Friday, 22 November 2013

Will the disordered always rule us? Capitalism, anti-capitalism and psychopathy revisited

“Humankind cannot bear too much reality,” said the poet TS Eliot. The shunning of discomforting truths lies at the root of various superficial explanations of financial and economic crisis. The blaming, for instance, of men, irresponsible borrowers or psychopaths all point to a refusal to accept that systemic causes are at work. Because there is a resolute unwillingness to change the economic system, culprits must be found that allow that system, capitalism, to remain uninterrogated.

The psychopath theory of financial crisis is prime illustration of this tendency. As I have written before, the fact that psychopaths are four times more common in senior management positions than the general workforce, is used to account for the destructive outcomes precipitated by the psychopathic institutions these people work for. Corporations – peculiarly selfish, manipulative, lacking in remorse or empathy, obsessed with surface image, irresponsible and grandiose – escape scrutiny because all attention is focused on the psychological flaws of some of the people employed by them.

Thus, with a wave of the ideological wand, the institutional flaws in society are glossed over in favour of the fruitless tail chasing of personal failings. A dearth of emotional empathy among senior executives, however much it can be demonstrated to exist, does not lead banks to create derivatives based on shifting sands of personal debt, it does not prompt corporations to systematically avoid tax and, as this article exposes, it does not spur pharma companies to make small modifications to drug patents in order to extend their life, thus precluding vital advances in treatments by others. In all cases, institutional interests do.

Arrested development

So it was with a distinct feeling of so what-ness that I encountered some admittedly startling statistics in the clinical psychologist Oliver James’ book, They F*** You Up. The book is about how early experiences, rather than genes, have a crucial effect on how we turn out as adults. Unempathetic early care, says James, often leads to personality disorders in later life (psychopathy is an extreme form of personality disorder). While 13% of the general population have a personality disorder, he says, it is present in a majority of high achievers be they in politics, business, the arts or showbusiness. “Early care that lacks empathy,” he writes, “creates an immature adult with arrested development, prone to the reckless and amoral acts of a young child, to the ‘me, me, me' selfishness and inflated grandiosity found in the fantasy life of the toddler.”

While many people with personality disorders do not progress in their careers, a minority, conversely, are extremely successful. “Many of the traits that accompany Disorder are also an advantage in reaching positions of power,” writes James. “Being a chameleon, with the self-monitoring, game playing distance that often accompanies dissociation, has been shown to enhance career success in organisations. If concealed well enough, an omnipotent drive to control others can motivate the industriousness that is so vital to success … ruthlessness is easier if you lack empathy for the emotions of others, as borderline people often do, and being ruthless is usually necessary if you are to reach the very top.”

The question is, does it matter? Does it matter that some senior executives have simply no remorse for the harm they cause while the mentally healthy majority rationalise it as unavoidable or ultimately for the best? It is arguable that the latter situation is far more sinister because to change it involves penetrating a highly resistant ideological carapace. However, I think what James is primarily talking about is the effect internally in the firm of so many calculating, self-obsessed, emotionally retarded managers, rather than their outward impact. And he believes that, though the problem may wax and wane, the personality disordered will always be in positions of power. “There is no obvious solution to this problem,” he writes They F*** You Up. “To run a large business or government department requires extremely hard work, and it may even be that the Disordered are the best equipped to make what others would be a sacrifice of their personal lives.” Ruling elites are always more disordered than the populations they rule over, he claims.

Ultimately, I do think the ubiquity of the disordered at the summit of society does matter, though not in ways that immediately spring to mind. There are implications here for oppositional, anti-capitalist movements.

Stalin was a psychopath

The first point to note is that the problem of the successful psychopath or personality disordered manager is not just prevalent in capitalist organisations. There is an unmistakable alignment between the aims of capitalist corporations – destroying the competition and achieving monopoly status – and the personal aims of ambitious senior managers, beating rivals and contributing to the success of the corporations, oblivious the externalities and costs to others. But other types of organisation are not immune. Speak to the employees of government departments, charities, universities, schools or quangos and you will soon realise that senior managers making other people’s lives a misery is not a malaise confined to commercial organisations. Money is not the only motivation, power is as well, and you can find power in definitely non-capitalist organisations such as,  historically speaking, ruling Communist Parties (Stalin is widely considered to have been a psychopath) or contemporary public sector institutions.

It is unquestionably true that the public sector has mimicked the private sector in the last 30 years. The thumbprints of right-wing economists such as Milton Friedman and James Buchanan are all over the Anglo-American public sector, evident in a disdain for the public service ethos, ubiquitous outsourcing and an obsession with measurement and targets, as proxies for growth or sales. But even a public sector cleansed of all capitalist imitations would not be rid of hierarchy or unaccountable management power.

