Sunday, 9 December 2012


Can we expect great things in 2013 in the domain of economics? 

Certainly the troubled economic areas, all of Europe, UK included, with southern and most of Eastern Europe in very deep recession currently, will see their economies suffer even worse in 2013, thus dragging down the rest of the world. This is because the European Union accounts for $17.5 trillion (2011), which is a major trading partner for the US and the Asia/Oceania  regions whose GDP is just under that of the EU.

Not until autumn 2013 when Germany has its national election will there be any kind of bold moves on the part of the EU to address deep structural problems of uneven trade and development across the debt-ridden eurozone. In case Italy and/or Spain have some unexpected catastrophe in their economies, that would signal a disaster. Perhaps such a disaster could work in favor of the entire eurozone, as Germany would have to address the EU-wide monetary, fiscal and integration problems comprehensively before the election in September. Otherwise, we can expect piecemeal approach that will sink the entire EU and the world into a very bad recession with much higher unemployment in 2013.

For the US, 2013 could be a much better year than analysts expect, certainly by the second half of the year, assuming that the government does not adopt a tight monetary policy combined with a fiscal policy that places even greater burden on the middle class. Clearly, growth at around 5-6% will come from China, India, Brazil and Russia, as the IMF-World Bank and OECD are predicting, but it may not reach those levels if the US and EU suffer much worse contractions owing to tight monetary policy and a fiscal policy that puts downward pressure on salaries and wages.

To predict global economic contraction in 2013 is hardly a major prediction, considering that many analysts and agencies like the IMF-World Bank and OECD have stated as much. The more interesting question is how deep the recession will be and whether the estimates of major private and central banks as well as the OECD and IMF are on the low side - mind you, they have revised them downward already; in other words, the recession will be much deeper and impact even countries like Germany that have been enjoying fairly good growth rates and the lowest unemployment in the eurozone (just above 10% is the current average, with Greece leading at 26% and Germany at 6.5%).

Will global growth hover around 3.3% as the IMF-World Bank and OECD (at 3.4) have argued, most of it coming from China, India, Brazil and Russia; and would the volume of trade be at 3.2% in comparison with 12.6% in 2010?  I have not conducted econometric studies to dispute the 'downward revised' estimates of both OECD and IMF-World Bank. And it may be that we have a much better year than these predictions call for. Looking at monetary policy of the European Central Bank, however, the debt-ridden eurozone that is now having a huge impact on the core countries - France and Germany - and considering that the US would have to arrive at a 'fiscal cliff' compromise beween Democrats and Republicans, contraction in public spending is a certainty. Therefore, the recession in 2013 will be much worse than the IMF-World Bank and OECD have predicted, when combined with the structural problems of the EU and its refusal to address them comprehensively.

The International Labor Office forecast for world  unemployment in 2013 is at 202 million, or 5.1 million higher than in 2012, surpassing the record set in 2009 amid the great recession that started in 2008. Even worse, world unemployment is expected to reach 205 million in 2014, impacting mostly the Southern Hemisphere, developing and semi-developed nations -  Asia, Africa, Latin America and parts of southern and Eastern Europe. The EU recession is partly to blame for the continued rise in unemployment, resulting in massive transfer of capital from developing and semi-developed areas into the developed nations.

Contraction does not have to take place, if a liberal monetary policy is followed, combined with a substantial rise in the income taxes of the top 10% of income earners not just in the US, but across the world. At the same time, the tax loopholes, tax heavens, combined with massive fraud and corruption that we have seen in the financial sector must be contained, so capital can be diverted to productive enterprises, instead of hiding in offshore accounts and sunk into parasitic enterprises. How much money is in this category? No one knows, but the top US corporations alone have stashed away most of their money outside the US, demanding tax breaks to bring some of it back.

Having money outside of the nation where the corporate headquarters operates is not illegal, but there is a percentage of that money that is indeed illegally kept in overseas accounts. In the absence of cracking down on tax loopholes, tax evasion, and corruption, as well as highly taxing parasitic capitalist practices while rewarding productive investment, the recession currently plaguing the globe will be much worse in 2013.

Can we expect miracles in politics?

Political stability is not an issue for the US, China, India, Russia, and most of the G-20. It is however, an issue for some within the G-20, like Italy, and for all of them there may be a problem of social instability. It is entirely possible that social unrest will become much worse in 2013 than it was in 2012 across most of the world. This is because economic contractions that hit mostly the middle class and workers account for sociopolitical polarization and extreme reactions that include forms of protests and violence.

