Attempting to Achieve Economic Democracy
The most highly education generation in the history of the human race, and the best connected, will not accept a future of high inequality and stagnant growth.
—Paul Mason
Democracy in the political sense does strive to reduce inequality. Fundamentally democracy has long been egalitarian; American history particularly has intuitively been linked to the ideal that all men are created equal and in liberal terms. The West purports to pursue the idea of the law of the majority where decisions are made to benefit good to the greatest number, even if the result is a hierarchy of opportunity and wealth. In theory, at least, the mixed market democracy seeks to distribute the wealth created through industrialized modernity equally, eventually. This is in direct contrast to the prevailing economic climate where inequality is accepted as part of the capitalist system and the wealthy elite is more equal than the poor majority. Capitalism’s claim that it is democratic is in direct contrast to the reality that the financial and political elite are, through their failure to redistribute wealth fairly, preventing democracy from thriving, even in the so-called liberal democracies of the West. What has become clear from research and empirical evidence is that the larger the public sector is within a market economy, the greater is the level of equality within a democratic society. Far from soft regulation extending democracy, the deregulation and privatization of public utilities from the 1980s has led to the diminishment of democracy understood by conventional wisdom. Studies researching the impact of communist or autocratic states transitioning to democracy, such as Eastern Europe in the early 1990s and more recently Egypt since the Arab Spring, have demonstrated that “there is strong evidence of rising inequality in the democratic transition” (Galbraith, 2012). However, what fast capitalism has contributed to most is that rather than political democracy leading to economic democracy, the outcome is aligned to higher levels of inequality. The associated aspirations of social democracy that should occur following a period of stabilization are never achieved under the capitalism system.
Rather than capitalism contributing to the decline in inequality, it has had the opposite effect, leading to a greater degree of inequality than almost 100 years ago. The gap between the Fortune 500 and FTSE 100 CEOs’ salaries and that of their workforce continues to grow, which is even more staggering when you consider the context of the ratio of employees to the 600 CEOs. The market economy does not create an equal platform for all to take the opportunity to prosper; instead it introduces regimented levels of class and status, distributing not only wealth but also power to those who are in a position to succeed under the capitalist structure. Capitalism doesn’t believe that each individual is of equal worth, but excuses inequality as inevitable, as if all those who suffer poverty and depravation were always meant to be that way, that if they would just apply themselves with rigor, they would benefit from the system. But reward for hard work doesn’t account for the hurdles that those who are born into poverty have to overcome, or the lack of opportunity available to those who have neither the financial resources nor the power connections to make the most of their talent and potential.
Capitalism also assumes that if someone is struggling with their circumstances, it is as a result of their own conduct rather than a result of misfortune or circumstance over which they had no control, not least being an accident of their birth. This not only is unfair, but also does not recognize that our success is based on the proportionality of the opportunities we have had from birth and a large degree of luck. To assume that those who are poor lack motivation, do not work, or enjoy unemployment is to assume the worst of the human condition and lack empathy in regard to the hurt and powerlessness that many have over their own situations. We are not all born equals, and capitalism protects and promotes the continuation of the inequality into which we are born. Just as an economic system should reward for effort, so too should it protect those who are downtrodden due to circumstances. Temperatism argues for providing the poor with a voice, to extend participation beyond what we are born into, increasing the opportunity for control of our destiny and making us more accountable for the privileges our place in society affords us.
The claim that capitalism brings satisfaction is also troubling, since it appears that capitalists will take the credit for the good in society, but it is the government and society’s fault that there is poverty and want. This failure to appreciate that capitalism is part of a wider system and is a party in the holistic framework means that economists and the market will claim credit for the good and blame others for its failures. The freedom to choose and to live how you wish, without reference to the wider society and the impact you have upon it, is not the same as democracy. “Democracy affords these processes and values, which is why we must cherish it to the last. Fair democracy—coupled with genuinely competitive, plural markets and the institutions that surround them, which guarantee debates, argument and deliberations—offers the best means to ensure that society is governed by due desert” (Hutton, 2011). Today, the capitalist market owns the mechanisms by which debate and argument can be had. The powerful elite who has an interest in maintaining the status quo orchestrates vitriol for dissenting voices. Protestors are marked out as troublemakers, and critics are slammed for “not understanding” or being “dreamers.” The utilitarian economist will defend the capitalist ideal, dismissing new ideas, such as Temperatism, as pathetic, utopian, or not grounded in the real world.
