Alternatives to Neoliberalism

The Financial Crisis of 07/08, followed by the ensuing ‘Great Recession’, has hugely undermined faith in Neoliberalism. As Colin Crouch argued in his 2011 book “The Strange Non-Death of Neo-liberalism”, it seems that in many ways neoliberalism is actually stronger than before the crisis. Indeed, the main groups attracting protest votes are very much neoliberal, and heavily influenced by the neoconservative (the two ideologies often go hand in hand) scepticism about the stability of multi-cultural and multi-religious societies. Yet 2011 was also “the year of the protestor” thanks in large part to people’s frustration with its dominance. Moreover, if you listen to the left then No Alternative to Neoliberalismneoliberalism might be in for a fall. Even mainstream (left wing) opposition groups (e.g. Labour in the UK and Die Linke in Germany) now voice their opposition.

But what are the alternatives? After all, when the UK Labour Party was in power between 1997-2010 it governed from within the neoliberal consensus, and its elite became more as opposed to less convinced in the truth behind that consensus as time went on.

To answer this question first let us define neoliberalism. Essentially, it is a political and economic ideology very close in thought to classical liberalism. Andrew Heywood’s “Key Concepts in Politics” defines it as an ideology of the “new right”. It uses models based on the rationality of markets and individuals, places faith in the capitalist economic structure, and espouses a limited role for the state given the capitalist market’s natural tendencies towards long term growth, and the balance of supply and demand. In terms of policy it emerges as a preference for privatisation, de-regulation, low taxes, and anti-welfarism (e.g. austerity cuts to public spending and benefits).

The espoused alternatives are commonly thought to be some sort of mix or variety of Mercantilism (whereby the state makes all economic decisions) and/or Socialism (whereby control is collectively managed without regard to socio-economic differences). However applications of these alternatives don’t take the big picture into account. And in this sense it is right that they are heavily critiqued. Neo-liberalism is the antithesis of the collectivisation and nationalisation seen in the USSR, and perhaps also an echo of the corporatist third way first employed in fascist Italy. To oppose it by lurching back towards the USSR’s tactics is ultimate folly, since the same reasons why we rejected that path in the first place still stand today.

Instead of choosing between letting the state dominate the economy, and letting private capital holding elites dominate the economy; we should be looking for a third choice – and a novel one! There are plenty of new ideas out there without us constantly looking back to the twentieth century. Moreover, it’s no wonder neo-liberals have found it simple to convince people of the economic strengths of their model. Capital holding elites, and especially since the so-called “managerial revolution” and the rising strength of managers and corporations, give high priority to increasing the amount of capital. Indeed the dominant model of corporate governance around the world is that which has one prime goal: maximising shareholder value. States don’t seek the same thing, and so it’s no wonder why people have become convinced that neoliberalism is a necessary evil to keep our economies strong. But answers are out there. The German model of Corporate Governance for example, also empowers the workers, and gives them say over corporate governance. So should we all seek to copy Germany? No.

Solutions must always be adopted, and tailored, relative to local demand. But the German model of corporate governance does carry the seeds of an interesting idea. It recognises that there are other stakeholders besides state and economic elites, and it also recognises that empowering other stakeholders can potentially regulate the excessive short-termism and risk-taking that especially ambitious managers, are often willing to take.

capitalism-is-not-democracySo what would the optimal solution be for Europe? Simple. The neoliberal consensus, which has been growing since the time of Reagan and Thatcher, has reversed our prior agreement that capitalism must conform to democracy as opposed to it being the other way around. To reassert democratic control, we must seek to empower all stakeholders in the economic system (e.g. consumers, suppliers, employees, shareholders, neighbours, and the broader public). Rather than socialism or capitalism, this would be an economic democracy; a model and an ideology that has thus far been unrealised in practice, and should reflect the new counter-argument to the modern neo-liberal consensus.

Why is Democratic Participation in Decline?

People are in widespread disagreement about the extent, or pace of change, of democratic participation today. But consensus in the West agrees that voter turnout has fallen steeply, and participation in all things other than single issues has fallen alongside it.

Voter Turnout

The chart to the left is from “The Decline of Party Identifications”, in Russell J. Dalton and Martin P. Wattenberg (eds.), Parties without Partisans: Political Change in Advanced Industrial Democracies (Oxford: Oxford University Press, 2000), p 73.

Even Professor Mark Franklin, who tends to be sceptical about the significance of this set of data, nonetheless calculates a decline in turnout of 5.4% over 23 democracies. For more information see p163 of ‘The dynamics of electoral participation’, in LeDuc, Lawrence, Niemi, Richard G., Norris, Pippa, eds., Comparing Democracies 2: New Challenges in the Study of Elections and Voting (Thousand Oaks ; London : Sage, 2002).

In other words consensus shows a steadily declining rate of engagement with the formal, country wide votes for parties, Members of Parliament and Presidents. And of course this strikes many people as odd. How can we be less engaged when we’re more educated than ever before, and have technological know-how to allow voting over the internet or via satellite?

