In the first five posts in this series – part of our Living Change campaign – I have described the key features and some of the implications of ideas I call ‘coordination theory’.
Organisations are most likely to flourish and solutions to social challenges most likely to succeed when they combine three active forms of coordination (which are also motivations, worldviews, and methods of change) – hierarchy, solidarity and individualism – while acknowledging the inevitability and sometime accuracy of a fourth perspective: fatalism.
Here, I explore whether these ideas can help us understand some of the characteristics of situations in which one active form is very dominant; looking at pre-credit crunch investment banks as examples of an individualist monoculture, totalitarian regimes as hierarchical monocultures, and communes as attempts at solidaristic monocultures. Taking the idea that the forms of coordination – based as they are in deep human motivations and basic approaches to social change – are ubiquitous, I suggest that these monocultures have in various ways to deal with the two active forms that are comparatively weak. They do this either by suppressing them or trying to find ways of managing them within the dominant monoculture. Neither strategy is likely ultimately to be successful.
Before the credit crunch
The positive sides of individualism include autonomy, creativity and self-expression. But in an individualist monoculture the overriding drive is unchecked personal ambition and the dominant method for achieving change is all-out competition.
A vivid, and ultimately tragic, example of individualist monoculture in practice lies in the model of financial capitalism leading up to the global financial crisis of 2008. While that crisis was the direct consequence of the collapse of complex financial products packaging risky home loans in the US, we now know that the banks at this time were acting unethically or illegally on multiple fronts. This was not just self-serving and destructive risk taking but also mis-selling of financial products to vulnerable people, violations of national and international rules, particularly on money-laundering, and manipulation of financial markets. Dissecting what lay behind such a catastrophic failure of responsibility reveals some of the generic characteristics of the monocultural form.
Financial capitalism will always be inclined to individualism. But even by the standards of the sector, the investment banks of the 1990s and first decade of the 21st century – largely based in New York and London – were sites of competition red in tooth and claw. Not only were the financial rewards for success high and the treatment of those seen to fail ruthless but the entire worth of a human being was judged in such terms.
Ex-banker Geraint Anderson recalled the pre-crisis days: “If I get a million pounds and you get two; that means you’re twice the man I am. And the market, which is God in that world, has spoken”. One high street bank had a weekly ‘cash or cabbage’ ritual at which, in front of all the staff, those with the highest sales were given a cash bonus, while the worst were ceremoniously presented with the unloved vegetable.
The rampant individualism of pre-crash finance was exclusive and elitist. Like all cultures it had tribal elements, but tribalism based not on collective purpose, much less responsibility, but a very narrow idea of personal value. The strongest collective norm was to fight ruthlessly to become as rich as possible. Bankers were wilfully or negligently blind to the consequences of their actions. One of finance’s most vivid chroniclers, Michael Lewis, writes of the prevalent culture: “The deep problem with the system was a kind of moral inertia. So long as it served the narrow self-interests of everyone inside it, no one on the inside would ever seek to change it, no matter how corrupt or sinister it became.” But whatever the moral failings of those involved, it is ultimately the structure of finance that creates incentives mean the misfortune of competitors is to be welcomed and the interests of those outside the system are to be viewed with indifference or worse.
A former trader interviewed by the author and journalist Joris Luyendijk offers one example: “We had a Thai sovereign debt position. This was before speculation was curbed due to Thai central bank regulation. There were riots with Muslim separatists in the south of Thailand. Several deaths, many wounded. This kind of fizzled out and some of the guys seemed genuinely disappointed the scale was minor and it didn't continue. The reason: we were very short on these Thai bonds. It didn't seem to occur to the guy that he was hoping for tragedy in order to profit from it.”
A solidaristic concern for social norms and values can be expressed through a variety of relationships, but in the banks and other financial institutions, indifference to society was matched by callousness towards clients and customers. High street banks engaged in wholesale mis-selling. Traders carried on selling investors’ mortgage bonds even when their toxicity was becoming widely known.
Even within a strongly individualistic or hierarchical organisational culture, a sense of solidarity may exist within enclaves such as departmental or functional teams; indeed it may be a way in which people resist the dominant culture. In the hyper-individualist culture of the investment banks, even solidarity in teams seems to have been weak. A former head of HR at the bank ABN Amro told Joris Luyendijk: “I remember giving a £2 million bonus to a banker…His first question: ‘How much is my co-worker getting?’ The status game is played on many levels.”
A notable aspect of the culture of the pre-crunch banks was the failure of hierarchy. This is partly manifested as weak and negligent leadership. Michael Lewis gives the example of John Mack CEO of Morgan Stanley: “John Mack was widely regarded among his CEO peers as relatively well informed about his bond firm’s trading risks. After all he was himself a former bond trader…yet not only had he failed to grasp what his traders were up to, back when they were still up to it; he couldn’t even explain what they had done after they had lost $9 billion.”
Just as the solidarity of the banks was attuned to individualistic goals, so leadership was largely oriented to personal gain. As Willem Buiter, Chief Economist at Citygroup, told the makers of the documentary Inside Job: “Banking became a pissing contest, you know; mine’s bigger than yours; that kind of stuff. It was all men that ran it, incidentally.”
