The Road to Armageddon

In Anglo-America and like economies, mature businesses are mostly driven according to Friedman’s command, to make as much money as possible for stockholders. The underlying ideology, which is generally accepted as the way the world works, holds that the free market is the most effective decision maker regarding the allocation of economic resources. Therefore both taxation and regulation should be cut to a minimum since they only distort the market’s most efficient allocations. The ideology also holds, according to Friedman, that the private sector of the economy is twice as efficient as the public sector, which should therefore be privatised wherever possible. Just those two strands of the ruling ideology, combined with a business sector which complies with Friedman’s injunction to maximise shareholder money, is heading the world down the road to Armageddon, a dictionary definition of which is ‘the site of the last decisive battle between the forces of good and evil.’

That dichotomy between good and evil might be very apparent if the ideology was given 100% implementation. Such would involve absolutely no regulation, no taxation and a private sector which was running all public services, as well as business operations, for the sole purpose of maximising shareholder wealth. That at least makes absolutely clear, the direction of travel we are currently taking.

The destination would be marked by extremes of inequality of wealth and income with the mass of people below the poverty line and the 0.1% owning the earth and all that’s in it. The unsustainability of such a position is obvious. Human beings would not just be given to social unrest, they would be dedicated to bloody insurrection, declaring war for ‘the last decisive battle’.

Similar extremes apply in the other strands of sustainability or otherwise, such as in the provision of education and health care, pollution in its many forms, finite resource depletion, species extinction and climate change. Responsibility for all these and more would be compromised on the altar of shareholder primacy if the ideology was granted full implementation.

Clearly such an extreme position is untenable, but the ideology does not allow for compromise. Ridiculous though it may now seem, before the Berlin Wall came down, the ideologue’s argument was that any small step towards a more liberal future would lead ultimately and inevitably to a full-on communist totalitarian state, and must therefore be resisted.

The truth is such arguments are unnecessary since it is the ideology itself which is false. Friedman’s conversion of profit maximisation to maximising shareholder money has no valid legal explanation and its only theoretical justification, agency theory, seems to have been invented specially for the purpose and is based on the pretence that the company simply doesn’t exist as a separate legal entity. That is simply untrue as discussed several times on this site.

That is one key part of the ideology that is palpably false. Much of the rest, as Ruskin pointed out a century and a half ago, is like ‘alchemy, astrology and witchcraft’ and is wholly lacking in practical ‘applicability’. It nevertheless suits the winners who continue to invest huge sums in its promotion.

So far they have been successful maintaining it as the mainstream belief system, despite it obviously heading down the road towards Armageddon. The US President-Elect’s incoherent adoption of both New Deal style investment in infrastructure combined with reduced taxation might betoken some questioning of the ideology. A more pragmatic way forward is available, based on common sense and common humanity rather than ideological pretence.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s