Below, I discuss a few different reasons (in no order), grouped for your ease into those causes associated with the voter and society, the political establishment, and the political and economic system at large.

Causes Associated with the Voter and Society

Lack of Knowledge

This one is usually dismissed without thought. People are more educated than ever before. They have more access to the news, as well as social, political and economic information, than ever before. And yet, people also have more access to other information too. And, they’re expected to be more productive than ever before. So although in the past it might have been difficult to get information, it’s possible that we are simply so bombarded with information today that we cannot act on it all, and consequently don’t believe we have enough information or knowledge to vote.

Contentment

You’ve all heard the quote “they’ve never had it so good”. But more than a simple elitist perception, the idea that people don’t vote because they’d be happy either way does have some grounding in literature. After the end of the Cold War Fukuyama wrote in ‘The End of History’ that we have found our perfect system of governance. And speaking economically, we have obtained a degree of productivity in many countries that, if we weren’t worried by comparisons with other countries, would enable us to cover our basic needs for survival many times over, and also allow us to spend a majority of our time at leisure. Therefore some argue that people don’t vote because they’d be content with any result. Given that this leisure filled world isn’t a reality however, and it’s human nature to always want more, this argument stands on very shaky ground.

Civic Culture

Arguments harkening back to a lost golden age are usually very weak. But there has nevertheless been a shift in values since the 60s and 70s when this decline in political engagement started. Community cohesion and unity is lower in almost all countries throughout the west. The strength of ‘individualism’ has grown. People can’t remember the struggles that women and working class men had to go through to get the vote. Membership of religious organisations and trade unions have declined. And discussing a vote today is more likely to see you labelled a geek than it is win you respect for completion of your civic duties.

Pragmatism

Aristotle taught that the true nature of a thing was in its potential; both the potential to change, and the potential to become something else. Given the Aristotelian philosophical dominance over western civilisation in a great deal of the centuries since, it is no wonder that the idea of democracy gained ground. Yet ironically, the first signs of democracy coincided with the period when Aristotelian ideas were being repudiated, and the foundations of modern day pragmatism were being laid e.g. Machiavelli.

Historically, and currently too, we tend to focus more on people than decisions. And this isn’t entirely a bad thing. People and relationships are always at least 50% of any job. But nonetheless, one of my first pieces of advice to the Democratic Reform Party after taking my position as an advisor to them early this year was to focus on the decision making process. In other words I said that we should think first (I stress first, as it is not always prudent to think this way) in an Aristotelian manner, about the potential for change as opposed to thinking in a pragmatic manner about the end results. But this isn’t as radical as it sounds. The UK has held two referenda on the decision making process over a very short period of time recently – on the electoral system first, and then secondly on Scottish independence. However AV in particular failed to engage. And where Scottish independence engaged it didn’t do so on rational grounds about which outcome would be best for decision making, but rather on the nationalist argument, and on fears related to the economic outcome.

In other words, is one reason why we see less engagement today that people care less about the process, and more about the end results?

Post-Modernism

The advance of post-modernism has been cited by some as a cause, such as for example Ronald Inglehart. Inglehart went so far as to correlate the degree of focus on survival or well-being as a function of GNP per capita. Historical focuses on survival as a political matter makes things like the health service key matters of importance to the voter. Yet when wealth reaches a certain level people can become much more de-constructive about all the multitudes of political issues which affect not only short term survival such as health-care, but also long term well-being (and survival) e.g. the environment and working time directives.

Post-Modern Values   Political Engagement

Although it might not sound very post-modern to be simply talking about wealth, Inglehart also linked the subjectivism of post-modernism to the individualism encouraged by modern-day consumer capitalism.

An increasingly post-modern society is one that is increasingly suspicious of reason, and particularly ideological reasoning behind actions. Even if politicians speak the truth; how can they possibly speak the “whole truth” without re-living their entire experience word for word? It might not be intentional even. We tend to believe that people stand to be elected for good reasons. And yet there is an entirely different culture in the halls of power. And what people hear in those halls will unwittingly affect what they say, and do not say, when speaking to the electorate. In other words post-modernism could be seen to breed individualism and distrust in the political and civic institutions in which people need to have some element of trust if they are to vote.

Decline of Class Tensions

It’s very hard to get someone passionately for something unless part of that passion stems from a stance against something else. Many parties are created on class lines, especially in the two party system, where the left party represents the working class people and the right party represents the middle and upper class people. But Professor Franklin (ibid) sees a decline in class tensions, of labour vs. capital interests, and thus of the debate on the welfare state. As a consequence voters may be less passionate about what debates take place.

Diversification in Identification

Linked to the possible decline of class tensions is the growing complexity of personal identity. Think about the stereotypical 1950s housewife. She worked hard at home, took the children to school, went to church, and engaged in local civic activities when possible. Between this local affiliation and her family’s socio-economic status i.e. class, it’s quite simple to see why this stereotypical person would very rarely have been a swing voter. She identified with few things, which were easy to embody within one party. But what about the stereotypical housewife of 2014? When I googled it it came up with the tv show ‘Desperate Housewives’. But a few hits down and I came up with a gem.

