Written by: Kamran Mofid

Published: 03 June 2011

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Photo:edie.net

The Broken Economic Model*

(First published as an email to the GCGI members in May 2011)

“Do you remember that Margaret Thatcher, the so-called Iron Lady!! She told the Brits that she was going to put the “Great” back into the “Great” Britain. Do you remember? Then, she told us this can only happen if we accept and implement the “Washington Consensus”, the so-called dreaded neo-liberalism. She told us that there was no alternative. She told us we will all prosper and develop more fairly and equitably. She won election after elections. Everything was privatised, deregulated, self-regulated. Industry, manufacturing, (the real economy) was destroyed. Instead, the banks and the bankers were encouraged to rule the world. The economists with no principles and values were “bought” and the business schools, such as Harvard and Columbia were showered with money to act as “Cheer Leaders” for the dreaded neo-liberalism (see the Inside Job for evidence). Communities were dis-mantled and dis-organised. We were told that there is nothing as a society and community. We are all in it just for ourselves, we were told. Destructive competition at the expense of life-enhancing cooperation, collaboration and dialogue was greatly prompted. We were told to say no to love, kindness, generosity, sympathy and empathy and say yes to selfishness, individualism and narcissism, as these values will fire the engine of capitalism and wealth creation! In short, the hell with the common good, we were encouraged to believe.

We were brained-washed. Our other Prime Ministers repeated her nonsense and have carried on her footsteps. It is now over 30 years since the neo-liberalism experiment in Britain. Are we any “Greater” than we were in 1979? Are we any fairer or more equitable? The country is nearly bankrupt, with public and private debt at unprecedented levels, with greatest levels of poverty and wealth disparity ever. The house of neo-liberal capitalism is now at its nadir of decadence.”

You see, all those interested in life’s bigger picture, have been saying the same, over and over. The neo-liberals are not in touch with humanity. They will prostitute all in the interest of profit maximization, cost minimization, highest return to the shareholders, and the biggest and juiciest bonuses for the CEOs and their lackeys.”

The statistics that tell the truth about Britain today:

• Britain’s richest 1% have accumulated as much wealth as the poorest 55% of the population put together (ONS)
• The household disposable income for the richest increased last year, but fell for everyone else (TUC)
• IFS)
• Foodbank use is increasing exponentially with a million people using foodbanks in 2013/14 and 350,000 in 2012/13. Also increasing are the diseases of malnutrition such as rickets. (Trussel Trust) (Faculty of Public Health)

Moreover, Work, for many millions, regrettably, in Britain today is not a sure way out of poverty either:

• A record 5.2 million UK workers are now in low-paid jobs, up by 250,000 since last year (Resolution Foundation)
• 66% of children growing up in poverty live in a family where at least one member works
• There are now more people in working families living below the poverty line (6.7 million) than in workless and retired families in poverty combined (6.3 million) (JRS)
• 1:4 employees on minimum wage are still on that rate after 5 years (Resolution Foundation)

There are many people who feel that they don’t belong, who feel alienated: who look around them and find that they cannot participate in the life which most people enjoy. In this country that implies a certain standard of living – to be able to have a stable, decent home, food and warmth, an occasional holiday: To be able to afford the costs of transport to work, necessary household goods and shoes for the children: And computer access, now seen as a basic tool in all Government welfare support and formal dealings.

A surprising number of people are unable to meet the most modest conditions in our society today:

• Those who are homeless, often struggling with chaotic live and health or addiction problems
• Those who become unemployed, with no or little savings or capacity within the family to soften the blow
• Those who are underemployed, self-employed, or on those zero-hour contracts which are exploitative – precarious employment conditions
• Those who are simply and long-term on low pay

There are others who are struggling with static pay against a background of rising costs; or those whose pay is brutally reduced as the contract regime is introduced; asylum seekers in various types of bureaucratic stasis who are not allowed to work yet have no access to public funds, many of whom are frankly destitute; and those outside society almost by definition – the victims of trafficking for example. (*The above statistics and excerpts were taken from an article by Helen O’Brien. For the original source see below).

In short, this is the real story of life for many British people today.

Is it not tragic that once again the economics of fools won the day and many were fooled and foolishly voted against their own best interest.

And is this not the time that all Progressive people come together, working for the common good, co-authoring and co-creating the better world we all wish to live in? Imagine that!

