When Keynes imagined capitalism in 2030

In his famous essay ' Economic possibilities for our grand-children' , Keynes projected himself a century later to imagine the society of the future. In reading it, growth would have supplanted misery. We would live in a society of abundance in which we would work few hours: " It will be time for the humanity to learn how to devote its energy to other ends than economic ones".

This text has been analysed in many ways and at length but its interest in our view resides in the rupture with capitalism that Keynes foresees. It unveils a 'radical'  vision of society than in most Keynes' writings.

Since the end of the 20s, Keynes predicted that the economic activity would be four to eight times higher after a century. Yet, today, in constant terms, the outpur of developed nations is already more than four times higher than it was in 1930. This prediction is remarkable as it was made in  troubled times with the crisis of 1929 and statistics at that time were relatively scarce. To measure the audacity, we should think about the difficulties that a contemporary economist would face today in predicting the level of development in a hundred years!

However, Keynes imagined a society of abundance, which contrasts with one of the basic principles of capitalism, the  scarcity of resources. He focuses on absolute needs (nutrition, housing, etc;) rather than relative needs (the desire to acquire a higher status), but this is rather consistent with his analysis. In an abundant society, these needs do not have any reason to exist since once materiual needs would be fully satisfied, we would be free to be human and to develop an authentic way of living.

What appears incongruent is that a  liberal economist conceives capitalism as a provisional phase of the development of mankind, where liberals think of it as the definitive and unsurmountable form of the economic order. But it is also the antagonism between true human values and the values of capitalism such as the love of money " which will be recognised for what it is, a somewhat disgusting morbidity".. In his vision, capitalism constitutes a sort of dark age during which men are constrained by the scarcity of resources. True values will only prevail when we will get out from an economy centered on work and subsistance. Keynes imagines a society where the 'old Adam' (our deep nature) would still feel the need to work three hours a day.

What makes this text debatable is the questioning of the logic of capitalism, which consists in producing continuingly more goods and serices. For Keynes, capitalism is conceivable only if we can break up with it to build a society of sobriety. Today, we face a similar  economic problem on a much larger scale because the 'productivist' model has reached its limits, due to the limitation of resources and the ecological equilibrium. This again contrasts with Keynes' traditional view on growth and innovation as palliatives to resolve our economic problems.

From an ethical perspective, he opposed the 'Benthamian' tradition which assimilates the good to the useful. Instead, 'once out of the tunnel of economic necessity (...) we shall prefer the good' as opposed to 'avarice' and 'usury'. But his conception of the good is of a different nature and identifies with 'delightful people' and  ' direct enjoyment in things',  which presumably owes to George Edward Moore, a philosophy professor at Cambridge and his 'Principia Ethica".

Interestingly, Keynes concluded that we should "not overestimate the importance of the economic problem, or sacrifice to its supposed necessities other matters of greater and more permanent significance. It should be a matter of specialists - like dentistry. If economists could manage to get themselves though of as humble, competent people on a level with dentists, that would be splendid"  .


His conception of the economy is not about entrepreneurship and innovation and he identified capitalism not with the spirit of enterprise but the desire of money. In his 'General Theory', consumption plays a central role, and saving a secondary role. His rejection of accumulation of money is at the heart of his economic doctrine. His vision of capitalism is not about finance and he imagines without any hesitation 'the euthanasia of rentiers' due to the necessary fall of the rate of interest. For Keynes, the two vices of the economic world are unemployment and inequality of wealth and income. In this sense, his liberal ideas are inseparable from social justice and the search for a better world.

 

Swiss initiative for a basic income

The idea of giving everyone in society a Universal Basic Income (Ubi) has been getting a lot of attention recently. The Finnish government is planning  a big experiment where up to 100,000 people could get about $1,100 a month. Four Dutch cities will also experiment this idea  this summer. And several other cities and states, from Canada to Spain, are interested.

Next 5th June,  Swiss citizens will vote for an unconditional basic income  equal to  2500 Swiss francs per month (about 2000 euros) that each adult would receive from the State each month as a financial safety net for the population.

This initiative has been launched a year ago by three committees, drawing inspiration from the French socialist Charles Fourier (1772-1837). This is a sign of growing public activism to combat pay inequality. The organizing committee collected more than the necessary 100 thousand signatures for the popular initiative - which under the Swiss law will be turned into political action if the initiative gets a majority of votes. The Committee B.I.E.N, at the origin of this initiative, considers that the basic income should replace the social security safety net  and the bureaucratic controls imposed to beneficiaries   

The initiative  is opposed by the government ( which fears that it would put in peril the national budget) , the  Swiss patronat which believe this would create a situation of rentier , discouraging people to go to work and trade unions which see the risk that workers will be paid less than their actual wages for 40 hours a week. Sergio Rossi, an economist from Freiburg, member of the referendum committee , argues that the basic income could be financed by social insurance system through a different redistribution system or a revenue tax.

As of today, more than 40% of the population is set to vote favourably to the referendum and it is rapidly growing which means that the initiative could go through and force the government to pass a bill on national basic income.