“Being a housewife or stay at home mom puts you in one of the most controversial professions today. Society’s views of us fluctuate so wildly it’s impossible to keep up. On one hand we are valuable members of society who are strengthening family ties. On the other we are old fashioned and outdated, possibly lazy, responsible for thwarting the efforts of women who work outside the home and insulting the memory of those who worked so hard to obtain equal rights for women.” (http://apriljharris.com/2013/08/are-you-a-professional-housewife/)

As this quote shows, far from living in a stereotyped world of their own making, even society at large struggles to pin a single identity on housewives or househusbands today. Those who live up to some sort of stereotype themselves are simply bringing back antiquated views from the 50s.

People today are more educated, and more sceptical, than ever before. But this doesn’t mean less identities. It means more. Just think about online identities. There have been several high profile acts of online bullying in recent years, by people who don’t display any bullying tendencies in ‘normal’ life, because they create new identities for themselves online. And as people look less at the class affiliations, and start thinking about policies more and more, they come to realise that they don’t agree with any party entirely. That was actually my first shock in politics. I went to volunteer with the Lib Dems when I was 17, and I said that I was still undecided about whether to help or not because I didn’t agree with everything the Lib Dems propose. I expected the answer “well what don’t you agree with? We’ll discuss it.” But instead, I got “neither do I”. Parties have always been coalitions of different politicians. But they would like to present a single, collective identity that their voters, as one collective body, can identify with. Unfortunately, that becomes more difficult every year.

For me this growing complexity in identity is one of the most convincing arguments. Although participation with generalist parties has declined, participation with specialist political organisations, lobbies, and movements has massively increased. Think about Occupy and the protests against the Iraq War in 2003. And think about all the small, single issue political parties which have increasing support.

Causes Associated with the Political Establishment

A Plague on All Your Houses

The anti-establishment feelings are present almost everywhere, especially in the wake of the Great Recession. This explanation sees all political parties grouped under one heading as a scapegoat. But more than this, despite the fact that involvement in non-party affiliated political action has actually increased; when asked, people report less interest in politics almost everywhere. Trust in politicians has declined to staggering levels.

Failure to Adapt

Societies have undergone enormous changes in the past few decades. Yet political parties look quite comparable to those which existed in the 60s and 70s. In the words of P.Norris:

“In conditions of greater security, Inglehart theorizes, public concern about the material issues of unemployment, health care and housing no longer takes priority. Instead, in post-industrial societies, the public has given increasingly higher priority to quality-of-life issues, individual autonomy and self-expression.” (Pippa Norris, Electoral Engineering: Voting Rules and Political Behavior (Cambridge: Cambridge University Press, 2004), p 19.)

It takes an incredible degree of bravery to shift so radically in focus, especially when most of those people who communicate with their representatives are those who believe that the right things are being discussed, and think that they can shape the outcome in some way. How is one to know when those who hold the new, post-modern values are in the majority? When you’re talking about something so deep, polls really don’t cut it.

What results from the knowledge of such changes is often more in the way of rhetoric than action. For example UK Prime Minister David Cameron often talks (or at least talked at the beginning of his term) about social wellbeing, and yet his actions, and even his rhetoric when he is seriously proposing something, is all geared towards improving economic productivity. This isn’t an uncommon thing to happen however. Societies and polities are often slow to adapt to one another, and rhetoric without action helps change the values of others around them, and thus facilitate a slow and steady shift over a generation or two.

Causes Associated with the Dominant Political and Economic System

Market Conformist Democracy and not Democracy Conformist Markets

Is it any wonder why the only countries which seem partly able to duck these international trends are those countries least associated with neo-liberalism e.g. Denmark, Sweden and Iceland? In 2011 Professor Colin Crouch wrote ‘The Strange Non-Death of Neo-Liberalism’, in which he argued that although the recession proved several staggering deficiencies in the logic of Neo-Liberalism, mainstream parties fear to reject it.

Tony Blair famously said that winning in politics was about capturing the centre ground. And the next time his party was out of government it was replaced by one in which both the Chancellor and Prime Minister adhered to Blair’s teaching with a vehemence akin to religion. In fact both supposedly kept a copy of Blair’s autobiography on their bed-stands for months. But was Blair really finding a universal truth of politics, un-realised for thousands of years? Or was he accepting the neo-liberal dominance of politics in the world today?

The words “market conformist democracy” were spoken by German Chancellor Angela Merkel, and commented upon in Professor Wolfgang Merkel’s 2014 article on the contradictions of capitalism and democracy. He said he believed that Merkel must have made a mistake to say that democracy should conform to the markets, and not the other way around – a kind of Freudian slip from someone who accepts the neo-liberal consensus. But then Professor Merkel also went on to argue that this consensus, which emerged around the 60s and 70s, especially with Thatcher and Reagan, has broken the delicate balance between capitalism and democracy, which do after all have opposing goals. Perhaps we’re seeing less engagement because democracy is so far in decline that capitalism has effectively defeated it. Perhaps all we have left is the Schumpeterian democracy i.e. nothing more than a legitimation of government through a choice of leaders once every few years.

