Monthly Archives: November 2015

2 Reorientating Economics

In most debates about capitalism, it seems, no-one has a clue what it is they are talking about!  Capitalism has become a catch-all for the modern economy.  I heard two Conservatives debating capitalism on the radio the other morning.  Is capitalism essentially free enterprise?  Or does it also encompass the financial markets (a misnomer if ever there was one) and capital accumulation with no connection to production?

If small businesses are part of a capitalist economy, then so are co-operatives.    Mutuals hold wealth in common and some people do not believe this is really capitalism.  Their view is capitalism is about accumulation of personal wealth.

I have argued elsewhere that accumulation of wealth is the wrong priority.  Wealth needs to circulate and to measure its circulation is to measure the economy’s health.  How do we set about reorienting economics?

I’m not an economist and so one problem I have had is finding an economist who discusses these ideas.  Perhaps Roberto Mangabeira Unger, whom I mentioned in my post Approaches to Social Innovation a couple of weeks ago, is one such economist.  If you click on the link over his name it will take you to his Wikipedia page.

I make no apology for basing this post on a Wikipedia page; you are following the development of my thinking and this is as far as I’ve got with his contribution.  I intend to read some of his books and will review them later.  For now, if you want to follow these thoughts you can scroll down the Wikipedia page to Economic Thought and read on from there.

Today I shall highlight two insights from these paragraphs.  I’m sure I shall return to these themes in the future.

Classical and Marginalist Economics

Unger distinguishes these two approaches.  Classical economics focuses on social value and this means economics  has a vision for the future.  You can look at what’s happening and say, “We don’t like that so let’s change the way we do things.”

Marginalist economics began as a response to socialism and is the dominant approach today.  It is an empirical approach to economics, which claims to be more scientific because it measures things.  You can look at what’s happening and say, “It’s a pity things are that way but there’s nothing we can do about it because that’s what the statistics say.”

Unger seems to be saying there is something profoundly wrong with marginalist economics but I don’t think he is advocating a wholesale return to classical economic models.  So, what is his model?

Permanent Innovation

This is a massive generalisation but it seems to me Unger has thought through the implications of an economy based on permanent innovation.  There are, he argues, no real economic eras such as feudalism or capitalism.  These are rationalisation we impose upon history.  What actually happens is a struggle, as I see it, between those with a practical, innovatory approach who seek problems and solutions and those who have an absolutist, ideological approach who seek certainty and domination.

The former tends to be reformist and the latter revolutionary.  Looked at this way, we can see both approaches are potentially flawed.  The practical approach can lose sight of social values, whilst the ideological approach can stifle innovation, running after a false vision of what human society can be.

He advocates a revolutionary reformist approach, an approach designed to make politicians on both the left and the right worried!  This is exactly where I have found myself, advocating a national localised economy.  It looks reformist to the left and revolutionary to the right.  It is the approach most co-operative and trade-union movements took in the UK.  Compare their approach with the 1917 revolution in Russia.

How to Stimulate the Economy

I fully intend to return to Unger’s contribution in future posts.  In the meantime, I shall finish by listing three key policies he advocates.  They are all about encouraging innovation in the local economy:

The Wikipedia article hints that Unger’s work is worth exploration.  Leave a comment if you know his work or find what we know so far exciting (you’re allowed to be excited even if you don’t agree!)

1 My Spiritual Roots

When writing about spirituality, how do you put into words perceptions that cannot be fully expressed? Perhaps they are incomplete, part of an ongoing story or cannot be expressed in words.  But it is possible to trace back your spiritual roots.

Too often religion comes across in the media (and religious meeting places) as a done deal. “You are one of us and so this is what you believe”. The same can be said of political views.

For example, I’m 61 years old and if someone interviewed me they might define my economic beliefs but I hesitate to say I’m a Keynesian or a Marxist or anything else because I am still exploring. I am not satisfied with most economic models on offer. There’s a lot of good stuff around but I don’t see why I need to adopt some particular view.

The same is true of religion. I became a Methodist in May 1978, when I was 24 years old and before that I wasn’t anything in particular. I went to see my Methodist Minister and asked him what I had to believe. His reply has been immensely influential over the last forty years. “Nothing”.

Stories

Religious faith is ultimately stories. Some will forcefully argue you must believe these stories are true. I have two problems with this. First, I’m called as a practicing Christian not to believe but to tell these stories. Of course, I believe they are worth telling.

My second problem is what do we mean by true? Fundamentalists usually mean  stories are true if they really happened. One day Jesus healed a demoniac by casting demons into a herd of pigs. How many demoniacs were there? Mark’s Gospel tells me there was one but Matthew’s version has two. Which is true in a historic sense? It’s not likely Jesus on separate occasions sent two herds of pigs over cliffs and Mark records one and Matthew the other.

The Gospel writers were not concerned about literal truth. I know why Matthew has two demoniacs. But even if we all agree there was originally one, it does not follow that a herd of pigs was ever stampeded by Jesus.