Blaming Regulation for Misdeeds
Those with a capitalist agenda would argue that we cannot replace capitalism and that the question is how much or how little regulation should be in place. For Meltzer, he believes that the call for more regulation is misguided because it
disregards the fact that a major cause of the [2008 banking] crisis was the failure of national and international regulation. The Basel agreement required banks everywhere to adopt common standards including a rule that required banks to increase their reserves as they increased their risk position. It never happened. Banks only shifted risk off their balance sheets so as to keep their capital levels low . . . the risk just became less transparent. (Meltzer, 2012)
This circulatory argument is infuriating as well as damning. The purpose of the argument is that financial institutions having too much risk didn’t cause the banking crisis and suggests that in creating regulation the regulatory bodies ended up making the banks with too much risk hide the fact that they had too much risk. The lack of responsibility to anything other than self-interest isn’t something that can be moderated or smoothed over; it is something that must be changed, and the economic activities of humanity must be recontextualized in regard to its place in a system where social, political, and economic activities impact on each other. This isn’t something that can be resolved on a voluntary basis, although there are plenty of organizations that are already stepping up to the plate in regard to offering a sustainability agenda that is along the lines of the Temperatist agenda. Regulation will be needed to begin with to bring corporate capitalism to heel and to begin the task of doing good. Some will come willingly, but many will need to be forced.
The capitalist will often argue that regulation is unnecessary, that the interference of regulation written by lawyers and bureaucrats fails to account for the dynamism of the market place, that the introduction of a piece of regulation at a point in time will result in failure as the market moves on and by default the market will find methods to circumvent the regulation eventually. “Regulation then often misleads the innocent” (Meltzer, 2012). Its true that as new markets emerge, regulation is often behind the curve in regard to managing market forces. Nowhere is this more obvious than with respect to the Internet and social media, which remain largely unregulated or outside of existing regulation because of the fast pace of change. However, the static regulation and dynamic market argument is infuriating and in another context untenable. Taking the argument forward into a different legal context, it therefore follows that we shouldn’t try to regulate to stop pedophiles from preying on young people because pedophiles will always find new and inventive ways to abuse young people, and because the way in which pedophiles operate is constantly shifting, we shouldn’t draw a line in the sand to say what is or is not acceptable in regard to the sexual exploitations and abuse of children.
This is an extreme example to illustrate a point. To say that we shouldn’t regulate the market because the market will always find a way to stop doing good suggests that as a society we should become amoral, as capitalism is. Rather than trying to fight for society to become the very best of everything that humanity has to offer in regard to goodness, we should give up and succumb to the lowest common denominator. The 2012 doping in cycling scandal regarding Lance Armstrong demonstrates what happens when morality is left outside of the equation. Cycling was beset with problems regarding illegal drug taking, with coaches and competitors finding more and more ingenious ways to circumvent the drug tests that cyclists were submitted to. It appears from the reports that have been published that Armstrong became a master at circumventing the drug tests, having never been caught. But cycling has demanded higher standards of itself. Rather than accepting that because everyone is doing it, there is no point trying to stop drug taking, the sport has been at great pains to clean up, and cyclists are now applauded for being clean. Winning is no longer the primary aim of a cyclist, rather it has become about winning fairly.
