On pioneers and potential followers: Further reflections on capitalism, transition dynamics, and the role of citizens' consciousness

Well, it seems my previous post (dated July 20) was both controversial and... too long. Ahem. OK, the "too long" part is familiar to you guys by now. Take it or leave it. It can't be helped. I'm long-winded and that's why you like me -- or don't like me. I assure you I'm not doing it on purpose. (See the post of May 10, 2011 for a short justification of long-windedness.) If you're reading this, chances are you're still finding those long posts nourishing enough. So -- ready for another one?...

Now to the more controversial aspect of the July 20 post as well as of the June 25 and 29 ones. It seems the distinction I make between low-grade (or low-intensity) and high-grade (or high-intensity) radicalism leaves quite a few people skeptical. Fine. The skepticism is associated with doubts as to the role that can be played by the "consciousness" or "awareness" of actors in the business and finance world. Top-down imposition of regulation and constraints, so the skeptics argue, is the only way to circumvent both people's ignorance (and/or plain laziness) and their ingrained interest in things not changing. F-i-n-e. Now let's suppose we do agree -- not a wild assumption, given that this view of top-down governance, based on a de facto elite that has understood things and has the intellectual means to know what's best from the vantage point of the "common good" (the "We" that's to be desired), is very widespread in both academic and political -- as well as juridical -- circles. Let's suppose we subscribe wholesale to Frédéric Lordon's idea (see the July 20 post) that

"given the manifest -- and manifestly dangerous -- degree of autonomy acquired by contemporary finance, bringing it back into subordination will no doubt require imposing on it brutal, if healthy, regressions"
(Frédéric Lordon, Jusqu'à quand?, p. 164, © 2009, Raisons d'agir)

and that the finance sector's

"extravagant privilege of profitability is an aberration to be eradicated as radically as possible. As always, the privileged, who present their privilege as something self-evident, will scream denouncing a refusal of modernity, an assassination of talent or God knows what else, perhaps even an 'injustice' since nothing seems to stop them. History has shown that there are more violent ways [than regulation] of reducing privileges -- such as reducing the privileged! --, and so they will simply have to get used to the idea that the perspective of merely getting pulled back into the general, common order of things in terms of profitability is actually exceedingly soft and caring."
(Frédéric Lordon, Jusqu'à quand?, p. 169, © 2009, Raisons d'agir)

The affect of anger is clearly perceptible here, and the black humor is indeed funny enough. But is it helpful when it comes to understanding transition?

Lordon's basic stance is that the protests of the finance industry are nullified by anticipation because, given the self-interest class to which they belong (see the July 20 post for an explanation of this), bankers and financiers are now lagging behind history. In French: "... eux sont des retardataires" (p. 184). True enough, many finance actors as well as finance economists seem not to want to let the extreme seriousness of the 2008 crisis, as well as its roots in a decades-long monetary binge, sink in. The historical breaking point represented by the 2007-8 meltdown may be lost on quite a few minds still. No doubt about it. And there's little doubt, either, that this coordinated myopia has led to both intellectual and political misinterpretations as to what needs to be done to repair the effects of the crisis, or at least to mitigate them. When a sufficient number of people's self-interest is sincerely aligned with visions of the "We" that involve problematic or dangerous mechanisms (such as the legally sanctioned use of almost unrestrained leveraging to generate alleged "prosperity" in a slow-growth economy, betting against all odds on a massive jump-start effect that will later on allow all outstanding debts to be repaid), then terrible collective effects can be generated without the slightest evil intentions on anyone's part. All this is true. Being embedded, through a necessity not of their own choosing, in a system that operates on cutthroat competition, lightning-speed information technologies, and a generalized scramble for "high (or ever-higher) yield," bankers, financiers, entrepreneurs, and investors play the game they are made to play. This game shapes their perception of their own interest to such an extent that many of them de facto become not just passive participants in, but active promoters of, the existing logic. It provides them, as Lordon rightly says, with existential meaning.

Along that line of reasoning, "alternative" investors or entrepreneurs are an oxymoron, a mere linguistic construction without actual substance: They are, by assumption, tied into a class of interests which acts like the noose on a fox trying to pull himself free from a trap in which he is caught -- the harder he pulls to get away, the more firmly he remains stuck until, eventually, he strangles himself to death. Along the exact same line, we could disqualify the credibility of any movement of consumer liberation or "critical consumption" since, supposedly, consumers in today's consumerist system are constitutionally incapable of envisaging life without the complete trappings of what feeds their self-interest. If overconsuming makes up your existential meaning, how can you break free of it and suddenly become "alternative"? So, both in the case of financial regulation and in the case of taxing excessive consumption or reducing work hours, those who can and might call for rules and regulations are not, by assumption, those whose interest class traps them in the system. If this is so, the question arises: For whom is Frédéric Lordon (in this case) writing his critical analyses? To whom does he address his ideas about the radical re-regulation of the financial sector? Inevitably, they will only be taken seriously and absorbed -- to the point of prompting action -- by citizens who have undergone a sufficient degree of what I would call cognitive emancipation: (a) they have actually bothered to gather information and ideas about what happened in the finance sector and its repercussions on the rest of the economy; and (b) what information and ideas they have gathered has led them to agree with the sort of analysis Lordon is offering. Both are necessary. What (a) means is that the person is a concerned citizen -- one who has formed the desire to understand key aspects of the system s/he lives in. As to (b), it means that this concerned citizen has furthermore undergone existential experiences such that his/her interest lead him/her to subscribe to Lordon's analysis.

