Easter and Eostre, Germanic goddess

This post was written in 2013 – pre-Brexit and Trump, before we realised how plastic was killing our oceans, when the northern white rhino was not extinct. It’s about value over volume, about the quality of life over the quantity of life – the sort of thing we should consider at the start of Spring or even at Easter-time.

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In the Christian tradition, it is Easter – named after Eostre, the Germanic Goddess of Fertility and Spring. It is that time of year, when we look for growth all around us. Yet, more prosaically, mention growth to most and we talk about recession and how ironically the current German goddess (Chancellor Merkel) is not so keen on helping those in need around the periphery of Europe.  She wants them to help themselves.

Growing Pains

Michael Heseltine, Cabinet Minister under Margaret Thatcher, who recently provided a report to the UK Government on the regeneration of English cities that David Cameron and George Osborne have welcomed , told The Independent newspaper on Saturday, March 30, 2013 that: “the richer you get the less imperative there is” for people “to drive themselves”.”

BBC Radio 4 followed this up with a debate on Saturday’s Today programme between Mariana Mazzucato (an economist) and Terry Greenham (from New Economics Forum – NEF). Terry ended by calling for more quality rather than quantity in how we measure “growth” – that GDP as a measure was flawed.

Our Affluent Society

Back in May, 2012, I posted “The Affluent Society and Social Balance” which looked back at the writings of John Kenneth Galbraith (author of The Affluent Society) and wrote about how mindsets had not changed since he wrote the first edition in 1958. Quantity was still valued over quality – economics was still all about more things, not more quality of life despite our (developed world) ability to acquire so much stuff.

I spelt out four areas for concern as developed nations seek to address further “growth” requirements. They were characterized as follows:

Forty years ago, five, major elements were missing from or only sidelines in Galbraith’s analysis – issues which have become more central over time and which complicate the prescription that Galbraith proposed: They are repeated below:

1. Globalisation

2. The errors in GDP accounting – quantity vs quality

3. The Environment – valuing quality

4. Civil Society – ending the private vs public sector spat

5. Social Balance

1. Global Trading

The world is a different one from 1958 or even 1973. We trade globally and the developed nations increasingly use labour from the undeveloped nations to do low-cost, manual work (often in conditions we would not tolerate in our own countries). It is a 19th Century state of work but internationalised– where now, international companies tend to operate as the mill owners of old.

From a micro-economic sense that is understandable – each company is different and many act responsibly. However, from a macro-economic viewpoint and from an international political viewpoint, there are limited mechanics for equalizing health and safety laws let alone education and pay scales.

Galbraith’s concern was that we produced too much and that we should be able to make less in a country like the USA. When the work goes international, the responses to the problem have to as well.

2. Production by numbers: quantity versus quality

In an affluent society, production is made the cornerstone of all we do (the economy is central to all our decisions) because work is needed to secure income. Even in an affluent society, income at a certain level is deemed to be critical. Products of progressively less use (or utility) are sold (often solely on the back of advertising) and we buy them and this is meant to keep us in work and more buying goes on.

Of course, in an international labour market, that won’t always work (as Gandhi found out in the early 20th Century when England produced most of the cotton garments sold in India) and it has become harder to focus just on one country.

However, the global economy does not mean that products become more useful – much of what we make is simply wasting energy and resources. However, it is keeping people in work in many developing nations.

But, growth is measured by GDP and GDP is a poor measure of quality of life or even production. Quality of education, for example, is measured in GDP by its cost (an input) not an output. A £500 handbag is deemed worth the same as £500 worth of essential foods – no difference in utility is assessed.

The felling of a rare tree is “valued” at the cost of felling or its price in the market as a table. The value of a river is missed completely – unless over-polluted when its clear-up costs may enter as a cost in a nation’s GDP.

It is production by numbers, quantity versus quality.

3. Environmental Balance

While mentioning the issue of environment, the main topic of “The Affluent Society” is the social balance between public goods and market production. All these are made by people – so, the environment in which we live is ignored. The trade-off is not, of course, that simple (even though the Galbraith trade-off has never been seen to function). The environmental trade-off (our need to maintain our natural capital) is now being understood but remains relatively hidden in economic debates. Natural capital needs to be brought into any debate on affluence in society – our quality of life as opposed to the quantity of life.

