I will be introducing a discussion of behavioural economics at the Institute of Ideas Economy Forum in London this coming Thursday evening. Do come along if you can. The discussion will range far wider than what is normally conceived of as economics. Details can be found HERE.
My latest book review for the Financial Times was published on 2 December.
For anyone who sees environmentalism as a radical outlook, its adoption by business must be bewildering. The examples are legion. From the World Wildlife Fund credit card from Bank of America to Conservation International’s partnership with McDonald’s to promote Happy Meals; and from Greenpeace endorsing companies, including Mars and Procter & Gamble, that support its sustainable palm oil campaign to Nature Conservancy’s partnership with 3M and Dow Chemical.
For some activists this is simply a matter of greenwash — companies pretending to be environmentally friendly. But it is hard to believe that corporate executives do not, to some degree, support the causes they endorse.
Paul Dauvergne, a professor of international relations at the University of British Columbia, sees it instead as an example of what he calls the “environmentalism of the rich”. He is careful to emphasise this does not refer to support for environmental causes by people who happen to be born wealthy. Instead he argues environmentalism has lost its spirit of outrage. It is only if this is recovered then, he claims, it can take on extreme inequality, destructive growth and excessive consumption.
So Dauvergne is careful to stress he is not opposed in principle to corporate social responsibility, eco-consumerism or partnerships between companies and campaign groups. The thrust of his argument is that such initiatives are positive but insufficient to tackle what he sees as a global ecological crisis.
Essentially this amounts to a narrow tactical critique of mainstream environmentalism which he thinks should be infused with a more passionate form of grassroots activism.
Dauvergne’s main failure is his lack of appreciation that the defining premise of green thinking — that human activity is subject to natural limits — has become pervasive in both business and political circles. Contrary to Dauvergne’s contention, there is little opposition to this outlook. Governments worldwide endorse sustainability as do a large number of business leaders. They might not go as far as the activists would like but they are nevertheless thoroughly imbued in green thinking.
This shift, which has taken place over several decades, reflects the emergence of a profound lack of confidence within the business and political elites. Businesses all too often feel uncomfortable with their traditional role of helping to make society more prosperous. So they play down the importance of their core activities while emphasising their eagerness to change the world. Politicians too tend to question their ability to help create a framework to generate more prosperity. The spread of green thinking in such circles is an outward expression of this crisis of faith.
Dauvergne also fails to explain the paradox he points to so often. Global consumption levels keep rising despite all the talk of sustainability. For him it seems to be simply a matter of too many people behaving irrationally or being duped by advertising. He cannot accept the reality that huge numbers of people quite reasonably want more.
The bulk of the world’s population demands higher material living standards. This is most evident among the world’s poorest. According to the World Bank, there were 767m living on less than $1.90 in 2013. But this is an incredibly low threshold. There are billions more people in the developing world living on low incomes and even in the advanced economies many have suffered stagnant incomes for years.
The fashionable heart-rending by world leaders about extreme inequality is not about achieving affluence for all. On the contrary, the implication is that the bulk of humanity should be prepared to make sacrifices for the sake of mitigating the most extreme forms of poverty.
It would be far better if businesses focused more on their traditional role of raising prosperity while politicians supported them. More resources and better technology help create the conditions to raise living standards but also to overcome environmental challenges. Achieving a richer world means transcending apparent environmental limits rather than embracing them.
I will be talking on the “great inequality debate” at 7pm at Cafe Mainstein in Berlin this coming Saturday. The discussion is in English and entrance is free.
The debate on the super-rich at the recent Battle of Ideas festival in London is now available to watch on video. Clink on the link here.
This is the text of my review of The Market as God for the Financial Times. It was published on Friday 21 October.
Just across the piazza from Milan’s magnificent Gothic cathedral, the Duomo di Milano, stands one of the first shopping malls in the world. The Galleria Vittorio Emanuele II, a temple of modern consumerism, was clearly built as a commercial replica of its venerable Catholic neighbour.
This uneasy contrast symbolises what Harvey Cox, an emeritus professor of divinity at Harvard, wants to explore in The Market as God. His goal is essentially to compare and contrast classical faith with what he refers to as “ersatz” religion. In his view, the market perspective bears all the characteristics of a traditional religion except it is constructed by human beings. He seeks to uncover the market theology, which he sees as comparable in scope, if not profundity, to traditional religion.
