Looking Down from Mount Olympus

With Olympics fervor at its height, it’s tough to resist Homer’s description:

“Olympus was not shaken by winds nor ever wet with rain, nor did snow fall upon it, but the air is outspread clear and cloudless, and over it hovered a radiant whiteness.” Homer, Odyssey.

Today, the equivalent of the 12 Gods on Olympus are, maybe, the G-20, or G-2, or the UN or any of the international organisations that are set-up on our behalf.

Or, maybe it’s closer to home – the national heads who make up the EU or the lesser number that make up the EZ; the 100 Senators in the US Congress.

Or, maybe they are the 1% who own 40% of the earth’s assets (financially-speaking).

Or, how about Forbes Global 2000 – the top 2000 of the world’s companies that, between them, account for $149 trillion in assets and employ 83 million people. This compared to McKinsey’s estimate of $212 trillion value of the world’s capital stock in 2011 – a huge percentage.

Icy Slopes

The Greek Gods took their place after a war with the Titans – who ruled before them. Mythology into reality – our new Gods rule in much the same way after a 20th Century where totalitarian regimes fought each other, amongst each and against  democratic nations in bloody conflict. Millions died in China, the Soviet Union, Europe, Vietnam, Africa, Indonesia and elsewhere as different theories of government battled for supremacy.

Francis Fukuyama declared it “The End of History” as liberal democracy supposedly triumphed. We know now that he was wrong (as he has himself declared). For, the winner (for now) was not democracy but a form of capitalism that promotes a new set of god-like creatures and a new Olympus where the wind does not blow and the air is clear. This new capitalism – the complete dominance of quantity no matter what type of government is in power – was relatively bloodless in its conquests, but no less callous in its purpose. Indeed, its callousness is worse than before as it is merely the “invisible hand” that drives the marketplace that has led to the victory of the new Gods.

Now, sitting upon the summit, surrounded by the icy slopes that let few into their circle, they can look down upon the rest in their eco-defended enclave.

How the War Was Won

 

The titanic struggle was won on the back of the primacy of goods – developing the ability for ordinary people to secure their basic material needs and then onwards to “choice” and leisure and luxury. This has been wonderfully accompanied by the ability of business to promote their products so that demand could be developed without the consumer realizing it. This ability to influence demand (so brilliantly described in Galbraith’s “The Affluent Society”) has led to a victory of quantity over quality in the West and will do so elsewhere.

The victory was made easier by Governments’ willingness to adhere to the 19th Century economic theories that made “growth” and GDP the concepts upon which all governing was placed – but, placed them in simulations which cannot reflect reality. Mathematicians and econometricians have extended the fallacy – we live for numbers. The evidence for this can be seen so well in Russia and China. For most of the 20th Century, both held out as anti-capitalist bastions as the world moved to strengthen democracy. Neither has succumbed to democracy – Russia is a gangster-elite State, China is a legalist, centralized State. But, both yielded wholeheartedly to the market.

Who Won the War?

Many argue that the democratic West won the war (as Fukuyama attempted to suggest) but this is wrong. The western form of liberal democracy with its desire to provide representative government, elections and low corruption levels (comparatively) as well as supposed access to education and upward social mobility is losing out. It is arguable that even in those countries that still pursue these ends, there is now a vastly worsening separation between rich and poor and a hardening of social structures – with far less mobility.

In China and Russia, elites have won the war and their instruments of war have been capitalist – as their citizens climb up Maslow’s hierarchy of need from the very bottom, quantity of goods is supreme no matter how they are derived. As Jonathan Fenby describes in “Tiger Head, Snake Tails” this is, in China, despite rampant corruption, ecological degradation and vast differences in wealth between elites as well as complete indifference to the vast population when their houses are demolished to make way for new buildings or motorways (for example).

Who Lost the War?

Millions of lives were lost in the 20th Century as nations defended themselves against the onslaught of totalitarianism. But, a new totalitarianism has taken root right beneath our noses.

It is the totalitarianism of the elites that control the markets – markets fed by a constant diet of GDP statistics and growth targets.

The losers are (in Orwellian-speak) supposedly the winners – the mass of the population that has grown “wealthier” throughout the latter half of the 20th Century.

So, it seems to be a benign revolution but the problems are becoming clearer by the day.

In Greece, home to Mount Olympus, the country is in its fifth year of recession. In Spain, 24.6% of people are now officially unemployed. In most countries, the gap between the wealthy and the rest is growing steadily.  Economic strains are now working their way around the system as growth (measured traditionally in 19th  Century models) stalls outside of newly developing nations (yet, who believes the measures coming from China?). Today’s youth in the developed west are unlikely to be “wealthier” than their parents in pure GDP terms.

But, we should not be focused on pure numbers. Economic growth is also threatening the ecology of the planet at an alarming rate. Whether or not fossil fuels are near their end, the effects on the planet are growing and recent changes to our weather patterns merely the first signs. Our damning footprint is ever more etched on the planet and real risks are emerging that the life styles we live now may not be available for long. As Rumanian economist Georgescu-Roegen surmised over fifty years ago, maybe we can’t change and will simply go out in a puff of smoke.

