David Cameron has been travelling the country giving plenty of speeches about the need for bankers to play a constructive role in society and appealing to the better nature of capitalism. It’s a sentiment we can all agree with, and after the speeches everyone applauds and pats each other on the back like it’s job done! So I have to question whether it can be said to be making a difference when government seems unwilling to offer any action other than words of wisdom.

Whilst many of these performances are attended by prominent businessmen and banking CEO’s, once it’s over and everyone has returned home, attitudes seem unchanged and the lessons they claim to have learned appear to be forgotten like it is some sort of joke. The reason it is being treated like a joke is because it is a joke, words don’t tackle the inherent flaws of our current capitalist model and, because they are all in competition with each other, unless you change the system then you can’t hope for more than a few exemplars who only occur because of exceptional circumstances.

The system we currently live under places profit and greed at its heart and has a policing system, the stock market, that prevents deviation from the model. A CEO is not answerable to his conscience, he is answerable to his investors and the quarterly report. The stock market demands ever increasing growth even in a saturated economy, it is what drives companies to lay off workers, cut corners, and pollute the environment, as directors try to find ways to make more money from less resources to keep their jobs and large bonuses. In a saturated economy where there are no new customers to compete over, the economic model of growth is no longer constructive, but destructive.

Corporations, not content with a stagnant balance sheet, begin to squeeze the customers they do have for all they are worth. We see rising prices that don’t match rising overheads, but instead correlate directly to a company’s rising profit margins. An example would be the energy companies who raised prices in recent years, apparently caused by rising oil prices due to war, but at the same time they all reported record profits. Similarly, the energy prices have not matched the decrease of the oil prices, yet each company has report as much as an 8% increase in profits this year. The UK has not experienced a sudden boom in population or energy usage per person, so where has this growth come from? It comes from greed.

It’s difficult to imagine a CEO presenting a quarterly report to his shareholders that shows reduced profits and a downward trend and managing to keep their job, and excuses like ‘we don’t need the money’ or ‘there’s no more money to be made’ would, undoubtedly, only hasten their exit. The only way someone keeps their job with a disappointing report is when they have outside influences to blame, an excuse that shareholders are willing to accept as outside the realm of control for the CEO. We often see bad winter weather, or rising oil prices get the blame for poor results and it usually buys a stay of execution, but without an excuse, the pressure of the stock market pushes us into an unsustainable model of infinite growth. Corporations need a bad guy to blame their failure for growth on.

The fact is that this is the pattern we should expect. It is a system built around our inherent greed and self-interest  (Game Theory) and creates an environment that supports bad behaviour. The quarterly report drives excessive risk taking and short term decision making, and the stock market drives an unsustainable business model that we are unable to break from. Appealing to our better natures without changing the environment we work in is like asking a crack addict to not take the drugs you just placed in front of them. Arguing that this behaviour will destroy us is all very well, and good common sense, but it has never been a convincing argument for an addict, and it’s not without intervention and a change of environment that any addict can hope to begin recovery.

Capitalism is the very reason that we struggle to deal with issues like climate change, deforestation, over-fishing, wars over resources etc. etc. etc. because it forces us to put profit before our morals, and actively prevents us from doing otherwise unless, by sheer coincidence, the more moral path is also the more cost effective path. This is why governments have taxes, subsidies and laws, to guide the market where it won’t naturally go on its own and prevent us from destroying ourselves.

When left to its own devices, ‘invisible hand’ capitalism is a system that destroys itself because it allows a few rich individuals to make short term gains that conflict with the long term futures of the many, and then isolate themselves from the consequences. Capitalism is an amoral system that is a force for profit, not a force for morals. Principles, morals and integrity are only tolerated as long as they are supported by the business model of the company, but they are quickly jettisoned if they begin to obstruct an opportunity to make larger profits via an immoral route. Even if such a decision will damage the company over the long term, the setup of the system will still drive us toward the short term gain.

