The Great 2007-2009 crisis has restated the menace of deep depressions among the current challenges while the livelihoods turned out to be subordinated to the bailout of the domestic financial systems. Looking back, in the context of the 1930 Great Depression, John Maynard Keynes pointed out that the evolution of financial markets increases the risk of speculation and instability since these markets are mostly based upon conventions whose precariousness affects the decision of entrepreneurs. Indeed, Keynes called attention to the fact that the capitalist system has endogenous mechanisms capable of destabilizing the levels of spending, income and employment. Thus, his approach enhanced a more fruitful apprehension of the real-world where the outcomes of the entrepreneurs’ decisions are not submitted to stochastic behaviour, that is to say, they are not predictable.

The Keynesian approach focuses on private expectations associated with investment decisions in a business environment where uncertainty about the future pervades the decision-making process. While the very nature of wealth management under uncertainty in a monetary economy is the cause of business instability, entrepreneurs could postpone spending decisions and search for alternatives of wealth management. As opposed to the classical economists that were defenders of laissez faire capitalism, Keynes believed that government policies and actions could play a fundamental role in shaping a business environment that could reduce uncertainty and favour investment decisions.

As a matter of fact, the capitalist process of business decision making is based on conventions. As uncertainty is inherent in all entrepreneurs’ decisions, the Keynesian approach relies on the concepts of credibility and degree of confidence on a conventional judgment that is historically built within the markets. In any specific historical scenario, the average opinion of entrepreneurs on future scenarios shapes a convention that is based on a precarious set of expectations about the behaviour of aggregate demand – consumption, investment and exports, for example. The degree of confidence on this convention could affect the expected return on investment- the so called marginal efficiency of capital, as Keynes warned.

Business conventions are influenced by a set of cultural, institutional, political and economic factors. In the attempt to re-shape the world order in the 1940s, Keynes pointed out the need of a “wide measure of agreement”, that is to say, the need to create new conventions based on trust. In his view, trust has a historical and social nature and impacts entrepreneurial development. Therefore, trust is considered a conventional concept related to the degree of confidence in the future business environment, that is to say, in the economic and political setting that turn out to shape the evolution of the markets.

Considering this background, two relevant questions arise: Which is the room for manoeuvre of nation-states to shape the markets towards sustainable economic and social growth in the context of globalization? Could domestic market regulation induce changes on  business practices  to promote job creation? How can the gap between public policies and the shaping of sustainable markets be bridged?

Published in The Express Tribune, August 31st,  2015.

The capitalist mode of production represents a radical break from traditional methods of organising economic activity. Because it has taken extremely diverse forms and evolved in complex ways over time, it is not easy to define precisely. Many authors have seen through this complexity of forms to the simplicity of the spirit. Max Weber writes about capitalism that “man is dominated by the making of money, by acquisition as the ultimate purpose of his life. Economic acquisition is no longer subordinated to man as the means for the satisfaction of his material needs.” It is natural for men to want wealth so that they can fulfill their needs, acquire luxuries, status, travel, or do anything that they desire. However, it is not natural to hoard wealth and revel in its possession. Ancient philosophers from Aristotle to Lao Tzu are united in their assessment that while money can be very useful, love of money is extremely harmful. Modern thinkers like John Maynard Keynes agreed that the pursuit of wealth is a “disgusting morbidity” and a “mental disease”. Nonetheless, they launched a daring experiment to harness the powerful force of greed for the accumulation of wealth and elimination of want.

This, then, is the fundamental contradiction at the heart of capitalism. The pursuit of wealth, universally condemned by traditional societies, is adopted as the central principle for the organisation of economic affairs. There is no doubt that legitimising the pursuit of wealth has led to an unprecedented accumulation of it, far beyond the dreams of traditional societies. However, economists like Joseph Stiglitz, Thomas Piketty, and others have shown that the increasing wealth has concentrated in the hands of a very tiny proportion of people. It has not ‘trickled down’. In retrospect, the reason is obvious. Traditional values of cooperation and generosity lead to sharing of wealth and general prosperity. When the modern value that ‘greed is good’ is promoted, those who accumulate wealth use it to acquire more wealth and power, rather than sharing it with the needy.

