Category: Commentary

With my colleagues here, I have been rethinking the emphasis we place on systems rather than on individuals.  Modern social science has become accustomed to focus on systems – how they work, their rise and fall, their coherence or incoherence.  Political philosophy has moved away from virtue studies and become political science, with a data-driven focus on mass behaviors, policies and programs, bureaucracy and hard and soft powers.

When seeking the public good in economics, we are caught between systems – capitalism and national socialism.

But what about the role of individuals in shaping organizations?  Or the role of organizations in promoting some kinds of personalities over others; personalities which then, when empowered, shape the organization to fit their needs and dispositions.

Here is a current commentary on the role of sociopathic individuals in corporations, authored by Jennifer Sey, who was the Brand President of Levi’s.

Her article appeared in the Spectator.

The recent collapse in scandal and abuse of customers at FTX is yet another example of the risks associated with “money.”

More and more, I am thinking that there should be an independent discipline of knowledge and research on “money.”  Actually, an interdisciplinary field of study and commentary, as “money” intersects with psychology, sociology, economics and politics.

There is something about “money” which can perversely engage with our natures, marginalizing the good and promoting the worst ambitions and meanness of the self.  Perhaps that is why so many religious traditions teach and practice the shunning of “money” and “money” making.  Usury – the making of money from money – was anathema to the writers of the Old Testament and is contrary to Qur’anic guidance.  Monks in Catholicism and Buddhism take vows of poverty, the better to be good persons.  The Confucian tradition did not privilege those who sought “money,” for such lifestyles would inhibit, it was thought, their ability to become good people following the moral codes of propriety and humaneness.

And so frequently, “money” abuses by smart and charming people – sociopaths? – involve “other people’s money,” not their own.  This seems to have been the case at FTX.

Here making the case for “money” as corrupting, especially taking risks with “other people’s money,” is an editorial from today’s Wall Street Journal:

Sam Bankman-Fried Becomes an ESG Truth-Teller
The fallen wizard of crypto confesses to phony virtue-signaling.

By the Editorial Board
Nov. 17, 2022

Sam Bankman-Fried PHOTO: TING SHEN/BLOOMBERG NEWS

Crypto dark knight Sam Bankman-Fried may have deceived investors, customers and various journalists and politicians.  But now the FTX founder is at least telling the truth about a few things.  Lo, he says that environmental, social and governance (ESG) investing is a fraud, and so was his progressive public posturing.

Mr. Bankman-Fried on Wednesday tweeted a rambling account attempting to explain how he managed to lose billions of dollars in FTX customer funds.  “I was on the cover of every magazine, and FTX was the darling of Silicon Valley,” he noted.  As a result, “we got overconfident and careless.”  There’s an understatement for the digital ages.

Mr. Bankman-Fried virtue-signaled by committing to make FTX “carbon neutral” and donating generously to fashionable progressive causes such as a foundation working to provide solar energy in the Amazon River basin.  “We’re giving millions each year to launch sustainability related initiatives,” he said in an April Forbes magazine interview with—you can’t make this up—Brazilian super-model Gisele Bündchen.

Meanwhile, he was leveraging FTX customer funds to make risky, ill-timed bets.  “Problems were brewing.  Larger than I realized,” he tweeted.  “In the future, I’m going to care less about the dumb, contentless, ‘good actor’ framework,” he added.  “What matters is what you do—is *actually* doing good or bad, not just *talking* about doing good or *using ESG language.*”

Mr. Bankman-Fried is also acknowledging that he genuflected to regulators and Democratic lawmakers to win political protection.  ESG ratings company Truvalue Labs even gave FTX a higher score on “leadership and governance” than Exxon Mobil, though the crypto exchange had only three directors on its board.  The directors were Mr. Bankman-Fried, another FTX executive and an outside attorney.  Truvalue Labs says FTX was given an overall “laggard” score.

“ESG has been perverted beyond recognition,” Mr. Bankman-Fried confessed in an interview this week with Vox in which he also acknowledged that his advocacy for strong crypto regulations was “just PR.”

He said he feels “bad for those who get” harmed by “this dumb game we woke westerners play where we say all the right shibboleths [sic] and so everyone likes us.”  Ah, yes, the poor saps who invest in companies because they claim to be sustainable.

For the record, Mr. Bankman-Fried denies wrongdoing.  “It was never the intention” to bilk customers, he said.  Maybe not.  But here is an object lesson for investors and the American public in how progressive virtue-signaling is used to conceal business vices.  Some people will believe anything if you wrap a chance to get rich quick in political fashion.

Putting aside, for a moment, whether wind and solar will ever generate enough electricity to meet humanity’s demand, what mechanism is best suited to get such clean electricity online?

