The Future of Capitalism
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Notes
1. THE NEW ANXIETIES
1.See Case and Deaton (2017).
2.Chetty et al. (2017)
3.Chua (2018), p. 173.
4.See, for example, Mason (2015), and my review of this recent literature in the Times Literary Supplement, 25 January 2017.
5.See Norman (2018), ch. 7, for a clear historical account of the disastrous distortions to the analysis of economics pioneered by Adam Smith that were introduced by Bentham and Mill.
6.Haidt (2012).
7.Reported in the Financial Times, 5 January 2018.
8.A readable new account is Roger Scruton’s On Human Nature (2017).
9.Cited in Chua (2018).
10.George Akerlof is a Nobel Laureate in Economics. Together with Rachel Kranton and Dennis Snower we have founded an association: Economic Research on Identities, Narratives and Norms. Tony Venables is a world-renowned economic geographer. For the past three years we have been co-directing a research project on the economics of urbanization. Colin Mayer is Professor of Finance at Oxford, former head of its business school, and director of the British Academy programme, The Future of the Corporation. His book Prosperity: Better Business Makes the Greater Good (2018) is a virtual companion to this book. For the past three years we have been working together on catalysing investment in poor areas. Professor Sir Tim Besley is currently President of the Econometric Society, a past-president of the European Economic Association, and past-editor of the American Economic Review. We are currently co-directing the British Academy Commission on State Fragility. Professor Chris Hookway is the world’s foremost scholar of Peirce and the origins of the Pragmatist school. He has been President of the Peirce Society, and editor of the European Journal of Philosophy. On his retirement in 2015, the conference in his honour was entitled ‘The Idea of Pragmatism’. Fortuitously, he is my oldest friend.
11.Tepperman (2016).
2. THE FOUNDATIONS OF MORALITY
1.A good case can be made that even our emotions are ultimately socially constructed. See Feldman Barrett (2017).
2.See Etzioni (2015).
3.Just as I had finished The Future of Capitalism, Tim Besley introduced me to the philosopher and politician Jesse Norman, who had himself just completed a book on the thought of Adam Smith. With a degree of trepidation, we exchanged manuscripts. I learned much, some of which will be reflected in later notes, but I was relieved to find that Smith will not be turning in his grave at my account of his ideas.
4.Norman (2018).
5.Towers et al. (2016).
6.This was the disagreement between Hume and Kant.
7.Haidt (2012).
8.Mercier and Sperber (2017).
9.Gamble et al. (2018).
10.The Leninist concept of ‘democratic’ centralism.
11.As Haidt (2012) remarks, ‘Deontology and Utilitarianism are “one receptor” moralities, appealing to people with a lack of empathy.’
12.See Dijksterhuis (2005), and Christakis and Fowler (2009).
13.See Hood (2014).
14.See Thomas et al. (2014).
15.See, for example, Cialdini (2007).
16.Akerlof and Shiller (2009), p. 54.
17.Mueller and Rauh (2017).
18.On taboos see Bénabou and Tirole (2011).
19.I have set these ideas out more fully in Collier (2016).
20.A good introduction is their book Identity Economics, Akerlof and Kranton (2011).
21.Besley (2016).
22.If you are interested in the details, I have recently surveyed this new literature: Collier (2017).
23.World Happiness Report, 2017.
24.The sentiments are those
of John Perry Barlow and Mark Zuckerberg, respectively.
25.The technical term is homology.
26.As argued in the seminal study by MacIntyre in 1981, the essence of moral language is to treat others not just as means to a self-interested end, but rather as ends in themselves. See MacIntyre (2013).
27.I have explained shared identity, reciprocity and purposive actions as an analytic sequence, but the empirical evidence that the three components are jointly necessary for ethical collective behaviour comes from the work of Nobel Laureate Eleanor Ostrom (1990) and her successors.
28.For a fuller discussion of the underlying theory and evidence, see Collier (2018d).
29.A phenomenon known as the political business cycle; Chauvet and Collier (2009).
30.Putnam (2016), p. 221.
3. THE ETHICAL STATE
1.This ‘existential crisis’ was recognized as such by the leaders of Europe’s socialist and democratic parties in inviting me to address their annual conference in October 2017 and their youth conference in June 2018.