And society itself has been psychologically remoulded. In a later book, Office Politics, James says the disordered traits of the ruthless, the calculating, the remorse-less and the narcissistic at the top of society in the US and Britain “have spread widely through those populations”. According to Professor Jean Twenge, who seems to have made a career out of tracking psychological traits over time, narcissism has dramatically increased in the US since the late 1970s. By 2006, two-thirds of American college students scored above what had been the average narcissism score in 1982.  Narcissistic people tend to have insecure high self-esteem, to be insensitive to others and to have a preoccupation with their own success. In the 1970s, the social ecologist Murray Bookchin (more of whom soon) pioneered the concept of the “market society”, the idea that the amoral, selfish values of capitalism were now longer confined to the economy but had burrowed deep into society itself. In vogue philosophers like Michael Sandel are belatedly discovering exactly the same concept and it is undeniable that western societies are more “marketized” than they were thirty years ago. The old left-wing dictum, change the institutions and you will change human nature, still holds, but the question now arises, who exactly is going to change the institutions?

What’s the cure?

If there is an “antidote” to the personality disordered executive or politician it seems to be the same as the cure for capitalism – radical democratisation. Psychopathy or personality disorder thrives in hierarchical organisations. “Triadic [personality disordered] behaviour flourishes where ruthless, devious selfishness is advantageous and where an individual is very concerned to gain power, resources or status,” writes James. Bastions of power in corporations that offer the opportunity to rule over subordinates, or niches in governments that permit the manipulation of public opinion would both be closed by radical democratisation. I have no evidence to demonstrate this, but I would hazard a very strong guess that personality disorder among managers in the Mondragon federation of co-operatives in the Basque country in Spain, where all managers are elected by annual assemblies of workers, is very much lower than in capitalist corporations. “At work there is potential for people to find a nucleus of friendships and to feel valued,” write Richard Wilkinson and Kate Pickett in The Spirit Level. “This potential is usually undermined by the hierarchical stratification of people into various gradations of order-givers and order-takers, which ensure that employees act not as a community, but as property, brought together and used to earn a return other people’s capital.”

It is no accident that contemporary oppositional movement such as Occupy and the 15m movement in Spain  endeavour to be leaderless movements, based on direct democracy, denying representatives the niches to dominate others. They embody a conception of politics which rejects the strange Janus-faced character of modern representative government. The money-saturated weakness of mainstream parties which sees them all cling like limpets to a failed consensus, allied to an adversarial practice in which, come election time, each faction tries to annihilate the other through negative campaigning and the manipulation of public opinion.

The thought of Bookchin, which pre-figures even if it doesn’t directly influence, Occupy and the Indignatos, comes from a completely different place. Embodied in Bookchin’s concept of dissensus, disagreement is not something to be frightened of or eradicated, but to be positively encouraged as a consequence of genuine, face to face political participation. Echoing the philosopher Hannah Arendt, he thought political freedom was a fraud without participation in government.  He believed that the effect of the “market society” he identified could be counteracted by new institutions, face to face assemblies of the population. In contrast to the eminently selfish institutions of capitalism, these would be selfless institutions, aiming to foster capabilities in their participants that were denied or squashed in the world outside.

But there is a problem here. These new democratic institutions, shorn of the pathologies of representative government or corporations, inevitably have another role – that of challenging for, and achieving, economic and political power. They would first espouse a minimum programme of reforms but later a maximum programme of forming a “dual power” to challenge and ultimately replace representative political institutions and capitalist corporations. We are plainly nowhere near that situation at present, but the question, I think, should be put. Would the degree of centralisation inherent in enabling these horizontal organisations to challenge hierarchical power, provide a breeding ground for exactly the psychological pathologies James speaks about? The history of the Left is replete with examples, from Lenin to Julian Assange, of charismatic individuals dominating the institutions they helped to create, and of radically democratic institutions, from the French revolutionary sections to the soviets of 1917, being perverted or destroyed to buttress hideous dictatorships. I’m not arguing for a second this happened for immutable psychological, rather than ideological, reasons, but it indisputable that the modern Left has seldom managed to oppose the status quo without lapsing into cliques and factions irrelevant to the mass of people and frequently speaking a different language. If the Left does succeed, in the coming decades, in becoming much more popular will it not be hampered by similar psychological flaws as the society from which it emerges?