All this may sound pretty tautological, but it isn't really. It's quite crucial to our reflection on transition. It means that we are going to go along with Lordon's critical analysis and conclusions -- again, I'm just taking him as a case in point here -- only if there is some sort of peculiar resonance between the reasons he, as a citizen who does research, had for developing his ideas and the reasons we, as citizens who seek information and ideas, have for adhering to his ideas. In other words, apart from eloquence and a particular talent for doing research and for writing and communicating, there really isn't that much difference between Frédéric Lordon and the citizens who, upon reading his ideas, agree with him and are led to act on what they read. At a deep existential level, anytime someone agrees with you it means you've been "preaching to the choir" all along: The audience that responds favorably to certain ideas is always the group of people who were just waiting to have a moment of recognition, or of what Plato called anamnesis. The question now is, Can an investment banker, a business lawyer, or the CEO of a multinational have such a moment of recognition? Strictly speaking, Lordon's own theory of structure-induced interests would forbid it: If such a person were to claim that they had a moment of recognition and that they realized how flawed the system in which they've been living and working really is, they'd be immediately suspected of hypocrisy or, worse still, of strategically appearing to agree in order to be able, actually, to "hijack" the regulatory process later on by watering it down or even standing in its way. That this is what often happens is obvious; that it always necessarily happens isn't obvious at all. I know people who have had genuine moments of recognition based on ideas and analyses that didn't cohere at all with their supposed interests as the incumbent systemic logic defined it for them.

The trouble is, of course, that the systemic logic does impose constraints and interests that must be pursued no matter what. You indeed cannot be an investment banker in a highly competitive banking sector and, just because you've had a moment of recognition, immediately reverse the logic of your trade, offering your clients "triple-bottom-line" investments which, while not much less risky than single-bottom-line ones, yield a lower financial return in exchange for a higher sustainability, or "intangible," return. Given the current accounting rules, the existing regulations, and the prevailing mentality among the bulk of your own clients, you'll be speedily driven out of the market and disposed of by your shareholders. So what do you do? Either you manage, out of sheer talent and visionary force, to become a pioneer in a new field and you carve out a niche for yourself -- a niche in which you can shine as an exemplar of what ought to be done but which, given the prevailing logic of the overall system, isn't large enough to accommodate many more exemplars like you. (To wit, the ferocious competition that goes on in academia amongst otherwise anti-competitive "heterodox" economists to occupy the very, very few university positions in which they can actually exercise their "heterodoxy.") Or you stay in the mainstream as long as necessary for better opportunities to present themselves, so that you remain outwardly indistinguishable from your pro-system colleagues -- even though there's once crucial interior difference: You, contrary to them, are playing along with the existing rules of the game while quietly but alertly waiting for a possibility to act on what you are convinced is right. Why would you do this? Well, there are as many reasons as there are personal histories, but basically they all boil down to the fact that individuals, too, have transition trajectories -- so that having had existential experiences that led you (let's say) to read Lordon's work and agree with him may not immediately lead you to leave your position as an investment banker and create a radically "alternative" investment firm. In the same way, just because you may have heard a jarring, life-changing talk by John Ivanko and Lisa Kivirist on their 2008 book ECOpreneuring: Putting Purpose and the Planet Before Profits doesn't mean you'll become an eco-preneur next week, or even next year. In fact, the system may simply not allow you to do so, for a while or maybe for a long time. (Besides, you may have a family -- or two -- to take care of, kids in college, and a mortgage to pay off, and such fundamental career changes just don't occur on the spur of the moment. They need to be prepared.)

So there are two categories of concerned citizens (trait (a) above) who agree with novel, alternative ideas impelling them to act (trait (b)): on the one hand, pioneers and, on the other, potential followers who are poised but still hesitant. The pioneer plays within the existing rules of the economic system and, for whatever reason, is able to dig him/herself into a niche where something exemplary can be built up and displayed to the rest of the world. This invariably means that there's some resilience factor allowing the pioneer to disconnect from the constraints imposed by the prevailing system: S/he may have a personal fortune from previous mainstream ventures (like the private banker turned eco-preneur, or the no-holds-barred tycoon turned lavish philanthropist); s/he may have adopted a lifestyle that simply makes her/him less dependent on what the system has to offer (like the couple of academics turned subsistence farmers, as in the case of Sharon Astyk and her husband -- see the sidebar); or s/he may, for a more or less extended period, rely on unconditional public income support or on public subsidies (like the academic who uses the shelter of his/her statutory wage to develop non-mainstream ideas not yet palatable to the private sector, as in Lordon's case). In all cases, the pioneer will be trying out things, building ideas, or taking actions that can't, given the prevailing rules of the systemic game, be universalized yet. The position of the potential followers is different. They don't enjoy the same degree of resilience with respect to the system, and they may also not have the same talent for imaginative action and for visionary thinking. But this is actually not a bad thing: It will impel them (since they, too, are blessed with traits (a) and (b)) to think about what more they would need, in terms of practices, resources, and infrastructures put at their disposal, so that they too might "make the jump." (And remember, again, that this is a jump they're just waiting to make, given the convictions they've built up through trait (b).)

It turns out that potential followers -- and not just pioneers -- actually play a very important social role: While the pioneers are fully busy developing an exemplar of possibility that has no chance yet of being taken up by everyone, the potential followers can -- impelled by the very frustration they feel at being "trapped" in a system they'd like to change -- get busy developing modest everyday "bridges" that will ever so slightly tweak existing practices and ever so discreetly instill new questions into existing mental reflexes. (One of my close acquaintances is a very high-ranking bank manager. Another is a former CEO of a very big capitalist group. Together, they co-organize a forum of managers who invite academics and "pioneers" to think about new management practices. The jury is still out on whether this will end up revolutionizing the system. Neither of them is probably him/herself going to become an eco-preneur or a triple-bottom-line investor anytime soon. But the questions and ideas circulated in their forum are new, and unheard of compared to even a decade ago.) These potential followers can also -- and this may, in fact, be an even more important role -- interact with the pioneers, on the one hand, and with political decision-makers, on the other, to begin to militate for larger-scale regulatory changes to be imposed by the government or by international or supranational bodies, so that the potential followers may soon have more leeway to become second-wave pioneers in a less hostile environment.

