Wednesday 16 May 2018
Auditors and Directors failed Carillion
Nils Pratley in The Guardian
Apart from the junior director who tried to speak against the delusion in Carillion’s boardroom, nobody emerges with credit from the two select committees’ post-mortem on the contracting firm. The other directors, led by chairman Philip Green, chief executive Richard Howson and finance director Richard Adam, were directly responsible for the failure because they were either “negligently ignorant of the rotten culture” or complicit in it. But the entire system of checks and balances failed.
The auditors, KPMG, were useless, as was the audit industry’s passive regulator. The government, in the form of the Crown Representative, was asleep. The Pensions Regulator was feeble. City advisers to Carillion were paid to be supine. Big shareholders were not inquisitive. None of those judgments will surprise those who followed the evidence sessions, but the MPs’ report will count for little unless it forces action from government. Three areas are priorities.
First, reform the auditing industry. The public lost faith in auditors when HBOS and Royal Bank of Scotland collapsed without a squeak of warning from the people signing off the accounts. Now there’s Carillion, where the report accuses KMPG, which had the auditing gig for 19 years, of failing to exercise professional scepticism – the basic requirement of the job.
The MPs’ prescription is not original, but is correct. Get the Competition and Markets Authority to look at two specific proposals: a breakup of the big four auditors or a separation of the auditing arms from their consultancy operations.
Concentration in this market has now reached absurd levels – the big four are auditors to 97% of FTSE 350 companies. Carillion perfectly illustrated the closed shop in action. KMPG approved the accounts, Deloitte advised the board on risk management, and EY was consulted on turnaround plans. That left the field clear for PwC to name its price as adviser to the Official Receiver.Quick guide
All you need to know about CarillionShow
A proper shakeup of the industry would probably mean an increase in the cost of audits, but that will be money well spent if it means more competition and higher standards. “KPMG’s long and complacent tenure auditing Carillion was not an isolated failure,” says the report. “It was symptomatic of a market which works for members of the oligopoly but fails the wider economy.” Spot on.
Second, ministers need to understand the risks they take when they outsource work to companies of Carillion’s size. The failed firm had 450 government contracts and the Crown Representative, looking out for taxpayers’ interests, had no insight into how badly things were going wrong. The huge profit warning in July 2017, which marked the beginning of the end, was a complete shock in Whitehall.
The report is short on specific proposals, other than telling ministers to appreciate that “the cheapest bid is not always the best”. But there are good ideas around, and some have even come from the contractors’ side of fence.
Rupert Soames, the chief executive who led the rescue of Serco to prevent an earlier Carillion-style calamity, has suggested a few: open-book accounting so that the Cabinet Office and National Audit Office have the numbers; bank-style “living wills” so that contracts can be handed back to government without huge costs to the public purse; and a code of conduct that, on the supplier’s side, would involve conservative financing, timely payment of subcontractors, and adequately funded pension schemes.
The government is free to demand all that and more. It just requires the penny to drop that, when you’re buying £200bn of goods and services from the private sector each year, you can change the way business is conducted.
The third priority is pensions, since Carillion dumped an £800m liability on the industry lifeboat. The Pensions Regulator’s threats were hollow and its bluff was called, the report says. The directors were allowed to keep paying a dividend to shareholders that was plainly unaffordable.
It’s now too late for excuses or pleas about insufficient powers. The MPs’ hard judgment is that “a tentative and apologetic approach is ingrained” at the regulator and “the current leadership” may not be equipped for cultural change. That sounds like a call for Lesley Titcomb, the chief executive, to go. It would be personally tough on her, since she arrived in 2015, by which time the worst mistakes on Carillion had been made, but she should take the hint. A pensions regulator needs to be feared.
The overall report is impressive – it drips with anger and is strong on detail. It would be disgrace if it fell between the cracks of Brexit. It is essential that the government makes a point-by-point response – starting with the auditors, who escaped from the scene of the banking catastrophe but whose moment in the spotlight is now.
Apart from the junior director who tried to speak against the delusion in Carillion’s boardroom, nobody emerges with credit from the two select committees’ post-mortem on the contracting firm. The other directors, led by chairman Philip Green, chief executive Richard Howson and finance director Richard Adam, were directly responsible for the failure because they were either “negligently ignorant of the rotten culture” or complicit in it. But the entire system of checks and balances failed.
The auditors, KPMG, were useless, as was the audit industry’s passive regulator. The government, in the form of the Crown Representative, was asleep. The Pensions Regulator was feeble. City advisers to Carillion were paid to be supine. Big shareholders were not inquisitive. None of those judgments will surprise those who followed the evidence sessions, but the MPs’ report will count for little unless it forces action from government. Three areas are priorities.
First, reform the auditing industry. The public lost faith in auditors when HBOS and Royal Bank of Scotland collapsed without a squeak of warning from the people signing off the accounts. Now there’s Carillion, where the report accuses KMPG, which had the auditing gig for 19 years, of failing to exercise professional scepticism – the basic requirement of the job.