Bookchin, in his later years, said it was unavoidable that vanguards, minorities of people with more knowledge and commitment, would come into existence. “The main problem of political organization is how to institutionalise the relations between those who know more and those who know less,” he argued, “and to do so in such as way that the more knowledgeable leaders – and leaders do exist even in confederal movements! – do not turn into bureaucrats or authoritarians.” This strikes me as a political tightrope from which it is easy to slip. It’s not hard to see why many oppositional movements eschew taking power in favour of activism, but to take that position is to indirectly justify current power arrangements from which you are always trying to extract concessions.

Faraway so close

This has maybe strayed from the original point of the article. What I believe should never happen is that, faced with the insights of people like Oliver James that the powerful are frequently disordered, leftists lapse into psychological explanations for systemic problems. James himself illustrates the flaws in this approach. Of all developed nations, he says, Japan is the least disordered. An attention to early infant care, a sense of connectedness and order, mean that there are far fewer psychopaths or narcissists in Japan compared to the US and Britain. Culturally, Japan is very different.

But the economic problems of Japan and the US and Britain are remarkably similar. All three nations suffer from chronic corporate and personal debt and cannot escape from economic stagnation. Japan pioneered Quantitative Easing, a policy which has now become the lynchpin of economic policy in the US and UK, and which has become more fervently practiced in Japan after earlier bouts of it failed. This similarity indicates that all three countries are in the grip of an economic system, capitalism, whose characteristics have absolutely nothing to do with national culture or levels of personality disorder. It’s still the system, stupid.

Friday, 1 November 2013

Tottering on the edge but never permitted to fall into the abyss

It has become fashionable again to speak of the contradictions of capitalism. Radical geographer David Harvey is writing a book about the 17 Contradictions of Capitalism (don’t ask why but critical economic thinkers like Harvey and Ha-Joon Chang with his 23 Things They don’t tell you about Capitalism seem to have this fascination with random numbers). For example, one of Harvey’s contradictions concerns market demand. One way to ensure demand is healthy in an economy is through high wages but if they rise too much they eat into profit. So, since the 1970s economies have definitively swung the other way, suppressing labour and trade unions and trying to restore profit. But that just creates the opposite problem, with employees whose wages are being squeezed unable to afford the products produced by firms and turning to borrowing as a consequence - creating the economic problems we are painfully aware of. That’s a contradiction – whichever way you turn under capitalism (a system in which employees and employers have conflicting interests), insoluble problems rear up.

But I want to talk about another contradiction of contemporary capitalism, albeit one which has attracted less attention, but is still a contradiction in the sense of attributes being in conflict with one another. That is modern-day capitalism’s instability, indeed worsening instability, countered by the determination of business representatives, politicians and the state to always stop it from collapsing completely. That is why, I would suggest, we inhabit this strange and conservative world.

Bubble Trouble

Capitalist instability is attributed by Keynesian and Marxian economists to the business cycle: competing firms produce more and more goods which eventually outgrow the ability of workers to consume them, glutting the market and causing bankruptcies and recession. Once this process of destruction has been played out, the process can start all over again. It is one of the features of the last thirty years that this instability has become chronic. Britain, for example, has suffered three major recessions and spikes in unemployment since 1980, in contrast to none between the end of World War Two and the mid-1970s.What has happened is that the instability of the business cycle has been supplemented by the greater volatility of a financialised economy. According to the Cambridge University economist Ha-Joon Chang, virtually no country in the world had a banking crisis between the end of the Second World War and the mid-70s. Between the mid-70s and late ‘80s, 5-10% of countries did. This grew to 20% in the 1990s and then to 35% with the onset of the 2008 global financial crisis.

Another way to look at this process is as a series of financial bubbles which went the way of all bubbles. “The thing you need to realize,” wrote Paul Krugman in August, “is that the whole era since 1985 has been one of successive bubbles. There was a huge commercial real estate bubble in the 80s, closely tied up with the S&L crisis; a bubble in capital flows to Asia in the mid 90s; the dotcom bubble; the housing bubble; and now, it seems, the BRIC bubble. There was nothing comparable in the 50s and 60s.”

The bursting of these bubbles caused major real world effects. The East Asian crisis of the 1990s, referred to by Krugman, precipitated mass unemployment in the region and more foreign ownership of companies in countries like South Korea. What he modestly calls the “housing bubble” became the 2007-8 global financial crisis whose effects are still being intensely felt now. But the point to keep in mind is that action by governments prevented these crises from following their natural free market course and becoming far more destructive than they actually were.

