The Hungry Spirit: New Thinking for a New World Read online

  Top professionals, whether they are tennis stars, lawyers or authors, these authors point out, can earn many multiples of the pay of people from the same stable, who are just not quite as good, or as well marketed. The bigger the market, it seems, the bigger the rewards to the really successful players, be they individuals or corporations.

  The business conference circuit is now an international one. Whether the venue for the event is Qatar or Sydney or Phoenix, the organizers want the same top names as speakers. Without them, they feel, the event would lack international standing, and would not attract the audience they want. These names are able to state their own price, although, in many cases, the material they deliver is no better in content or style than that which a host of less well-known experts could provide.

  Marketing then becomes as important as content, but marketing is expensive, however it is done. It is hard for any newcomer to break into the circuit. Meanwhile the costs, and therefore the prices, of the events go up. In theory, higher prices will encourage new entrants with lower prices, but this market is more about prestige than reality, and prestige thrives on high prices and suspects the cut price deal. The result is a market that seems as unreal as it is unfair.

  Business conferences may one day price themselves out of existence, but not the other top professions. Who, when their life or liberty are at stake, would not pay all that they could afford for the best lawyer in town? But how do you know who is the best? Price is one good indicator. The old equation, which relates price to quality of goods delivered, then breaks down. Even if we only get 10% more from paying three times as much, we will take the more expensive option if we can afford it, because we want that extra 10%, whatever it costs.

  Mega earnings to a few and peanuts to the rest is not what the markets were supposed to deliver, even if the customer seems prepared to pay for the exorbitant costs.

  Markets ignore the free

  Anything that is unpriced is ignored by the market. The environment is the most obvious example. Air is free, so we use it and pollute it, without penalty most of the time, likewise the oceans. What is not owned is not priced, and therefore cannot be included in any calculation. The answer, clearly, is to price these things, by taxing their use, or at least their abuse, but the practicalities of policing it are difficult.

  Some things are not free, but because we don’t fully price their everyday use they seem to be free. Roads are one example. In Britain all roads are free to all users, with the exception of a few toll bridges. They are, of course, funded from a variety of taxes on vehicles and fuel, but their use is not directly priced. We don’t know what each journey costs the country, or even us. A rail journey, where every extra mile is directly priced, seems therefore to be more expensive than the equivalent journey by road, although, when everything is taken into account, it is often the road that is more expensive. The average person is unable to make the price comparison so the market does not work. More people use the roads than they would if they knew what it really cost them. The answer would be to put roads and rail on a comparable basis, making both apparently free, or both priced per mile.

  Unpriced work in the home or in the community is another obvious example of a free good ignored by the markets. Since there is no financial reward from home work, parents are tempted to take their skills into the paid labour market and to hire someone else to do what they would have had to do for nothing. It may be that there is more satisfaction in the normal job market, but one suspects that if a way was found to pay parents for their important work at home many of those parents would want to devote more time to it.

  It is true that I would not want to be paid for parenting, myself. It would demean the gift of my time and love to my children. Similarly, I don’t want to be paid for the time I give to voluntary associations. It is often more pleasurable to give than to earn. On the other hand, if you live in a market it is tempting to live by the market. The things that have no price are either beyond price, like the care of one’s children, or worthless, because no one seems willing to pay for them. It is not surprising, therefore, to find that most volunteering is done by those in jobs, not, as one might think, by the unemployed, the retired, the housewife or househusband. If one’s labour seems worthless in the paid market, it can seem to be a gift not worth giving away in the free market.

  We can’t put all work into the market. Even if I wanted to be paid for parenting, who is going to pay me? What we can do is to recognize more publicly that free work makes a vital contribution to society. There is no fundamental reason why an estimate of its value could not be included in GDP statistics, since GDP stands for Gross Domestic Product. What doesn’t get counted doesn’t count, but market price need not be the only number that gets counted. By ignoring what is inevitably unpriced the market can distort our values.

  THE TROUBLE WITH COMPETITION

  If you lived alone on a desert island you wouldn’t need money or markets and you wouldn’t miss them. But you might find it very difficult to live without someone to compare yourself with. That is where competition comes in. It provides the basis for comparisons, so that we know what it means to be clever, or reliable, a good cook or a fast runner. It would be hard to know what these things meant if you knew no one else. Competition is, therefore, an essential part of any system, although it does not need to be measured in money to work. It sets standards.

  Visiting Hungary when it was still a centrally planned economy, I enquired why they had two fertilizer plants for a relatively small country at a time when there were major economies of scale in fertilizer production. ‘It’s simple,’ they said, ‘if there was only one plant, we in the centre would have to set the standards and we don’t know what fertilizers should cost. So we have two, and, by competing they set their own standards.’