The MPs’ prescription is not original, but is correct. Get the Competition and Markets Authority to look at two specific proposals: a breakup of the big four auditors or a separation of the auditing arms from their consultancy operations.
Concentration in this market has now reached absurd levels – the big four are auditors to 97% of FTSE 350 companies. Carillion perfectly illustrated the closed shop in action. KMPG approved the accounts, Deloitte advised the board on risk management, and EY was consulted on turnaround plans. That left the field clear for PwC to name its price as adviser to the Official Receiver.Quick guide
All you need to know about CarillionShow
A proper shakeup of the industry would probably mean an increase in the cost of audits, but that will be money well spent if it means more competition and higher standards. “KPMG’s long and complacent tenure auditing Carillion was not an isolated failure,” says the report. “It was symptomatic of a market which works for members of the oligopoly but fails the wider economy.” Spot on.
Second, ministers need to understand the risks they take when they outsource work to companies of Carillion’s size. The failed firm had 450 government contracts and the Crown Representative, looking out for taxpayers’ interests, had no insight into how badly things were going wrong. The huge profit warning in July 2017, which marked the beginning of the end, was a complete shock in Whitehall.
The report is short on specific proposals, other than telling ministers to appreciate that “the cheapest bid is not always the best”. But there are good ideas around, and some have even come from the contractors’ side of fence.
Rupert Soames, the chief executive who led the rescue of Serco to prevent an earlier Carillion-style calamity, has suggested a few: open-book accounting so that the Cabinet Office and National Audit Office have the numbers; bank-style “living wills” so that contracts can be handed back to government without huge costs to the public purse; and a code of conduct that, on the supplier’s side, would involve conservative financing, timely payment of subcontractors, and adequately funded pension schemes.
The government is free to demand all that and more. It just requires the penny to drop that, when you’re buying £200bn of goods and services from the private sector each year, you can change the way business is conducted.
The third priority is pensions, since Carillion dumped an £800m liability on the industry lifeboat. The Pensions Regulator’s threats were hollow and its bluff was called, the report says. The directors were allowed to keep paying a dividend to shareholders that was plainly unaffordable.
It’s now too late for excuses or pleas about insufficient powers. The MPs’ hard judgment is that “a tentative and apologetic approach is ingrained” at the regulator and “the current leadership” may not be equipped for cultural change. That sounds like a call for Lesley Titcomb, the chief executive, to go. It would be personally tough on her, since she arrived in 2015, by which time the worst mistakes on Carillion had been made, but she should take the hint. A pensions regulator needs to be feared.
The overall report is impressive – it drips with anger and is strong on detail. It would be disgrace if it fell between the cracks of Brexit. It is essential that the government makes a point-by-point response – starting with the auditors, who escaped from the scene of the banking catastrophe but whose moment in the spotlight is now.
Sunday 13 May 2018
The Opposition to Rahul Gandhi is Disturbing and Dark
Tabish Khair in The Hindu
As far back as the ascension of Sanjay Gandhi, much before the coming of the (more likeable) Rajiv Gandhi, I felt that the Nehru-Gandhi family ought to graciously retire from politics and let the Congress proceed on its own. I was very young then, probably not even in my teens, and I belonged to a family of staunch Congress supporters, but I recall feeling distinctly uncomfortable with the notion of Sanjay taking over from his mother.
I have not changed my basic position on this matter, and yet I have to say that much of the current ‘opposition’ to Rahul Gandhi has a disturbing and dark side to it. While opposition to ‘dynasty raj’ is offered as an explanation, what really exists, more often than not, is a mix of envy, resentment, neo-casteist sentiment and a disturbing kind of racism, most of it indirectly supported by major BJP politicians.
This is barely camouflaged in many online cartoons and ‘jokes’ about Rahul Gandhi, which often refer derisively to the Italian side of his family. Frequently, he is dismissed — unfairly — because he has a parent who came to India from elsewhere. This dismissal is in tandem with the dismissal of Muslims and Christians by the same elements.
Not only does this present a destructive kind of nationalism, it often verges on racist prejudice. The perpetrators of such jokes — and I use the word ‘perpetrator’ on purpose — seem to relish degrading Rahul Gandhi. Very often this is done literally, for instance in cartoons of doubtful humour that place Rahul Gandhi in an abject ‘Baba-like’ position against a ‘towering’ BJP politician. Hence also, the ‘language’ jokes about him by people who speak fewer languages than him.
The case with Nehru
This drain of resentment runs a long way. Jawaharlal Nehru encountered it too, but in more restrained ways. And for similar reasons: in his writing and lifestyle, Nehru repudiated the entire structure of upper-caste prejudices. He also repudiated the strong structure of endogamy that still sustains the caste system, and not just within Hinduism. Elements of these prejudices are visited upon Rahul Gandhi too.
But there are other elements too, of which one was probably less of an issue with Nehru: Nehru appears to have faced far less envy for his personal, educational and class advantages. This might seem surprising; after all, Nehru was a more cultivated and talented person than Rahul Gandhi or, for that matter, any other major national leader today. And yet, Nehru’s difference was largely respected by the voters then.
