Index

Competition or Association

What drives a truly global economy?

A report of a talking economics evening of the Associative Economics Network in London (www.talkingeconomics.co.uk)

In economics , as in almost every other scientific discipline, it is important to bring into consciousness the extent to which the organisation of our thinking occurs through images. By making our use of imagery explicit, a context can be created through which we can better relate to one another in conversation.

I would therefore like to introduce this evenings’ subject with an image which I take to be universal: the image of the earth, represented as an elliptical sphere, a globe in space. The surface of this body is the realm of economics. One can imagine it alive with activity, a whole network of exchange and communication, complex yet distinct processes, evolving in time, an organic whole.

I sometimes call this starting point ‘moon economics’ – nothing to do with the economy of the moon but a way of seeing the earth’s economy, through the imagination, as a global organism visible from space. I do not, however, wish to suggest that there is any merit in physically abandoning the earth’s surface in order to obtain the objective view of the economist astronaut, if in doing so, one leaves oneself out of the picture. Rather, in imagination, one has the possibility to be at the same time inside and outside an event, actor and observer.

You could perhaps say that the image of the economy of the earth as one dynamic process, is just another way to say that we live in a global economy. However the term ‘global economy ’should beg in us the question: ‘as opposed to what other sort of economy ?’ At this point one could bring before one’s imagination the picture of a map of a nation, the United Kingdom, for example. to stand next to that of the globe. Although this image is a prequel to the global imagery with which we began, it still remains very much part of contemporary discourse. These two images, one of global the other of national economy, are the starting point of this exploration.

Economics arises out of thinking. How we organise ourselves in the world, be it consciously or not, is a result of the way we think. It is therefore to the process of how we form thoughts that economists must pay attention. What becomes manifest in the world is the end result of a design process that originates in the world of thought. The way that we orientate ourselves and move about in our thinking therefore becomes a critical factor in economic efficacy – for example in the exactness of the terms used to describe world events. This might be better described as a cultural than a philosophical question: especially if our language takes on the colouring of the current cultural climate, with its already much-used terms. It is a cultural question how one is able to speak in such a way as not to push an audience into one or other box, by carefully choosing ones words. Contemporary debate on economic questions is so thoroughly saturated with materialistic assumptions that the first step in beginning a conversation must be to explore what really lies behind the current terminology.

With few exceptions, business is today thought of as the art of economic warfare. It is seen as a struggle for predominance through self-assertion and the defeat of ones opponents . To what extent is this way of thinking open to question ? Can it really stand up to a rigorous economic analysis, or is it just based on a partial point of view ?

I have already mentioned that we must now acknowledge ourselves in a state of global economy which has arisen from the previous scenario of distinct national economies gradually expanding until they found themselves locked against one another. This condition of ‘global economy’ is a new phenomenon which requires a new understanding if its ‘true’ inner dynamic is to be revealed. As it is we use much the same terminology as was used for describing ‘local / national economy’, much of it derived from Adam Smith. ‘Competition’ is continually cited as the watchword for what should drive this economy. In the background we have the Darwinian notion of ‘survival of the fittest’ and the unchallenged assumption that we are ‘competing for scarce resources’. This way of thinking, whether, made conscious or not, leads us into a self-fulfilling prophesy of human beings attempting to fight one another as a mode of economic interaction, the language of the pursuit of self –interest thinly veils a brutal animalism that occasionally expresses itself in ‘economic’ war. That we currently organise our notions of economic science on a model of animal drives is reflected in the use of terms such as bull and bear markets, herd instincts, making a killing etc . The results of this model are entirely predictable, and what’s more we all feel culturally affected by the ‘soul’ angst that is induced by an evermore competitive world.

Darwinian die-hards will reply that this is ‘reality’ and nothing is to be gained by transposing an economic wishfullness thereon. This reality, however, discludes the possibility that one is ever able to act on another person’s behalf, or put differently that one can socialise one’s own self-interest so that the other person’s interest can also appear in the picture, and out of this a collaboration can arise. Not only that, but it overlooks the fact that economic benefits arise from mutuality, not from beggaring your neighbours until only you are left. To put this in accounting terms, attempting to increase your balance sheet at the expense of all those around you is an act of economic shortsightedness. If you wish to carry on doing business with people then you should be concerned that they too stay in business. How will you increase your balance sheet when all your potential customers are flat broke ? Real economics must include a wider perspective than only acknowledging your immediate self-interest. Business is ‘de facto’ a social activity. When seen as the driver of a global economy, competition will either lead us into a world that is deeply anti-social or simply to economic unreality. It is therefore clear that in some way collaboration must be a factor in economic activity - this is obvious within an organisation, yet becomes controversial when we want to see the spirit of collaboration at work in the economy as a whole. Yet this is already the case, although we do not necessarily recognise it at first. What else is implied in the division of labour other than that the proceeds of each man’s labour serve someone else? Objectively observed, we work for one another; it is our thinking about and description of this economic fact that is in need of development.