Grassroots protest movements are now part of the landscape across much of the world, from the US to Europe, from Latin America to the Middle East, from Russia to Japan. The biggest challenge for political elites, invariably backed by socioeconomic elites, is to engender conformity and contain social unrest. This cannot be done solely by propaganda through the mainstream media and by tougher laws and force against the people who are supposed to be the backbone of a democratic society. In the absence of political regimes altering their policies of catering so exclusively to the top ten percent of the richest in the population to the detriment of the rest, social unrest is inevitable in 2013. This does not mean mass uprising, but it does mean increased protest/demonstration activity by an ever larger segment of the population representing the middle class and workers who feel they have no stake in the institutional power structure.
I am assuming that there would be no major conflict in 2013, something that involves yet another US-led military operation, or US-backed one like hitting Iran or intervening in yet another Muslim country with the usual detrimental results for all concerned. If there is, as I am predicting there will be, a rise in social instability in most countries - from Kyrgyzstan to Pakistan, from street riots in Athens and Madrid, from student protests in London to Santiago de Chile, etc. - that translates into political instability and that means that investment can be held back from the most volatile areas. In short, there is an inexorable link between social peace, political stability and economic growth and development. The prescription to securing social peace is not to weaken the middle class and labor, but to strengthen it, give it the illusion at least that democracy works for them and not for a handful of rich people. Short of giving people hope, even the illusion of it, 2013 will be a year of not so great expectations for many countries around the world. 

Friday, 7 December 2012


The Question:
Does the value system and Western-centered ethics that exists under the political economy of free enterprise best serve all of humanity, or merely a very tiny percentage of it? If indeed all of humanity is best served under the system, why do we have the following deteriorating conditions throughout the world?

1. Why do so many believe that there is a great moral decline in under the market system and why does mass cruelty at the institutional (public and private) level persist and grow as we become more advanced in science and technology?
2. Why do we have high structural unemployment and underemployment, especially among the youth, regardless of educational training both in the Western and non-Western societies?
3. Why a gradual drop in incomes among labor and middle class in the last three decades, without prospects of upward socioeconomic mobility?
4. Why pervasive public-sector and private sector corruption that undermines all institutions from political to educational?
5. Why increased sociopolitical protests/demonstrations against a system that claims to be 'democratic', but in essence serves a small percentage of wealthy people whose interests the political economy serves?
6. Why growing gap between poor and rich not just in underdeveloped nations, but in the developed as well, without any prospects for improvement? a similar growing gap also exists geographically between urban and rural populations as well as between the top 20 richest nations and the bottom 180.

The Existing Ethical System
With the decline and fall of Communism, apologists of the free market argued that:

a) capitalism is the only system that respects producers and consumers;
b) a capitalist society represents the only hope for the individual to optimize his/her creative potential through the profit motive;
c) capitalism offers the opportunity to all for prosperity and the greatest chance for economic growth and
d) that the poor-rich gap will close between classes and geographic regions owing to the growing economy;
e) that the lives of people would improve because no other system engenders the values of product/services quality geared to customer satisfaction. Therefore, 'happiness' is inevitable for people only under a system that encourages freedom of opportunity to producers (capitalists).

If all five points as cornerstones of capitalist goals are true, then why do we have the six major problems on a global scale that I have delineated above? Perhaps it is too soon, given that the system has existed for about five hundred years, so we must wait another five years for capitalism to mature before it achieves those goals? Meanwhile, human suffering persists under a system that claims to be the only one under which humanity's condition can exist and make progress.

If by 'progress' we mean more and better technical gadgets, more and better medical equipment, but fewer people having access to health care and basic consumer products, then we need to rethink the concept of progress as based on social classes. But can society move forward toward in the absence of the profit motive, given that human beings are atomistic and irrational, unconcerned about the whole of society and only about themselves? Adam Smith argued that God is concerned about all humans and universal happiness, while the individual is concerned about his own happiness. If this so, then it stands to reason that capitalist ethics reflects human nature. Therefore, let us just accept it and forget about widespread global poverty and countless others domains of injustice, ranging from human rights to socioeconomic, ethnic, race and gender inequality.

GREED, rooted in atomism at the expense of the community, is at the core of capitalist ethics. By contrast, SOCIAL JUSTICE does not appear anywhere in the value system and body of ethics under the capitalist system that places the individual (those individual that own capital) at the core rather than the community as a whole.  Of course, there are elements pointing to aspects of social justice, such as human rights, volunteerism, and civil rights. However, in every instance and upon closer examination, those are subject to political considerations and only selectively are they applied.

