Some more thoughts triggered by Paul Collier’s new book

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von Hans Dembowski

We are facing new anxieties – and old ones too

Paul Collier’s new book “The future of capitalism” tackles important policy issues – from the level of the individual family to the international community. As the author concedes, an essay of 250 pages cannot offer solutions to all pressing problems. I found it to be quite inspiring.

My review has been posted on our websites a few hours ago. It summarises what I think are the book’s most important points, but I'd like to spell out a few more thoughts the book inspired.

First of all, it is commendable that Collier, who teaches economics at Oxford University, not only spells out shortcomings of his profession, but also delves into other social sciences in order to tackle important issues. All too often, economists pretend to be somehow superior, looking down on other disciplines. Collier does a great job of taking them down a notch and indicating where their simplistic policy advice has caused serious harm. 

His discussion of “homo economicus” is excellent. No, human beings are not by nature so selfish as to disregard the needs of others, and yes, claiming that they are will only make them behave more selfishly. 

Second, Collier's perspective is distinctively British. In view of the Brexit drama, he wants to restore the social inclusiveness that marked the decades from the Second World War to the 1970s. He is appalled by right-wing populists, but equally frustrated with left-wing variety of the Labour Party, which, led by Jeremy Corbyn, so far has not made a difference in the all-consuming Brexit-debate. Collier’s call for a new kind of responsible and radical centrism makes sense in the British context, but it does not fit all countries equally well. In the USA, for example, the Democratic pParty is in a much better shape than Labour. 

Collier sees the rise of manipulative populists as the consequence of growing social disparities. This explanation, however, is irrelevant where societies were never inclusive. Marginalisation, exclusion and exploitative abuse of minorities were always the norm in India and Brazil. If anything, matters improved in these countries in the past three decades or so. 

That Prime Minister Narendra Modi rose to power in India cannot be explained with the Congress Party’s failure to alleviate poverty, though it is true that it failed to implement meaningful reforms in its last term of office. Clever policies in its previous term had ensured its re-election in 2009, but after that success its main focus seemed to be on collecting bribes. In Brazil too, people's anger about corruption and crime seems to have been the driving force behind the rise of Jair Bolsonaro, the new right-wing president. His election was the result of masses of people not trusting any of the established parties anymore.

More generally speaking, right-wing populism with its empty promises of homogenous nations and restoring some kind of historic greatness is far more dangerous than left-wing populism. Leaders of the latter variety normally are in favour of social inclusion, and while some of their promises may be exaggerated, there is scope for more social justice in most countries. 

Third, I think we need a more radical approach to global governance than Collier suggests. As he sees it, there should be three levels of international cooperation. 

  • First of all, countries facing desperate needs should be rescued by the international community. 
  • Second, all national governments should feel bound by mutual obligations.
  • Finally, they should expand systems of mutual obligations in a spirit of enlightened self-interest. 

At first glance, these principles look convincing, but in practice, the distinctions are not as clear-cut as they seem. Consider, for example, the UN’s responsibility to protect (R2P). It is conceived as a duty of rescue, obligating the international community to interfere in places where national governments perpetrate crimes against humanity. The underlying idea is good, but it is hard to carry out in practice. Which nations will commit the troops for the R2P intervention? And what is to be done if their engagement increases the risk of violence spreading to neighbouring countries? What are the mutual obligations – rich nations committing funding and poor ones deploying soldier? Is that fair? These are tricky questions. They don’t invalidate the R2P principle but they show that it is easier spelled out than implemented. 

Collier does not discuss R2P in his book, but he does state that the international community has a duty to save refugees. I fully agree, but again, this is easier said than done. Many citizens of rich countries awkwardly worry about migration. The solution Collier proposes is that refugees should be hosted close to their home countries and that rich nations should provide funding for doing so. The reality today, however, is that most refugees actually stay in their world regions, but they tend to lack long-term prospects there. Accordingly, young and educated people in particular try to get to the EU or the USA. The issues is fiendishly complex.

Collier makes a distinction between international organisations that rely on mutual obligations and those that serve the interests of powerful countries. The dichotomy makes sense, but the problem is that we are dealing with an issue of perspectives. Collier writes that the EU has become a kind of imperial force that imposes policies on weaker members. It is true that, in the euro crisis, debtors like Greece complained about excessive austerity, but creditors like Germany stated that debtors were not fulfilling mutual obligations. As many British economists do, Collier would probably argue that austerity was indeed excessive, and my hunch is that they are right. However, German policymakers sincerely believe that budget discipline serves the interests of both the EU as a whole and its member states. The dichotomy of mutual obligation versus policy imposition does not really help to find solutions in matters like these. 

More fundamentally, I think Collier overestimates the role of nation states and underestimates how urgently the international community needs better global governance. He insists that ultimately nation states are the entities that matter to citizens, so they must be the main actors. This stance is not without merit, but it disregards that some important policy issues simply cannot be dealt with by nation states acting on their own. The most pressing of these challenges is climate change. If we don't rise to it as a species, all the other problems we face will only get worse: security, financial stability, containing infectious diseases, migration and the fight against terrorism or other issues that defy policymaking at the nation-state level. 

Reference
Paul Collier, 2018: “The future of capitalism. Facing the new anxieties.” London: Allen Lane.

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