The owl of Minerva begins its flight when dusk is falling…
(G W F Hegel, Preface to The Philosophy of Right and Law)
I met a traveller from an antique land,
Who said--"Two vast and trunkless legs of stone
Stand in the desart....Near them, on the sand,
Half sunk a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed;
And on the pedestal, these words appear:
My name is Ozymandias, King of Kings,
Look on my Works, ye Mighty, and despair!
Nothing beside remains. Round the decay
Of that colossal Wreck, boundless and bare
The lone and level sands stretch far away.
(Percy Bysshe Shelley, ‘Ozymandias’)
BUILDING WORLDS: A CONSCIOUS CIVILIZATION
It is hard to define the term Civilization, as Kenneth Clarke cautioned, but one knows it when one sees it. Western and indigenous narratives have travelled, crossed and criss-crossed through the Akkadian, Sumerian, Greek, Persian and Roman empires.. Out of primordial chaos, human communities and urban polities constantly arise. Drawing on Clarke’s insights, Robert Miles has similarly alluded to the originary impulse of civilization, the word deriving from the Roman, ‘civis’ or citizen of the Roman Republic. Lost and emerging societies testify in monument and ruin alike, therefore, to the human spirit and our collective human capacity for ‘building worlds’.
Currently - and by extension I allude to the ‘current of history’ – we live in a time of crisis: crisis economics and the chaos of change. Professor Andrew Gamble indicates, nevertheless, that the West and the Rest may have reached a turning point, a point where new and more glorious socio-economic scripts are possible. As a global collectivity, humanity may stand upon the first rung of a bridge leading to financial, political and cultural progress: in short, we may be in the birth pangs of another great civilization. Reflecting upon the worldly matters of finance, law and international relations, therefore, I do see a civilizing light at the end of our historic tunnel..
As a practical corollary, moreover, I envisage greater opportunity and responsibility for global finance and business. Coupled with artistic and scientific and social endeavour, we may be on the cusp of a new, global business ethic and project for financing beneficial growth.
CIVILIZED BEHAVIOUR: CONFRONTING THE LAW OF CHANGE
In his magisterial text, The Gentle Civilizer of Nations: the Rise and Fall of International Law 1870-1960, Marti Koskenniemi expounds a fluid conception of socio-legal and historic change. Built from the Sir Hersch Lauterpacht symposium and lecture series at Cambridge University 1998, Koskenniemi points to the civilizing role of global culture in inculcating the international lawyer’s ‘professional sensibility’.
Through a process of redaction, Koskenniemi congests a century of legal and political change into an account of the ‘rise and fall’ of international law and civilized conscience. Hence, Koskenniemi views lawyers, macroscopically, as ‘actors in particular social dramas’ who traverse the full ‘terrain of fear and ambition, fantasy and desire, conflict and utopia’. As a result, Koskenniemi heralds a ‘supra-national historicism’, the advent in his discourse of a fluid, flexible politico-legal dynamic of change and progress.
In particular, Koskenniemi’s internal dialogue with history is relevant to the current eurozone crisis. In the nineteenth century, great European legal minds such as Bluntschli and Sir Travers Twiss devised the paradigm of international cooperation, the ‘esprit d’internationalite which governed the European’s civilizing ‘conscience’ toward Africa and beyond. After two disastrous wars, Koskenniemi tempers this sanguine outlook with ‘realist’ and post-liberal critiques regarding ‘eurocentrism’ and the European narrative of everlasting progress. In the process, Koskenniemi stresses the importance of technology in generating better, more inclusive and inspiring narratives for international change.
TELLING STORIES: THE FUNCTION OF NARRATIVE
The function of narrative, I will argue, is to sustain explanations of change. One should question, in turn, whether these narratives are themselves ‘sustainable’. Whereas law, economics, politics and finance sustain independent stories, I would submit that we are truly engaged whenever we, collectively and in our work, acquire an enlarged ‘professional sensibility’. Koskenniemi himself refers to the term in order to distinguish fruitful story-telling, or “narrative” from sclerotic or sterile sub-narratives within narrow intellectual disciplines. In short, Koskenniemi and myself believe that history is constant, or rather constantly ‘fluid’. Things could have been different, but counterfactuals aside, professionals will seek to overcome their ‘limits of imagination’ to imagine new and better narratives. In so doing, Kosekenniemi demonstrates, professional story-telling enables struggling societies to travel beyond ‘epochal’ or biographical explanations of progress and decline.