Ethics in the age of globalization

The age of globalization means that capital that transcends national borders has created an international ruling class made up of financial and political elites that have mutual interests in preserving the existing system. Lesser elites, from academics to journalists are essentially in the business of disseminating information and analysis based on the ethical system of capitalism, while castigating anything that is critical of it. For example, when the issue of massive banking and corporate scandals arises, the answer is that it is the fault of individual and not the system that produced them and under which they operated. Moreover, there is no alternative to the existing system that is 'the best of all possible worlds'. If there are problems, they can only be fixed within the existing system that created them.

The issue of "rulers and hierarchies manage to subjugate the masses by imposing 'false ethical systems' is an interesting one, just as is the reality that people believe in myths. For those arguing that there are 'false' vs. 'true' ethical systems, let are consider that there are no absolutes, even in ethics where there is relativism and ambiguity.  In Ethics of Ambiguity, Simone de Beauvoir argues that "ambiguity is that each of us is both subject and object, freedom and facticity."

Exactly what constitutes 'false' vs. true ethical systems may be a subject of considerable philosophical debate. Let us make it clear that the domain of meta-ethics, the question of what ought we do as ethical people, is different from the domain of normative ethics that asks what is the difference between good and bad. Both meta-ethics and normative ethics raise the question of ethical relativism, that  brings into the picture the field of applied ethics - professional, business, organizational, clinical, and social ethics.

While ethical systems are invariably superimposed by elites and always have been in all societies, regardless of the nuances in ethical systems, it is also true that in the domain of normative ethics the individual exercises free will, to the degree that institutional constraints permit. As an advocate of existentialist ethics, as the most sound analytical system to explain the field, I believe that free will must be given some weight, and we must not surrender entirely to fatalism, assuming that 'superimposed ethical systems' is an absolute.

French philosopher Georges Sorel (1847-1922) argued that myth has inordinate power of influence in the lives of people. Long before Sorel, the power of myth in determining people's lives was evident in societies from the beginning of civilization when organized religion emerged as an integral part of the social, economic and political power structure that had a stake in maintaining the status quo and passing it onto posterity. From ancient times to the present, myth has a very powerful place in the consciousness of the masses and plays a catalytic role in preserving the status quo under the existing social contract.

Human beings live by myths because they are an integral part of a belief system that helps them cope with life, while also providing a cohesive worldview. It is also the case, that human beings need myths, good and bad not only in an existential sense because they are so fulfilling, but also because the intellectual and spiritual life of a person is shrouded by myth that contributes to shaping the individual's identity.

Myths too are superimposed by the elites of any society, but become universally accepted if people recognize in certain myths, which includes religion, a sense of purpose and utility, such as serving psychological (spiritual) needs. There are dangerous myths - destroy the enemy that the state or group has identified for now - and there are commercial myths - buy our products to make you look young - and there are innocuous 'feel-good' myths linked to commerce and political goals.


If we accept the relativist argument of ethics, then we cannot argue, as some have, that there is no such thing as 'ethical capitalism' because by nature the system entails exploitation of the many for the private gain of the few. Of course, one could rely on John Calvin's version of Christianity and Capitalism, as developed by Max Weber in the Protestant Ethic. Therefore, there can be a theoretical correlation between religion and the market system, given that prosperity of the individual is a manifestation of that person's faith, thus reward from God. The assumption here is that the capitalist is doing something 'good' for himself thus for society of which the individual is a part.

How humane is the ethical system that:
1. argues that 'property is sacred', but does not extend the same privilege to human beings' right to social justice?
2. places the individual's welfare above that of the community?
3. has greed as a core value?
4. is rooted in uneven distribution of wealth and perpetuates poverty?
5. legislates private morality - sexual orientation, same-sex marriage, abortion, etc. - but refuses to legislate how financial institutions appropriate capital and sink the world economy into recessions that destroy the lives of billions of people?

Prevailing ethical systems reflect institutional structures and do not come from any grassroots movements or from the wisdom of philosophers. For there to be change in ethical systems, first there must be change in the social, economic, and political structures, that would entail altering the myths and ethics people accept as absolutes. In short, there is no possible way to see systemic change in the existing ethical system, although it is always possible to see nuanced changes within that system.

Monday, 3 December 2012


Has human nature undergone a radical transformation in the past 10,000 years? Have people in "civilized society" created institutions that reflect an egalitarian/hierarchic dichotomy in their nature? Watching a documentary, I was amazed at one of the 9/11 survivors who claimed that when families came together to form a support network, hierarchies developed naturally because some believed "their suffering" was greater than the others. What accounts for the propensity to reject a communitarian/egalitarian spirit and to act accordingly in social groups, especially in the Western World?