You know what? It really doesn’t matter whether it really happened. When I tell the story I never ask whether it really happened. It doesn’t matter. What matters is the meaning of the story.

But even that is not the full truth. You see there is not one single plain meaning of scripture. Whatever meaning you favour is your interpretation of the story. There are other interpretations. How many? They are uncountable, effectively infinite. You can always find another.

So, as Pilate asked, what is truth? I’ll return to this question in my next post.

Radical Methodism

So, how would I describe my spiritual roots? The way I see it is you need to be something because you need something to argue with. It is about wrestling with the tradition, not swallowing a party line.

So, I would describe myself as a radical Methodist. Methodism is the body of teaching I wrestle with, my aim is to go deeper into the roots of Methodism. Radical means literally to go to the roots. One thing about the roots of any plant is you find it increasingly difficult, as you look closely, to see where the roots end and soil begins. Radical is not about pulling up the plant but understanding how the plant grows and thrives. I shall return to this in a couple of weeks.

0 Delivery of Products Services and Causes

This is my first post about the second element in the circuit questionnaire, Products and Services.  This element’s first question asks whether you deliver products or services or combine both. I would add causes to the mix. Many organisations combine two or all three of products services and causes. So you need to understand what they are and how they combine.

Products

A product is a thing you purchase. It might be a consumer product such as a car or a television set or something more ephemeral like food or soap.

Two Types of Product

Material products, manufactured or crafted by hand, were the foundation of the industrial revolution. The digital revolution has modified them in significant ways.

The second type is digital products, such as applications or online courses. These did not exist a few years ago and for some people have become a significant source of income. Their big advantage is they can be downloaded once created at any time and in any part of the world. However, it is not as straightforward as that because they still need marketing, which is usually the hardest part of selling a product.

Products with Services

Products often combine with services. Walk into most department stores and you almost always thread your way through a maze of make-up counters. Here is a product with a closely related service. Do you buy the product with the service as a bonus, buy the service with the product as a bonus or buy a package that includes both?

Products with Causes

Products combine with causes too. Solar panels are a product but also a cause. Some governments encourage renewable energy and so offer incentives to invest in solar power. Other governments withdraw these incentives.

Services

A service is work done for you in exchange for payment. There are two kinds of service.

The first is a task performed for you. Hairdressers or cleaners are examples.

The other type of service is coaching or consultancy. This can deliver a completed task (expert consultancy) or help with a task (coaching or non-directive consultancy). These services do not always need the physical presence of the service deliverer and so can be delivered online.

Services with Products

Someone might visit your home to help apply make-up and sell you make-up as well as the service. Equipment may come with a service that helps you install and maintain it. Sometimes this service is an essential part of the package.

Services with Causes

Plenty of consultancy/coaching businesses offer support to people who want to be more effective campaigners, for example health or spirituality consultancies are usually inspired by a cause. Sometimes the cause is so integral to their offer, they may not even think of it as a cause.

Causes

Causes are offers that aim to change the world in some way. The invitation is to join the cause; it may include payment for a product or service but may not involve a financial exchange of any type. A financial exchange may be a donation, where you receive little in return beyond an acknowledgement.

Causes with Products

The cause may be peripheral, for example where someone sells make-up that is not tested on animals; they choose how much prominence they give to this and can make it a major selling point. Another example is solar panels sold to cut the customer’s carbon footprint. There are other reasons to buy solar panels but climate change is a major incentive for some customers.

Causes with Services

Combined with services, a cause may be a primary incentive: “I’ll show you how to apply the best make-up not tested on animals”, may appeal to people concerned about animal testing. The person offering this service could be forceful, lecturing customers on the ethics of animal testing and encouraging them to sign up to the cause. Others may simply state in the small print they use make-up not tested on animals.

Why are Causes Important?

Causes are more important than some marketers realise. Whilst some businesses may be cautious promoting a cause because it might put off some customers, the fact is causes permeate the marketplace.

With climate change, for example, the market is very lucrative, especially with government incentives. Solar panels, insulation, efficient boilers and other appliances, electric cars, bicycles; the list is likely to be very long.

Political campaigners soon realise they can sell products and services for their campaign to be successful. The money might go directly to the cause or a small business might fund its owner to devote time to promoting their cause as well as their product or service.

However, some businesses start solely to generate income. Purists might argue this is the usual reason for starting a business and a cause will only get in the way. However, many business-owners have ethical values. Someone selling make-up may soon realise there are several associated causes, for example what does “natural” mean? The Body Shop certainly turned natural make-up into a cause and in the early days recycled its bottles. (Maybe it still does but these days it does not make such a big thing of it.)

Many businesses discover an ethical dimension and embrace it. It makes sense to share your customers’ values; listen to their concerns and try to meet them. You might be a cynical manipulative capitalist but people find embracing a cause is natural and increases their offer’s credibility.

It becomes more complex where large corporations take on causes and impose their values on their workers. But for most small businesses the cause makes complete sense as a part of their offer.