Oikonomics: a social life of money

We make the markets we deserve...

We have been having sex for some weeks now – what about starting a relationship?

I found myself talking about the social life of money in two very different forums last week.  The first was on the topic of ‘promoting a savings culture’ in the UK at the CSFI, a no holds barred, lively debating forum MC’d by the incorrigible Andrew Hilton.  The second was at the invitation of the Finance Lab at ICAEW who ran a workshop on ‘Preventable Surprises’ with a select group of stakeholders and opinion formers about the financial crisis – applying the lessons of the Deepwater Horizon disaster.
In many respects, both sessions were a great confidence boost for the point of view that underpins Abundance Generation and what it is trying to achieve in the world of financial services and sustainability. Aviva’s ‘Big Picture’ think piece has much in common with Abundance’s own manifesto and even its language was very similar which generated some new friends and contacts amongst the CSFI audience who also think the time has come to rethink the way we ‘make’ money.

The core philosophy of Abundance; that we need to move from a world dominated by what you can ‘get’ with money (which fits with a world obsessed and addicted to all forms of cheap credit) to what you can ‘do’ with money (which requires a long term investment view of money and a more balanced perspective on risk) was something which helped simplify the complexity of ‘what do we do’ in the face of a crisis not just in our financial system (that is just a symptom of a deeper problem) but in the very values and use we ascribe to money in our society.

New thoughts coming out of the cut and thrust of CSFI and the more collaborative atmosphere of the Lab centre brought my own focus back to the problem of markets.  In particular, the idea that it is the State (or more pertinently in a democratic context ourselves as ‘the people’) that make markets and we make the markets that we deserve.  This instantly attracts attack from passive/implicit neo-liberal acceptance of the reality of markets as somehow universal and immune from the society or culture in which they operate – regulated by rational not social or cultural physics.  The idea that markets are ‘created’ or performed out of a social or cultural context challenges ideas of efficiency and objectivity despite copious evidence to the contrary coming out of the crisis itself and the success of socially produced and embedded markets such as Zopa or eBay.

The energy market in the UK is a case in point. It is a dysfunctional market, created by the State yes, but dysfunctional because of a lack of regulation and intervention from society to ensure the decisions it makes are right for the long term investment we need to make if we are not going to be held hostage to the price of high marginal cost fuels in the future (high marginal cost in economic as well as environmental terms).  Markets and the information they use and value have limits.  They “know” the price of everything but the value of nothing (to re-purpose a phrase) because markets seek to reduce the forces and costs of change – social, cultural and environmental – to a price at a particular instant and constantly discounts future cash and value flows which include economic  as well as the familiar ‘triple bottom line’ benefits.  To explain the slightly cryptic title to this post (taken from a cartoon in this week’s Private Eye) it is like deciding the value of marriage and family on the basis on the quality of the first time you kiss or have sex with your prospective partner. Or even perhaps the quality of restaurant choice for a first date... 

The recent decisions on Feed in tariffs by the UK Department of Energy and Climate Change reflect that blind belief that ‘price’ is somehow a signifier of “value” and that markets are the best arbiter of economic and political decisions about how we generate energy in this country for the next 50 years or more.  This is to miss entirely the point of subsidies for renewable energy sources (of whatever technology) which is to protect those technologies from the short term vagaries and volatility of a market which is driven by the high marginal cost of fuel (compared to renewable energy which has high set up costs but zero marginal cost apart from the discount rate on the money required to build the infrastructure something which requires market confidence to keep the price down, confidence which has been eroded by the current behaviour and signals coming from a department struggling with a arbitrary and short sighted decision not to make FiT part of the annual managed expenditure).

The economics of renewable energy makes its cost highly predictable and stable which limits the potential of the casino side of energy companies (betting on the rise and fall of energy prices – rather like those other well loved utilities our high street banks) to make money from speculation.  Spending on FIT and ROC’s now is about encouraging a more stable (and green) future where businesses can plan and grow in an economy with more stable (and based on evidence from Ireland and Germany were renewable energy installation is ahead of the UK slow and cautious tiptoeing forwards – one that reduces energy bills for ordinary consumers once a critical mass is reached due to something called the ‘Merit order effect’.)

