Friday, 11 July 2014

Conspiracy or Assumptions

Background

A recent visit to Rockingham Castle and Lyddington Bede House made it obvious that the UK has long had problems with inequality and with the way that it treats the poor. This is further evident looking through the Richmond Castle built during the feudal era of English history. Not only was there are clear difference between the wealth and conditions of those who lived in the castle and those in the Bede house or surrounding town, we were told that those who had access into the Bede house where the respected poor. There was another class of poor that were in even worse conditions.

The Back-to-backs in Birmingham and the alms houses in many towns and cities also reflect the disparity conditions that have existed and continue to exist. What is more the government in its austerity measures take more (in terms of ability to live) from the poor and needy than from the rich, thus continuing to reinforce a system that has existed and continues to exist.

Should we interpret this as a conspiracy designed to continue to enrich the wealthy and keep the poor in submission. Isn't the system being manipulated for the advantage of those who are in power or who control the resources.

In this article, I want to look at what is currently happening particularly economically and try and answer the question of whether this is a conspiracy or whether we are all part of allowing the system to develop because we have taken on board a set of assumptions possibly through our education.

I am going to start by looking at definitions for conspiracy and assumption. I will then look at a number of issues and terminology that are part of the political scene in the UK. I will then conclude by expressing my view on whether we are operating in an environment of conspiracy or faulty assumptions.

Definitions

A conspiracy, according to the Collins Shorter English Dictionary, “is a secret plan to carry out an illegal or harmful act, especially with political motivation” (Mcleod & Makins, 1993, p 239). There are three words that I think are key to this definition and these are secret, illegal and harmful. We need to look at the events and our economic environment to access whether these terms apply to what we see happening.

In contrast, assumption is defined as “the act of taking something for granted or something that is taken for granted” or “an assuming of power or possession” (p 63). The key in this definition is whatever drives the situation is taken as being the way things are. They are ignored by the population because they seem to be what is expected to happen.

Based on these definitions, we need to look at each of the things that we want to change and ask whether what is happening is caused by a secret plan (conspiracy) or whether they are simply the result of the principles that we use in our every day lives.

Signs of Conspiracy

I have already mentioned inequality as an issue and some would argue that it is a sign of conspiracy. In the current context, wealth is moving increasingly toward the top 1% as promoted by the Occupy Movement. Wilkinson & Pickett (2010) have also highlighted the growing gap between the rich and the poor showing that relative to the small percentage of rich, the rest of the population are getting poorer. Their thesis is that a more equal society is a healthier society and that unequal societies are bad for everyone. Mervyn King, while Governor of the Bank of England, in a conference speech said

“Never in the field of financial endeavour … has so much money been owed by so few to so many”
(quoted by Pettifor, 2014, p 71)

The implication is that the few have obtained their wealth on the basis of a debt to the many.

The conspiracy argument is that ex-employees of banks like Goldman Sachs have obtained key leadership roles in other banks. If these actions are about forming a global banking corporate then maybe there is room for arguing for conspiracy but is this what is happening? Those employing the ex-Goldman Sachs employees see them as having the desired skills for the company that they are joining. To some extent, these companies want to mirror the success of Goldman Sachs and one of the ways of doing that is to employ people who understand that culture.

Another sign that could be taken as conspiracy is the way the large corporations argue for laws or trading agreements that protect their ability to trade freely between nations or what they see as their intellectual property. An example of this in Monsanto seeking to have in free trade agreements what they see as their ownership of seeds. Their argument being that they have developed a number of these specialist seeds and if others take advantage of this then they are utilising Monsanto's intellectual property without Monsanto being able to profit from it.

There are clearly differences in wealth accumulation whether between individuals or nations. The question here is whether this inequality or favouring of the few has happened by stealth or secret plan? I would argue that it hasn't. We assume that some people will earn more because of their talent or status in society. We expect people who invent innovative products to be rewarded for their efforts. Our society assumes that there will be people with different financial status and to some extent enforces it. We just didn't expect the difference to be as much as it is. That is what we are upset about.

This assumption and our desire is reflected in the Simon and Garfunkel song “Richard Cory” (1965) that relates a story about a desire to be the person who has everything. That is our desire but the problem is, as the song shows, wealth and having everything doesn't make us happy. We always want more. Yet, we still seek to do better than others and believe we are worth more than others. We just don't like others having the advantage over us.

We favour systems that pay according to work done rather than according to need and then wonder why there is inequality and poverty. Is it likely that the cleaner will accumulate as much wealth as the chief executive. However, this may also be explained by some of the other principles expressed in our society.

