Corona and the Optional Society

                                                                         

Lockdown is a not a new invention. We share history with those who lived through the repeated tragedies of the plague and with the societies that suffered in the invisible hands of the Spanish flu a hundred years ago. What is different today are prosperity, the predictive tools and the much-improved ability to communicate governmental messages and have their restraints respected. As Finland has demonstrated, most of the world had the option to prepare much better for this sort of calamity, but almost all other countries decided against comprehensive prepping despite the stark warnings of SARS, MERS and Ebola. The current tragedy could probably not have been completely avoided, but it would have been contained significantly had we deployed our wealth wisely and exercised our options with more foresight.

 Our upcoming book, ‘Essays on the Optional Society’, takes a close look at how society and individuals will be affected by the plethora of options we have and will gain in the future – options that are put in our lap because of the digital revolution, globalisation, and the rapid growth of wealth we experienced until the corona virus brought it to a halt, but hopefully not to an end.

 A society full of options may appear an unambiguous good, but will, in fact, present dangers as well as opportunity. How we act in the current crisis is an illustration of both qualities.  

 Resilience is what we are looking for now and options are a key element. When one way of living and operating becomes impossible, others will open up. Yet options can be abused, can also lead to new appalling inequality, for instance, and that influences resilience.

 This brings us back to the specifics of corona. The wriggle room that options give makes sure that we do not go hungry during lockdown, because we can quickly modify supply chains (look at the explosion of delivery services). But options are very unequally distributed, and it was heart wrenching to read about the American single mothers on hourly pay that had to go to work even when sick with corona. For them the options picture was: work or let the children starve! All the ‘great leveller’ talk proved empty. As always, the underprivileged become even less privileged when disaster strikes.

 If we decide to build the optional society in a conscious fashion in order to make sure that its benefits will touch everybody, one important task will be to create resilience in such a fashion that a shift in tectonic plates will not automatically sacrifice society’s weakest. Future resilience dictates that everybody’s daily life be moved well away from the breadline – that a safety buffer be there for all.

 The inequality in options exists not only within countries, but very much between countries and regions, as well. Ebola showed that, with proper leadership, rich countries could insulate themselves from a highly contagious virus. There was virtually no spill over. In West Africa however, Ebola was a terrible killer and one reason was that the region did not have the range of options available to rich countries. They did not have an army of doctors and nurses that could be re-deployed, they could not communicate health messages efficiently and effectively, there was no physical and human infrastructure that allowed proper quarantining, let alone a meaningful lockdown, supply chains were not easy to re-arrange. Options were there, but far too few.

 The corona virus is making its way to Africa now and there is a horribly big risk that a continent starved of options will see disaster of an unimaginable scale. The rich world that is monopolising all debate is not addressing this issue at all although the delay function in the spread of the virus is giving time to protect these vulnerable populations. Just as we cannot let the single mother be too close to the abyss, it is a moral imperative not to leave Africa to sink or swim. Our options, and the wealth that options have created, must be deployed now to assist Africans. There is no time to waste!

 The upshot of all this is that the optional society can become a libertarian wet dream with all the attendant inhumanity, or it can become a society of solidarity where options work for all. What we will do for Africa today is the harbinger of the way we will go tomorrow. To choose solidarity or barbarism is the ultimate option facing us!

Capital in any century

 

At a recent lunch I discussed with a friend the perennial issue of populism and how difficult it is for the liberal elite to colport truer statements without oversimplifying. I mentioned as an example of such oversimplification an incident in the seventies at my high school when an in-crowd hippie told a large meeting how unjust it was that a normal worker would earn less than hundred thousand kroners when Denmark’s richest man would earn hundreds of millions.

My friend immediately said: don’t give me the trickle-down story now. And he was right, of course. Trickle-down is another oversimplification, partly because it does not distinguish between unequal consumption and unequal capital ownership.

Inequality is a moral and economic outrage. The moral aspect requires no explanation, but it is important to understand the economics in this respect. And it is important not to oversimplify.

What disturbs us the most is not necessarily that capital ownership is so unequally distributed. Our concern is mostly about the inequality in living conditions, the inequality in consumption. This inequality in consumption makes little sense from an economics perspective, since a healthy economy requires prosperous consumers. The current expanding global economy is largely driven by exporting to underserved markets, which is fine since this helps inter-regional equality. However, in the long run export markets will start to saturate, and start to be more self-sufficient, and the lessons of the Industrial Revolution is that that is when the purchasing power of the domestic consumer will start to become critical. Marx and Engels explained very clearly that the bourgeoisie ultimately requires a better paid proletariat in order to hang on to its wealth. Social democracy was the handmaiden to a blinkered capitalist class.

Capital that does not go into consumption must be invested. When we question unequal capital ownership we are implicitly also questioning whether the capital owners that be are the best to allocate capital. And this is an exceedingly pertinent question, and one that should be explicit, not just implicit. With a very high percentage of capital ownership concentrated in very few hands we are approximating the planned economy paradigm. The difference to Marxism is only that those who in our society are allocating capital are not politically chosen, but, in the best case, chosen by entrepreneurship, in the worst case by inheritance, and in many cases by the ability to climb a corporate ladder not dissimilar to that of a government bureaucracy. John Kenneth Galbraith explained fifty years ago how large corporations in the Industrial State exercise a planned economy function. That fundamental truth has only been exacerbated nowadays by capital ownership residing in so few hands.

Capitalists are genetically aligned with Adam Smith. Yet, the vision of Adam Smith was not an economy planned by the few and the quasi-monopolists. Adam Smith imagined a vibrant society of mainly middle class entrepreneurs. Ironically, if we want to pursue the Adam Smith ideas we must thus break the stranglehold on capital by the few. Adam Smith would have voted for a much higher degree of capital equality! But also, in a democracy we must believe that capital allocation should harness the wisdom of the population at large. Yet for that to happen capital ownership must be far more broadly distributed!