Understanding the vagaries and fluctuations of the economies of today is beyond the reach of conventional economic theory being taught in universities. This is because the economy has become sharply segregated into the haves and the have-nots, also called the one per cent and the 99 per cent. In confidential reports circulated in 2005 to their wealthy investors, Citicorp coined the term “Plutonomy” to describe this situation. This word combines Plutocracy — the rule of the rich — with economy and can be defined as follows: Plutonomy refers to a society where the majority of the wealth is controlled by an ever-shrinking minority; as such, the economic growth of that society becomes dependent on the fortunes of that same wealthy minority.

The concept of plutonomy allows us to resolve a contradiction presented by economic statistics over the past three decades. The statistics show that life has become more difficult for the vast majority of the population. The real wage has been stagnant or declining over this period. The rate of job creation has been low, and the quality of jobs available has declined. The time spent at work has increased to an enormous extent in the heartland of capitalism, while vacation time is pitifully small. All this time spent on the job takes away from time for family and friends, and loneliness and unhappiness show a strong upward trend. While skilled jobs carry very high wages, acquiring an education has become increasingly costly. The average debt of the graduating class of 2015 is at historically record-high levels. Similarly, homelessness and hunger are also at record levels after the global financial crisis.

Despite these depressing statistics, stock markets have been booming, growth seems to be going at a normal pace, property values have recovered to levels seen before the global financial crisis, corporate profits are increasing and so on. The Citicorp report tells the wealthy investors that they can safely ignore the doom and gloom statistics. These concern only the bottom 99 per cent whereas the economy is driven by the fortunes of the top one per cent. Textbook economic concerns with the “average” consumer are completely irrelevant in a plutonomy. The Citicorp reports classify the US, the UK and Canada as world leaders in plutonomy, with many other rich countries on their way. Nonetheless, some countries like Japan, France, Switzerland and the Netherlands are classified as the “Egalitarian Bunch”. The key difference is that the share of the top one per cent is not strikingly high. The Citicorp reports paint a rosy picture for the top one per cent: “Our own view is that the rich are likely to keep getting richer, and enjoy an even greater share of the wealth pie over the coming years.” They are not daunted by the visible threats: “We see the biggest threat to plutonomy as coming from a rise in political demands to reduce income inequality, spread the wealth more evenly, and to challenge forces such as globalisation which creates wealth and profits.”

Whereas the global financial crisis wiped out the lifetime savings of millions, the recent upheavals in the stock markets in China and the US have only affected the fortunes of the top 10 per cent. The bottom 90 per cent has only minor holdings in stocks. Obviously, there was no change in real productive capacities — no floods, earthquakes, wars or other catastrophes. As long as the lives of the workers are not affected, there is no impact on the real sector of the economy. The fortunes of the top one per cent did suffer a temporary setback. In the past, such crises have been successfully exploited by the plutocrats to their advantage, to scare the public into providing a bailout to the rich at the expense of the rest. This is not likely to happen since recent events have created increasing awareness and understanding of these financial games which impoverish the poor. Nonetheless, levels of awareness and cohesion among the bottom 99 per cent appear insufficient to create a threat to the plutonomy, justifying the confidence of the Citicorp report.

The expansion of neoliberalism in the last four decades has increasingly expressed the tensions between the expansion of the market economy and the consolidation of a new way of life. Indeed, the neoliberal way of life can be apprehended if considering Karl Polanyi´s concern about the way in which the economy relates to social organization and culture and the impacts of social and political institutions in relation to human livelihood. In his opinion, since the proper self-regulation of the market entails that nothing must be allowed to inhibit the formation of markets, the institutional patterns and principles of behavior turn out to adjust perfectly.

