The spectacle of a president of the United States choking with anger over the behavior of one of his country's companies is so unusual that it deserves comment. In fact, Barack Obama's attitude is dictated not only by the fact that AIG executives paid themselves bonuses while their company - bankrupt from an accounting perspective - called on massive public financial assistance. It's their moral obliviousness that has stupefied all America.

    These executives are the highly representative product of a capitalist system that has reinterpreted the original neo-liberal doctrine so as to remove any and all of its moral connotations. Thus has the official doxology imposed the idea that the market is a pure mechanism for the optimal allocation of resources, a strictly neutral procedure from a moral perspective. Thanks to this intellectual hoax, faithless and lawless speculators along with finance's whiz kids have amassed fortunes without anyone questioning their decency. That out-and-out swindlers were able to so easily blend into the background shows the degree to which moral ruin has overrun the system.

Also see below:     
Bernard Maris | Earn More to Buy More or Human Folly    â€¢
Jonathan Sacks | Morals: the One Thing Markets Don't Make    â€¢

    Now it was not inevitable that the capitalist economic adventure should turn out this way. In the beginning, the English, or rather the Scottish, school closely associated the new economic theory of the invisible hand with what Adam Smith called a theory of moral sentiments. The latter was based on the idea that human behavior was guided not only by personal interest, but also by sympathy for others. To this original foundation, the Protestant ethic Max Weber analyzed so well added the sense of duty well-performed and the taste for professional rigor as a contribution to God's works on earth. But all this moral component of capitalism has been thrown overboard. Nothing remains but greed in its raw state, concealed under the mantle of market procedure and the scientific imposture of new financial techniques. In the name of so-called efficiency, the system has dumped its old eighteenth century moral trappings. That dumping, in fact, was a ruse to construct dominant positions one could abuse without limit in the name of the market. As the price of its misdeed, Obama has decided to dismantle AIG; that is undoubtedly only the first effect of the moral boomerang.

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    Translation: Truthout French language editor Leslie Thatcher.

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Earn More to Buy More or Human Folly

Tuesday 24 March 2009

by: Bernard Maris  |  Visit article original @ Marianne2

    In conjunction with France Inter, the column of journalist and writer Bernard Maris, who wonders about some people's consumer impulses and Stakhanovism. So there's nothing rational about the economy?

    Is the economy the domain of impulse and not of rationality? When you watch an ad about a car that arouses your desire to buy a car ... you are always presented this machine within a magnificent desert landscape, where it runs at an improbable speed in absolute silence and well-being. Nobody sells you this car stuck in a traffic jam next to a scowling truck driver who's just given you the finger. In other words, you're not sold a car, but beauty and freedom. No one sells you pollution, landscapes ravaged by highways, forests destroyed to produce ethanol, but well-being; no one really speaks to your reason. Advertisers have long understood that economic man, in this case, the buyer, is not a rational animal ...

    It is to be feared that he is moved by "impulses." The desires to always buy more, to always accumulate more, to enrich oneself beyond what one will ever be able to consume, the need to destroy, to exhaust nature, for immediate satisfactions are not very "rational." And, above all, why desire always and ever still more money? The great economist Keynes said that that desire reveals, and I quote, a somewhat repugnant mental illness. He was fascinated by the myth of King Midas, who had asked Dionysius for the power to turn everything to gold: But when he wanted to eat, he was very upset! To such a point that I believe one must ask oneself the question: is there not a certain intense sensual pleasure in the destruction and massacre of nature, which would explain our destruction today of Indonesia's last rain forests to plant palm groves for future "bio-fuels" (with 3,000 quote marks around "bio").

    Still, one must work to live! We are no longer - alas! - monkeys that spring and eat from branch to branch. But why "overwork" to live? Why work to earn more, if working to earn is enough (I understand one has to work to earn)? Voluntary servitude is one of the great mysteries of humanity. I'm talking about voluntary servitude at work: why overwork when we could satisfy ourselves with [merely] working? The answer: because other people overwork. The economy reacts to many crowd phenomena, as Keynes thought, and not to rational individuals.

    Quote of the day: "When the last tree is felled, the last stream poisoned, the last fish caught, only then will you realize that you can't eat money." Prophecy of a Cree Indian chief.

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    Translation: Truthout French language editor Leslie Thatcher.