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?

Climate, energy and culture change

How many cultural change specialists does it take to change a light bulb?

A stimulating evening spent listening to Professor Mackay, Pilgrim Beart of Alertme and Stuart Groves of Booz and a plethora of the great and good of science, engineering, environmental policy, and me, (as an 'Energy Anthropologist' - a label coined by Mr Beart).

The question was the need for cultural change to address the challenge of reducing our national energy demand. A number of the more rational approaches to this problem were highlighted and critiqued.  There was a lot of discussion of clever ways to convince 'consumers' to use less of something they don't understand, don't explicitly value (I must keep me and my family warm, not just choose to do so) nor appreciate the true costs.

So the million dollar question which is being asked is 'what works?'.  A question which fills most researchers with a sense of dread because as Zygmunt Bauman quoted his own mentor saying, "don't make predictions, especially not about the future".

Clients usually say they want research to be 'actionable', which would be all well and good if actionable meant being able to think more clearly about what to do, but is less attractive when it involves leaping into the unknown with a do list and some verbatims.

At the risk of using a circular analogy in the context of sustainability and climate change, the problem at one level comes down to confusing the difference between weather and climate. Most research briefs ask questions about the weather and try to define the climate, others ask questions about the climate and try to predict the weather.  In general, weather is more interesting, more immediate and more open to objective measurement. I can measure rainfall on a particular day, but a flood does not mean that the climate is getting wetter. Likewise I can be pretty confident of a heavy lasting snowfall not presaging the next ice age (and a particular lack of snow not being a direct cause of global warming).   Climate, as the UN have found, is a much more slippery beast to define and measure.

However, we seem to be obsessed with researching the social and cultural weather and assuming that this means we are living in a changing social climate. And we perhaps miss evidence of climate change because we can't see beyond the extreme events and responses which obscure the bigger picture.  The recent announcements about measuring 'happiness' fall into this domain, as do predictions of the death of democracy in the face of voter apathy. 

Some businesses live or die on trying to predict social and cultural weather - fashion retailers for example - but others would better spend their money understanding climate and making decisions based on changing patterns while keeping an eye out for disruptive El Nino-El Nina like oscillations. 

This is important because our responses to the clamour of the climate change lobby, the need for energy sustainability and the need to provide affordable energy to everyone (not just the very few who can afford to go 'off the grid') are not generated from a blank sheet of paper.  They are situated in a complex social and cultural "climate" which itself distorts the meaning and effect of different statements, scientific or otherwise, and resists the modernist drive to leave behind traditional beliefs or superstitions and trust in the ulimate truth to be found in a rational pursuit of progress.

Perhaps this is because the world "out there", be it a "consumer" one or otherwise, is not reducible to a single, universal guiding morality, but is made up of a number of parallel, often dissonant moralities, and likewise, we don't live in a world inhabited by a single, universal rationality, but a dissonant set of rationalities.

Predicting the weather is enormously difficult and expensive, requiring ever more complex computer models (and the greater the granularity, it seems, the greater the potential for volatility) reflecting the individualisation of the liquid modern experience. Working from an understanding of climate, by contrast, enables organisations to play a longer game by preparing for periods of disruption and volatility but working to a probablistic but thereby more predictive model of attitudes and behaviours over time.

Each generation is heralded as bringing a new social climate when in reality they usually represent oscillations within a still recognisable sets of norms and values - a function of the ambiguity which definitions of either social or geographical climate need to encompass to maintain their integrity over the long view.

That Richmond or death moment

Yet again, Mad Men wades in where UK television fears to tread, lifting the lid on the fictions of consumption and the process of creation that lies behind any brand’s myth. This time Draper was the cynic, executing what the client ‘wanted’ while Peggy felt creatively challenged by the stereotype they were creating. "You are not an artist, Peggy – you solve problems" was his cutting one liner.  However this off the peg approach ultimately back fired as the copy of the original became a tokenistic parody of itself, with the additional irony that in carrying out his not so macho impression of her female performance in turn implicitly "outed" the secretive Sal to his sexually unsatisfied wife! 