Taking into account the current effects of the neoliberal modernization process on the way of life, Karl Polanyi´s critique of the liberal myth and of the disruptive forces inherent to the self-regulated markets is inspiring to think about the deep impacts of neoliberal policies and institutions on livelihoods. In accordance to Polanyi, the centrality of the market entails that “Nothing must be allowed to inhibit the formation of markets, nor must incomes be permitted to be formed otherwise than through sales” (Polanyi 1944: 69). In other words, labor, land and money turn out to be seen as commodities and are produced for sale. As the commodity fiction proves to be the vital organizing process, the self-regulated markets demand the institutional separation of society into an economic and a political sphere. In other words, the commodity fiction implies that the market economy demands the institutional separation of society into an economic and political sphere, that is, in the market society the social relations are embedded in the economy rather than the economy embedded in social relations.

As Polanyi warned, the transformation in individual behavior towards the economic motive has disorganized the traditional forms of reciprocity and redistribution. As a result, the way of life has been increasingly subordinated to the commodity fiction.

Consequently, the neoliberal way of life is an important expression of the recent economic and cultural changes because it may possible to enlarge the subordination of sociability conditions to the market economy and the social relations increasingly become an “accessory of the economic system” (Polanyi 1944: 75). The policies adopted and the institutional changes have not only redefined employment and working conditions, but also patterns of behavior and patterns of subjective expectations and preferences that turned out to privilege competition in social dynamics.


Madi, Maria A. C.; Gonçalves, J. R. B., Corporate Social Responsibility and Market Spciety: Credit and Social Exclusion in Contemporary Brazil. In: Bugra, A.; Agartan, K., Reading Karl Polanyi for the Twenty-First Century: Market Economy as a Political Project. Palgrave McMillan, 2007.

Polanyi, Karl.1944. The Great Transformation. Beacon Press: Boston, 1971.

Published in the Express Tribune on  Aug 10, 2015

Hegemony refers to domination of various kinds, often by one state or group over others. The definition given by the Italian Marxist, Gramsci, leads to deeper understanding: it is the success of the dominant classes in presenting their view of the world as the only acceptable one. The importance of shaping minds, as an essential component of modern warfare, has received recognition under the name of ‘soft power’ and current US Army manuals devote considerable attention to it. The importance of the hard power in the form of weapons, soldiers and technical support in the Iraq war is obvious. However, the essential enabling role of the soft power required to convince the US public that Iraq possessed weapons of mass destruction, that al Qaeda was somehow present in Iraq and that Iraq posed a danger to the world, often escapes attention. Similarly, a massive propaganda effort magnifies the terrorist threat out of proportion to reality, in order to allow trillions to be spent on ‘security’ when millions are homeless and hungry in the US.termdefinition

One of the most useful tools in the arsenal of the hegemon is the myth of objective history. This is the widely believed idea that there is only one objective version of history, and hence all versions which deviate significantly from this are just plain wrong. Once the hegemon constructs the dominant version, there is no need to waste time in contradicting or arguing with alternatives — they are simply assumed to be wrong, and not given serious consideration. To free our minds, it is essential to understand why there can be no such thing as objective history. Currently, there are about seven billion people living on the planet. A complete objective current history must include the unique life experiences of all of them. Including the past multiplies the problem many times. Of all the events that have occurred since the dawn of time, only a very small percentage have been recorded. There is every reason to believe that this record is highly biased, since most writers who record events do so because they have some interest in them. Even discounting this bias, the extant historical records would fill several buildings and it is not possible for any single human being to absorb them even with a lifetime of study. Necessarily, what reaches us from the historical record is a very, very small fragment. Many startling conclusions flow from our inability to grasp more than an extremely tiny percent of the historical events which have occurred.

First, nearly any concept can be given historical support. Given any thesis, we can always find a few events which support this thesis, and hence ‘prove’ it historically. Of course, opponents can also find events going against the thesis. The hegemon argues that all such events are ‘exceptions’ to the general principle. Given our vast ignorance of historical records, such claims are accepted on authority. Second, and perhaps even more important, we choose our past by highlighting certain historical events that we choose to call our past. For example, some Egyptians launched a project of identifying with the Pharaohs of Egyptian history, in addition to their Islamic heritage. As part of a deliberate effort to separate Muslims within the Russian Republics, cultures, histories and even languages were created for the Tatars, the Bashkirs, Chechens, Ingush and other Muslim republics. Identity politics refers to how identities can be created or modified by political concerns.