Lack of Choice

A truly values led-democracy, based not on a belief that democratic decisions are effective, but rather a belief in the people, would not be a permanent democracy. Rather, there would be an entrenched part of the constitution, which would say that every generation there would be a referendum on which type of government should be employed e.g. Oligarchy, Theocracy, Elected Dictatorship, Geniocracy, etc. This is actually a system I would very much like to see researched, and maybe even employed (depending on the electoral system used to decide the winner, and the safeguards designed to ensure that the generational referenda were always maintained). But it would be misleading to say that the form of government is the only area of agreement within the main parties of government today. There is also widespread agreement on neo-liberal tools, capitalism, the use of oligarchic components in representative democracy, and most tellingly, even on the way that decisions are formulated. For example in the UK, although Members of Parliament technically have the power to propose new laws, almost all proposals come from those few people in Cabinet who have practically no time to think upon, or research new ideas. The only party which proposed alternatives to such a system of decision making is the Democratic Reform Party.

So is this the reason? Are mainstream parties converging in ideology? There is evidence from the Comparative Manifestos Project (http://www.wzb.eu/en/research/dynamics-of-political-systems/democracy-and-democratization/projects/the-manifesto-project) that this isn’t the case, and choice is still as present as ever.

Globalisation

Why vote for those who have almost no power over the things that you really want to change?

Despite the fact that globalisation is responsible for increasing powers as well as reducing them, the view that politicians no longer have any real power is very popular. And it’s not just about international political and economic bodies like the EU, international free trade associations, the UN, the WTO, the WB and the IMF. It’s also about the growing strength of multi-national corporations, and even rich individuals. France is a perfect example. When President Hollande tried to buck the trend and increase tax on the rich, he was seriously hurt by a number of high profile people leaving the country. The power of these economic figure-heads can be seen in the media too. It would be reasonable to think that media intending to maximise sales would attack the actions of these rich emigrants fleeing the country to avoid taxes that the people gave their government a mandate to impose. And yet the attacks hit Hollande even worse, for this educated economist was labelled as someone with absolutely no idea about the real world of economics.

Lack of Time

One result of increased education may be that people begin to understand how complicated many legislative decisions actually are. When you have a full time job, a commute and a family to look after, it’s a struggle to have a hobby or to ever see your friends. Where does the time for civic duties come from? Some companies talk about letting people have time off to fulfil said duties. But such talk is almost always nonsense. Bosses frown if you ask. The work culture usually sees it as bunking off. And what happens to your work when you go away? Likely, you have to do overtime later.

In times gone by there was great speculation that increased productivity would leave us able to work less, and enjoy more leisure. But sadly, the truth is entirely the opposite, and France is just one example of a country which may soon be forced to increase the number of hours worked.

Irrationality of Representative Democracy

Individual voting is often explained by reference to the rational choice equation. Yet the problem with this is that this equation suggests voting is usually irrational. And so it may be. When you reach a size of several million one vote is a drop in the ocean. It’s like your chances of winning the Euromillions, but without the potential for winning anything personally, and with the possibility of taking a lot more of your time to know who’s who and what they stand for. In other words voting is a collective activity for the collective benefit. Individuals, as part of that collective, will benefit from the electoral outcome whether or not they vote.

So why, under this explanation, would people ever have voted? This could be explained with reference to novelty of universal suffrage, which initially caused excitement during the period 1893 to today, when universal suffrage has still yet to spread to places like the Vatican City, Brunei, Saudi Arabia and the UAE. Indeed Switzerland only granted universal suffrage in the cantonal elections in 1990. The UK only lowered the voting age to 18 in 1969. And issues such as when migrants should be able to vote or stand for election, and whether children should be able to vote, are still widely discussed. So in terms of the evolution of our political systems universal suffrage is a blip on the radar. Will we stop voting when we get bored?

Conclusion

So why is democratic participation in decline? The answer clearly depends from country to country, region to region, interest group to interest group, and issue to issue. But keep in mind that this is a simple blog post, not a well researched piece. I’m well aware that I missed other causes I didn’t have time to delve into. And with such a multitude of reasons the most obvious conclusion is that pieces written by authors blaming one or two factors are either attempts to mislead the reader, or attempts to mislead themselves.

Nonetheless, what do you think are the big causes? Why do you think democratic participation is in decline?

Does Everyone Deserve Freedom?

Aristotle once wrote that there are such things as “natural slaves” (he said that slavery can only be justified with tell me what to donatural slaves, and not those who desire to make their own choices and pursue their own goals), and I have often said that in reality there are few people who want nothing more than to be told what to do (discounting those who prefer being told what to do simply because they have had to grow accustomed to it). And yet I cannot help but think that it depends on how this concept is interpreted.

In theory we could one day realize that complete economic freedom which we seem to be striving towards i.e. freedom from the necessity of human economic productivity, whereby machines would do all of our work. But how would human society respond? Some people would excel in such a world of freedom. They would become happier, more learned, more creative, more physically active, more charitable, and more socially productive. However, it seems quite likely that most would completely flounder.

