This article is part of a series of articles on the subject of evolution, ethics and spirituality:

Parts: I, II, III, IV, V, VI (1), VI (2), VII, VIII (1), VIII (2), IX (1), IX (2), IX (3), X (1), X (2), X (3), XI (1), XI (2), XI (3)

Evolution, Ethics, And Spirituality: Part XII — Imperfection and the Economy

A Divine Problem: Imperfection

It is very rare to actually read an economist who shows that he or she is well versed, not only in the economy, but also in philosophy, literature, science, politics, and so on. It is an absolute delight to read Adam Smith’s The Wealth of Nations, because it shows how brilliant is he as an economist and as a moral philosopher. I love to read Marx’s Capital because hidden in it there is allusion to today’s classics, such as Bram Stroker’s Dracula, or Mary Shelley’s Frankenstein. You notice that he has a taste for horror: ghosts, specters, werewolves "transmuting", etc. He also shows a lot of theological and philosophical knowledge throughout his writings. Yet, I fail to remember other more contemporary economists who express themselves this way. Smith’s and Marx’s works are classics and speak to all of us for this reason. Even those of Keynes speak to us and remain relevant. Yet, today, I’m sad to say that most economists are working as technocrats, and have forgotten that touch of Humanities.

Yet, I do think that there is one particular economist who, regardless of what he writes, he shows his intellectual depth, his acquaintance with philosophy, literature and history, and has a great economic insight. I want you to meet this Puerto Rican economist: Francisco Catalá Oliveras.

This is a renowned economist in Puerto Rico. The Center for the New Economy (CNE), an organization which works frequently with the Brookings Institution, uses to invite him to give speeches on the economic situation of my country, Puerto Rico. The banking sector and the foreign corporations hate him because he frequently suggests that we should raise taxes on foreign corporations investing in Puerto Rico. Of course, like the Tea Party movement in the U.S., who likes to label anyone it doesn’t agree with its economic policies a "Marxist", our banking sector and corporate industry label him a "Marxist", even though he isn’t. He is now a retired professor of the University of Puerto Rico, and works as advisor for labor unions, cooperatives, and the Puerto Rican Independence Party (PIP). He also advocates for independence for Puerto Rico as the key to its economic growth and better future. We will not be concerned with this particular subject right now, but I wanted to let you know his background.

Catalá is well versed in philosophy and literature, and part of his formation was his reading of Erasmus’ The Praise of Folly (in Spanish Elogio de la locura). Inspired by both literature and history, he wrote one of those books I wish there were a version in English for my English-speaking friends: Elogio de la imperfección (The Praise of Imperfection).

His whole focus of that book is what he calls the Funes Syndrome. Now, if you can’t find such a syndrome in Wikipedia or in any medical journal, don’t worry, he made it up.

Yeah, it sounds like a sort of psychiatric term, yet, its origin is literary. (Ah! There he shows his literary formation again!) He read a short story by the renowned author Jorge Luis Borges called "Funes el memorioso". In it he Borges tells the story of a man who had the perfect memory. He remembered EVERYTHING, even the minutest details … a sort of Adrian Monk, the famous detective played by Tony Shaloub. Yet, unlike Monk, this guy was not a hypochondriac, but rather an insomniac. Funes is tormented by the fact that he is in constant vigil, and his perfect memory enables him to remember everything simultaneously, and his recollections overwhelm him constantly. Ironically, Borges says, the guy could not think. Why is that? Thinking requires abstraction, and abstraction implies forgetting some things to take into account only a few of them. For Funes, there was nothing but immediate details, he couldn’t forget.

