Tuesday
27th
May saw various power-brokers and thought leaders from across a wide
spectrum meet at The Lord Mayor's Mansion House and The Guildhall
(here in London) to discuss the role of global capitalism into
tomorrow.
The
event named “Inclusive Capitalism” is the support event to 'ICI'
(the Inclusive Capitalism Institute) a non-profit organisation which
seeks practical ways to “renew capitalism as an engine of economic
opportunity and shared prosperity”.
A
broad international array of speakers and attendees participated,
spanning: British royalty, an ex US president, seniors from the IMF,
BoE, SWFs, consulting groups, academia, varies types of large finance
houses (retail banking, institutionals and investment banking),
holding companies, sector specific corporations, trade union umbrella
bodies, national and regional governments and financial press; all
hosted by the current Lord Mayor.
The
Re-Emerged Right vs Left Debate -
The
heart of the global establishment invariably stands centre-right
within the political spectrum. Necessarily so as to effectively
purport the advantages of capitalism, which though noted by Winston
Churchill as structurally imperfect, has largely submerged communism
(and the threat of world wars), and which even after the 2008
financial crisis is still seen as the singular pathway remaining for
humanity's progress.
It
has largely proven itself as a system for improving the lives of the
impoverished, even if today for the mass of the western
middle-classes the model itself has either stalled. That the
establishment does indeed seek to re-energise profit-making is the
logical panacea, since prosperity is the 'naturally correlated' (ie
free-market) outcome of ever more economically integrated human
activity. Capitalism offers the many to participate in various forms,
most notably as employees, or as entrepreneurs and both directly and
indirectly within the stock market, itself acting as a key instrument
in the allocation of funds and thereby dedicated human effort. Yet
this same establishment also recognises the need to provide financial
stability and improved socio-economic input from presently
disenfranchised western economic beings.
Uninvited
naysayers – who range across the remnants of the left-leaning
'occupy movement' (with its overtly propagandist slogan “we are the
99%”) to fully entrenched life-long socialists to the poor working
class through to the growing non-WASP ethnic-minority groups - will
undoubtedly publicly or privately highlight their viewpoint. That no
matter how seemingly socially acceptable representatives of 'power
families' appear – primarily the Windsor royals (nee Sax-Co-burg,
nee Witten) and Rothschild (historically closely allied to European
royals) – the same old power structure remains.
Many
of these groups have either intellectually arrived, or led, to the
conclusion that capitalism is little more than a conspiratorial
'smoke and mirrors' socio-economic system, consisting of a closely
orchestrated banking-political-military-industrial-media mechanism to
push the Judo-Christian 'western agenda' so as to gain worldwide
power. All to the detriment of the masses. This conference then
little more than a staged play, or at best soon to be forgotten
'lip-service', designed to placate the now disenfranchised broad
masses (from old senior managers to young graduates). All so that the
'squeeze 'em dry' process can re-start in a more amenable guise to
entrance the marginalised worker. But that any future gain of the
average individual will once again be comparatively minuscule given
the realities of 'the western condition' compared to the worldwide
reach of the profiteers.
Reality
of the Shattered Middle Ground -
As
with most oppositional stances, any rational concept of an optimal,
morally legitimate, position lays somewhere in the middle ground.
Somewhere between the hyper-competitive right to the hyper-idealistic
left, in which a natural equilibrium of effort and reward is
achievable on personal and social levels.
A
sound and functioning middle-ground, devoid of the ill-will and
surreptitious guerilla machinations that actually goes on in supposed
civil society as people strive to better their lot.
Yet
what is true – far from such Mansion House meetings of very the
hard-working but highly rewarded, highly cosseted and often very
'removed' - is the fact that the average (wo)man who was once
stereotyped as riding upon the “Clapham Omnibus” now seethes
about the fact that not only can he/she not afford to live in
suburban districts (such as the 're-gentrified' Clapham), but that
increasingly he/she cannot afford to live in those areas to which in
the past have been viewed as socially improving, aesthetically
pleasing and so educationally character-building.
Furthermore,
many others are physically trapped, and so very psychologically
constrained, by the fact that they cannot even afford to take public
transport, so become geographically contained within what appears to
them to be an evil intention of 'top-down' social engineering.
