Could Japan be a Model for a Post-Growth Economy?

17 10 2010

The New York Times launched a series of articles examining the effects on Japanese society of two decades of economic stagnation and declining prices. I am interested in this series for clues on what a post-growth economy could look like.

There are many comments and descriptions in the article that shatter accepted icons of what we believe to be fundamentals to economic growth. For example:

  • The younger generation in Japan — people who have known nothing of Japan’s super prosperous times of the ’70s and ’80s — is devoutly ANTI-consumption. They buy clothes at discount stores, don’t travel abroad and think spending in general is stupid.
  • Young Japanese men are called “herbivores,” meaning that they don’t have the will to succeed and work for long hours that their fathers did. In other words, a special kind of manhood is seen as necessary for economic growth.
  • A Japanese economist wishes inflation would return because it is the engine for “creative destructionism,” a reference to Joseph Schumpeter’s famous praise for entrepreurialism. Today’s deflationary environment, he says, is “just destructive destructionism.”

I believe that we face an imperative to go, in the words of Herman Daly, “beyond growth.” This means not consuming more than can naturally be regenerated. It means not having an inflationist economic system where debt-based money requires prices and output to either (a.) rise exponentially or (b.) have the whole whole economic edifice collapse. It means getting away from conceptions of wealth being tied to masculine power.

The deflation besetting Japan could be seen as a glass half full, not empty, in showing what a post-growth society could be.





Reaganomics, Supply-Side, Free-Market, Monetarist, Neo-Liberal, Washington Consensus – All Gone with the Wind!

1 10 2008

In the space of one week (in October, 2008), the supply-side, free-market dogmatists went from “Government is the problem,” to “Government is the solution.”  They went from “There is No Alternative” – Margaret Thatcher’s remark that global markets rule – to ‘hurry up and let’s find some alternatives.’

What happened?

What happened was that an imaginative, but thoroughly ungrounded ideology ran into hard reality. Reality won.

The ideology is that ‘government’ is not necessary. The reality is that humans are social beings, and that we are all on this earth together. And, until we go elsewhere, we inhabit this earth as a group, not as a bunch of warring individuals.

Whenever two or more people live in proximity, people need to explicitly or implicitly make agreement about how they will live with each other. Even if the agreement is not written down, as in the case of tribal peoples, this is a form of ‘government.’

The challenge is not whether government is a valid concept or not, the challenge is whether government will be democratic or authoritarian.

We’ve gotten ourselves into an upside-down world because, for a long time now (30 years at least), the people who openly held government in contempt, were the very same people who held government power. We had government leaders who claimed they didn’t believe in government leaders. Not surprisingly, it has led to silly, cavalier and reckless behavior. Indeed, the ‘government-is-the-problem’ proponents represent an emotionally immature person, and at the level of an insolent teenager who bristles at any kind of restriction of his or her behavior. When this kind of person has the upper hand in setting the ground rules for how we are to live with one another, you can expect all hell to break loose.

Now, hell has broken loose.

Timothy McVeigh was angry that he had to drive according to a speed limit. He didn’t recognize all the other people who contributed to his power to drive a vehicle. The engineers who created the car, the roads built at taxpayer expense, the other people on the road who also had a need to use auto transportation infrastructure. For a slight bit of curtailment of his freedom (i.e. not drive at 100 mph, but keep it to 65), the social group who empowered him in the first place all could have gotten along using a commonly shared physical environment. But he didn’t see it that way.

Ronald Reagan, Timothy McVeigh, George Bush – these rugged individualist, anti-government proponents don’t want to recognize the community in which they live. The closest they get to recognizing a social dimension in their lives is when using such financial terms as “counter-party” or “greater fool.”

The real challenge that we face today is in creating genuine democratic government. There is too much centralized power, political and economic. Global corporations and authoritarian national governments have too much say over day-to-day living arrangements in communities, cities and regions.

There exists a solution and it is to decentralize power – political and economic – and cultivate strong, vibrant regional economies.