2.I set out the model more formally and develop its normative implications in Collier (2018b).
3.Wolf (2013), p. 32. This one sentence not only captures the shift of salient identity to work, but also the emphasis upon personal fulfilment, which I take up in Chapter 5.
4.See the Edelman Trust Barometer. Its Annual Report for 2017 opens with ‘trust is in crisis around the world’: https://www.edelman.com/trust2017/.
5.The exemplar of reciprocal co-operation to address anxieties is the cooperative insurance movement, born in Rochdale, an industrial town like Sheffield and Halifax in northern England. In November 2017 the P and V Foundation, part of the giant Belgian insurance co-operative, presented me with its Citizenship Award and I learned of its origins. The Rochdale pioneers had visited Flemish-speaking Ghent, inspiring the birth of the movement in Belgium, but it had swiftly spread across the language barrier to French-speaking Wallonia, and gradually scaled up to become national. The award ceremony was trilingual.
6.Elliott and Kanagasooriam (2017).
7.David Goodhart (2017) has enlarged on this contrast between national and global identities.
8.The quotation is from The Making of the British Landscape by Nicholas Crane (Weidenfeld & Nicolson, 2016), p. 115.
9.Johnson and Toft (2014).
10.Elliott and Kanagasooriam (2017).
4. THE ETHICAL FIRM
1.The survey data are for Britain in 2017. For reasons that will become apparent later in the chapter when I discuss the power of finance over firms, Britain rather than the USA is the supreme exemplar of the Friedman doctrine and its consequences.
2.Gibbons and Henderson (2012).
3.The words are those of a former senior employee, as reported in ‘The Big Bet’, Financial Times, 11 November 2017.
4.Quoted in the Financial Times, 23 October 2017.
5.Again, it is a matter of the erosion of professional ethics. The accountancy profession has mislaid its moral compass. See Brooks (2018).
6.1.7 per cent of GDP, versus an OECD average of 2.4 per cent.
7.See Kay (2011).
8.See Haskel and Westlake (2017).
9.Hidalgo (2015).
10.See Autor et al. (2017).
11.See Scheidel (2017).
5. THE ETHICAL FAMILY
1.I am indebted to Robbie Akerlof for this insight on the change in family norms.
2.Even as late as 1975, working women such as my mother, who left school before completing high school, spent the same amount of time on child care as those who were graduates. By 2003 both had increased, but the less educated were now spending barely half as much time as the graduates; Sullivan and Gershuny (2012).
3.I am indebted to Professor Roger Goodman, a specialist in the modern sociology of Japan, for this intriguing insight.
4.Wolf (2013), p. 236. The data are for white graduate mothers.
5.Ibid., p. 183.
6.See Putnam (2016), p. 67.
7.Eliason (2012).
8.Putnam (2016), p. 70.
9.Ibid., p. 78.
10.Heckman, Stixrud and Ursua (2006).
11.Clark (2014).
12.Bisin and Verdier (2000).
13.Brooks (2015).
14.Seligman (2012).
7. THE GEOGRAPHIC DIVIDE
1.See Venables (2018a, 2018b).
2.See the recent work of Jed Kolko.
3.The underlying research for this disturbing fact is by the OECD. For an accessible discussion see The Economist, 21 October 2017.
4.I would like to thank Tim Besley for confirmation and clarification of this point.
5.See Arnott and Stiglitz (1979).
6.See Collier and Venables (2017).
7.Greenstone, Hornbeck and Moretti (2008).
8.Lee (2000).
8. THE CLASS DIVIDE
1.Wolf (2013), p. 240.
2.From the Fragile Families and Child Wellbeing Study Fact Sheet: www.fragilefamilies.princeton.edu/publications.
3.See ‘Effects of social disadvantage and genetic sensitivity on children’s telomere length’, Fragile Families Research Brief 50, Princeton, 2015.
4.Philip Larkin, ‘High Windows’ (1974).
5.A proposition brilliantly explored by David Brooks in The Social Animal (2011).
6.Pause has a website. Visit it; join in. The data in the text are taken from http://www.pause.org.uk/pause-in-action/learning-and-evaluation.
7.Wolf (2013), pp. 51–2.
8.Brown and de Cao (2017).
9.Putnam (2016), p. 212.
10.Hanushek (2011).