4. Civil Society

To Galbraith, the game is between the market and the public sector and to most, this battle still exists as the only one. There was not much mention of civil society – where most of us spend most of our time – except through discussion of leisure time. Here, the trade-off was between productive working and spare time. I expect that this assumes that all non-productive time is spent on hobbies or watching TV.

The creativity and value of civil society – a huge array of organisations from sports to international development, from charities to women’s institutes – is normally missed completely by economists and thinkers on society. The problem is that it does not fit easily into econometricians’ computer simulations: more of the “if you can’t count it, it doesn’t exist” syndrome.

Of course, for centuries, people have been undertaking “good deeds” – the history of the 19th Century is full of examples of charitable activities. However, society is changing fast and as politics loses its appeal for so many (with parties genuinely fearing for their future), the role of civil society is growing and, in affluent societies, taking back more from the state that it lost to the state in the 20th Century.

This escape from the centre is to be applauded, but needs to be better understood.

5. Social Balance

Complete reliance on the market or on the centre (libertarianism or communism) may still appeal to some. The reality is that complexity is the norm. Society is a mixture of competing ideas and competing structures – out of which we muddle through and where individuals take centre stage and form organisations to make their voice louder.

Nevertheless, we should learn from history and our mistakes. Centrism is a doctrine of the defeated; totalitarianism a doctrine of the damned. There is no one answer but a constant mix of opportunities that society provides and where changes are constant in the way we answer our problems.

The mix of competing answers does no longer rest between public and private sector in an affluent society – that is a 20th Century doctrine or response. The response now has to take into account the social balance we want from our lives between products, social value, natural capital and civil society relationships in a global context not a rigidly national one.

This means being adult about the causes of change and grown-up about the challenges – it means being international in approach and understanding the complexity of the problem – not something that can be understood wholly by quantities or computer simulations.

As we grow materially (i.e. through the quantity of products we are able to manufacture) and bump up against the troubles of environmental degradation and massive disparities of wealth and conditions (on a global scale), the question to be addressed is how does a complex society best form itself to take the decisions it needs to maximize the value we all give and receive from this “affluent society”.

So, should we Give up on Growth?

Terry Greenham of NEF would propose (as does NEF) that this is what we have to do. As the developing world strives towards economic well-being as described by growth of GDP (gross domestic product), the developed world should (in NEF terms) re-balance the lives of their people so that quality is maximized and quantity is stabilized.

Of course, all our measures and motivation focus on quantity. Homo sapiens have developed over 100,000 years to seek food and shelter and the more the better. However, following Maslow (Hierarchy of Need), humans aspire to more than just “stuff” and as we gain wealth, the majority want more that is not measured.

A salutary valediction from The Independent’s Michael McCarthy (Environment Editor) today after 15 years with the newspaper, showed a pessimism that the human race could wake up to the qualitative disaster that it was causing in its rush to quantitative growth. Governments have responded with nothing in this debate – transfixed as they are by the glamour of GDP statistics. Heseltine is the first senior Conservative in the UK to state the obvious – that being the fastest growing economy is not necessarily what we all want. GDP is, in reality, meaningless as it fails to measure value as outlined above. A tree is not worth the amount it costs to fell and transport; a river is not worth just the cost of keeping clean – they have value beyond this that is not within the bounds of GDP.

Businesses, operating in the micro-economy cannot be expected to make the change – they are set up to benefit their shareholders and adjust to cultural and legal pressures (usually with some degree of resistance).

It ends up with Government having to lead. In very few nations is there an understanding of the problems that faces us – the race to grow GDP. Most completely misunderstand what GDP measures (and that includes most economists – centred as they are on econometrics the simulation of economies that reflect the 19th Century reality not the 21st Century’s).

We need to establish measurement (if that is how we work best) of the Gross Domestic Value  –  GDV  –  where Value takes over from product (things).