At the heart of this vision is local ownership of local enterprise. The Washington Consensus – the myth that is disintegrating before our very eyes – held that jobs were all that mattered for economic growth. A large retailer, manufacturer or a large World Bank project could be inserted into a local area, and the job creation from this would lead to economic growth and prosperity.

But now, with 30 years of hindsight on this idea, we know that this doesn’t work.

Strong, resilient economies depend on more than jobs. In addition to jobs, they depend on enterprises buying inputs from other local enterprises, and they depend on profits of enterprises being remitted to local owners as well. Then, as these three distinct flows of funds (wages, cost-of-goods expenditures, and profits) are channeled – as much as possible – to other local enterprises and households, the region’s aggregate income and wealth rises.

These three flows of funds, compounded through multiple cycles of transaction, also lead to solid capital formation in the region. Capital formation is necessary because it provides the capacity for seed investment into new enterprises in the region.

On the contrary, when only one of the three ingredients is present – job creation – and profits and cost-of-goods expenditures go outside of a region, that region’s ability to grow is severely limited. Over time, a highly concentrated, extractive global economy emerges. Ultimately, it collapses. Witness the collapse occurring around you.

Strong, interdependent local economies, based on local ownership of enterprises, are the way out of our current crisis.

This simple framework has been lost in the mad rush to globalization and privatization of the past 30 years. Yet, this framework has proven itself throughout the modern era. Look at “regional economies” such as Singapore, Taiwan, and Hong Kong and specialized regions such as Silicon Valley, Hollywood and the Emilia-Romagna of Northern Italy. Economist Jane Jacobs, as far back as 1984 put together the massive empirical evidence of this vision (in her book, Cities and the Wealth of Nations).

Multiple, strong regional economies, engaged in trade with one another, are resistant to global collapse due to overconcentration of power.

What we want to create going forward is a world economy that is metaphorically similar to the Internet. The Internet is a very strong, resilient device because it is highly decentralized. If any one server, patch of servers or subnetworks fail, the global system keeps on ticking. Network traffic is simply re-routed around the problem spots.

We want to have a world economy based on similar principles of decentralization.

The strategy of strong regional economies is pro-trade, by the way. The key distinction is to have the exporting enterprises be owned by locals, not by invisible offshore entities. Local ownership is key because it provides the greatest capacity for self determination and sovereign power to locals. Local people are the best stewards of the environment, and the best arbiters of social issues pertaining to the community. Giving sovereignty to the peoples of a given place insures the greatest balance in the economic system, both at local and global scales.

This simple framework is also the basis for good government. Government in this framework is where local citizens truly have power to establish their livelihoods, to manage public resources, and to make agreements about how they want to live together.

Ownership of the enterprises that generate and govern the deployment of capital (human, financial, natural) must be re-localized, re-regionalized and decentralized from today’s status quo. Today’s status quo is extremely vulnerable to collapse and it is non Democratic. It makes an increasingly smaller group of families very rich, while impoverishing the mass of humans and depleting the environment.

The Washington consensus that there is no alternative but to have all powerful global corporations running the world is an ideology whose time has come and gone.

A new day is dawning. It is in strong regional economies that retain individual personality, that give the greatest governance to the citizens of the region, and that creates the greatest well being for all.





Creating Better Futures

16 12 2007

 

Book Review 

Creating Better Futures: Scenario Planning as a Tool for a Better Tomorrow.

By James Ogilvy

This book is mistitled, in my opinion. It is less a business book (on the technique of scenario building as an adjunct to strategic planning). It is mostly a philosophical critique of the idea of human “progress” and “betterment” in the postmodern world. Ogilvy shows how it is possible that we can still believe in progress and that we ought to strive to create better futures, even when our traditional standards of “good,” that we formerly took from religion and science, no longer stand solid.

Ogilvy’s argument is a wonderful marshalling of philosophy, literary criticism, anthropology, social theory, and psychology with the emphasis on the “interpretive turn” in philosophy. (Early in his career, Ogilvy taught philosophy at Yale.) In clear writing and unmatched erudition he shows that despite the loss of these universal and absolute guidelines, there are ways “forward” available to us if we choose to use them.