Now, what is the Funes Syndrome according to Catalá? It consists of two errors people frequently fall into:

• The error of believing that perfection is possible in this world.
• The error of believing that if perfection existed, it would be functional

While I was reading his amazing book, Catalá solved one of the problems which tormented theologians for a long while, one of the aspects of the theodicy problem (i.e. if God exists, then why is there evil in this world?) New atheists like Richard Dawkins cannot point out enough all of the imperfections in the world as a sign that there is no intelligent designer, and, that no God exists at all. Evolution is a messy process, supporting living beings on Earth involves a lot of waste. Our eyes are a mess, and, as I’ve argued before, our brain is too. Why the heck would God choose such a messy process to support living things? Kenneth Miller, who is himself a Roman Catholic, tries to solve it in many ways in his book Finding Darwin’s God. Other authors such as Darrel Falk or Francis Collins try to address that particular problem. Yet, the answer to this problem is so amazingly simple! A perfect world wouldn’t work!

If there is a reason why nature works so well to the point of letting life emerge constantly through evolution, it is because it is an imperfect "blind watchmaker". Why is our brain capable of reasoning? Because it is imperfect and it is all messy regarding how it distributes its functions among its own organs. Life is possible only because death exists. Without death, other living beings cannot arise. The natural creation of objects in the universe exist only because destruction exists. Our Solar System exists because an earlier star "died" and exploded. These things work precisely because the universe is imperfect.

Economists Dealing in Absolutes

"Only a Sith Lord deals in absolutes."
~ Obi-Wan-Kenobi
(Star Wars – Episode III: Revenge of the Sith)

Now, why would an economist in particular be interested in such a very important philosophical subject. The answer is that as an economist he has seen too much of his colleagues fall into the Funes Syndrome. Pro-corporate economists always point out how the powers of the state should be minimized and how the economy would do "just fine" without it. The less the power of the state has over the economy, the "more perfect" (so to speak) the economy would be, capital would flow happily, poverty would be eliminated from the Earth as Adam Smith predicted, and we would live happily ever after.

That doesn’t mean that the economic right-wing is the only one falling into the Funes Syndrome. Marxism does too. Marx is an excellent thinker when you see him diagnose capitalism as a system. Capital is still a work to be read, and look at our economic reality through its lens. Yet, when it comes to evaluate history from the materialist view he proposed, well…. take his proposal cum granus salis (handle with care!). And when it comes to implementing his version of socialism as a transition period to a more just society, such efforts are doomed to failure as history has taught us. We should be fair with him, though. No version of the implementations Marxist socialism resembled remotely what Marx originally had in mind. Yet, that can be a clue to the fact that Marx’s solution was a failure from the very beginning. Right and left-wing versions of Anarchism are no better when it comes to solving the problem. As studies of efforts to build communal life have shown, they all fail in one way or another, mostly because of internal conflicts and tensions within: secular socialist communal societies collapse after a median of two years, and religious communal societies last a median of twenty years (ref. Pinker 2002, p. 257; see Klaw, 1993; McCord, 1989; Muravchik, 2002; Spann, 1989). As the linguist and cognitive scientist Steven Pinker tells us what is wrong with this reasoning:

Studies of altruism by behavioral economists have thrown a spotlight on this sword of Damocles by showing that people are neither the amoral egoists of classical economic theory nor the all-for-one-for-all communalists of utopian fantasies (Pinker, 2002, p. 256).

Part of the failure of implementing any of these economic policies or solutions is that, sometimes, it completely disregards the necessary social conditions for them to be possible, and tries to implement their theories in an absolutist and perfect manner. In the case of those who wish to implement capitalism in the freest way possible, the elimination of state powers is only geared at less economic restrictions by the state. Yet, for some reason, this leads invariably to more state restrictions towards people. For many people this is a mystery, but in reality it isn’t.

Sometimes, blinded by ideology, we want to refuse to believe what Marx reminded us over and over again about the capitalist system: it carries with it the seed of class struggle. Class struggle as understood by Marx is not an ongoing street fight between the bourgeoisie and the proletariat. Class struggle is the result of the fact that wealth is scarce in principle, and the bourgeoisie and the proletariat have opposite interests regarding the way it should be distributed. So, when the state eliminates the restrictions on the economy, and lets the bourgeoisie and capital act the way it wants, it will necessarily lead to more poverty in the working class, and the poverty of people who are not proletariat because of the imperfections in the capitalist system, and depend on state assistance. Obviously, this leads to unrest, protests, and strikes (many times violent), which then require the state to become a militarized or police state.

