“Our capacity to deplete natural capital is intrinsic to the economic system of our global society and yet it is unaccounted for by this system. This is the basis of false accounting and it is the basis of our complete dislocation from nature. “
A term I have often used in this (and other) blogs is paradigm, usually in the context of the urgent and expedient need to change the prevailing one. Altering the way we all understand and look at the world and the ingrained norms and habits that drive public opinion and behaviour, is the single most important lever with which to put pressure on governments and create meaningful policy. But the machinery of history is two way and pressure must come from above as well as below to usher in a complete paradigm shift. Infact, quite often the details surrounding the pertinent issues and challenges we face, are beyond the scope of much of the public’s capacity, such is their complexity, moral ambiguity and often esoteric nature. I have addressed the problems inherent in democracy and its inability to deal with public intransigence on key policy and the paradox of the ‘benign dictatorship’ in a previous blog post. This series of posts is not concerned with the problems of democracy however.
Natural capital is very much like the capital of global free market systems except for one important distinction; it is not man made. Water, oil, air, ecosystems, rainforests, oceans, grasslands are all examples of natural capital. We deplete natural capital in order to accumulate man made capital, wealth in the form of investments, property, production capacity, factories, cars, computers, etc. This is simple correlation is not difficult to understand and yet we misrepresent it in the most fatal way.
Someone builds a factory, they make a product, we buy the product with wealth we have accumulated personally. But we have to account for the natural capital depleted in this transaction, the pollution caused by the burning of fossil fuels to bring the bricks and mortar to the factory site, as well as those given off by the factory during the manufacture of the product. If the product is food then we have to account for the water used to produce it (5 gallons of water are used to produce a pound of wheat but 5000 gallons are required for a pound of beef) as well as the damage done to the topsoil, local river systems and wider environment by the use of fertilisers, pesticides, fungicides, herbicides, etc. These are often referred to as externalities by economists but they are internal to any appropriately inclusive macro economic system.
Our capacity to deplete natural capital is intrinsic to the economic system of our global society and yet it is not accounted for. This is the basis of false accounting and it is the basis of our complete dislocation from nature. Juedeo-Christian belief systems, which have survived to become ingrained into the DNA of the world’s hegemonic economies, have always stressed mankind’s dominion over nature, his stewardship of the earth, and not his interconnectedness with it. I believe that these moral paradigms persist in modern day secular societies and their prevailing economic models.
The Abrahamic origins of this paradigm is perhaps irrelevant though. Science has in the last hundred years or so shown us again and again the majestic and sublime interconnectedness of all things. James Lovelock’s Gaia theory has taken these earth systems as a whole and describes the planet’s geosphere and biosphere as one self regulating system. A system that relies on an abundance of natural capital itself, a system that we are creating dangerous imbalances within. We are now exponentially depleting this natural capital as new consumer classes are created in China and India and other emerging economies and the global population as a whole swells uncontrollably.
The current economic model feeds into our very misunderstanding of the world and buoys up the prevailing paradigm with fallacious notions that ignore the most basic scientific laws of causality. The prevailing economic measure is GDP which takes a country’s turnover and divides it by its population to give an indication of its wealth. But it is a misconception of wealth that we see in this equation, a fool’s paradise that promotes an illusory reality. GDP does not take into account the depletion of natural capital which is seen as having a value of zero. Therefore the value of a pound of beef does not take into account the value of the 5000 gallons of water pumped in from rapidly depleting aquifiers to make the grain that fed the cattle; just the cost of extraction and transportation. A fishing company pays for the cost of catching fish but does not put in its books the costs of depleting fish stocks to levels where they can no longer recover.
The British author and information technology consultant James Martin uses the analogy of trust funds to describe these deficits. By plundering these trust funds of natural capital without replenishing them we are leaving natures coffers empty for the next generation. Current trends of natural capital depletion suggest very strongly that we will not survive the century without some kind of cataclysmic event.
What is needed is a complete reworking of the current model of economic accountability, that takes into account natural capital as well as man made. Half hearted attempts have been made at this, such as the implementation of a carbon trading scheme. But without massive international support and a rallying cry against vested business interests (which will undoubtedly suffer heavy losses to their profit margins) we will never achieve the paradigm shift necessary to lay the economic foundations for this kind of seismic shift.
What is most notable though is the degree of parity that this system of inclusive accounting this will create around the world, forever altering the global economic picture. Impoverished nations would suddenly find themselves sat on huge amounts of natural capital which would overnight make them players on the world’s markets. This paradigm shift would therefore have many positive benefits springing forth from it, such as the alleviation of poverty and inequality. Without robust and authoritative international frameworks and institutions we cannot hope to ever achieve these conditions. And if we don’t achieve them we will ultimately seal our own fates. As global population burgeons and more and more people are consuming more and more natural capital, our planet is is also heating up at an alarming rate and this will be the subject of our next post.
