Making Connections

Laudato Si’ is a deeply challenging document. Who would listen to a call to live our economic lives differently and why would they do so? We may find that when we break its message down there might actually be different answers to those questions.  I want to look at one area where at least a part of it might find surprising support.   Fundamental to any answers that individuals may give are of course their fundamental convictions: the web of beliefs about the world, about ethics and responsibilities, along with their affective capacity for compassion – their commitment to lived compassion, their beliefs about the implications of their religious/philosophical tradition and their commitment to following them out consistently, as well as the story they tell themselves about the sort of person they are.   And so on.

It is unlikely that those whose capacity for compassion is limited or who recognize no responsibilities beyond their own well-being and that of their immediate circle of dependants will find a call to change their lifestyle at all interesting.   However, there is another significant obstacle even for those who are well disposed to listen. It lies in the difference between an ethics concerned with the character and choices of an individual in relation to other specific individuals of their acquaintance and an ethics concerned with the behaviour of large numbers of people who share a common living space with one another and with other large numbers of people who live outside that common living space.   In the ancient ethics of Plato, Aristotle, Epicurus and Zeno, this was a little less problematic. The ancient city was a small enough unit to allow personalized ethics to stretch across the gap between the aggregate of individuals and their goals and their collective identity in the conscious or unconscious pursuit of a common good.   Or at least for the purposes of theoretical discussion.

Nevertheless, even in the small world of the ancient Aegean, the Mytilenean debate (Thucidides History 3.35 – 49) reveals an abiding obstacle to collective decision-making founded on compassion.   The city of Mytilene had rebelled against Athenian control. The Athenians had recaptured the city. Fuelled by anger the people had voted to send a ship carrying the order that all the inhabitants of fighting age were to be killed as punishment and the women and children enslaved.   The next day they had qualms. It seemed brutal (omon), on reflection, to kill the whole city rather than just those identified as responsible.   The envoys from Mytilene saw their chance and were able to get the assembly reconvened.   Cleon the demagogue denounced being nice (andragathia) as a luxury that the Athenians, running an empire and a war, could not afford. The envoys replied by arguing that it was in the Athenian interest to show other rebellious cities that there was a way back, otherwise they would be guaranteed every time a fight to the death. This argument in terms of self interest tipped the balance – just. Only those found responsible for the revolt would be killed. The second boat arrived just in time to prevent the slaughter.

The point is that while the Athenian people clearly wanted to show some mercy (otherwise they would not have had the second debate), they needed to be persuaded that it was in the interest of the city before they did so.   A decision involving compassion is a risk, but it is the sort of risk that we can take upon ourselves as individuals more readily than we can take on behalf of others.   We cannot presume on the generosity of those who will also be affected by the decision – unless we can guarantee that they will not be disadvantaged in the process.   Do I, living on my own in a large house, open it to a refugee family that I know is struggling to survive in the neighbourhood? Does a government open the country’s borders to 100 000 refugee families? The ethical quality of these decisions is significantly different. There is a mirror of this in the case of prudential, self-interested decisions that have to override compassion.   It is easier to sit on a board and agree to a decision that will result in large job losses for the good of the company than it is to go through a competency procedure with a needy employee living in your house.

This is perhaps part of the reason why political philosophers and economists have often taken rational self-interest as the natural starting point for discussions. It is not just that it makes the calculations easier (according to the insightful remark of John Kay – see below).   It also reflects the rather depressing minimum that we could reasonably persuade everyone to agree on in collective decision-making.   However, this is most plausible only when it is allied with the more thorough-going claim that the only model of rational decision-making is that of rational self-interest.  Once you allow that individuals can have other reasons (for instance, a commitment to compassion or Adam Smith’s ‘common humanity’) for their actions in their personal decision-making, you also allow space for such reasons to find their way into collective decision-making. When the Athenians called the assembly, after all, the good of their city was not uppermost in their minds. For them to kill thousands of innocent men seemed, the morning after, simply brutal.

Pat Riordan SJ in his book Global Ethics and the Global Common Good has explored just this ground (see a presentation of it here: A Review of Global Ethics and Global Common Goods by Pat Riordan SJ). I found particularly interesting his reference to work of Rawls and Searle from the last fifteen years that pointed towards how collaborative decision-making could emerge against a rich background of goals and values shared, or partially shared, by a communities of individuals. It dovetailed neatly with some of the insights of Derek Parfit in his On What Matters (see Appendix 2 below).   The common ground for discussion about collective action is actually more diverse than the rational minimalists supposed. Riordan presents examples of international activities (like accepting quotas of refugees) which do not simply fit the rational self-interest paradigm.