Given that our past is not etched in stone, and that our choice of a past has a strong impact on the potential futures available to us, how should we choose our past? The hegemonic historical account is strongly Eurocentric, creating the impression that rational thought, democracy, science and all good things originated exclusively in Europe. Students in Pakistan learn this history from an educational system devised by Macaulay to reinforce these lessons. As a result, they despair of making significant achievements or contributions to human knowledge. A history which highlights the contributions and achievements of Islamic civilization in terms of human excellence, restores hope and creates the courage, idealism and vision required for great accomplishments. Such a history is not ‘biased’ but ‘purposive’ — aimed to counter hegemonic accounts in order to achieve certain desirable educational goals.

Published in The Express Tribune, August 10th,  2015.

Published in The Express Tribune, August 3rd,  2015.

A recent and amazing article by John H Richardson, titled “When the end of human civilisation is your day-job”, describes how many climate imagesscientists suffer from psychological trauma because their studies lead to the inescapable conclusion that human beings are destroying the planet, and climate change will create conditions making it impossible for the human civilisation to survive. There are two strategies currently being pursued with regard to climate change. One is the ostrich strategy of denial, which claims that there is no such thing, or if there is, it is part of natural geological processes rather than being created by human beings. The second is the band-aid strategy which seeks to make small efforts at relief of major visible problems being caused by climate change. Neither strategy has any hope of success at saving the human civilisation in its current form.

The roots of the problem run deep, and the changes we need to make are very radical. One of the most fundamental teachings of all traditional societies is the subordination of personal interests to the social or collective good. During the “Great Transformation” that led to the creation of modern society, this teaching was turned on its head. Individuals were encouraged to pursue personal interests even at the expense of society. As this philosophy gradually gained strength, many institutions which depended on social commitments were destroyed. Key examples are families and communities, previously built on lifetime commitments, which have been replaced by temporary social relationships based on expediency in advanced societies. The idea that excessive and wasteful consumption was immoral, especially when others were in need has been replaced by the idea of sacredness of property. That is those who have are perfectly justified in flaunting their luxurious lifestyles, while the rest of us struggle to imitate them. The breakdown of barriers to greed led to a mad race to consume more and more without any concern as to the effects on others or on the planet. As a result, income inequalities have become greater than ever seen in human history, and the lifestyles of the super-rich are unimaginably wasteful of planetary resources.

Two additional developments have magnified the effects of this pursuit of individual pleasure to planet-destroying proportions. One is the corporation, which has been given the rights of individuals, but not the responsibilities. Milton Friedman’s assertion that “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible” became widely accepted as the norm for corporate behaviour. The second problem is the loss of the idea of the symbiotic relationship between human beings and the planet they live on. In earlier times, this idea was encapsulated in the term ‘Mother Earth’, and it has been revived in modern times as ‘Gaia’, the living planet.

Among the hundred largest institutions today, 51 are now large corporations, while 49 are nations. All nations are pursuing growth, while all corporations are driven by the pursuit of growth and profits. Unfortunately, the planet we live on is finite, and cannot accommodate a constantly increasing demand on its resources. In addition to stripping the planet of resources which took millions of years to produce, our current demands (which keep increasing) on its renewable resources exceed the capacity of the planet by about 50 per cent. Current levels of consumption and population are not sustainable, and pursuing further growth is tantamount to suicide by destruction of the planet. Yet, increasing levels of consumption are required by corporations for growth and profits. In fact, the popularisation of hedonism and individualism can be attributed to the needs of the corporation to sell more and more products. Also, the rape of the planet is largely due to corporations, which have responsibility to the shareholders to produce profits, but no responsibility to preserve the planet. Because corporate profits are hurt by environmentalist movements, a documentary called“Merchants of Doubt” shows organised efforts by corporations to create doubt about climate change. This completely reverses the ancient Greek proverb that societies grow great when old men plant trees whose shade they know they shall never sit in. It is hard to imagine the greed of those who would destroy the planet for a few dollars.