This is the point where the government is supposed to step in and play the bad guy. Government is supposed to provide that excuse with regulation that prevents speculative bubbles and destructive behaviours, government is supposed to play the bad guy to keep the capitalist model in check. Capitalism isn’t moral unless it is by force, rigid regulation that can’t be circumvented, and effective taxation and decent minimum wages to harnesses the force of capitalism for good. More regulation where it is needed and less regulation where it isn’t is what keeps the system running smoothly. It’s the dance we do, a secret agreement between governments and corporations that maintains stability, government plays the bad guy, corporations play the victim, and we all live happily ever after. Capital and labour have a symbiotic relationship, one cannot survive without the other, but since the 80’s deregulation bonanza we all seem to have forgotten our roles in the world.

Capitalism doesn’t know it needs this counter balance because it is a system, not a person with a conscience. Appealing to the better natures of the people who work within this amoral system will be ineffective because the system drives the opposite behaviour. The only way capitalism can be moral without government regulation is with independent companies who have a single person, or small group of people in charge with impeccable character. These people are answerable to themselves and their own conscience, not outside investors or the stock market, their environment is different from the vast majority of other companies, and so it allows better behaviour. However, we all know that these exemplars are few and far between, and so to pin our hopes on the moral character of individuals working in the broken system is foolish without government intervention.

Having said all that, I’m not preaching ‘smash the state’ or a move to communism, capitalism may be a flawed system, but it’s the best we’ve got. It is important to make it clear that to be anti-capitalist, or an anarchist, is to ignore the lessons of history. Capitalism has been a great wealth generator and has made many people’s lives longer and more prosperous. Capitalism can still be harnessed for good, but it requires we have a government that understands the system it is trying to control and has the balls to step up and play the bad guy role when necessary. We don’t need small government, or big government, just the right government that is big when it needs to be and small when it doesn’t.

The problem that low tax economies face is that they are stuck in a race to the bottom. Countries such as the UK, USA, Switzerland are over reliant on multinational companies who move their offices at the first sign of increased taxes or inconvenient regulation. Our governments are trapped, unable to fix their problems without half their economy moving elsewhere and making the financial balances worse. Globalisation has made it too easy for a company that doesn’t like the rules to move to another country that is more accommodating. Governments can no longer play the bad guy for fear of scaring them off, and we are forced to kowtow to the corporations every demand. The system has become unbalanced, with the power residing resolutely with capital, and we are unable to do anything about it until we rebalance our economies to local or independent industries.

It’s not until countries stop trying to outdo each other with lower taxes and softer regulation, that we can regain control over capitalism. Like our systems of communication, our system of currency has outgrown traditional national borders and have become uncontrollable, whilst this is a good thing for communication, it is not so good for capitalism. Globalisation requires globalised laws that trap capitalism in necessary regulation with no way to weasel out by moving elsewhere, only when we stop this race to the bottom can we force capitalism to be moral. We need unprecedented international cooperation and progressive international politicians to fix this problem, people who are willing to implement standardised tax rates and minimum wages that allow governments to harness the power of capitalism for good and put the generated wealth to work in the real world rather than leaving them to grow on a computer screen. Without this new world order, we will remain stuck, unable to change, crippled, left desperately competing with each other for the affections of a few rich men.

It’s not just David Cameron’s failing, no politician or government is showing the necessary progressive attitudes, there is very little international cooperation, no one wants to make the first move for fear of losing out, and so while our countries are focussed on competing with each other, the corporations continue to get away with record profits in a system where we have socialised the risk and privatised the benefit. All our governments have shown little desire to change, no new taxes or regulations on corporations, and we hear constant relocation threats from multinationals to keep the government in check. So what is the purpose of David Cameron travelling the country with a well rehearsed speech about moral capitalism?

We are left then with the realisation that either the government has no understanding of the system it is trying to regulate, or it has no desire to see it change. As I highly doubt so many educated people are so confused by capitalism, I am forced to believe that we are witnessing a performance. A show being put on for the benefit of the public that serves to make it seem like action is being taken, all whilst capitalists are on their best behaviour trying not to rock the boat and set the public off again. Many powerful people dutifully attend and applaud Cameron’s sentiments to help portray a system that is back under control, newly humbled by their fallibility, and grateful to the public for their help with the bailout, desperate to prevent public unrest from developing into something real.