Notice that I have written "to be imposed." The idea is not that first- and second-wave pioneers will create a whole new, "ethical" business and financial world in which no external regulation is necessary, and in which self-regulation through do-good ethics and spontaneous "social responsibility" is sufficient. Not at all. Regulation is needed to have a level playing field at whatever level is deemed collectively desirable. (In fact, so-called deregulation is merely a particular case in which the State regulates itself into irrelevance so as to create a level playing field at the lowest possible level of "collectivity." It is still a form of regulation, after all. Indeed, officially proclaiming that a game has no rules is still a way of ruling. I would claim that the deregulated capitalist market with its alleged optimality properties is, in fact, a form of collective planning. This is why, unsurprisingly, the State was called in by the private-finance sector itself to help as soon as free-market capitalist finance failed in 2008 due to its own excessive credit dependence and risk-taking. There is never a clear-cut distinction between a so-called "public" sector and a so-called "private" one.) To the extent that a sufficient number of us are convinced that Frédéric Lordon's severe re-regulation of private finance is warranted -- including within the private finance sector itself -- so that alternative finance practices can develop from small pioneering ones into generalized ones, we will indeed push for such severe reforms to be imposed. But this obviously requires two things: first, that alternative finance practices have already developed within the incumbent logic -- which keeps them marginal and embryonic, as well as only moderately successful; and, second, that they are inspiring a sufficient number of "insiders" who would want to become alternative, too, if only more favorable regulations were put into place.

Why should people from outside the financial sector be more compelled in favor of severe reform than actors within that sector? Lordon's own answer, based on his interest-class model, is that it's rational and logical for actors within the finance sector to oppose regulation that might reduce their access to high yields and force them to bear more of the costs of their own risk-taking. Thus, the argument continues, citizens from outside that sector, who have no such rational interest and whose sense of existential meaning doesn't depend on high yield, on competitive ranking, and on a jet-set life -- citizens who, moreover, realize that recent and current financial practices actually go against their own best interests -- will rationally and logically call for regulation to cap yields and increase accountability. Now this would be a valid argument if all actors in the financial sector were exclusively after high yield and competitive ranking no matter what. But even if this were the case, a question remains: Who would devise the regulation? It couldn't be the anti-regulation financiers (and the economists who subscribe to the same views as them), who know much too much to give away their tricks, nor could it be the incompetent average citizen (including the average politician, as well as all economists who understand too little about finance), who know far too little to be able to think up regulatory measures on their own. So the only persons left are, in Lordon's model, those critical economists who know enough about the subtleties of financial mechanisms, such as himself and a handful of others. That doesn't create a political movement. So popular adhesion must be sought outside the financial sector -- by assumption -- and this means enough citizens must be made to realize how flawed this system really is. Faced with the prospect of not being reelected if they continue to support current financial practices, politicians will then presumably follow suit.

Now this model may actually work in Lordon's case, since his proposals for financial reform don't really, for all their radicalism, move very much out of the box. He doesn't consider a multiplicity of currencies as a challenge to the monolithic debt-money model of credit creation, nor does he question the basic growth model inherent in capitalism. He doesn't call for a plural economy and his re-regulated capitalism is still, in its essential features, a form of capitalism -- to be pitted against what he rightly calls deregulated capitalism. The re-regulated capitalism he calls for is a return to social democracy in its respectable, traditional form: a full-employment capitalist economy, hence a growth economy, which (thanks to a suitably reined-in financial sector) generates investment in such a way that upward-drifting wage incomes can fuel consumption and hence employment. Deregulated capitalism in and after the 1980s has wrecked the social-democratic regulation framework, and this is what Lordon is lamenting. He certainly can't be blamed for doing so. Very few of us are still, after the 2007-8 financial debacle, claiming that social-democracy's hara-kiri in the late 1970s brought on a durably better economic climate. However, at best, the framework ushered in by Lordon's calls for re-regulation would be some form or other of "green capitalism" -- not as a stepping stone for a genuinely plural economy such as the one I've been suggesting in Parts 1-4 of this blog, but as a further "regime" of capitalism, coming after the Fordist regime and the deregulated financialized regime. (Remember, again, that so-called deregulation is basically a form of regulation.)

By being skeptical -- to say the least -- of the existence of genuinely "alternative" trends, people, and interests within today's financial sector, and therefore by condemning investors, financiers, bankers, and managers as a class to be "latecomers" (retardataires) on the stage of history, Frédéric Lordon is effectively claiming that the only way of implementing the intermediary goal of re-regulation is to vindicate re-regulated capitalism as the sole ultimate goal. This is where his "metaphysics of struggles" (see the July 20 post) comes fully into its own: As a social democrat steeped in the belief that the role of the State is to regulate the struggles for the sharing of surplus value between capital and labor, Lordon isn't interested in de-growth, in reasoned re-localization, or in bioregionalism -- that is, he doesn't believe in a transition trajectory that would lead through a period of coexistence between capitalist and non-capitalist modes of economic organization, and would end up with a durably plural, sustainable economy. Full employment and high social protection seem to imply, for him, one form or other of capitalism along with a strong regulatory State that controls money and finance. The rest is mere bucolic fantasy. There are no credible later stages. Here's how one of the characters in his play, more precisely one of the President's advisers, ironically expresses the dismal things that will occur if the crisis is allowed to wreck the existing economic system:

"Disparition brutale des moyens de paiement,
Toute l'économie prend un tour amusant:
Retour au jardinet ou bien à la cueillette,
Vivent les joies du troc et celles de la diète...
Nous payerons en fleurs, ou bien avec des glands.
[aux banquiers]
-- Ça n'est pas dit pour vous, ce serait déplaisant...
En tout cas mes bravos, magnifique avancée,
Le retour à la terre, il fallait y penser!
Est-ce cela qu'on nomme "Nouvelle Economie"?
N'hésitez surtout pas, développez, je vous prie.
En revenir au foin ou bien à la luzerne,
Quel projet audacieux, et du dernier moderne,
Cette modernité dont vous étiez si fiers --
Quand vous nous ramenez droit à l'âge de pierre."
(Frédéric Lordon, D'un retournement l'autre, p. 57, © 2011, Editions du Seuil)
(Here's a loose translation, with no attempt to mimic the alexandrine meter and all the very French traits of humor: "All means of payment brutally disappearing, and the economy taking a pleasant turn: Back to the little garden or to picking from trees, long live the joys of barter and of dieting... We shall pay with the help of flowers, or perhaps using acorns. [He turns to the bankers.] I am not saying this for you, that would be discourteous... In any case, you have my applause: What a great leap forward -- back to the land, why did we not think of it before? Is this what goes by the name of "New Economy"? Do not hesitate, I beg you, and be even more precise. Back to straw (or is it alfalfa?) -- is that not one bold project, the epitome of modernity? -- This modernity you were so proud of, and which is now leading us back to the stone age.")