As Naomi Klein (2007) has shown in her research, this is exactly what happened in Chile, when the Chicago Boys wanted to make Chile an economic blank slate, and start a pure and perfect form of capitalism from scratch after the coup against Salvador Allende. The result? A government under the Augusto Pinochet. It is said that Chile "prospered" under his government, but at the expense of human rights. Despite that, even Pinochet had to implement some socialist measures to alleviate or minimize social unrest. Similar repressive measures were made in many countries in Latin America which led to abduction of opponents of the regime, to killings of families, to outrageous forms of tortures. We can say this has happened in the United States during its history. Lousy history teaching in schools has made people forget completely what happened in the past when capital was free to rule with next to no state restrictions. Invariably it led to more misery, harsh living conditions, continuous violations of human rights which were rarely validated by the courts. If today you have Social Security, pensions, and other benefits, it is because of the huge fights which happened so frequently in the past.

The situation was no different under both the Clinton and the Bush Jr’s administrations, when much restrictions were stricken down. This led to reinforce all sorts of the most repressive sectors of government, especially the military, intelligence operations, and extensive surveillance. Unfortunately, these policies have continued and increased under the Obama administration, whose significant contribution to restricting the economy has been limited to health care, and even THAT is going to be struck down with current Congress or, perhaps, a future Republican (Tea Party?) president..

This does not mean that communism is paradise. As many intellectuals are realizing, even Marxists, communism led to many human rights violations. As Pinker (2002) points out:

The Nazi Holocaust was a singular event that changed attitudes toward countless political and scientific topics. But it was not the only ideologically inspired holocaust in the twentieth century, and intellectuals are only beginning to assimilate the lessons of the others: the mass killings in the Soviet Union, China, Cambodia, and other totalitarian states carried out in the name of Marxism. The opening of Soviet archives and the release of data and memoirs on the Chinese and Cambodian revolutions are forcing a reevaluation of the consequences of ideology as wrenching as that following World War II. Historians are currently debating whether the Communists’ mass executions, forced marches, slave labor, and man-made famines led to one hundred million deaths or "only" twenty-five million. They are debating whether these atrocities are morally worse than the Nazi Holocaust or "only" the equivalent (Pinker, 2002, p. 155; see also literature on this subject: Besançon, 1998; Chirot, 1994 Conquest, 2000; Courtois et al, 1999; Getty, 2000; Minogue, 1999; Shatz, 1999; Short, 1999).

This conviction is reinforced with the fact that today, as much as I sympathize with Venezuela’s Bolivarian government, as well as Ecuador’s government, there have been violations of human rights (although the majority of the cases never reach the level of repression of earlier right-wing governments in Latin America), which have been reported by Amnesty Intentional and Human Rights Watch. In the case of the latter, the head of this organization had been expelled from Venezuela.

How can it be that Marxism, an ideology whose goal is economic justice for all, reach this level of repression, genocide, murder, and so on?

Corporate Amorality

The economy is the result of two things: an evolutionary process, hence the biological constitution of humans, and culture. Groups of organisms have a sort of economy, an ecosystem. It is nothing more that a form of distribution of energy through a food chain. Plants get the energy from the sun, animals eat plants, and other animals eat these animals. Yet, unlike other animals, humans have intelligence and culture, which let us create ways of arranging a form of distribution of energy in the form of wealth, otherwise we wouldn’t be able to live.

To say that economic systems are imperfect is a truism, yet, it is not a trivial one. As we have seen, assuming that a perfect economy is possible can lead to disaster, especially when looked at from an ethical standpoint. And here we touch a very particular subject that sometimes is ill-addressed: the interaction between the economy and ethics.

