Oikonomics: a social life of money

The start of something new with www.abundancegeneration.com

I have been away from this blog for a long time but for a good reason.  After more than 2 years of effort, energy, bloody mindedness, up's and down's, battles, victories, set backs, surprises and not small amount of coffee, Leon lunch boxes and falafel consumed Abundance is finally ready to born into the world.

Abundance is a new way to think about investing money which aims to go to the next step after the likes of zopa and others in establishing an alternative way of using money that is fundamentally social democratic (i.e. open to all especially those with smaller amounts to invest) and sustainable, and like zopa, competitive in the mainstream financial services market.

Abundance is a community investment platform which allows retail investors to invest in renewable energy projects.  It is the product of the unlikely meeting of an anthropologist, environmentalist and an ex-banker, which sounds like the start of a joke, but has actually produced the first really new regulated financial product in more than a decade...

Exact timings of the launch are yet to be confirmed but you can sign up for email updates at our website which is www.abundancegeneration.com.

Because Abundance is regulated and authorised by the FSA you can find more details on the website and sign up for email updates directly there.

 

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Are you a fixer or a changer?

The world is dividing. The divisions of ideology, culture, class and religion are being replaced by something more fundamental.  It is a question which vexes right and left, fundamentalist and liberal, conservative and progressive, neo-liberal and socialist.It is a question which requires each to question their beliefs and assumptions about the world as it could or will be. 

Are the problems of the sustainability – financial, economic, social and environmental going to be solved by fixing the current system or changing it completely?

Above all this question requires us to ask whether the way things are is a function of the realities of existence and the limited capabilities of human society to create real change or merely the construct of a particular way of thinking about the world and its future.

A fixer is not necessarily a conservative or reactionary, they believe in the passage of progress which has brought humanity into an age of globalised society enabled by technologies that simultaneously shrink the world and overwhelm you with its enormity and diversity.

A changer is not necessarily an idealist or revolutionary, they believe that progress is an illusion and in reality the passage of human civilisation is characterised by rupture and discontinuity rather than any rational model or plan.

A fixer would argue that the current crises of sustainability are a function of a poorly executed plan or lack of rational controls on society, hence a response based on developing new forms of regulation and billions of dollars and pounds spent propping up the institutions which caused our current set of crises – whether than money is supporting banks, oil or other powerful vested interests.

A changer would argue that the current crises are a function of an unsustainable system which is based on false assumptions about the limits and effectiveness of growth, financial capital and industrial scale institutions (of the State, private sector or third sector).  

A fixer sees the barriers to change being irrationality, complexity and resources.  A changer seeks new accounts of change which make sense of the contradictory nature of the world, aims for simplicity and optimises the use of resources for the long term.

A fixer lives in the now and is overwhelmed by the passage of change in a liquid modernity.  A changer makes decisions for the long now, seeing disruption as part of the process of change not a departure from the process.  For a changer, liquid modernity represents the opportunity to re-invent global society rather than simply re-build it.

Which are you?

Building the big society will be more than just a matter of fact

It is a recurring debate within most financial services companies to ask "does this constitute advice?'.  Advice in financial services is highly regulated as a result of Financial Services somewhat chequered history on the matter.  You don't have to go very far back in history to find repeated examples of sharp sales practices masquerading as advice.  My main 'stuck record' when talking to FS companies is to try to convince them that such practices reflect their own skewed view of the world and have very little to do with the meaning and value of advice in society at large. 

I have come across this problem in a related field, namely social care; specifically regarding the advice given by professionals such as GP's, and the perceptible shift in the definition of advice away from common sense or normal cultural praxis and towards something which is rooted in the theme of rationality and evidence led policy thinking which has dogged so much of what purports to be innovation in the public sector.

This is more than just a philosophical debate, although policy wonks and practioneers need (and I think this would be a good thing) to be more philosophical about the nature of advice (and information) if we are not going to see the dysfunctionality of advice in the financial services industry repeated in other sectors of public good - such as health, social care and sustainability.

So lets look at the 'facts'.  Facts are the holy grail of policy making and service design in the public sector.  We treat facts as 'real' and they always trump a good hypothesis or theory. One of the projects of the solid modern world is to make sure that all information is produced in the form of facts - or perhaps more accuratedly, every thing is/can be reduced to a fact.  We even call them 'hard facts'.  A fact is a self contained statement - i.e. all of the necessary the meaning is contained within it.  The value of a fact is that it is an objective bit of stuff (or content) which can be 'transacted' repeatedly between the state/institution/professional and the individual. 

Facts do not refer to or require context to be understood.  Facts are supposed to make things plain and simple so that people can make decisions without any undue influence.  Introducing context about the product or even asking about context (either of the product or of the individual) constitutes advice.