In the UK, it seems we leave such meaning for the stage to pursue (probably because angst doesn’t focus group terribly well amongst those it is implicitly criticizing?) where last week I was witness to the first use of ‘semiotician’ in a West End play; the modern take on Moliere’s Misanthrope which grapples with the problem of the ‘authentic’ writer in a world where truth is what you can make out of it. Ms. Knightley was fantastic as the shallow image of herself (of course being a local girl made good I have to be supportive) while Lewis was left grasping for a dramatic anchor for his angry young man eventually lost in a world where public form and private bitchiness are the ultimate proof of superior social value. Ultimately he became some sort of Daily Mail reading conservative (with a small ‘c’) setting out an escapist bourgeois fantasy in suburbia which was cruelly dismissed by Knightley as merely swapping a life of being a commodity for one where she is bourgeois property –albeit the very place of her ‘real’ birth!

Watching the play reminded me of the cringing irony of watching "The Hours" in Richmond cinema, surrounded by fellow SW Londoners, while Virginia Wolff rebuffs her husband’s desperate entreaty to choose between ‘Richmond or death’ – "I choose death". Cue every person in the room experiencing a reflexive perception evidenced only by a ripple of nervous laughter.

Perhaps that is why the satire feels different and lands different punches in the post modern world? Our world of brands and advertising has been an ‘ironic joke’ for a long time now – for fear of analyzing too closely what lies beneath we laugh it all off. Even our politics has become a similar performance of protest and counter protest – "all sound and fury signifying nothing". I found myself having sympathy for Knightley’s character because she self consciously lives in the "real economy" of image and commodity and trades herself for the illusion of individuality, while I found myself unable to connect with the anachronistic Alceste for his nostalgic hankering after a social world long fossilized in its semi detached museums. Museums which for Knightley meant the complete loss of self – itself a sort of death. But then maybe it is all Magritte to me.

 

The Practice of Everyday life - strategies and tactics

Reading Michel de Certeau’s the Practice of Everyday life has proved very fruitful for thinking through a potential study on the social life of money. His criticism of Social Science’s ability to examine the ways in which individuals appropriate and subvert meaning (strategic meanings of institutions and power vs. the (unconscious) tactics of the individual navigating their own paths) mirrors my own view of consumers as ‘producers of meaning’ and consumption being merely seen as a means to an end, not an end in itself.

Where I diverge, perhaps a function of the liquid modern, connected context we now inhabit, is the level to which individuals do not possess conscious strategies of their own which oscillate between conformity and subversion (often simultaneously as individual life projects) and are unconscious tacticians using a form of cultural common sense. The ‘brownian motion’ of tactics as De Certeau characterizes it, seems too random, and in its own way deterministic and limited, in its vision for the modern individual. Surely the existential angst we feel is a function of broadened horizons, new technologically enabled freedoms and the creation of long term goals which often conflict with our short term, tactical needs, desires, faults, mistakes, habits, addictions, etc. Given the right context, any individual can articulate their strategic ideal and trajectory to the level of an institution or brand, but they often lack the confidence and mutual support to carry it through. In other words, we carry the means and capabilities to produce a "kingdom of ends", but are often held back from expressing them through inherited deference to authority, repression or merely lack of self esteem and confidence.

Last week’s debate on money played out just such conflicts in the minds of bankers and bureaucrats of money, and likewise a similar rich vein of this experience is being exposed by the personalization initiatives in adult social care. Perhaps what MdC and others underestimate is the level to which individuals not only subvert but appropriate brands for the furthering of their own strategic aims and ideals, not just ‘surviving and navigating’ the city, but increasingly shaping and seizing control of it.

Realizing the potential of brands, and other vehicles for the creation of social and cultural meaning, for liberating the praxis of individuals (as well as repressing or oppressing it) will create the bridges we need to achieve the new goals of society; such as sustainability, fairness etc.

Amartya Sen: The Idea of Justice II – learning to trust the individual?