Philippe Van Parijs, of the Basic Income Earth Network  is promoting the idea worldwide based on academic studies and research. This debate shows that the idea of basic income is gaining momentum to tackle the inequality gap which has hit all major economies, with resulting absolute poverty. This mechanism would contribute to bridge the gap between high and low revenues and finance consumption. In current economic conditions, It is as much the general interest of society than the particular interests of the rich and the poor.

The Pope's Moral Lesson

The Pope's address to the US Congress has a historic significance as he spoke to the most powerful country to remind the congressmen their duties and responsibilities. Most of his words derive from the Church's social doctrine.

His main message is summarized in this part of the speech, where he recalled the pursuit of common good as the mission of politics.

All political activity must serve and promote the good of the human person and be based on respect for his or her dignity. "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness" (Declaration of Independence, 4 July 1776). 

If politics must truly be at the service of the human person, it follows that it cannot be a slave to the economy and finance. Politics is, instead, an expression of our compelling need to live as one, in order to build as one the greatest common good: that of a community which sacrifices particular interests in order to share, in justice and peace, its goods, its interests, its social life" 
P.S:  The Pope expresses a progressive view of the world and its modernity and without him the world would be much worse. 

Markets and Morality

Today, public trust in markets has deteriorated. Modern societies are confronted with  extreme inequality (the Occupy movement), tax avoidance, corruption and protests against the dominant system. Mainstream economists  tend to ignore these contemporary issues leaving them to other social scientists.  

The relations between economics and ethics have been developed by a number of economists drawing on welfare and development economics as well as moral philosophy.  In the classical tradition of Adam Smith, Stuart Mill or Marx, economics goes beyond issues of profit and efficiency. Amartya Sen, perhaps the most prominent 'ethical economist', looks at the relations between economic behaviour and moral sentiments and discusses how freedoms and rights are fundamental to understand them.

The arguments about 'ethical economics' are often presented as a mix of markets and morals. We look here at three different arguments. 

Some consider markets as being intrinsically 'moral'. There is wide consensus  that  markets are necessary because they allow for free choice among a variety of goods and services. The former head of the Bank of England, Professor Brian Griffiths, gave a series of lectures in 1980, collected and published in 1982 under the title 'Morality and the Market-place'. In his book, he regards businesses as a moral community and markets as "morally self-sufficient" if they respect certain Christian values such as justice and compassion. But this is not a condition for being 'moral'. The question is to ask whether the income distribution outcome  is fair. Profits are not immoral but they are not an end in itself.

For others, ethical economics is about the use of  human and natural resources. Various economists (for example, J.Attali) consider that  sustainable development is 'ethical in itself'. The reduction of carbon emissions is certainly kinder for future generations than accepting the 'diktat' of markets. However, ethical investment goes beyond the environment: for example, respecting workers rights or not supporting dictatorships. Increasing the minimum wage, in times of austerity, is an 'ethical measure' because the poorest workers will increase their purchasing power and this will increase internal demand, which is also good for producers.

Moreover, other systems of ethics call for more fundamental change beyond the the functioning of markets. In Islamic finance, for example, religious tenets forbid usury and favour risk sharing with low but safe returns of investments. There are also some systems, such as Bouddhists who reject the foundations of classical markets based on individual choice, private property and material wealth. To be ethical an individual should withdraw from the market  or even disrupt it . Marxists in turn, seek a transformation of social production relations between capitalists and workers, but socialist ideas  gave rise to original forms of organization such as cooperatives and other aspects of social economy.  

There is thus wide disagreement on the relations between markets and morality and the different systems of ethics which underpin those relations. But, there are also different views on where ethics should apply when economic agents make a decision. Adam Smith, who was regarded as the founder of  classical economics was a moral philosopher who believed sympathy for others (or empathy)was the basis of the ethical system. But one of his key ideas in the Wealth of Nations is that empathy could be counterproductive - in other words individuals would be better off if they pursue their self interest. Smith explains this by the collective outcome.

Instead of judging consequences, Aristotle argued that ethics is about having the right character, displaying virtues such as courage and honesty. We see this today between good managers or political leaders and greedy bankers and financiers in search of immediate gains. Aristotle thought there was a golden mean between the extremes and found it a matter of fine judgement. But if ethics is a matter of character, it is difficult to apply it in modern economies.

But there is another approach - instead of focusing on the consequences of actions or the character of people who act - we  may also focus on our actions. From this perspective, some things are right, some others are wrong. For example, we should buy fair trade goods and help the poor, but adverts should not tell lies. Ethics could thus result in a list of commandments of dos and dont's. 

Many moral dilemmas arise when these three views go in different directions and conflicts can be inevitable. Take fair trade coffee, for example: buying it might have good consequences and feed virtuous behaviour in flawed markets. This suggests, that even without an agreement on where ethics applies, ethical economics is still possible.  

The classical conception of man - rational and selfish - exists, only in limited cases, and even classical economists, such as John Stuart Mill admitted that this was a parody. This economic man is a fiction, and our brain can hardly process all the relevant information to take rational decisions. A new wave of ' behavioural economists' (such as recent Nobel prizes Fama and Schiller), aided by neuroscientists, tries to understand our psychology, both as individuals and groups, so they can anticipate our decisions in markets more accurately. But psychology can also help understand why we react with disgust toward social injustice or we accept the market laws as universal. This will not define a new ethics for us, but at least economists will be more attentive to consider ethical issues in their judgements. 