Some of it had to do with the person: Nehru had spent years in jail and organising for independence among ordinary people. Some of it had to do with the age: Nehru lived in a less envious age, perhaps because the discourse of easy riches and the magnifying glasses of TV and such media — which take us into houses we cannot enter in reality — was not prevalent in the period.
And yet, some of it probably has to do with character — or lack of character. No, I am not talking of Rahul Gandhi. I have no reason to suppose that he has less character than any other national leader. Actually, he seems to have more than most. I am talking of people who obviously envy him, his exposure to the world, his space of living, even (subconsciously) his lifestyle.
This is the taluk middle and lower middle class to which I belong. These are people with education and at times professional careers whose formative years were spent in small towns of India, or who are still based there. It is among these people that you find the greatest resentment of Rahul Gandhi, not among farmers or workers or born metropolitans. I have spoken to such people. I am convinced that what they unconsciously resent in Rahul Gandhi is the structural lack that keeps them where they are.
Mores in taluk towns
A taluk town has never been cut off from the rest of India, but it is now wired not just to India but to the entire world. On the other hand, the mores and social skills that prevail in taluk towns are not those that enable its denizens much space in the world. To take just one example: English. Every time I visit my home (taluk) town, I am asked not about my books, but about how to become fluent in English. This is the genuine concern of people who have English, but not sufficient fluency in it to capitalise on their other talents and skills in the world. For people like this, the easy access that Rahul Gandhi has to the world — perhaps without even the kind of hard work they have put into their own education — is deeply galling. The best among them overcome it, but the worst simmer with envy against all the Rahul Gandhis of India.
Given the sharp educational and social stratification of India, and the vast chasm between not just the rich and the poor but between metropolitan/international education and taluk education, I suspect that Rahul Gandhi has a far steeper mountain of resentment to overcome than Nehru ever had. I can understand the resentment, but I cannot accept it, for it brings out the worst in us. Politicians who capitalise on this are doing us — and India — a disfavour.
As far back as the ascension of Sanjay Gandhi, much before the coming of the (more likeable) Rajiv Gandhi, I felt that the Nehru-Gandhi family ought to graciously retire from politics and let the Congress proceed on its own. I was very young then, probably not even in my teens, and I belonged to a family of staunch Congress supporters, but I recall feeling distinctly uncomfortable with the notion of Sanjay taking over from his mother.
I have not changed my basic position on this matter, and yet I have to say that much of the current ‘opposition’ to Rahul Gandhi has a disturbing and dark side to it. While opposition to ‘dynasty raj’ is offered as an explanation, what really exists, more often than not, is a mix of envy, resentment, neo-casteist sentiment and a disturbing kind of racism, most of it indirectly supported by major BJP politicians.
This is barely camouflaged in many online cartoons and ‘jokes’ about Rahul Gandhi, which often refer derisively to the Italian side of his family. Frequently, he is dismissed — unfairly — because he has a parent who came to India from elsewhere. This dismissal is in tandem with the dismissal of Muslims and Christians by the same elements.
Not only does this present a destructive kind of nationalism, it often verges on racist prejudice. The perpetrators of such jokes — and I use the word ‘perpetrator’ on purpose — seem to relish degrading Rahul Gandhi. Very often this is done literally, for instance in cartoons of doubtful humour that place Rahul Gandhi in an abject ‘Baba-like’ position against a ‘towering’ BJP politician. Hence also, the ‘language’ jokes about him by people who speak fewer languages than him.
The case with Nehru
This drain of resentment runs a long way. Jawaharlal Nehru encountered it too, but in more restrained ways. And for similar reasons: in his writing and lifestyle, Nehru repudiated the entire structure of upper-caste prejudices. He also repudiated the strong structure of endogamy that still sustains the caste system, and not just within Hinduism. Elements of these prejudices are visited upon Rahul Gandhi too.
But there are other elements too, of which one was probably less of an issue with Nehru: Nehru appears to have faced far less envy for his personal, educational and class advantages. This might seem surprising; after all, Nehru was a more cultivated and talented person than Rahul Gandhi or, for that matter, any other major national leader today. And yet, Nehru’s difference was largely respected by the voters then.
Some of it had to do with the person: Nehru had spent years in jail and organising for independence among ordinary people. Some of it had to do with the age: Nehru lived in a less envious age, perhaps because the discourse of easy riches and the magnifying glasses of TV and such media — which take us into houses we cannot enter in reality — was not prevalent in the period.
And yet, some of it probably has to do with character — or lack of character. No, I am not talking of Rahul Gandhi. I have no reason to suppose that he has less character than any other national leader. Actually, he seems to have more than most. I am talking of people who obviously envy him, his exposure to the world, his space of living, even (subconsciously) his lifestyle.
This is the taluk middle and lower middle class to which I belong. These are people with education and at times professional careers whose formative years were spent in small towns of India, or who are still based there. It is among these people that you find the greatest resentment of Rahul Gandhi, not among farmers or workers or born metropolitans. I have spoken to such people. I am convinced that what they unconsciously resent in Rahul Gandhi is the structural lack that keeps them where they are.