Now a severely re-regulated green capitalism would, of course, need its own brand of pioneers, in the form of a new generation of Schumpeterian entrepreneurs, innovators, and investors able to ride the "Green-to-Gold" wave and to make ecology into good (albeit, in this case, severely re-regulated) business -- and this is fine in itself, except that these green-capitalist pioneers, who fill the pages of today's "sustainable investment" literature, don't seem to be very interested in the six framework conditions I've been setting out in Part 4. Again, this is quite normal and not, in itself, objectionable: In line with Lordon's theory of structure-induced interests, re-regulated capitalist private finance will generate... well, new capitalists, what else? He seems to believe that such a re-framing will allow a better power balance in the ongoing struggle around wages and profits. He's right, of course, and from a traditional social democrat's perspective this is the best one could wish for, since capitalism as a monolithic system is simply assumed to be here to stay. [Lordon's other book on the financial crisis, entitled La crise de trop, does contain a final chapter on ways to exit capitalism -- among others, participatory coordination akin to what I discussed in the May 9, 2011 post. However, he starts out by acknowledging that he doesn't see that scenario as "the most likely." That's reasonable, of course, but his proposals in that book aren't very clear, either, about how intensely he believes ideas such as bioregionalism, re-localization, or de-growth ought actually to be promoted. Pointing towards Albert and Hahnel's participatory economics, as he does in that final chapter, isn't quite enough to ensure that the five other framework conditions I've set out will be promoted as well. I suspect they won't in Lordon's approach.]

I, on the other hand, believe that the true, deeper potential of green capitalism is to serve as a first-generation transition mechanism towards yet more ambitious goals, and that we should therefore use the innovations, the dynamism, and the enthusiasm generated by the "green economy" movement in order to reach a sustainable pluri-economy such as the one I've been describing in Parts 3 and 4. Sure enough, this does require a strong regulatory State. But its role shouldn't just be to rearrange today's framework conditions -- be it drastically in the way Lordon suggests -- so as to have the same old actors with the same old interests and motivations playing a somewhat new game. We do need a new game, no doubt, but within that new game have to find ways to (re-) regulate green capitalism in such a way as to also foster the emergence of new types of actors, with new types of consciousness or awareness, hence with new types of interests and motivations, so that eventually a much more deeply renewed set of framework conditions can be pushed politically. Of course, we have nowhere else to begin but the world as it is now -- but there are indications that within the critical sectors of today's economy, and within banking and finance in particular, there already is a fringe of "new consciousness" people who would want to put their atypical and counter-systemic motivations into action but haven't all found the best climate to do so. A few are pioneers, but most are potential followers, poised but hesitant. So instead of operating as if the deeply renewed framework conditions were already in place (which they indeed aren't), they go for more modest things like social business, sustainable investment on Wall Street, or trying to start thinking outside the box within mainstream business schools. It's these people who are strategic so that new framework conditions can be pushed for, because they're already operating within the existing structures and trying to work out whatever "alternatives" can be worked out even while the educational, regulatory, and political support superstructure hasn't yet been upgraded. This is what I mean by low-intensity radicalism as a prelude to high-intensity radicalism.

It isn't a question of whether "top-down" should be replaced wholesale by "bottom-up," as if it were a binary, either/or choice. It's a question of which types of new economic "leaders" (a term from the management literature which I don't particularly like in other, more mainstream contexts, but which is apt nevertheless) can be made to emerge from within the system as it is today -- and this means that pinning self-interest classes against one another too rigidly probably isn't the most productive strategy. If green capitalism is going to be a positive transition tool instead of becoming the next obstacle to further transition, all actors involved, from management schools to trade unions, from government to the banking and finance sectors, from the fledgling social economy sector to our massive industrial mammoths, from our towns to our myriad of small-and-medium enterprises, need to be pulled into a broad and demanding discussion around two inextricably interconnected questions: on the one hand, how do we raise our levels of consciousness and change our ways of life (our "existential interests") so that we can push for really deep regulatory changes in the future -- and on the other hand, how do we already create sufficiently new regulations in the present so that our levels of consciousness and our ways of life can change more easily in the future?

As economists and social scientists know, this sort of micro-to-macro-to-micro loop implies a host of very difficult technical issues -- particularly about the timing of reforms and about how to detect and exploit hidden potentials in individuals and organizations -- but if we are to engineer a three-tier transition that eventually leads us towards a genuine pluri-economy with equal opportunities, we can't avoid these difficulties. The whole idea of this blog is to -- modestly and, no doubt, very imperfectly -- set the stage for tackling at least some of them.

This post from the "Eco-Transitions" blog by Christian Arnsperger is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Regulatory change, consciousness building, and the three transitions (including a debate with Frédéric Lordon)

The whole idea of a "Next-Step Economy" is to make do with the unavoidable fact that, since (for better or for worse) we are living in a capitalist social democracy with globalized goods and financial flows, the transition towards a genuinely plural economy (ultimate goal) will require a transition towards new framework conditions (intermediary goal), which in turn will require the emergence of new economic practices, the forging of new political alliances, and the modification of at least some citizens' awareness (immediate goal). Of necessity, such a three-tier model of transition implies the need for tactics. More to the point, depending on "our" ultimate goal, "we" need to recruit citizens whose immediate interests, given their current level of awareness and consciousness, are in line with the intermediary goals "we" have envisioned (i.e., in our case, the six basic framework conditions for a genuine transition).