One of his main points, in fact, is that it is precisely this unprecedented range of choice before us that measures our freedom. As a species, we have never been as free or as mature as we are now. And while these may be difficult times due to the inherent ambiguities of the loss of absolute standards, we are poised, each of us, to live even freer than ever before. The ambiguity of what is good, and the inescapable fact that we choose how to interpret our world and circumstances (and not have it interpreted for us by religious dogma or not at all, as in the case of science), is exactly the measure of our freedom. Yes, it is confusing; yes, it is messy; yes, there is the possibility of evil. But this is the “price” of freedom.

The “choosing of better futures” is where Ogilvy places the practice of scenario building. This practice can be done across the spectrum of organizational “units” from corporations, to businesses of smaller numbers of people, to government agencies and non profits, to community groups. For the actual techniques and specifics of facilitating the scenario process, Ogilvy dedicates only one chapter. In the other 12 chapters, he fits the importance of the scenario practice to the larger philosophical points he raises. Readers who want more detail on how to facilitate scenario workshops are directed to other texts, especially the one by his colleague Peter Schwartz (with whom, along with Stewart Brand and two others, he co-founded in 1988 the consultancy, Global Business Networks, GBN). Also, I was happy to discover many PDFs that can be downloaded from the GBN website that discuss details of the scenario process.

The majority of Ogilvy’s book, therefore, is the philosophical underpinnings of why scenario building should be considered the logical locus for individual and collective choice of social alternatives. Or as Ogilvy likes to call it, the “moral fulcrum for lifting the better over the worse…and prying the present toward a better future.” (p. 16 and p. 153).

This is the juice of the book. And Ogilvy presents many great things to think about:

Theory of the “some.”

Not the individual (the “one”) nor the entire collective (the “all”), but communities of people (the “some”) are the appropriate “units” of socio-political discourse, meaning and power. These may vary in size and numbers according to the scope of the issue(s). “The nation state is too big for the small problems [e.g. education], and too small for the big problem [e.g. global warming],” says Ogilvy. P. 54

“The community, the corporation, and the company are the subjects of social history, the creators of alternative scenarios, and the choosers of paths into better futures,” says Ogilvy (p. 67). These groups are “limited communities of interest defined by geography or by profession or by any or a range of other criteria.” P. 54

Ogilvy says, “Neither the Individual nor the Collective is ontologically given…[but if they] are seen as possible achievements…then their advantages are complementary rather than conflicting. The collective needs the spark of creativity and autonomy [of the individual]. The individual needs language, community, and all the rest of the benefits of society [the collective]” P. 86 “The social philosophy of the ‘some’ finds in groups a useful synthesis of creativity [and motivation and freedom] attributed to individuals and the power attributed to collectives.” P. 101.

Ogilvy goes on to show how the theory has implications for “representative” government. He makes a very cool analogy between representation politically and representation epistemologically. The two thorny issues are similar in many aspects, and now, with current paradigm shifts in the philosophy of knowledge (epistemology), particularly the demise of the “copy theory of truth,” we can rethink our conventions around sampling and representation in politics. “Communities [are] the appropriate units of representation – the players – in representative democracy.” (p. 67) “We ought to be able to learn to live together in communities of communities.” P. 224 He also links the psychological concept of individuation to the issue of representation and sampling. (p.64)

Finding Ethical Norms in Groups.

The philosophy of the some is also the linchpin of how we find meaning in our lives in the absence absolutes. While we no longer can resort to truths that transcend time, for all human beings, everywhere, we don’t necessarily have to fall into the utter subjective relativism where each person is free to do his or her own thing. We can derive moral norms by which to live from the friends, families and communities in which we live. They may not be as all powerful and eternal as the religious ones that humanity used to go by. But they certainly can be powerful enough – in terms of having obligatory sway on the person – than mere personal whim. There is an in-between place – pragmatic and practical – where norms have force, even if they are not absolute.

