Sunday, December 14, 2008

The culture of greed

Today's LA Times report on Schwarzenegger's fund-raising proclivities (Where Schwarzenegger goes, money follows) includes this observation:

"That's the way the system works, and it troubles me," said Derek Cressman, Western regional director for Common Cause, who worked with Schwarzenegger on the initiative and has written a book critical of his fundraising. "The governor, like every other elected official in our state, pays more attention to those people who support him than those who don't. And those people who support him with big checks get noticed."

Schwarzenegger obviously has a better sense of the law than Rod Blagojevich, whose main excuse is that what he did is perfectly consistent with political culture in Chicago, where everything has always been up for sale. But how significant is the difference? And however signficant, what do the two cases - among thousands of others - tell us about "democracy in America"? To me the answer seems simple: politics is a marketplace and as with all marketplaces there is a white market and a black market. The white market is dominated by people who are usually (but not always) careful to remain within the constraints of the law, while manipulating those constraints is an integral part of their well-honed craft of business and art of politics. In both case this translates as a way of getting an unfair advantage over one's competitors and culling profit from unwitting consumers and voters. And because it's white it appears invisible. The black market is dominated by close and surprisingly secret networks of accomplices whose philosophy is less to "share the spoils" (sharing isn't a core value of their system) than to protect each other from discovery (the extreme case being omertà).

But when you look at the sociology of white and black markets you discover another signficant factor. White markets are dominated by those who have accumulated wealth (e.g. legitimately invested capital that then needs to be protected through persistent commercial advantage) whereas black markets thrive through the energy and initiative of those who have no capital but are intent on adopting the white life style. Schwarzenegger is a white market politician because his wealth came from another source. Blagojevich is a black market politician because 1) he's relatively "poor" 2) he was nurtured by the secretive black market system and remains loyal to its practices. Schwarzegger doesn't need to milk politics for his personal survival; Blagojevich does, at least insofar as "survival" is defined as living according to the minimal standards of the elite. He was driven by personal debt.

In other words, white markets and black markets are the US version of yin and yang, where the white, sitting comfortably on top, still depends on the dynamics and energy of the black, most of which is attracted to the white (wishing to stay legitimate) but a significant part of which remains attached to the values and habits generated by its roots in poverty, deploying its intelligence primarily to acquire enough to be seen as white and eventually to move over to the white side.

But the comparison with yin and yang should stop there. However similar the dynamics, all cultures are different. Chinese yin and yang is based on the value of harmony: natural opposites flow towards each other in order to establish a dynamic balance. US American yin and yang is based on greed, the belief that everyone pursuing his or her self-interest will automatically produce a better equilibrium as they move over to the other side or move up from where they were. And combined with the Puritanical ethos inherited from our historical predecessors, that equilibrium depends on the domination by the wealthy of the poor, since the wealthy are protected by their wealth from having to violate the laws in order to survive (and can, in any case, manipulate them, thereby attaining recognition, in the Puritanical scheme of things, as the "virtuous"), whereas the poor (the dark "yang") are forced to organize themselves outside the law and risk being caught before they are recongized as "yin" and so be considered automatically as virtuous. Blagojevich is a typical "yang" trying to become "yin" and almost making it, but still living within the yang system that is founded on black market principles.

Greed is indeed the motor of everything and officially recognized as such in the capitalist/puritan ethos. And so, in the midst of the biggest crisis of capitalism in 200 years (yes, bigger than 1929 because striking deeper into the system in a world that is now clearly post-industrial), the news is dominated by stories of greed, the latest and perhaps most spectacjular being the case of Bernard Madeoff (sorry for the spelling but it is true to say that he "made off" with $50 billion of other people's money). Was he yin or yang? Or does he just represent the principle at the middle of the whole dynamic... greed? Is he the black dot in the white or the white dot in the black? He went from investing "$5,000 that he said was earned from working as a lifeguard and installing sprinklers" (Wikipedia) to chairing the NASDAQ. And he used his "reputation" to cheat both hedge funds and charities out of their assets. And therein we discover the real secret of all societies and why greed is the least stable principle of social organization: reputation. Trust depends on reputationon and no society or economy can survive without trust. It doesn't matter how much law you have (and how many lawyers): trust is the foundation of everything. But in a society of greed trust is considered naive. Contracts replace promises and relationships. Yet human nature craves trust and human beings continue to build relationships around it... or at least around the illusion of trust. And so it has come to pass. Hasn't our whole commercial culture evolved away from the foundational principle of trust towards the subtler and more "businesslike" notion of creating the illusion of trust while at the same time seeking an infinite number of ways to betray it (legitimately or illegitimately, according to circumstance) ? I don't think the people who invested in Madoff's Ponzi scheme were inordinately trustful. They bought into his illusion because he was seen to be a solid symbol of the white market, legitimate - legally sanctioned and officially organized - greed as opposed to lawless greed. His reputation was such that they couldn't imagine he was operating according to the alternative laws of the black market.

We are living an historical moment when the culture of greed is undergoing a serious shock. Will the current crisis be solved by the self-policing of the greedy or by the radical calling into question of greed as a core value, the lowest common denominator of social motivation? In any case, the confusion is deep. The neat black and white of yin and yang has gone surprisingly grey. The economic and managerial culture, exported from the US to the rest of the world for the past 60 years, is unlikely to be the same in the decade to come and beyond.