  Competition generates energy, rewards winners and punishes losers. It is, therefore, the fuel for the economy. A competitive economy, Bill Clinton promised in 1992, would deliver ‘good jobs at good wages’. Since then American business has improved its competitiveness dramatically. Exports grow by leaps and bounds, profits have boomed. The USA is once again the most competitive large economy in the world, having previously lost out to Japan. It has also created a lot of new jobs, many more than the whole of Europe. Unfortunately, only half of those new jobs could be called ‘good’ in any sense of the term. Competition means that America is getting richer, but some Americans are getting very much richer than others, and some are actually getting poorer. Productivity isn’t good for everyone.

  Partly for this reason, Europe has not pursued competitiveness as aggressively as America and so has failed to create jobs. For every 100 jobs that existed in Europe in 1975 there are now only 96. In America there are 156 for every 100 in 1975. On the other hand, the gap between the richest and poorest 10% is twice as great in America as in Europe. The poorest 10% in America now earn only half the amount, in real terms, than their counterparts do in the leading European economies. You can’t, it seems, have it both ways.

  It is not even obvious that the fruits of competition – economic growth and riches – necessarily bring contentment. They walk faster in Japan, Taiwan and urban America. The slowest walkers are in Indonesia. There are more suicides in the faster growing countries, and more road rage. I remember my first economics teacher, a central European now working in America, and a winner of a Nobel prize, saying, rather wistfully, that he always preferred living in a country where the economy was in decline, because there was so much more time for lunch! The art and the theatre was usually better, too. The trouble was that there wasn’t the market for his work in such countries.

  The story of Michael is all too familiar in the more competitive businesses.

  It was a Sunday morning in executive land. Michael, a top-flight 55-year-old manager with one of those corporations known only by their initials, was breakfasting late with his wife and daughters. ‘Your mother tells me,’ he said, turning to his 23-year-old, ‘that you have b
een burning the candle at both ends – work all day, and play all night. It won’t do you any good in the end,’ he chided her gently.

  ‘And what about you, Dad?’ she replied. ‘We haven’t seen much of you lately. When are you going to slow down?’

  ‘In this business,’ he said, ‘it’s like riding a bicycle – if you stop pedalling you fall off! But,’ he went on, ‘I’m planning to retire when I’m sixty and then we can do all the things which your mother and I have been dreaming of together. And now – once I’ve cleared my desk I’m going to have a game of tennis!’

  Three hours later the phone rang. It was the hospital. Michael had had a massive heart attack on the tennis court and was dead by the time they got him to hospital. His last check-up had found nothing wrong with him, except exhaustion and a touch too much cholesterol. His wife is sure that it was his work which killed him that morning.

  What are we doing to ourselves? Consider these numbers:

  42% of all workers feel ‘used up’ by the end of the day.

  69% would like to live a more relaxed life.

  Parents spend 40% less time with their children than they did thirty years ago.

  The rise in per capita consumption in the last twenty years is 45%, but the decrease in the quality of life as measured by the Index of Social Health is 51%.

  Only 21% of the young now think that they have a very good chance of achieving The Good Life, compared with 41% twenty years ago.

  The numbers are, in fact, American, so there may be a chance that the British will choose to be different, although I doubt it. The British already work longer hours, but not necessarily better, than every country in Europe. An astonishing 36% of non-manual staff work more than 48 hours every week, and they are almost all managers or professionals. It’s voluntary, so the European ban on compulsory working weeks longer than those 48 hours won’t apply to them.

  They don’t all enjoy it any more than the Americans do. In a 1993 survey of managers by the Institute of Management, 77% considered their hours were stressful, 77% worried about the effect on their family and 74% about their relationship with their partner. By 1996 it had got worse. Stress, the Institute said, costs Britain forty million working days a year and £7 billion in health care. A study by the Massachusetts Institute of Technology calculated that depression at work was costing America $47 billion a year, roughly the same as heart disease.

  So why do we do it? It can’t be to improve our competitiveness or the British would be outperforming the Germans by more than 10%, because they work that much longer. Could it be that some actually prefer their work to the other parts of their lives, or was Michael right in thinking that once you relax, or slip, you’ll be lost for ever? Have we, in other words, exchanged the over-comfortable cushion of the lifetime job for a philosophy of a corporate marketplace in which you are only as good as your last project or report, where the best will thrive and the less good will be ejected?

  Have we, perhaps unconsciously, decided that creative destruction, the principle at the heart of market capitalism, is also appropriate to its people, and that for the best to grow the rest must be neglected? Competition reaches down into the institution and demands a sort of corporate Darwinism, the survival of the fittest and the death of the rest, in the organization as well as in society as a whole.

  If this is what is happening, the consequences are worrying. Leaving aside the stress which inevitably follows, but which, it could be argued, often brings out the best in people, as long as it doesn’t kill them, a competitive philosophy within the firm will encourage people to look first to their own interests, and only secondly to the firm they work for. The short-term, then, will dominate their thinking while the competition for personal recognition will splinter group loyalties and make cooperation even more difficult than it already is, across functions, countries and language.