Today it is a fashion to talk about business ethics. In universities we breathe it. The first time I was going to teach ethics in UPR in Cayey, and talked to some members of the Business Administration faculty, they asked me if I knew anything about "business ethics". That is because it is a new fashion in the business world. Some weeks ago I even received a book by José González Barja called Ética empírica para el éxito (Empirical Ethics for Success), which advocates for "business ethics" to lead people to "success" in the business world (or life in general). Of course, when I studied ethics, I studied philosophical ethics, but had no idea about the particulars of "business ethics". In my naïve attitude, I supposed that it was much like bioethics: the rational examination of biotechnological and medical production and practices from an ethical standpoint. The more I researched business ethics, and the more I talked about it with some of my colleagues in philosophy, the more I came to realize that this was not the case of "business ethics".

"Business ethics" is not a field of Applied Ethics, it only pretends to be. It takes its name too seriously. It stems from the genuine worry by businesspeople regarding the problem of low wages, the gap between the rich and the poor, environmental concerns, and so on. Yet, in its attempt to address these concerns, they make business ethics have as premise the following statement: "Only acting ethically, you will have success in your business". In other words, acting ethically will mean that in the end you will have more benefits, and more money. It is an ethics designed to legitimize business, because, despite the fact that this premise actually begs the question, it suggests that if you are successful, it is because you are behaving ethically. Nothing further from the truth!

Take corporations, for instance. A corporation is a group of people who ask for a charter to create a legal person, which will limit the investors’ (stockholders’) liability. Inherently, corporations have one end: how to produce the maximum wealth possible for the stockholders in the shortest time possible. In the U.S. it became a judicial decision to place the stockholder’s welfare above everything else, including the public good (Dodge v. Ford). The question is, why does the juridical system grant stockholders a limited liability, if ethics leads to financial success? In principle, there shouldn’t be any problems if that were true!

And what sort of person is a corporation? A key to that is what Baron Thurlow said: "They have no soul to save and they have no body to incarcerate." This abstract artifice, the corporation, cannot hurt or be hurt, it is not happy, does not cry, nor does it suffer. The only way it "suffers" is if it loses capital and profit. Does it act ethically at least most of the time? Not necessarily, but these are successful giants, and it is not because they are concerned for what is good. Lacking emotions and empathy, you are left with one sole conclusion: corporations are amoral entities. Don’t believe me? Let Dr. Robert Hare, an FBI consultant on psychopaths explain the whole thing for you.

Yep, you can actually be very highly successful, if you are a psychopath … not if you act ethically.

Many people, even my colleague philosophers, can be deceived by "business ethics", because they see the genuine ethical concerns by businesspeople, and I emphasize the word genuine. I’m not saying that CEOs are not worried about oppressive regimes, or the environment, or sweatshops, or child labor. Many of them are worried about that! They are themselves moral beings, they empathize, they want everyone to be happy, they are for world-peace! They can give you Miss Universe sorts of answers if they participated in that pageant, and mean it! In fact, many CEOs in their personal lives might dedicate their own resources to many good causes.

Yet, at the end of the day, the stockholder has all the judicial system on his side, and will demand of CEOs that they do everything they can to maximize profit now, not matter what. As a result, they will lay off workers, will establish sweatshops, exploit children around the world, contaminate the environment, lie to Congress, and so on. Why? Because there is competition, if you don’t do these things, the competition will squeeze you out, and your corporation is screwed. Corporate obligation is not ethical. Yes, there may be studies that show that paying a good health care or your employees will ensure that they will be more productive, but if my job as a CEO is to maximize profits now, then my duty is to give my workers in salary the minimum of the minimum, which includes no health care.

Don’t get me wrong! I’m not saying that corporations are "evil". There are many products, services, goods, merchandise, that are inherently good for us. Hey, I loved The Dark Knight, I love computers, and they are amazingly useful, and I love books like crazy. Yet, what does that imply? It implies the use of contaminants of the environment, copyright restrictions and penalizations against users who dare use even a small segment of a movie soundtrack, and cutting off trees for paper production… needless to say, paying authors little money in royalties. Corporations are not (ethically) good, but they are not evil either. They are amoral, hence they have no moral conscience, and also inherently irresponsible.