Profiting from Doing Good
Temperatism seeks the same combination of winning and fairness. The idea behind the new way to think about business does not say that profit is wrong, but it does pursue the best that human society has to offer. It seeks to develop an economic system where profit is a result of doing good, rather than being the only objective outcome of our endeavors, and we hold ourselves to a higher standard in regard to the way we treat the society and world in which we do business, expecting the best, rather than the worst to dominate. Many will argue that a social agenda will fail, because it has failed before. But success needs failure in order to be successful, to learn to be better, to adjust and innovate, and to get it right next time. The reason why change is needed now, more than at any other time in history, is that in 2008 capitalism, most notably the financial markets, circumvented failure and is no longer learning, adapting, or changing its ways in response to getting it wrong. As a system, capitalism believes it is invincible and that it is right—there is no room for change or for criticism to curtail its excesses. To believe that it is possible to divine a system such as capitalism to be more caring or to have a heart is to believe that capitalism has a heart in the first place. Point to any good works at any point in history and you will find behind it, not the capitalist market, but a human who feels that something needs to be done differently. In a mixed market system, the good works, in regard to affordable health, education, and social care, are supported and maintained by the public sector. If you thought that the muscular capitalism of the last 30 years was bad, what will be the result of egotistical capitalism that believes it has a God-like mandate to do as it pleases?
Temperatism doesn’t dispute the Kantist view that the human race is imperfect, but it does promote the fact that despite everything, despite our differences and our individual choices, culture, and histories, humanity has the ability to succeed in doing good. We do have a capacity to do evil, but we have a greater capacity for doing good, given the opportunity. Choose your tragedy, man-made or natural. The Second World War, 9/11, Indonesia 2006, Japan 2010, Syria 2012, Nepal 2014, even in the midst of the very worst excesses of mankind, what rises to the surface is a social cohesiveness of protecting the weak, helping the injured, feeding the hungry, roofing the homeless, and shielding the scared. Humanity isn’t just about a population of individuals sharing planetary space, it is about a shared purpose and concern for our fellow man. We are more caring, more considerate of others, and greater at doing good than self-interested capitalists would have us believe; it is just that we have forgotten how marvelous we are after decades of having spun lies about being worth it in a self-interested sense.
The Invisible Hand Is a Social Construct
The biggest battleground for the possible rise of Temperatism is that of the market. In researching capitalism, the market is often held up as being the invisible hand that is something that has a life and structure of its own, an entity that exists separate from the control and machinations of man. But the fact is that the market is nothing more than a social construct, “fraught with power relations. What ‘the market wants’ tends to mean what corporations and their bosses want” (Monboit, 2016). The way it operates, the way it reacts to regulation is because of the processes and players that interact and set the rules of the market itself. The market does not exist in a temporal way; it is simply a process by which we choose to interact, existing only as a spiritual realm in which human relatedness occurs. Even the stock market is a figment of our imagination, a list of numbers to which we attribute meaning, but the numbers in and of themselves mean nothing, their physical reality created by machines, displayed digitally or printed onto paper.
If the market does not exist separate from those who create the market, like an organization does not exist separate from the individuals who make up the organization, then it is people that have the power to change the way in which the market operates. The capitalist market is capitalist only because we choose to make it that way through a process of social constructionism. Like anything that is constructed, created, or man-made, it can appear that there is a permanency about it. But like all things man-made, it is possible to unmake them and time can diminish man-made structure in a period of years. The misquoted myth of IBM’s Thomas Watson predicting in 1958 that “there would one day be a market for five computers” demonstrates the flimsy nature of human society. We reinvent and remake ourselves all the time. The problem is that capitalism has become a sacred cow that we are afraid to sacrifice.
The housing market is a clear example of a social construct. A house is worth only what the market will pay for it or rather what someone else thinks it is worth. When people stop thinking a house is worth the price tag, it stops being worth that much, and that is when housing booms turn to a housing market slump. When moving to the town I live in, North Wales, in 1997 a three-bedroom Victorian terrace could be bought for £12,000. Can you believe a house was worth so little? Despite the credit crunch, those same houses are valued at over £140,000 (Zoopla, 2017) in a town where the average wage is still around the same level it was in 1997; according to PayScale the average wage in Wrexham is £22,565 (PayScale, 2017). In 1997 you could buy the house with a half a year’s salary; fast forward to today, and the same house will cost five times the average salary. In London property prices are higher, with an average terraced house selling for £640,271 (Rightmove, 2017), and the average house price in the UK is £217,502 (Land Registry, 2017). Houses haven’t got bigger, the quality of living space is the same as it was when the house was built, but for the average family it now requires two wages to afford to live in that space. As social constructs go, our homes have never been more valuable, and their affordability never more out of reach from the average family.