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Morals: the One Thing Markets Don't Make

Saturday 21 March 2009

by: Jonathan Sacks  |  Visit article original @ The Times UK

     No amount of regulation will restore our sense of honour and shame. Economics needs ethics.

    The continuing disclosures about excessive pensions and payoffs, salaries and bonuses for people at the top stir in us feelings for the oldest of human bloodsports: the search for a scapegoat. But they ought to lead us to think more deeply about the values of our culture as a whole.

    Often, these past months, I have found myself going back to one of the most painful conversations I have had. It was with one of Britain's leading industrialists. He had led his company to consistent success for decades. When I met him he had retired and was near the end of his life.

    He was not a religious man but he was a deeply moral one. He spoke of the principles that had guided him in business and of the salary he had drawn. It was not negligible, but it was modest. What pained him was that his successor had awarded himself a salary ten times that amount, while systematically destroying the company he had so carefully built.

    I recall another conversation with a successful investment banker. He told me that the first thing he had to establish was his character, his reputation for trustworthiness and honesty. Without that, he would have been unable to trade. Nowadays, he said, deals no longer depend on character but on lawyers.

    Common to these stories is the gradual disappearance of the cluster of principles that went by the name of morality. Whatever its source - religion, conscience, custom or code - it meant that there are certain things you don't do because they are not done. You don't reward yourself when customers, clients or shareholders or employees are suffering losses. You don't pay yourself out of all proportion to what you pay others. You don't take advantage of your position just because you can. You are guided, even if no one is watching, by a sense of what is responsible and right. Without that internalised code of honour and trust, no institution can be sustained in the long run.

    Somehow, between the 1960s and 1980s the idea prevailed that we could do without the moral sense. Who needed it any more? In the 1960s we thought that the State would take care of our problems. In the 1980s we thought that the market would. Self-imposed restraints were dismissed as outmoded and killjoy. Greed was good. The guy with the most toys when he dies, wins.

    The result was that we began to lose our understanding of the vital distinction between the value of things and their price. The key example - at the heart of the entire financial collapse - was housing. The value of a house is that it is a home. It's a shelter, a haven, personal space in an impersonal world. For many, it's where we sustain a marriage and build a family. It's where love finds its local habitation and name.

    At a point in time, some began to think of houses not as homes but as capital investments. They began to borrow more and spend more. Building societies duly obliged.

    House prices kept on rising. Their attraction as investments grew, and so the cycle fed itself: ever higher prices, ever bigger mortgages, until house prices and borrowing lost all connection with average incomes and sustainability. Those who just wanted a home had no choice but to join the game, at great expense and risk. The speculators were convinced they had become richer, but in real terms they hadn't. The value of housing had changed not an iota, because value is not the same as price.

    It was bound to collapse, and anyone who had thought it through, said so. The investor Warren Buffett called sub-prime mortgages ìfinancial weapons of mass destructionî as long ago as 2002. In the collective madness, no one was listening.

    After financial collapse many questions are being asked. Should there be more regulation? State ownership of financial institutions? Have we reached the end of the market economy? They are good questions, but they get nowhere near the heart of the matter.

    The market economy has generated more real wealth, eliminated more poverty and liberated more human creativity than any other economic system. The fault is not with the market but with the idea that the market alone is all we need.

    Markets don't guarantee equity, responsibility or integrity. They can maximise short-term gain at the cost of long-term sustainability. They don't distribute rewards fairly. They don't guarantee honesty. When it comes to flagrant self-interest, they combine the maximum temptation with the maximum opportunity. Markets need morals, and morals are not made by markets.

    They are made by schools, the media, custom, tradition, religious leaders, moral role models and the influence of people. But when religion loses its voice and the media worship success, when right and wrong become relativised and morality is condemned as 'judgmental', when people lose all sense of honour and shame and there is nothing they won't do if they can get away with it, no regulation will save us. People will outwit the regulators, as they did by the securitisation of risk so no one knew who owed what to whom.

    The big question is: how do we learn to be moral again? Markets were made to serve us; we were not made to serve markets. Economics needs ethics. Markets do not survive by market forces alone. They depend on respect for the people affected by our decisions. Lose that and we lose not just money and jobs but something more significant still: freedom, trust and decency, the things that have a value, not a price.

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    Sir Jonathan Sacks is the Chief Rabbi of the United Hebrew Congregations of the Commonwealth