This
the British, European and American reality today, in which the
long-term personal experiences for millions demonstrate what is
viewed as an innately immoral unfairness to modern society. The worst
aspects of which lays well under the socio-political radar, and only
surface through anti-votes such as that seen in Britain with UKIP.
That
financial frustration has a tremendous impact upon all facets of a
person's life, yet paradoxically the resulting frustration and anger
is more often than not masked beneath the increasingly thin veneer of
'social-normality', so creating internal turmoil. This effects people
of whichever ethnic background, but at least typically closely knit
minorities tend to have social cohesion and mutual support.
Whereas
ironically, social disenfranchisement (and long term alienation) has
perhaps become especially pertinent for portions of the indigenous
middle-class; those who were brought-up on the specific edicts of
education, hard-work and deferred pleasure for a better tomorrow.
The
trouble is that this deferral now appears ever-lasting, the promised
pleasure foregone. Especially true for what may be termed the
middle-class intelligentsia, far beyond the walls of academia,
themselves long betrayed as important but under-appreciated component
parts of capitalism, but upon whose specific and generalist knowledge
progress relies.
A
strong middle, which acts as a central hub of stability for society,
can only exist where there is general social cohesion, even if not
respect or warmth, across the three seemingly everlasting class
levels. But the middle itself is now viewed as a shattered ideology
from a notional golden yesteryear which in retrospect itself for
appears somewhat of an illusion.
Ultimately,
yet another part of the western post-modern 'grande-narrative' lost
and awaiting, if possible, foundational re-building.
Fundamental
Issues -
The
prime concerns for much of the west are:
-
Income Levels: wide inequalities and inconsistencies
-
Industry: divestment and collapse of various mid-value industries
-
Industry: loss of associated knowledge (R&D to hands-on)
-
Regional: disparities as a consequence of regional 'vacuum'
-
FDI: partly replaced by foreign interests over past 30 years
-
Policy: partly replaced by debt-funded 'phantom' employment
(eg
public-sector, charities and NGO employment)
-
New Vacuum: resulting from necessary 'phantom' de-staffing.
-
Population: economically, rationally and emotionally disenfranchised
by “the system”
-
Education: need to question various structures, methods and practices
-
Education: need to question of many participant's personal dedication
-
Policy: transitional process from education toward employment /
entrepreneurism
-
Commerce: proportionate imbalance even within services sector.
-
Commerce: proportionate imbalance of high value research
-
Commerce: proportionate imbalance of high value manufacturing
-
Social: return of personal privacy (a now eroded endemic human right)
-
Economic: true “Capitalist Renaissance” vs Managed
“Proto-Socialist” Decline
-
Leadership: corporations as de facto emergent global powers
-
Leadership: corporate autocracy vs corporate social responsibility.
These
just a few elements of the transitional process in 'western
future-forming'.
Reduced
'High-Value' Western Contribution -
Whilst
the west obviously maintains various advantageous 'high-value'
capabilities which lead the world, it is perceived that this portion
of economic contribution may well have remained flat or even declined
over the last three decades in proportion to the actual broad
economic whole of everyday activities undertaken by western
countries.
Two
factors appear to have made this the case, when supposedly better
education and training for an expanded mass of participants should
have been raising the 'high-value capabilities' of western states.
Firstly,
the overt economic boom period existing largely between 1985 and
2008. This credit-fuelled, property-price driven 'party' induced
overt wage-price inflation as a partial consequence of financial
deregulation. Though seemingly rational upon an introspective pan
western regional basis it arguably over-inflated the true
participatory value of many mainstay activities; ranging from
brick-layer to PA to dentist. Whilst the housing boom (even including
periodic 1992, 1999, 2001 contractions) invariably through the
demand-pull of housing credit effectively lifted the income of the
masses, it also served to starve funds from more truly rational and
value-adding science and innovation and efforts; with perhaps only
the special relationship between Silicon Valley and Wall Street
gaining true support and momentum. Other countries efforts too little
too late in comparison.