Mores in taluk towns
A taluk town has never been cut off from the rest of India, but it is now wired not just to India but to the entire world. On the other hand, the mores and social skills that prevail in taluk towns are not those that enable its denizens much space in the world. To take just one example: English. Every time I visit my home (taluk) town, I am asked not about my books, but about how to become fluent in English. This is the genuine concern of people who have English, but not sufficient fluency in it to capitalise on their other talents and skills in the world. For people like this, the easy access that Rahul Gandhi has to the world — perhaps without even the kind of hard work they have put into their own education — is deeply galling. The best among them overcome it, but the worst simmer with envy against all the Rahul Gandhis of India.
Given the sharp educational and social stratification of India, and the vast chasm between not just the rich and the poor but between metropolitan/international education and taluk education, I suspect that Rahul Gandhi has a far steeper mountain of resentment to overcome than Nehru ever had. I can understand the resentment, but I cannot accept it, for it brings out the worst in us. Politicians who capitalise on this are doing us — and India — a disfavour.
Thursday 10 May 2018
Wednesday 9 May 2018
How to conduct good meetings
John Gapper in The FT
Jeff Bezos and Winston Churchill do not have much in common, but one is chief executive of a company that is valued at $770bn and the other stopped the Nazis invading Britain, so the advice of both is worth heeding. Amazon’s founder and the UK’s wartime prime minister agreed on one thing: the value of a good memorandum.
Mr Bezos’s recent letter to shareholders extolled the Amazon practice of starting all internal meetings by everyone present reading a memo of up to six pages, explaining what they are there to discuss. Instead of watching a PowerPoint presentation, or breaking into an immediate debate, Amazon’s executives spend up to half an hour in complete silence, absorbing the briefing that one of them has prepared.
“This is the weirdest meeting culture you will ever encounter,” Mr Bezos admitted in one interview. The principle is that an executive must refine his or her proposal so fully to express it in narrative form that everyone will be able to understand it. Reading the memo means that all those in the room are informed for the conversation that follows, and are not merely bluffing.
Churchill would have appreciated the attention Mr Bezos has given to this. On August 9 1940, a month before the Blitz bombing of London started, he dictated a memo to the UK civil service on the subject of memos. “To do our work, we all have to read a mass of papers. Nearly all of them are far too long.” he declared. “The discipline of setting out the real points concisely will prove an aid to clearer thinking.”
Amazon’s approach sounds eccentric, but there is a lot of value in it. Most large companies have too many meetings in general — some executives spend their days traipsing from one airless room to another — and too many of them are disorganised and sprawling. People spout off without knowing much about the topic, or caring whether they do: it becomes a battle of rhetoric.
Mr Bezos is a student of managerial efficiency — Amazon itself is a huge machine for sucking inefficiency out of the retail industry. He has grasped that starting out with everyone knowing the basics makes the debate both better informed and more democratic. There is less chance of a decision being taken arbitrarily or ignorantly, or of a clique of two or three people in the room controlling the outcome.
The surprising aspect is his faith in narrative, rather than the data on which Amazon relies. You might have thought that data would rule decision-making at Amazon, but not so. He said: “We have so many metrics . . . and the thing I have noticed is that when the anecdotes and the data disagree, the anecdotes are usually right. There’s something wrong with the way you’re measuring.”
He believes in telling a story vividly, rather than relying on data or graphics, or packaging a business case in bullet points on a slide. Some Amazon memos can be almost like dramas: a typical memo for a new product comes in the form of an imaginary press release for the service, backed by a question and answer brief written in a way that a customer would understand.
Churchill, a journalist turned politician, was equally a devotee of strong narratives that could shape policymaking. “Let us not shrink from using the short expressive phrase, even if it is conversational,” he instructed his civil servants, warning them that “most of these woolly phrases are mere padding, which can be left out altogether”.
He and Mr Bezos also agreed on the correct place for any data and slides: somewhere at the back. “If a report relies on detailed analysis of some complicated factors . . . these should be set out in an appendix,” Churchill declared. Amazon’s data-rich executives must obey the same rule.
Conciseness can be taken too far. Staff at the US National Security Council were told to trim their policy memos to a single page for Donald Trump because he did not like to read too much. Then it turned out that the president wanted what one official described to the New Yorker as “two or three points, with the syntactical complexity of ‘See Jane run’”, and preferred pictures.
But preparing a crisp narrative is much harder work than spraying around some sentences on a slide. It requires someone to pause and not only to think through the thread of the argument, but to shape it in a way that can inspire others. Churchill could do that on his feet; the rest of us must concentrate. As Mr Bezos notes, it takes a lot of effort to write a “brilliant and thoughtful” corporate memo.
The impact of narrative is clear in public speaking. The Technology, Entertainment, Design conference became a global brand by forcing speakers to hone their “Ted talks” ruthlessly for months in advance. No one is allowed to get on stage and improvise some thoughts. A corporate meeting is not a Ted event, but it is still a gathering that needs to be educated.