“Just because there is no universal code of ethics for everyone everywhere, it does not follow that we have to submit to a subjective relativism that says anything goes. The slope is slippery, but we can stop short at cultural (not subjective) relativism. The unit of moral integrity is not one (the individual subject), not all (everyone everywhere forever), but some (a corporation, a company, a community, a culture).” P. 126

Ogilvy cites Jurgen Habermas’ important distinction of “natural law, which is the object of our theoretical interest, and conventional law, which is the product, not the object, of our practical interest.” P. 96. In other words, as humans, we have different classes of interests: the theoretical, which when we pursue this interest, we generate knowledge that is the basis for science and technology; and the practical, which we face day to day in how to live our lives and whose ‘knowledge’ includes shared ethical norms and meanings, which are co-created thru interactions with others.

Scenario building is the deliberate pursuit of practical interest. Groups of people come together to articulate the norms and shared hopes for the future. This future is near-term – i.e. not eternal – about which participants agree, more or less, as to what is desirable and good. “Habermas and his forefathers are the closest thing we have to an honorable ancestry for scenario planning,” according to Ogilvy. P. 97.

Part of the shift is the legitimization of other intelligences besides the purely mental-rational. These are intuition, emotional, social, empathic. (p. 25) To pursue our practical interests, i.e. finding meaning and ‘doing the right thing’ in our day to day living, we turn the old scientific humanism paradigm on its head. “There is more room for emotion …than the bloodless objectivity of the scientific worldview.” (p. 35 ) Today, says Ogilvy, “We must not be afraid to use our minds on behalf of our hearts.” P. 97

The “relational worldview,” ethical pluralism and ‘heterarchy.’

Ken Wilber and Deepak Chopra are great for shining light on subjectivity and interpretation in human understanding, and in particular, how this applies to getting your own life together. Ogilvy is equally great unpacking all this but focuses on its implications for social activism, organizational development, and politics and economics.

Our ‘understanding of understanding’ is changing: away from the laws-and-causes scientific explanation (where observer and observed are distinct) and towards the interpretive study of meaning (where observer and observed are aspects of a single consciousness gestalt).

In much of his book, Ogilvy describes what he calls the “relational worldview.” This is a shift from a focus on things and absolute truth, to a focus on symbols and interpretations of them for meaning. It is a shift from identity to a focus on difference. It is an emphasis on relationship – among people, among symbols and interpretations, among subpersonalities within the individual – as the focus for finding meaning and understanding of life. It is a shift from scientific, cause-and-effect, mechanical explanation to narration of history and the telling of stories. It is a falling into time and historical drift, which implies that progress will not necessarily happen of its own accord, that there are competing histories, i.e. a contest of interpretations of whence we come, where we are, and whither we go,’ and that we must get together and collectively choose what we want. There is a democratization of meaning; an ethical pluralism; and the necessary, if uncomfortable acceptance of ambiguity in our lives – because this comes, part and parcel, with freedom to choose.

Finally, according to Ogilvy, a relational worldview includes recognition of a new aspect to our understanding that impacts our ethics. ‘Heterarchy,’ according to Ogilvy, is not hierarchy nor anarchy but in between. It is not that only one thing or nothing is good but that too many things are good. There are circularities in preferences, and first principles, which require us “to serve several masters” not just one.

Given this relational worldview – where human, group interpretation is central to living the good life – scenario building is a foundational practice. It is the creation of multiple scenarios, and then evaluating strategies to deal with them, that people share their values and hopes with each other. This kind of conversation is profound because it is an act of courage and freedom, a building of solidarity, and a giving of meaning and worth to the individual person who participates.

“Where meaning is concerned, it is not a matter of getting closer to the “truth.” Where meaning is involved, alternative contexts can determine widely divergent significances for the same [thing].” P. 126 For example, we can view the rise of information technology as an instrument of big brother and the loss of privacy. Or, we can consider it as the means for true democracy, freedom of expression, and freedom of assembly.

