Friday, January 30, 2015

Marxism as religion: a personal recollection



A couple of days ago, I was writing a part of my forthcoming book (with the provisional, and not very clever, title “Globalization and inequality”) dealing with war. You have to have a section on war in today’s books because all of your stories about convergence, divergence, global middle class, r>g and the like can be totally swept away by war, and especially by a world war.

I then remembered a small episode in my life, from much earlier times when the threat of nuclear war really loomed large in everyday life. Like many of my peers,  I have been strongly influenced by the Cold War. We lived, until the late 1960s-early 1970s constantly in its shadow. I was in elementary school when the Cuban missile crisis happened and I still remember the feeling of dread that took over everybody. For sure, Yugoslavia, where I lived then, was a non-aligned, although Communist, country and we did not expect that the first volley of missiles would hit us. It was even unclear who might shoot at Yugoslavia. But the fear of the abyss was nevertheless palpable.

Around that time, we also studied elementary Marxism with its teleological succession of socio-economic formations: primitive Communism, slave-owning society, feudalism, capitalism, socialism and then, the blossoming of all, Communism. We learned that every society had to go through these stages and  that the ultimate and inevitable final stage of all human societies was Communism. Then, living in the shadow of a nuclear cataclysm, I combined what  I had just learned about the ineluctable advance of humanity with the threat of war. If all of mankind had to reach Communism, I thought, then we cannot have a nuclear holocaust  now since it would destroy the mankind before it had acceded  to Communism. Thus I decided that Marxism provides a very effective rebuttal to any possibility of a nuclear war. My fears receded. For, I thought, if there is a war, the scientific study of where the mankind is  going would be proven incorrect. And, on that soothing note, I went to bed, sure that no world war would break out.

Now, almost half-a-century later, as I was writing about the war, I realized how Marxism in that case really fulfilled the essential functions of a religion. It is often said that Marxism, with its succession of social stages and with the beliefs it engenders in people, is a secular region. But in this case it was more  than that: it dispelled the fears of death, like any “serious” religion would.

Now when I see the clouds of a nuclear war appearing again, and no longer believe in Marxist schemata nor in the ineluctable future of the mankind, nor in religion, there is nothing, I thought, to make me forget the fear of war.

Tuesday, January 27, 2015

My wealth and the lives of others



I watched tonight a BBC-sponsored discussion on inequality held in Davos. It was a good discussion, and the crucial moment for me came when the moderator put down the two views of the top-one-percenters, creators or predators, and asked the audience and the discussants (which included private sector CEO’s, Governor of the Bank of England and the head of the IMF) whether one or the other category exemplified better the super-rich. The audience voted, unsurprisingly, 9 to 1, in favor of creators but I thought that the dichotomy, while real and very important, was not sufficiently developed.  

           No rational person can be against people who through their effort or brains, inventions, innovations or hard work, have become rich by improving also our lives. Without them we would be living without electricity, internet or washing machines. Even the person who invented pizza delivery deserves his wealth and our eternal gratitude. On a cold winter night, we would be freezing and hungry in our apartments without him.

            But I thought, there are at least six other ways that people might become billionaires without making lives of the rest of us any better. That is, their fortune could have been given to a random person and nobody (except perhaps their family) would be worse off for that. Let me list these six ways, in descending order of opprobrium.

(1) Inheritance. There is nothing that a person who got it did to make life better for anybody in this wide world. I think this is pretty clear.

(2) Political position. Presidents, kings, emirs who either got to their positions through “force and guile” or have inherited them have often (but not always) become rich without doing anything to improve other people’s lives. Here, think of the Saudi rulers, presidents  of the resource-rich countries (Obiang Nguema from the Equatorial Guinea) and others who simply stole billions of dollars.

(3) Political connections. These are people who made money by cozying up to the rulers, from billionaires in Indonesia who were Suharto’s best buddies to Abramovich and Khodorkovsky who were Yeltsin’s. These are people who have become rich just by being close to power and being given a license to steal or to “organize” business in the best possible way for themselves. Most of what is called FranÏ›afrique falls into this category: French businessmen cozying up to the African rulers. Many of today’s Russian and Chinese billionaires belong there too. State-financed activities, from road-building to military purchases, are the ideal forms for wealth made through political connections. (Read Helen Epstein’s excellent recent review of several books on Zambia if in doubt about what this category includes.)

