The economy should be a benignly competitive one where the form that competition takes is in the interests of ordinary citizens and the common good. But more than this - much more - the economy should be an honour system. Trust, respect and regard for the common good are the foundations of a virtuous economy. A foundation of trust is also a highly efficient and non-bureaucratic way to operate.
The operation of a virtuous economy is an essential factor in ensuring the achievement of the common good. It is one in which individuals, private companies, the public sector, charitable and religious institutions and government have developed a shared vision of the good of the nation and its citizens - present and future - and the care of the environment. And acting upon this foundation in their public, business and private lives they seek to operate with the common good firmly in mind.
It is important to note that this need not be to the exclusion of other, compatible interests of which there would be a wide range - including strictly personal benefit. No particular form of economic organisation is implied although wastefulness (as in a consumption driven society), rank inefficiency (as in over centralised economies) and gross imbalance (as with our present economy) are inferior models.
The key to a contented future is a shared vision and a 'citizenry of good intent' in all their doings. This and a perception of how the values of good intent are imbued and sustained. Clearly, given the point we have now reached, it will be no small task to bring this change about - and these changes will need to start from the top. But one very encouraging sign is the evident realisation of ordinary people that true contentment involves the rediscovery of older values.
The virtuous economy will have mechanisms to ensure that the 'external effects' of major corporate decisions (such as factory closures and the impact on supply chains, the off-shoring of business, tax avoidance and the sending abroad of engineering machine tools) are always taken properly into account. But there is no mere effective mechanism that the moral principles of the decision makers involved.
In contrast to current arrangements, the virtuous economy seeks to operate on a basis of greater self-sufficiency where this is possible and reasonable. In this it recognises that the accountants' current 'bottom line' and the common good may not always be in full accord. This is so since the common good will attach positive value to the pride and sustainability of self reliance and the command of resources.
In the country's present situation there has been a struggle between social and moral values and a rampant, advertising driven market where commercial sales and the extraction of more and more profit dominate all other considerations. We have become a debt laden and wasteful society - and it should be no surprise that we are unhappy and dissatisfied as a result.
Indeed, advertisements are designed to create in people a mood of restless dissatisfaction with the material goods that we have already got. Therefore we need a completely different vision of what constitutes ‘the good life’ where values and relationships rather than commodities are at the heart and where, as one example, public places are free of commercial advertisements.
The concept of never-ending geometric economic growth cannot be sustained - as we should have known. We are not above the natural order of things - there are economic ‘seasons’. And it should be clearly understood that 'the ‘market’ is not a part of the natural order - it is an entirely human concept.
The virtuous economy is one where individuals or groups (for example companies, public bodies or charities) act in manners such that satisfactory answers are given to these questions throughout commercial life, the life of individuals and families and the provision of public services:
What is the effect of corporate or governmental actions and policies on individuals as people and not merely as exploitable economic units?
What are the possible effects of economic conduct on the natural environment?
What are the effects of policies and decisions on future generations?
What are the effects, positive and negative, on community and country?
What is the effect on the quality of life and the common good?
The agents within a virtuous economy do not engage in excessive risk taking. The virtuous economy does not support the usurious conduct that has become so rife in technically legal financial dealings as well as in loan shark transactions.
Rather, it emphasises balance, respect and fairness. It takes the longer view and the broader view (of humanity's place in the world) and seeks self-reliance both in terms of individuals, the things we depend upon and fundamentally important sectors such as manufacturing, mining, agriculture and fishing.
In accordance with both fairness and long term efficiency, a virtuous economy will have relatively flat pay structures and an absence of the privileged and outrageous executive payment schemes that continue to be so prevalent today. Equality of opportunity amongst citizens and the benefits arising from this cannot be achieved where there are, as at present, extremely large differences between the resources available to individuals.
Thus for example, all employees of a profit making company should be paid according to the same scheme, including profit sharing, and pensions, differing only in the scale of remuneration. In all of this, the value of co-operatives and not-for-profit enterprises should also be underlined.
The virtuous economy is one which operates in a manner more consistent with the twenty four dispositions rather than the oft referred to 'twenty four / seven' lifestyle of often pointless work and sometimes dissolute leisure.
The virtuous economy is one where the concept of the common good as well as that of the current driver of private gain (since the two will not always be inconsistent) is embedded in economic activity.
The virtuous economy is one where there is an pervasive economic morality and where respect is afforded to individuals not just within organisations but also to those interacting from outside as customers and traders.
A virtuous economy is one where there is not pressure to create unnecessary needs to make people dissatisfied with their present stock of material goods or even with the appearance of their own bodies.
The virtuous economy is one that is not dependent on personal greed as the overwhelming driver in economic behaviour. There is a fundamental distinction to be made between selfishness and self-interest. Genuine self-interest is a much wider concept than economic power and the mere possession of objects and embraces respect for others, self respect and the benefits of living within the realm of the common good.
And the virtuous economy is one where there is also concern for the national interest in the longer term - for example by having industry, agriculture and jobs that are available at all levels and for all ages and where the practice of sending abroad jobs, machinery and equipment is eschewed.