The leitmotif of scenario building is this: with a group of people you spin out possible scenarios for the future regarding some thing or issue (e.g. a company, community, region, organization). Then, the group discusses and formulates strategies for dealing with each future possibility. In the discussion, the values and preferences of the individuals come to the fore and are made explicit. A person’s conversation might take the form of, “If such and such happened, then our organization might have this happen, and, in my belief system, this would be bad because…” Scenario building is a structured speculative conversation of a group of people that allows them to tell each other what is important to them.

“Power, leadership, property, consumer, health, and education [for example] might take on very different meanings in the different contexts of scenarios,” says Ogilvy. (p.130)

Ogilvy’s discussion of how groups make history is much more explicit than Flores et al in Disclosing New Worlds (which Ogilvy nonetheless references in his book p.105). “Communities create history by framing alternative scenarios, identifying a range of strategic options appropriate to those scenarios, and choosing among them.” (p.105)

Scenario building is how to deal with the fact that we as free agents drifting through history must interpret our world (and not apprehend it deterministically or by commandment); that we do this interpretation with others; and that there is no absolute quality to things independent of our interpretations. The qualities of things are aspects of our interpretations and relationship to them.

Humanity is a work in progress, there is no resting place, all meaning and interpretation is contestable. There is ambiguity and uncertainty. “We are a bootstrap phenomena,” he says. (p. 95) Ogilvy suggests that we can deal with the perceived nihilism of this in two ways: “God is dead. The self does not exist. O woe. We are doomed…Or … God is dead. Daddy’s gone. Now we can play.” (p. 87)

Reframing government and the private sector.

Ogilvy sees privatization and the rise of markets as inevitable. It is a historical movement, he claims, that is of comparable epochal import as the separation of the nation state from the all encompassing polity of the Church (in European history). Just as Locke, Hobbes and the rest had to construct philosophical legitimacy for the existence of the State (i.e. they had to look elsewhere beside theological arguments – because now the state was a new authority in opposition to the church), so too do we need to develop a new legitimacy of the market (because it is a new social-organizing principle whose legitimacy is not given by the state). Ogilvy says that this is not a blanket endorsement of privatization across the board. There are certain public goods such as health, education, public safety, and others. We have to take a case by case – i.e. “industry by industry” – look to separate the public from the private sector.

In his interpretation of the long view, the long time in coming of the primacy of the market, Ogilvy comments how it is a relatively benign institution. “Passion is so much safer when sublimated through the displacements of the marketplace than when it erupts though the sublimations of religion and politics,” he says. (p. 36)

This reminds me of Jeremy Taylor’s claim (in The Living Labyrinth: Exploring Universal Themes in Myths, Dreams, and the Symbolism of Waking Life) that the marketplace was the compromise and somewhat awkward cultural institution adopted by humanity when the patriarchal, marauding, pastoral tribes of central Asia started pushing up against the matrilineal, settled civilizations of the Eastern Mediterranean. Marketplaces and trade are better solutions to inter-cultural conflict than territorial warfare and pillaging. But, some may say, compared to the old days, they are boring. All the passion’s gone!

Ogilvy points out that, with the rise of middle-class civilization around the world now, with marketplace as norm, it confronts us with a question of legitimacy. “Precisely in the modesty of its mission, the marketplace appears to be heartless and bloodless,” he says. (p. 35) We are seeking more room for emotion in the emerging millennia. (p. 35)

Ogilvy then cites that we consumers are moving away from buying material goods per se, and are seeking experiences and services. The “experience industry” is now the vogue of market economy. “The marketplace provides a place where consenting adults can get together for safe passion,” he says. (p36) This has to be sorted out regarding the public goods that marketplaces do not effectively provide.

Individuation, the information economy, and the end of mass production.