Strivers verses Skivers

The strivers and skivers assumption basically promotes the idea that those who make an effort can improve their situation. For this statement to be acceptable, we have to assume that there is nothing to hinder people advancing their position if they are willing to make the effort. Strivers and skivers policy is really based on the assumption that everyone has equal opportunity. Is it true that those without resources to start with really have equal opportunity?

This assumption promotes the idea that inequality is self inflicted since the person hasn't made the effort to advance. Wealth and status are the result of hard work and not something passed from one generation to the next. Poverty is the result of laziness and not the payment of inadequate wages or lack of work opportunities or lack of initial resources.

From this perspective, in order to encourage people to strive, you endeavour to reduce the support for those at the bottom of the economic ladder. This way, they will be forced to cease being lazy and strive for success or accept their position within the economic pecking order.

The strivers verses skivers assumption is part of the philosophy that supports the current environment. Those with wealth support this policy but so do many of the middle class who have worked hard to obtain their homes and assets even though they may recognise that they still have not overcome the need to strive to stay ahead of increasing costs. The emphasis on striving being a way of enslaving the people to the system. As people see inequality, they express dissatisfaction but often do not see a way of resolving the issue.

Market Driven Economy

A free market economy is supposed to deliver to the purchaser the choices that they want at competitive prices. The international free trade agreements are supposed to give access to a wider range and the competitively priced products. The general public are encouraged to support them because they provide competition in the economy and give them plenty of choice. They are supposed to provide the best basis for deciding what is needed or the appropriate price for a product or what is useful or not useful for society.

International free trade agreements are often designed to ensure that the interests of international corporations are not impacted while those of the local producers are often hindered. As well prices are often set based on what the corporations believe will give them the best return. If the market set prices then the consumer would have more room to negotiate. In other words the agreement isn't really about free trade but giving advantage to those who already have power and wealth.

The problem here is that often these negotiations are behind closed doors and although many of the documents associated with the negotiations can be accessed, the general public is not informed of the details. Often support for free markets are stated in terms of the agreement being a win-win for all parties. These expressions of win-win are nearly always from managers of large corporations or from politicians and not from the workers.

Because of the nature of these negotiations, these are often cited as being a conspiracy. However, most of these negotiations are in the open and large percentage of people actually believe that free markets are in their best interests. After all, free markets can deliver products at cheaper prices and cheaper prices are in the best interests of consumers but are they really in the best interests of local producers?

As long as the general public believe that as consumers they benefit from these agreement, they will not question the agreements being put in place.

The market philosophy isn't simply about trade in products and trade agreements. By setting up derivative markets and capitalising loan portfolios, we are driving our society not by the needs of the people but increasingly by the returns on transactions that bear no relationship to what is happening in society and more importantly the needs of people and planet. Commodity markets gamble on the prices of food adversely impacting the price of food and the returns to the producers. Foreign exchange markets gamble on fluctuations in exchange rates often impacting the exchange rate in the process and forcing traders to join the gamble in the commodity markets in an attempt to protect their incomes. Focus moves from production to the financial markets and the return that can be gained through financial gambles. I have just seen an application that is aimed at the financial markets and it uses the term “betting” and not trading. Business is becoming a gamble and not a trade in what is needed or desired for society and planet.

As student loans are capitalised and sold off to the highest bidder, the return on the investment in the student loans begins to dictate what is taught and which students have access to education. Loans also act as a way of enslaving students to the economic system and ensuring that they will take their place as the next generation of serfs. Since students become more focused on the return from future work, they become more interested in the grade than the learning. Instead of the standard of education rising, it falls as everything depends on return on investment. Freedom of thought and challenging society become secondary to being conformed to this world.

Living within their means

This is a phrase quite often used when an economic unit runs into financial difficulty. What this phrase means is that the economic units outgoings should not exceed its income. Ideally, the economic units income should exceed it outgoings. There is a problem with this assumption. In order for one economic unit to consistently have an income in excess of its outgoings, another economic unit must have outgoings that exceed their income.

This is part of a wider assumption that the economy is expanding and we just need to work harder to earn more. The monetary economy does expand during good times but it expands on the basis of increasing debt. Economists like to argue that it is credit saying that all money is an IOU of some form. If we take this view then it isn't wealth that we generate but rather increased indebtedness. This indebtedness under the current system is to the commercial banks who through charging interest on credit that they generate from nothing further compound the debt cycle.

I have called this assumption living within their means but I could have equally called it the growth assumption. Without an assumption of growth and without indebtedness, there is no possibility of living within our means. I can live sustainably by limiting my dependence on the monetary based economic system but in general this is seen as relinquishing the gains of modern society. Yet, we should be asking why we are going into debt to harness the resources that we as a nation already own?