The virtuous economy will also give more weight to achieving a greater degree of agricultural self-sufficiency and the interests of rural communities. For example, it has been estimated that there is a potential extra contribution of some £200 billion that could be made to the national economy if rural communities were sufficiently well connected.
In the virtuous economy it would be measures of public wellbeing and employment levels rather than measures of national output such as GDP (Gross Domestic Product) that are directly targeted by government. There is no doubt that such measures or indicators would be difficult to construct but so also is GDP and it should be noted that there are many oddities in the construction of GDP (for example flooding or mass illness are likely to increase GDP due to the activities undertaken to combat them) which have not prevented its virtually universal use.
For example, by ensuring that infrastructure work is intensive in labour rather than machinery and that self-respect (both individual and national) and other desirable qualities of the human spirit are evaluated with at least equal weight to the transient and noisome glow from consumerism.
Furthermore, measures of natural wealth would stand alongside financial measures. Natural capital and population well-being would be emphasised. Failure to do this, in particular in developing countries will further impoverish the poor and lose substantial current and future benefits.
The effort should be towards creating inside, between and with companies a joint understanding to secure the common good and the best interests of the nation as a whole.
National economic policy should reflect these objectives and take steps internationally to make sure that rival countries such as China observe basic rules of fairness in competition and respect for people, environment and law. Equally important is the necessity of private corporations ceasing to make such ready use of the unrestricted reign that has been allowed to China to further increase their own profits.
For example this would require exchange rates being set on the same basis as other countries, comparable anti-pollution requirements, similar work safety regulations, respect for copyright and international trade agreements and the withdrawal of export subsidies.
In material terms there is a case for supporting a refreshed ideal of a genuine free and fair trade system – a balanced and reciprocal free trade that is. This is something that is sharply distinguished from the current excesses of laissez-faire globalisation with its plundering of natural resources and associated human exploitation and profiteering.
However, the virtuous economy would certainly not be bound to a doctrine of free trade fundamentalism such as we see today. Being doctrinally holier than the rest in this regard does not always serve the interests of the country well, as we have seen to our cost, nor does it serve the common good.
The 'market' should operate as a social market and it should be understood that while capitalism can serve a country well, it is by no means to be regarded as an end in itself. A capitalist model will only operate in the general interest if, as John Maynard Keynes pointed out, it is governed by 'gentlemanly codes of behaviour' rather than the dog eat dog culture - which manifestly in important sectors in recent times it has not.
The pursuit of wealth should not be an end in itself. The end, as Keynes expressed it, being to live 'wisely, agreeably and well' - qualities which, if not wholly describing it, are at least consistent with the common good.
It is very important that full appreciation is given to those institutions in our society which encourage the spiritual life and support, maintain and strengthen the ethical conduct of people, businesses and government. Their role is vital in both social and economic renewal and in the righting of the ship of state that has come so close to foundering.
While it has become taken for granted in recent times that 'The Market' must be bowed down to, in fact market forces are not sovereign unless we choose to make them so. They can reflect incomplete information and the transient, self-seeking and short-termist views of the herd. But the escape from their embrace and threats will not be easy or quick.
And much of what are passed off as 'market forces' - for example in the attempted justification of grossly excessive executive pay and bonus awards - are nothing of the kind. The contexts that are involved here are nowhere near truly competitive. They have the properties of informal cartels and they can bear more resemblance to an exclusive club than even an economic bazaar.
In the restoration of trust, people need to be confident that they are being served rather than constantly under threat of exploitation by the economic system. The virtuous economy would have this goal as a priority.
The commercial banks provide a good - or rather an extremely bad - example of a defective 'market'. Competition between the banks exists to the extent of how much money they can extract from ordinary customers who have, in the absence of public service alternatives, no recourse but to make use of one or other such profit seeking bank.
This is because the 'industry' - if that it can be called - has, at best, an unreformed oligopolistic structure or, more realistically, it is an informally cartelised situation - a 'cartel by convention' as it were, one which ensures that whatever penalties are meted out or whatever speculative losses are made, it will be the ordinary customer, the taxpayer and the junior employees who will pay the price in the end.
Even if there existed the will to implement it, statutory regulation on its own has no chance whatever of changing this anti-social behaviour, it has become far too deeply ingrained. One possibility that would bring genuine and valuable change and offer real choice and security to ordinary people would be to create 'exemplar institutions' with public service values that would break the cartel and force changes in corporate behaviour.
One example of an exemplar institution would be the re-establishment of municipal banks. In Birmingham there were branches of the Birmingham Municipal Bank in every ward of the city and a culture of thrift, beginning at school level and lasting throughout life was encouraged.
Mottoes such as: 'Thrift radiates happiness' and 'Saving is the mother of riches' expressed the ethos of the Birmingham Municipal Bank - an ethos so very distant from that of commercial banks today - and its overall watchwords were 'Security with Interest' - in which we note the ordering.
While it is the prime candidate, there is scope for exemplar institutions beyond the financial sector for example in utilities where exploitative abuse of consumers has also been unchecked or in manufacture where the failure to invest or otherwise provide for the future is apparent.
No comments:
Post a Comment