There is another factor which will increasingly have the effect of throwing ‘competition’ into question as an economic modus operandi: this is the development of the information age. Shared knowledge creates increasingly transparent situations, these inevitably encourage a collaborative approach to ‘problem-solving’. Not only this, but ‘competition’ will offer ever-decreasing returns in an economy where increasingly, everyone has access to the same information. Unless business resorts to squeezing labour costs and plundering the environment, there will be no competitive advantage. If I know exactly what exactly you are doing, I can just undercut you by doing it cheaper, nastier and dirtier– the so called race to the bottom. Yet shared knowledge is intrinsically value creating , more information means better organisation and greater efficiency.

I have suggested that it is collaboration not competition that is essentially productive of economic value. While many may pay lip service to this idea, we must still ask not only what sort of image of collaborative activity is economically realistic but also how to walk the path towards it. This path is fraught with potential hazards, not least how one must outflank the assumptions conventional thinking may have about what belongs here. Associative economics implies neither state planning nor the enterprise-stifling structures of democratically organised businesses.

Consider a counter-example, i.e. one that illustrates the natural consequences of letting competiton reign. Worldwide coffee production has, for the past few decades, been on an ever changing roller-coaster ride of price volatility. Today the beans are barely worth picking, there is massive overproduction, devastating social fall-out and a coffee mountain which will probably end up being destroyed. Where is the logic in this ? Everyone involved agrees that the situation now needs to be managed, for example through the International Coffee Organisation, the major players must sit down around a table and find out how to work a sensible solution to a crisis that increasingly is a public concern. Yet it is just in this situation that a dogmatic advocate of competition will cry foul – ‘ producers can only meet to conspire against the interests of the consumer’ this is ‘collusion’ and thus we have a whole raft of incipient legislation to ensure competitive fair play. Without wanting to deny that collusion is a potential hazard when producers meet , many would point to OPEC as an example of this, this ‘partiality’ is readily countered by the idea of not just producers, but also consumers and retailers meeting and sharing their perspectives so that an economic judgement can be reached.

Association implies free participation in an exchange that has the aim of creating better informed decisions, it implies being able to recognise another person’s situation and adjust oneself accordingly. To ask what form this should take is perhaps to put the cart before the horse. The willingness to create this way of working will of itself ennable the appropriate forms to arise, and it is from individual insight alone that this willingness comes into being. To create a form and demand participation would simply result in uneconomic bureaucratic wrangling. Nevertheless, it is in the meeting of various partial interests that the anti-social aspect of each one can be taken into account and balanced out. Social interaction based on economic objectives can counter the tendency just to see one’s own point of view, with the result that a social judgement of real insight can arise, not according to abstract economic laws but out of the particularity of each situation, with its implications for price, labour, production, etc. Of course, the whole enterprise must to some degree be lead by public-spiritedness, if it is not just to be another occasion for human-beings to exercise their discord.

What then drives a truly global economy ?

I spoke earlier of animalism as an implied shadow side to our failure to humanise economic organisation. Perhaps this can be illustrated by a recent advertisement for a British bank. This depicts a herd of wild horses stampeding over the roof-tops of city sky-scrapers, not only conveying the atmosphere of herdism that characterises current investment behaviour, but also giving a picture of unharnessed capital careering aimlessly around. I think this aptly describes our present predicament and also points to its solution. The way forward consists not in tethering these horses, nor confining them to their stables, but rather progressively breaking them in and finding riders who will harness them to human goals. It is by putting ourselves in the stirrups that we can find the way to work for one another, not by abdicating the very possibility that we should journey the same path.

I spoke earlier of the global economy as an organism and it is to this idea I would like to return, not in order to fully explore what that implies but just to touch on some characteristic qualities of organic activity which we might find a parallel for in economic life. There are two balancing processes at work in organic activity, both a generative and a degenerative one, a coming into being and dying away. How can this dying away be found in the economic realm? Growth leads to metamorphosis, culminating in seed formation, how is this transposed in economics ?

I have the sense of something trying to express itself in various contemporary economic phenomena. Something that is suggestive of the possibility of a radically different approach. What happens when you follow through the conclusions of network economics, lean thinking or the fairtrade movement ? You cannot help but be lead out of the competitive ‘devil take the hindmost’ paradigm. Why does an organisation like the WTO need to exist in a world where we are told that we just need to get on with the business of competing with one another individually, corporately, nationally ? If competition is supposed to be self-regulating then what need is there for another agency ?

If I ask questions rather than give prescriptions, then it is purposely so. Little is to be achieved with ready-made, fully thought out solutions, but rather the challenge to the human imagination can result in the beginning of something new.

I have given you the image of the earth, an organism alive with economic activity, yet engaged in an internal war, not yet humanised but conducted according to animal instincts. I would like to end by suggesting that in our economic endeavour we have the picture of our common human enterprise, the economy as a global human body, representing what we are, yet not defining what we are to be.

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