Inhuman crisis

 Pope Francis said that "the current world economic crisis is inhuman, being a grave symptom of the disrespect for man and for truth with which governments and citizens make decisions" . These strong words were pronounced at the end of a 3 day Vatican conference gathering experts from Catholic universities and institutions and from the UN, Council of Europe, the African Union and the organization of American states  to discuss the relevance of the Encyclical letter 'Pacem in Terris" (peace on Earth) in the promotion of a more peaceful world.

The Encyclical underlines the importance of respect of human rights as an essential pillar of modern Christianity. It clearly establishes: "Man has the right to live. He has the right to bodily integrity and to the means necessary for the proper development of life, particularly food, clothing, shelter, medical care, rest, and, finally, the necessary social services".  But it also calls for better relations between men and States, the need for equality among  nations and mutual assistance.  

John's call for peace in 1962 was an attempt to promote international dialogue on the basis of mutual respect and solidarity.  This message was not heard by world powers, as tensions escalated with the rise of the Berlin Wall, the Vietnam War, the nuclear race and so on. Now, Pope Francis urges to build on this universal message to meet the challenges of peace today; what he described as an "educational emergency", " the impact of the mass media on consciences, access to the earth's resources, " the ethical use of biological research", " the arms race and national and international security measures".

The basis of peace making exists because it is in the nature of men. Individuals, families, the society and the States are called to contribute "to build peace, on the example of Jesus Christ... by promoting and practicing justice with truth and love…(and) contributing…to integral human development” through solidarity. And that means an end to “egoism, individualism, and group interests at every level. ”But has today’s world learned any lessons from Pacem in Terris?  “Are the words justice and solidarity” found “solely in our dictionary or are we all working to realize them?”

Pacem in Terris reminds us that “there can be no real peace and harmony if we fail to work for a more just” and jointly supportive society. Every human being shares a common dignity “to promote, respect and safeguard always. ”Priority national and international action,  must work towards a world where everyone is able “to effectively access food, water, shelter , health care, education and (be given) the possibility to form and support a family.” 

"Pacem in terris traces a line that goes from the peace to be built in the heart of men to a rethinking of our model of development and action at all levels, so that our world is a world of peace". Despite the fall of walls and barriers, the message of the Encyclical remains extremely relevant. There cannot be peace if there is no fair development of all men of the Earth! These words have a savor of revolution today. 

P.S: All quotations are extracted from the English version of the address made (in Italian) by Pope Francis on 3rd October

We have a dream

50 years ago, Martin Luther King pronounced  his famous speech  at the end of a huge march of protest for civil rights on 28 August 1963. Those words changed the world and are still relevant today. Hundreds of  millions of people do not enjoy basic rights of freedom, equality and access to education and healthcare. 

Pdt Obama has delivered a speech to commemorate that march and reiterate the values and the spirit of that fundamental event. Just as the US prepares an attack to Syria...

Sampedro, an ethical voice

I am not familiar with the work and life of Jose Luis Sampedro, a Spanish economist and novelist who passed away last Sunday at 96. But what I have read from him in the last few days impressed me.  

Sampedro wrote extensively about the moral and social decline of western civilization and developed a critique of neoliberalism. He also  wrote the prologue to the spanish edition of the book Time for Outrage!, by Stéphane Hessel.

I just pick up one his numerous citations which summarizes his thinking:  "The market is in the hands of the mighty. they say that market is freedom but I would like to know which freedom has someone without a cent. When we talk about freedom, we have to ask : freedom of whom? " (El Pais 11 April 2013). 

Public Education is our Common Good

Profit is the motor of capitalism. Where there are business opportunities, private sector tends to step in. This principle also applies to the education  sector. The economic crisis and the dogma of austerity which prevails in Europe has as an immediate consequence a reduction of public expenditure in welfare policies such as education or health. Lower investment from the State opens the door to private capital. 

Risk capital has a long experience in investing in education, especially in anglo-saxon countries and northern Europe. In southern countries like Spain or Italy, private equity operations are not so developed, but there is growing interest from the business sector in a context where public investment in education is likely to fall significantly in coming years. The shortfall, which could be, for example in Spain , around 10-11 billion € will be only in part compensated by wealthier families. History tells us that when public investment falls private investment tends to crowd in and vice versa. In fact, one of the main arguments of protests against austerity is to combat privatization and the risk of dismantling public education to the benefit of private initiative. 

Available data on profitability of private colleges and universities do not compare well with other economic sectors. The fall of household income tends to shift students from the private to the public sector as families cut spending in education for their children. However, investment firms acknowledge that education is  particularly sensitive  because clients are the children and their parents. Risk capital firms will step in if it is a stable business based  on foreseeable cashflows over the schooling cycle of students and therefore can provide leveraging. Considering that the duration of private equity in a business varies between 4 and 10 years, the education sector offers a sufficient margin for for making investments profitable in the medium term. This means, that public-private partnerhips could develop as it has already happened in healthcare sector.  