David Cameron is impotent, with no real power to change anything, and is left with appealing to the better nature of capitalists as his only option. The dance that government and corporations need to do to keep the system in equilibrium has become a dance of deception to keep the public in the dark, and once this storm has passed the system can return to normal and they can continue with business as usual.

Related Reading, A Moral Crisis, The Problem With Perspective

tl;dr - An analysis of the mentality of the London rioters. (can also be applied to London bankers), politicians to blame.

Empathy sounds easy, but it get more complicated without direct experience. We easily relate to the physical pain of others because pain leaves an indelible mark on our senses from our own mistakes. It’s simply not possible to empathise correctly without direct experience of those circumstances or experience of something relatable. The cold reaction from most of the public towards the London rioters stems, I believe, from empathising incorrectly and looking at another person’s problems from the wrong perspective. So I’m going to try and create a few relatable scenarios so we can all adjust our perspective to properly understand what needs to be done to fix the problems effectively.

Many of us think that stealing is just a simple conscious decision between right and wrong, but it’s not. Our conscious decisions of right and wrong are dictated by our subconscious feelings about right and wrong. If you are standing in the street and see a man stealing a bicycle, what is it that compels you to stop him? You don’t make a conscious decision to stop him, you start to feel bad about it and your subconscious then pushes your consciousness to act. Chemicals are release by glands into your head which your brain doesn’t like, and so you act to make that feeling stop. When you act to prevent the man from stealing the bike, you then feel good about it. Your subconscious rewards your conscious decision with new chemicals which your brain likes, serotonin, dopamine etc., and if you don’t act you then feel guilty about it for the rest of the day because your subconscious punishes you for not acting. Guilt, right, wrong, love, are all feelings in our brains created by different chemicals acting on different receptors, and it is our addiction or repulsion to these chemicals that drives our conscious decisions. If you didn’t have these chemical processes happening to make you feel bad about the man stealing the bike, then all you would feel was indifference, and indifference is not a well known tool for motivation. Undoing this idea that right and wrong is a simple decision is the foundation for our understanding of the situation. We are merely puppets of our subconscious, and free will takes a back seat once your subconscious becomes involved in the decision making process.

So where do these emotions come from and how do they get there? Well, they come from the environment we live, work and grow up in. The vast majority of us are fortunate to grow up in an environment that punishes us when we do something bad, and rewards us when we are good. This process continues out of the home into the school, community, university and work, and so most of us grow up as well adjusted individuals. The act of being punished or rewarded creates emotional associations in our subconscious at a young age that allow us to become responsible autonomous adults later in life. Now imagine you grow up in an environment where you are treated with suspicion and distrust, and harassed by the police even if you are not doing anything wrong, and when you do commit a crime you are given harsher sentencing for your crime just because of who you are. What do you think the outcome would be? It causes your perspective on right and wrong to be skewed, and it’s not something that can be fixed with rational thought. To change someone’s ideas of right and wrong, you have to change their feelings about right and wrong, and to do that you have to change their environment. The emotional associations we create in our subconscious are durable over a short term change in our environment, but are not permanent, and if there is long term change then you quickly notice a behavioural change. This is because there has been a perspective shift as a result of our changing environment, and this can work both ways, from bad to good and vice versa.

The carrot and stick mechanism can be used to flip right and wrong by rewarding bad behaviour and punishing good behaviour, and has been used to devastating effect by the banking industry. Bankers are rewarded with bonuses for high yield, short-term, self-interested gains and are not rewarded for smaller yield, safe, long-term gains for everyone. As a result we have a bankers who show no remorse for their actions because they feel they have done nothing wrong, their perspective on right and wrong is different to ours. This is in spite of most of the bankers probably having grown up in stable families with standard moral practices. What this tells us is that it is the environment we are in now that matters most. Most of us acted with outrage during both the banking collapse and London riots as we couldn’t comprehend why people would do such things. What we failed to realise is that the differences in the environments we live in create differences in our versions of right and wrong. A bankers environment is different from a rioters environment is different from a law abiding middle class environment.