Wednesday’s episode of Horizon on BBC2 reveals a shocking truth concerning the nature of corporate culture and the types of individuals it nurtures.
BBC2′s Horizon documentary on Wednesday was an eye opener to say the least. Entitled ‘are you good or evil’ it sets about explaining recent developments in neuroscience and how scientists are beginning to recognise the kind of brain patterns and genes that characterise a psychopathic personality. The kinds of advances we are witnessing in these fields never fail to amaze me. They are allowing us to peer deeper into the human psyche than we ever have before and what we are finding is often quite disturbing and unsettling. It’s a fascinating and highly philosophical field which is helping us get to grips with what it actually is to be human and why we are the way we are.
The programme featured Prof Jim Fallon, who’s was given a number of brain scans by a colleague and asked to sort them into distinctive groups. He had no prior knowledge concerning the recipients of these brain scans but found a distinct difference in some of them and so grouped these seperately. It turned out that every one of the brain scans in this distinctly different group belonged to a convicted murderer or psychopath. Further studies into genes reveals how the MAOA gene (also referred to as the ‘warrior gene’) is another important precursor in an individual propensity to psychopathy. It seemed that scientific research was beginning to reveal a distinct neural and genetic template for a psychopath. But this was only half the story. It is the combination of these two factors along with the social trigger of an abusive or troubled childhood that sees to cause psychoapthy to fully develop.
This is all very fascinating, but what really made me think was the announcement of a simple statistic whose implications seemed to stretch far beyond the remit of the programme. Far beyond the remit of science infact. The issues thrown up by Horizon are at once ethical, social and political in their implications. Perhaps even economic. It seems that psychopathic personalities are much more common than we would perhaps realise and that these personalities can operate within society quite normally. Indeed, in some scenarios they can positively thrive. It turns out that psychopathic personalities have been found to exist in far greater concentrations in the boardrooms of big businesses and corporations. Infact there are four times more psychopaths these groups of people than there are in a normal cross section of society.
Now lets just take that statistic in shall we. Four times as many psychopaths in the gleaming towers and citadels of London’s square mile than walk the streets far below. Four times greater a concentration of unempathetic, manipulative, charming and potentially viscous people betting billions of pounds of savers money on risky financial investments, playing the stockmarkets, earning the big bucks until… well until the whole house of cards came crashing down in 2008. It seems there are times when the results of rigorous scientific research reveals what people quite often observe anecdotally within a given system or society. This is one of those occasions.
Lets look at wikipedias definition of a psychopath.
“The prototypical psychopath has deficits or deviance in several areas: interpersonal relationships, emotion, and behavior. Psychopaths gain satisfaction through antisocial behavior, and do not experience shame, guilt, or remorse for their actions. Psychopaths lack a sense of guilt or remorse for any harm they may have caused others, instead rationalizing the behavior, blaming someone else, or denying it outright. Psychopaths also lack empathy towards others in general, resulting in tactlessness, insensitivity, and contemptuousness. Psychopaths can have a superficial charm about them, enabled by a willingness to say anything to anyone without concern for accuracy or truth. Shallow affect also describes the psychopath’s tendency for genuine emotion to be short-lived, glib and egocentric, with an overall cold demeanor. They tend to be impulsive and irresponsible, often failing to keep a job or defaulting on debts.“
We can now accurately and detachedly observe that some of the most fundamental institutions of our nation’s financial wealth and the pillars of our economy, have much higher concentrations of psychopaths making decisions at the top levels than in normal cross sections of society. It is no wonder then, that this tendency fostered such a consequence free environment; an environment that became so engrained into corporate culture that it became systemic throughout the entire free market economies of the world. It has always been self evident that very few men at the top of these organisations saw the dangers lurking around the corner. But maybe many did and they just didn’t really care about the consequences. Greed has always been prescribed as the driving force of this collective corporate myopia, but could we add psychopathy as a factor as well?
This kind of clinical description not only seems to describe individuals but systems and practices in general. In many ways it offers up explanations for a lot of the post banking crisis behaviour we have seen from banks and financial institutions and the individuals that run them. These institutions, many of which in the UK are now majority tax payer owned, seem to have absolved themselves of all blame, perhaps occasionally feigning guilt when public relations requires them to do so. They are antisocial, in that they have no concern for the damage they have caused and their egocentricity is surely self evident.
I don’t know about you, but if the consequences of curbing obscene bankers bonuses means a move towards a less finance sector dependent economy in the long term, and less psychopathic bankers at the helm of the British economy in the short term, then I’ll help chip in for their plane tickets myself.
Obscured behind the smokescreen of recent shocking headlines and epic rolling news stories there are storms building that, should they be unleashed, will effect every single one of us and could plunge the world economy over the edge. We’re not out of the woods yet.
