Category Archives: Business and Society

Modern Thinking: Atomism and Communication

‘Modern Thinking: Atomism and Communication’ – Although written four years ago for an essay competition, I still think this piece encapsulates as well as anything my approach to economics, politics and social institutions.

Atomised and helpless
Atomised and helpless
Bertrand Russell, the great British mathematician and philosopher, believed that to be ‘modern-minded’ was to make the error of thinking with the fashion rather than ahead of it. When he wrote about this in 1937 he believed that with God’s role as arbiter of truth and beauty having been usurped, ‘detachment and objectivity, both in thought and feeling’ had also been thrown overboard. Russell, as a rationalist and a non-believer, believed it was ‘possible and important’ to preserve them without recourse to a Creator. To do so, he believed, required ‘solitude’ and ‘a certain degree of isolation both in space and time’. While he may have been right when it comes to studying the physical world and creating great art, his advice is less helpful when it comes to human nature and society. Even if we wanted to, as human beings ourselves, we cannot stand apart from other humans and society as a whole. Unfortunately when this recognition came it was in part responsible for a critical wrong turning in our approach to social phenomena. This wrong turning came about because modern thinking, having dispensed with God guiding from above, had already turned to look for causes and drivers of events at the level below that at which they are observed. The properties of substances had to be derived from the properties of their molecules; the properties of the forces that change the world about us from day to day are derived from the waves and particles into which they can be decomposed.

This atomistic approach has often worked brilliantly in explaining the physical world. Since many physical objects and forces have properties that are fixed (or at least change predictably) through time and space, the interactions between them are often manageable. Other ways of expressing this are that such physical systems are ‘linear’; or that the whole is simply the sum of its parts. By understanding how each part works we combine this to understand the whole and make it do what we want. As it turns out, we now recognise many physical and biological phenomena with properties that seem only distantly related to their component parts, and so are extraordinarily difficult to analyse in terms of the behaviour of individual molecules or forces. Fortunately, what is often found with such systems is that, while there is apparent chaos at a lower level of analysis, inputs into the system, outputs from it and large-scale patterns of the system’s behaviour may still be predictable. Since individual humans are themselves complex systems whose behaviour is varied and difficult to predict, it is easy to see that the atomistic approach is likely to be even more unhelpful for the study of social phenomena. Small external or internal events affecting our physical or mental condition can have unpredictable results for our ability to do things or the way in which we find it easiest to do them. Continue reading

Unemployment – Morality, Money and Increasing Returns

Returns to Scale in Frankfurt's business district
Returns to Scale in Frankfurt’s business district ©DWP

The causes of unemployment make it a moral issue. Radical solutions are required.

In an earlier post I noted some features of unemployment from a UK perspective. The main thrust was that a fairly constant proportion of the population in employment (around 72% of those of working-age) hides a serious decline in the availability of adequate work, due mainly to the increase in women in the workforce and the fall in the ratio of full-time to part-time work. In a paper I wrote and referenced here on welfare I hinted at a moral dimension to the issue of unemployment in a capitalist economy (by which I simply mean an economy where physical means of production tend to belong in more or less concentrated hands).

I have now written a rather more formal paper (pdf 198kb) which I presented to the Post-Keynesian Study Group annual workshop in May this year in which I expanded on why we have a persistent problem with unemployment, and why this has a significant moral implications in our attitude to the unemployed. In this light of this I review the inadequacy of current policy and look at some of the more radical solutions proffered. The following is a non-technical summary of the paper.

Resource Use Failure
The failure to make the best of our human resources is not only a failure to make the best of our welfare, but in a society which explicitly assumes that we ‘get what we deserve’, condemns millions to needless poverty, social exclusion, humiliation and increasingly near-criminalisation for the sin of being unable to persuade firms to employ them at a liveable wage.

Standard Thinking
Standard economic thinking about employment holds that it can be increased by lowering the cost of employing labour for firms, sharpening the cost-benefit separation between low-paid work and unemployment for labour-market participants, and weakening links between labour demand and nominal price rises by reducing workers’ bargaining power and by increasing market competition. The approach of many ‘Keynesian’ economists shares this basic view but tends to see these features that lead to unemployment as being so ingrained and so sustained that since ‘in the long run we are all dead’ direct government action is often required.