I measure the quality of a book on the slowness of the read rather than for its page turning quality. Slowness is a function of the amount it makes me stop and think. I am conducting a project on Adult Social care which sits right at the intersection of his thesis and approach – what are the barriers to individuals taking control of their own social care (budget and services) and what are the opportunities which would justify the initial investment required to make that all happen?

Essentially, the answer is that the institutions that define and provide ‘care’ (i.e. the state, the various departments with social objectives, the local service providers, and importantly the third sector) need to learn to trust individuals. The problem is that this requires an almost Kierkegaardian ‘leap of faith’ to move from abstract managerialism with its implicit moral structures and negative risk assumptions to a more concrete ‘lived’ philosophy; no longer framing the question for the state vs. the individual as ‘what is the life he/she/we ought to live?’ but instead asking ‘what is the best life he/she/we can live?’.

Sen appears to be advocating a type of social existentialism – championing the individual in the face of normative state sponsored programming which assumes it has all the answers; if only people would listen to what they had to say! Just as Sartre wanted to wake us up to the reality of freedom and choice and the implications of ‘not choosing’ (i.e. following the herd), so Sen’s book can be read as a wakeup call to examine the implications of the state feeling it must be ‘providing choice’ to its citizens – i.e. setting out the paths we must follow to a ‘good life’.

The problem is that the state provides choice in the Hegelian sense of ‘both/and’ – this creates the double speak and contradictions inherent in the third way. The state doesn’t want to offer real choice but a safe choice. However, you cannot talk about individuals being responsible for their actions and then take away responsibility for their choices. What people at the sharp end lack is not institutions but practical examples – role models – from which they can identify the best life for them to follow. In fact, the more institutions take responsibility for those individuals the more they become programmed that freedom = negative risk; the risk of failure, rather than freedom = positive risk; the risk of success. No wonder they call being on benefits ‘living in the waiting room of life’.

Amartya Sen: Implications of "the idea of justice" for the future of money

I have just started Amartya Sen’s new book "The Idea of Justice" which in many ways is the culmination of his heterodox approach to the problems of economics and political philosophy. Sen’s approach is to start not from perfect ideals, but from comparative analysis to derive capabilities. His belief is that ‘perfect’ models blind us to what can be achieved in the real world – the life I can lead – by focusing on creating idealistic contexts which must artificially separate themselves from the social and political realities of the individual human agents who enact them.

His is also a valid criticism of thinking about ‘money’ which is too often focused around some idea of "perfect money" or the ‘idea’ of money. A one time student and collaborator with Rawls, Sen is seeking to develop a new approach to engage with the problems and injustices of modern societies without resort to abstract 'perfect institutions.  In fact, many economists would find Rawls' "original condition" and "thin conception of the good" familiar in the way it defines human actors in minimal form to enable analysis of a hypothetical social contract free from contemporary baggage.

Perhaps it is not the idea of the hypothetical contract which is the issue, but rather Rawls’ focus on human actors in the performance of justice. Rawls appears to privilege the subjective as providing the ultimate ‘objective’ view of what justice is. The problem with this approach is that at some point he must introduce additional ‘actors’ and ‘things’ into the situation to avoid his world becoming an entirely ‘alien’ or solipsist proposition without meaning in our cultural and linguistic context. As a result, his global hypothesis becomes contaminated with very ‘local’ concerns (geographically and temporally speaking) and shifts from a hypothetical state to a virtual one (an imagining of the real as opposed to some purely rational ideal) which borders on and even overlaps with the ‘real’.

Rawls later conceded that his theories were designed to make explicit and coherent the principles of justice in democratic, culturally pluralist states and appeared to move away from some of the universalist implications of his magnum opus. Sen takes that a stage further by making the context the start point for understanding how I can live the good life rather than an abstraction of what the good life is.

Certainly I can see real value in examining money both using a comparative approach to generate capabilities rather than some universal ideal. To liberate money from the subjective is the first stage in de-mystifying its meaning and practice in everyday life. The separation of  particular forms of money from the context in which it is being used removes the very meaning that drives its usage.

