The feral rich

A major article by Peter Oborne, chief political commentator in the "right-wing" Daily Telegraph newspaper, appeared today under the title "The Rise of the Overclass". Oborne argues that the middle and working classes are now caught between an overclass and an underclass that are effectively out of control – on the one hand the class of super-rich who seem "immune from the restraints that govern the lives of ordinary people", and whose wealth and immunity has grown steadily for the past 30 years, and on the other a "dependent and sometimes criminal class of welfare claimants", among whom "the idea of responsibility, duty, patriotism and neighbourliness has been destroyed". The interesting point is that Oborne shows that these last comments (about lack of patriotism and so forth) apply just as much to the overclass as the underclass. "These feral rich pose, in their way, every bit as much of a danger to society as the rioters who stole and pillaged London streets last August." It is a significant addition to the ongoing debate about the future of capitalism.

Capitalism in question?

As we wait for the final instalment of our series on the Crisis of the Corporation, after which we'll move on to discuss the Recovery of the Guilds, here is a general comment on the broader "crisis of capitalism", so called. Two big topics will be left out, for the moment – the environment, and Europe – to be addressed later.

In capitalism the pursuit of self-interest is supposed to work for the greatest common good. It hasn't. Maybe it was always just too simplistic an idea. George Soros makes some sensible points about the fallibility of the economic system we have created. He argues that

George Soros

The financial speculator and philanthropist George Soros recently gave a lecture at a panel discussion in Oxford's Sheldonian Theatre, sponsored by the 21st Century School. In it he developed his theory of reflexivity and financial markets. He also announced the creation of an Institute for New Economic Thinking to be launched in April in Cambridge, through the Central European University. Interestingly, the distinguished panelists made several key points: that one's model of the human person determines one's economic model; that the economic order cannot be separated from the religious, political, social, and cultural orders; that there is a need for a new integration of the different academic disciplines in order to study big events (such as the recent recession); and that we have by and large lost the ability to educate students in such a way that they are capable of seeing the big picture, thanks to the fragmentation of our educational system (for more on that theme see my Beauty-in-education blog).

The point of the lecture in Oxford was to see what lessons could be drawn from the recent global financial crisis. For Soros, the lessons were stark. International, deregulated capitalism is over. It does not work. When governments were forced to put the market on to artificial life support, it became clear that markets by themselves do not tend towards equilibrium. The alternative, he concluded, is state capitalism of the kind we see in China (and much less successfully in Russia, he added), where the market is explicitly regulated by the state.

Many will react to this suggestion with scepticism, if not horror. Whatever happened to the Open Society? Personally, I wonder if Mr Soros in his preference for bipolar thinking has jumped too quickly to contrast the unregulated with the state-controlled market, ignoring the actual and potential role of civil society, in the space between the individual and the state. When the dinosaurs collapsed many millions of years ago, tiny little mammals running around their feet inherited the earth. Maybe the alternative to big state-run markets is a multiplicity of overlapping tiny markets, supported by credit unions, cooperatives, guilds and local currencies. That may be a dream, the dream of a small mammal in a world of big beasts, but as for putting our fate in the hands of the state, Leopold Kohr warned us against it long ago:

The fourth and last form of Radicalism is therefore no longer directed against capitalist exploitation, political privilege or religious superstition. Socialists, Liberals, and Christians have taken care of these. It is directed against the power of the state, symbolised by the swollen sponge of Parkinsonian bureaucracy. Since this is proportionate to the size of society on which it feeds, it follows that the most modern form of radicalism, having again to step outside the existing order to accomplish its ends, must aim at centering social life in national communities whose size is so reduced as to render excessive governmental power both impossible and unnecessary. For what good is the welfare state if its costs of administration become larger than the benefits it yields? The new radicals are therefore the decentralisers, the federalisers, the regionalists, the regional nationalists (in contrast to the centralizing, expansionist and hence non-radical nationalistic power megalomaniacs) such as they begin to emerge in all corners of the world.

Image: Sheldonian from Catte Street (Wikipedia Commons)