Paul Mason at Newsnight has been asking what will bring about the recovery in the UK, saving the current system or building a new ‘post-industrial’ system. Zopa was used as an example of what Philip Blond calls ‘de-centralized capital’ or the ‘re-localised economy’. More interesting for me (aside from the cheerleading for my one and only shareholding….) is the challenge to the idea that philosophy of maximizing, be it efficiency, profit or growth is the only strategy for business success. What Paul called ‘a bunch of Hippies in West Wales’ would assert that optimizing for your environment and your values is the more sustainable strategy and they cited strategies for survival in nature which utilize this approach.
But this is more than financial engineering, it is also about decentralizing the political economy too. Not through the creation of more quangos and institutions, or perhaps even a new bubble forming in the so-called "third sector", but through the creation of new and more sustainable networks of individuals who can do much more than just create a new way of borrowing and investing money (although of course that is a good start). The problem is that just as in banks there is a significant and powerful vested interest in the pyramid-like structures of power which organize both our financial and political capital – propped up by their own forms of bail out for whether it be unions or non-doms.
Perhaps something which Paul missed in his commentary was the implicit challenge to the idea of competition and self interest as the maxims for success which in turn will generate the wider social goods which our society arguably needs to survive. It doesn’t take a genius to recognize that this model has its limitations but as yet there is relatively little being created as a cogent alternative. Giles at Zopa used the word ‘collaborative’ to describe the zopa market – but the important thing to note is that this is not some form of Soviet collective setting prices for the greater good, but a collaboration in which everyone is equal in their ability to influence the market and set prices because price is not a function of some competitively driven index but a function of individual decision on how much is ‘enough’. It something that needs more study, but my theory would be that as a zopa lender I have an ‘interest’ in being competitive versus banks (which in the current climate is relatively easy) and also an interest in creating a sustainable and affordable (by borrowers) return on my money.
Perhaps it is timely that the Spectator was handing out free copies of Adam Smith’s Invisible Hand this week!
Nice post. Great insight that, on Zopa, "price... is a function of individual decision on how much is ‘enough’"
Best
SDJ
Posted by: Pragmatist | April 07, 2010 at 09:16 AM