Claiming the Commons

This leads to the next issue. I am not calling this an assumption although in some areas, it could be seen as an assumption. We rightly get upset when companies endeavour to claim the rights to natural resources because in their view, they have enhanced that resource through scientific research and development. I am thinking particularly about seeds and food production.

However, as soon as we endeavour to claim ownership of a piece of land or natural resource because it happens to be on our land, we are making a claim to the commons. Indigenous peoples often understand that land and natural resources are not for personal ownership. They belong to the community and we are simply caretakers of these resources for the next generation. Unfortunately western or capitalist societies see natural resources as something to be exploited for financial gain. This exploitation of natural resources often comes at the expense of their destruction and the destruction of the communities and wildlife.

We want to claim conspiracy when a company endeavours to assert what it claims as its rights to natural resources but when we claim access to natural resources for our own use, we see it simply as our right. We assume that we have some right to claim these natural resources and to dictate to others what they should have access to.

Do not hinder profit / wealth making ability

This leads me to what in some respect is the core problem, a focus on profit or wealth creation. Profit or wealth creation becomes more important than meeting the needs of others and maintaining the planet for future generations. To some extent all of the other issues that I have discussed are subordinate to the need to make profit or wealth creation.

If you read carefully each of the above themes, the underlying story is one of being able to profit from our labours and the goods that we produce. No one stops to ask the question whether it is possible for all people to make a profit (i.e. earn more than they spend). Neither is it asked what are the consequences if we make a short term profit while destroying the resources that are needed for longer term survival.

I have heard it said that modern society is no longer driven by the desire to meet need but rather by the promotion (marketing) of goods that we do no need and are of little value. The result is products built for short life expectancy and replacement products being produced at ever increasing intervals. This needs to be done, not to satisfy the needs of consumers but to feed the profit margins of producers.

For me, the most obvious example of this is in digital technologies such as computers and smart phones. I have been involved in the computer industry for over forty years. Initially, the computer capacity couldn't keep up with demand but I have seen that change to where the new computers are generating the desire of the consumer. However, designers and manufacturers driven by the profit motif cannot stop development or production. The production of products with a long life isn't to their advantage. Cash will cease to flow and profits will decline.

Recyclable products or products that are easy to upgrade with true advances will only occur if these are seen as profitable options. The consequence is a willingness to destroy the environment and add to a cycle of waste and destruction.

Protection of assets

There is an even more fundamental assumption that I believe lies at the heart of our self destructive society. This assumption is that we should be able to retain ownership of the resources under our control and be rewarded for that which we produce or are capable of producing. Not all people are born into society with the same resources available to them. Wild nature isn't in a position to demand money for its destruction or preservation. Wild nature and low income communities are dependent on the generosity of those who control the wealth. Yet at the heart of our economic system and to some extent the nature of money is that it is an IOU for services or goods that have been provided.

Our monetary system had its origins in a system of trust. If I had the resources or capabilities to meet your needs then I would do so in the belief that if I had a need in the future and you were able to satisfy that need then you would reciprocate. This changed when people began to account for whether they had received back the equivalent of what they had provided to the community. This is based on an assumption that I should get from others as much as I have given to them. An assumption of equality of opportunity and ability to participate in the meeting of needs.

The final change in the system to bring us to the current state of affairs is that I should be able to profit from my resources and capabilities. It is no longer enough simply to ensure an equality in meeting of need but it is essential that I must profit from meeting the needs of others.

Could we return to a needs based economy? As long as we are concerned that someone may be gaining more than they are willing to give then I suspect the answer is clearly no. Fear of exploitation lies at the heart of our economy and the self destructive society that we have all had a part in creating. This fear drives many of my own decisions even though I am aware of the problems that it creates. Changing this involves a major change in the way that we think and behave.

Conclusion

In this article, I am not arguing that conspiracy never occurs. What I am arguing is that much of the conspiracy and the direction of economic development in society comes from faulty assumptions. Correction of the way we behave in society can only come through examination of those assumptions and deciding on what basis, we want society and our ecological environment to operate.

References

Mcleod, W. T., & Makins, M. (Eds.). (1993). Collins shorter English dictionary. Glasgow: HarperCollins Publishers.

Pettifor, A. (2014). Just Money: How society can break the despotic power of finance. Commonwealth publishing.

Simon, P. (1965) Richard Cory.

Wilkinson, R., & Pickett, K. (2010). The spirit level: Why equality is better for everyone. London: Penguin Books Ltd.

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