How many people are socially productive in the spare time? How many people want to be if given the choice? Would Man as a Thinking Creaturea world of academics, sportspeople, artists, writers etc realistically come to pass? Or would we have a world of Hedonists, bent more towards personal short term pleasure than anything else? Combined with the forces of conservativism, which would remind people about how big a cause of depression economic unemployment has been, jobs may continue to exist solely for creative reasons, and the peer pressure for people to get an economic as opposed to social job may in fact stay.

Just as children need rules, do some adults need to be controlled (I’m not talking about criminals here, or the extent to which freedom for one person can restrict the freedom of another so please don’t open this topic in the reply)?aristotle_on_slavery Perhaps you think that we all need to be controlled, and that our efforts to ask for guidance from God(s) are just an example of this. In other words, in a world of economic freedom:

  1. Would all people (as a collective) be happier with freedom?
  2. Would they be happier if all people still had to work, but a reduced number of hours?
  3. Or would they be happier if people could obtain freedom in order to pursue socially productive, but not personally productive, goals?

P.S. To see some other recent blog posts about freedom please see the below:

How do principal-agent relationships evolve within a context of structural contradictions?

The principal-agent relationship is a very simple one. It simply means any relationship in which one party (the agent) is contracted by another (the principal) to do something on their behalf. So when you take your car to the garage for example, you, as owner of the car and the person hiring, are the principal. The car mechanic, as the person being hired to do work on your behalf, is the agent.

As society has grown more complex and specialised, principal-agent relationships have become increasingly important to modern day life. The reason for this is that they exist when one party does not have the time, resources and/or expertise necessary to carry out a certain task, and must seek an agent to do it on their behalf. Therefore, Dilbert - principal-agentbecause such relationships are so widespread, and because they create problems such as moral hazard, asymmetrical information, adverse selection, and agency rent (see notes at the bottom if you wish to know what these are), they are always evolving.

In thinking about how relationships evolve, the common approach is to think in terms of utility, attachment, and the basic emotions which drive us to maintain those relationships. In other words we tend to conduct relational analyses in an individualistic light, looking predominantly at the agents (when described in agency-structure terms both principal and agent are agents) who take part in the relationship, more than the structure within which that relationship evolves. Yet structures are built by individuals, and they are built to achieve certain things. Therefore, structures have intentions just as much as do individuals.

So what does it mean when principal-agent relationships evolve within a context of several overlapping structures? Does it cause a synthesis of those structural intentions? Or was the Bible (Matthew 6:24) right when it said that “no man can serve two masters”; implying that, if structures can be considered as Masters, then either one or both will have to be chosen over the other at various times.

Let’s take the structural contradictions between liberalism, capitalism and democracy as examples. Can a principal-agent relationship evolve within each of these structures, and at the same time better achieve each structure’s goals? What’s the aim of each? I have to be very clear here; what I’ve written below is purely my interpretation of these concepts, and some people would disagree.

Liberalism aims to maximise freedom of the individual, insofar as said freedom does not impinge upon the freedom of others; and thus it treats all individuals as being equal under the law. An utopian liberal principal-agent relationship would therefore be the most anarchic of all structural relationships. Its theoretical ideal would be that principal and agent collaborate together on an equal footing, towards a Pareto-optimal outcome in terms of marginal utility gains (an outcome in which no stakeholder’s level of satisfaction deteriorates). However its intentions as a structural framework would not be to create a Pareto-optimal outcome, but rather to allow it. This is why many people think that liberalism and capitalism go hand in hand, because liberalism is more concerned with equality of input i.e. legal rights, than output i.e. wellbeing, power etc.

Capitalism aims to maximise productivity, by ceding power over the means of production, distribution and exchange of wealth to private individuals who express competencies through their existing capital holdings. An utopian capitalist principal-agent relationship would perhaps behave in a Darwinist fashion, as a great deal of Darwinist thought was absorbed into the then youthful notion of capitalism.The ideal capitalist principal-agent relationship would at face value seem very conservative, as it would seek to maintain, and further, the power held by the ultimate capitalist principals i.e. the capital holders. And yet it would be ruthless about letting those who squander their power fall.

Democracy is slightly more collectivist in its thinking than those other two structures above. Where liberalism is slightly anarchic about its definition of principals i.e. everyone should have equal rights; and where capitalism selects individual capital holders as the ultimate principals; democracy finds the majority electorate to be the ultimate principal. An utopian democratic principal-agent relationship would therefore seek to empower the electorate.

Although many well-renowned figures have argued that democracy and capitalism go hand in hand e.g. Schumpeter and Friedman, the aims of democracy and capitalism are immediately and visibly contradictory if the above definitions are used. So what does this mean for the evolution of principal-agent relationships? If you were writing a contract governing a principal-agent relationship today, what would you do? Would you instinctively employ one structural understanding over another? Would you seek to serve the interests of multiple structures at the same time?