In our world order at the moment, teachers, nurses, and the police are paid less than footballers, celebrities, and CEOs because we, the people in Western society, have constructed a world where we place more monetary value on one than the other. It’s not even that these people produce something of value other than a momentary level of enjoyment and entertainment. Entertainment is an important part of our makeup as human beings, but few would argue that a night at the theater was more important than education, or health, or security. It isn’t even as if this was always the case. In Victorian times, being in a profession was highly regarded and well rewarded. Even for those born into an aristocratic family, being given a parish was considered an excellent career for a third or fourth son. Florence Nightingale, the founder of modern nursing, came from the Upper Middle class and taking a position as a governess was an acceptable position for middle-class unmarried women. The level of training and education required for those who pursue these careers today is more demanding than ever before, and yet the profession has been devalued. The capitalist marketplace has placed a price on celebrity, and even though players’ wages are crippling, the very football clubs they play for, the market justifies their wages. It doesn’t have to be this way; if leading football clubs make a decision that they are no longer going to pay players hundreds of thousands of pounds per week, the market will readjust, just as the housing market or stock market readjusts based on perceived value. This phenomenon is beginning to appear in shareholder meetings regarding executive pay, and pay rewards are being recalibrated.
Therefore, if we place value on doing good, then under a Temperatist system those individuals who pursue a career in a role that centralizes in doing good will be more highly valued, and that is a change that would most likely be applauded by the majority. What is more, Temperatism would ensure that each individual is given the opportunity to find out who they are and what value their own personal talent potential is worth by providing a new measure of success beyond pure monetization. Our value as a human being becomes embedded because we are human, not because we can turn a quick profit, earn mega bucks, or afford the latest consumer must have.
Making Good Choices
We are encouraged by capitalism to focus on the fact that we are all different and have differing wants and tastes. What is more, those differences are exploited to separate society into different cliques, fashions, and classes. Take the simple act of buying bread from the supermarket. It is no longer a simple choice between white or brown bread, but what bread you choose to eat separates you into a particular demographic and class. The very range of bread is frankly absurd when you take a step back from being a consumer and matters of personal taste, and notice that today several supermarket aisles are dedicated to bread products. It begs the question, is that really what wealth is for? Capitalism promotes itself as an ideology of freedom and democracy because of its focus on a market that responds to choice. But liberal democracy promotes choice insofar as it does not do harm to others. There is so much choice in our society that we now have the tyranny of choice. As the number of options from which we can choose multiplies, so does the effort required to make the choice. At some point, too much choice makes it difficult to be able to distinguish the best choice and therefore the consumer no longer benefits from the extra choice to which they are subjected. In the wealthy West, we have access to so much choice and more information than it would be possible to consume in a lifetime that it is becoming impossible to know whether the choices we make are good choices or bad choices. But capitalism is self-interested when it comes to offering more choice. In order to drive profit, growth is needed and growth needs additional consumption. Consumers will consume more only when there are more options about what we can consume. No longer content with brown leather boots, we are bombarded with shoes for every occasion and every outfit. Any parent will know that in order to bring up children to understand good and bad there has to be limits to the choice and an encouragement to make good choices whether that is with food, behavior, bedtimes, activities, or school. But as a parent, the choices that our children want, in regard to their favorite foods, bedroom furniture, toys, clothes, and activities, extend far beyond the realms of good and bad and blurs the lines between needs and wants.
Society sets the boundary for what good is in any given context. In the UK, society deems that it is good for children to attend school, turn up on time, respect the teachers, and make an effort to learn. Parents in the UK are held to account, and if their children don’t attend school and they make no effort to respond to truancy, then parents can and have been fined or even sent to prison. School reports are sent outlining academic achievement and parents are encouraged to partner with the school to help their child’s educational development. Children don’t have a choice in the UK about whether they will or will not receive education until they are 16 and there are moves to increase the age to 18. Many children in countries around the world don’t have the freedom to receive an education, either because of politics, religion, war, or poverty. But in the UK education is not a choice, but is given free as part of our democratic right. Our freedom makes it compulsory to attend free education until the age of 16. It appears, therefore, that unlimited choice is not always good and freedom sometimes means that our choices are made for us. Capitalists would argue that it is paternalistic to set parameters for common good such as education, health, or infrastructure, including roads, sewerage, and water supply. But it is subjective as to what point doing good stops being good and begins to interfere with our freedom. According to capitalism, any regulation, intervention, or interference is theoretically a bad thing purely because it is interfering with the purity of the market. But with an agenda that is focused on profit as a primary goal, is it any wonder that we have ended up in a position where what we are being told is good for us is actually doing more harm than good, is leaving a large section of society poor and a select few wealthy, and is reducing responsibility to the lowest common denominator rather than empowering individuals with an expectation that they have a responsibility to something bigger than mere individual self-interest.