Churchill, for whom making well-informed decisions was a matter of life and death, devoted some time on a day when Birmingham was bombed to setting out how to write memos. Mr Bezos has done extremely well for Amazon by appreciating the value of briefing his executives thoroughly. We should probably listen to them.
Saturday 5 May 2018
Is Marx still relevant 200 years later?
Amartya Sen in The Indian Express
How should we think about Karl Marx on his 200th birthday? His big influence on the politics of the world is universally acknowledged, though people would differ on how good or bad that influence has been. But going beyond that, there can be little doubt that the intellectual world has been transformed by the reflective departures Marx generated, from class analysis as an essential part of social understanding, to the explication of the profound contrast between needs and hard work as conflicting foundations of people’s moral entitlements. Some of the influences have been so pervasive, with such strong impact on the concepts and connection we look for in our day-to-day analysis, that we may not be fully aware where the influences came from. In reading some classic works of Marx, we are often placed in the uncomfortable position of the theatre-goer who loved Hamlet as a play, but wondered why it was so full of quotations.
Marxian analysis remains important today not just because of Marx’s own original work, but also because of the extraordinary contributions made in that tradition by many leading historians, social scientists and creative artists — from Antonio Gramsci, Rosa Luxemburg, Jean-Paul Sartre and Bertolt Brecht to Piero Sraffa, Maurice Dobb and Eric Hobsbawm (to mention just a few names). We do not have to be a Marxist to make use of the richness of Marx’s insights — just as one does not have to be an Aristotelian to learn from Aristotle.
There are ideas in Marx’s corpus of work that remain under-explored. I would place among the relatively neglected ideas Marx’s highly original concept of “objective illusion,” and related to that, his discussion of “false consciousness”. An objective illusion may arise from what we can see from our particular position — how things look from there (no matter how misleading). Consider the relative sizes of the sun and the moon, and the fact that from the earth they look to be about the same size (Satyajit Ray offered some interesting conversations on this phenomenon in his film, Agantuk). But to conclude from this observation that the sun and the moon are in fact of the same size in terms of mass or volume would be mistaken, and yet to deny that they do look to be about the same size from the earth would be a mistake too. Marx’s investigation of objective illusion — of “the outer form of things” — is a pioneering contribution to understanding the implications of positional dependence of observations.
The phenomenon of objective illusion helps to explain the widespread tendency of workers in an exploitative society to fail to see that there is any exploitation going on — an example that Marx did much to investigate, in the form of “false consciousness”. The idea can have many applications going beyond Marx’s own use of it. Powerful use can be made of the notion of objective illusion to understand, for example, how women, and indeed men, in strongly sexist societies may not see clearly enough — in the absence of informed political agitation — that there are huge elements of gender inequality in what look like family-oriented just societies, as bastions of role-based fairness.
There is, however, a danger in seeing Marx in narrowly formulaic terms — for example, in seeing him as a “materialist” who allegedly understood the world in terms of the importance of material conditions, denying the significance of ideas and beliefs. This is not only a serious misreading of Marx, who emphasised two-way relations between ideas and material conditions, but also a seriously missed opportunity to see the far-reaching role of ideas on which Marx threw such important light.
Let me illustrate the point with a debate on the discipline of historical explanation that was quite widespread in our own time. In one of Eric Hobsbawm’s lesser known essays, called “Where Are British Historians Going?”, published in the Marxist Quarterly in 1955, he discussed how the Marxist pointer to the two-way relationship between ideas and material conditions offers very different lessons in the contemporary world than it had in the intellectual world that Marx himself saw around him, where the prevailing focus — for example by Hegel and Hegelians — was very much on highlighting the influence of ideas on material conditions.
In contrast, the tendency of dominant schools of history in the mid-twentieth century — Hobsbawm cited here the hugely influential historical works of Lewis Bernstein Namier — had come to embrace a type of materialism that saw human action as being almost entirely motivated by a simple kind of material interest, in particular narrowly defined self-interest. Given this completely different kind of bias (very far removed from the idealist traditions of Hegel and other influential thinkers in Marx’s own time), Hobsbawm argued that a balanced two-way view must demand that analysis in Marxian lines today must particularly emphasise the importance of ideas and their influence on material conditions.
For example, it is crucial to recognise that Edmund Burke’s hugely influential criticism of Warren Hastings’s misbehaviour in India — in the famous Impeachment hearings — was directly related to Burke’s strongly held ideas of justice and fairness, whereas the self-interest-obsessed materialist historians, such as Namier, saw no more in Burke’s discontent than the influence of his [Burke’s] profit-seeking concerns which had suffered because of the policies pursued by Hastings. The overreliance on materialism — in fact of a particularly narrow kind — needed serious correction, argued Hobsbawm: “In the pre-Namier days, Marxists regarded it as one of their chief historical duties to draw attention to the material basis of politics. But since bourgeois historians have adopted what is a particular form of vulgar materialism, Marxists had to remind them that history is the struggle of men for ideas, as well as a reflection of their material environment. Mr Trevor-Roper [a famous right-wing historian] is not merely mistaken in believing that the English Revolution was the reflection of the declining fortunes of country gentlemen, but also in his belief that Puritanism was simply a reflection of their impending bankruptcies.”
