Wednesday, March 25, 2015

The view from the corner office

In my last post I presented a mildly dystopian description of how the future would look like from a societal perspective if we do not substantially change how we organize property and production relations (and keep in power the major parties that have been ruling the main economies of the world for the past half century, which are overly vested in maintaining the status quo). It is essentially a society not much different from Today’s, just a bit more unequal, a bit more stagnant (regarding economic capacity to produce material goods, scientific knowledge and even technologies with the ability of improving people’s lives… in those materially stagnant periods sometimes the zeitgeist compensates with flourishes of creativity that may make the future appear again as distinctly modern –garish fashion, crazy visual arts, innovative narrations, even new art forms enabled by electronic media, likely an almost fully livable Virtual Reality…) and thus a bit more hopeless, a bit more desperate, for the increasing numbers trying to clinch to a middle class life style with incomes increasingly low classy. That means more pressure at work, more competition to stay put in the ever more precarious labor market, more lifetime devoted to the advancement of professional careers in an increasingly zero sum game (my employment is your lack of new opportunities) to the exclusion of everything else.

In that previous post I intimated that I did not expect the situation to change due to pressure from the bottom up, but I saw the only sliver of hope in the possibility of the elites themselves, favored as they are by such state of things, pushing for change. Yup, the plutocrats, the one percenters (my gosh, in my youth those were the members of bike gangs, as they proudly christened themselves after the conservative AMA dubbed them so for their perceived responsibility in the Hollister riot), the filthy rich, are almost the only hope for bettering everybody else’s condition. So, to keep that hope alive I am going to devote this post to analyze how the likely evolution of the socioeconomic world-system in the next two decades may look like from the perspective of that elite that occupy the corner room of the title: the CEOs of the big corporations, the investment bankers and hedge fund managers, the ones that decide which lobbies to pay and what legislation to enact, which items are newsworthy as they may further their interests and which are not… but first a word of caution. I have never believed (and do not believe now) that the world is actually ruled by a tiny clique of entrepreneurs and executives that convene behind the public scene to dictate policy. Those CEOs and bankers I’ll speak of are isolated individuals, typically surrounded by a heavy retinue of sycophants and false friends that shelter them from reality and impede their fair evaluation of their surroundings, and thus incapable of coordinating their actions for their global benefit. They are individually very powerful, but collectively almost powerless (to begin with, because imposing the will of a tiny number over the desires of the many doesn’t sit well with our avowedly democratic principles), which in part explains why they have to advance their interests in mostly secretive and restrained ways. However limited their capacity for coordinated action may be, they specifically set the tone of the cultural agenda, they legitimize dominant ideas and they can ostracize new alternatives (they are mainly responsible for defining the “Dominant Reason” I’m devoting my dissertation to expose).

Now this responsibility is not planned or explicit, and may be not even consciously intended. Is not like the owner of a giant conglomerate calls the poor soul in charge of programming a local network and threaten to fire him if he airs a documentary about the ill effects on public health on some chemical compounds that other branches of his firm manufacture, or a media mogul threatens to shut down the operations of an independent publishing house if they bring to market the ideas of an up and rising countercultural figure; although those things may conceivably have actually happened, I think they belong more to an imaginary narrative of corporate evildoing that the public finds comforting to indulge in… I fear the reality is more prosaic and in some sense more terrible: great corporate leaders do not give a humdrum shit about ideas or discourses, trusting the herd instinct of the masses and their zest for emulating the worst excesses of the public figures to discard those alternative voices to the proverbial dustbin of history without need for their intervention. The mechanism through which economically powerful captains of industry (in a post industrial economy that expression has to be revised) shape the framework of what can be publicly discussed, and even of what can be privately thought, deserves a post of it own.

Now back to our original concern, what do I think those captains are more likely to observe from their privileged perches a couple decades from now? First, given their age, most of them are thinking more about their legacy than the state of their bank accounts (the latest whiz kids to make it to the C-Suite stormed the heavens in the noughties… so in the thirties most of them are already 40-50 years old, or older). Not having many heirs to think about (either childless or divorced) and with fantastical amounts already stashed away (in the old times they would have no doubt diverted part of their fortunes to fiscal havens, but with tax rates ludicrously low already in most advanced nations there is just no need any more) they can only fall prey to melancholy thinking how the future, once you arrive to it, is just not all it was hyped up to be: no flying cars, no colonies on Mars, no cheap and inexhaustible sources of energy, no great medical breakthroughs that have expanded the average lifespan to above 120 years… just the same old same old (as it couldn’t be otherwise, when you gear all of the economy and all of the creative energies of the population towards the production of shorter lived gizmos that can have an impact in the bottom line in months rather than years, let alone decades). Even the excitement of growing the corporate behemoth under their command may have grown stale, as that growth only comes from absorbing the competition (the only real alternative to being absorbed oneself) in a market of either constant or slightly diminishing size (neither private nor public demand can grow: the first one depends either on demography or on productivity through technological innovation, and as we have argued ad nauseam both have dried up; the second one is hobbled by the historical legacy of ever increasing deficits that have failed to spark the overall economy back to grow). So politically they resort to what all the plutocracies in all ages have done: they try to buy the government to ensure their protection and turn their (uncertain but definitely low by historical standards) incomes in monopoly rents, which they then lend (most likely to the very same government, always hungry to finance the aforementioned irreducible deficits) in an ever expanding financial turn. But of course, in an economy devoid of real growth that lending can only finance speculative enterprises in the form of bubbles, which by definition sooner or later end up bursting, so if the leading tycoons turn too greedy (and take excessive risks) they may end up loosing significant portions of their wealth.

So what is an honest to God plutocrat to do in such dire circumstances? In my view, there is only one alternative: a substantial increase of the aggregate demand that creates anew niches of opportunity and can trigger the “creative destruction” that Schumpeter famously (and incorrectly, as it has only worked in a couple very specific historical circumstances) identified as the true spirit of capitalism. Now in a couple decades we (they) will have realized that fiscal stimulus by national states just can not create the necessary oomph for that substantial increase. The multiplier is nowadays close to 1, and the already strained public finances are unable to make a difference in today’s moderately financialized economy (again, Europe and Japan are our , much less two decades from now (when the degree of financialization will likely dwarf anything we have known so far). How can then they prod the economy towards that required substantial increase (once they convince themselves, having exhausted any other alternative, that Keynes was right all along)? I can think of only two alternatives, one of which has already been tried: another turn of the screw of weaponization, and all out war between great powers (be it USA vs China, or USA vs Europe, as the imperial project of a hegemonic USA has already failed miserably, and demonstrated that just obliterating the socioeconomic gains of the past 50 years of your run of the mill rogue state or banana republic doesn’t do all that much for your GDP, and have a number of unintended consequences that just makes it not worth the cost) with the subsequent massive destruction of fixed capital (probably with a significant amount of human capital alongside, but in an era of high inequality and no growth we are all expendable)… or a redistribution of wealth so enormous numbers of poor villains can increase their level of consumption (and again, I hope nobody has any doubts of how that redistribution would look like: universal basic income).

So there you are: unlikely as it may sound today, our best hope for a more just and less dehumanizing society is that the plutocrats that set the tone of what and how to think come to realize that redistributing a part of their gains is the only way forward. Which in 20 years should be abundantly clear, anyway. Talk about delusional optimism…

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