[R-G] [BillTottenWeblog] Is There Such A Thing As Society?

[Bill Totten]

by Aseem Shrivastava

Countercurrents.org (November 12 2008)


The question is far from rhetorical. Margaret Thatcher, the British
Prime Minister during the 1980s, and one of the chief architects of the
economic policies that lie discredited on the heap of economic history
today, once dared to say that "there is no such thing as society". She
added: "there are individual men and women and there are families".
That's all. We live in a world of Robinson Crusoes, each maximizing
private gains for themselves and their separate families. The sad part
about such a view is its potential for becoming a self-fulfilling
belief, especially when held widely by men and women in positions of
power. It lacks the humility to leave the door open for the possibility
that we may be consigning ourselves to the shallows of human nature in
believing in our selfishness alone.

The fact that there is such a thing as society is an obvious truth for
most people in India and other poor countries, where bonds of community
life still prevail in significant measure. Where such community living
survives, our emotions tell us of the folly of the Thatcherite view. But
for "developed" countries which have been outrun by capitalism for a
century and more, the market has subjugated society itself. So it is
hardly surprising that the British Prime Minister could say such a thing
without fear of ridicule (which incidentally she did not escape from
certain quarters). What's more, here in India for at least half a
generation now, we have come to live in a world where a good many would
nod in approval at the Thatcherite view without fear of ridicule either.
What's to be ashamed of in something like self-interest, so much a part
of our nature, after all. The world has obviously changed here too.

And if that is indeed the essence of our true nature, there's nothing
like a well-functioning free market capitalist economy to maximize each
one's happiness. Social welfare, on this view, is little more than the
sum total of the welfare of each. So, it is claimed, said the great
grandfather of modern economics, Adam Smith himself.

There's no such thing as a free market

If only one lesson is to be drawn from the grave financial and economic
crises sweeping the globe today it is this: there is such a thing as
society, after all, well beyond families and individuals. The rise of
market society had convinced many experts, especially economists that
only individuals and their economic transactions with each other matter.
What lay beyond the pale of such relationships were consigned to
exceptional cases referred to in the jargon as "externalities" (where
third parties are affected by what happens between two individuals) or
"public goods" (whereby a good or service cannot be transacted without
making it possible for third parties to avail of them, for instance,
clean air).

Who dares to see any truth in such a world-view after "the great
financial crisis" of 2008? The cookie of free-market capitalism is
crumbling rapidly precisely because externalities and public goods, far
from being the exception, are actually the rule - even (especially?) in
the realm of the economy.

There is a systematic pattern here. In a capitalist economy what is
individually rational is all too often socially irrational. Consider the
latest example. The great financial crisis has forced each bank into a
situation whereby it has to sell many of its assets in order to rescue a
battered balance sheet. But the more the number of banks that do this,
the faster is the decline in asset prices. And this only accelerates
each bank's need to sell assets: as they see the value of their holdings
decline sharply, they prefer to hold cash, contributing further to the
vicious cycle of asset price deflation, apart from contributing to the
massive credit squeeze by increasing the overall reluctance to lend.

By acting in narrow self-interest fund managers could maximize
short-term profits for their firm's shareholders for a while, but the
damage that they caused to the system as a whole is so large in the long
run that (almost) everyone is ending up on the losing side. The (global
financial) system itself is a "public good" of sorts, whose survival
everyone takes for granted, until the day of reckoning arrives and the
pirates realize that they have all been milking a generous cow, which is
now exhausted from their depredations. "You don't know what you've got,
till it's gone", sang Joni Mitchell.

The failure of "confidence", "trust" and other vanishing intangibles are
being diagnosed as among the primary causes of the "systemic risk" which
has all but overwhelmed the world's financial system. These are the
forces which are making every important graph stoop. The numbers don't
matter any more. They were always consequences and it's never more
obvious than today. The ground reality is that no one is willing to
lend, because trust has evaporated from all transactions involving
credit and the future. Grain and raw materials are piling up at
international ports awaiting letters of credit which fail to arrive. And
with the vanishing of trust, hope - the other immeasurable intangible -
is rapidly dying too. We all need a future, after all, to look forward
to. Or else destructive despair sets in.

When asked what determined investment in a capitalist economy, John
Maynard Keynes had answered "animal spirits". Calculations and numbers
are secondary. What we are looking at today is the enormous failure of
an obstinate belief, widely held over the past generation among those
who control the levers of economic policy in the citadels of global
power: society (and hence government) is irrelevant, free markets are
all that matter for prosperity. And it will come one day to one and all,
if only "we" brave the pain in between and stay the course.

Now we know, once again, that hubris never escapes nemesis.

What is society? The question begs to be asked yet again. A moment's
reflection would reveal that even the most famous and powerful of this
world ultimately get to know at first hand at most just a few thousand
people, some of whose names they might be able to recall on their
death-beds. In other words, the human condition is such that our
ordinary ignorance of the existence of others is almost infinite. What
this means is that the vast majority of transactions and relationships
one has in life is with people we do not know, or even do not see.

A society, one might say, can be judged by the quality of its anonymous
relationships. If there is good faith and trust, society lives well. If
they are absent, it may not even survive in the long run. There is
obviously such a thing as society, to be understood in terms of the
quality of relationships we form, not just with our "loved ones", but
also with those we meet only occasionally, or anonymously, or with those
who live far away from us and who we may never meet. If globalization
has changed human society in one profound respect it is this: we can no
longer ignore how our words, actions and ways of living affect those who
are not visible to us on an everyday basis.