PASSION FOR THE PAST, PASSION FOR THE FUTURE
In light of the not-yet Post-GFC world, it is time to review the ‘cyclicality’ of history and the process of building socio-economic and political worlds. Nietzsche propounded a theory of ‘perspectivalism’ to accommodate multiple viewpoints on cultural development. This is akin to the ‘commodious vicus of recirculation’ which James Joyce’s dictum reflects in Finnegan’s Wake. An isomorph for today’s world, the commodious vicus embodies Giambattista Vico’s account of history rising through ages of heroism, poetry and scientific endeavour. Such moments of advance, and punctuations of retreat, one can also read in the writings of Nietzsche, Toynbee and Spengler and their disciples. As the philosopher of logic and history, Georg Friedrich von Hegel claimed in The Philosophy of Right and Law, our conception, or philosophy of the past, always ‘comes too late’. In historic consummation, nonetheless,
‘What the conception teaches, history also shows as necessary, namely that only in a maturing actuality the ideal appears and confronts the real. It is then that the ideal rebuilds for itself this same world in the shape of an intellectual realm, comprehending this world in its substance’.
In view of history’s meanderings, more striking with respect to Civilization is the evolution of Hegel’s ethical thought in The Phenomenology of Spirit. To quote extensively:
‘Reason is spirit, when its certainty of being all reality has been raised to the level of truth, and reason is consciously aware of itself as its own world, and of the world as itself.. The living ethical world is spirit in its truth. As it first comes to an abstract knowledge of its essential nature, ethical life vanishes into the formal generality of right and law. Spirit, now being divided against itself, traces one of its worlds in the element of its objectivity as in a hard reality; this is the realm of culture and civilization’… [My emphasis].
SHAPE-SHIFTING: THE SHIFTING SANDS OF GLOBAL BUSINESS
In the ‘World Ahead’, Foreign Affairs describes the soaring arc between twentieth century geopolitics and the resurgence of twentieth first century faith and cultural difference. Compassing the decline of American power and ‘profligacy’, the November/December 2010 edition analyses the BRIC pivotal powers, Brazil, Russia, India and China, including Turkey. In so doing, the various authors contemplate how one should legislate to solve the issues of population, food security, education and poverty. Focussing on the power in the twenty-first century, nevertheless, the edition underscores the value of technology and how value-creation will benefit the ‘rest’ as well as the West. In consequence, Foreign Affairs suggests how the world has bypassed Fukuyama’s ‘end of history’ for highly dynamic, uncertain growth. (Cf Ferguson, Huntingdon, Kojeve, Fukuyama). (See also, Zakaria, Ajami, Friedman).
For myself, three authors stand out in respect to their contribution to thought on “civilizational” change. Joseph Nye, Jr, in the “Future of American Power”, descries the outline of ‘Smart Power’. Meanwhile, Eric Schmidt, CEO of Google and Jared Cohen, Director of Google Ideas, hail the ‘advent and power of connection technologies’ in “The Digital Disruption: Connectivity and the Diffusion of Power”. As with Koskenniemi, Schmidt and Cohen reflect their own innovative acts in their thought, and that thought, they hope, will facilitate positive change. Thus, the Google team see students and entrepreneurs (and more controversially, activists) as the ‘Interconnected Estate’ which will ride the tsunami of global growth. Since the Twenty-First century will be ‘all about surprises’, they applaud the policies of hyperconnected states such as Finland and Sweden who participate in the Global Network Initiative to improve digital networking. At the same time, Nye draws on the Global Entrepreneurship Monitor and Higher Education Supplements to advocate the use of networks and ‘Smart Power’ to effect suitable global outcomes and a ‘New Narrative’ of global progress.