Now this pronoun "we" that I've been using in the previous few sentences is notoriously elusive. At the same time, it's of absolutely crucial importance. In a democracy -- and in the present day this means, roughly, a parliamentary and therefore representative democracy, usually quite prone to special interests intervening at various stages in the ongoing "muddling through" process in order to influence policy-making -- the only concrete "We" is, trivially, the set of inhabitants of the relevant decision-making area: a sovereign country or, as in the case of Europe, a set of countries that have in part relinquished their sovereignty. When it operates its economy or when it sets in motion the mechanisms of a general election, this concrete "We" functions as a more or less mechanical system. In that case the "We" actually works like an "Its," a collection of things in interaction. Cogs and wheels start moving, inputs become throughputs and then outputs, and certain measurable results ensue. However, the same concrete "We" also generates, and is sustained by, a language-mediated culture, in which ethical values, metaphysical worldviews, and political visions circulate through language. Ideas start to flow, words and images become debates and arguments, and gradual shifts in collective values and views (sometimes hard to quantify) occur. Cultural exchanges and systemic interactions make up the external and the internal sides of "the collective," and they reinforce each other: the dominant systemic logic -- made up of a myriad of interlocking mechanisms -- influences, and is in return influenced by, the dominant cultural motifs, made up of a score of assertions about what's right to "us," what's self-evident in "our" eyes, what "we" think is the meaning of life and the cosmos, and so on.

Now notice, however, how these first-person-plural pronouns have suddenly become much more abstract. OK, "we" may generally believe that parliamentary democracy is preferable to all other systems -- that's part of today's democratic culture -- and "we" may be living in a society where the market is considered as preferable to all other allocation mechanisms -- that's part of today's market culture -- but not all of "us" equally believe these things. It's not an issue of being right or wrong at this stage; it's just a plain fact. Not every "I" within the concrete "We" actually adheres to the dominant mechanisms and ideas that "We" profess as a collective. Contrary to what the most reductionist neuroscientists would have us believe, the universal biological and neuronal features of each "I," which we all share as human animals, don't completely determine what aspects of the abstract "We" each "I" will adhere to when it comes to fitting into the concrete "We." In other words, there exist various degrees of -- more or less conscious -- non-adaptative and anti-functional thinking and behavior in human "I"s when faced with the dominant systemic logic and the dominant normative motif of the "We."

In my recent book Full-Spectrum Economics (Routledge, 2010), I have tried to spell out the consequences of this for economics as a scientific discipline. These consequences are actually, or so I believe, quite momentous. Once the external and internal sides of the "We" and the "I" are all taken into account, economics needs to be re-thought almost completely and made into a highly pluralistic discipline -- which it isn't for the moment, although some small progress is slowly occurring at the fringes. In this post, let me say a few things about how I believe this "four-quadrant" approach (OK, yes, some of you may have guessed I take this framework initially from Ken Wilber's so-called "integral" approach and then work out its implications for social science) allows us to better understand the three-tier transition model I'm proposing in this blog.

Actually, I'm glad to be able to use this opportunity to reflect further on the pro's and con's of awareness and consciousness building in economic agents. The opportunity is given me by a book I recently finished reading, by a French colleague of mine from Paris, Frédéric Lordon. The book is called Jusqu'à quand? Pour en finir avec les crises financières. Frédéric easily stands as one of the most brilliant economists of his, and hence my, generation. (Well, yes, it's publicly known that he was born in 1962, just four years before yours truly.) The way he blends technical expertise, political shrewdness, and a focused interest in philosophy and anthropology is something I find not only personally appealing, but scientifically essential. Frédéric Lordon has endeavored over the past twenty years to build his own particular brand of what I would call integral economics. Taking his cue from the 17th-century philosopher Baruch Spinoza, he has chosen to use economic agents' "affects" (which lie at the border between the neuronal and the emotional) as the anchoring point for both an approach to money and finance which is truly fascinating, and a theory of social conflict which he terms a "metaphysics of struggles" (métaphysique des luttes). I won't go into too many details now, but let me just say that Frédéric's central idea is that, since we (universally) act in the vicinity of our affective perceptions, and hence of our interests as we perceive them, we can only be brought to change if we affectively adhere to the idea that something must change; and, on the contrary, as long as (be it out of fear or because we are angry that things of interest to us are going to be taken away from us) we affectively refuse the idea of change, we won't just resist it but actively struggle against it. Therefore, the "We" is a theater of constant struggles -- and this, to Lordon, is a metaphysical fact, not just a momentary feature of reality -- and interests clashing with, or even crashing into, other interests. Self-regulation is therefore virtually impossible, and codes of ethics and good conduct are, in his eyes, a complete sham. For him, calls for morality and "ethics" are, especially in the business and financial worlds, mere alibis to avoid having to submit to the only really effective tool: political -- and therefore juridical -- regulation.

It's a shame that Frédéric Lordon's two gripping books on the financial crisis -- Jusqu'à quand? Pour en finir avec les crises financières (Raisons d'agir, 2008) and La crise de trop: Reconstruction d'un monde failli (Fayard, 2009) -- as well as his hilarious play in alexandrine meter (D'un retournement l'autre, Seuil, 2011) haven't been translated into English. Together, they form an amazingly didactic panorama about the causes and consequences of financial deregulation (alternatives in English include George Cooper's The Origin of Financial Crises and Adrian Buckley's Financial Crisis), and they also trace out radical reform measures by way of re-regulating the financial sector, re-disciplining banks (way beyond what the current Basel Accords impose), and massively backtracking on so-called "financial innovation." Lordon's threefold message -- if I may be permitted to collapse his truly brilliant analyses into a few rudimentary words -- is that (a) financial deregulation and the proliferation of high-risk "innovations" were pushed in the name of a more economically efficient "We" (efficient money, asset, and capital markets were supposed to allocate risks and resources "optimally") and of a more culturally advanced "We" (Fed Chairman Alan Greenspan saw the access to home ownership, with the associated feeling of prosperity as people rode the wave of the real-estate bubble, as a way to reinforce pro-capitalist worldviews in the U.S.); but that (b) in actual fact, the underlying economic and cultural model served a small minority of interests and created perverse incentives for an even smaller minority of "I"s whose existential meaning lay in earning ever more millions -- and those minorities could obviously not be counted on to regulate and rein in their own excesses. Ergo, (c) only a State-driven, public and therefore sufficiently drastic re-regulation of finance, banking, and the market economy in general could undo the fundamentally perverse incentives which the promoters of financial interests had created for themselves.