Also,
very probably the case that potentially 'high-value' activities that
had been associated with those mid-value industrial sectors either
“hollowed-out” or divested to EM buyers, were ostensibly lost,
aside from very specific, narrow academic explorations.
“Keeping
it in the EM Family” -
The
last twenty-five years have witnessed many EM nations individually
and collectively undertake a veritable economic leap-frog into a
truly new era. Not just toward economic, technological, social and
political modernity (though many millions are still yet to gain) but
with it the sense of truly redressing the age-old notion of
international inequality vis a vis the west. The G20, EM trade pacts
and academic and industrial alliances illustrate the efforts for
'global reform'.
However,
the recognised reality for the west is that its once broad and deep
semi-controlling connections to the slowed but still growing EM
nations, whilst in tact appear increasingly weak, as EM leaders
co-create with each-other utilising modern principles and
technologies previously gained from western corporations; the
re-nationalisation of Venezuelan oil a prime example.
Because
of the very size of EM populations and the rise in standards still to
be provided for many, it may be the case that having imported much
knowledge and technology over the last decade, that the economic
value to be created and extracted, will be done so internally within
EM nations; especially so now that many countries must shift from
investment-led growth (naturally aligned to foreign joint ventures to
capture modern plant and offer quality goods) toward internal
consumer-led growth (the majority of the spoils expectedly retained
domestically).
So
whilst the west promotes its role of high-value services and
manufacturing, and its role regards global environmental
guardianship, the disturbing fact could be that western participation
within the global whole actually diminishes.
This
was seen previously as ex-colonial nations such as India in the mid
1960s bought-in western know-how and previous generation technology
(eg Austin Oxfords and Fiat 1100 cars and taxis. Those same vehicles
were manufactured with only small changes and utilised in society on
the for many decades as the Indian firms producing the cars gained
strong profits on a captive markets.
Whilst
this era of specific market protectionism and internal exploitation
of such domestic markets is no longer the case - with most EM nations
seeking to lower tariff barriers to enable cross border trade and so
nurture their own strong competitive capabilities - such 'mutual
inwardism' does obviously serve the vested co-interests of specific
regions. Thus such complementary intra-trading and manufacturing
scenarios formed officially or unofficially, and already a stark
reality across SE Asia and South America, even with efforts such as
the US's Pacific Pact, could well lead to the ongoing erosion of
western influence, trade enablement and so western wealth creation.
Thus
then another well recognised, but unstated concern, amongst the
corporate leaders and bankers attending the Inclusive Capitalism
conference.
If
indeed (heaven forbid) today's well inter-connected global world of
trade does indeed not further integrate, but disintegrates across
'new-power' vs 'old-power' regional lines (not ideological lines);
then the west will be forced to rely ever more upon its presently
disenfranchised peoples.
Starting
Over via “ICI”-
Importantly,
the western establishment well recognises the need to address ongoing
mass populace dissatisfaction. Obviously no coincidence that this
seminar has been run during what appear the first stages of economic
renewal, the financial markets massively buoyed by QE but awaiting
the intrinsic true economic traction or the real economy.
Using
the the acronym “ICI” is seemingly a subtle attempt to regenerate
examples of past success and capture broader cultural diversity.
It
has knowing cognitive association to the yesteryear UK chemicals (and
multi-play) company which both innovated, created value and spread
worldwide wealth from its homeland roots, during its era as a
progressive conglomerate player it was admired as a force for good,
both operationally with the likes of strong research base and best
practice methodologies, and for spreading wealth across diverse local
industrial and agricultural communities as far apart as NW England
and rural India. And for the older generation refers to the crop of
yesteryear 'good eggs' such as its ex-head Sir John Harvey-Jones.
“ICI”
also is the acronym for a number of culturally influential associated
bodies, such as the 'Islamic Counter-Terrorism Institute',
'International Compaq with Iraq', ' Istanbul Cooperation Initiative',
'Institute of Cultural Inquiry', 'Institute for Competitive
Intelligence', 'Institute of Cooperation of South America' and the
'Investment Company Institute' of America).
[NB
Conspiracy theorists will also cite the 'International Commission on
Illumination', as pertaining to association with (the supposedly all
powerful) “illuminati”].