11.Levitt et al. (2016).
12.If you find this as remarkable as I do, may I encourage you to contribute to Grimm and Co, which is a registered charity. You can visit its website at http://grimmandco.co.uk/.
13.A good source here is Wilson (2011), whose book is indeed called Redirect.
14.See http://www.winchester.ac.uk/aboutus/lifelonglearning/CentreforRealWorldLearning/Publications/Post2014/Documents/Lucas%20(2016)%20What%20if%20-%20vocational%20pedagogy%20%20RSA-FETL.pdf on which the following paragraph is based.
15.Alison Wolf, Financial Times, 28 December 2017.
16.Dancing in the Dark, Knausgård (2015), p. 179.
17.Goldstein (2018).
18.Acemoglu and Autor (2011).
19.Financial Times, 10 September 2017.
20.Michael Lewis and Dylan Baker (2014), Flash Boys.
21.In Britain, there has been a strong increase in assortative mating by education, with the biggest increase being graduates marrying graduates: Wolf (2013), p. 232.
22.See Harris (2018).
9. THE GLOBAL DIVIDE
1.World Bank (2018).
2.The following results are from Rueda (2017).
3.Muñoz and Pardos-Prado (2017).
10. BREAKING THE EXTREMES
1.Pardos-Prado (2015).
2.See Chua (2018).
3.People like to identify with success. Depetris-Chauvin and Durante (2017) show that, following the victory of the national football team, national identity becomes more salient.
Index
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3G mobile phone network, 88
Abedi, Salman, 212, 213
abortion, 99, 102
AfD (Alternative for Germany), 5
Africa, 8, 110–11, 192, 193
capital flight, 208
HIV sufferers in, 120–21
need for modern firms, 37
and World Bank/IMF, 118†
youth’s hope of escape to Europe, 121
African Americans, 13
Akerlof, George, 18, 34, 35, 50–51
Amazon, 87, 91, 146, 147
anger management programmes, 160
Apple, 148
asymmetric information, 88, 90, 185
>
auction theory, 146–7, 148
Bank of England, 39
Bear Stearns, 71, 75, 86
belief systems
and belonging, 34, 40–41, 42, 53–6, 165, 211–15
CEO compensation committees, 77–8
Clark’s ‘family culture’, 107–8
the ethical family, 97–8, 99–105, 108, 109, 210
formation through narratives, 34, 40–41, 42, 53–6, 165, 211–15
GM-Toyota comparisons, 72–4
and ISIS, 42
Johnson & Johnson’s Credo, 39–40, 40*, 41, 72, 74*, 79
and leadership, 41–2, 43, 95
of personal fulfilment, 28, 99, 100–101, 102, 103, 108–9, 213
polarization within polities, 38, 63, 202–5
and schools, 165
Theory of Signalling, 41, 43, 53, 63, 95
and trust, 27, 29*, 48, 53–4, 55–6, 59, 63, 73–4, 79, 94–5, 210
see also belonging, narrative of; reciprocity
value-based echo-chambers, 38, 61–2, 64–5, 212, 215
see also nationalism
belonging, narrative of
absent from Utilitarian discourse, 16, 59, 66–7, 210–11
avoided by politicians, 66–7, 68, 211, 215
as a basic drive, 27, 31, 42–3, 65, 66
and belief systems, 34, 40–41, 42, 53–6, 211–15
in Bhutan, 37†
civil society networks/groups, 180–81
and ‘common knowledge’, 32–3, 34, 54, 55, 66, 212
families as natural units for, 32, 97–8, 104
heyday of the ethical state, 49, 68, 114
and home ownership, 68, 181–2, 184
and ISIS, 42, 212, 213
and language, 32, 33, 54, 57
and mutual regard/reciprocity, 25, 40–41, 49, 53–6, 67, 68, 98, 181, 182, 210–11, 212–13
place-based identity, 51–6, 65–8, 211–14, 215
and purposive action, 68, 98, 114, 211, 212, 213
and salient identity, 51–6
Bennett, Alan, The History Boys, 7*
Bentham, Jeremy, 9–10, 12, 13
Berlusconi, Silvio, 14
Besley, Tim, 18–19, 35
Betts, Alex, 27
BHS, 80, 172
Bhutan, 37†, 63