The fallacy of "business ethics" is that it businesspeople can actually make all of these ethical decisions in business management and have more profit because of them. This whole "field" is a humongous non-sequitur. Corporations are externalizing machines, as well as money-making machines. This is a problem for corporations because externalities are their essential trait. If you are not acquainted with the word "externalities", at least learn what it is: an externality occurs when a third-party (not consenting a specific transaction) has to pay for the transaction made by the other two. Due to competition, the maximization of profits, and market pressure, all corporations externalize: let somebody else pay for contaminating the environment, let somebody else pay for the layoffs, let somebody else die in wars while we profit from the oil, let someone else pay for our irresponsible behavior, establishing mortgage rates so high no one is able to pay, or let someone else pay for our bad decision for making the Hummer. If you don’t believe in "externalities" … well… listen to one of the Chicago Boys (Milton Friedman) and a corporate CEO of Interface Global (Ray Anderson) talk about it!

And in the case of Ray Anderson, I strongly sympathize with him. He is the face of a CEO who wants to really look for alternatives to save all living things on Earth. Go and buy his book Confessions of a radical industrialist, and see how he is trying to address environmental concerns. Yet, Interface Global, despite its best efforts, still has to externalize in many other ways, because … at the end of the day, a corporation is all about profit! Interface Global is doing a great job in trying to produce environmentally friendly carpet products, and Ray Anderson is trying his best to convince other CEOs to do the same for their companies. The problem is that it is almost certain to convince an oil CEO at a personal level that climate change is a real phenomenon, and that if we use solar panels, wind, and other alternative energy sources it would be better for humanity. Yet, as a CEO, if those alternatives bring much less income than with oil, then that means much less profit for the shareholders … which means that as a CEO he will do everything it can to bring down all sorts of alternative fuels. Don’t believe me? Just ask yourself Who Killed the Electric Car?, and why corporations are making sure that the only fusion project that is funded is the Tokamak, which hasn’t worked for over 25 years, while much more promising fusion projects which require relatively small funds, like the Focus Fusion Project are underfunded, or not even mentioned in the media!

Also, many people in the "business ethics" arena take refuge in Muhammad Yunus microlending strategy (the banks of the poor). Yet, the strategy itself is also amoral … for one simple reason … the economy itself is amoral.

Economic Problems and Ethical Problems

I need to clarify once again that when I say "amoral", I’m not saying "immoral". What I am saying with "amoral" is that an amoral being is not concerned about the ethical values of right and wrong, or good and evil. Just like nature, the economy is exactly what Dawkins said about nature: "no evil and no good, nothing but blind, pitiless indifference".

The capitalist system is amoral, a Marxist socialist system tries to be moral, but at the end of the day, for it to work, it has to become amoral. Contrary to the claims made by Ron Paul, there is no such thing as a "compassionate economy". The marketplace is the marketplace: all the problems which arise in an economy depend solely on supply and effective demand. No ounce of ethics get into it at all. Prices in the market do not respond at all to the notions of duty and dignity. These have no place in economic equations. If chocolate prices soar or they flunk, it will depend exclusively on supply and effective demand. There are no decent market prices, there are no evil market prices either.

No economic system is perfect … and it should be that way, no economic system will work if it were perfect! Let’s not fall into the Funes Syndrome. Yet, there is a sense that the economic system is screwed up because of problems which arise inside and outside the economy. From an economic standpoint (in theory) low wages are the result of a combination of criteria that the company takes into account in order to have significant profits and compete in the marketplace. From an ethical standpoint, depending on how low are low wages, they can become inhumane. From a political standpoint it is not good for the state (public) for corporations to do this. Yet, another externality is the cost to the state (public) if government is bribed by corporations or members of the bourgeoisie (to use a Marxian term).

How do we deal with the economic, ethical, and political frameworks?

Stratified Problems and Solutions Model

In the following blog posts I shall be working on what I will call the "Stratified Problems-Solution Model". This will consist of a blend of two proposals:

• Karl Popper’s Problem-Solving Scheme: which we have discussed at length here and here: the evolutionary problem-solving scheme that Popper posited for epistemological growth, but now placed in the cultural realm in general.