My expectation is that as principal-agent relationships evolve, they’re led by social, state and international structures towards one or other particular ideological structures. So for example in the period after the Cold War ended I might expect to see that principal-agent relationships evolved towards being more capitalist, as this period of history saw many people believing that capitalism was the best system that we would ever find. Whereas when a left wing government takes power, and proves to be successful with the economy, I would expect to see that principal-agent relationships become more socialist.

I’m now thinking about starting a PHD in exploration of this question, in which I would explore recent theoretical developments, and the thoughts of those elites working in the field, to test whether or not these structures do seek to pull the evolution of principal-agent relationships in different directions. Given that this is a huge question, my initial thoughts are to limit the parameters of this study as described below:

Geographical restrictions Comparison of Luxembourg with an individual UK constituency of a similar sized population
Restrictions in terms of people Economic fiscal relationships between decision makers on the one hand, and the principals of both capitalism and democracy on the other (I added liberalism above as a further example of the many competing structures that affect our thought, but it would be too broad to encompass more than 2 within a PHD)
Restrictions on the types of relationships Specific fiscal decisions made by key individuals, and how the decision makers interacted with their agents and principals in making the decisions. It doesn’t matter whether those decisions were made into law or not. It could simply be a decision to vote in a certain way. The focus will be on what influenced that decision and how e.g. were measures taken to mitigate the principal-agent problems, and if so did they better help capitalism or democracy?
Temporal restrictions The longer the timeframe the better the data will be in terms of building a trend in the evolving direction of said principal-agent relationship. However this will of course depend on what data is already available.
Restrictions on the type of research Secondary theoretical analysis will be required in order to test what I see as the study’s main weakness i.e. the subjective theoretical interpretations against which data is analysed. And if feasible it would be great to verify any hypotheses which emerge as a result of this research en masse via crowd-surfing. However most data gathered will be in the form of individual interviews with the key stakeholders involved.

Such a study would not only provide invaluable data on the evolving trend of principal-agent relationships among political and economic elites, but would also prompt further research questions into the impact of competing ideological structures on decision making among elites. However, the idea behind this research is at present only that: an idea. No research proposal of any shape or form has yet been drawn up. Therefore, I would be immensely grateful to you if you could share your thoughts with me. It doesn’t matter how educated those thoughts are. What do you expect that I’d find? Is it a worthwhile idea? Is it feasible? Whatever your thoughts are, I would truly love to hear them!

 

P.S. If you’re interested then please see the below definitions of the major problems in a principal-agent relationship:

Moral hazard is a situation in which the contract arranged between principal and agent makes one party more likely to take risks, which might adversely affect the other party. An interesting example today is bank deposit insurance. If a bank shows signs of trouble, and individuals’ deposits in that bank are not guaranteed by the government, then depositors/investors are likely to run on the bank (withdraw more than the bank holds in reserves, and prompt bankruptcy) out of fear. Yet if the government says it will insure deposits in the event of a crisis, then banks feel more able to take risks, because should the worst occur then they would not bare the costs. In the principal-agent relationship, the agent may have incentive to act inappropriately if the agent’s and principal’s interests are not aligned, and depending on the nature of the contract. For example collective cabinet responsibility creates moral hazard, for it means that the results of high levels of risk created by one Minister (agent) will be shared by all other Ministers, and the Prime Minister (principal)

Adverse Selection refers to the process through which undesirable selections could be made, usually as a result of when principal and agent have asymmetrical information. In agency terms, adverse selection often occurs because those least qualified for a post are often the keenest to be hired. For the same reason, the most ambitious are likely to try harder, and so to obtain posts more quickly than those who are perhaps more able. Yet they could also be more likely to policy shift if they think it will get them a better job in the near future. In political situations adverse selection may often be more likely, as it could occur without asymmetrical information. For example election results could require a coalition, or party factions could necessitate certain, otherwise undesirable appointments.

Agency Rent describes the opportunity for agents to extract ‘rent’ (in material or policy terms) that the principal would rather not pay. This rent can be extracted within the agent’s ‘bargaining range’. For example even if there are other perfectly suitable candidates for the job, so long as there are costs involved with replacing the agent, there is always bargaining power to be had. Rent can be extracted in material terms where the agent has the power to request more resources/pay than he/she actually needs, in the form of leisure i.e. agent shirking, or in the form of policy i.e. policy shifting.

Agent shirking is a situation when the agent is not putting in the required effort to get the job done, which is possible in the Principal-Agent relationship because the agent can observe what he/she is doing much more closely than can the principal. Dilbert - principal-agent 2

Policy shifting occurs with the presence of asymmetrical policy goals between principal and agent. As the agent does not share the same preferences as the principal, they may not lead in the direction that the principal would wish. For example ministers may have different policy ideas to their principal: the Prime Minister.