Let's call Lordon an ontological and metaphysical realist. He's not neo-Hobbesian, however, because for him, everything is political to begin with -- there isn't ever any "state of nature" in reference to which the rules and regulations we adopt could be explained. There's never an "I" without a "We" in Frédéric's work (he doesn't espouse stark methodological individualism), but the key issue in his metaphysics of struggles is that, most of the time, the "I" uses the reference to the "We" out of pure self-interest -- hijacking the collective, as it were, to use it for the furtherance of his/her own interest, of his/her existential meaning. This is what points (a) and (b) of his message indicate. In other words, each "I" builds his/her worldview and preferred economic theory (both of which refer to "We") in such a way that they will cohere with, and further, his/her existential interest -- and s/he does this within a framework in which, most likely, political relations are highly asymmetrical so that some worldviews and theories get disproportionately more hearing from public authorities than others. This means that a minority of "I"s' self-interested references to the abstract "We" get translated into actual policy (in this case, financial deregulation in the alleged "common interest") and become the dominant political and cultural reference point of the concrete "We."

In the everyday functioning of society, there will therefore be various classes of self-interest. Each such class is a network of "I"s who, even though they may never have met and may never meet, share the same outlook on what's important for them and therefore for society as a whole. There is no conspiracy involved (although there frequently are asymmetries as to who gets listened to most, and who gets ridiculed), there is simply an objective collusion of self-interests based on shared existential outlooks (that is, shared views as to what's meaningful and what's important). These interest classes, Lordon proposes, gradually shape the functioning of the economic system and create the incentives (for instance, asymmetric bonuses leading to an absence of accountability, or financial derivatives that allow for Herculean amounts of leveraging) which will most further their interests. The self-interest of certain intellectuals, he continues, plays into these mechanisms as well, leading some economists to defend deregulated financial markets as "efficient" and to portray -- in line with the interests of the financial institutions that sometimes finance their research -- various "financial innovations" such as derivatives as conducive to optimal risk-sharing, even though the reality of the crisis has shown markets to be grossly inefficient and derivatives to create leverage-driven catastrophes of previously unheard-of proportions as huge risks that had long remained invisible suddenly materialized.

Lordon brilliantly combines the microeconomics of Spinoza, Keynes, and Bourdieu with the macroeconomics of the French "régulation" school of economics to offer us an approach to the crisis in which the sole plausible outcome is a firm, top-down re-regulation of the whole financial sector by the public sphere. He makes a very convincing point of it and, in fact, goes about it in a way quite similar to what I earlier called the "ultimate" and the "intermediary" goals. Frédéric's ultimate goal is a high-growth, full-employment capitalist economy with high levels of social protection (as a Keynesian social democrat, he isn't at all interested in de-growth or in post-capitalist alternatives). His intermediary goal is a set of regulatory framework conditions -- both microeconomic and macroeconomic, going from the creation of unlimited negative bonuses (i.e., "maluses") for traders all the way to the radical reforms of the Lisbon treaty -- that severely rein in the latitudes of financial institutions to reap two-digit returns by emitting exceedingly risky instruments. What Lordon's approach is highly skeptical of, however, is what I have called the "immediate" goal of building awareness and consciousness among citizens in general, and among the agents working in the economy in particular.

Why is this so? He holds hard and fast to a theory of "interest classes" which says that people will only act on their own interests and, more precisely, on the affective emotions that "mobilize" them to act. So yes, there may be -- and are, in fact, likely to be -- revolts and even revolutions as the common people gradually realize that, for all the dominant rhetoric and for all the dominant mechanisms of the economy, none of what goes on in the financial sphere is in their own interest. But Lordon's approach is adamant that such movements will not be transitional but, rather (as happens at the end of his play D'un retournement l'autre), will be more or less reenactments of the storming of the Bastille. The reason for this is, mainly, that in his perspective revolt or even a change of vision and a change of heart, leading to "transition advocacy," can't possibly occur in people who are active within the financial sphere. Why? Well, because if such people did act on "alternative" or "transitional" convictions they'd be trampled by the competitive logic that's at work in the sector -- they'd make losing investments, offer too low rates of returns, and be driven out of the market in a short while. Their "class" interests wouldn't be furthered at all. It's not a question of individuals being "bad," says Lordon, it's a question of the structural rules not being the right ones -- and this is what motivates his insistent call for top-down re-regulation without any concern for whether there are agents within the system who might "support" this regulation. In short, he is utterly skeptical of what I have called "low-grade radicalism" as a prelude to "high-grade radicalism" (see previous post, dated June 29).

I have spoken in private with a few "alternative" investors, as well as with a few economic lawyers, who have been kind enough to look at some or all of my blog posts. The lawyers will tend to agree with Lordon and stress that regulatory measures must be pushed for at top levels and with no regard for what most investors, entrepreneurs, bankers, or politicians at the grass roots think or believe -- simply because most of these agents are so busy getting by within the system that they have no objective interest in really thinking about the system or in investing the time and resources required to do so. So, forget the "Next-Step Economy" and just push for the six framework conditions wherever necessary so that they can be implemented directly -- same as Lordon's conviction that the re-regulation of finance ought to be imposed on the finance sector. And, in full coherence with his own approach, he does express this conviction in acidly trite, and also sometimes affectively charged, ways. Translated into our terms here, this would mean that the six framework conditions identified in Part 4 should simply be imposed -- meaning, in a democracy, voted into being through the maze of national, international and supranational decision-making entities.