While governments  ensure that budget cuts are essential to sustain the public education system in the medium to long term, opponents to austerity believe that they are taking advantage of the crisis to put more money for education in the private sector. Having exhausted the main sources of business and profit such as the construction and public works and industry remains unattractive because it needs large investments, private capital seeks new business opportunities or expands the existing ones. In that sense, basic services such as education or healthcare offer relatively safe profit opportunities. 

The real problem is that a too large involvement of the private sector may endanger the fundamental right to education as citizens will turn from owners of these rights in users of a private system that they will afford according to their economic possibilities. Some organizations support private investment in education but not for all ages. In the early stages of education where investment brings high social returns, public budgets should intervene in financing education.  

Investing in education increases well being and productivity but also yields positive  returns for the society. According to some empirical estimates by Angel de la Fuente (2011), the social returns to investment in human capital are higher than those on physical capital in most EU countries . Of course, outcomes vary across countries depending on both quantity and quality of human capital investment. However, there is no evidence that private education systems will be better performing. Nordic countries invest a much larger proportion of their GDP in public education with better results than the rest of EU countries. A better educated population means a more productive economic system, and therefore more able to compete globally. It's not a matter of  privatizing education systems. 

Finance and the good society

Robert Shiller of Yale University talks  about his book, ‘Finance and the Good Society’, in which he argues that even after the crisis, rather than condemning finance, we need to reclaim it for the common good. He discusses financial innovation, personal morality, the importance of education, and the contribution that finance can make to our lives. The interview was recorded in Bristol in May 2012.


Finance and the good society | vox

What does Equity mean today?

Equity (from latin aequus which means equal) is often used as a synonym of justice. We should start making a distinction between these two notions. The principle of justice applies to individuals and consists of treating equal things in equal manner and unequal things in an unequal manner.  Equity has to do with social and moral righteousness and suggests that people share a common human dignity, and as such should be treated as equals with equal concern and respect. This matters for public policy because citizens can hold the State responsible for ensuring that all citizens are treated as equals and for influencing how things are distributed, i.e. goods and resources (for instance access to healthcare, pensions ) are allocated according to need, not power.  

In current times of crisis, Equity implies that those being responsible for financial speculation - individuals, structures and mechanisms - which to a varying degree  caused the current global crisis are identified and punished so they should not be able to cause any more damage. Their privileged situations of impunity which offend gravely the innate sense of justice among human beings should be brought to an end. Equity also means that everyone should pay its share on its own income and wealth, and that,   the burden is not put only on workers but extends to hidden wealth and tax evasion. Finally, Equity means  that we should not tolerate that opacity persists on the responsibility of the crisis. This means, in substance that those who have more should pay more, but also those who never paid taxes (or very little) should start paying their contribution. 

Citizenship is often an empty word in contemporary democracies. It cannot be a feast for some and a malediction for others, but a commitment for mutual solidarity and aid. Carlo Maria Martini, a former archbishop of Milan and probably the most (intellectually) authoritative voice of the Catholic Church reminded us that  the crisis should be fought with civil courage and that helping the poor is not just a moral obligation. It means helping ourselves as a community of men. 

The primacy of Labour

In a recent speech held in Rimini on 28th October, Cardinal Bagnasco, a conservative and influential member of the Catholic Church, affirmed that the State has the duty to intervene to create job opportunities. He said: "”In the shadows of the non-working , confidence and self-esteem are severely threatened, and serenity to the future is not. For all these reasons, the State has the delicate and onerous duty to provide access to employment opportunities in different areas, taking into account all circumstances, however, that unusual, such as those that the world is experiencing, require an update of mentality and ability to ”renewal. (...) Without decent employment, the man hardly able to measure his personal capacity, to establish collaborative relationships with others, to contribute to the achievement of social good, to feel part of the building in the world, to perceive its dignity in earning honorable bread for themselves and their loved ones". 

The archbishop of Genoa has insisted on the work as " a right and duty of every person, the primacy of man at work, and the primacy of labor over capital, without labor". ”It‘s undeniable- he added – that all human activity, and then the work takes place within the culture and interacts with it, and then between economy and culture, there is a reciprocal relationship, but must remain firm and clear the primacy of culture, if you do not want to enter the jungle of a market without rules because without values.”

Every man  of good will and respectful of human dignity should subscribe to these words. In fact, many constitutions recognize that work is a right and its primacy over capital. This is the legacy of Europe's culture and ideas on labour and value developed by Adam Smith, David Ricardo and Karl Marx. 


Today's world is characterized by an increasing antagonism between labour and capital. Governments failed to address social inequalities while maintaining privileges for the rich. That unsustainable situation gave rise to the explosion of anger of the young generations and revived social conflicts in our societies. The Church's message on the priority of labour is a key component of its social doctrine and has been subject to academic discussion.  But now it has to be understood and turned urgently  into concrete measures of social justice and equity for the vast majority of men and women. 

Corruption and the Rise of Dignity

Corruption is becoming a transnational issue which affects most economies and societies, including the most advanced democracies. The preamble of the UN convention on corruption raises concern about the "seriousness of the problems and threats posed by corruption to the stability and security of societies, undermining the institutions and values of democracy, ethical values and justice and jeopardizing sustainable development and the rule of law". Most countries have ratified the convention with different legislative acts according to their legal and institutional frameworks.

