolidation and shift to long-term investment and institution building.

Where Sachs implores us to be “mindful”, Haque asks us to be “meaningful”. Both seek Aristotle’s  “eudamonia” – the “good life”. To be “meaningfully rich” is to be:

“rich with relationships, ideas, emotion, health and vigor, recognition and contribution, passion and fulfillment, and great accomplishment and enduring achievement, exactly what “business,” “output,” and “product” seem so achingly deficient at producing”.

Future prosperity relies on “getting out of business and in to betterness”. There are three remarkable things about Haque’s book: (i) that it has been written at all, given that he is a leading thinker in the business community; (ii) that the consequences are a revolution in our entire way of doing business; and (iii) that he deploys ethics as a means to open new frontiers rather than to admonish and limit.

The centre-piece of his argument is that psychology shifted around the time of William James from a focus on avoiding pathology to creating positive approaches that enable people to achieve their psychological potential. He sees the economics of Adam Smith onwards as very much about removing pathology (he is no romantic about the pre-commercial economy of guilds and restrictive practices.) What we now need is a new economics that reaches beyond utility, profit, efficiency, output, and productivity and becomes a  vehicle – through better institutions – of human well-being and betterness. Accept the necessity of Smith then move on.

Along the way in this short but punchy ebook, he has some real fun with corporate mission statements and objectives. Where he is very effective is in drawing clear and neat distinctions between businesses that corrode and those that create (and it works for a business writer in a way it doesn’t for, say, a leading politician) I enjoyed his The New Capitalist Manifesto immensely. This is pithier, but even stronger in many respects.

It is in their ability to present real choices that both Sachs and Haque succeed. The reason that neo-liberalism is reasserting itself is because the other options on the table don’t seem grounded and real. Business can help people live better lives and prosper in the process. We can organise our politics in a more open fashion and build in a greater long-term bias to public policy. But there’s lots of hard work to do to get there. The problem with the alternatives to neo-liberalism at present is that they want to get to an alternative way of doing things the easy way. As a consequence, they are riding off into sunset leaving the cart containing public legitimacy behind; easy picking for the neo-liberals. Sachs and Haque can help keep those looking for alternatives grounded.

Anthony Painter is an author and a critic.


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2 Responses to “Sunday Review on Tuesday: “The price of civilization” by Jeffrey Sachs; “Betterness: economics for humans” by Umair Haque”

  1. “Haque challenges business to be better; not more profitable but more meaningful.”

    “What on earth is that supposed to mean? ‘Better business’ means getting getting better products and services into a market at better prices so people will be happy to pay the asking price. Any business that fails to do this will fail because unlike politics there is far more choice, while anyone has the right enter the arena and immediately start to compete against the perceived incumbents who are falling down on the job.

    An outstanding example of the second point is the continuing growth of internet marketing. An equally outstanding example of how it can be negated to the detriment of everybody in this country is the lax and as we all know now to our cost, almost fatal lack of supervision of a cabal of banks that were ‘too big too fail’ under the auspices of the lamentable FSA. Guess which left leaning government made that possible?