The alternative investors, surprisingly enough, are more ambivalent. They do, of course, recognize that regulation is crucial if there is to be a common foundation for everyone's decisions -- which is the regulatory version of the free-market idea of the "level playing field." They see clearly that worldwide accounting rules need to be modified, that international or supranational rules for protecting "green" or "integral" foreign investments more than "gray" or "brown" ones may be needed, and so on. But they also believe that such regulations only have a chance to be passed if they're advocated by a sufficiently visible minority of powerful actors in the investment community itself. This may be an unfortunate fact of our contemporary capitalist social democracy, but if a whole "interest community" whose interests stand to be affected by legislation or regulation has the financial and symbolic means to lobby against it, that legislation or regulation will not be passed unless there's a haphazard coup within the political institutions. "Muddling though," remember, means that competing interests are to be given equal hearing -- and de facto this often means they get un-equal hearing, some turning out to be more equal than others... Therefore, in order to even have a chance to have new regulations and legislation encouraging eco-preneuring and sustainable investment, we need to have a sufficient number of investors themselves asking for such new rules -- and that obviously requires the emergence of a minimum number of already active, already practicing "alternative" investors. Not pseudo-alternative ones, not greenwashers (for these will gladly, in full compliance with Lordon's theory, push for more of the same and for business as usual), but individuals who, due to some event in their lives which caused them to experience a consciousness shift, are truly open -- with their whole affectivity -- to going all the way and doing, as well as asking for, whatever regulation is necessary for a genuine transition to get off the ground. But for this to be the case, they already have to be such alternative investors within the system as it is. Which means that they already have to have started on low-grade radicalism -- some because they think it's just good business, others already with a view to furthering high-grade radicalism later (in the form of a genuinely plural, sustainable economy as the ultimate goal).

So the fated expression, "consciousness," has been pronounced yet again, and it could equally well have been "awareness." Structures-oriented social scientists are legitimately wary of these expressions. Frédéric -- as well as other radical colleagues I'm thinking of -- will surely associate them with the worst of New Age hogwash. If consciousness/ awareness is structure-determined, he might claim, then what sort of "mutation" can one expect from a person who's still busy making a living within the financial system, investing his/her own or other people's money? Actually, wanting to do "alternative" investment within the existing structure is suicidal: the deregulated capital and asset markets and their cutthroat competition will take care of such fantasies... The only true latitude for surviving within the system while appearing to be "alternative" is, indeed, to practice greenwashing -- so that greenwashing is, in fact, the only really systemically coherent form of behavior and is, by that token, only to be expected from capitalist investors. Or so the claim would be.

Of course, as he's surely aware, "heterodox" economists such as Frédéric Lordon himself are living counterexamples to this very approach. In order to survive intellectually, institutionally, and financially within a profession whose dominant mainstream is quite hostile to them, "alternative" economists both accept sacrifices (on average, fewer career opportunities and lower salaries) and militate for the creation of "havens" and opposition forces, such as professional associations and partnerships with specific institutions (e.g., trade unions or government agencies, rather than perhaps banks or multinationals). There are also, within the mainstream of economics, quite a few "heterodox-washers" (Lordon offers a scathing critique of some of them in his two books) who seek to combine a critical-looking façade with innocuous practical recommendations. Their existence makes the life of more sincere heterodox thinkers even more difficult, but the latter nevertheless sometimes manage to carve out a place for themselves -- just like Frédéric himself has done -- in the hope that they might, someday soon, influence the deeper structure of the profession and of teaching curricula so as to durably modify the incentives economists face. (I have devoted two books to a general theory of the reform of economics: in French, L'économie c'est nous [Erès, 2006] and, in English, Critical Political Economy [Routledge, 2008].) If economics is someday to become a genuinely pluralistic discipline, the first transition that has to occur -- still at a long distance from this ultimate objective -- is the emergence of thinkers such as Lordon who, through one form or other of "mutation" of their self-interest, start doing alternative economics within a still largely hostile professional environment with its institutional constraints and systemic sanction mechanisms. (Another example is my colleague from the University of Athens, Yanis Varoufakis, born 1961, who has just co-authored a stunning Modern Political Economics [Routledge, 2011] and has spent two decades struggling within the establishment, ending up successfully creating a pocket of serious, rigorous, and credible "heterodoxy." His book, written with Joseph Halevi and Nicolas Theocarakis, is the uncontrovertible proof that this is possible.) This first transition toward a critical mass of "new consciousness" economists might then, in a second transition, lead to a modification of the rules by which PhDs are awarded, academic positions are labeled and filled, and economics departments are evaluated -- so that, in a third and final transition phase, the actual everyday functioning of the profession might become durably pluralistic. That such a transformation requires deep structural changes is quite clear; that it also, and probably first, requires the emergence of a cohort of "alternative" actors who start acting from within seems to me equally clear.

This, and nothing else, is what I see as the "Next-Step Economy" phase. I don't care about building a Next-Step case per se. I, too, like many of the visitors to this blog, would prefer the six framework conditions (and others accompanying them) to be implemented in a one-shot, once-and-for-all "bang!" It would save a lot of time and a lot of energy spent working on mentalities in more or less skeptical, more or less hostile environments. It would save the resources that, right now, are going to have to be devoted to creating embryonic groups of "alternative" actors. And by that I mean groups aiming to have a significant impact given the intermediate and ultimate goals set out in this blog -- not given a hidden agenda of neutralizing radicalism so as to maintain the status quo. And this, as I insisted in my two previous posts (June 25 and June 29), requires critically vigilant citizens (a minority, surely, given current living conditions in our societies) and partnerships between NGOs and businesses that go way beyond empty declarations about "social responsibility" and "the greening of business" (a minority endeavor also, to be sure). In fact, when Frédéric Lordon admonishes his readers about the primary influence of structure-determined interests on most people's actions, he is offering a tool to critical citizens who seek to work with the currently available handful of genuinely "alternative" investors and decision-makers. (This is, in fact, how the great late French sociologist Pierre Bourdieu, who has clearly had a big influence on Lordon, saw the role of his own theory of "habitual" action: Most actors in politics and in the economy aren't upfront interested in deeper change, but clearly becoming conscious of this very fact might lead a minority of them, and then an increasing proportion, to actually become interested in structural change.)