His interest in the subject was piqued when, on a friend’s advice, he started reading the business pages to help him understand the real world. To his surprise he found that the Financial Times’s lexicon (among others) “turned out to bear a striking resemblance to Genesis, the Epistle to the Romans and Saint Augustine’s City of God”.
Of course, he was not claiming that the financial press literally focuses on divine matters. Rather that the preoccupations of finance strangely parallel those of theology. Each of them has its own grand narrative about the inner meaning of human history. Theologians have their myths of origin, legends of the fall and doctrines of sin and redemption. Finance has similar concerns but in disguise: chronicles about the creation of wealth, the seductive temptation of over-regulation and salvation through the advent of free markets. Even entrepreneurs can, in his view, be seen as a secular version of saints.
Cox is at pains to emphasise that he is not opposed to the market itself. His objection is what he sees as its aspiration to divinity that has emerged over the past couple of centuries. It has become, in his view, a hubristic outlook that inspires wastefulness, cupidity and avarice.
Such criticisms are in line with two papal encyclicals (letters) that are approvingly cited by Cox at the start of the book. In 2013, inEvangelii Gaudium (the Joy of the Gospel) the newly elected Pope Francis criticised a “deified market” and “ideologies which defend the absolute autonomy of the marketplace”. Two years later, Laudato Si, the Pope addressed the growing planetary crisis brought about by climate change. Indeed, Cox dedicates his book to Pope Francis “with gratitude and hope”.
In principle, Cox’s project of examining the values and symbols of the market is a good one. It could help yield a better understanding of how the capitalist economy works.
Unfortunately, he makes a fundamental error that plagues countless critiques of the market system. He assumes that a confident pro-free market perspective is the dominant outlook. But even on a descriptive level, leaving aside any debate about the desirability of such a worldview, this is simply not true. Free market economics is not prevalent at the level of the workings of the market system or in relation to public discourse.
Despite the occasional flourishes of free market rhetoric the overwhelming reality even in the US is of huge state intervention. Government spending in the US is expected to amount to about 36 per cent of GDP this year, or $6.6tn, according to the International Monetary Fund. It is hard to square this reality with claims to the economy’s free market status.
On the level of ideas, pervasive doubts about the free market most often take the form of concerns about its alleged damaging effects. For example, the widespread idea that climate change represents a huge market failure, one that potentially threatens the future of humanity, is hardly a ringing endorsement of capitalism. Similarly, the often expressed concerns about the damaging effects of extreme inequality suggest a lack of confidence in the market system.
What Cox presents as a humane critique of the mainstream free market outlook is in fact an expression of the contemporary orthodoxy.
The Financial Times has published my review of The Market as God by Harvey Cox. I will upload the text in the next few days but meanwhile here is the link. You may need to register (free) to read it.
A reminder that I will be debating inequality and the super-rich at the Battle of Ideas this Saturday. Come along to the session and indeed the whole weekend.
I am delighted to be speaking at the Battle of Ideas weekend at the Barbican Centre in London on 22 and 23 October 2016. On the Saturday I will be speaking on a panel on the super-rich and on the Sunday on the debate about social inequality. I will post more details at a later date. Alternatively you can check out the Battle of Ideas website. The whole festival is well worth attending.
Those who know German would do well to read Zeitgeisterjagd (Hunting the Zeitgeist) by Matthias Heitmann. The German author explores the dire consequences of the spirit of the times we live in. Risk aversion has infused public and private life to such an extent that we think of ourselves as unable to act upon the world. This ultimately renders us incapable of overcoming the challenges that face us. The result? We have become unfree.
The book was reviewed by Maren Thom in English on spiked in October 2015.
Readers in the UK can buy the book on Amazon here.
Welcome to danielbenami.com.
To contact me email ferraris AT danielbenami.com
I also have a Facebook fan page.
Ferraris For All, my book defending economic progress, has just been published in an extended edition in paperback and on Kindle with a new chapter on the inequality debate.Amazon.com, Amazon.co.uk, Amazon.ca, Amazon.de,
Please see the Buy the book page for more details.