Rich folks and the pitchforks

Three years ago billionaire Nick Hanaeur warned fellow plutocrats that the pitchforks were coming for them. They would be weilded by those most disadvantaged by increasing inequality

A few weeks earlier, the City of London mayor was making a similar warning to a conference on ‘Inclusive Capitalism’

“If too many people remain or become marginalised, they are less likely to be enfranchised, empowered and effective as workers and citizens, rendering them unable to make an economic contribution at best, and resulting in civil unrest at worst. Everything a firm does from the very top to the very bottom should demonstrate on a daily basis our desire to see a stronger, better evolution of capitalism. “

I wrote an open letter, to point out to her that the same warning had been made 10 years earlier in a social enterprise business plan, which warned of widespread unrest.

“Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode.”

By this time, the author had died in the trenches, going to to toe with ‘insanely greedy oligarchs’ in Ukraine, though his original warning had been made to one of the ‘Inclusive Capitalism’ speakers, 20 years ago. I refer to former US President , Bill Clinton.

As a member of the steering group for Clinton’s re-election committee, Terry Hallman had argued for capitalism to be re-directed to something which could be measured in terms of human well being, a people-centered economy.

“We can choose to not reform capitalism, leave human beings to die from deprivation — where we are now — and understand that that puts people in self-defense mode.

“When in self-defense mode, kill or be killed, there is no civilization at all. It is the law of the jungle, where we started eons ago. In that context, ‘terrorism’ will likely flourish because it is ‘terrorism’ only for the haves, not for the have-nots. The have-nots already live in terror, as their existence is threatened by deprivation, and they have the right to fight back any way they can.

“‘They’ will fight back, and do. “

At the end of 2004, Terry Hallman arrived in Ukraine to be greeted by those fighting back. The Orange Revolution had just kicked off.

He wrote home to North Carolina, warning Senator John Edwards of where the US was headed, toward ‘Doom and Revolution’.

He warned Ukraine that their revolution was being betrayed by US economic hit men.

‘Elimination of graft and corruption, and raising the overall standard of living for ALL Ukrainians rather than a few insanely greedy oligarch clans, was the main underlying and implied reason for the Orange Revolution — at least from hundreds of people, activists and otherwise, I talked with on the ground during and after the Revolution. Further, as director for any sort of peace institute, Mr. Aslund is obliged to review the connection between poverty and peace. Peace does not and cannot exist for people in poverty, unless they are harshly suppressed by government or other forces. Poverty is a horrible existence and lifestyle, and is bound to breed violence, not peace.’

By February 2007, the ‘Marshall Plan’ for Ukraine was delivered to government, it argued the case for deploying this redirection of capitalism on a national scale:

“An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples — the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.”

Speaking to the opening plenary of the international Economics for Ecology conference in Sumy, Hallman made another warning:

“At this point, the simple fact is that regarding economic theory, no one knows what to do next. Possibly this has escaped immediate attention in Ukraine, but, economists in the US as of the end of 2008 openly confessed that they do not know what to do. So, we invented three trillion dollars, lent it to ourselves, and are trying to salvage a broken system so far by reestablishing the broken system with imaginary money.

Now there are, honestly, no answers. It is all just guesswork, and not more than that. What is not guesswork is that the broken — again — capitalist system, be it traditional economics theories in the West or hybrid communism/capitalism in China, is sitting in a world where the existence of human beings is at grave risk, and it’s no longer alarmist to say so.

The question at hand is what to do next, and how to do it. We all get to invent whatever new economics system that comes next, because we must.”

When the opportunity arose in 2012, I made several contributions to McKinsey’s Long Term Capitalism initiative.

‘Re-imagining Capitalism — The New Bottom Line’ has been the most widely read.