The debates (example) about capitalism (here, the libertarian ideology seems to come to fore, though, note that libertarianism can be enlightened) and socialism (here, the purported autocratic , or perhaps only authoritarian, tendency arises) rage forever in the western mind. Yet, we find ourselves now bailing out the socialistic fat cats of capitalism (Thain, another poster boy -- who would have believed that on the Republican watch, such largess with taxpayer money would ensue?). What gives in all this mess?
Well, it's time to look at something that can change the perspective, such as looking more closely at the Islamic take on these matters. Some insight might come from looking at Iran. It's Islamic but sufficiently away from Arabia to have interesting twists. A recent New Yorker article introduces the ideas of an economist in Teheran, Mohammad Tabibian. He talks of going to Qom to talk to the spiritual leaders who, by the way, are humble in characters, poor in acquisitions, and consideration of their human fellows. They are not inhabiting gold palaces as we see in some western situations.
But, they, from a spiritual sense as there is more attention to the 'other' world, don't really have an economic plan there in Qom. Hence, post the 1979 change-over in Teheran, the regimes have had to expend efforts to develop the necessary economic prowess. It would be interesting to see some more in-depth analysis, comparative to our stumblings over the past 200 years.
But, Tabibian, who is not favored in Iran due to his free market leanings, sees the need to encourage innovation as one thing that capitalism can do (yes, wouldn't it be nice to be able to do this with exhorbitant pocket linings - reminder, any pocket that fills, empties others - usually a many to one phenomenon). Why is not the socialist (at least, the communist experiment) view useful? Well, Tabibian was able to look closely at East Germany's economy, and, as a fellow revolutionary, could do so without censure. However, note that he had already been influenced by the western view.
As, he did study here in the west before he went back to Iran. So he can talk about the problems with the command economy (see the Trabant and much more) in comparative terms that are more meaningful than not. For example, he can talk about the problematics of the top-down specification of things versus the markets' approach that is, supposedly, bottom-up.
Isn't it the case that companies are more top-down now than ever before? What happened to worker empowerment? What we see is that people don't really matter here (western economy) except as resources to be exploited); one reason is that the 'other' influence has been filtered out.
Our recent turmoils from the disintegration of that Wall Street hubris show us the problems related to the 'free' ideology. In the western world, the reward for innovation has been seen as allowing enormous pocket filling to the detriment of the many. That is, smart means rich. But, do not the best-and-brightest (ah, yes, the favored) essentially corrupt the market's paradigm? Too, do they not screw it up for the rest of us?
One solution: monks as CEOs (who needs the preening of the elites?).
Yes, the suggestion is that the CEOs work from a vow of poverty (see Remarks) relative to their current expectation that they are the best and, divinely, chosen. It's the function that we want; these egos may have arisen to their positions by some talent that seems to hide under their avarice; let's propose that they just floated to the top (scum?) in the irrationalities that have run amok the past couple of decades.
So, our task? Define what might be the qualities that would be truly beneficial to all concerned (isn't that the ideal - meaning, of course, shareholders, customers, employees - what can BofA show its customer? no much, according to some). Among these attributes would not be the excessive drive for accumulation (those socialpathic tendencies ought to cause a filtering - are boards mere sustainers of elitism?).
This theme will re-occur.
07/17/2009 -- China has eaten our lunch (and dinner). Shows how silly our games are. Yet, finance can be run by people who can be non-profit in scope and who have an impeccable (oh, what quaintness!) un-interest in money.
03/30/2009 -- Near-zero will be looked at more closely.
03/11/2009 -- We also need to look at accounting's role messing up affairs.
02/05/2009 -- Of course, Iran is only one of many Islamic examples that we can (ought to) study; especially, as on this side of the world, the likes of the poster boys, who want their big pay and fast jets, even when they are on the dole, seem to prevail. Why do we allow such idiocy?
Too, Iran can be thought of as being about 30 years old. So, they've stumbled. The USA has been perfect over 200 years (e.g. Mining in Colorado)? Obama says that we do not disparage wealth on this side of the planet. Well, no wealth has been accumulated without others (the endless hapless) being diminished. Near-zero is the reality, folks.
Also, equity and debt are not equivalent when looked at correctly. The former's mechanisms have evolved, unreasonably, into gambling. Some wanted the latter to be so influenced, to boot. But, these both could be tempered, by various means that are rationally, and naturally, supported.
Economics and finance have erred to the extent that they've abstracted, meaning misused mathematics. Let's get back to being real and more stable.