Maybe, though, society will not, for ever, tolerate the new totalitarians, the new Olympians.

The Gods were not immortal

 

Of course, nothing lasts forever. The Greek Gods did not survive (except in mythology) and neither will the current ones.

The problem is that we are engrained with the belief that quantity is the key to good life (which it may be up to a point) and have lost a connection with what society is about. Mass production has led to greater wealth but, as Galbraith saw 60 years ago, society cannot be all about quantity.

Maslow, developing his Hierarchy of Need as a marketing tool, expected that we would go beyond quantity to some form of self-actualization. We have definitely not managed that yet but we have some signs that societal self-actualization is possible.

A major problem in the way of this is that different countries are at different stages of economic development. China has a massive population still well down the material scale and there will be no let-up in the leadership’s drive for “growth” to stem the dismay of their people on all other issues. In Africa, the longing for material wealth is as strong and who can blame them bearing in mind the economic and social torment they have suffered?

So, initiatives like Zero Impact Growth being developed by John Elkington and his Volans company are worth considering.

This is an approach to growth with zero impact on the planet and ultimately to give back more than is taken out. Where others seek to quantify (and there are dangers in the approach of quantifying everything), the Elkington approach is to develop a maturity matrix as follows:

Maturity Level Definition from ‘The Zeronauts’ Analogy: Characteristics of a company on that level
No strategy and goals No definition The company barely understands the relevance of restructuring its actions towards sustainable solutions and hardly reports on sustainability. Furthermore, no strategy has been defined and no targets have been set.
Eureka Opportunity is revealed via the growing dysfunction of the existing order. The company understands the relevance of restructuring its actions towards sustainable solutions. No considerable actions have been taken yet and almost no strategies and targets have been set. The company does already understand the relevance of the topic though, has started reporting and communicates plans to ameliorate its sustainability performance in the future.
Experiment Innovators and entre­preneurs begin to experiment, a period of trial and error. Although the company has started its first inno­vation efforts and internal programs in certain sustainability areas and has developed initial policies and strategies, no concrete milestones and an overarching future vision have been defined yet.
Enterprise Investors and managers build new business models creating new forms of value. The company has developed a short- to mid-term strategy ( ≤ 2020) for specific areas and has set measureable targets. Nevertheless, almost no long-term milestones have been defined. Furthermore, they do not communicate an over­arching future vision.
Ecosystem Critical mass and part­nerships create new markets and institu­tional arrangements. Measureable, ambitious (zero) targets based on a mid- to long-term vision (≥2020) are set. Nevertheless, a conjoint approach and some collaborative aspects are still missing since the holistic zero impact growth vision has not been (fully) adapted.
Economy The economic system flips to a more sustainable state, supported by cultural change. The company has fully adapted the zero impact growth vision. Measureable zero targets that have been adapted jointly are set out for each field of action. A clearly defined strategy is in place on how to achieve these targets, with defined short- and long-term milestones. The underlying benchmarks are clearly defined.

Maybe there is some fight left and the reality behind the model is clear – we can’t fight the invisible hand but maybe there is a chance for society to develop some self-actualisation behind the corporate drive towards zero impact growth where the planet survives along with humanity.

That doesn’t impact on the gap between the wealthy and the rest as the focus is on economics and sustainability. Inequality is as important a problem as ecology. Numbers should be seen for what they are – where money is one aspect of our lives not the only one. Demos, a UK think-tank has just published: Beyond GDP – New Measures for a New Economy.

It is an attempt to seek a rationale for economics beyond numbers. Briefly it posits that:

  • GDP does not distinguish between spending on bad things and spending on good things.  By this measurement, the BP oil spill in the Gulf of Mexico “positively” contributed to the economy just like the many good and services that people actually want or need.
  • GDP doesn’t account for the distribution of growth. Our total national income has doubled over thirty years, and so has the share of national income going to the wealthiest households, but average households have seen little or no income gains. GDP doesn’t care if growth is captured by a few or widely shared.
  • GDP doesn’t account for depletion of natural capital and ecosystem services.  If all the fish in the sea are caught and sold next year, global GDP would see a big boost while the fishing industry itself would completely collapse.
  • GDP doesn’t reflect things that have no market price but are good for our society, like volunteer work, parenting in the home, and public investments in education and research.

Two studies that show on this morning after that wonderful Danny Boyle-inspired Olympics night – where values were keenly shown as more than just money – that the slopes of Mount Olympus are slippery but not completely impassable: a Danny Boyle-inspired dose of self-actualisation.

Sudan – China’s Supply Chain Gang

George Clooney got arrested yesterday – outside the Sudanese Embassy in Washington, DC. He was freed with a $100 fine – but he (and his journalist father) have brought some attention to the awful situation in Sudan / Nuba / South Sudan.

I was in Khartoum in 2010 on behalf of Global Witness, an NGO that campaigns against natural resource funded corruption and conflict. The Sudanese had reacted badly to a report we had written on how oil resources were being corruptly handled against the interests of the South Sudanese – who have since gained independence. Around 98% of the income is from oil.