  2. Ralph Baldwin says:

    Fascinating but both face some very real challenges Anthony. One set of challenges “on the ground” and another set in the “upper echelons” of our political economy.
    On the ground: When you are starting out in business, when you are creating what you hope will be a success and a reward in itself, you face many challenges. For example many businesses do not even see a profit and are fueled by blood, sweat, energy, creativity and cunning where competition is great. Many people pour all they have into said businesses and survival is the primary goal and function. It’s not that people taking the plunge are evil or bad necessarily, it is the fact they are working their guts out, I knew one business man who slept in his workplace because he literally had no money to pay anyone rent or mortgage, though he is a success today. In the process they get into habits that they believe are in the best interests of their company and to seek remuneration for all stress, energy and effort they invested to make it a success. You are never going to overcome this with platitudes on morality and charity. Especially when they find themselves responsible for others who they have given work to. It’s a tough life and if Government of any kind is not “on their side” they will not pay attention to abstract moral theory. As far as they are concerned if there was incentive or a reason to be more moralistic, many of them would been quite happily to be so…but it’s a luxury item and more so now than before where people are desperate and struggling.
    To these people Labour are preaching from a position of gross hypocrisy (Labour is after all funded and fueled directly and indirectly by big business whereas many of these people have tried as far as they can to play a straight game without preaching to anyone) and unqualified in their appreciation and understanding of “business”, good bad or whatever.
    On the “upper echelons” what we are seeing is not Ed Milliband leading on the more moral economy front, Cameron won that prize with the Big Society (vague as it was) as Society includes business and Ed is merely chasing after Cameron’s coat tails and even offering policy the Tories are already preparing to enact. In any case both are still relying on “bad business” to fund their almost identical policy agenda. Labour has on business placed itself in a more restrictive corner than the Tories. By still believing themselves to be allergic to the Left Labour are more afraid of an open debate than Tory. Cameron can talk about the need for more manufacturing and Ed has to stick to a variety form of Capitalism to avoid being Labelled Left Wing. The Tories then are more able to capture the center ground as nobody will accuse them of being Socialist. They are therefore commanding the argument and the debate.
    The great irony is though great people on the Left were spot on in the 1980?s about the dangers of this form of Financial City Capitalism and were proven to be right in recognizing the need for skills of a high level and diverse nature.
    It is not a question of the Purnell/Blue Labour better companies or we will protest and boycott you. It’s a case of ensuring the economy is more equitable for all concerned. I have a relative who gained a job in a company where animals were treated cruelly, he left the job and became vegetarian, he could leave the job because he was always going to inherit the family business, others less fortunate do not enjoy and who have to do the work many would prefer not to for a poor wage.
    We have seen that Corporations (usually the City) whose shares allow great control over almost all businesses (FTSE etc) will not directly break the law (they can use contract law etc) but will use indirect ways of doings, under Labour we witnessed many a businessman elevated to the Lords who would later be exposed for the practices their companies practiced, Labour of course served their interests and not the employees or the public and this will remain the case as we have seen with the types of character currently funding the Party directly or indirectly. So before we talk about good and more moral business practice we have to start talking about Regulation, the strengths and limitations, the ability of political Parties to be trusted to deliver rather than just comment (and the silence of Labour MP’s is palpable and bizarre and clearly highlights their support for “bad” business policy implementation by the Coalition), and of course how such a change could be practiced and implemented by assessing how and to what extent Governments should meddle in markets they barely understand.
    Governments lead business and economics, or the other way around? In my experience its the other way around and if there was to be a more equitable Corporate business settlement it would have to be led by the City itself that wield so much power with trillions in assets, they would as major Shareholders have to demand more from themselves and from the companies they have power over. It cannot come from Parliament because Parliament is subject to the summons and desires of the City. The City would then ask its MP’s to negotiate a deal with other Internationals to create a more “responsible” business practice however this would be dangerous as the experience and skill of a City banker is not the experience of say, a major UK developer and does not understand the business environment that said specialist experiences daily, which might place said person at a significant competitive disadvantage to any competition in what is a Global game.
    So without Parliamentary Supremacy over Corporate Supremacy there is little that can actually be done, Gordon Brown mentioned the possible creation of new International Platforms, the problem as we have seen in the EU and other “democratic” organizations is that such bodies would require very strict observation as they are far too easily corrupted. This in turn is due to the fact it is very easy for political parties to place the “right person” in positions on behalf of the Corporations because they themselves do not practice democracy and when such a body is disgraced, it takes years for it to gain any significant credibility as we have seen with the decline of the EC and EU that are barely democratic if at all which protects vested interests.
    Ed talks the talk about challenging such interests but still practices the politics of corruption. I knew he was still a Corporate lackey the moment we had the first ever Parliamentary bi-election and he has reinforced it on many levels since then.
    Change can occur but Labour cannot deliver it, it lacks the discipline, determination and most of all the desire for a better and more moral world.

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