320px-Principal_agentAsymmetrical information means no more than to say that both parties do not have the same information. But the most commonly described problem here is what Gary Miller describes as Weber’s asymmetry i.e. the agent, as the specialist, holds an informational advantage over the principal, who thusly feels a need to make use of his/her authority to incentivise the agency to act according to his/her interests. For example when you take your car to the garage, you know that the mechanic knows more about the car than you do. You don’t know that when they say they’ve fixed the problem, they haven’t created another dozen, which will require you having to go back to the garage within a few months. So you, as principal, might want to ask for some sort of insurance e.g. that if there is a problem in the same area of the car within the next six months, that they will fix it.

“We should be too big to take offense and too noble to give it.” Do you agree?

Modern society places great emphasis on not giving or taking offence. It is the reason why so many people support, and so many others are annoyed by, the idea of ‘political correctness’. But should we?Offence

The quote was from Abraham Lincoln; and we have a prima facie (at first sight) urge to agree with it. But this does not mean it is beyond dispute. In fact the statement is both imbalanced, and also inconsiderate of human emotion. The taking and giving of offense is both part of human nature, and also purposeful. Indeed as Thomas Carlyle once said:

“No man lives without jostling and being jostled; in all ways he has to elbow himself through the world, giving and receiving offense.”

Offense giving and taking are most often the least honourable courses to take. And nobody likes the person who’s quick to give or take offense. But let’s face it; emotions get a point across as reason just never could. And taking offense is an emotive reaction. Imagine you’re a Palestinian or an Israeli person, and while you live in London you meet someone who doesn’t know anything about Israel and the holocaust, or Palestine and the human rights crisis (if you don’t know already, you should note that the number of Palestinian refugees stands at a similar figure to the number of Jews killed in the holocaust). Imagine not taking offense when that person makes stupid remarks about people in the region. Wouldn’t that be a good time to start taking offense, in order to ensure that such stupid remarks are not repeated?

In the political world, umbrage seems to be a powerful tool in twenty first century politics. Announce that the opposition’s or media’s tactic is outrageous and offensive, and you will immediately frame a public response; not in terms of whether that opposition/media point has logic, but rather, whether or not they are in the wrong. In other words it shifts the negative focus somewhere else, and leaves only sympathy behind. After all, who can’t empathise with someone who’s been offended?

There are two responses to such umbrage in politics. One comes from the logic of Voltaire:

“I disapprove of what you say. But I will defend to the death your right to say it.”

The quote actually comes from Evelyn Beatrice Hall in her 1906 biography of Voltaire, whose opinions she was attempting to summarise. It was her interpretation of Voltaire’s attitude towards Claude Adrien Helvétius, and his controversial book De l’esprit. But nevertheless, the quote has gained a great deal of attention, and been repeated many times by those who believe that we should be entitled to both give and take offence as we please.

The second response is captured by widespread laws and conventions against denying the Holocaust (it is illegal inRacism in tabloids Germany, Austria, Romania, Hungary, Belgium, France, Israel, Luxembourg and many other places – in Austria it can earn you 6 years in jail), by Germany’s ban on the publishing of Mein Kampf (to be lifted in 2015), by the Islamist reaction to a series of Danish cartoons depicting the Islamic prophet Muhammad, and by even neo-liberal groups who aim to censor the press as a means to mitigate the spread of false and misleading information such as is spread about by tabloid papers.

The two opposing views understandably create quite a bit of animosity, and trigger a lot of offence.

against press censorship

But the very fact that a debate on whether or not we should be permitted to offend causes a torrent of offence giving and receiving, surely proves that it is both natural, and also to an extent unavoidable. In the economist’s ‘ultimate game’, designed to teach us about human nature, Player A is given 20 $1 bills, and told that in order to keep any of the money, A must share it with Player B. If B accepts A’s offer, they both pocket whatever they’ve agreed to. If B rejects the offer, they both get nothing. Economists expected pure rationality at first; A would propose the lowest possible amount i.e. 1 dollar. And B would accept, knowing it was better than nothing. But in fact what happened was that when the amount given was 7 dollars or less, most people took such offence that they preferred rejecting the offer in order to teach A a lesson, rather than taking the lower amount. Indeed in Descartes’ Error, neurologist Antonio Damasio argues that humans who behave purely rationally are in fact brain-damaged. Now one could of course argue, as I would, that punishing player A based on the offence caused was in fact entirely rational. But the offence which lies at the heart of the matter still seems to call the shots.

The question that remains for you to answer, is, should such offence giving and taking be calling any shots? Was Lincoln right that “we should be too big to take offense and too noble to give it”?

Does meaning go further than emotion?

“We think, therefore we exist.” It’s a clever phrase, and difficult to refute. But thought can be little more than a computation. cartoon-meaning-of-lifeA more pertinent phrase would be “we feel, therefore we live.” But today, as with Descartes’ quote, the fact that feeling is a crucial aspect of life is fairly obvious. So let’s take it to the extreme.

In his book ‘The Passions’, Robert Solomon proposed that emotions literally are the ‘meaning of life’. What he meant by this was that emotions constitute frameworks of value and significance. Without emotions there would be no value, and therefore no meaning.