The
“Inclusive Capitalism” Agenda -
As
seen “ICI” seeks to both find alternative methods by which to
remould capitalism, principally to be seen as more 'new age'
responsible and in doing so eliciting greater 'fresh thinking'.
In
essence the grand mission is for major investors of whichever ilk
(pension funds to hedge funds to private equity) to ensure that all
attendees, but perhaps especially so the executive and management
teams of individual corporations and firms, recognise the need to
re-mould capitalism as a force for good.
Thus
the notion is that of an extended CSR , across what
investment-auto-motives terms a “3-D perspective”. Encompassing
consideration of those critical macro, micro and time-line issues
across:
1.
Macro – greater cohesion and clarity within global economic
frameworks, geographies and demographics ...(on what
investment-auto-motives terms the 'vertical plane' of today)
2.
Micro – strengthened cohesion of critical commercial ties from
initial project assessment and investment through various stages and
phases to 'end of life' value re-capture...(the 'diagonal plane')
3.
'Chrono'- logical – increased consideration of cause and effects
upon future generations and people's into the distant future...(the
'horizontal plane'...literally the 'chrono-logical').
The
forum the idea of creating a more intelligent and conscientious
economic culture, with as vital input, an understanding of how the
successful socio-economic case studies of Germany and Nordic
countries can possibly create platforms for renewed western economic
systems.
Thereby
promoting a greater sense of inclusive capitalism.
Main
speakers at the IC forum naturally reverberated the same sentiment –
it was after all a talking shop for that very cause – but there
were other more esoteric takes.
At
its most extreme, as purported by economist Jeremy Rifkin, this sees
an emergence of 'near zero marginal cost' enablers, primarily via the
“precipitating agent” of the internet, which powers massive
productivity gains.
This
connectivity so moulding a mentality of a “new sharing economy”.
Critics
of such a future would call such a world little more than
psuedo-communism given a capitalist slant. With no or little
financial gain for the contributors / sharers; in effect a multitude
of no or low pay 'cottage industry participants', increasingly over
the global level as cyber-space becomes increasingly dominant.
Thus
this supposed new form of 'turbo-capitalism' instead reflective of
the low marginal costs which underpinned the USSR's ideology, and
which eventually sapped people's enthusiasm and energies so
stagnating socio-economic progress.
Those
who are historically attuned will well recognise the parallel the
west has today with that of Eastern Europe a century ago, whereby the
once prosperous Prussian lands and Austro-Hungarian empire entered a
socio-economic tipping-point into disarray and eventually communism
once its capital saw new opportunities further afield in Western
Europe and North America.
A
concept too far?
The
social dynamic of even London today appears that way.
At
times with its mass cycling, the influence of the smart-phone as a
tool to socially influence the screen-fixed, often unthinking
“easily-led” amongst both the hooded and huddled increasingly
tribal youth and the 'cyber-grouped' middle-aged. Plus especially the
effects of a camara-phone wielding antagonistic society which (akin
to stasi informers), means that London and elsewhere appears to mimic
the worst aspects of the communist years in Warsaw, Budapest and
Belgrade.
The
“ICI'” Influence -
To
add basic insight of the meetings apparent importance, the BBC states
that when combined the financial fire-power of the attendees adds up
to $30 trillion; approximately one-third of the world's investable
assets.
To
highlight the once prevalent power of the industry as a force for
good, the IC forum's sponsors include the Ford Foundation,
established by Edsel Ford in 1936 but long since separated from the
auto-corporate. Given its long-standing social influence it
inevitably has close ties to the US government, and obviously seeks
to promote the USA's the soft-power hopes within the 21st
century.
Reviewing
the Structure of Capitalism -
Here
investment-auto-motives posits that one and all should start to
consider the very 'bones of capitalism', so as to better understand
the often nebulous ideology which moulds our society.
What
was previously termed western capitalism, now global capitalism, is a
complex system of interactions, both individually within and
symbiotically.
Actions
and reactions plying across the four notionally distinct worlds of
'financial services', 'main street' (both physical and cyber
economies), the 'socio-political' all set within the broad context of
the 'inter-geo-political'.