Sen’s hypothesis is that once this is recognized, we are freed from the pursuit of ideal institutions and instead see them as tools for the resolution of particular social injustices and problems. By transforming (e)Utopia (the good place) into Eudaimonia (living well) we look for solutions in terms of individual capabilities rather than through the imposition of institutional frameworks or solutions.

As we found in last week, this approach forces us to challenge our assumptions about how particular segments of our society use and experience money and how that use and experience changes their perception of its meaning and value to them. Hence ‘living without money’ has very different cultural interpretations depending on your perspective and any intervention involving money needs to take account of both the constraints and capabilities generated by those perspectives.

Afterword: the FS club bloggers night on social media

Some more thoughts on social media which occurred after Chris Skinner’s Financial Services Club event last night - prompted by the inspirational qualities of Young's Bitter perhaps? If I am repeating myself apologies to those who attended but I always have a bit of a goldfish memory when speaking at these events:

1. Social media is not homogenous. It value is its fecundity in producing multiple forms of community, interests and meanings of ‘social’.

2. Social capital can transform into both political and economic capital/power/value.

3. It is hard to rationalize social progress into linear trends – trial and error, James’ creative adapters and the like mean that graphs, etc are de facto descriptions not a priori explanations.

4. Why wouldn’t banks value the ability of new forms of social media and interaction to create social capital alongside political and economic capital despite the obvious challenges of the transparency and equality required to participate in these new social spheres as they emerge and evolve.

5. Constantly feeling the pressure to be original and individual is hard work and stressful. Sometimes conformity and anonymity seem a comforting alternative. I have colleagues in who have enjoyed the freedom of the Berlin lifestyle who are now (jokingly perhaps) longing to retire to the prejudice and class hierarchy of Munich!

6. Social media is creating contexts where the ‘money’ itself is being transformed from economic to other forms of (cultural/political/social) value.

7. So-called social media (typified by "internet 2.0" for want of a collective term) will solidify into institutions which will be critiqued and overthrown just like any other forcing them to adapt and change to new social realities themselves – perhaps more quickly than their investors / creators think!

Zygmunt Bauman unplugged on the Wye

I am off to listen to Zygmunt Bauman talk at the Hay festival on Sunday. His sociology of individualism and consumerism was a major source of inspiration for the creation of Zopa which was in part envisaged as a ‘liquid modern community’ (if that is not a contradiction in terms). Sitting here in the Foyles jazz café I am swatting up on his latest oeuvre – "Does ethics have a chance in a world of consumers?" and trying to think of a good question to ask on Sunday that won’t leave me feeling like some fresher student challenging his tutor on his chosen topic.

It overlaps with my latest venture which is looking at ways of harnessing the moral economy in service of bringing green practices out of the political activist niche and slap bang into the middle of the consumer agenda. At the heart is the insight that ‘consumers’ are in fact deeply moral about the choices they make (not all, obviously, but there are some major conflicts and dilemmas which drive great swathes of an outside observer might characterize as ‘consumer behaviour’*). That morality may not always be articulated explicitly (and sometimes it is even ignored in the post-rational ramblings of many market research interviews) but with the right line of questioning it can be flushed out and laid bare. It is at that point that consumerism shifts from a technological narrative of solutions to ‘problems’ and shifts into a Bauman-esque negotiation between moral ideals and the problems and needs of everyday life.

In other words, consumerism has the potential for generating a significant social revolution which could far outstrip the outmoded political institutions and conventional activist channels to generate the change necessary for a positive compromise between our individual aspirations and the collective cost of our "lifestyle".

Consumerism itself, like money, is neither intrinsically good nor bad, it is merely a place where our notions of ethics and morality are played out and morphed by experience.

*Even the much maligned ‘diet coke and donut’ choice represents a desire for the eradication of a contradiction between the desire to be ‘good’ and the need for a sugar rush… In Australia this is mainly characterized by the juxtaposition of smoothie stores with donut emporia. Ironically of course the smoothies might be lower in fat but they are far fuller of fattening (fruit) sugar.