In Financial services I can only use facts unless I want to start giving 'advice' (and enter a painful world of costs, risks, liabilities, authorisations and bureacratic box ticking).

Advice in the solid modern world is enacted by introducing some element of context or personal details. I can identify that I have back pain to my GP or savings that I want to put in an ISA but the GP/FS salesperson will avoid moving to context of that condition/decision for fear of entering the realm of 'advice'.  In the case of a GP it turns a 10 minute consultation into an hour's conversation, and in the case of the FS salesperson (who is not 'trained in advice") it turns a harmless conversation into a regulated transaction of advice.  Advice is about more than the facts about a thing, it involves the application of some contingent context in which the thing will be purchased, used or chosen over another option.

I am sure that a philosopher would have something to say about this (or would assert the limits of what could or should be said), but understanding the gap between the way we define advice in theoretical and policy terms and the way advice is consumed in reality is fundamental to understanding why both the State and financial services are so poor at giving advice which is actually heeded and acted upon by its citizens/customers.

Of course, consumers in reality are less than comfortable with the idea that all they can have are facts about a thing; they are desperate for some context (theirs or someone like them) so that they can make a decision based on what they would define as evidence (i.e. experience).  They don't see the exchange as a finite transaction (one which will not be remembered the next time they interact with that insitution as this would constitute advice) but rather as part of the to and fro/reciprocation of a relationship building exercise.

It is like purchasing a work of art, such as a painting, without being able to know anything beyond what it is a painting of, what paints were used in its creation and what someone else paid for something very similar.  Information about the artist, and the fact that he / she may have painted similar works,  constitutes advice.  And advice is to be avoided.  We are left in the rather post modern state of being when the meaning of a thing is entirely constructed and enacted by the audience and the authors retreat behind a wall of facts about their work.  It is perhaps ironic that much of the rhetoric of the Big Society against the "Big State" is based on the falacy that the state was somehow interfering in everyday life.  The experience in many areas has been akin to the retreat of the financial services from our communities and high streets, i.e. the Big State has become obsessed with presenting only the facts and left the consumer to fend for themselves via choices. Of course, as you often find when marketing financial services products, the way you frame the choice (number of choices, use of brands and other symbols of trust, etc) can control the decision of the individual in much the same way as advice and this constitutes a much more insidious interference in many respects - an interference which could be framed as 'when nudge turns to prod'.

In fact, we are now faced with a system where even advice itself has been reduced to a transactional commodity, valued in temrs of work done to establish the context of an individual and recommendations (or at least priorities established) such that a decision can be made.  The problem is that the costs of this advice are so prohibitive that it is only worth seeking if you have sufficient money to afford it from the investment decision you are about to make.  Essentially the single digit percentage of the population with 100k + of net worth (not counting illiquid assets like houses).

And perhaps we come to the nub of the problem with my last post but one about the Big Individual.  Liquid Modernity delivers freedom for those with the resources to generate their own advice (technological, economic, social, cultural capital) while many are cast adrift in a sea of choices with little or no supply of such capital to navigate their own choices in any meaningful sense, recoursing instead to superstition (picking the third one in the list, picking the middle one) and habit/apathy (making no choice).

So perhaps it falls to researchers to stop selling the (mass) production of facts and start selling the search for meaning?  We only have to look at the essentially irrational behaviour of equity markets to realise the risks of relying purely on the production of facts to make sense of the world and decide how we are going to invest our increasingly finite resources. We don't need States to assume that Google is all the meaning we need to make decisions.  There must be a billion facts on Google which purport to be the 'meaning of life' each one, taken by itself, as useless as the last if you actually want to live that life.

Addendum:

This response from the Sustainable Development Commission to a request for evidence about Behaviour change seems to endorse the importance of changing contexts rather than changing minds and also points to a lack of research resource to understand the impact of interventions and policy changes.

Sustainable Development Commission Submission to the House of Lords Science and Technology select commitee

The Economics of Enough

A thought in progress which occurred when putting together a presentation on “The long now of finance” for SIBOS next week in Amsterdam. I will be presenting as part of the following ‘Innotribe’ whose remit is to think forward across the next century.  A slightly daunting prospect, as Bauman reminded us at his conference, “don’t make predictions, especially not about the future”.

I have always found it challenging to describe ‘what is going on now/here’ let alone make any assertions about the shape of the future. Perhaps that is the best to hope for, just as we write our histories for the present so we write futures.  One thing which is ‘going on now’ is an increasing instance of ideas of collaboration and inklings of new consumer moralities emerging under the banner of sustainability.