In this way, CO2 in the atmosphere can be valued; that tree being felled can be valued; humans can better value their time given back to society.

We should not give up on growth, but growth of value not product or income (based on the wrongful simulation of salaries, costs and sale prices).

National Value or Gross Domestic Value should become the target – not how many products we have. The question is whether there is a drive and energy to establish an understanding of what really is important or whether (as economist Georgescu-Roegen said in the 1970’s)

“Perhaps the destiny of man is to have a short but fiery, exciting, and extravagant life rather than a long, uneventful, and vegetative existence. Let other species — the amoebas, for example — which have no spiritual ambitions inherit an earth still bathed in plenty of sunshine.”

Michael Heseltine is only partially right. There is a limit to the drive and push people have to continuously get more stuff – but, there is probably no limit to our drive for more value. Michael McCarthy is, maybe, too pessimistic – we can drive human growth through value not products – GDV not GDP.

 

Politics and polar bears – the race for extinction

Polar bears evolved into a niche that for thousands of years gave them a status at the top of their local food chain. Global warming is putting paid to that and, swimming from one ice-island to another they give the appearance of a doomed species. It may take some time, but the human race is ensuring that they are no longer suited to the new environment in which they have survived for so long.

Changing Environments

It’s probably less important, but the world is changing for politicians, too. They are suffering from their own form of global warming that shows that they have not sufficiently evolved to meet the demands of the new environment that they face. It is an environment in which the political systems of the 19th century don’t work and the where the fixed mental states of those in politics and who have grown up in politics and nurtured by 19th and 20th Century models no longer have the validity or purpose that they once did. Populations see them incapable of creating the conditions for us to live well and are giving up on them.

Voting is down to 50% in many democracies; in Western Europe, corruption and greed has isolated the political factions from their people. When Mario Monti said in an article in Spiegel recently, “If governments allow themselves to be entirely bound to the decisions of their parliament, without protecting their own freedom to act, a break up of Europe would be a more probable outcome than deeper integration”, then you know the game is up. Politicians and the people are separated and democracy itself us in danger.

When you have evolved into something of no use, then it is time to give way or you erode (or, worse, implode) with time.

Fukuyama believed that politics had evolved successfully and that liberal democracy had won. The problem with that analysis (apart from being plainly wrong, as he now agrees) is that he was providing an answer to the wrong question. The question was not which political system out of communism, fascism or democracy would win. Nor, was it a question about whether capitalism in one form or other would win – we know the market has its place on the winner’s podium already.

No, the question to be asked is more fundamental – what is the role of government in a modern society? Monti would argue that democracy might well not be part of it. There are other, better positions.

“The Gardens of Democracy” by Eric Liu and Nick Hanauer (http://www.amazon.co.uk/The-Gardens-Democracy-Citizenship-ebook/dp/B0061S3UMA/ref=sr_1_1?ie=UTF8&qid=1344783105&sr=8-1) describes, from an American vantage point, the type of new politics (combined with new economics and new citizenships) that could dominate in the future. More a long pamphlet (but no less important for its Tom Paine comparisons) than a major book, it describes the “big what and the small how” of politics in the 21st Century. But, it will require a sea change in politics and in politicians and take us well away from the technocratic (mechanical) notions of 19th Century thinking.

What is different now?

Liu and Hanauer’s work is based on discoveries made in the late 20th Century in places like the Santa Fe Institute (they base much of their work on the Eric Beinhocker’s great book “The Origin of Wealth”) into complexity and the new rules that completely shake the 19th Century idealism of economics doctrine that still rules (mainly through econometrics – the 20th Century form of alchemy) the policies of the 21st Century.

They bind together the new guidelines into citizenship and politics and, probably for the first time, attempt to develop a society-wide thesis based on the new rules. It is a bold attempt and no different to the aims of Common Threads (this blog) – to rid ourselves of 19th Century prescriptions based on Newtonian (they call it “mechanical”) rules and forward to what they call “gardening” – the desire for politics to shape and cajole (and, as necessary, fund and intervene) but not to control or to allow the unfettered invisible hand of the markets to run riot.

