Wednesday, 18 March 2009

Sausage? Nah, just the sizzle

I blame Rudolf Hilferding myself. By 1910 the notion of an owner managed capitalism that underpinned classical Marxist theory was more than a bit iffy due to the emergence of big, private, bureaucratic organisations across a range of industries. To accommodate this Hilferding devised the notion of “Finance capital”, which for him only arose at a distinct stage of capitalism and constituted the coming together of finance capital - banks - and industrial capital - industry. The theory was very much a product of Germany at that time and the close links already formed there between big banks and big business. By contrast in Britain where banks remained wedded to the provision of working capital and senior debt as opposed to any equity, the relationship remained more arms length.

Regardless of its applicability elsewhere, Hilferding sought to establish a meaningful and relevant theory of capitalism as he saw it. For me that kind of intellectual endeavour (and effort) should at least be acknowledged. However, I still think the subsequent notion of “managerial capitalism” is the more relevant, especially as developed by Alfred Chandler Jr.

Chandler distinguishes managerial capitalism from Marx’s personal capitalism by detailing how decisions concerning the production and distribution of goods and services are made at a remove from the market by hierarchical teams of salaried managers with little or no equity ownership in the enterprises they manage. Ownership is instead at a remove, typically in the hands of institutional investors such as pension funds. Even better by describing this as the “visible hand” as opposed to Adam Smith’s “invisible hand” he introduced a wonderfully powerful metaphor that by itself made clear the fundamental change in how things were.

There was an attempt in the 70s to claim managerial capitalism was no more by I think it was Maurice Zeitlin, except his argument was pants. Essentially it was executives have been given so many shares and share options they count as owners i.e. lets all go back to classical Marxism to avoid the fact that when you have to distinguish between ownership and control in a capitalist enterprise, Max Weber’s class theory is more useful for analysing things than Marxist approaches.

And there you are then, a horrendously brief summary of some serious attempts by social theorists, business historians and sociologists to understand the location of ownership, control and authority within capitalist society, and the structuring of capitalist enterprises. By contrast what we now have are jizz slobbers fixated on generating a funky title first and only then some barely coherent assertions to substantiate it.

So now fer instance we have “casino capitalism”. Err right, but capitalism is predicated on risk taking, that being the reward for investors and entreprenuers so who gives a monkeys whether that's in a casino or not. Casino capitalism? And?

That kind of pants leaves you with the feeling that because managerial capitalism still largely rules the roost, these people are struggling here for something new to say to justify the advance given by their publisher. This is a shame because privatisation, fer instance, created a regulatory capitalism where strategic direction and capital allocation is set by private managers in relation to public sector fdetermined rameworks, objectives and representatives i.e. it constitutes a new form of locating, managing and structuring control and authority. Crikey, that might be a useful starting point for approaching the part-nationalisation of banking!

Except, that would be a bore. Much better is Noreena Hertz’s “Gucci capitalism”. Now Noreena is a cutey. She also knows Bono (I mind she kept saying this when she gave a speech at some corporate shindig I was at). She is also wonderfully, wonderfully vacuous despite having an otherwise impressive CV. Good ankles too.

But, rather than digress any further, I'll quote - “We are witnessing the death of a paradigm”, “The public recognises it has the moral right and authority to condemn the ideology that resulted in this.” No not really, the public is more concerned with Jade Goody right now while paradigm and ideology imply a worked out set of principles rather than the vague and untested list of assumptions and prejudices that more accurately describes the thought of the great and the good who created the credit crunch.

Oops I'm digressing again. Back to Noreena - “The next phase of capitalism will combine policies of localisation with an understanding that there are problems we share - such as carbon-dioxide emissions - that cannot be tackled alone. And it will actively seek to redefine what is valuable, so children growing up today do not make the mistakes of this generation in confusing success with the ability to purchase another pair of Nikes or a Gucci bag.”

See that just betrays a complete failure to understand human nature that does.The only way the kids are going to stop fiending for Gucci and Nike is if something more fashionable coming along. Ahh, but that’s just a consequence of capitalist cultural hegemony said the social worker who’d done an Open University sociology module too many years ago. Aye well, feck off ya plumb. Here, have a real example – so there was me in Havana a coupla years back sipping an espresso with a mate who got out his mobile phone. Allova sudden a product of the socialist revolution came over and started trying to buy his phone off him cos you know how the Cuban chicks dig a man with a flashy mobile.

But anyway, Noreena and what not – so that’ll be localisation and globalisation all mixed together then? That’s just meaningless drivel that is. Besides compared to say Hilferding and Chandler, Noreena misses the point big time in a manner that sounds groovy, but is actually deeply, deeply conservative to an extent that explains (even more than her being easy on the eye) why banks are happy to have her as a guest speaker.

Noreena's Gucci capitalism signifies nothing more than an environmentally destructive, selfish fixation with brands and conspicuous consumption i.e. a specific set of assumptions completely at a remove from issues of ownership, control, authority and the allocation of resources. As such they could as easily occur in a capitalist society as in a socialist one. Besides, if you take Thorstein Veblen at his word much of this was kicking about 100 years ago anyway or even 250 years ago if your preference is for recent academic accounts of conspicuous consumption in eighteenth century England.

This lack of analytical purchase and depth leaves the issues Gucci capitalism highlights looking no more than the kind of things a more detailed Corporate Social Responsibility policy could address, give or take establishing an emissions trading market. In other words things are dandy just as they are so long as institutions co-operate more and get a bit more fluffy.

Personally, you can take that and shove it. If Gucci capitalism is about the self aggrandizing triumph of the superficial, then Noreena's attempts at theory are as emblematic of it as kids aspiring to own branded goods.

Back in the real world Her Majesty’s Treasury came out with its latest survey of economic forecasts today. The new, average, independent forecast made in March is that in 2009 the British economy will shrink by 3.1%. Given the February average was -2.7% it seems pretty reasonable to expect a further downgrade next montt. if so, FECK! -3.1% would already be the lowest rate of growth – give or take World War II – since the great depression.

So it seems when Dr Sentence PHD of the MPC and formerly of BA and the CBI went to the IEA and said things were only looking as bad as the 70s and 80s he really was talking pants and isn’t anywhere near as good a forecaster as he thinks. Given that and in the spirit of the lovely Noreena here’s my localised, globalised typology for the current stage of capitalism – fucked.

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