The GFC and The New
Capitalism
An Ethical Response
Is there an alternative?
• “Political and economic conventional
wisdom: As immoral as it is unintelligent”.
• ‘The temptation is to drift towards the default
setting of modern liberal capitalism once
more. The point of this book is to insist that
this would be monumentally irresponsible: as
immoral as it is unintelligent”. Rohan Williams
Faith has its own integrity
• ‘As long as a Christian does not know what
true Christian faith is he or she cannot relate
in a collective way to political questions…This
is of course over looked today when out of an
inner uncertainty in faith one plunges into
political engagement in order to find a more
certain standpoint’ J Moltmann , The Crucified
God
Keynesian Liberalism
• Following the global economic depression in the
1930’s there was widespread consensus as
between the political and economic elites in
Europe, North America and Australia that
governments needed to support expansionary
economic and industry policies designed to
create sustainable employment. There was also
support in these countries for stronger social
policies focused around health education and
social services and including a stronger income
security safety net especially for those
unemployed or not of workforce age
After Keynes
• Following the international oil crisis in the mid
seventies and the abandonment of Breton
Woods these policies were abandoned as
governments gave increased attention to
inflationary pressures, which were seen to be
being exacerbated, by steady increases in
public spending. (Phillips curve).
Neo Liberalism
• During the 1980s (Thatcher Reagan)
governments in Britain and North America sought
to decrease public expenditure and to tighten the
money supply in an effort to slow economic
growth and also redirect public expenditure away
from welfare towards increased spending in
defence. Also in this period governments sought
to limit and reduce spending on public sector
enterprises ( privatization) placing greater
emphasis on private enterprise and markets in
key sectors such as transport, energy policy and
government administration.
Corporatism
• In Australia some of these elements were present in
reductions in public expenditure and wage restraint but the
focus on ‘the accord’ emphasised the importance of
maintaining the real incomes of wage earners through the
social wage. There was also for a period, comparative to
other developed countries, high rates of employment
growth although the composition of employment was
changing. The Australian government under ‘the accord’
negotiated trade offs as between reductions in wages and
tax transfers or improvements in the social wage (increased
spending in education and reintroduction of universal
health insurance along with increased social protection for
families with children ).
Irrational Exuberance
• What seems to be absent from the thinking of
many economists and economic commentators is
an understanding that contagion of ideas is
consistently a factor in human affairs... The
changing zeitgeist drives common opinion among
members of society at any point in time and place
and this zeitgeist changes as new ideas gain
prominence and recede in importance within
collective thinking. Speculative markets are
merely exceptionally good places in which to
observe the ebb and flow of zeitgeist’ Shiller 43
The Scandal of Inequality
• ‘Part of the increase in upper brackets of the earning
distribution took the form of the massive growth of
CEO pay relative to the pay of normal workers.
Estimates by Business Week and the Institute of Policy
Studies show a ratio of CEO pay to worker pay of 42 to
1 in 1980, 0f 107 to one in 1990 and 325 to one in
2010’
• Optimal Inequality for Economic Growth, Stability and
Shared Prosperity : the economics behind the Wall St
Occupiers Protest, Richard Freeman Harvard University
, March 13 , 2012 Miegunya Lecture p7
The One Percent
–
• ‘ Technology (skill based technological change) may be
central to certain aspects of our current inequality
problem, especially in the polarization of the labour
market. But even if that is the case, we don’t have to
sit idly by and accept the consequences’ …We can and
should regulate banks and forbid predatory lending,
make them accountable for their fraudulent practices
and punish them for abuses of monopoly power. So too
stronger unions and better education might mitigate
the consequences of skilled based technological
change’ p80 Stiglitz, The Price of Inequality
Australia and the new economy
I want to mainly draw attention to important shift
encouraged by the Labor government in the 1980s
especially the inter-nationalisation of the Australian
economy with a stronger export orientation replacing
the import replacement strategy based on high tariffs
that had previously supported Australian industry.
• In pursuing this, for Australia, new direction Australia
joined many other countries similarly seeking to build
knowledge or information economies. It certainly was
a break with post war reconstruction that had
emphasized manufacturing industry and it
foreshadowed a very different economy with a much
stronger emphasis on services.
New Employment Profile
• ‘ Since the 1960’s there has been a significant
shift in industry employment away from
productive industries towards service industries.
In the mid sixties employment was almost evenly
split between production and services, however
this changed significantly in the four decades that
followed. By 2011 around four in every five jobs
were in the service sector, with only one in
every five available in production’ (Keating,
Riemens and Smith, 2012)
Changing Values
• Daniel Bell who had earlier forecast ‘The Coming
of Post Industrial Society’ ( 1973) also wrote The
Cultural Contradictions of Capitalism (1976). In
this work he saw the new forms of capitalism as
‘heralding the end of Puritanism, and mounting
a final attack on bourgeois values’ It is the
breakup of this ethic and temper, owing as much
to changes in social structure as in the culture,
that has undercut the beliefs and legitimations
that sanctioned work and reward in American
society.