So what is to be done? Many initiatives going under the name of ‘green capitalism’ have emerged, which suggest how we can modify capitalism to make it compatible with survival of the planet. However, in a deep and disturbing book titled Green Capitalism: the god that failed, Richard Smith has explained the failure of current efforts at greening capitalism, and how all such efforts are bound to fail because of fundamental conflicts between the demands for growth and profits, and the ecological planetary balance. Among the radical changes required to save the planet is a radical transformation of the economic system. We must go back to pre-modern models of social responsibility, where individual goals are subordinated to social concerns. A key priority has to be a reduction in standards of living to levels which are feasible with life on the planet. Instead of growth, we need to pursue de-growth. Interestingly, happiness research shows that simple ways of living produce more happiness at lower cost than our currently targeted ever-increasing standards of luxury. Currently, our lives are devoted to huge amounts of over-production and over-consumption of useless or wasteful goods. This producing and consuming leaves no time for pursuing more precious aspects of living, such as achieving excellence in different dimensions such as spiritual, moral or physical. We are too busy to cultivate friendships, and to give time to our loved ones. Agreements cannot be reached on environmental protocols because every group wants to consume more at the expense of others. To save the planet, it will be necessary to join hands in a collective effort, which puts social concerns ahead of private individual ones. Little wonder that climatologists are in despair.

The conceptualization of the informal economy focuses on some features of the business dynamics and employment conditions. That is why the definition includes not only enterprises that are not legally regulated, but also employment relations that are unregulated and unprotected, that is to say, employment without any kind of social protection.

In most of the developing countries, the small businesses’ challenges have contributed to the expansion of the informal economy. Small and micro-entrepreneurs are usually subject to complex regulatory barriers. Besides, the access to credit is restricted. As a result, micro and small enterprises reveal poor performance in competitive environments, a lower capacity for innovation and a weak international orientation. Among other obstacles to survival and expansion in the formal economy, the costs of starting up a formal enterprise are outstanding in developing countries. Among these transaction costs, we can highlight: i) the number of procedures that includes all necessary licenses and permits and completion of any notifications, verifications or registrations required by the relevant authorities; and ii) business legislation, specific regulations and fee schedules that are used as sources for start-up cost calculation.

Current global transformations in labor markets have also been characterized by the decline in the formalization rate of employment and an increase in the rate of self-employment. In many countries, the decreasing weight of industrial jobs promoted new relations and interactions between formal and informal economy. Today, informal unemployment includes self-employment in small unregistered enterprises, unpaid workers, own account operators and also unpaid work in family businesses. Actually, the total amount of informal workers include: employees of informal enterprises; casual or day workers, domestic workers, temporary or part-time workers; home workers and workers occupied in the context of outsourcing agreements.

In the middle 2000s, in the developing world, the percent of informal employment was almost 50% of the total in Latin America, nearly 60% in Africa and more than 60% in Asia. These data, from WTO, is considered one of the alternative measures of informality and its evolution shows that there is substantial heterogeneity across the world regions. In African countries, the level of informal employment seemed to have slightly decreased, mainly in urban areas. However, it slightly increased in Latin American countries. Besides, in Asia, the level of informal unemployment rose after the Asian crisis.

In addition to this informal employment indicator, governments try to measure the incidence of informality in production in other ways. For instance, the percent of the informal economy in relation to the total gross domestic product gives an indication as to the low overall productivity in the informal economy. In accordance to the WTO data, the percent of the informal economy (excluding agriculture) in relation to the total gross domestic product, as of 2006, was 37.7% in South Saharan Africa, 30.4% in North Africa, 26.8% in Asia, 25.9% in Latin America, 21.2% in the Caribbean countries and 13.9% in the transition economies.

However, the global scenario reveals that the level of informality is also growing in advanced economies since various forms of informal working conditions have been included in the new global production networks. Actually, many formal enterprises hire wage workers under informal employment relations.