  More insidiously, people will lose their objectivity over time, as they focus more narrowly on the immediate task, losing touch with the world outside, the markets beyond their focus and the way more ordinary mortals think and feel. Insensitivity is as bad for business as it is for relationships. ‘Blinkered, bigoted and boring’ was the comment by a group of friends on one of their number who was flying high in his corporation, which could have been jealousy but was more likely to be a prediction of problems to come both inside and outside his work, for who would want to live with, or work for, a boring, blinkered bigot?

  It is all strangely reminiscent of Adam Smith’s warning about his revolutionary idea of the division of labour and specialization, which did so much to increase prosperity and wealth. The division of labour, said Smith, drove economic prosperity but it rendered many an individual ‘not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble or tender sentiment, and consequently of forming any just judgement concerning many even of the ordinary duties of private life. Of the great and extensive interest of his country he is altogether incapable of judging.’

  Yet it was then, and probably is now, to such people that we entrust the future of our country, because they are often the most successful.

  These personal dilemmas are a direct result of competition. If capitalism is to retain its credibility in a democratic society we will have to find some way around these problems. We all need our bread, and a proper share of it, but bread alone won’t do, we want something else as well. Can we have both, or does the bread get in the way of fulfilment? Just when we seem to have finally understood how to run our economies, people seem to want something more or something else. Jeffrey Smart, the famous Australian artist, who paints stark images of our industrial society, said once that there was a crisis in our idea of Progress. You can see this in his paintings. Starkly beautiful, they show individuals dominated by their industrial creations – a tiny human figure in front of two huge lorries or a multicoloured pile of oil drums.

  Keynes, that prescient economist, warned us of the problem over seventy years ago. ‘Modern capitalism,’ he said, ‘is absolutely irreligious, without internal union, without much public spirit, often, though not always, mere congeries of possessors and pursuers. Such a system has to be immensely successful if it is to succeed. Today [1923], it is only moderately successful.’

  I would suggest that ‘moderately successful’ could be an accurate description of capitalism today, and I say this in spite of the huge increases in material well-being that it has delivered in the seventy odd years since Keynes made that statement. The reason is that the system has its flaws, as every system does. We can repair it here and there, but the real answer is to keep it in perspective. It is only a tool, and tools are not for worshipping.

  TWO

  WHEN EFFICIENCY IS INEFFECTIVE

  ONE CAN QUARREL with the importance that is given to money and markets in the capitalist scheme of things, but no one, surely, would want to take issue with one of the main results of a market economy, the efficient society. Maybe, in searching for a purpose for our world, we could do worse than settle for efficiency. Forget who gets the money. When things work well it is for the good of all. Politicians ought, perhaps, to give it a higher priority in their manifestos.

  Russia has not got there yet, which makes life in that country difficult. We asked our hotel in St Petersburg for a telephone number. The receptionist said that there was no telephone directory. ‘There are seven million people in this city,’ she said, ‘it would obviously be impossible.’ In a year or two, it will be found to be perfectly possible.

  Efficiency, and the results of efficiency, are the most evident fruits of capitalism, competition and the market. More goods, better services, lower prices and more reliability give us all an easier and a better life. These fruits should more than compensate for any distortion thrown up by the system. Much of the time they do, but there is a real danger that our passion for efficiency is itself creating distortions. Unless we get efficiency in perspective we may find ourselves so busy be
ing efficient that we forget the original purpose of the enterprise. Efficiency is not always the same as effectiveness.

  E-mail and voice-mail are wonderful additions to business life, very efficient in rapid person-to-person communications. So efficient are they, in fact, that the head of one large consulting group complained the other day that her people are now spending so much time listening, reading and responding to their incoming communications that they have ceased to think. Efficient? Yes. Effective? I’m not so sure.

  Recently I discovered that I could book a cinema seat, choose the date and time I wanted, the price and location, give my telephone number and full credit card details, all by punching the keys on my telephone, have every detail confirmed back to me by a computer voice, go to the cinema that evening, put my card into a machine and watch my ticket pop out – all done without any other human being. I was impressed by the efficiency of it all, but it took me a long time to do all that key punching, and the call was long-distance. Efficient for the cinema, not wonderfully effective for me.

  Still, at the end of the process, I did get what I wanted. Too many times when I ring a hospital or a business and am asked to press this or press that, I find neither an answer to my query, nor even a human voice. One day, I imagine, we won’t go to the doctor but will only interact with the surgery computer. It may be efficient to reduce the number of visits an unemployed youngster needs to make to the Benefits Agency while drawing his or her dole, but by removing the personal encounter it lessens the pressure on them to get up and going. All these interactions would be more effective if they were allowed to be less efficient.

  In theory, and in due time, the market or good management should correct such flaws, but if the whole world is going down the same path to cost efficiency the consumer often has no choice and therefore no voice. These flaws are, however, merely the irritants of the efficient society, in a world where software and telephones are cheaper, more reliable and less trouble than humans. There are more serious consequences of our love affair with efficiency.