Yet, if a global framework exists to combat corruption - unlike financial markets for which there is a lack of global rules- States seem powerless to defeat this evil which jeopardizes the bases of democratic societies and prevent any effective intervention to address issues of social injustice and inequality.

The origins of corruption may vary greatly, but in a sense, it reflects the changing nature of capitalism. R.Dworkin, in a recent book* argues that modern culture has introduced a false (and apparently persuasive) belief that the most important criterion for 'good life' is wealth and luxury and the power it conveys. The search of wealth as the only value in life, nurtured by the ideology of free market and monetary accumulation has led to corruption as a mere instrument of class domination and therefore as a source of social injustice.

Populist parties seek today legitimation and social acceptance of corruption as an inevitable evil based on the principle "all guilty, all innocent". This is contradiction with the kantian principle that we should honour humanity and morality. But these words seem today meaningless, if we just observe the magnitude of corruption, in its various forms in our democracies. It is not incidental that in the US corruption takes the form of unlimited funding from large corporations to political candidates, which is even considered legal under the consitutional principle of freedom of opinion. But money is not an opinion.

Recent events in Italian political life show the extent of corruption both in public and private spheres and the increasing connection with organised crime. Judges are systematically accused of being "communists" or "terrorists" by corrupted politicians (with the complicity of their allies) to defend their priviledges and their system of power.

The rule of Law, the principles of liberty and justice are not applied onsistently, become obsolete or are circumvented by 'ad hoc' norms. But if democracies are vulnerable and weak to fight corruption, this is also true for totalitarian States, as demonstrated by the recent revolutions in Tunisia, Egypt, Lybia and now in Siria. The search for liberty and justice against corruption has led to an uprising of poor and middle classes living in urban and rural areas, students and young people as well as ethnic and religious groups.

The fight against corruption is therefore essential to address issues of economic development, intolerable inequality, rising unemployment and poverty and more fundamentally the existence of the democratic societies. We need a culture of social justice where dignity prevails over the "culture of corruption". The principles of this alternative culture link the rule of Law to morality and dignity. These are the principles stemming from the Age of Enlightnment, whose ideas have so powerfully inspired our common sense of living together. In Kant's words** we find the essence of these principles: " Morality and the humanity as capable of it is that which alone has dignity".

* R.Dworkin, Justice for Hedgehogs, Harvard Univeristy Press 2011, 422 p. The book is about one's responsibility to living well rather than 'Good Life'. At the end of the book, Dworkin writes: 'without dignity, we are only blinks of duration. But if we manage to lead a good life well, we create something more. We make a subscript to mortality. We make tiny diamonds in cosmic sands"

** I.Kant, Fundamental Principles of the Metaphysic of Morals, 1785, Transl. by Thomas Kingsmill Abbot

The Barbarians

The Barbarians are at our gate and they are threatening our democracies.  They are not the uncivilized or uncultured people from ancient times which prevailed both in Western and Asian cultures. They do not necessarily use violence, but superficiality as their main strength. In doing so, they undermine the very foundations of our societies. Is it the end of  western civilization which invented art, music, literature and wonderful monuments?

The sack of Rome was perpetrated by the Barbarians. But this does not explain why the sophisticated society of ancient Rome, with its advanced technology and powerful armies fell to less developed people. Edward Gibbon's monumental work* argues that   the Roman Empire succumbed to barbarian invasions in large part due to the gradual loss of civic virtue among its citizens and the rise of Christianity. He wrote:  'the pure and genuine influence of Christianity may be traced in its beneficial, though imperfect, effects on the barbarian proselytes of the North. If the decline of the Roman empire was hastened by the conversion of Constantine, his victorious religion broke the violence of the fall, and mollified the ferocious temper of the conquerors." (chap. 39))'. 

We may disagree with this explanation but the fact is that there is no consensus among historians about the decline and fall of civilizations. Jared Diamond's book 'Collapse' attributes the decline of civilizations to external disasters . Another scholar, an American anthropologist, Joseph Taintner explained the collapse of complex societies to diminishing returns on investments in social complexity like education, energy or technological innovation.

This issue has also been discussed by prominent philosophers. F.Nietszche elaborated his doctrine on the overman  (übermensch) as part of his critique of Christianity and modernity as an expression of decadence and nihilism. This vision opposed the idea of progress and equity and the advent of the new man was a liberation from the 'tyranny of Reason'. On the contrary, he saw his age as the final chapter in the levelling and mediocritization of men. He wrote : " The total degeneration of humanity down to what today’s socialist fools and nitwits see as their “man of the future” – as their ideal! – this degeneration and diminution of humanity into the perfect herd animal (or, as they say, into man in a “free society”), this brutalizing process of turning humanity into stunted little animals with equal rights and equal claims is no doubt possible! Anyone who has ever thought this possibility through to the end knows one more disgust than other men, – and perhaps a new task as well! **. 

Barbarians of today are, by no means, the higher men described by Nietszche. They do not see the complexity of societies. They use simplistic, superficial arguments to gain support from the population. Sometimes, they use (or even control) the media to manipulate public opinion and increase control over democratic institutions. They claim that their power stems from the people and that they have the legitimate right to change the rules of law to their advantage. They don't read books and newspapers and their only source of information is  commercial television with reality shows, soap operas and hardly any programme on classical music or fine arts. They mark the triumph of superficiality as opposed to deepness.