Wants V Needs
• One observation that social scientists make is
the shift from deferred to immediate
gratification. Keynes assumed that as incomes
increased people could meet their finite needs
and work less but average hours of work are
increasing as what people want as opposed to
need often proves insatiable. Raises the issue
of sustainable development as a moral
imperative, intergenerational equity. Skidelsky
2012
Information Capitalism
• ‘At the core of this technological change that unleashed
the power of networks was the transformation of
information and communication technologies based on
the micro electronics revolution that took shape in the
1950’s and 1960’s. It formed the foundation of a new
technological paradigm , consolidated in the 1970;s,
first in the US and rapidly diffused around the world
ushering in what I have called the information age’ M
Castells, Communication Power, 23
Multidimensional Change
• We are most conscious in Australia of the increasing
emphasis on a knowledge or service economy and the
shift of much of our manufacturing to Asia. Castells
also emphasises the growing importance of finance
capital, increasing reorganization of firms reshaping
management structures, forming powerful
international partnerships designed to increase the
power of capital vis a vis labour, the declining power of
trade unions, the incorporation of women into the paid
workforce, states increasingly deregulating markets,
trimming the welfare state and increasing the
emphasis on global competition.
The New Divide
• New divide in the work force as between ‘‘self
programmable labour’ and what Castells
describes as a ‘generic labour force’.
Increasingly people feel that the workforce is
being divided as between the core and the
marginal. One impact of change is the
increasing diversity of work contracts or
standard and non standard contracts.
Insecure Work Enquiry
• Conducted by Biddington,Charlesworth
Munro and Howe and reported to the ACTU
Congress in May 2012. ( Lives on Hold)
• ‘We defined insecure work as poor quality
work that provides workers with little
economic security and little control over their
working lives’ ( Howe 2012)
Casual and under employed
• Almost a quarter of all employees in Australia (23.9% or 2.2
million workers), and one fifth of the total workforce, are
engaged in casual employment’ (Howe, 12)
• ‘ There is a strong relationship between casual employment
and age and gender. Casual employment is most common
among younger workers, with 20% of all casual workers
aged between 15-19 years and just fewer than 60% of
casual workers less than 35 years of age. Women are much
more likely to be in casual employment than men with
25.5% of all female employees are casual compared to
19.7% of male employees. Most workers who work part
time (54%) work in casual employment. Just over 30% of
casual employees work full time hours’ ((Howe, 15)
Flexibility
The mantra of employers is very much about
using labour on their terms. Formally, the
workforce today is divided as between
standard and non standard work. Effectively
employers are moving away from standard
work contracts and dictating working
conditions that shift responsibility from them
to the individual encouraged to think of
themselves as self employed.
Creates a New Culture of Work
• In the modern workforce there is much
greater emphasis on mobility, or multiple
transitions across the working life as more
people are employed on a casual or fixed term
basis. For ‘self programmable labour’ mobility
may not be a problem but for millions of
workers insecure work is not compatible with
personal or family stability. There may be
good or bad transitions which often lead to
social exclusion.
A Role For Theology
Hans Kung remarks that ‘the gospel is the norm’
The role of the theologian is on the one hand
that of emphasizing the values that are
integral to the gospel while on the other hand
looking with ‘the greatest care at what is
being assumed about human motivation
about character and integrity’.
Faith based orgs are employers
• Faith based orgs exist in society not outside .
In Australia where they are present as major
employers in fields such as health education
and welfare there will the challenge to bring
together faith and practice. Faith based orgs
may also be major investors in companies and
various corporate funds, presenting the
challenge to be ethical investors.
Ethical Socialism
• Canvassed in Crisis and Recovery as a
possible option. Social liberalism strongly
supported in Australia ( Strong and Anderson)
and recently revived as an option by Andrew
Leigh MP for Canberra. The ALP could renew
he said recently ’ by becoming a party of
egalitarianism and social liberalism. Liberalism
means standing up for minority rights,
recognizing that open markets are
fundamental to boosting prosperity.’
ICCR
• The interfaith Centre for Corporate
Responsibility ( US). Started as a non
denominational faith based organisation, it
works to have issues (ethical, social , moral,
religious, environmental) raised at Company
shareholders meetings. Local activist Howard
Pender here in Canberra is seeking to establish
a similar organisation in Australia
Dialogue
Faith based organizations often struggle to find
ways of engaging with influential policy
makers, especially around economic issues
where their technical expertise may be
questioned but where they may affirm
important values and priorities. Christians for
an Ethical Society might initiate a discussion
on ethics and values with say the Productivity
Commission or the Business Council.
Conclusion
• The transformation of the Australian economy,
that has been underway now for at least three
decades, has a darker side evident in the ongoing
reconfiguration of the Australian workforce.
Behind these changes is the awesome power of
international finance capital. Faith based
organizations with their strong global links are
uniquely placed to understand and respond to
the deeper implications . Avoiding the ’default
option’ requires fresh ideas also new sources of
power.