To Hobsbawm’s critique, it could be added that the so-called “rational choice theory” (so dominant in recent years in large parts of mainstream economics and political analysis) thrives on a single-minded focus on self-interest as the sole human motivation, thereby missing comprehensively the balance that Marx had argued for. A rational choice theorist can, in fact, learn a great deal from reading Marx’s Economic and Philosophic Manuscripts and The German Ideology. While this would be a very different lesson from what Marx wanted Hegelians to consider, a commitment to doing justice to the two-way relations characterises both parts of Marx’s capacious pedagogy. What has to be avoided is the narrowing of Marx’s thoughts through simple formulas respectfully distributed in his name.
In remembering Marx on his 200th birthday, we not only celebrate a great intellectual, but also one whose critical analyses and investigations have many insights to offer to us today. Paying attention to Marx may be more important than paying him respect.
-------
Slavoj Zizek in The Independent
There is a delicious old Soviet joke about Radio Yerevan: a listener asks: “Is it true that Rabinovitch won a new car in the lottery?”, and the radio presenter answers: “In principle yes, it’s true, only it wasn’t a new car but an old bicycle, and he didn’t win it but it was stolen from him.”
Does exactly the same not hold for Marx’s legacy today? Let’s ask Radio Yerevan: “Is Marx’s theory still relevant today?” We can guess the answer: in principle yes, he describes wonderfully the mad dance of capitalist dynamics which only reached its peak today, more than a century and a half later, but… Gerald A Cohen enumerated the four features of the classic Marxist notion of the working class: (1) it constitutes the majority of society; (2) it produces the wealth of society; (3) it consists of the exploited members of society; and (4) its members are the needy people in society. When these four features are combined, they generate two further features: (5) the working class has nothing to lose from revolution; and (6) it can and will engage in a revolutionary transformation of society.
None of the first four features applies to today’s working class, which is why features (5) and (6) cannot be generated. Even if some of the features continue to apply to parts of today’s society, they are no longer united in a single agent: the needy people in society are no longer the workers, and so on.
But let’s dig into this question of relevance and appropriateness further. Not only is Marx’s critique of political economy and his outline of the capitalist dynamics still fully relevant, but one could even take a step further and claim that it is only today, with global capitalism, that it is fully relevant.
However, at the moment of triumph is one of defeat. After overcoming external obstacles the new threat comes from within. In other words, Marx was not simply wrong, he was often right – but more literally than he himself expected to be.
For example, Marx couldn’t have imagined that the capitalist dynamics of dissolving all particular identities would translate into ethnic identities as well. Today’s celebration of “minorities” and “marginals” is the predominant majority position – alt-rightists who complain about the terror of “political correctness” take advantage of this by presenting themselves as protectors of an endangered minority, attempting to mirror campaigns on the other side.
And then there’s the case of “commodity fetishism”. Recall the classic joke about a man who believes himself to be a grain of seed and is taken to a mental institution where the doctors do their best to finally convince him that he is not a grain but a man. When he is cured (convinced that he is not a grain of seed but a man) and allowed to leave the hospital, he immediately comes back trembling. There is a chicken outside the door and he is afraid that it will eat him.
“Dear fellow,” says his doctor, “you know very well that you are not a grain of seed but a man.”
“Of course I know that,” replies the patient, “but does the chicken know it?”
So how does this apply to the notion of commodity fetishism? Note the very beginning of the subchapter on commodity fetishism in Marx’s Das Kapital: “A commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties.”
Commodity fetishism (our belief that commodities are magic objects, endowed with an inherent metaphysical power) is not located in our mind, in the way we (mis)perceive reality, but in our social reality itself. We may know the truth, but we act as if we don’t know it – in our real life, we act like the chicken from the joke.
Niels Bohr, who already gave the right answer to Einstein’s “God doesn’t play dice“(“Don’t tell God what to do!”), also provided the perfect example of how a fetishist disavowal of belief works. Seeing a horseshoe on his door, a surprised visitor commented that he didn’t think Bohr believed superstitious ideas about horseshoes bringing good luck to people. Bohr snapped back: “I also do not believe in it; I have it there because I was told that it works whether one believes in it or not!”
This is how ideology works in our cynical era: we don’t have to believe in it. Nobody takes democracy or justice seriously, we are all aware of their corruption, but we practice them – in other words, we display our belief in them – because we assume they work even if we do not believe in them.
With regard to religion, we no longer “really believe”, we just follow (some of the) religious rituals and mores as part of the respect for the “lifestyle” of the community to which we belong (non-believing Jews obeying kosher rules “out of respect for tradition”, for example).
“I do not really believe in it, it is just part of my culture” seems to be the predominant mode of the displaced belief, characteristic of our times. “Culture” is the name for all those things we practice without really believing in them, without taking them quite seriously.
This is why we dismiss fundamentalist believers as “barbarians” or “primitive”, as anti-cultural, as a threat to culture – they dare to take seriously their beliefs. The cynical era in which we live would have no surprises for Marx.