This is perhaps the most acute sign of this major transformation of our societies. But it is also the most dangerous one because it gives rise to forms of extremism and populism. Their strength is the use of simplistic and demagogic arguments such as the eviction of immigrants (especially muslims), the introduction of barriers to foreign goods and capital and exit from the euro area. Wise and clairvoyant politicians seem powerless and often fail to persuade their public opinions that these ideas are flawed.

But they must be fought on the terrain of ethics, not just because they are immoral. First, the return to the old currency would imply terrible consequences for businesses and citizens: more exports for few and failure of many living on imported products which become more expensive; incapacity to borrow on financial markets as debt will be reimbursed in euros with a depreciated currency; aggravated risks for the banking system which will transfer the increase of financing costs on businesses and citizens. Second, the return to protectionism in the form of giving preference to domestic products and protecting national firms does not make much sense. If  we rise tariffs against imported products, say from China or Japan, domestic exporting firms will be penalized in selling their products in those countries and the result would be a diminishing purchasing power for the more modest categories of the population. Third, the issue of immigration: in economic terms, the deportation of hundreds of thousands of immigrants would put in danger the survival of businesses which employ a large quantity of foreign workforce such as the construction sector, agriculture, hotels and restaurant; in human terms, we have a moral obligation to help them just as human beings regardless of their religion or color of the skin. .

In sum, they are no welfare gains from these measures but this needs to be explained in plain language to every citizen. Needless to say, education is the best argument against barbarians.

*  The History of the Decline and Fall of the Roman Empire (vol. I, 1776; vols. II, III, 1781; vols. IV, V,VI, 1788–1789). all London: Strahan & Cadell
**     Nietszche, F. Beyond Good and Evil- Prelude to a Philosophy of the Future.

The decline of work

Our civilization is facing one of its most acute crises as it has financial, economic, social and moral implications.  Beyond the financial meltdown, work is at the heart of the decline of western values. Middle class has impoverished over the last two decades; part of the young generation do not even know what work is. But the decline of work is not only expressed in economic terms, it has above all a moral and social aspect.

What is happening in our western world? In past 25 years, globalization has opened up the boundaries in which national states could intervene to regulate the economic activity. Now, the most negative feature is that it creates a downward pressure on wages: a billion and a half workers in developing countries with low wages and almost no rights are competing with half a billion of workers better paid and socially protected. In western countries, there has been an overall reduction of the workforce, in particular blue collars and middle class employees which guaranteed average incomes to buy goods and services produced for them and these jobs are now being destroyed; conversely, lower paid jobs with hardly any social protection have expanded in all sectors. The consequence is that the share of annual output to workers was reduced and the one which went to capitalists increased dramatically. We have a direct experience of this structural change: entire categories of workers had their (real) incomes gradually reduced and their social status as well, whilst we are surrounded by highly qualified people who accept to work with low remunerations and low protection. This is what impoverishment of work actually means.

Technological change affects work in many ways. It reduces, first of all, the number of workers needed to produce he goods and services needed by the global population. It also changes work organization, allowing people to work more autonomously and to relate with others much faster. But all these changes do not mean necessarily the 'end of work' (J.Rifkin), nor a negative impact on human beings ('labor' in Latin means suffering!). Productivity and autonomy can be reconciled with more jobs created elsewhere and better quality of life.   

As explained by classical economists, the economic value of work and its social value are indissociable. Between the 50s and the 80s, it was a sort of 'golden age':  industrialized economies grew steadily and workers could get more income and social rights. Work was the only means to realize people's aspirations for better living, come into their own in society and create a better future for them and their children. Then  started a slow but steady decline. If work loses economic value, it also becomes less relevant in social, cultural and political terms giving rise to an individualistic and fragmented vision of society.  This was the project which was inherent to neo-liberalism which pervaded western societies in the 80s and 90s. 

Yet, this is not what young generations want. Overwhelmingly, they desire a job to be independent, start a family life, build or buy a house, all things which were possible for their parents. But what social research tells us is that, most of them  don't have realistic expectations that this may happen one day. 

We must give value to work as it is the foundation of any society as laid down in many Constitutions of democratic countries. It is not just a matter of industrial relations and the role of trade-unions. It is a more fundamental issue as it has profound societal implications. The challenge for the next millennium is to create better jobs, with higher intrinsic value and to train people being able to make them. If work gets an increasing economic force, it may drag all the rest of the economy while ensuring a more balanced society, a stronger democracy and a more sustainable economy. The decline of work values has conversely increased inequalities and made democracy more fragile and vulnerable to any form of extremism. Restoring the value of work is the only antidote to the decline and perhaps the fall of our western societies.   

On Corruption

In recent times, there are worrying signs of increasing corruption in our most advanced democracies. This is not a new phenomenon, but what matters are the new forms that it is taking. According to many sources (Transparency International, World Bank, etc.) the level of corruption has reached in some countries, such as Italy and Greece, its highest level. In fact, the corruption index is based on surveys which capture the perception of the phenomenon by citizens, but it difficult to measure it accurately. In a survey carried out by Eurobarometre in 2009, most European citizens consider it a very serious problem, especially in Italy. Again, in this country, 17% of those interviewed declared to have experienced corruption in the last twelve months.