Therefore, it is worth thinking about the  description of the current economic relations presented by Chen:

“… economic relations – of production, distribution and employment- tend to fall to some point on a continuum between pure ‘formal’ relations (i.e., regulated and protected) at one pole and pure ‘informal’ relations (i.e., unregulated and unprotected) at the other, with many categories in between” (Chen, 2007: 236).


Chen, M. A., (2007). Rethinking the informal economy; linkages with the formal economyand the formal regulatory environment. In: Ocampo, J. A., Jomo, K. S.(Eds.), (2007). Towards Full and Decent Employment, Canada, Zed Books.

planetdestroyThe mounting evidence that we are moving along the fast track to ecological suicide can no longer be denied. A new word ‘endling’ has been coined to describe an individual which is the last of its species. There are too many recorded tragedies of endlings who issued mating calls, but there was no one left to answer them. In Cut From History, author Eric Freedman writes that “It is deep-to-the-bone chilling to know the exact date a species disappeared from Earth. It is even more ghastly to … know that nobody knew or cared.” Elizabeth Kolbert details the depressing facts in her book entitled The Sixth Extinction: An Unnatural History. She estimates that about half of the species of plants and animals currently in existence will die out by 2050. This is not due to any natural catastrophe, but rather due to destructive effects of human activities.

Human beings use the world’s atmosphere as an open sewer for the daily dumping of more than 90 million tonnes of gaseous waste. Unless we can urgently change this pattern, the resulting rise in global temperatures will melt polar ice, resulting in permanent and catastrophic changes. According to reputable climatologist James Hansen, the man-made pollution already in the atmosphere traps as much extra heat energy every 24 hours as would be released by the explosion of 400,000 Hiroshima-class nuclear bombs. The resulting rapid warming of both the atmosphere and the ocean, which Kolbert notes has absorbed about one-third of the carbon dioxide we have produced, is wreaking havoc on earth’s delicately balanced ecosystems. It threatens both the web of living species with which we share the planet and the future viability of civilisation. “By disrupting these systems,” Kolbert writes, “we’re putting our own survival in danger.”

The most recent parallel to the current mass extinction occurred some 66 million years ago when a six-mile-wide asteroid collided with earth, wiping out the dinosaurs, and vast numbers of plant and animal species. Today, Kolbert documents a similar mass extinction event, which is happening in the geologic blink of an eye. The present extinction rate in the tropics is “on the order of 10,000 times greater than the naturally occurring background extinction rate”. This time, we cannot blame a giant asteroid. We have caused this catastrophe by altering environmental conditions on our planet so swiftly and dramatically that a large proportion of other species cannot adapt. Our own future is at risk as well, since we have fundamentally altered the fragile climate balance which fostered the flourishing of the human civilisation.

The earth’s water cycle is being dangerously disturbed, as warmer oceans evaporate more water vapour into the air. Global humidity has increased by an astonishing four per cent in just the last 30 years, causing larger and more frequent floods and mudslides. The extra heat is also absorbed in the top layer of the seas, which makes ocean-based storms more frequent and more destructive.

Our oceans, a crucial food source for billions, have become not only warmer but also more acidic than they have been in millions of years. We have overloaded their capacity to absorb excess heat and carbon pollution, causing destruction of entire ecosystems like coral reefs and rainforests. The same extra heat pulls moisture from soil in drought-prone regions, causing deeper and longer-lasting droughts.

Food crops are threatened by the disruption of long-predictable rainy-season-dry-season patterns, and also by the growing impact of heat stress itself on corn, wheat, rice and other staples. The melting Arctic ice cap is changing the heat absorption at the top of the world, which will lead to dramatic world-changing and irreversible climate change. In particular, the melting ice will accelerate the rise in sea level and drown low-lying coastal cities and regions. Everywhere the intricate interconnections crucial to sustaining life are increasingly being pulled apart. The individualist free-market system encourages all to pursue short-run growth without regard for long-term consequences. The Frankenstein’s monster that we have created in the form of corporations is running on its own steam, pursuing profit without any social responsibility. Without making radical changes, we cannot avoid the complete “Collapse” that Jared Diamond has so graphically warned about.

Published in The Express Tribune, July 27th,  2015.


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