The Radical View
Other economists hold a more radical view of Keynes’s insights. They argue that unemployment generally arises due to the interaction of money and uncertainty – uncertainty in the sense that ‘we do not know’ rather than that reducible to probabilities. Money greatly expands the opportunities for exchange, for wealth accumulation and for varying the timing of transactions. The result is an economy more complex, more productive, more prone to fluctuations in activity levels and more unequal than one relying on barter and trust. Money provides a buffer for uncertainty for individuals but acts as a magnifier of uncertainty for the economy as a whole. (See previous posts for discussion of the particular nature and problems of monetary economies.) Continue reading

The Real Wealth of Fizz

Coca Cola bottle and CashAmol Rajan, whom I have had cause to praise previously, wrote last week about Coca-Cola’s self-serving ‘anti-obesity campaign’. While much of what he writes is refreshingly scathing, I would take issue with the following statement:

[Coke] is a massive corporation that exists to make huge profits. This is fine by me, because I like big corporations: they create wealth, tax revenues and jobs.

Clearly the first part is mostly true. Mostly in the sense that a company also exists to expand the empires, wealth and reputations of its executives – which is generally also tied up with making ‘huge profits’. The problem I have is with the idea that big corporations necessarily ‘create wealth, tax revenues and jobs.’ Whether they create real wealth is often doubtful.

In the case of Coca-Cola what it mostly creates is sweet fizzy drinks and the additional pleasure that comes from drinking their drinks rather than those of any competing suppliers. If we wanted to monetise that real ‘wealth’ it would be in terms of the additional price we are willing to pay for Coca-Cola products over other similar drinks. Note that we have to pay that surplus freely – if we are forced to pay it because of local monopolies or persuaded by misleading advertising than it represents not a social gain but a loss. Continue reading

Better Press Regulation should be Liberating

This article is on 3 pages, and you can go to the next page you want by clicking on the relevant  number at the bottom of each page.

papersThe report of the Leveson inquiry into the Culture, Practice and Ethics of the Press is expected to be delivered next week. I am publishing here a fuller version of my article that was previously published on LabourList. I was interested to note a report on the BBC News this evening on the Danish Press Council, which operates on a statutory basis and in a way not dissimilar to my suggestions here.

Introduction – The Press: Free for Whom and Free from What?

Press regulation as self-regulation is no longer, if it ever was, acceptable. It has utterly failed to prevent harm, to deal with the consequences of harm, and most importantly, failed to give us the high quality information and varied interpretation of current events and processes for which a ‘free press’ is valued. There is strong evidence for this in observing some extraordinary misapprehension of facts about our society.

As reported by a Cabinet Office briefing in 2000, when questioned people estimated on average that 26% of the population belonged to an ethnic minority. The real figure then was 7.1%. They thought on average that 20% of the population were immigrants. The figure at that time was just 4%, although it has now increased following EU expansion. A recent YouGov survey conducted for the Fabian Society found that people systematically overestimate government spending on unemployment benefit and the police by a factor of eight, housing benefit and child benefit by a factor of three, and sickness and disability benefits and defence by a factor of two. Yet when it comes to those parts of public expenditure where direct experience is common, such as the NHS, education and state pensions, the average estimate is reasonably close to the reality. Whatever our preferences, if we aren’t getting accurate information we cannot collectively make good decisions on important matters. As Lord Judge, the Lord Chief Justice, has pointed out

‘[T]he liberty of the press…is the right of the community as a whole. It is…our right, the right of every citizen.’ Continue reading

Equality of Voice and ‘Devo-localism’

Dependent Smurf
Don’t I get a say?


That’s where the real constitutional debate needs to be – around a radical constitutional option that puts Scotland back into the hands of its people: devo-local, if you like. Trevor Davies, The Scotsman 10/5/2012

 [Politicians] see themselves as propping up something which is tottering rather than letting citizens build anew something that is soundly based. Charles Moore, Daily Telegraph 13/7/2012


Power wielded from the centre is slow to react, inflexible and discriminates poorly. Yet political power at all levels has been steadily eroded as a consequence of the economic demands of global corporations and the economic strain on central government to provide for these corporations and mop up the damage they cause. No redistribution of political power from centre to periphery can be sustainable without addressing the centralisation of economic power. The willingness to address the latter is surely what will separate the left ‘devo-localist’ from the right. Continue reading

Leveson Heat Rises for the Press

Since my post Leveson, the Press and Labour there have been further developments. The Prince Harry photos episode was hardly edifying for the press or the Royal Family. That the Sun editor could claim that publishing these photos of a silly over-privileged young man was somehow ‘about the freedom of the press’ should re-inforce my main point. The primary freedoms most of the current press industry are ultimately interested in are the freedom to make money and the freedom to promote their owners’ interests.