Economists have started dealing with this issue two decades ago. But the findings remain still controversial. For instance, the excess of bureaucracy is regarded as a major cause of corruption, but there is still an open debate on the issue of its relationship with economic development. Although most economists consider that corruption has a negative incidence on growth, there are still some views on an inverse causal relationship, that is low growth determines the level corruption. The channels of influence may differ insofar corruption allows inefficient businesses to survive and thus distorts competition, discourages new entrepreneurship and increases the price of good and services delivered by the public sector. Furthermore, it contributes to an inefficient allocation of ‘talents’ and skills: as D. North, a former Nobel price put it, a system which rewards pirates produces pirates not engineers. It is interesting to note that countries more prone to corruption are characterized by a plethora of lawyers- who make up a great deal of the unproductive class. If corruption in Italy would drop to, say, German levels, economic growth would improve by 0,8% per annum, using econometric coefficients derived from a recent study*.

In Italy, four decades of economic development – between the 50s and the 80s- were not conducive to similar institutional standards of the other founding members of the European countries. This means that the quality of institutions has not improved over time. It has been an era of growth without institutions for which the Italian economy is paying the price with a lower growth. The decline of institutions and the loss of control of corruption are, in fact, associated with recent evolutions in the political system, with Berlusconi’s aversion for the rule of law. There are also specific channels of transmission such as electoral rules and decentralization. In the current electoral system, candidates are chosen by political leaders irrespective of merit or competence, which creates opacity and a risk of corruption as compared to a system based on open lists based on the expression of preferences. Local governments are also more prone to corruption relative to central governments, especially if they are supported by very large majorities built around networks of ‘clientelism’ giving little space to a political opposition making a case for good governance.

Yet, we don't have a full understanding of the phenomenon of corruption, its causes and its effects on economic growth. But, it is clear that without it, policies would be fictive or not effective, and the gap between the political class and civil society will keep growing, economic growth will remain sluggish and we might end up with some kind of authoritarian State.

* T.S.Aidt, Corruption, Institutions and Economic Development, Oxford Review of Economic Policy, 2009

A free society means a fair one

Classical liberalism states that markets under perfect liberty will lead to perfect equality. Adam Smith observed, however, that the 'invisible hand ' would not warrant this end and should not be understood as a pure self-regulating mechanism. The metaphor was used in his Theory of Moral Sentiments, to explain the distribution of wealth (1759, p. 350) : 'The rich ... consume little more than the poor, and in spite of their natural selfishness ... They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and ... advance the interest of the society, and afford means to the multiplication of the species"

Contrary to common misconceptions, Smith did not assert that self interest necessarily brings benefits to the whole society, or that all public goods are produced through self-interested labour. His proposal is merely that in a free market, people usually tend to produce goods desired by their neighbours. The 'tragedy of the commons', applied for example to world natural resources,' is an example where self-interest tends to bring an unwanted result.

Moreover, a free market arguably provides numerous opportunities for maximizing one’s own profit at the expense (rather than for the benefit) of others. The tobacco industry is often cited as an example of this: the sale of cigarettes and other tobacco products certainly brings a very good revenue, but the industry’s critics deny that the social benefits (the pleasures associated with smoking, etc.) can possibly outbalance the social costs.

Adam Smith observed that throughout history we find "the vile maxim of the masters of mankind": "All for ourselves, and nothing for other People." He explains that the unproductive class prefers to devote part of the rent to luxury goods rather than provide 'subsistence to a thousand during a year'.

Free societies call for justice. A.Sen explained that freedom is not merely being left to our own device. It also requires that people have the necessary resources to live a decent life. In his recent book**, A.Sen develops a new idea of justice in opposition with the institutionalist vision of John Rawls, Kant and J.J. Rousseau who are engaged in a “long-range search for perfectly just institutions”, and a hunt for “spotless justice”. For Sen, these philosophies are ultimately regressive, because societies full of actual human beings will never agree on a final, perfect set of institutions and rules. More immediately, the search for a perfect set of arrangements for society can distract us from tackling real-life, immediate injustices such as poverty and malnutrition, access to education for women in the developing world or action on climate change. The perfect becomes the enemy of the good.

The competing vision of justice Sen prefers is a “comparative” one, which examines “what kind of lives people can actually lead". For him, as for Condorcet and Stuart Mill, abolishing slavery or giving women the vote would free people to lead lives of their own choosing, even without creating a perfectly just society. The keystone of judging the lives people can actually lead is an assessment of what Sen has labelled their “capabilities” — or, as he explains, “the power to do something”.

The book deserves careful consideration and analysis. The key question is, however, that liberty and fairness are mutually reinforcing and lead to a more egalitarian society. But, we should not overlook what A.Smith said about the masters of mankind, the "merchants and manufacturers," using their power to bring "dreadful misfortunes" and in our day the big transnational l corporations and financial institutions that dominate the world economy, that control today trade, investment and finance above the power of the nation-states. It is the arrogance of these 'masters of mankind' that has led us to the current crisis and its awful consequences for the poor in terms of job losses and wages cuts.