The victory of "free markets" has proved to be a pyrrhic one. In the
very realm they were supposed to bring "efficiency" and "optimality", in
finance, they have destroyed themselves. It is precisely the unregulated
inner workings of free (unregulated) financial markets which are now
threatening human society itself. Greed was "good", till just yesterday.
So said Michael Douglas in the film Wall Street, back in the early
1990s, when this present age of financial buccaneers had just taken off.
Today we are rapidly being sobered back to the ancient wisdom, which
every Indian child has heard during childhood: lalach buri bala hai
(greed is a bad habit). Money does not grow on trees any more, no matter
how high the ladder one might take to them.

Sometimes insiders reach important truths, having sipped some of the
poison on offer. A decade ago, one of the world's richest financiers,
George Soros had acknowledged publicly that

"people increasingly rely on money as the criterion of value. What is
more expensive is considered better ... What used to be a medium of
exchange has usurped the place of fundamental values ... What used to be
professions have turned into businesses ... The cult of success has
replaced a belief in principles. Society has lost its anchor".

Soros added:

"The doctrine of laissez-faire capitalism holds that the common good is
best served by the uninhibited pursuit of self-interest. Unless it is
tempered by the recognition of a common interest that ought to take
precedence over particular interests, our present system - which,
however imperfect, qualifies as an open society - is liable to break down."

This is now happening, and in a far more severe manner for men of Soros'
tastes. We are seeing the rapid unravelling of the "greed is good" age
and one hears desperate talk involving recycled concepts like
"capitalism 2.0", "sustainable capitalism" et cetera. Intellectual
despair has set in because a whole generation has been taught to ignore
the evidence, or to massage the facts before examining them.

Can we?

The enormous crowd that felicitated President-Elect Barack Obama on his
monumental victory the other evening roared "Yes we can!"

The challenges that beset humanity today are of a nature, and of an
order that require something fundamentally different from the mere
positiveness implied in such an incredible statement of collective
determination, delivered in an epoch-making moment. The rhetoric of
"progress" has accustomed almost everyone to the language of "moving
forward". But how do you move forward when you are approaching a steep
environmental precipice under the business-as-usual scenario?

The question is not so much "what is to be done?" as "what is to be undone?"

The financial sector is busy "deleveraging". The consumers are reducing
consumption and are worrying about how to pay their debts. As they
rapidly lose markets - and loans - the corporations are also pruning
their ambitions severely, restructuring and often just shutting down or
going bankrupt. Cruel as it may sound to the millions being laid off by
the month (a comment on the capitalist system), perhaps all this is a
blessing in very thick disguise. It is one way that carbon emissions
will be controlled.

The excesses of the past have to be paid for, after all. Our era, like
no other age in history perhaps, has the enormous obligation to undo
most of its (mis)deeds just in order to enable the planet to remain
inhabitable for our progeny. Their living standards are obviously going
to be lower than ours. The future we had been trying to live off is now
at the door. Life is not just about getting more and more rich.

All science knows that life is given to humanity under certain very
specific, delicately balanced, environmental and biological conditions.
What has grown with the economic growth of recent decades are also
crises which will ultimately destroy the conditions of human existence.
We should read the Great Financial Crisis of 2008 as a shadow of the far
more real ecological crisis which is lying in wait to overwhelm us. The
facts are in. We are being asked to fundamentally change our way of
life. Half-measures will not do.

The great economic anthropologist Karl Polanyi in his famous book The
Great Transformation had concluded back in 1944:

"A market economy can exist only in a market society ... A market
economy must comprise all elements of industry, including labor, land,
and money. But labor and land are no other than the human beings
themselves of which every society consists and the natural surroundings
in which it exists. To include them in the market mechanism means to
subordinate the substance of society itself to the laws of the market."

We have become so used to the abiding realities of the day that we fail
to notice that we are all victims of them. The latest financial episodes
show that unrestrained capitalism is not even good for capitalists
themselves. They are all suffering from unbearable stress and
depression, and many of them from the onset of fatal diseases.

The West has given us valuable notions of individual liberties, but none
of collective freedoms. Social problems, however, do not have individual
solutions. If society has allowed itself to be subjugated by the market
an individual acting alone has little choice about following the rules
of competitive survival in urban (or rural) jungles. But acting
collectively, it is possible to decide whether we are going to continue
being a society that serves the market, or whether we will finally make
the market serve society. For markets are known, as we are learning
every day, to be good slaves, but terrible masters.

These are strange times indeed, when the high priests of the day, the
economists, are eager to quote prophetic poets like WB Yeats, The Second
Coming (1929), fearing an apocalypse, which has already happened a few
times in the recent history of "modern" civilization. But they fear,
perhaps rightly, that what may arrive may be something unimaginably
worse than all catastrophes seen hitherto.

Let us not just hope that they are wrong, let us live and act in ways
which makes it so. Yes we can. But just you and I cannot. If we remember
that our grandchildren may still have a chance.

_____

Aseem Shrivastava is an independent writer. He can be reached at
aseem62 at yahoo.com.

http://www.countercurrents.org/aseem121108.htm
	

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