In a month of predominating news stories it is perhaps worth remembering how easily such rolling stories and shocking headlines can temporarily eclipse other events. In any ‘normal’ news week such events may have grabbed the headlines and provoked far wider discussion and debate but in the shadow of such preoccupied news agendas they tend to lose some of the gravitas they rightly deserve. But if we were to take a step back for a moment and, with a dispassionate eye, look at the pull these stories have had over our base emotions (the temerity of Murdoch, the tragedy of Norway, the wasted talent of Winehouse) we not only start to appreciate the predominance they have etched out in our mind, but can also perhaps, start to acknowledge the blinkered state this can leave us in. There is only a finite amount of energy we can channel into our emotions and the huge news stories of the past month have acted like a vacuum for this energy.
I have no doubt that the News International scandal followed by the horrific events in Norway last Friday will go down, not only as two of the big news stories of the year but ingrained in the history books as events of lasting significance and consequence in their relevant countries and quite possibly beyond.
But there is a news story that has been bubbling away under the surface for some time now, whose scale is of a more epochal and potentially global nature, hovering as it has done for some time, two or three news stories below the big headlines of the day but now slowly starting to work its way up the agenda. For as the dusts settle over Norway and News International the dark thunder clouds of the US Debt Crisis begin to roll in, moving across the landscape of the news agendas with a growing sense of menace, threatening to batter and pelt the shaky framework the world’s economy now rests on and plunge the world back into recession. Beyond this stormy weather are yet more thunderclouds, as Europe’s sovereign debt crisis continue to wreak havoc upon the monetary union as it continues to kick the can further down the road in a desperate attempt to avert meltdown.
The fact that this crisis across the pond is unfolding at the same time as the scale of the contagion in Europe becomes clear, with Italy (an economy too big to rescue) now looking dangerously vulnerable, is surely a sign that we could be witnessing the beginnings of the perfect storm. More specifically the culmination of these debt crises are perhaps the most disturbing and telling indicator yet that the astronomical government bailouts that were needed to prevent the world’s financial institutions all falling over like dominoes, have now worked their way through the pipework of the world’s economic systems to be reborn as a crises of nation states and government treasuries.
Today John Boehner, the Republican speaker, was forced to go back to the drawing board and rewrite his party’s proposals to lift the US debt ceiling, allowing the government to continue borrowing. With the prospect of the largest economy on earth not being able to fund itself and defaulting on it’s debts for the first time in it’s history, of a country upon which much of the deeply interconnected capitalist infrastructure sits, of a nation now locked together in a bitter partisan struggle, we today learnt that the man opposing Obama and leading the right wing charge had lost his calculator.
There are times, dear reader, when I struggle to find the words, I really do. I struggle to make sense of people like John Boehner and the Republican party he represents. It is a depressing testament to the American right’s complete and unfaltering adherence to the doctrines of the Washington Agreement and the total supremacy corporate America still has over the rights of ‘the average Joe’, even though it is the average Joe that has now bailed out corporate America. If the last 3 years can’t put a dent in the American Dream then nothing can.
There’s a strange religosity to the American mindset that goes way beyond their Puritan Christian heritage. The Republican party’s continuing intransigence towards raising taxes on the very wealthy as well as spending cuts, as Obama has sensibly and justly proposed, is something I can only liken to a fundamentalist mindset. It’s as if they’ve been indoctrinated, nay brainwashed, into thinking that taxing corporate America is somehow punishing success and that this is a betrayal of the American Dream. Deviation from this orthodoxy is heresy; in this case meaning being branded unpatriotic or worse still, a lefty. But in the wake of a financial crash, in the midst of a global recession, the fantasies of the American dream may well be turning into the rest of the world’s nightmare.
The view that the American political establishment is playing chicken with the Global Economy, is to a large degree true. Perhaps understandably most people on the outside aren’t concerned with the machinations of Washington, they just want to avert disaster. Time is, after all, of the essence and if America defaults on its debt then the economic shockwaves would be worldwide. Many outside America, especially those in China, are in shock at US’s dysfunctional political system and with credit rating agency’s and markets beginning to start factoring in risk. America’s polarising politics is shaming it not only in the eyes of the world but in the eyes of the world economy and this is not a good thing for those who wish things to carry on as they are. If the US loses its AAA credit rating it will inevitably cost it more to borrow and it’s debt problem (currently standing at $14.3 trn) will only get worse. Undoubtedly we are, and have been for some time, witnessing the wane of American hegemony and the rise of China, but in the bubble that is the Republican mindset this simply doesn’t compute.
US politicians on both sides need to come up with some kind of deal because it will be all of us that will suffer as a result of their malfunctioning politics. But we cannot and should not forget that failure to win this ideological war over capitalism in its heartland and bring about a sea-change in the way it functions, will inevitably involve the rich corporate interests of the few trumping the rights of the taxpayers that have bailed them out. And if they can get away with it once, you bet your Lehmans Brothers they will think they can do it again.