I would like to quote here the great poem by Percy Bysshe Shelley, Ozymandias, which is an ode against tiranny and the course of time:

I met a traveller from an antique land

Who said: ‘Two vast and trunkless legs of stone

Stand in the desert. Near them on the sand,

Half sunk, a shattered visage lies, whose frown

And wrinkled lip and sneer of cold command

Tell that its sculptor well those passions read

Which yet survive, stamped on these lifeless things,

The hand that mocked them and the heart that fed.

And on the pedestal these words appear:

‘My name is Ozymandias, King of Kings:

Look on my works, ye mighty, and despair!’

Nothing beside remains. Round the decay

Of that colossal wreck, boundless and bare,

The lone and level sands stretch far away.

*An Inquiry into the Nature and Causes of the Wealth of Nations: A Selected Edition Adam Smith (Author), Kathryn Sutherland (Editor), 2008, Oxford Paperbacks, Oxford, UK
**The Idea of Justice by Amartya Sen
Allen Lane £25 pp496

The pursuit of Happiness

In his Eudomian Ethics, Aristotle believed that (ethical) virtues led to Happiness. But the happiness that Aristotle spoke of was not necessarily the same that we would think of today. Today our view of happiness tends to be hedonic. We want to feel good immediately and tend not to think too far ahead. So we see a night out or a pleasant activity as a route to happiness.

The ancient Greeks had a very different perspective on Happiness. Aristotle spoke about achieving eudaimonia. He thought that the practice of virtues would equate to happiness, in the sense of being all one can be. For him it was the act of living in balance and moderation that brought the highest pleasure. Not in the action itself, but in the way of life. It is this way of life that would lead to the greatest benefit rather than just a passing amusement. A modern illustration would be the difference between earning a high income, but spending it all and living in more moderation and having great wealth that will last you and provide security.

Happiness is also an issue for economics and politics. For utilitarism, a fair society is a happy society. No supreme authority can decide what is good and fair for mankind; utilitarists like Bentham think in terms of states of pleasure or pain that human beings experience in their daily lives. Stuart Mill has broadened the notion of utility to all areas of life, but in substance utilitarism represents individual interests maximizing (their) well being, not collective interest, which is nothing else than the sum of individual interests.

My question is a different one: Is Happiness a right? All human beings are born equal and should have the same rights. The US constitution refers to 'life, liberty and the pursuit of happiness '. Some believe that the famous phrase is based on the writings of English philosopher John Locke , who expressed that "no one ought to harm another in his life, health, liberty, or possessions. When Jefferson spoke of pursuing happiness, he had nothing vague or private in mind. He meant a public happiness which is measurable; which is, indeed, the test and justification of any government. But to understand why he considered the pursuit of that happiness an unalienable right, we must look to another aspect of Enlightenment thought - to the science of morality. In fact, as in the philosophy of Locke he meant property.

Gross internal product is traditionally used to measure economic performance but is rarely correlated with happiness. Rich societies are often unhappy as they pursue as their main objective the accumulation of goods and wealth. By essence, happiness is subjective, and it is therefore difficult to compare one person’s happiness with another. It can be especially difficult to compare happiness across cultures: are Buddhists happier than (Christian) Europeans?

Economists sought to determine from what source people derive their well-being. Historically, economists have said that well-being is a simple function of income. However, it has been found that once wealth reaches a subsistence level, its effectiveness as a generator of well-being is greatly diminished. This paradox has been referred to as the Easterlin paradox* : aspirations increase with income; after basic needs are met, relative rather than absolute income levels influence well-being. So income is not the only determinant of happiness. Children tend to decrease parental happiness, at least until they leave for college. Married people are happier, but it is unclear if this is due to the marriage or if already happy people tend to marry(!). Democracy and economic freedom bring more well being to individuals. Fair and free societies are the key to increased happiness, but a deteriorating natural and health environment with higher levels of stress, allergy, asthma, pandemics and so forth will bring those levels down.

The question of happiness in our societies is an ideological one. Many countries are developing a Happiness index since Bhutan did so in 1972 because the King (an economist) was concerned about the consequences of deforestation; the example was recently followed by Thailand after the military coup in 2006 and it now releases on a monthly basis a Gross National Happiness (GNH) index on a 1-10 scale with 10 being the most happy(!).

We tend to embrace some happiness myths quite willingly. We are in fact the product of our genes and our societies. From a societal and ethical point of view, it would be better to focus on economic and social progress and the ability of societies to meet the needs of their citizens. In this regard, the Stiglitz-Sen-Fitoussi Commission's “Report on the measurement of economic performance and social progress concludes that the notion of well being requires a multidimensional approach that includes the material conditions (income, consumption and wealth), health, education, personal activities (including work), participation in political and social life, environment and insecurity (economic and physical) which go beyond the traditional tools of measurement of income.

In fact, Happiness is a different thing !

* http://graphics8.nytimes.com/images/2008/04/16/business/Easterlin1974.pdf

** www.stiglitz-sen-fitoussi.fr/en/index.htm