Marx’s theories are thus not simply alive: Marx is a ghost who continues to haunt us – and the only way to keep him alive is to focus on those of his insights which are today more true than in his own time.
How should we think about Karl Marx on his 200th birthday? His big influence on the politics of the world is universally acknowledged, though people would differ on how good or bad that influence has been. But going beyond that, there can be little doubt that the intellectual world has been transformed by the reflective departures Marx generated, from class analysis as an essential part of social understanding, to the explication of the profound contrast between needs and hard work as conflicting foundations of people’s moral entitlements. Some of the influences have been so pervasive, with such strong impact on the concepts and connection we look for in our day-to-day analysis, that we may not be fully aware where the influences came from. In reading some classic works of Marx, we are often placed in the uncomfortable position of the theatre-goer who loved Hamlet as a play, but wondered why it was so full of quotations.
Marxian analysis remains important today not just because of Marx’s own original work, but also because of the extraordinary contributions made in that tradition by many leading historians, social scientists and creative artists — from Antonio Gramsci, Rosa Luxemburg, Jean-Paul Sartre and Bertolt Brecht to Piero Sraffa, Maurice Dobb and Eric Hobsbawm (to mention just a few names). We do not have to be a Marxist to make use of the richness of Marx’s insights — just as one does not have to be an Aristotelian to learn from Aristotle.
There are ideas in Marx’s corpus of work that remain under-explored. I would place among the relatively neglected ideas Marx’s highly original concept of “objective illusion,” and related to that, his discussion of “false consciousness”. An objective illusion may arise from what we can see from our particular position — how things look from there (no matter how misleading). Consider the relative sizes of the sun and the moon, and the fact that from the earth they look to be about the same size (Satyajit Ray offered some interesting conversations on this phenomenon in his film, Agantuk). But to conclude from this observation that the sun and the moon are in fact of the same size in terms of mass or volume would be mistaken, and yet to deny that they do look to be about the same size from the earth would be a mistake too. Marx’s investigation of objective illusion — of “the outer form of things” — is a pioneering contribution to understanding the implications of positional dependence of observations.
The phenomenon of objective illusion helps to explain the widespread tendency of workers in an exploitative society to fail to see that there is any exploitation going on — an example that Marx did much to investigate, in the form of “false consciousness”. The idea can have many applications going beyond Marx’s own use of it. Powerful use can be made of the notion of objective illusion to understand, for example, how women, and indeed men, in strongly sexist societies may not see clearly enough — in the absence of informed political agitation — that there are huge elements of gender inequality in what look like family-oriented just societies, as bastions of role-based fairness.
There is, however, a danger in seeing Marx in narrowly formulaic terms — for example, in seeing him as a “materialist” who allegedly understood the world in terms of the importance of material conditions, denying the significance of ideas and beliefs. This is not only a serious misreading of Marx, who emphasised two-way relations between ideas and material conditions, but also a seriously missed opportunity to see the far-reaching role of ideas on which Marx threw such important light.
Let me illustrate the point with a debate on the discipline of historical explanation that was quite widespread in our own time. In one of Eric Hobsbawm’s lesser known essays, called “Where Are British Historians Going?”, published in the Marxist Quarterly in 1955, he discussed how the Marxist pointer to the two-way relationship between ideas and material conditions offers very different lessons in the contemporary world than it had in the intellectual world that Marx himself saw around him, where the prevailing focus — for example by Hegel and Hegelians — was very much on highlighting the influence of ideas on material conditions.
In contrast, the tendency of dominant schools of history in the mid-twentieth century — Hobsbawm cited here the hugely influential historical works of Lewis Bernstein Namier — had come to embrace a type of materialism that saw human action as being almost entirely motivated by a simple kind of material interest, in particular narrowly defined self-interest. Given this completely different kind of bias (very far removed from the idealist traditions of Hegel and other influential thinkers in Marx’s own time), Hobsbawm argued that a balanced two-way view must demand that analysis in Marxian lines today must particularly emphasise the importance of ideas and their influence on material conditions.
For example, it is crucial to recognise that Edmund Burke’s hugely influential criticism of Warren Hastings’s misbehaviour in India — in the famous Impeachment hearings — was directly related to Burke’s strongly held ideas of justice and fairness, whereas the self-interest-obsessed materialist historians, such as Namier, saw no more in Burke’s discontent than the influence of his [Burke’s] profit-seeking concerns which had suffered because of the policies pursued by Hastings. The overreliance on materialism — in fact of a particularly narrow kind — needed serious correction, argued Hobsbawm: “In the pre-Namier days, Marxists regarded it as one of their chief historical duties to draw attention to the material basis of politics. But since bourgeois historians have adopted what is a particular form of vulgar materialism, Marxists had to remind them that history is the struggle of men for ideas, as well as a reflection of their material environment. Mr Trevor-Roper [a famous right-wing historian] is not merely mistaken in believing that the English Revolution was the reflection of the declining fortunes of country gentlemen, but also in his belief that Puritanism was simply a reflection of their impending bankruptcies.”