In the U.S., one quarter of the gigawatt generating capacity now available has been invested based on companies having demand for such output locked in.

These would-be producers of green electricity use PPAs or power purchasing agreements as a risk reduction play to justify investment up front to be repaid over time by customers.  With a PPA, the buyer of green electricity promised to pay, over time, for consumption of that form of power.  With a PPA in place, the producer of such power can, with confidence, invest in generating capacity and so financial capital is deployed to reduce future contributions to global warming, where the risk/return relationship justifies the expenditure.  The risk is shifted to the customer, who then faces the problem of finding customers who will pay for such use of electricity.

PPAs also revise time horizons, collapsing future use into present financial value.

The point of capitalism, as deftly noted by Adam Smith, is that customers drive the system, not capitalists.  Producers who can’t sell at a profit just go out of business.  Society has spoken against them: what they offer is not valued.

And high-tech companies, which operate giant data centers using lots and lots of electricity to produce a service vital to our daily lives, are well positioned to enter into PPAs with potential producers of electricity from wind and solar technologies.

It’s a win/win/win formula, rather beyond the ability of government to make happen by fiat: “Thou shall!”

Two very prominent and “big” American companies are having trouble making a profit.

Boeing reports a $3.3 billion loss for its third quarter.

It has only made profits in 3 out of 14 quarters since the crashes of its 737 Max 8 aircraft in 2018 and 2019.

Secondly, Meta or Facebook, if you like, reported a 4% decline in quarterly revenue from the same period last year.  Its profit for the previous quarter was 1% below earnings for the equivalent quarter last year.  Its stock price has dropped 16%.

The misconception – very much touted by Karl Marx – that capitalism is just a never-ending flow of money to capitalists (“Mr. Moneybags,” Marx called them) needs to be challenged, again and again.  Not every company succeeds day in and day out.  Only those who properly and adroitly take care of their stakeholders do well in the long run.

There is in life and especially in capitalism, risk.  Risk brings on the bad with the good.  Putting risk in the calculation of probable outcomes of business and finance should be a no-brainer for us all.

It is true, as Adam Smith complained, that many in business and finance will try to arrange circumstances to remove risk, even abusively, at times, by hook and by crook, in order to turn capitalism into rent extraction.

For ever so long, many have taken it for granted that in power hierarchies, those on top coast from privilege to privilege and are secure.

Often forgotten, however, is the old saying, “shirtsleeves to shirtsleeves in three generations.”

Now, in hierarchies of rent extraction – dictatorships and crony capitalist systems – something like what you have today will be there tomorrow, only more so, does seem to apply to the top ranks.

But in free market capitalism, risk is not fully under control and so losses can occur.

General Electric is splitting itself into three independent companies, a failure of its once so profitable and so admired business model.

Goldman Sachs’s profit just slid 43%, so the company is reorganizing, the better to survive volatility in financial markets and to earn fees, no matter what the economy does.  The company will fold investment banking and trading into one profit center and merge asset and wealth management into another.

The company’s CEO is shifting priority away from once very profitable high-risk, high-return lines of business to products and services that generate consistent fees.  Wealth management is less remunerative, but steady.

Today, October 27, 2022, is the one hundredth anniversary of Benito Mussolini’s March on Rome, the insurgent action which brought him to power in Italy a few days later.  As the Prime Minister of Italy, Mussolini, a former mainstream socialist and a follower of the syndicalist Georges Sorel, would build out an economic and political system of national socialism.  He would call it “fascism,” using an ancient Latin metaphor for binding individuals together in a corporate unity.

We have almost entirely forgotten Mussolini, but that is a grave mistake.  His version of socialism – a nationalist one, turning its back on class conflict and promoting a “volk” – has proved to be the more successful version of socialism.  Along with international proletarian communism, fascism is also an anti-capitalist mode of organizing a society, using corporatist management of enterprise under the suzerainty of one political party and its leader, its “Duce” or its “Fuhrer.”

While experiments in proletarian, Marxist socialism failed, Mussolini-ism is still very much with us.

Putin’s Russia and Xi Jinping’s China are quite obviously “national” socialist states, centered on the mythos of their respective “volk” community.

The October issue of our newsletter Pegasus, soon to be published and sent to you, will contain a longer essay of mine on the lasting impact of national socialism.

We often struggle with the abstraction of ethics and morals, compassion and responsibility.  They are not tangible assets, though they have tangible impacts.  They are, are they not, like Adam Smith’s “invisible hand,” which we can’t touch, but which process can give us our daily bread.

At the Caux Round Table, we more and more feel an obligation to point out and even attempt to “measure” intangibles, like social capital and human capital, as essential to a moral capitalism.