(4) Political lobbying. These are people who made money through incessant political lobbying (“having politicians in their pocket”) aimed at changing the rules of the game, lowering taxation or handicapping competitors. Here think of pharmaceutical or insurance companies, oil and gas, and these hundreds  of multinationals that keep offices in Washington and Brussels and make their managers and shareholders rich. Financial sector belongs here too: how else would they have gotten the legislation they needed in Washington?  

(5) Monopoly. People who owe large share or all of their fortunes thanks to monopolies (which are  often acquired though political lobbying). Carlos Slim is often mentioning in this context; Bill Gates too. In every country where I travel I hear of one or two or three persons who have become rich by managing  to obtain a monopoly or a privileged position on TV channels, mobile phones or Internet. Berlusconi and Thaksin could be placed there before they moved to category 2.

(6) Tax evasion.  Although it may not be strictly illegal (but then lobbying is not illegal either) it surely often implies that wealth was acquired by cleverly exploiting the rules and without making anybody else better off. Bono of the U2 fame is often cited as an exemplar of this approach and of hypocrisy of arguing for higher taxes to help the poor while his companies are incorporated in the Caribbean islands and pay practically no taxes.

            So clearly, among the millionaires and billionaires there must be quite a few who have become rich, or who owe at least a part of their riches, to one of these six ways listed here. In other words, they have become very wealthy without any obvious contribution to anybody else’s welfare.  

            And thus I thought that we are unlikely make progress about finding out “who is who” among the top 1% (or rather 1% of 1%) until we do something that I suggested to a couple of my  Oxfam friends a year ago: we have to figure out who is mostly a creator and who is mostly a predator. As in many areas, we are unlikely to make a real progress until we quantify things. And we can quantify things by asking a simple, but powerful, question:

(1) How much of your wealth was acquired through activities that benefited other people in the world?

            Obviously, we cannot get to an exact assessment, but we can try to get to an approximation. I suggested to my friends to use the resources of Oxfam, information on the Internet, and people with specific  country knowledge, to look at the way the 1,500 billionaires on the Forbes list have acquired their wealth and then to make an approximate assessment of (1).  It is not an impossible, not even a difficult, task.  Most of the information is known. Very few large fortunes are made without people having an idea how somebody got rich. Not all of these ideas may be correct, but an impartial researcher can assess them, check them up against the known facts, and come to a preliminary judgment. We just need to create a  template where we would give negative points for acquisition of wealth under the six categories listed above (with  inheritance and political position being the worse and tax evasion being the least bad) and then make an assessment for each of the 1,500 billionaires.

            To give an example.  Start with the maximum of  10 points (all of your wealth was acquired through activities that benefited others), and then deduct points as you find out more about how wealth was really gotten.  Surely, Bill Gates might lose 2 to 3 points, but  his contribution to the betterment of the world through Microsoft (I am not talking here of the philanthropic activities; see the note on the bottom of the text) is real. Then, come to the owners of Walmart: they too have contributed to the world (through lower prices of the products in their stores) but have also made lives of many of their employees  miserable and used political lobbying to increase their wealth. They should lose points for the latter.  Then go to the Russian oligarchs:  it is difficult to see how anyone could have been made worse off if oligarch’s  wealth had gone into the hands of somebody else. Then, end with the heirs of large fortunes (Bettencourt in France, Forbes in the US) or Saudi princes where it is just impossible to see what their wealth has to do with the welfare of the world.

            The grades would at first be rough. But they can be gradually improved. If we can grade countries’ democracies, or how much governments’ policies help reduce world poverty, I cannot see why we cannot make estimates about how much of the wealth of each individual billionaire was made through activities that were innovative and helpful to others or not. The  objective is not to shame them into being better people. Many of them do not care about it. The objective is to put some value on that unending discussion about wealth acquisition, illustrated by the question posed at Davos: was wealth deserved or not. Until we know whether we are moving towards the world where most of the wealthy have become so by doing something useful, or the opposite of it, we shall remain stuck in the sterile discussion where one opinion can be equally right or wrong as another. We shall never know if we are getting closer to the socially-minded capitalism or to what Max Weber rightly called “political or exploitative” capitalism. In other words, whether we are moving forward or backward.


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Philanthropic activities. The objective of the exercise is to assess to what extent the acquisition of wealth serves some broader purposes of general human betterment, not whether a person, after perhaps acquiring wealth fraudulently or in a violent manner, is willing to share it. The latter may be good or desirable but is a separate issue from the key one here: is my wealth acquired through actions that have improved the lives of others.