What makes the problem worse is that the politicians charged with fixing the issue are just as short-term as the bankers, their version of right and wrong hinges on winning and losing an election. A politicians environment doesn’t encourage long term thinking, or even truth telling, because you can’t make change if you lose an election. A politician will travel to areas affected by the riots, and to fearful middle class neighbourhoods, and will talk about a lack of morals, or lawlessness, then make an election promise of more police, tougher sentencing, and more prisons because that is what the middle class likes to hear, and it is what will win them the election. But then the issue of perspective enters into the fray because, once again, we fail to realise that what works for one doesn’t work for another. Police and jail time are not a deterrent to those who have nothing to lose, and many ‘youths’ actively hate and want to cause harm to the police because of the way they feel they are mistreated by them. More police and tougher sentencing only makes the environment even more hostile and just makes the problem worse. Police and jail is only a deterrent to those who respect law enforcement and have something to lose, i.e. the middle class voter. This is why we react so well when a politician promises a crackdown on crime, because the measures he proposes would deter us from a life of crime, and so we think it would deter other as well. But in reality, all we are doing is protecting us and our neighbours from ourselves, a collection of middle class voters who are unlikely to cause crime anyway with or without the presence of law enforcement.

If we are to correctly empathise with people we can’t understand then we need to view the situation from the same perspective. Empathy comes from direct experience or relatable understanding, and without it we end up living in a hateful and fearful environment perpetuated by our own ignorance. The trouble is most of us won’t have direct experience, otherwise this probably wouldn’t be an issue, so I’m going to try and create a relatable scenario to get everyone on the same page.

We have all experience the stress of a work deadline. In the last 24hrs many of us will look at the amount of work we have left to do and start to have a mini panic attack. What happens is that we see what we have to do, then we see the finish line, but can’t imagine how we can achieve our targets in the time we have left. No matter how hard we look at the problem we can’t strategise or plan a path or schedule that enables us to finish the task on time. We look around for help, but no one will give you the time of day, they all think you’re lazy even though you’re trying your best. You start to feel trapped because you can’t see a way out, and that leads to stress and panic. To make matters worse, you start imagining worst case scenarios of what will happen when you miss your deadline, your boss gets angry at you, a stern telling off, feel insecure about your job, or worse you might get fired. But at least you have an end point, and afterwards you can relax about it and get on with rebuilding, because you know you have the skill set and support systems to go and get another job and try again. Now imagine there was no light at the end of the tunnel, no ‘afterwards it will all be OK’, and that feeling of stress was your feeling towards the rest of your life. You look at the environment around you and see intense poverty because the free market has forced the poor from the city centre, you see nothing but unemployment and dereliction, you are blamed for the criminal actions of a minority, harassed by police when you’ve done nothing wrong, rejected and marginalised by a society that has no sympathy for you. You are bombarded with images of how life should be, aspirational living, and look at your life and can’t imagine a way for you to achieve a desirable future. Like with a deadline, you start to feel trapped and isolated, but with no end in sight, that isolation develops into despair and frustration, and when that is allowed to fester in a community, it eventually develops into anger. Anger towards a society that seems unfairly rigged against you, and many young people will end up dealing with that anger through random acts of destruction and vandalism.

This kind of damaging environment skews a person’s views on right and wrong, damaging society as a whole by creating an internal conflict between different sectors of our community. But it can easily be changed, when you sit down with one of these people and treat them like an adult, you’ll be surprised by how normal they are. When you tackle ignorance head on you find that your fear will often disappear with along it. Creating an equal society with social justice and opportunity for all will create a society with an environment that inherently combats social unrest.

In the UK we spend more money per capita on policing than any other country in the world, yet our crime statistics are no better. When we look around the world we find that the safest societies, like Sweden and Japan, are often the most equal. This tells us that increased spending on law enforcement is just throwing good money after bad, that we have long overshot optimum spending on policing, and are receiving diminishing returns on further investment. It is here that I would like to suggest that maybe the best plan of attack would be to make cuts to the police service and redirect those funds to social programmes that specifically target the young in these communities. Give people skills, education, a future to be optimistic for, give people one-on-one support and take them by the hand and show them the options they have, show them they aren’t trapped and have a way out. Deal with the frustration and anger towards an unfair society and then watch crime rates fall through the floor. Scaling back the police force is an idea that might sound counterintuitive, but then that’s what this article is for. By showing that more police only makes the problems worse and fails to deal with the real problems, maybe I can make something that seems radical make sense.

