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Paul Collier on Rebuilding the Moral Capacity of the World

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Paul Collier is one of the most distinguished development economists in the world. His Breaking the Conflict Trap: Civil War and Development Policy is one of the best books ever written about violent internal conflict. His Bottom Billion is a very fine book on global poverty.


Collier has just decided to write “the big book” on everything that is wrong with modern society: The Future of Capitalism: Facing the New Anxieties (2018, Harper Collins). Collier is a master of conciseness. What most people would need five or six hundred pages to say, he fits into just under two hundred. The prose is light. The thinking is weighty.


This is a book that all readers are going to hate regardless of their political or moral persuasion. He is not writing to please.


He is convinced that life in the rich nations has gone off the rails. The logic that produced consistent economic growth, a viable and capable state, meaningful and supportive communities, sound and emotionally stable families and a fundamental sense of meaning in life – the logic behind all of this has been corrupted. Both the left and the right have failed. The intellectual elite has failed. The social planners have failed. The working class blokes in dying cities have failed. The secularists and the religionists have failed. The logic that produced the glory days of the twentieth century has been bastardized – with it the basis of a social contract that once worked.


Development economists are expected to conclude their work with “policy recommendations”. These are supposed to be realistic, implementable and politically acceptable to whomever is funding the research. Collier has written hundreds and thousands of pages of “practical safe” policy recommendations in a distinguished career of writing on global poverty.


In this book, he throws all that aside. This time, he is writing for himself. He writes about what the world really needs and how it ought to be fixed. His visions are profound. Most of his suggestions are impractical. He wants firms to be governed by forces other than self-interested executives and boards that care only about shareholder value. Good luck getting the executives and the shareholders to go along with that. He wants to eliminate regional inequalities by taxing the residents of chic cities and spending the revenue on poor places. Donald Trump did tax the residents of chic cities such as Boston and San Francisco by eliminating deductions for state taxes for United States federal income tax. Did the residents of poor states get a lot of extra social spending? I don’t remember that happening.


This is a two hundred book with two hundred different complex and sophisticated ideas. It has at least fifty suggestions as to how to improve the world. Many of those solutions fall into the category of “Great, But Who Bells the Cat?”


But a book needs only one profound idea to be a profound book. With two hundred ideas to choose from, it is not surprising that Future of Capitalism becomes deep and informative many times. Most readers will throw the book at the wall when they hit some argument that unreasonably attacks their cherished beliefs. Different readers will have different trigger points.


The overlying theme of the whole book is that the modern world has lost its moral foundation. You have heard loss-of-moral-tone arguments before – but his version is better and more convincing. He is not making the argument that the world has lost traditional religious values and that we need to start going to church more and having more traditional sex.  Gay marriage is not going to bring the wrath of God across the land. Nor do we need to fear being swamped by non-Christians because Christian women are not having enough babies. (These are real arguments made by the conservative right.)


He is also not arguing that the rise of capitalism has brought on an impersonal greed that destroys the mutual support system of society. (Karl Polanyi fans can restrain their enthusiasm here.) Collier is all for capitalism as being the most effective means for producing wealth ever created.


He does argue that what made the nineteenth and twentieth century great was a fusion of capitalist social organization with a larger sense of morality based on common shared identity. Firms were not only concerned about profits but were concerned about making products of value. The work that people did in these firms was not alienating because employees were working for a company that made something spectacular. Nowadays, everything is shareholder value, screw the customers, screw the vendors, screw the workers, bring on the executive bonuses. He would probably acknowledge that not every sweatshop in nineteenth-century Manchester was a citadel of creating social value. But undoubtedly, the increased financialization of the modern world has undercut this culture of creating value for its own sake. This has been exacerbated by the changes in corporate governance that gave more power to shareholder activists and raiders. Executives and boards of directors now have stock-price-monomania. No other obligation matters including those to customers, workers or the world.


More significantly, he argues that most nations have lost a sense of common moral community. The problem is the bifurcation of nations into prosperous high tech high skill metropoles, and declining low education low income rustbelts. In the old days, welfare states and basic patriotism were motivated by a sense that prosperity was linked to one’s own nation. So one took care of people in one’s own nation. The isolation of America and Canada, the unique technological and naval power of Britain and the state-led state-centered  developments of the rest of Europe made nation a meaningful psychological community – and one cared for other people in one’s own community.


Now the high-tech Yuppies have more in common with high-tech Yuppies in other nations – and do extensive business with those other nations. Their community of identity is a global high-tech world. They are repulsed by the less educated regions of their own nation and wish to act as global citizens. The contempt is mutual, since the residents of the backwaters receive little value from the Yuppies activity – short of having entertaining software on their phone.


The focus of urbanites on global community rather than nation makes them unwilling to provide welfare benefits or any kind of benefits at all to the “uncool” regions. One of Collier’s most compelling arguments is to consider the secession movements that have occurred in the advanced industrial nations. Scotland, Barcelona, and the North of Italy are all prosperous, urban enclaves of high technology – who want to separate themselves from welfare obligations to residents of the poorer regions. (Collier knows quite well that this does not always apply in the Global South. Separationists in Mindanao or Southern Thailand are rural and hinterland.) An alt form of separation is withdrawal from the welfare state. Who wants to pay for benefits to go to those people in that tacky region?


The solution, says Collier, is rebuilding a sense of “place” as a part of fundamental identity – and try to get the nation-state reinstated as a fundamental “place”. Neither he, nor anyone else, has any real clear idea how to do this. But I agree with him that this is a significant issue. I live in Austin, Texas – which has tremendous pride of place as a city. Our slogan is “Keep Austin Weird”. Weird means different from the rest of Texas, which is not weird enough for our personal taste. This produces no love lost between the rest of Texas and Austin. This manifests itself in a vast amount of not-helpful non-cooperative politics, as the Texas State Government tries to undercut everything the City of Austin does, no matter how trivial.  “Standing up for Texas” plays well with non-Austin voters, a majority of voters in the state. Hating Austin also justifies voting for a number of conservative policies that are actually not beneficial for the rural dwellers involved. Texas routinely refuses to extend Obamacare or federal health coverage – a policy solidly supported by rural voters – and one which deprives many of them personally of healthcare.


Yeah, yeah, yeah, you can argue with this proposition. Welfare state benefits are also associated with union strength and the strength of an organized left. The conservative poor in the hinterlands are also looking at diminished prospects for a union movement being able to protect them. Urban politics in the metropoles do not narrowly devolve into Yuppie politics. There is a sizable and politically important immigrant working class which does not fit the Collier scheme. Yes, they have transnational links – but they also can be fiercely patriotic about their adopted country. Wealthy metropoles in the United States often have conservative suburbs. Republican suburbanites share the politics of the hinterland – but their bourgeoisie are fully integrated into the high-skill knowledge economy. Conservative politics, whether in the United States or Britain or Germany, is sometimes a simple manifestation of class interest.


Note that I have covered just one of Collier’s two hundred arguments. You can have a lot of fun playing around with the remaining one hundred and ninety-nine.


I think his argument about modern capitalism having lost an older moral foundation is a good one. I think his analyses of causation are provocative and pick up a significant proportion of the story. He strains to find workable solutions – but everyone else has the same problem.


And if you don’t want to read what Collier has to say about the Global North, you should still read what he has to say about the Global South. Few people are more perceptive about problems of poverty and organized violence. Modern capitalism is still doing at least somewhat well if it continues to produce robust amounts of solid scholarship.


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