TO HELL AND BACK: BEYOND CRISIS
In Professor Andrew Gamble’s work on economic crisis, we find, I believe, a productive paradigm through which to view the Global Financial Crisis still ongoing. In The Spectre At the Feast: Capitalist Crisis and the Politics of Recession, Gamble indicates that ‘a crisis is not a natural event, but a social event, and therefore is always socially constructed and highly political’. Instead, a veritable matrix of stakeholders, not a consolidated architecture, will attempt to fill the void. Haunted by the ‘spectre of the past’ as history pertains to capitalist crisis, the current global crisis will involve consumers; national governments; international agencies; commercial organisations; non-state actors and financial intermediaries.
Presently, two schools appear to compete for the mantle of Civilization, at least economically: the Austrian/neo-liberal and New Liberal/neo-Keynesian. On the one side, the Austrian school, descended from Hayek and Friedman with neo-liberal variants, extols the acuity of the market. That is to say, the Austrians imagine the ability of market participants to bring assets to their true price levels, thereby smoothing wage and labour distributions and facilitating market clearance. From the Austrian perspective, ‘The capitalist market economy was a precious legacy which underpinned the foundations of modern civilization’. On the contrary, the New Liberals reiterate that the world, after thirty years of Great Moderation, has entered the cycle of Boom, Bust and Slump characterised by severe recession. Dismissing pre-crisis housing prices and asset values as the ‘product of exuberance’, the Keynesian demand-siders decry the failures of monetarism and Bernanke’s quantitative easing to escape the ‘liquidity trap’ of stagnant corporate cash balances and the drop in consumer confidence. They lament the likelihood of an Irving Fisher ‘deflationary hole’ together with the risks of contagion and Marxian overproduction. In fine, the New Liberals condemn neo-liberalism and Hayek’s work specifically as an ‘impressive monument to a myth’.
WHAT OF CIVILIZATION? A ‘TRANSFORMATIONALIST’ THESIS
Like Professor Gamble, I find literary parallels between the global economic crisis and the nature of tragedy and art. With more appropriate narratives, as Gamble argues, the eurozone, America and the emerging BRIC powers can achieve catharsis. A leading thinker, Hyman Minsky has been happily revitalised by the current debacle. Advancing his Financial Instability Hypothesis, Minsky’s oeuvre see the financial system differently: opposed to stasis, financiers, policy-makers and the citizenry can instead seek to negotiate periods of robustness and fragility within an unstable equilibrium. By avoiding absolute Austrian or Keynesian prescriptions, Minskyeans prefer to adjust economic policy toward to continually new situtations. (In many respects, Minsky “moments” resemble the trajectory of Elliot and Kondratieff Waves in the real economy and the stock market respectively). Gamble paraphrases their approach thus: ‘Ideological determinism is no better than economic determinism’. And this, I feel, extends to finance and global development. The key for a global citizenry, however, will be the sense of, and power derived from, legitimation. Here, Jurgen Habermas' work is most instructive.
With an artists’s eye, Gamble opines:
‘Crisis is a much overused term, but still an indispensable one.. Here crisis is understood as a distinct moment in a process which has a much longer time-frame. This process is the disease itself, and the crisis is the turning point in that disease, the moment when the body either starts to shake off the disease or succumbs to it.
This notion of crisis as the point of resolution is also present in drama and music. Plays are often structured so that they build to a climax, which is then resolved in a way that makes sense of everything that has happened up to that point. The notion of crisis as a turning point is evident again here, the moment when a decisive change for better or worse is imminent’.
Crucially citizens, whether of the world or their region or nation, interpret events through independent narratives. By reconstruing, or re-constructing these constructions, I would argue, humanity can construct something greater in the future. But as Gamble reminds us, crisis entails moments of suspense. Do we know what the future will bring??