However, changing the environment for the isolated poor doesn’t change the environment for politicians. Unfortunately, poor young people are not active voters and are either too young to vote or are disenfranchised by the whole affair to care. So any politician that says he is going to make cuts to the police force will likely lose an election where it is the fearful middle classes that dictate the agenda.

This is how you end up with idiots like David Cameron blaming the youths for not having religion as the reason for their ‘moral deficit’.

Further critique of the London riots and morals. Previously, 1,2,3

Dear David Cameron,

Once again you’ve made a tit of yourself, you cheeky scamp, always finding ways to make things worse. It’s like watching an episode of Mr. Bean, a hapless man just falling through life much to the amusement of all those who watch. So imagine how much I lol’d when you said the UK was a Christian nation and should not be afraid to say so. But, seeing as you’re in charge of the country, I thought I should take a moment to correct you on a few of your statements and show how the UK is not a Christian nation and should always be ashamed to say otherwise.

To imply that the UK is a Christian nation is to imply that there is no separation of church and state. This is clearly not the case, and the government is a non religious entity that stands for a nation with many different religions under it. The government’s responsibility is to take an impartial position on such issues and represent all those within its borders whether they are religious or secular. To side with any one argument is label all others as wrong, which is a completely impossible position to take as all religion is subjective. There is a famous saying that “If you wield a hammer then all your problems begin to look like nails”, it is a lesson for those in charge not to have ideologies and predisposed ideas when approaching any given situation because you will inevitably deal with it incorrectly. It’s this idea that keeps us from making decisions based on the claims of uncorroborated books who’s ideas have no basis in fact, but have a basis in the ideas of a generation of people who knew nothing of the world or of what humanity could be. A secular government recognises that you may have a strong moral conviction that being gay is wrong as a result of your religious upbringing, but you must find facts outside of this subjective perspective before you act on your convictions. It is this mechanism that means we have a society of acceptance rather than tolerance or bigotry, because we often find that stepping out of a religious paradigm allows us to see more clearly.

However this is just semantics, as I mainly want to take issue with your ignorant labelling of an entire generation of kids as lacking morals because they lack religion. In your own speech you contradict yourself by citing that religion is not necessary for people to lead a moral existence, so I think you must understand that religion is not a moral arbiter but a mechanism for control. The presence of religion in communities is the presence of a mechanism/person who is trusted and pushes people into being more moral individuals. Your desire for those who were part of the London riots to have religion in their lives seems to subconsciously recognise that you want another system of control in these communities that uses shame and guilt to prevent people from acting out when they are victims of injustice. It is when we are without these mechanisms for controlling people that we are forced to objectively analyse the real causes of such outbursts, something which you have failed to do. To continue to rely on unfounded religious arguments as a source of policy is dangerous, and means that it is inevitable that we will repeat history over and over again having solved nothing.

The riots over the summer are not an indication of a generation that lacks morals, it is the resulting damage that is caused when a government continues to use religion as its moral source and refuses to deal with reality. Society does not lack morals, it is just not living by your version of a moral society, which appears to say that a moral society is where people know their place and don’t complain about the injustice of being ignored by their government. Whereas, a responsible secular government would know its place and not complain about civil unrest when they have refused to deal with the issues of their people. To continue to rely on religion is to absolve yourself of your responsibilities as a government, and it is therefore very important that religion and state have nothing to do with each other, and a Prime Minister must never make claims with a basis in religion or champion any one religion in the process. To do so is to reveal your incompetence.

Maybe we are a religious nation though, because a secular nation wouldn’t label an entire youth generation as lacking morals because that is what he believed. Only a religious nation could see a generation of youth’s cry for help as a symbol of their immoral nature without a hint of irony or hypocrisy. Someone who is the victim of injustice and has the audacity to complain about it is not an immoral man, the immoral man in this equation is you Mr. Cameron as you continue to fall through life and blame everyone but yourself for your mistakes.