That News International in particular are an organisation whose values are seriously removed from human concerns was re-inforced today by the publication of a seriously awful picture of Cheryl Cole. She had been photographed through a car windscreen bleeding from the nose after an accident. For all the photographer knew at the time this image was taken, this woman had a basal skull fracture and was minutes from death. The fact that she is well known for her celebrity career gives only public prurience rather than public interest to this photograph.

The tendency for the press to close ranks in denial at the overall damage done by a press with skewed ambitions was emphasised yesterday in the Independent editor Chris Blackhurst’s BBC Radio 4 interview on the ‘Section 13′ letter he has received from the Leveson Inquiry outlining the criticisms likely to be made. Continue reading

Leveson, the Press and Labour

This post was published on LabourList on 16th August 2012, under the title ‘Labour must free the Press’.

The first instalment of Lord Leveson’s inquiry report into the Culture, Practice and Ethics of the Press is due in the autumn. It’s vital that Labour are ready to argue for a truly free press. We should be well aware that the political right and the press industry itself have major combined interests in adhering as closely to the status quo as possible. Although the issue of privacy was the final trigger for the inquiry, the most important failure of our press is to provide high quality information about current events and a true variety of interpretations of their causes. We need these if we are to make good collective decisions on important matters. The truth-distorting bile that issues from some outlets has had a measurable effect in false impressions left on the public. Continue reading

The Riots of August 2011

The riots that engulfed London and other cities in England began one year ago today. Just to hark back to my piece ‘Riots: Looking Deeper’ on this topic last year, written one week after they started. I think it’s fair to say that it was a reasonable analysis. In particular the Independent Panel set up to investigate their causes stated

Clearly the importance of those attributes becomes even more pronouncedwhen young people are faced with growing up in a time of austerity, a struggling job market and pervasive messaging telling them that criminality provides a fast track to achieving status among their peers. For example, while we know that most convicted rioters were not gang members, we also know that gangs operate in a large number of areas where the riots occurred. Some young people are exposed to imagery and attitudes associated with gang culture from an early age, which glamorise a life of criminality outside the system and which eschews any empathy for the victims of crime.

An article by Richard Wilkinson and Kate Pickett (of ‘The Spirit Level’ fame) on today’s Guardian CiF specifically blames inequality. You might care to look here at my general response to that thesis.

As Laura Wilkes, Policy Manager at the Local Government Information Unit, points out today on LabourList

…with local authority cuts set to continue the environment will become more challenging than ever before – if we are to avoid a repeat of 2011 councils need to have the funding to invest in key intervention programmes, community development and economic growth; all things that could help to prevent future riots. As things currently stand, government policy could threaten this.

Capitalism Meets its Match?

Still capture from Cohen video.
The late Jerry Cohen.

Whichever side of the argument you might be on, it’s worth looking at a very cogent and entertaining video talk by the late Professor G.A Cohen on some of the problems of ‘actually existing capitalism’.  I found it while following up a reading of his Tanner Lecture, ‘Incentives, Inequality, and Community’, given at Stanford University in 1990-91, which contains a powerful argument against incentive justifications for income/wealth inequality.

The talk was evidently broadcast on the UK Channel 4 some time in the 1980s. You can find the video here at ‘Sociological Images.

Bailouts and the Future of Banking

Long piece today by the Guardian’s economics leader writer, Aditya Chakrabortty, on the cost of the banking crisis, bank misconduct and what should be done about it. I agree wholeheartedly with the thrust of this piece, and indeed said much the same two and half years ago in my piece on the Guardian Cif site. Aditya’s piece concludes that

any investigation needs to understand how to reform the finance sector so that crises like these don’t recur; and so that banks actually work in the public interest rather than hire propagandists to pretend they do. Because in the end, financial reform is not about technicalities, but about politics: deciding what role banks should play in an economy, and what kind of economy we want.

However, he says also that:

According to the IMF, the British stuck £1.2 trillion behind the finance sector. Read that again: well over a trillion pounds in bailouts, and loans and state guarantees on bankers’ trading. In just a few months, and with barely any public debate, every household subbed £46,774 to the City. A sliver of that money eventually went unused; as for the remaining hundreds of billions, we have no idea just how much we’ll get back – or when.

I have some concern with these numbers. And, as I suggested in response to David Malone also, I think this is important. Continue reading