Is this true? Does meaning go any further than emotional implication? meaning-emotion-meaningIn day to day life everything can be connected to emotion. The thing we remember most from any given day is always that thing which causes us to emote most, whether it be because it gave pleasure, pain or any other emotion. And even those mundane trivialities of life that we have to do, but may not result in any emotional engagement e.g. employment to do a task for another, are still purposefully carried out in order to avoid negative emotional implications were we not to do the tasks.

However, if all of reality were nothing more than a stream of emotions and preceptors able to feel them, many people think that life would be more meaningless. In fact some people even believe both, seemingly opposing views.

On the meaning of life, Aristotle said:

“Happiness is the meaning and the purpose of life, the whole aim and end of human existence.”

It seems almost utilitarian of Aristotle to say such a thing, and the statement finds a great deal of acceptance today. And yet Aristotle also argued that were life nothing more than emotion, then life would mean less.

How can we hold such opposing views? Is there any meaning beyond emotion? How does one justify it? Is it simply that one source of emotional gratification today is justification relevant to tangible realities, and so we believe that we would always need such justification, simply because we don’t know of a world without it? Indeed the human mind is unable to imagine that which carries no weight in reality. We cannot imagine a colourless world, and as such are likely to remark that a world without colour would be worth less somehow. But isn’t that only because we know of colours? Even a person born blind has been told of colour, and wonders what they are missing. But if we had known nothing else, and if only two things existed: emotion, and the ability to feel; would we want for more? Does meaning go further than emotion?

Matthew Ratcliffe thinks the answer lies in the phenomenology of mood, which he describes as a generalised, background of feeling.

“Not all moods are generalized emotions. Some may indeed take this form but those that are responsible for the ‘meaning of life’ are not intentional states at all. Instead, they are part of the background structure of intentionality and are presupposed by the possibility of intentionally directed emotions.”

Ratcliffe gave the example of fear, which he says it would not be possible to experience without tangible cause. In other words Ratcliffe highlights the fact that the meaning of emotion hinges on our ability to think. After all, emotions are nothing more than chemicals unless they are processed and interpreted. And of course once we have the ability to think, we have the ability to doubt, to speculate, to make justifications and comparisons, and to build upon thoughts with still other thoughts. Emotions ruled by thought

So, what does all of this mean? Is it possible to feel, and not think? Is there meaning without feeling? If we could feel and think, but not remember, would we want reality? Does meaning go any further than emotion?

Does Civilisation Lead to Fragmentation, or Collapse?

If civilisation is that which broadens society, within the framework of a social contract between people, (if you wish to dispute this definition then please see the previous posts: what is civilisation & what is it to be civilised) then what happens when society grows too big/civilised?

You could debate the extent to which civilisation is growing or shrinking (the sick society post seems to suggest that we may in fact be at the beginning of our decline). But if/when it is expanding, then this broadening of society seems doomed to lead towards societal fragmentation.

More InfoAs civilisation has grown, we have built more complex identities & more complicated lives; we have explored far and wide; we have built bigger social networks than ever before; we have settled in more places; we have constructed more buildings, groups and works of art; and we have more commitments on what precious resources we have. How can we keep up with all of these developments?

In short, due you think civilisations come to ends in ‘Big Crunches’, when the gravitational forces that held civilisations together (e.g. ideologies, nationalism, religion etc) begin to crush the spirit of civilisation? Or do you think, like scientists currently think about the universe, that modern societies could continue to expand, until one day that one society has become ten, or twenty or more?

This question is in fact much more difficult than it seems. And you can see this by thinking about fallen civilisations from eras past. The ancient Sumerian civilisation (the civilisation which invented writing, and whose name means ‘land of the civilised kings’) collapsed under the strain of repeated invasions. The Mayan civilisation came to an end palenque-overview_mg_1198as a result of the Spanish invasion in the 16th century, due to war, disease, and a foreign civilisation determined to assert its own supremacy. The Khmer civilisation in modern Cambodia came to an end due largely to environmental changes. Ancient Rome fell as a result of repeated invasions, but over an incredibly long period of internal economic decay. All of these falls are caused by very pragmatic things: food resources, safety, environment and economics.

Are you still following? Good! Because almost all of the above ‘falls’ were in fact the falls of political and economic entities; and not civilisations! That one requires the other could be true, and should be the topic for another day. But that point aside, if civilisations are primarily about societies, then how much do those above examples really help? Was Roman civilisation expanding when it fell? Did it end up splitting into various smaller civilisations, all of which bore the mark of its ideas, art, music, writings and religion? Or was it in fact being pulled towards a ‘big crunch’, by entrenched ideas of aristocracy, hierarchy, militarism and hedonism? Did Mayan civilisation get destroyed by the Spanish? Or did its spread get temporarily halted, only to re-emerge and fragment into various different territories, such that signs of it can be seen today in Guatemala, Mexico and Belize?

Author and historian William R. Everdell once said that the rise and fall of civilizations is

“more a pattern in the mind than a pattern in the world.”

If this is true, and civilisations are carried not by the size of your guns, but rather the potential within the minds of your society, then what is the future for modern civilisations today? Are we headed towards a big crunch? Or are we headed towards accelerated expansion and fragmentation?

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