The economics of enough are bubbling up all over the place, not so much new era economics as “new age” currently, but then so was Gaia theory and environmentalism not so long ago. I have seen it used in the context of rethinking Thailand’s economic strategy post the 1997 Asian crisis and trying to assert some new moralities of economic endeavour through recourse to Buddhist teachings.

For me the “economics of enough” reflects a fundamental optimism of what we do as individuals in an open, transparent and social context.  It is a function of the compromise between individuality and security which Bauman places at the heart of all social contexts.   The Gordon Gekkos of this world thrive behind the opaque doors of regulated financial markets which enshrine and legitimise greed and ruthless competition in the name of liberalisation and the pursuit of money as an end in itself.  In many ways in the long now of finance, modern money has been an interesting and roller coaster interlude powered by a sixties style revolution of individual credit (the “pill” that liberated consumerism) and the glamour of an ultimately self absorbed and hedonistic elite (LSD replaced by CDO’s and other ‘exotic’ derivatives). Lehman’s was the gorilla /butterfly crushed by in this case a wheel of its own making. 

We are now prepared to consider the idea that you can have ‘enough’ money and be happy, it doesn’t leave you empty and wanting more.  Those who believe you always need more money are those which betray the stresses of the reality of servitude that underpins modern money’s promise of liberation.

However, the “economics of enough” are not just a closed loop of self reliance and drawing in of ourselves to our nearest and dearest, but about how individuals will negotiate their share of market returns and rewards for risk when it becomes clear that some investments needs to be made collectively to produce economically enabled social goods, and as such need to be made fairly and transparently to ensure that both sides of the bargain get a fair return or reciprocation.

Big Society of Big Individuals?

A stimulating day spent in search of evidence for the Big Society at NCVO left me feeling that rather like the term “social enterprise”, “Big Society” will end up being another interesting contradiction in terms that feeds the intellectual interest of policy advisers but leaves the ultimate beneficiaries – i.e. taxpayers, citizens, etc – rather cold.

Perhaps it is worth a minute to consider the view from the other end of the telescope.  We have spent the last two decades embracing individualism, (and the twin trends of personalisation and consumerisation of everyday life) both fueled and enabled by the equivalent of a consumer contraceptive pill of the 1990’s, the credit card.  The liberator of your money, because in your heart of hearts you know that it isn’t your money.  At the same time, technology has enabled us to live increasingly independent lives of personal choices and freedoms which hitherto were both unthinkable and unworkable. I look at my own freelance career, seemingly living without the need of a nurturing corporate body, constantly shifting from project to business, following my own interests in money, consumerism and sustainability and at any moment able to say “tomorrow, I will do something else” on the basis that my time, as a freelancer, is not sold in advance for a salary but paid by the day or even the hour.

Of course, the alternative to this narrative is the atomised individual cast adrift from the institutions and communities upon which previously we had relied and tyrannised by endless choice and so-called consumer ‘liberation’.

And, Ok, I am probably not typical. (Although my work for zopa showed that such lifestyles, which we called ‘freeforming’, were emerging as a significant trend which would foster new forms of social and economic activities and collaborations).  What is evident is that compared even to when I started as a freelancer, 11 years ago now, technology has leapt ahead to make living a ‘liquid modern’ life more accessible, more efficient and cheaper than ever before.  And perhaps more importantly, more ‘solid’ or ‘tangible’.

The same goes for the businesses which seek to harness such technologies for the creation of new low cost business models.  A business really can be built from your bedroom, something reminiscent of what started the rot in the music industry at the end of the 90’s when anyone with talent or an ear for a mash up could produce professional sounds from a laptop. 

Into this context comes the ‘Big Society’ which when understood from this liquid modern perspective appears to be an assertion of some of the very vested interests and traditional institutions which individuals have sought to subvert and undermine.  But I think this is perhaps just one interpretation of just what the Big Society is and a real danger sign that if it is isn’t defined in a meaningful and practical way (or as praxis) soon then the vacuum will be filled by the status quo which adopts BS as a new brand ‘marque’ of legitimacy for their public and private demands for power and resources.

As someone who is essentially optimistic about the ability of liquid individuals (or “freeformers”) to produce meaningful and moral outcomes through new forms of collaboration, the opportunity of the Big Society is to encourage individuals to become ‘big’ rather than replace one set of institutional interests with another.  At Zopa we used to talk about the ‘individual revolution’ of which zopa itself was at the vanguard of new ways of individuals getting together to achieve personal and social goals.  If Big Society is going to be more than a badge, then government needs to adopt a whole new set of beliefs about the potential of the individual and trust in their ability to shape their futures in a way that does not just maximise their pleasure but makes for a more sustainable and fundamentally human response to the needs and challenges of being a good society.