In the country I wish to see, we value ourselves, and we value each other.  In this new country, it is an honour to serve, where the highest good is the common good

*An earlier version of this Blog was first published at: Human Dignity and Humiliation Studies on 24 May 2011

Written by: Kamran Mofid

Published: 18 May 2011

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 'Over the last decade or so, I have been trying as hard as I can to highlight the rotten state of the value-free departments of economics and the many business schools around the world, and how they have been infected by the now discredited neo-liberalism and the “Washington Consensus”. Recently, a dear friend sent me a copy of a letter that had been published in The Times. This is a very important piece of evidence confirming that what I have been saying is true. I have re-typed it below. It says it all.

Unless, somehow, this rotten and destructive approach is reversed, I cannot see how we can change the world for the better. The key is education for the common good - what we have on offer now is all for the common bad! Lest we forget, it was the same establishment, the London School of Economics, that turned down the funding offered (see the letter) to set up a Chair in Business Ethics, which later on accepted millions from the Gaddafi family and sold a PhD to his son!

The Times, 8 March 2011

Ethics boys

Sir, Around 1991 I offered the London School of Economics a grant of £1 million to set up a Chair in Business Ethics. John Ashworth, at that time the Director of the LSE, encouraged the idea but had to write to me to say, regretfully, that the faculty had rejected the offer as it saw no correlation between ethics and economics. Quite.

Lord Kalms

House of Lords

What a sorry state of affairs! Shame on those at the LSE, and all others like them elsewhere, bringing Economics into such disrepute, not to mention business and the world of education, and in the process so destructively short-changing their students.

*

I was born in Tehran, Iran in 1952. In 1971, after finishing high school, I came to England to further my education. In 1974 I married my English wife, Annie, and two years later we emigrated to Canada. I received my BA and MA in Economics from the University of Windsor in 1980 and 1982 respectively. We returned to England in 1982, and in 1986 I was awarded my PhD in Economics from the University of Birmingham.

From 1980 onwards, for the next twenty years, I taught economics in universities, enthusiastically demonstrating how economic theories provided answers to problems of all sorts. I got quite carried away by the beauty, the sophisticated elegance, of complicated mathematical models and theories. But gradually I started to have an empty feeling.

I began to ask fundamental questions of myself. Why did I never talk to my students about compassion, dignity, comradeship, solidarity, happiness, spirituality – about the meaning of life? We never debated the biggest questions. Who are we? Where have we come from? Where are we going to?

I told them to create wealth, but I did not tell them for what reason. I told them about scarcity and competition, but not about abundance and co-operation. I told them about free trade, but not about fair trade; about GNP – Gross National Product – but not about GNH – Gross National Happiness. I told them about profit maximisation and cost minimisation, about the highest returns to the shareholders, but not about social consciousness, accountability to the community, sustainability and respect for creation and the creator. I did not tell them that, without humanity, economics is a house of cards built on shifting sands.

These conflicts caused me much frustration and alienation, leading to heartache and despair. I needed to rediscover myself and a real-life economics. After a proud twenty-year or so academic career, I became a student all over again. I would study theology and philosophy, disciplines nobody had taught me when I was a student of economics and I did not teach my own students when I became a teacher of economics.

It was at this difficult time that I came to understand that I needed to bring spirituality, compassion, ethics and morality back into economics itself, to make this dismal science once again relevant to and concerned with the common good. It was now that I made the following discoveries:

Living happily is “the desire of us all, but our mind is blinded to a clear vision of just what it is that makes life happy”. The root of happiness is ethical behaviour, and thus the ancient idea of moral education and cultivation, is essential to ideal of joyfulness.

Economics, from the time of Plato right through to Adam Smith and John Stuart Mill, was as deeply concerned with issues of social justice, ethics and morality as it was with economic analysis. Most economics students today learn that Adam Smith was the ‘father of modern economics’ but not that he was also a moral philosopher. In 1759, sixteen years before his famous Wealth of Nations, he published The Theory of Moral Sentiments, which explored the self-interested nature of man and his ability nevertheless to make moral decisions based on factors other than selfishness.