At the conference organized in Khartoum by the Sudanese Government – and aimed at rubbishing the Global Witness report – the oil companies were represented (Chinese at the forefront) along with the Government and oil ministries. The conference was aimed at whitewashing the Sudanese of corruptly taking more than their fair share of the oil under the oil sharing agreement.

Since then, Bashir’s Government has been syphoning off South Sudanese oil (which has to run through Sudanese pipelines).  Because Sudan is made up of various tribes, fighting over territory and natural resources remains continuous and high-risk. As in many countries, economic well-being is a necessity to ensure that such conflict is minimized. In a country riven by wars and dependent on one natural resource, oil, oil management and an ending of the rampant corruption in Sudan and South Sudan are critical.

19th Century Boundaries

Sudan is a nation with boundaries set up in the 19th Century by Empires that adored straight lines and cared little and understood less about the tribal affiliations or histories of those lands. Kept together by undemocratic and repressive regimes, corruption and conflict were devices developed to hold strong elites in power. Corruption is now rampant throughout the region and conflict is often seen not just as a means to take over territory but to keep populations focused on the enemy so as to distract them from internal strife and to motivate all against a common foe.

Decisions taken many years ago by foreigners have destabilized the region and insinuated a corrupt regime and continuous conflict into it. The new colonizers, though, are the Chinese. As George Clooney states, the Chinese oil companies (really the Chinese Government) have invested over $20bn in Sudan / South Sudan so that 6% of their oil needs back home can be fed. They have styled their colonialism on the back of “no involvement” in politics or in the affairs of the Sudanese. Confucian disinterest in the affairs of a nation so far away means that the west’s plans (certainly since the end of WWII) to link economic prosperity (mainly through aid) with improved governance are now foundering as the new colonialists (extracting vast quantities of natural resources) care nothing about governance.

21st Century Payback – China at the centre

Following the demise of the League of Nations after WWI (a bastion of 19th Century borders), the United Nations was created to establish peace worldwide. How will the 21st Century be reshaped to deal with the enormous economic changes taking place whereby dominant nations from the 20th Century are being progressively sidelined in those areas of greatest economic need and highest risk of conflict?

China despite its size and annual economic growth remains a poor country where 70% of its people are poor by international standards. It is determined to grow itself to a level where its people are comfortable and where the political system is salvaged. This means that its supply chain (especially its natural resource supply chain) is seen as merely that – it doesn’t matter that nations who have the natural resources so badly needed for economic growth in China are corrupt and riven by war as long as the Chinese can minimize supply disruptions. This may have been OK in the 19th Century but is not sufficient now where elites are enriched in the supplier nations on the back of corruption and conflict.

The key to the crisis in Sudan and the key to making a real change to 21st Century struggles against corruption (and its impact on poverty, hunger and disease), against conflict and against world-changing disasters like climate change is ………China.

Whether or not China is dominant in terms of its economy – and it is still much smaller than the USA – it has the power of veto and, more positively in terms of persuasion.

China can free the Supply Chain Gang

Whilst economic strength moves to China at great speed, the Chinese government has to take account of the fact that its customers and suppliers and itself are completely interdependent. China will probably over time become the most interdependent nation on this planet. Its huge population and increased momentum for economic growth will encounter limits that the current Premier, Wen Jiabao recently acknowledged. Increasing “reform and openness” are critical to further economic progress, he said recently in Beijing.

As out-going Premier he will not in the future have the power he currently possesses and Chinese power is entangled in many ways so that his words may not bear fruit. Nevertheless, there is some reason to believe that the government in China may seek to adapt as time goes on – because economic progress is vital to secure the political power base. At the same time, it is possible to see that (with the right pressure) Chinese attitudes to its customers and suppliers may be reformed to more than purely customer / supplier status. China is not a corporation and the competition for natural resources is not merely a supply chain activity – there are lives at stake within the supplier communities, not just shareholders and shareholdings.

Sudan and South Sudan are examples of so many things – countries dependent on a natural resource which is dissipating that basic wealth to a foreign country so that a core of wealthy and powerful government cadres get wealthier while thousands live in poverty, disease and in war zones. While China treats Sudan and South Sudan on a supply chain basis, no change can exist – and this same treatment is expanded wherever China works to secure supplies.

The Clooneys and Amnesty International and Enough (as well as organisations such as Global Witness) are working hard to free the Sudanese and South Sudanese from the terror of war. It is also a crucial case for expansion of China’s role in natural resource extraction and dependency. China can change the way the world works by relaxing is grip on pure supply economics and allowing its huge economic strength to persuade its suppliers that good governance is a worthwhile benefit along with the extraction of its natural resource wealth.

Holes in the ground – whether the result of mining, oil extraction or graves dug to bury the dead from conflicts – are no use, merely the result of the supply chain gang effect. It is a good time for China to take its global responsibilities more seriously. It will be around for a long time – it should be seriously acting on how it lives within the global neighbourhood. The traditional Chinese view that you should follow the local custom when you go to a new place is outmoded – especially when local customs are keeping elites in power, corrupted and financing conflicts.