Yours Sincerely

A Concerned Citizen 

tl;dr

The economic crash of 2008, which we are still feeling the effects of today, marked the end of the 30 year experiment with an aggressive free market ideology. Or at least it should have market the end, yet we sit here having apparently learned nothing, with the same damaged economy and watching our politicians desperately trying to push this flawed free market system on us, a system which favours the few over the many. I’m not a communist or even a socialist, I’m for capitalism and individualism etc. I’m just sick and tired of the idea that an unregulated market place can do no wrong.

The generally accepted wisdom is that an unregulated free market system can’t go wrong because people vote with their wallets when companies do something bad, or there are no bailouts when people make bad investments. All of modern economics is based around a self interested ideology of self preservation called Game Theory. However, what this fails to account for is advertising. An oil company, for example, will present an image of itself with cyclists and green trees and pretend cleaner burning fuel means less CO2, but behind closed doors their activities are far more questionable. The public end up believing in the good oil company whilst they cut corners and fire good people in the search for greater profits, all while creating an unassailable position as market leader. This means the public is completely reliant on them so no matter what happens the customers won’t go far. Even if they did manage to create enough shock to cause a mass exodus they just rebrand the company as if nothing has happened, and wait for our short attention spans to lapse. Perhaps the invisible hand of the free market is invisible because it’s not there. You need regulation in the market place or you create a system that inevitably destroys itself, but without strong enough regulation then it is still more cost effective to break the rules than adhere to them. In effect, weak regulation just encourages companies to find more elaborate and secretive ways to break the law. I’m not for a revolution, just an evolved government with a backbone that starts creating regulation that favours the long term goals of the many over the short term interests of the few.

When a survey was done to examine if people actually thought in the self interested terms of Game Theory, they found that there were only two groups of people that did. Economists, people who are taught to think that way, and psychopaths. So if no one actually thinks like this, then what is it that went wrong? To put it simply, we forgot we were better than this. In the 80’s we had a massive cultural shift and now believe that greed is good.

In the 19th Century we lived in a society where the general public opinion was that greed was bad, and successful businessmen and bankers would often feel shame and embarrassment over their vast wealth. This feeling would often compel the rich to do something worthwhile with their wealth and “put the world to rights”. Not everyone was good, some were classed as misers, but greed was in the minority. It is the love of money that is the route of all evil, not money itself, and many rich and talented fellows thought that if you had a talent for business and banking you shouldn’t squander it but use it to make vast sums of money and then spend it well.

However, in the 19th Century we also lived in a much more religious society, and those feelings of guilt and shame would often be the result of deeply religious upbringings. We don’t get our morals from religion, there are plenty of rich religious people today who no longer place philanthropy at the heart of their life, in fact we get our morals from the teaching we receive from parents when growing up, the teaching in our education, both higher and lower, and the environment we exist in. Most of us turn out to be moral beings, even atheists, and that is because we grow up in an environment that encourages good behaviour. We will often go on to higher education in subjects that instil in us idealistic values and ideas, yet this isn’t the case with economists and businessmen anymore. After high school they go into a higher education system that teaches them a confused ideology where everyone is self interested and greed is good. Then they go on to jobs where this behaviour is reinforced in the work place with bonuses, and there is no connection with their actions as all they are faced with is numbers on a screen. So are we really surprised that things have gone to shit? Are we really surprised when the bankers show no shame or regret?

If the Occupy movement tells us anything, it’s that we need a Capitalism 2.0. A deliberate move away from unbridled free markets that only make us more unjust and greedy, and ensure we follow the good examples set by people like Bill Gates and Warren Buffet. A deep cultural shift is essential because, as Albert Einstein said, ” you can’t solve the problems of the future with the tools of the past”, and economists are definitely tools.

“Those who do not learn from history are doomed to repeat it” George Santayana

Suggested Watching

Ian Hislop - When Bankers Were Good

Adam Curtis - The Trap