“The quest for vivid experiences,” says Ogilvy “is part of the sublimation of the economy, part of the shift from the solid goods of the industrial economy to the intangibles known as information and services.” (p. 30)

Ogilvy ties the information economy to personal individuation and maturity. The customization of products (and the demise of mass manufacturing) is allowing each person to be who they truly are and still be served by the market.

“The old shell of oppressive conformism is breaking … One by one, individuals are emerging from the realm of necessity – what nature or nurture tells them they have to do – and stepping forth into the realm of freedom toward what they want and hope to do. A new technology, an information technology whose essence is to differentiate, will be there to greet them.” (p. 223)

I like this book a lot. I found insights on just about every page, even in material that I thought I already had a good grasp of. It is a rewarding read.

Nevertheless, I do have some residual skepticisms:

Ethical pluralism is incompatible with and does not address religious fundamentalism. There will be this face off and tension. Fundamentalists will not embrace scenario building. To put my complaint another way, the only absolute that ethical pluralism requires is that everybody acknowledge that there are no absolutes. Ogilvy mentions the difficulty of cross cultural scenario building and common cause. He mentions Salmon Rushdie as a case of someone who has got into trouble living in two cultures. Ogilvy, appears to be saying, oh well. This is an upper limit to scenario building. It can’t solve everything. My issue is that in this post 911 era, where the extremists seem to be setting the agenda for political discourse, and are framing things in terms of a clash of civilizations, scenario building doesn’t have much to say and flatly doesn’t work in this discourse. It doesn’t apply here. Ogilvy’s book was published on the eve of i.e. before 911.

Ogilvy’s endorsement (or, at least, claim of inevitability) of the market economy, privatization and the information economy, while very nuanced and carefully argued with many caveats and qualifications (e.g. we still have public goods and mandates, there are known limits of the marketplace, etc.), is incomplete, I believe. He does not squarely address the debilitating, system-changing tendency in free market economies of concentration of wealth and power. He may be committing an ontological error of his own around such symbolic things as “public sector” and “private sector,” “consumer” and “producer.” For example, there is quite a plurality of interpretations about where the line can be drawn between the Federal Government and the military-industrial complex. There may be tremendous fragmentation of consumer tastes reflecting the individuation and emerging sense of freedom of expression of consumers. And this may be happily met by the information technology of producers to deliver custom goods. But there is also a self-amplifying consolidation of power by large producers in merchandise, financial and labor markets. This consolidation is often abetted by the very same information technology. The range of choice, of which Ogilvy speaks, is superficial. The consumer may have greater selection of merchandise to purchase, but fewer vendors from whom to purchase it, and fewer employers by whom to earn the money to spend for it. Ogilvy seems to minimize the importance of social equity, seeing the main limits of markets being the lack of access to them by lower income folks. I see the limits of markets being the other way around: that, over time, the highest income folks (including corporations and ‘regulator/regulatee shapeshifters’) get all the goods, property and resources. There is a structural and emergent quality of markets – concentration of wealth and power and out-and-out cheating – that Ogilvy does not address. (He has written an essay on Greed, that I have yet to read and where he, perhaps, addresses this.) In any event, I don’t see how scenario building addresses these aspects of markets.

The sufficiency of scenario building in general. I may be misreading Ogilvy, but it sounds like he claims that scenario building is all that it takes to create better futures. To me, it is necessary, but not sufficient. It is the necessary first step in a many phased process that is followed by execution and management (to use business terms). In other words, the main part of better futures is the working, playing, and living in them – not just the brainstorming of them. Ogilvy seems to be saying that all you need to do is get together with your group, brainstorm and discuss various possible futures, and agree on what you want. With that, your work is done. Ogilvy does address the issue of “what next” in several papers that are available, as I said above, from the GBN website (in particular the one called, “After the Scenarios: Then What?”

All in all, this is one of the most inspiring books that I’ve read in years. I feel ‘straightened out’ by Ogilvy’s masterful pulling together of the several philosophical, psychological and social strands of thinking. While I was familiar with most of this material, I lacked a coherence and cogency that Ogilvy’s book now provides. Whole new and better futures are opened to me by this one book.