To Hobsbawm’s critique, it could be added that the so-called “rational choice theory” (so dominant in recent years in large parts of mainstream economics and political analysis) thrives on a single-minded focus on self-interest as the sole human motivation, thereby missing comprehensively the balance that Marx had argued for. A rational choice theorist can, in fact, learn a great deal from reading Marx’s Economic and Philosophic Manuscripts and The German Ideology. While this would be a very different lesson from what Marx wanted Hegelians to consider, a commitment to doing justice to the two-way relations characterises both parts of Marx’s capacious pedagogy. What has to be avoided is the narrowing of Marx’s thoughts through simple formulas respectfully distributed in his name.
In remembering Marx on his 200th birthday, we not only celebrate a great intellectual, but also one whose critical analyses and investigations have many insights to offer to us today. Paying attention to Marx may be more important than paying him respect.
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Slavoj Zizek in The Independent
There is a delicious old Soviet joke about Radio Yerevan: a listener asks: “Is it true that Rabinovitch won a new car in the lottery?”, and the radio presenter answers: “In principle yes, it’s true, only it wasn’t a new car but an old bicycle, and he didn’t win it but it was stolen from him.”
Does exactly the same not hold for Marx’s legacy today? Let’s ask Radio Yerevan: “Is Marx’s theory still relevant today?” We can guess the answer: in principle yes, he describes wonderfully the mad dance of capitalist dynamics which only reached its peak today, more than a century and a half later, but… Gerald A Cohen enumerated the four features of the classic Marxist notion of the working class: (1) it constitutes the majority of society; (2) it produces the wealth of society; (3) it consists of the exploited members of society; and (4) its members are the needy people in society. When these four features are combined, they generate two further features: (5) the working class has nothing to lose from revolution; and (6) it can and will engage in a revolutionary transformation of society.
None of the first four features applies to today’s working class, which is why features (5) and (6) cannot be generated. Even if some of the features continue to apply to parts of today’s society, they are no longer united in a single agent: the needy people in society are no longer the workers, and so on.
But let’s dig into this question of relevance and appropriateness further. Not only is Marx’s critique of political economy and his outline of the capitalist dynamics still fully relevant, but one could even take a step further and claim that it is only today, with global capitalism, that it is fully relevant.
However, at the moment of triumph is one of defeat. After overcoming external obstacles the new threat comes from within. In other words, Marx was not simply wrong, he was often right – but more literally than he himself expected to be.
For example, Marx couldn’t have imagined that the capitalist dynamics of dissolving all particular identities would translate into ethnic identities as well. Today’s celebration of “minorities” and “marginals” is the predominant majority position – alt-rightists who complain about the terror of “political correctness” take advantage of this by presenting themselves as protectors of an endangered minority, attempting to mirror campaigns on the other side.
And then there’s the case of “commodity fetishism”. Recall the classic joke about a man who believes himself to be a grain of seed and is taken to a mental institution where the doctors do their best to finally convince him that he is not a grain but a man. When he is cured (convinced that he is not a grain of seed but a man) and allowed to leave the hospital, he immediately comes back trembling. There is a chicken outside the door and he is afraid that it will eat him.
“Dear fellow,” says his doctor, “you know very well that you are not a grain of seed but a man.”
“Of course I know that,” replies the patient, “but does the chicken know it?”
So how does this apply to the notion of commodity fetishism? Note the very beginning of the subchapter on commodity fetishism in Marx’s Das Kapital: “A commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties.”
Commodity fetishism (our belief that commodities are magic objects, endowed with an inherent metaphysical power) is not located in our mind, in the way we (mis)perceive reality, but in our social reality itself. We may know the truth, but we act as if we don’t know it – in our real life, we act like the chicken from the joke.
Niels Bohr, who already gave the right answer to Einstein’s “God doesn’t play dice“(“Don’t tell God what to do!”), also provided the perfect example of how a fetishist disavowal of belief works. Seeing a horseshoe on his door, a surprised visitor commented that he didn’t think Bohr believed superstitious ideas about horseshoes bringing good luck to people. Bohr snapped back: “I also do not believe in it; I have it there because I was told that it works whether one believes in it or not!”
This is how ideology works in our cynical era: we don’t have to believe in it. Nobody takes democracy or justice seriously, we are all aware of their corruption, but we practice them – in other words, we display our belief in them – because we assume they work even if we do not believe in them.
With regard to religion, we no longer “really believe”, we just follow (some of the) religious rituals and mores as part of the respect for the “lifestyle” of the community to which we belong (non-believing Jews obeying kosher rules “out of respect for tradition”, for example).
“I do not really believe in it, it is just part of my culture” seems to be the predominant mode of the displaced belief, characteristic of our times. “Culture” is the name for all those things we practice without really believing in them, without taking them quite seriously.
This is why we dismiss fundamentalist believers as “barbarians” or “primitive”, as anti-cultural, as a threat to culture – they dare to take seriously their beliefs. The cynical era in which we live would have no surprises for Marx.
Marx’s theories are thus not simply alive: Marx is a ghost who continues to haunt us – and the only way to keep him alive is to focus on those of his insights which are today more true than in his own time.
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