Capitalism and neoliberal theory promote a dichotomy and conflict between private and public, state and market, when in fact there is a mutual interdependency between the economic, political, and social elements of our society, which means that they maintain and support each other. Temperatism with its focus on changing the market agenda to deliver a primacy of doing good and profit for purpose isn’t looking to destroy the opportunity or mechanism to create wealth. Rather it seeks to address the current disfigurement of market practices that has led to villainy and social welfare reductionism, which will ultimately result in the destruction of society and nature. If it is possible to assume that growing levels of inequality in society can be described as freedom, then, for the majority, an intervention that changes the focus of the market and readdresses the distribution of power between the social, political, and economic realms is no less free, especially as the market is a social construction and as such should be constructed for the benefit, empowerment, and betterment of the majority.
The Numbers to Change the System
Is such as transformation possible? Genghis Khan transformed self-seeking, disparate Mongol tribes into a strong nation in a generation. Churchill constructed a system that enabled a poor and weak country to pull together to stand up to fascist tyranny. Wilberforce pulled together the most unlikely of allies to succeed in pushing through a parliamentary act for the abolition of slavery, despite the majority of parliamentarians being slave owning. All things are possible if there is a heart and mindfulness to make it so. Temperatism has both. Capitalism has neither.
Human society is made up of political, economic, and social elements; they cannot be separated and each part is part of a wider system of cause and effect. Currently we can look at the government, society, and economy and come to the conclusion that the market is in control. Since the government has the responsibility to regulate the market and protect society, we begin to understand the size of the problem we are faced with. Those who support the free market would argue that regulation or intervention is problematic. Democracy is about power. Capitalism marginalizes power to those who have the economic resources to defend it, at the expense of the wider society. People power is what will be needed to disperse power across society and across political, economic, and social boundaries. This is more than taxpayers and voters demanding fairness and holding organizations to account for the external costs of their operation, but rather a redefinition of the role of organizations, the purpose of the market, and the demand for a different agenda.
If government regulation and legal restraints are not the answer, then what is? The truth is that the answer lies in the very organizations that currently pursue the capitalist profit agenda, as well as in every individual within society. There are more employees than employers and there are more consumers than suppliers. For those of us that inhabit management positions, we can make decisions that are based on doing good, before making profit. CEOs and shareholders can choose to invest an organization’s time and resources into a wider context in regard to return on investment. Consumers can choose to buy products and place their money in the hands of credit unions rather than big business and banks. To say that you don’t have time to do these things is to accept the way things are. If you are unhappy with the way society is, then change really does begin with the man in the mirror. In democracy citizens have to take part in democratic processes to ensure that power is kept in check. Perhaps the most encouraging outcome of the Trump presidency is a realization by the apathetic that their voice and vote count. Not just in America, but around the world, citizens are finding their voice again, and they are taking action to be heard.
Currently, power is one sided—organizations have the money to fight, both in terms of marketing and in regard to lawsuits to keep at bay consumers—but the social media is out of their hands, very often bypassing the gagging orders and restrictions of an autocratic government to highlight the true voice of the people. Consumers and citizens are discovering how powerful this mechanism can be in the West. The biggest weapon that capitalism has right now is indifference or the belief that our voice won’t make a difference. But the underprivileged exist in both rich and poor nations; the numbers who have seen a demise in their quality of life far outstrip those who have seen wealth flow into their personal reserves. There is a germinating realization that all of us deserve and can create a society where equality is possible. Temperatism doesn’t pursue a world of flat-earth egalitarians but neither does it believe that the financial world should benefit at the expense of those that create the value. Profit must be considered in proportion to the value creators. The continuing gap between the haves and their lack of contribution to wider society and the have nots who create value is an injustice that society cannot continue to stand back and allow.
