Friday, November 6, 2015

225. Rebellious capitalism

In opposition to Levinas, who demanded surrender and awe with respect to the other person, Lacan, and followers Zizek and Badiou, focus on how others can hurt, constrain and gag the self.[i] They seek to break out from the repressive dictates of convention, claiming space for rebelliousness and authenticity, and acts of defiance. Such striving for escape from the institutionalized order is also to be found in Foucault and in Derrida’s ‘deconstruction’ of such order.  

Zizek claims that the ‘postmodern valorization of diversity, glorification of contingency, flexibility, hybridity, and flux mirrors the logic of capitalism, which thrives on the proliferation and dispersion of identities … (so that) postmodern politics replicates capitalism’s dislike of boundaries’.[ii]

Ruti quite rightly notes that ‘neo-liberalism … permits the heterodoxy, rebelliousness’[iii] that Zizek seeks. Indeed, as recognized by the economist Joseph Schumpeter, entrepreneurship wreaks ‘creative destruction’ of the existing order. The economist Friedrich von Hayek, considered to be a godfather of neo-liberalism, called competition a ‘discovery process’, and claimed that the prime virtue of markets is that they give scope and opportunity for idiosyncratic ‘local knowledge’ in ways that central planning never could. Instead of being thankful to capitalism for offering this opportunity for rebelliousness, deviance, which they seek, Zizek and Badiou castigate capitalism for it. Capitalism has to be the evil force, no matter what. But it is communism that takes out the scope for rebellion.

Yet I also am deeply critical of the way capitalism has developed. I recently published a highly critical book on markets.[iv] They are having perverse effects. I go so far as to make the radical proposal that the utilitarian ethic that underlies present economic science should be replaced by a virtue ethic, in a variation upon Aristotelian virtue ethics.

What now? Where is the good and where the bad of capitalism and markets? Schumpeter distinguished between conduct of corporations and that of independent, new entrepreneurs, coming from outside, and predicted that in the development of capitalism the latter would be replaced by the former. Here I adopt and develop that idea.

In my scientific and advisory work on innovation I ran into this contrast. One can distinguish between incremental innovation, with improvements on what exists, and the creative destruction of radical innovation. The latter entails what economists call radical uncertainty, as opposed to calculable risk. Under radical uncertainty one does not know what may happen. Economics as the science of rational choice cannot deal with such incalculable uncertainty which therefore is an extraneous, embarrassing phenomenon that is best ignored.

Radical innovation is not in the interest of established, large corporations, since it creatively destroys the economic value of their current investments. In many ways, large firms try to halt or slow down the creative destruction contrived by outsiders. For politics, the uncertainty of radical innovation also is an embarrassment, with eight out of ten projects not achieving their professed goal. Funding that is seen as largely funding failure. But it is in fact warranted, since the successes are worth the failures, and failures are a source of learning. However, this is difficult to sell in a society that has become pathologically averse to risk.

So, an unholy alliance arises between politics and large business, where corporations can exercise their lobbies, in funding incremental innovation in large firms. As a result, the obstacles are increased for radical innovation by the rebels, the outsiders.

Also, large-scale, concentrated business yields the excesses of unjustifiable remuneration, tax evasion, hiving off risks unto society, and the mutual embrace in what earlier in this blog I called ‘system tragedy’.

Also, the shared avoidance of risk has yielded a pre-occupation with efficiency rather than quality and innovation, and an orientation towards detailed forms of control that are suffocating professional work and innovation.[v]

So, the compulsion and suffocation by the established order, constraining deviance and rebellion, derive from  a degenerate form of capitalism.  

[i] See Mari Ruti, 2015, Between Levinas and Lacan; Self, other, ethics’, Bloomsbury.
[ii] The same, p. 90.
[iii] The same, p. 133.
[iv] Bart Nooteboom, 2014, paperback 2015, How markets work and fail, and what to make of them, Edward Elgar.
[v] I have been conceptually developing and promoting leaner, more trust-based forms of ‘horizontal control’. See item75 in this blog.