In The Wealth of Nations, Smith laid the early groundwork for economic analysis, but he embedded it in a broader discussion of social justice and the role of government. Students today know only of his analogy of the ‘invisible hand’ and refer to him as defending free markets. They ignore his insight that the pursuit of wealth should not take precedence over social and moral obligations, and his belief that a ‘divine Being’ gives us ‘the greatest quantity of happiness’.

They are taught that the free market as a ‘way of life’ appealed to Adam Smith, but not that he distrusted the morality of the market as a morality for society at large. He neither envisioned nor prescribed a capitalist society, but rather a ‘capitalist economy within society, a society held together by communities of non-capitalist and non-market morality’. As it has been noted, morality for Smith included neighbourly love, an obligation to practice justice, a norm of financial support for the government ‘in proportion to [one’s] revenue’, and a tendency in human nature to derive pleasure from the good fortune and happiness of other people.

The focus of economics should be on the benefit and the bounty that the economy produces, on how to let this bounty increase, and how to share the benefits justly among the people for the common good, removing the evils that hinder this process. Moreover, economic investigation should be accompanied by research into subjects such as anthropology, philosophy, politics and most importantly, theology, to give insight into our own mystery, as no economic theory or no economist can say who we are, where have we come from or where we are going to. Humankind must be respected as the centre of creation and not relegated by more short term economic interests.

‘Economic rationality’ in the shape of neo-liberal globalisation is socially and politically suicidal. Justice and democracy are sacrificed on the altar of a mythical market as forces outside society rather than creations of it. However, free markets do not exist in a vacuum. They require a set of impartiality in government, honesty, justice, and public spiritedness in business. The best safeguard against fraud, theft, and injustice in markets are the cardinal virtues of justice, temperance, fortitude, and prudence, and the theological virtues of faith, hope, and charity.

Every apparently economic choice is, in reality, a social choice. We can choose a society of basic rights – education, health, housing, child support and a dignified pension – or greed, pandemic inequality, ecological vandalism, civic chaos and social despair. Modern neo-liberal economics ignores the first and promotes the second path as the way to achieve economic efficiency and growth.

The moral crises of global economic injustice today are integrally spiritual: they signal something terribly amiss in the relationship between human beings and God.

Where the moral life and the mystery of God’s presence are held in one breath – because the moral life is the same as the mystical life – the moral agency may be found for establishing paths towards a more just, compassionate and sustainable way of living. ‘Moral agency’ is the active love of creation (for oneself as well as for other people and for the non-human creation); it is the will to orient life around the ongoing well-being of communities and of the global community, prioritising the needs of the most vulnerable; it is the will to create social structures and policies that ensure social justice and ecological sustainability.

In contrast to this sensibility, which weds spirituality and morality, stands modern economics’ persistent tendency to divorce the two, in particular to dissociate the intimate personal experience of a close relationship with God from public moral power.

It is the belief in collective responsibility and collective endeavour that allows individual freedom to flourish. This can only be realised when we commit ourselves to the common good and begin to serve it.

There are three justifications for the common good which are not commonly discussed in economics:

-        Human beings need human contact, or sociability. The quality of that interaction is important, quite apart from any material benefits it may bring.

-        Human beings are formed in the community – their education and training in virtue (their preferences) are elements of the common good.

-        A healthy love for the common good is a necessary component of a fully developed personality.

The marketplace is not just an economic sphere, ‘it is a region of the human spirit’. Profound economic questions are divine in nature; in contrast to what is assumed today, they should be concerned with the world of the heart and spirit. Although self-interest is an important source of human motivation, driving the decisions we make in the marketplace every day, those decisions nevertheless have a moral, ethical and spiritual content, because each decision we make affects not only ourselves but others too. We must combine the need for economic efficiency with the need for social justice and environmental sustainability.

The greatest achievement of modern globalisation will eventually come to be seen as the opening up of possibilities to build a humane and spiritually enriched globalised world through the universalising and globalising of compassion. But for ‘others’ to become ‘us’, for the world to become intimate with itself, we have to get to know each other better than we do now. Prejudices have to disappear: we have to see that the cultural, religious and ethnic differences reflect an ultimate creative principle. For this to happen, the great cultures and religions need to enter into genuine dialogue with each other.

It has been my pleasure and honour to put into practice these discoveries by founding the Globalisation for the Common Good Initiative.'- Reprinted from Vijayvaani

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