This makes it reasonable to include concern for the future of the planet, compassion for the working conditions of employees, or the plight of the poor into the mix of global and personal decision-making. But there is one powerful obstacle in the form of the received economic wisdom that has dominated politics and business since the early eighties.   Perfect markets yield the best outcomes, both in terms of profits and of products. Such markets are ideally driven by individuals and collectives pursuing their own gain. Provided trade is allowed to flourish in a perfect market, ultimately everyone benefits as much as is possible.   No alternative can produce a better result. It is easy to see why this is appealing – especially when supported by beautiful mathematical formulae. If this is true, by doing what I like for myself and those around me, I benefit everyone anyway, so I don’t even need to worry about being nice to anyone else.

If this were true, it would be a good reason for abandoning any form of political interference in economic activity beyond that of the minimal state, as proposed by Robert Nozick in Anarchy, State and Utopia.   Talk of ‘common good’, let alone control and regulation of business activity for the sake of the environment or human ecology would be pointless.   Provided all were freely pursuing shareholder value, the invisible hand will guarantee the best possible outcome.

So it is reassuring to read[1] (even if the message does not seem to be widely appreciated yet) that the belief in the power of the perfect market to deliver the best of all possible worlds is false because such a market does not and cannot exist, and because, where an approximation to such markets has been attempted, the results have generally been dire.   John Kay, as far as I can tell from The Truth about Markets, does not carry a torch for socialism. He appears to have the normal assumptions about the value of economic growth that are held by most politicians – and are being questioned by ecologically minded economists. Nevertheless his language of ‘embedded markets’ points towards a way of thinking about economics that gives the role of the social context – and the values of communities and their relationships – an essential role in the discussion, rather than reducing the personal realm to a notional beneficiary or necessary collateral damage. This at the very least makes space for engagement with that highly suggestive concept from Laudato Si’: human ecology.

Here, then, is what Kay has to say about the idea that redistributive market liberalism (let business do its stuff and just collect the taxes) will make the world a better place:

‘The fundamental objections… are the mistaken assumptions about motivation and behaviour, the failure to acknowledge the socially constructed nature of property rights, the inability of market institutions to deal with risk, the problems of securing necessary cooperation among self-interested individuals and the difficulties of handling asymmetries of information within a complex modern economy… For all these reasons market economies function only by virtue of being embedded in a social context.’

His argument neatly reverses the assumptions of the free-marketeers of the eighties. They assumed that if they selfishly pursued profits, they would achieve all the goals humanity could expect, without having to worry about the human dimension of their activities itself. Here Kay argues that unless the activities are recognized as human and treated as such, the pursuit of profits according to the perfect market dream is doomed to failure. His answer to the question why rich states are rich and poor states are poor is something like this.   The former have an evolved complex social and physical infrastructure that includes laws, education and welfare systems and political structures supporting trustworthy and reliable transactions under what he calls ‘disciplined pluralism’ – a framework for businesses (whether state or privately controlled) to compete in finding the best solutions to complex problems by trial and error. The latter may once have had these (they may never have had them) but they do not have them now.   Markets bring them no benefit, because the human structures are missing.

An important strand of argument in this and in his recent book Other People’s Money emphasizes the importance of knowledge of the realities of a business or a transaction or of the human needs that are involved, and how this knowledge gets marginalized and lost when focus shifts to profit alone.   In The Truth About Markets we read ‘Corporations may aim to make profits, and there is nothing wrong with that, but their aims and their responsibilities are not the same. Heidi’s primary aim [Heidi is a teacher, one of several recurring examples in the book] may be the welfare of her family but her responsibility is to her students.’ And in Other People’s Money we see a stark illustration of the change from a humanized view of the activity of a firm to a decontextualised one in the course of the eighties. Kay quotes from two annual reports from ICI:

1987: ICI claims to be the world’s leading chemical company, servicing customers internationally through the innovative and responsible application of chemistry and related science. Through the achievement of our aim, we will enhance the wealth and well-being of our shareholders, our employees, our customers and the communities which we serve and in which we operate.

1994: Our objective is to maximize value for our shareholders by focusing on businesses where we have market leadership, a technological edge and a world competitive cost base.

Kay goes on to chart the gradual decline of ICI and concludes with the comment. ‘The company whose objective was ‘to maximize value for shareholders’ was not successful even in achieving that.’ (OPM 46).   If I understand the point correctly, focus on the market activities that yield frequent bursts of profit distracts from the real concerns of a business and can ultimately damage it. Long-term business success is only likely to be achieved with sustained care and attention to what the business is trying to create and who it is creating it for (this is almost Aristotelian!). That does not get us to the sort of new economy or lifestyle that Laudato Si’ is urging, but it does provide a very significant reason at least for taking the idea of human ecology very seriously, whichever side of the desk you sit.

[1] Both in Ha Joon Chang and John Kay

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