Sunday, June 09, 2013

Creators amidst Predators

The Locust and The Bee
Predators and Creators in Capitalism’s Future
Geoff Mulgan
Princeton University Press 2013

With so much of churn in the capitalistic world, it might well be the right time to look back and wonder if capitalism has failed. Geoff Mulgan’s book on Capitalism is set at a philosophical level. Therefore he looks at the entire business world not only from and economic lens, but also from a moral and ethical lens. At the same time he keeps the thought process and examples largely restricted to the world of business, except in a brilliant chapter where he traces how Monarchies have dissipated making way for democracies, hinting that there could potentially be another form in which the world of business could operate. Not, that such attempts have not been made, but those attempts have come as a counter to what Mulgan calls as the predatory tendencies of capitalism than the creative tendencies of capitalism.

The largest counter-capitalist thought was from Karl Marx. And when we discuss Marx, the discourse has to be raised to a philosophical level – because Marx transcends the world of business, government and looks at the phenomenon from a societal point of view. While Mulgan’s book is set at a philosophical level, it looks at capitalism as a mere tool than as a philosophy. That is because, Capitalism itself does not transcend beyond commerce. For a large part of the book Mulgan has put a boundary around himself in unpeeling the layers of the world of business. I use the word “tool” deliberately, because it is only a tool that could harm or help depending on the use we put it to. The underlying argument in Mulgan’s book is one of acceptance of capitalism, and then exploring how it could be saved from predators and used constructively. Look at this quote as evidence:

“…(Marx) misread the ability of capitalism to respond to threats and pressures, and in particular he misread how well it would be able to spread wealth as well as hoarding it. That the distribution of wealth was often forced on it by striking workers, or reforming governments, is one of the paradoxes of history. If capitalism had been left to the capitalists it probably would have destroyed itself. Instead, the capitalists were bullied into saving themselves”(p.118-119)

The questioning of the future of capitalism is follows arguments of capitalism’s constructiveness. Mulgan does not find an inherent design feature in capitalism that ensures capitalists do not behave like locusts. His examples show predatory practices like the genetically modified “terminator” seeds exist. The technology also gets protection and it takes a long time before non-capitalist forces (like the State) make the capitalists behave.

Clearly, what capitalism provides is a framework to do business. This framework makes capital the central part of the business and rewards the capital with all the residues after all other factors of production have been paid. In a utopian world of perfect competition, there should be no excessive rent sought by a single factor of production. However, capitalism does not provide a fix for aberrations. That fix would either come from capitalists themselves – firms like Patagonia, Selco Solar, Narayana Hrudayalaya which suo motu decide to restrict the residual claims and ensure that the returns from the business are spread more widely or from the society at large. In his brilliant chapter “New Accomodations”, Mulgan talks about a “small town of Saltsjobaden near Stockholm where the representatives of business, government and unions agreed to create a society with no rich individuals but rich concerns (p.230)”. It is evident this design initiative will more often come from outside than inside.

Mulgan concludes with a range of ideas. Some of these clearly move away from the centrality of capital – an alternative measure of exchange that looks at time and moves beyond money. How do we change the measure of performance? How do we introduce multiple measures of performance? All these ideas come from beyond the business, from the larger society of which business is a small sub-set.

Mulgan draws from a wide range of examples which makes it such a pleasure to read the book. He has referred to the Honey Bee network that documents innovations, the radical positive outcomes that the unique identification exercise in India which could have in personalizing transactions with the government, including taxes. He also draws from a wide range of sources, beyond business, science fiction, literature, life sciences and sociology.

With this entire range of discussions, it is surprising that Mulgan does not devote attention to one viable alternate business model that questioned the primacy of capital. Co-operatives though not very successful across sectors and geographies moved the locus away from capital to “patronage” making capital one more factor of production with residual profits going to people providing the service or “patronage”. Co-operatives also propogated equality of vote of all the users without discrimination, making it possible for somebody who could be small and marginal to have a equal say in the way the business is done. He also does not discuss the Social Business model that is being propogated by Muhammad Yunus which also rejects the accumulative tendency of capitalism. If Mulgan had built many more such counter-capitalist ideas in the book, he would have had a much lesser tentative answer to the question he asks about the future of capitalism.

The Locust and the Bee is a brilliant book, full of great ideas, provoking us to pause and think. He ends the book with a brilliant picture of imagining the identity of a city. How do we define a city? Through its palaces and forts, churches and temples, railway stations, airports and museums or the skyline of Manhattan. If our image of USA is predominantly filled with the Manhattan skyline, we know that Capitalism is still around.

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