A current example in the continuing practice of UK is energy suppliers increasing the prices of gas and electricity just as winter starts. Many people, not just the old and infirm, live in fuel poverty, where more than 10 percent of their income goes on heating and lighting their homes. As November rolls around, news reports are full of people frightened of turning on their heating because they will be unable to pay their bills, this at a time when the energy companies are reporting hundreds of millions of pounds in profit. In the 1980s the British government opened the energy market to competition, removing the state monopoly and privatizing the energy companies at the time. The idea was to introduce competition into the marketplace and improve service to the public. Services haven’t improved and the big six large players who all seem to increase their prices at the same time dominate competition. At the same time the UK is entering a period in history where energy supply is going to become problematic. It is reported that the UK will soon begin to experience regular power outages and energy shortages. In a capitalist marketplace scarce resources also equate to an increase in prices. This isn’t about luxury goods, but about households being able to keep warm and light their homes. It is true that energy consumption has increased per capita as the number of appliances we rely on in modern life have increased, but for many of the most vulnerable in society and those greatly affected by the energy price rises, they don’t have several televisions, computers, or mobile phones. They seek simply to heat their home, cook, refrigerate their food, and turn the light on when it gets dark. The current solution is that energy companies are offering to insulate homes in the UK for a discounted rate, or in some cases at no cost to help make homes more energy efficient.
But more could be done. A Temperatist approach would suggest that the energy companies take the poorest in society and help make them net producers of energy. The installation of solar panels on the homes of those suffering from fuel poverty might seem like madness to those with a profit-first approach. But if the ideological approach were focused on doing good, then it would make sense.
First, it means that those who once couldn’t afford to pay for their basic energy needs, who are suffering from fuel poverty, can once again heat and light their homes without fear of a bill they can’t afford. In fact, not only does energy stop being a cost to the poorest in society, but rather offers the opportunity of becoming an income generator, although at a lower level than if the household had installed the system privately. Secondly, the energy companies benefit because they take those who can’t afford to buy their energy out of the net consumption equation into a net positive generator of electricity, providing a steady supply of excess energy to the national grid at relatively low cost and low maintenance to the energy companies. All this while contributing to the increasing percentage of clean energy supplies and reducing the carbon footprint in the UK.
The wider UK population will also benefit because the cost and efficiency of solar panels and the energy collection infrastructure and technology will improve because the energy companies will want to deliver the program in the most efficient way possible, which will drive innovation in regard to materials, cost, and generation capacity. This in turn will promote affordable solar energy among private householders producing a further reduction in residential energy consumption, ensuring that vital energy supplies can be used for industry as energy shortages begin to bite and help the UK navigate, or possibly avoid, a period of possible social unrest because of power shortages.
Many will read the above and declare that this is too simplistic, that it is not as easy as all that. But no one is promising doing good will be easy. For a start the cultural shift required to make such new thinking the norm is far harder than flicking a light switch to the on position. But this is the great thing about the human race. We are inventive, and anything is possible. Give us a problem and we will find a solution; it might be difficult, it might seem impossible, but we can rise to the challenge, and in doing so advance our society. If it is possible for a man to free-fall from the edge of space, why do we doubt our capacity to invent, innovate, and develop the means to improve our society for the benefit of everyone? The fact is that whenever industry has been challenged to do things differently, to change the way that they go about their business by regulation or societal demands, they have. They might have moaned about it. They might have declared that the end was nigh by being made to do things a certain way, but it never was. There will be many who will struggle with the transformation. There will be a great number who will fight against it, block it, and barricade the way we do things around here but, if and only if, a few good men and women, indomitable in spirit and with great tenacity, decide that we can and can influence those who will, then all things are possible.
If you are a leader of an organization, then the challenge is to consider how your organization could do things differently, to contribute to doing good. Begin with the end point of doing good as an outcome, and adopt new thinking about the way your organization goes about its business.