(Generalized Problem-Solving Scheme)

(Popperian Evolutionary Problem-Solving Scheme)

• The Stratified Model Proposed by André Comte-Sponville. Comte-Sponville is a French philosopher who has dedicated most of his life to make expositions on other philosophers and making ethical reflections on world affairs. His book Le capitalism est-il moral? (Is capitalism moral?) is one of those books which I’m sorry is not available in English. As far as I’m concerned there are only two versions: French and Spanish.

My proposal is nothing more than a slight modification of Comte-Sponville’s proposal with a Popperian touch and other things. It stems from a premise that due to the fact that no aspect of human life is perfect (including the economy), each stratum will generate two sorts of problems:

1. The internal problems of each stratum.
2. The external problems generated by a stratum.

This model I’m advocating for will propose a sort of interaction between strata. It will also identify the basic problem with many proposals made by so many thinkers to create "perfect" societies: level confusion. Level confusion is a categorical confusion that occurs when we want to understand or solve the internal processes of a stratum in terms of an external stratum or sets of strata.

The "field" of the so-called "business ethics" is bogus, because it is fundamentally a glorified level confusion: it states that you can act ethically in the internal dynamics of the economy to generate profit. Imagine that! So many universities and businesses have invested so many billions of dollars in something that is not possible. No business can be ethical, and acting ethically will not lead you to wealth.

Sorry for deflating "business ethics" in the minds of so many people.

Sources

Achbar, M. (Prod.), Abbott, J. (Ed.), & Bakan, J. (2005). The corporation. [Documentary]. Zeitgeist Films.

Anderson, R. & White, R. (2009). Confessions of a radical industrialist: profits, people, purpose — doing business by respecting the Earth. NY: St. Martin’s Press.

Bakan, J. (2004). The corporation: the pathological pursuit of profit and power. NY: Free Press.

Besançon, A. (1998, January). Forgotten communism. Commentary, 24-27.

Catalá, F. (2007). Elogio de la imperfección. PR: Ediciones Callejón.

Catalá, F. & Rivera, C. (2010). El movimiento cooperativista en Puerto Rico: un paso más. PR: Ediciones Huracán.

Chirot, D. (1994). Modern tyrants. US: Princeton University Press.

Comte-Sponville, A. (2004). El capitalismo, ¿es moral? Spain: Paidós.

Conquest, R. (2000). Reflections on a ravaged century. NY: Norton.

Courtois, S., Werth, N., Panné, J. L., Pczkowski, A., Bartosek, K., & Margolin, J. L. (1999). The black book of communism: crimes, terror, repression. Cambridge: Harvard University Press.

Getty, J. A. (2000). The future did not work. Atlantic Monthly, 277, 113-116.

Klaw, S. (1993). Without sin: the life and death of the Oneida community. NY: Penguin.

Klein, N. (2007). The shock doctrine: disaster capitalism. NY: Metropolitan Books.

McCord, W. M. (1989). Voyages to Utopia: from monastery to commune — the search for the perfect society in modern times. NY: Norton.

Minogue,, K. (1999). Totalitarianism: have we seen the last of it? National Interest, 57, 35-44.

Muravchik, J. (2002). Heaven on Earth: the rise and fall of socialism. US: Encounter Books.

Pinker, S. (2002). The blank slate: the modern denial of human nature. US: Penguin Books.

Popper, K. (1994). Knowledge and the body-mind problem: in defence of interaction. London & NY: Routledge.

Shatz, A. (1999). The guilty party. Lingua Franca, B17-B21.

Short, P. (1999). Mao: a life. NY: Henry Holt.

Spann, E. K. (1989). Brotherly tomorrows: movements for a cooperative society in America, 1820-1920 NY: Columbia University Press.

Yunus, M. (2007). Banker to the poor: microlending and the battle against world poverty. US: PublicAffairs.

Yunus, M. (2009). Creating a world without poverty: social business and the future of capitalism. US: PublicAffairs.

Yunus, M. (2010). Building social business. US: PublicAffairs.

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