Is it all a gamble? Yes, in a way. Given the current power relations, and given the way incentives work in the capitalist system, even among those who are genuinely concerned about alternatives there will only be a handful who step forward as pioneers. (It's the exact same idea as Warren A. Johnson's point, put forward in an earlier post [dated April 21, 2011], that there's a crucial social role to be played by pioneers who sacrifice their comfort inside the system and resolutely act "outside the box" so as to set an example.) So let's say that while Frédéric Lordon may be quite correct as to what regards the average population's lack of concern, he may not be right in inferring that regulation and legislation can, and should, be pushed forward regardless of the readiness of anyone in the business community and the political elite to follow suit. In fact, he may well want to argue that this is what should happen, but I fear that it simply won't be what actually happens. That's why some people I know are working in the world of investment or in environmental NGOs in order to win at least some of the mainstream business actors over to some embryo of "radical" change. Which means, like it or not, consciousness- or awareness-building -- but with convincing economic arguments as to why the six framework conditions, if implemented, would either (a) not mean any losses and would perhaps even improve business or (b) imply restrictions and losses whose magnitude would be more than compensated by other valuable aspects linked to environmental or social bottom lines. And once such actors are convinced of this, they will themselves not simply draw up vacuous and opportunistic "ethical charters" but ask governments and international as well as supranational institutions for regulations that make sustainable investment more easily feasible and allow more localized banking and trade to be less exposed to the strictures of planetary competitiveness.

No easy task, and more than occasionally frustrating, to be sure. But necessary if, in the medium run, the six framework conditions are to have any chance of emerging with enough legitimacy and if, in the long run, a truly pluralistic, sustainable economy is to become a durable, established reality. In fact, even those of us who read Frédéric Lordon's own suggestions for radical reform of the financial system will only adhere to them, and make them part of our individual conception of a desirable "We," to the extent that -- like Frédéric himself -- we have undergone a change in awareness that makes us agree in a deep, affective way that this system has deep faults and needs to be changed structurally. Now, Lordon believes such awareness will come more easily to citizens who are not working within the financial system itself because their affect of revolt and anger can be more easily mobilized. But to have a "Next-Step" case for reforming our system and for taking the first steps towards a long-term transition goal, we also need people from within the system to experience affective changes in awareness, i.e., to be jolted into the "gut feeling" that something is very wrong. There are a handful who already have had such an experience -- each with his/her own specificity and his/her own character qualities and flaws -- and it's these individuals who need to be mobilized towards genuine structural change, because it is they who can help decision-makers realize that there's an "intra-system" demand for change, not just a "clamor from the street." Both are very necessary in a democracy, but without the demands for truly structural re-regulation and legislation from within the system, a long-term transition will be much more difficult to steer.

Does this mean we must, as citizens, uncritically accept all calls for regulation and legislation arising from within the mainstream system? Not at all. Transition-oriented vigilance means that we'll probably -- in line with Lordon's skeptical approach -- unmask 90 percent of such calls as covert attempts to hijack the transition process and maintain an interested (and interesting) status quo. Yes, there's a lot of greenwashing out there, and there's bound to be quite a lot of "transition-washing," too. At the same time, the principled stance according to which no businessperson from within the mainstream economy could ever truly renege his/her own "class" interests and be won over by a truly alternative perspective is nonsense. True enough, a few isolated cases wouldn't be sufficient. Critical mass is essential, and therefore the "Next-Step Economy" and its specific properties (which I set out in the post dated June 25) requires that a new "interest class" be gradually built up -- a class of individuals whose conception of a desirable "We" rests mainly on the promotion of sustainable (or "green") investment, of genuinely alternative management (or eco-preneurship), of new processes of European integration and a new logic of trade regulation, and of a new social compact (or Green New Deal). Surely, protests from the man in the street may help quite a bit in hastening the change of awareness in some decision-makers -- but they will never be sufficient in a real-world capitalist democracy where, like it or not (and this sometimes takes objectionable forms indeed), the powers that be -- elected representatives as well as administration officials -- need to see that a significant fringe of the capitalists, investors, and CEOs have changed their minds before they go for more or less radical legislation for re- (as well as de-) regulation.

This means, of course, that if such a new interest class doesn't arise, our cherished transition objectives won't be attainable. Sure enough, we may be able to create tiny "alternative" enclaves where some of us live "as if" the transition had taken place, but still in total dependency on the system they would have wanted to transition away from. This is what happens now with all manner of "voluntary simplicity," "transition town," or "grass-roots agriculture" groups. It can be stimulating to see how such groups operate and what new horizons of possibility they're imagining. It is, in fact, essential. But in the end it can get highly frustrating, too, if the systemic logic in which all of these groups are embedded doesn't change a bit. That's why what is ultimately needed -- here I fully agree with Lordon as well as with my economic lawyer friends -- is full-scale regulatory change of a fairly deep nature. This regulatory change needs to be supported by some of those who have the means to act on it and who -- therefore -- also have the means to block it. Alas, this is part of the realpolitik of capitalist social democracy. That they might massively use their economic poser to actually block real advances -- and again, Lordon is quite right in suggesting that this might happen -- is what prompts the need for extreme vigilance on the part of citizens (and NGOs should ideally be of help here). But citizens' vigilance will only overcome such blockages if, in parallel to grass-roots activism (and here, again, I follow Lordon's lead, but with a smaller dose of skepticism than him), the emergence of a new interest class that genuinely wants investment, trade, and governance, both nationally and internationally, to be shaped in a transition-conducive way.

A long shot, yes? Sure. But if there's another avenue short of remaining stuck in the status quo and feeling resigned to it, I'm eager to hear about it.

This post from the "Eco-Transitions" blog by Christian Arnsperger is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.