These
realms act upon each-other in a myriad of inter-relationships,
individually with domino-effect upon neighbour, and collectively
during strong winds of positive or negative change and so outlook.
However,
with regard to investment decision-making,the constant 'investor'
perspective is the interpretation of a specific market's innate
dynamic.
This
consists of: available liquidity vs price vs perceived value.
Very
simplistically, it appears that necessarily so, the historical
process of capitalism is that of a process of ever fragmenting and
more detailed commercial activities set within an ever growing volume
of challenges/opportunities on a per head demand; valuation driven by
the apparent “scarcity or balance of resources”.
Thus,
expectedly so, the nexus of Adam Smith's and Robert Malthus'
theorems which underlay “the dismal science” which it turn
compels investment thinking toward the satisfaction and creation of
demand and supply.
A Final Pause For
Thought -
The staging of the IC
conference is highly positive.
However, the citing of
exemplar cases present and past invokes the idea of an easily
achievable goal, when the restrictions and expectations of the real
world will make any such journey harder than expected.
The 'guiding light'
countries of Norway, Sweden, Finland and Germany are socially,
culturally and structurally very different creatures to the likes of
Britain, the USA or much of Southern Europe. Northern Europe's
evolution into mutually inclusive, fair, modern societies stem from
many reasons and critically core value systems which at heart have
intrinsic central identity systems.
Likewise, 'guiding
light' businesses such as Britain's John Lewis Group (which is
ostensibly employee owned, and so provides for group participation
and motivation) because of its self-determination, tends to better
withstand economic recession given the willingness of staff to align
to management's requirements. Critics will say that reliant upon
recycled free-cash-flows and fixed income debt notes, such firms
invariably operate as self-serving 'clubs', and are effectively
closed to major structural reforms that would boost operational
efficiencies and profits, and being remote from the accessible realm
of publicly quoted stock markets, in good economic periods, act
instead as an eventual constraints on true value creation for broader
society.
Furthermore, there are
those who view today's times as a modern-day parallel to the
socio-economic climate which gave rise to the historic origins of the
19th century cooperative societies. If Wall Street and The
City and the network of nation-wide big businesses cannot be trusted
to best serve the people, then time to create new cooperatives; to
philosophically replace the morally defunct Co-op, itself largely
subsumed by 'Mammon'; and undermined by its sloth-like historic
executive structure wholly unsuited to a very much changed
operational environment from its yesteryear heyday. Such highly
valuable social enterprises were born from the need for workers to
escape the local foodstuffs and goods monopolies of local robber
barons, and did indeed bring far greater fairness in local trade,
wider availability of choices and so life-style improvement for the
many who joined such co-ops. But today (with very few rural
exceptions) no local monopolist rules the conditions of local trade,
and instead hyper-competition such as the 99p shop, the £1 shop and
Dollar stores providing exceptional value for basic goods compared to
only twenty years ago thanks to imported goods and globalisation. No
new local co-op start-up could hope to match such purchasing and
distributing power, unless much finance was injected into such a
national campaign
Exactly how to re-shape
the primary activities and outcomes of capitalism, so as to still
promote proportionate endeavour and reward, yet also ensure that
those in need are better served, is an age old dilemma.
Whilst the 'guiding
light' cases do offer partial assistance, western capitalism (beyond
the 'Valley' and 'Street') and guided by past political will, has
already demonstrated its lost opportunity to create the type of and
level of 'high value' activities, supported by well educated peoples,
needed to maintain its role within the concept of global capitalism,
itself increasingly influenced by EM capitalism.
This watershed could
make for great change
But any simplistic
notion of philosophically and practicably stepping onward from the
seeming mass notion of capitalism as an unfairly tilted, 'zero-sum'
game (with sharply contrasting winners and losers) toward some kind
of truly even 'Nash equilibrium' (wherein all gain from rational
choices), is ultimately a fatuous hope.
It would be little more
than a farce if the IC forum were seen to offer such an outcome. It
well recognises the complexities of capitalism and its participants
across the social spectrum.
Platters of platitudes
? No.
True re-Imagination ?
No
As ever, case of
“ongoing work in progress”.
