Economics:IN THE wake of the events of September 2008 and the arrival of the International Monetary Fund (IMF) as the emergency crash team specialising in rescuing insolvent free-market economies, business ethics has moved much further than reform of accountancy rules to questioning the basis of our economy.
The wider issue of distributative justice and allocation of goods and resources has begun to surface, having been buried for decades under an ideology of growing gross national product enhancing individual liberty to allow us act as independent economic agents free of overbearing state interference.
The spotlight began to tilt towards that bushy-bearded Victorian political economist, Karl Marx, who was among the first to highlight inherent contradictions in capitalism which would produce the seeds of its own demise. Marx attracted a sympathetic response from those who were offended by the disparities in wealth and the sometimes cruel nature of capitalist competition.
But his real appeal should not be so much to sympathetic socialists or ambitious political revolutionaries but to economic analysts keen to understand how global capital might develop.
Marx believed his version of the labour theory of value provided the key to understanding the nature of capitalism, the origin of profit, and the exploitation and breakdown of capitalism. This reliance on the 19th century labour theory of value came under severe pressure, and many economists have come to regard it as being fatally flawed. The contrast between the social development of western states compared to those that attempted to adopt his principles relegated his theories to the backwaters.
Nevertheless many of his economic insights survive and, increasingly, analysts are searching behind the post-Cold War triumphalism of globalised capitalism to look at the inherent contradictions that may be the cause of major collapses of confidence in capitalism.
This is key to an ethical weakness in unbridled market forces in that, if capitalism is unviable in the longer term, its consequences could be the impoverishment of the great majority.
Traditionally those at risk were the “wage-slave” unskilled, casual workers – but the latest bout of capitalist crisis is also hitting the heretofore largely protected middle and lower-professional classes.
For 20 years, analysis of Marxist thought has been confined to a few academic centres as its political influence seemed to be dead and buried with the collapse of the Soviet Union and the earlier crumbling of socialist regimes in central and eastern Europe It led to a Cold War triumphalism which unleashed the dogs of globalisation as a new, information technology variant of late 19th century worldwide investment. Its confidence found expression in Francis Fukuyama’s widely read The End of History and the Last Man (1992).
His thesis was that the western concept of history is leading to a network of liberal democracies.
One of Fukuyama’s main analogies was of states becoming part of a “Wild West”-style multicoloured wagon train of settlers moving towards a land of liberal democracy filled with milk and honey.
Essentially, history, in the Hegelian sense, would end when “enough wagons would pull into town such that any reasonable person looking at the situation would be forced to agree that there had been only one journey and one destination”.
But Fukuyama hedged his bets and speculated that the worldwide settlers may not like their new town and might move on in search of greener pastures while others may be diverted on the trail and even choose other routes through the mountains and deserts.
Back then he did not see Osama bin Laden and his al-Qaeda groups playing the role of Crazy Horse, the Sioux
and Cheyenne, attacking the settlers as they sought out the promised land of liberal democracy. Nor did he forecast the better-armed wagons moving off-trail towards Iraq and Afghanistan for their own version of the Battle of the Little Bighorn.
Marx, more so than Fukuyama, is often blamed for getting his perceived predictions wrong – such as proletarian socialism developing in Russia rather than Germany. What he was predicting, however, was that capitalism contained its own inevitable destruction and every time we have a serious global wobble in capitalism and world trade, his Das Kapital gets another dusting down from a top shelf.
Marx was highlighting the weak foundations of modern capitalism compared to the theory of trade and exchange between equals such as neighbouring farmers or post-medieval craft workers.
Even after 150 years, his criticisms have a familiar ring: “In every stock-jobbing swindle everyone knows that sometime or other the crash must come, but everyone hopes that it may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in secure hands. ‘Après moi le déluge!’ is the watchword of every capitalist and of every capitalist nation.”
Whether they be Icelandic banks or Irish property developers, first-time house buyers or option traders, they all hope to get in and out before the crash.
Unfortunately, the intricate nature of modern capital, resting on a platform of digitalised transaction technology, does not allow for such leisurely planning.
Political philosopher Jonathan Wolff has argued that we need to look more closely at the impact of economic competition – which we assume is the life of trade and progress – and its impact on those who lose out. These could be small family shops hit by multiple supermarkets; peasant farmers at the mercy of large commodity traders; or those who fail to secure the skills or education to obtain the better-paying, more secure jobs.
Of course, sometimes winners become losers, as with many of the developers and bank shareholders who are now getting to know executives from the National Asset Management Agency (NAMA) on a personal basis. That is supposed to be the egalitarian beauty of efficient competitive activity – that nobody is totally protected from the risks and vicissitudes of economic activity.
It is impersonal and provides wider benefits of economic growth and material progress and, for most of us, we are neither the holders of Swiss bank accounts nor facing the loss of our homes, as a result of the recession. Okay, we are paying higher taxes, experiencing reduced public services and about 400,000 have lost their jobs, but the majority are still getting by with belttightening, so they have avoided the very worst aspects of the recession.
Prof Wolff, secretary of the British Philosophical Association and author of Why Read Marx Today?, argues that this is not the real point from an ethical perspective.
What should concern us all is that we buy into an economic model which can only continue by creating
“losers” who are forced to emigrate, dispose of their homes or do without necessary medical care.
He notes that: “There is something suspect about economic competition... the problem is not so much that the winners harm the losers – even though they do – but that we, as voters and consumers, benefit from a system which allows people to harm one another. Potentially, we who benefit are exploiters.”
We try to overcome this moral or ethical concern by trying to reduce the degree of exploitation through welfare supports and interventions. But we cannot ignore that we live and operate within a competitive system that cannot avoid exploitation, whether of a peasant family in Colombia or Cameroon, or a middle-class family paying punitive prices or interest repayments to have a home in Ireland or India.
Our scruples and ethical concerns may dissipate as recovery emerges, guided by the IMF and European Commission, over the next five years but we will never lose that nagging ethical doubt that competitive, global capitalism is really the best, most efficient and fairest way to order our economic lives.
No matter how liberal or egalitarian we may be on issues of access to education, healthcare or housing, and tolerant and understanding of those of other races, cultures and beliefs, we retain the real suspicion that economic competition is based on a rough game of winners and losers which presents as a coercive force external to the individual participants. Naturally, we want to be on the winning side but there are no guarantees and losers are now closer at hand than they have been for many decades.
