Voodoo economics, journalism & human rights

Posted on January 7, 2011


(First published: February 2006)

It is time we all stopped bowing down at the altar of voodoo economics and acknowledged that our world is in crisis. And that this crisis — not of shortages, but of gluts — is a consequence of adherence to an almost religious belief that “the market” is some sort of sane and sensible mechanism; that the mystical “invisible hand” mentioned by Adam Smith is a reality.

Smith’s Wealth of Nations, the foundation of modern laissez faire — free market — capitalism was written in 1776, yet many of his supporters dismiss as “old hat” the ideas of Maynard Keynes or Karl Marx. Yet Marx propounded his theories about 100 years after Smith and Keynes wrote in the 1930s. Both acknowledged a debt to Adam Smith.

What laissez faire supporters also seem conveniently to forget is that Smith also warned against shareholder companies, the forerunners of the giant corporations of today. They were banned in England when Smith was alive because, as he noted in Wealth of Nations, the very structure of what we know call corporations provides a recipe for corruption.

He was also writing before the advent of limited liability, which, as one 19th century English Lord Chancellor pointed out, created entities that had “no soul to be damned and no body to kick”. This reality was also summed up well by Gilbert and Sullivan in their opera, Utopia:

“Though a Rothschild you may be, in your own capacity
As a company – you’ve come to utter sorrow
But the liquidators say: ‘Never mind — you needn’t pay’
So you start another company tomorrow”

Smith did not foresee the advent of limited liability Nor did he foresee — courtesy of his belief in an invisible hand — a future crisis of over production. But, writing in 1848, Marx noted that there would be future crises “that in all earlier epochs would have seemed an absurdity — the epidemic of over production”. Nearly 100 years later, Keynes proposed his solutions to tackle the boom-slump cycle of the system.

Today that crisis of glut and surplus is solidly with us as corporations chase around the globe seeking ever cheaper and less regulated regions in which to outsource or base production. This is largely the result of an industrial revolution that few people, anywhere, seem to have come to terms with: the industrial and commercial transformation brought about by the development of the advanced integrated circuit or microchip. It has allowed much more to be produced at ultimately lower cost and with far fewer people.

It has speeded up an international economic system already prone to crises, a system in which credit increasingly takes the place of disposable income and where national and household debt threatens constant instability. The huge army of the unemployed and under paid, displaced by capital intensive machinery or surviving below any poverty level, also comprise the market; these are the consumers who, because more and more are jobless or under paid, do not have the income to buy the cheaper products of this new industrial revolution.

This raises a variety of issues, not least of which is the maintenance, extension and protection of human rights. Especially since the world seems to be at a critical juncture where basic preconceptions need to be confronted and challenged. For this we need an informed media and an informed public.

We do not need glowing reports about economic growth that ignore the surge in poverty; we do not need reports that hail the R30 billion purchase of the Absa banking group by Barclays as a wonderful example of foreign direct investment. Absa, already the beneficiary of a controversial R2 billion governmental “lifeboat” was a going concern; and Barclays will probably get their investment back in dividends within eight years.

These are among the facts and the contradictions we all need to confront, to discuss, debate — and take action about. It has become increasingly clear, from whatever point of view, that there is a desperate need for reliable information. Traditionally, the provision of this has been the role of journalists and the news media, both of which maintain at least a pretence at seeking out truth and reporting it objectively.

This is not to say that journalists could or should be objective or that they should take up cudgels in a partisan manner. Not at all. In the first place, there is no such thing as objectivity. We can all only strive toward that as a goal.

The role of the journalist should be to tell it as it is. No more. No Less. And no matter how uncomfortable.

Journalists should ferret out as many facts as are available and highlight contradictions that exist. Their job should be to diligently present as real a picture as possible to the reading, listening or viewing public. Without fear or favour.

Of course, journalists also have opinions about what they see and report about. And they should feel free to voice them, but clearly as opinions, as contributions to the debates triggered about the facts reported.

As a profession, however, we don’t have a good record overall. However, the fault is not only with individual journalists: they are ordinary working men and women who have mortgages to pay and families to maintain. And, in the present climate internationally, they are under increasing pressure, especially from the corporate world, to comply; to keep their heads down.

This is because media outlets — those pretenders to being in the service of truth on behalf of the mass of humanity — are increasingly coming under the control of fewer and fewer large corporations. That old aphorism about he who pays the piper calling the tune has a terrible resonance here.

And its not just the corporations, or the editors, or advertisers. Governments and the military are very much part of this pressure. Increasingly widespread today is the practice of embedded journalists. Not just with the military in places such as Iraq and Afghanistan. Presidential press corps and other cosy examples of mutual back scratching are everywhere being encouraged.

Control is the name of the game. Control of information, of knowledge. Because knowledge is power. And, at times of crises, the powerful, who may be responsible for the crises, are often desperate to keep the truth, the facts — the knowledge — under wraps. And they have the resources to bribe, to manipulate, threaten and intimidate.

Global warming is a good, current, example. As former US presidential hopeful, Al Gore mentions in his Inconvenient Truth documentary, more than 900 properly peer reviewed scientific papers all agreed about the fact of global warming and its causes. At the same time, however, of more than 650 news reports about the topic, 53% cast doubt on the phenomenon.

The general public, of course, does not read scientific papers. We read the newspapers. And corporations and governments, many of whom have a vested interest in not letting the voting and buying public becoming aware of certain realities, are only too aware of that fact.

They are often able to spread doubt about various issues by relying on the nonsense promoted by some media schools and editorial executives that objectivity means giving equal weight to all points of view. This — “post modern” — collapse into relativism is not just ludicrous, it is dangerously reactionary. It allows uncomfortable truths to be obscured by confusion.

And one of those uncomfortable truths seems to be that human rights and business do not mix. As the late Milton Friedman noted, shortly before his death: any company director who prioritises social responsibility (for which, read: human rights) should be sacked on the spot.

For Friedman correctly deduced that the dynamics of our existing system dictate that the business of business is to make a profit; that in order to survive, let alone thrive in what is now a brutally competitive world, accumulation is the key. It is essential to accumulate capital in order to be able better to compete.

But this formula for survival comes at a huge price to the environment, both human and physical. Among these costs is massive pollution from cost-cutting, and the over-exploitation of natural resources such as fisheries, coupled with the steady drive to lower wages and the provision of cheaper (therefore more dangerous and unhealthy) working conditions.

These are the fundamental — and very uncomfortable — realities that have to be faced and dealt with if we wish to avoid a potential, global, catastrophe.