Strongly influenced by Marx whose dialectical materialism he rejected, Weber developed conflict theory, and social stratification theory on the basis of property, power, prestige, age and gender--all in a white European context of the 19th century. Besides class, status, gender, ethnicity, race, and prestige, the immediate and extended family structure, the ego and desire to affirm/validate the self by claiming separateness from the other may be contributing factors to the hierarchical mindset and practice. But the irony remains that in society and in hierarchies the ideal aspiration is egalitarianism.

Food gathering communities operated under egalitarian/communitarian conditions that reflected their needs and no doubt considered it "natural." Today such conditions appear antithetical to humans that respond to hierarchical models in daily life. If universally immersed in hierarchical models, why do human beings pay homage to egalitarianism (spiritual or humanist) and seek it as an ideal? Before Judaism, Christianity and Islam, paganism which was based on nature and female deity worship evolved toward patriarchal and hierarchical structures with the stratification of society owing to private property and military conquest.

Initially rooted in hierarchy of nature and then reflecting patriarchal social stratification, paganism reflects the convergence of the real and the ideal. By contrast, Christianity, once it separates people into "good and evil" dichotomy, judges all who are "good" (saved) as equal in the Kingdom of God, while the eschatological model of Hell certainly makes liberal use of hierarchies as Dante dramatized in his ingenious novel intended to criticize secular and spiritual hierarchies in the Italian city states. Of the Eastern religions, Confucianism of course is hierarchical. Hinduism, Buddhism, and Taoism are closer to paganism in spirit and structure, while they embrace a holistic oneness de-emphasized in the hierarchical mindset.

The basic hierarchic model has remained in tact throughout history partly because it reflects the stratification of "civilized society." Today hierarchies are not only present in military, government, business, hospitals, academic institutions, NGOs, but even in community groups that begin with some kind of egalitarian structure but quickly abandon it. Communist countries never managed to put into practice an egalitarian structure as their followers hoped. After taking power, they tried to address the larger issue of social justice within the context of the regime's political perimeters. By adopting a rigid hierarchical structure to enforce "social justice," Communist regimes lost the PR war to Liberal-bourgeois regimes that idealized the individual within the hierarchic social structure.

Even to their own popular base, Communist regimes appeared to undercut Marxist ideology, thus allowing critics and their Cold War nemesis to claim moral superiority on the issue of "equality." All along, hierarchies at all levels of society East and West prevailed and the question was who is better off materially--Communist East or capitalist West? The thin layer of Communist regimes resting on top of a multi-layered hierarchical society was hardly sufficient to alter peoples' hierarchical values and envy of Western materialistic culture.

Since the French Revolution the proclaimed ideal of governments as often reflected in their written constitutions is egalitarianism in some form. Invariably this is translated into equality of opportunity in Western bourgeois regimes, a model exported to most of the world with globalization and the downfall of Communism. The (hierarchical) reality of course is far from the unreachable (egalitarian) ideal. While merit-based system is the aspired ideal of businesses, an ideal that business often projects as "equality of opportunity," the reality is one of rigid hierarchy often unrelated to merit-based models.

Given that educational and non-profit institutions have followed the business model, hierarchies prevail in those sectors despite the ideal of egalitarianism. Hierarchies may not only be the result of social conditioning, or inherent societal conflict where each individual struggles to maximize his benefit as Weber postulated, but they may have a psychosomatic basis as well. If we accept Jean Piaget's theory of cognitive development and Carl Jung's "stages of life" theory, then hierarchies are a reflection of human nature.

Shaped by society's institutions invariably dominated primarily by social and political elites, human nature is conditioned to accept hierarchies as "natural." In the Middle Ages the Divine Chain of Being (the ultimate hierarchy) was reality throughout Christendom. Human beings thirst for affirmation of self and the desire to transcend self, they struggle to maximize their individual benefits oblivious to the welfare of the community. Therefore, they live in hierarchical structures because hierarchies are an expression of neurosis to use a Freudian interpretation.

However, at the ethical and sociopolitical levels, the elites and most people in Western societies
acknowledge that some basic rights--human rights--must be conceded because we live in communities, share a common fate, and aspire to harmony that yields safety and security. At the existential level, death as the great equalizer representing the inevitability of eternal oblivion, the realization that the individual is indeed an organic part of nature's whole forces human beings to feel empathy in order to feel human and overcome fear of death, as in Leo Tolstoy's The Death of Ivan Ilyitch. Given that equality cannot exist in the absence of integration with the whole and given the individual resists integration into an amorphous mass where will and ambition are surrendered to the benefit of the "whole," hierarchies which are externally imposed will remain for eternity.