While their focus is on the USA (developing a point of attack against both free marketeers such as the Republicans – or, worse, the Tea Party – and the pro-government-does-all wing of the Democrats), this is a model for all nations.

What is different now is that in many countries people are tired of the old left against right philosophies and are reaching (or have already reached) a level of economic “wealth” (at least measured by numbers) that should allow us to turn our minds to what actually matters – Maslow’s self-actualization but on a global scale. More than this, education is sufficient for people no longer to want to be ruled by governments in every sphere of life but educated enough to know that massive income variations should not be the norm and that society is important – it is our position in society that matters more than the material wealth on its own.

As a Brit, nothing is clearer than the genuine pride shown during the 2012 Olympics – a pride of a nation that (despite may problems) has provided a high value games with genuine affection for all nations as well as pride in itself. The pride of the many volunteers that contributed will resound as long as the concerns over the amount it cost. This was a society working together – a form of national self-actualization.

This self-actualization has to take us away from the mechanical drudge of being a cog in a wheel – focused only on what monetary wealth provides – to a society that encourages growth of all its citizens. That growth is whatever we believe to be important and government’s role is to help us understand what that is (not “tell” – this is not a totalitarian regime proposal) and assist in attainment. It means  (according to Liu and Hanauer) the “big what” – i.e. what we aim for – and the “small how” (i.e. not controlling how we get there but aiding the process).

Politicians as leaders not controllers

Society in the developed world is driven (in the main) by money. We count our wealth in dollars or euros or pounds or yen or yuan. But, we all know that there is more to life than that. Our memories of our lives are far more than how much money we make – they are of family, education, learning, books we have read or films we have seen or football matches played in or viewed, pride in our kids, helping loved ones over illnesses or a myriad of other prized mental possessions.

Yet, modern society always seems hell-bent on just monetary gain – “it’s the economy, stupid”. This is a 19th Century concept given heart by 20th Century victories of democracies run on market economics against totalitarianism, communism and fascism. The result was a victory that was far, far better than the alternatives. We now have a chance to modify that victory and show that the 21st Century offers more than the Chinese alternative of a market economy driven by a legalist clique that fears for its life. Competing on those terms is not what we should consider.

The market economy is the best worst option but not as a free (unfettered) one. Government has to play a role and Liu and Hanauer point us towards that role.

The role of government changes in this worldview and the role of politicians, too. Instead of CEO’s in charge of a business, Liu and Hanauer propose that they become gardeners – working out the general landscape and then tilling the soil, weeding and watering the plants, as it needs it. This is a worldview that is consistent with the way the world works – not the way that 19th Century politicians and economists have developed the simulation.

What’s the next step?

I have been interested in complexity and the new findings of this deeper, richer analysis of how the world works since the 1980’s when I attended a lecture in London on complexity in business – with Michael McMasters, then a guru of the subject. Murray Gell-Mann (who found the quark) and Stuart Kauffman were presenters amongst a stellar mix of experts in science and economics. Work done at places like the Santa Fe Institute and elsewhere have pushed the boundaries of thinking in this area and there are now areas where this new (er) thinking is taking hold. Eric Beinhocker’s recent article in the Independent  (http://blogs.independent.co.uk/2012/08/08/new-economic-thinking-and-the-potential-to-transform-politics/) which highlights the Liu and Hanauer book also provides an example of how computing technology is assisting the process – how the difficult arguments of complexity can be made real.

However, in the last thirty years (since I attended that conference), it has been hard to see the visible signs on a macro-scale that complexity has made to make a difference in a society that is driven by simplicity – the drive to count based on GDP and earnings.

Liu and Hanauer have in a large pamphlet done something important in working to make a tough subject easier to understand. Now, we should be shouting like Tom Paine and working to establish such thinking in schools and universities and to challenge our leaders to address the world’s problems through the dose of reality that complexity provides. This is a major challenge of explanation no less important than any other doctrinal assertion over the years but without (yet) the simplistic notions that the Tea Party or labour rights or communism or centralized government (or left vs. right) have.