So, I was struck recently when reading this account in a report on the fighting in Ukraine: “Sergo’s story, and many others that I heard like it, illustrates the real reasons for Ukraine’s success, which go far deeper than the critical U.S. supply of long-range, precision weapons or the shoddiness of the Russian army.  The Ukrainians know why they are fighting; theirs is an existential war for survival. … “We are smaller than Russia and don’t have so much artillery or manpower, but we have social capital,” said Yehor Soboliev.

Jesus said something about the value of the intangible, of the spirit: “Neither shall they say, Lo here! or, lo there! for, behold, the kingdom of God is within you.” (Luke 17:21)

The Dao De Jing notes that: “We make a bowl from a lump of clay; it is the empty space within the vessel that makes it useful.  Thus, while the tangible is of selfish advantage, it is the intangible that creates that usefulness.”

The New Criterion is a monthly journal on arts and the intellectual life published in New York City with Roger Kimball as its Editor and Publisher.  It derives from the articulate and avant-garde tradition of New York City intellectuals, only its non-conformity takes on the conventional wisdom of progressive intellectuals and activists to expose the underside of those narratives.

Kimball is an eloquent writer, never at a loss for a good turn of phrase and unabashed about being judgmental.

In this recent essay, he deconstructs the adoption of woke virtue signaling by the Wharton Business School.

In effect, he refuses to accept “virtue signaling” as a constructive morality for business.  In this, he indirectly ratifies the position of Adam Smith that the morality, the prudent usefulness of business is to create wealth and so improve the conditions under which humanity can live.

Someone must pay for most everything we need or desire and where, do you suppose, the wealth to make all those payments will come from?

Under Abraham Maslow’s hierarchy of needs, he supposes that we want to move from meeting basic needs of food and shelter to higher order, more intangible desires to experience self-actualization.  But to live a life that permits self-actualization (the way most of us want to self-actualize) takes money.  So, again, to live as most of us would wish, we need wealth.  Those who create the wealth which flows our way do us a great service.

Making possible those better circumstances for us all is virtue in action.

Kimball’s disdain for the superficial in business education reminds me of the old saying, “If you want golden eggs, the first thing you must do is catch the right goose.”

You can read his essay on the American Greatness website, where he frequently contributes, here.

After reading Michael Hartoonian’s essay on technology in our September issue of Pegasus, Professor Hashim Kamali sent me his draft article on technology and the moral purposes of Sharia law in Islam – the maqasid.  In my judgement, study of the maqasid should be of priority for all non-Muslims and more widely emphasized within the Muslim ummah, as well.

You may read his essay here.

Prof. Kamali draws on the maqasid to make an important distinction between the black letter law and the higher purposes, which give law its virtuous legitimacy.

This distinction was also drawn by Jesus Christ in this passage from the New Testament:

Woe to you, teachers of the law and Pharisees, you hypocrites!  You tithe a tenth of your spices–mint, dill and cumin.  But you have neglected the more important matters of the law–justice, mercy and faithfulness.  You should have practiced the latter, without neglecting the former. (Matthew 23:23)

Prof. Kamali is the founding CEO of the International Institute for Advanced Islamic Studies in Kuala Lumpur, Malaysia.  He previously served as Professor of Islamic law and jurisprudence at the International Islamic University Malaysia and also as Dean of the International Institute of Islamic Thought & Civilisation from 1985 to 2007.  One author has described him as “the most widely read living author on Islamic law in the English language.”  Prof. Kamali received his BA from the University of Kabul, his LLM in comparative law from the London School of Economics and Political Science and his Ph.D. in Islamic and Middle Eastern law at the University of London.  He features in the book, The 500 Most Influential Muslims in the World (2009, 2010, 2016, 2019 and 2020).

The other month, before Putin invaded Ukraine if memory serves correctly, a wise friend of mine just said of our increasingly troubled times: “The Enlightenment has run out of gas.”

In short, there is a crisis of faith unhinging Western civilization and the world order it built after defeating Fascism and Soviet Communism.

The European Enlightenment privileged human reason as the giver of truth and certainty.

Nietzsche, however, as many of us can recall, pointed out the hubris of that position.  Reason, manipulated by our minds, can go haywire and fall in love with narrow extremes and intolerances.

One of the giants of the Enlightenment was Immanuel Kant.

He once asked, “What is the Enlightenment?,” answering that it was “man’s emergence from his self-imposed immaturity.”

So, to promote our personal and presumably also our collective maturity, Kant challenged us to “Dare to know!”

But … what if Kant took his ideas to extremes, in the process losing a sense of proportion, balance and equilibrium?

Then, what he called “immaturity” might actually be maturity of judgment and character and his “maturity” only a turn towards infantilism, with its myopic self-absorptions and will to power over others.