Don’t purge the rottenness out of the system

Marxian economist Andrew Kliman has pointed out that the 1930s Great Depression was the last time there was a genuinely free market response to one of capitalism’s periodic busts. Then US Treasury Secretary Andrew Mellon wanted to “purge the rottenness out of the system” by liquidating stocks, labour, real estate and farmers. “The amount of capital value that was destroyed during the Depression was far greater than advocates of laissez-faire policies had expected,” writes Kliman in The Failure of Capitalist Production: Underlying Causes of the Great Recession, “and the persistence of severely depressed conditions led to a significant radicalization of working people. Policymakers have not wanted this to happen again, so now they intervene with monetary and fiscal policies in order to prevent the full-scale destruction of capital value. This explains why subsequent downturns have not been nearly as severe as the Depression.”

If you want to see an example of “significant radicalization” that policy-makers are so desperate to avoid, look to Greece now, where both the socialist Syriza and Fascist Golden Dawn are on the rise, and in danger of eclipsing the conventional, capitalist parties. The suffering in Greece is politically created, as opposed to just being an outcome of economic slump, but it shows what the “full-scale destruction of capital value” could look like and bring in its train and why policy-makers are so terrified of universalising it.

The economist, Harry Shutt, has said the period since the 1970s has been characterised by a “progressive postponing of the evil day” on the part of ruling elites. The 1987 stock market crash was nipped in the bud by pumping money into the banks, the Latin American debt crisis resulted in public bail-outs, the response to Russian hedge fund crisis of the late ‘90s was a recapitalisation of financial institutions by the US government to the tune of $3.6 billion and when the share bubble burst in 2000, interest rates in the US were held below the rate of inflation for three years in order to encourage borrowing and avert a recession.

All these government interventions to stop capitalist busts following their natural course are dwarfed by what happened in 2007/8. A conservative estimate puts the cost to the public at arresting the crash at $7.7 trillion in the US and £1.5 trillion in Britain. There is a consensus that this intervention had to happen, governments had to stop this “sucker going down”, in the poetic words of George W Bush. Without action, companies would have been unable to pay their staff, ATMs would have not dispensed cash, trains and buses would not have run. The system would have collapsed, with untold and unpredictable human consequences and suffering.

There was political unanimity about the necessity of government intervention. For the Right and Centre and faux-Left, intervention meant “capital value” was saved. For the Left, intervention meant that the structures on which ordinary people depend for the livelihoods were stopped from going under. Allowing everything to be liquidated, as Andrew Mellon recommended in 1929, was not regarded as an option. Referring to Mellon, the famous left-wing economist, John Kenneth Galbraith wrote in 1954: “a developing depression would not now be met with a fixed determination to make it worse”. The contemporary mainstream Left, Right and Centre would all concur.

Groundhog Day

But, as a result of this consensus, little attention is paid to the consequences of the fact that complete collapse was not allowed to happen, that “full-scale destruction of capital value” was prevented: the huge insolvent institutions bailed out (which, if the market had had its way, would now be in the dustbin of history), simply said ‘thanks very much’ and went on acting in precisely the same way as they did prior to the crash occurring. That is why there is a Groundhog Day quality to the UK economic ‘recovery’ based, as it is, on rising house prices and household debt; factors which caused the crash in the first place. The only purging allowed is inflicted on those at the bottom of society – the unemployed, benefit claimants, the disabled. Those at the summit are the recipients of government intervention, not laissez-faire. Nothing was solved and nothing has changed, not least declining real wages which necessitate greater household debt for consumption to go on happening.

The processes that aim to re-balance the economy, which almost all politicians say they want, cannot happen because the dominant financial institutions, which in the years leading up to the crash made the economy so unbalanced, are still dominant - because they were artificially stopped from going bust. Instead of innovation and organic growth, you get stagnation, monopoly and the unalterered ascendancy of finance. Contemporary politics is characterised by a fervent desire for the benefits of capitalism, but an equally strong aversion to experiencing its negatives.

Looked at another way, it is possible to have the advantages of capitalism - healthy economic growth, innovation, new firms replacing old - but only if you accept periodic destructiveness and all that that entails. But, of course, the last time this destructiveness was allowed unbridled reign, in the Great Depression of the 1930s, the results were not only the immediate ones of mass unemployment, hunger and destitution but the later, though no less attributable ones, of Nazism, Stalinism and the physical annihilation of World War Two. Only after this orgy of destruction had played itself out could the so-called “Golden Age” of capitalism begin.

Thus there is a determination on the part of ruling elites to perpetually put a lid on the instability of capitalism for fear of what will ensue if they don't. But this inherent instability keeps bubbling up nonetheless. The question now is: are ruling elites merely (quite literally) buying time, in a futile attempt to avert a systemic meltdown that will inevitably happen eventually? Will the next one blow the lid off?

Note: I’m indebted to this article, Forever blowing bubbles, on the UK Independent Working Class Association site, which sparked the idea for this post.