“Peek greed” – this is what Sir Paul Collier calls the present state of mind, both in business and society. But the resistance against the most obvious forms of market excess is growing. Collier’s most recent book “Greed is Dead,” co-authored by fellow Oxford economist John Kay, offers a scathing take on the pillars and premises of economy and society. The central thesis is that a culture of irresponsible individualism has led capitalism to an inflection point.
Collier is also one of the initiators of our program “The Foundations of Value and Values,” whose first cohort of fellows will join us in the fall and whose purpose is to rethink the assumptions behind Homo Economicus. Collier takes a very fundamental approach to this question, indicating that a misrepresentation of human nature underlies most mainstream economic thinking and that the crudely Darwinistic view of “us“ has been debunked by a great deal of recent scholarship on evolutionary biology.
We, it turns out, are not just greedy, selfish and egotistical creatures. Humans actually thrive on empathy, collaboration and solidarity. Which is good news if you seek to envision new forms of community, as does Collier.
Paul Collier, your view on the economy in particular and society in general is quite damning. You declare: Greed is dead. If you could design a different future – what would a better society look like?
The book is actually quite hopeful because it points to the fact that the description of human nature that is underlying a lot of economic thinking is actually a travesty of reality. We are mammals, like other mammals – but very unusual mammals. We are very pro-social. We choose to bond into groups. We take a lot of our decisions influenced by the collective brain of the community rather than our individual brains. And all that's good because what we need to do to have a good society is to be able to build common purpose within a community, as big a community as possible.
What elements of a more communitarian society do you see?
First of all: We don't need to return to the past. Society is dynamic, it is moving forward, and the problems are always somewhat different. But some things are in common. We know that individuals maximizing their own individual set of interests doesn’t work. We also know that the state meeting all obligations in a centralized way doesn't work either. We need actors that are morally load-bearing. We need community.
What kind of community are you thinking about?
Community works on many different levels. You could build community, so that you identify some obligations to your street, some obligations to your city, some obligations to your region, some obligations to your country. And some obligations to larger entities, whether it is Europe or the world. For some purposes, like climate change, we need to identify with the world and for other purposes, like Covid, we need to identify with the street. These communities are compatible.
Obligation is the key word here. And your assumption is that it is in our nature that we feel this obligation – it just hasn't been fostered in recent decades or rather repressed?
It is not an assumption, it is evolutionary biology. The problem is that economists have built their models on a very different understanding of Charles Darwin and the assumption that humans are by nature greedy, lazy and selfish. So we ended up with having institutions and organizations that drag us back towards some crude instincts instead of fostering our much nobler instincts.
You create a common purpose through dialogue. It is like playing ping pong.
Markets and corporations are also often built on these wrong assumptions.
Corporations are absolutely fundamental to modern society – but the idea that corporations exist just to make a profit, which was Milton Friedman's view in the 1970s, is now roundly rejected by some of the most brilliant economists like Raghuram Rajan, chief economist at the IMF, governor of the reserve bank of India and now a professor at the University of Chicago, the apex of the economists’ world. He published a book called “The Third Pillar.” The third pillar, between state and markets, is the community. Or as Rebecca Henderson of Harvard Business School, in her book “Reimagining Capitalism in a World on Fire,” proposes, it is a community of morally responsible businesses.
Yet you are skeptical about models of industrial democracy and other forms of co-ownership of businesses. Why is that?
I prefer a legal responsibility to combine the commercial interests of the corporation with the social interest. At a minimum, no firm should meet a commercial interest by damaging society. Making a profit at the expense of society is not a proper purpose for business. Beyond that is a balancing act between different interests.
And how do you achieve that? Where is the place for this understanding?
You create a common purpose through dialogue. Dialogue is a particular type of communication. It is a bit like playing ping pong. You step up to the table with a bat, you agree on some rules. You want to win, and you are playing to win. But you agree that you can't just go down to the table and win by hitting your opponent on the head with your bat. Similarly, dialogue presupposes that you have to listen to the other as well as speak to the other and try to form some common understanding of a problem even if you might not end up agreeing. But you are building some forward-looking common strategy.
Instead, you say, corporations are guided by wrong incentives to maximize profits for interests other than the public.
The over-financialization was a dreadful force for pushing corporations into short-term profit maximizing, which was not good for anyone. Clearly, some public policies can be changed to permit a forward-looking common purpose. All the corporations that have lasted for a century have done so through building some common purpose. The corporations that maximize short-term profits live very precariously. Just look at Bear Stearns, the first investment bank to go bankrupt. The mission statement in their lobby was: “We make nothing but money.” Well, that’s not a very uplifting statement.
In the end, it is also a question of leadership.
There is a big difference between communitarian leaders and individualistic leaders who come forward and say: The solution is me. I am the commander in chief. Communitarian leaders don’t do that, they talk about the interest of the community that they themselves live in a way that reveals that they are committed to it. That way, they become trusted. Once they're trusted, they can be something much more important than a commander-in-chief. They can be the communicator-in-chief. They can reset the ideas. Good leadership is trusted and takes the community forward to bring in the new ideas – for Covid or reduced carbon emissions. These are the leaders we need for the future.
One last question. Can you complete this sentence: For me, this is personal because –
– because by chance I have straddled the bitter divide of our society. Both my parents left school when they were 12. I've got more education than most, I am now a professor in one of the top universities. I have had one foot in the world of the very educated and one foot in the world of the very much less educated. My postcode has the highest house prices relative to income of any place in Britain. My relatives are very far from my own fortune. I think these bitter divides are avoidable and must be reversed. That's why there's a passion and a purpose to what I am trying to do. And I'm very proud to be part of the program “The Foundations of Value and Values.”
Sir Paul Collier is Professor of Economics and Public Policy at the Blavatnik School of Government and a Professorial Fellow of St Antony’s College. From 1998–2003 he took a five-year Public Service leave during which he was Director of the Research Development Department of the World Bank. Collier is one of the initiators of the program “The Foundations of Value and Values” at THE NEW INSTITUTE. His books include “The Bottom Billion” (2007), “The Future of Capitalism” (2018) and most recently “Greed is Dead” with John Kay.
(The interview was edited for length and clarity. You can watch the recording of the whole conversation )