ART OF PROFIT: THE TRANSFIGURATION OF FINANCE AND ITS ‘PROBLEMS, FRICTIONS AND SPARKS’
Supporting the concepts of speciation and interdisciplinarity, I will tie two final perspectives together in the hope of drawing a possible future for finance. Being one possible future, my remarks are necessarily tentative. In light of the above, I hope the ‘transformational’ value of such an act of creation will be clear. In Empires of Profit: Commerce, Conquest and Corporate Responsibility, Daniel Litvin describes multinational corporations (MNCs) as ‘partially sighted giants’ which struggle to cope with the emergence of new narratives and the tension between globalization and indigenization. With 53,000 MNCs representing $200 billion of annual investment in the Asia/Pacific and Latin America, MNCs alternately create and are engulfed by ‘waves and repulsions’ of global change.
Whereas global big business and capital are exceedingly mobile, MNCs are paradoxically limited. Like Polyphemus in the Odyssey, MNCs are easily blinded by their lack of anthropological knowledge. From the destruction of the East India Company through to Murdoch and Star TV’s hesitant foray into Guandong province, China, MNCs and international business lobbies encounter problems, frictions and sparks. By opposing strict Western disciplines of rationality and narrow balance-sheet logic, however, Litvin advises that businesses, such as his ex-employer, Rio Tinto can peer ‘underneath the cloak.. of new narratives’ to sustain international cooperation and prosperity. In turn, MNCs are surprisingly capable, as the story of Aramco shows, in generating high levels of cultural commitment and social development. The objective, if only imperfectly realised, is for MNCs, capital and business to ‘understand, predict and shape' for the better.
(In accord with Litvin, I do not intend to comment on the nature of these businesses per se).
In the Ascent of Money, Professor Niall Ferguson espouses an evolutionary theory of banking and financial reform. Setting aside for the moment Ferguson’s acrid dispute with Paul Krugman, Ferguson proposes an interesting paradigm for financial markets and for financial innovation. Tracing the extraordinary morphology of debt and capital markets from 13th century Venice to modern London, New York and beyond, Ferguson sketches, in more than impressionistic detail, the rise and fall of merchant banks and commercial houses to the apex of highly-leveraged hedge funds and commodity syndicates. Throughout this fluid history, nevertheless, Ferguson reiterates the value of innovation and price of inactivity or overreach. In a simultaneously globalizing and fragmentary world, financial markets will stand, fall or adapt to the Civilization or civilizations in which they find themselves and to which they provide sustenance.
Reflecting upon the importance, for example, of Central Banking in facilitating English industry and commerce, Ferguson dismisses any simple narrative opposing the real to the financial economy. Rather,
‘It may in fact be futile to seek a simplistic causal relationship (more sophisticated financial institutions caused growth or spurred growth spurred on financial development). It seems perfectly plausible that the two processes were interdependent and self-reinforcing. Both processes also exhibited a distinctly evolutionary character, with recurrent mutation (technical innovation), speciation (the creation of new kinds of firm) and punctuated equilibrium (crises that would determine which firms would survive and which would die out)’.
And this innovation will spiral on…
A CONCLUDED CANVAS?
According to Gamble, the crisis was a ‘moment of truth’.
Change acceleration.
Unity of Art applied to markets.
A new paradigm.
Not the only paradigm..
REFERENCES
Marti Koskenniemi, The Gentle Civilizer of Nations: the Rise and Fall of International Law 1870-1960, Hersch Lauterpacht Memorial Lectures, Cambridge University Press, Cambridge, 2001.
Andrew Gamble, The Spectre At the Feast: Capitalist Crisis and the Politics of Recession, Palgrave MacMillan, London, 2009.
Foreign Affairs, ‘The World Ahead’, Volume 89, Number 6, November/December 2010.
Monroe C Beardsley (Ed), The European Philosophers from Descartes to Nietzsche, Modern Library, New York, 1992.
Richard Miles, Ancient Worlds: The Search for the Origins of Western Civilization, Penguin Books, London, 2010.
Daniel Litvin, Empires of Profit: Commerce, Conquest and Corporate Responsibility, Thomson, USA, 2004.
Niall Ferguson, The Ascent of Money: A Financial History of the World, Penguin Books, Australia, 2008.