One of the inherent challenges of leadership is to avoid appearing to be self-serving. For a hierarchy operating in an overwhelmingly individualistic milieu it is unnecessary even to pretend. Many bank bosses demonstrated the kind of ostentatious self-indulgence that we might associate with Roman emperors or dictators. The former Vice President of Lehman Bros described his CEO, Richard Fuld: “He never appeared on the trading floor. There were art advisors up there all the time. He had his own private elevator… they hired technicians to programme it… so that his driver would call in the morning and a security guard would hold it and there’s only like a two or three second window where he actually has to see people.”
Coordination theory helps draw attention to an important aspect of monocultures. By denying the validity of important human motivations, and in so doing making full engagement (when all the forms are expressed and aligned) impossible, these unbalanced cultures tend to exhibit a strong current of fatalism. Given the way an individualist culture prizes action and ambition, this may seem counterintuitive. There certainly wasn’t much fatalism in the investment banks in the benign forms of philosophical insight or awareness of risks, but with the benefit of hindsight it is possible to trace a different kind of negativity.
One expression came as the crisis loomed. Although more people knew the system was headed for the rocks, few had the sense of agency, responsibility or courage to do anything about it. This was partly about people scrabbling to defend themselves, often by trying to dump worthless assets on to unsuspecting customers, but it also reflected a sense that the system and its culture had become irreparable. As Citigroup CEO and Chair Chuck Prince said, “when the music stops in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance”.
Those who joined and stayed in investment banking during this period had a proudly individualistic mind set. Yet bankers are also human beings with the same core motivations we all have; to feel our lives are meaningful and our behaviour defensible, if not virtuous. As Loughborough Professor and former bank regulator David T Llewellyn puts it: “We can assume that those bankers who attempted to rig market interest rates would not steal from their corner shop or sell an inappropriate product to a beloved grandmother’. Since the crisis there has been an almost universal condemnation of the prevailing norms of the financial sector; not even those who were part of it have defended the culture. For powerful, well-educated people to have been uncritically part of something for so long and then – almost overnight – to acknowledge its pathological nature, tells us that the culture required them to dull or deny important parts of what makes us human.
The influential Salz Review, an in-depth look into the culture of Barclays bank commissioned by its own chastened board, says the sector had “lost sight of its sense of purpose”, the only real values that were “powerfully conveyed” being “commercial drive and winning”. Through interviews and copious research, the authors highlighted that Barclays in particular put “little emphasis on culture and values” and the “absence of a common purpose” made space for the kinds of activities that led to crisis. Bankers acted on assumptions that may have appeared merely self-interested glossed with a complacent and vacuous free market fundamentalism, but part of their mind set was also arguably profoundly fatalistic. In finance there was no way to be fully human and to survive.
Finance is bound to be susceptible to individualist excess. Psychological research has shown that merely engaging with money as a concept has the tendency to make people more selfish and materialistic in their attitudes. As Michel Thompson, one of the people who has most influenced my own thinking, argues, it is an endemic problem for the finance sector that the business cycle acts as a systemic confirmation bias: reinforcing a monoculture commitment to extreme individualism at times of boom; and silencing other voices which highlight the risk of bust.
For the millions of people whose lives were blighted, the villains were not just those who drove the financial sector to virtual collapse, but the politicians and regulators who allowed such institutions to hold the health of the global economy and the financial well-being of its citizens in their acquisitive hands.
Solidaristic collectivism was the glue that bound human society in prehistory but systems of hierarchical domination have been the norm since the emergence of civilisation several thousand years ago. The nature of authoritarianism changes dramatically in the 20th century with the emergence of a new and phenomenon: totalitarianism. The regimes of Nazi Germany, the Soviet Union, Maoist China, and more latterly, North Korea, are qualitatively different from the late medieval feudalism of Eastern Europe or even the colonial rule of Western nations in Asia, Africa or South America. The cluster of characteristics that mark out totalitarianism include: one party rule; leadership cults; control of all media channels for propaganda; an all-encompassing ideology, which claims to be based on scientific analysis; the use of terror; and aggressive nationalism.
Sheila Fitzpatrick, a leading scholar of the Soviet system explains that the key feature of totalitarian regimes is the intrusion of a single hierarchical force – the one-party state - into every corner of life. This concerted attempt to control all aspects of everyday marks out the regimes above as hierarchical monocultures. Yet, whatever is done to human beings their core motivations and needs remain. A key challenge for totalitarian leaders lies in the need to either channel or control the other core sets of motivations and methods.
Solidaristic feeling is the most obvious. It is not enough for totalitarian leaders that they are obeyed because of their authority and power; they want also to be loved. The suppression of free speech, the use of propaganda, the development of leadership cults, and the central role accorded to the Party are all ways of seeking to reinforce hierarchical authority with solidaristic belief and commitment. Even if they got to power through political machination – as did Stalin and Hitler – the propaganda machine will portray the authority of the totalitarian leader as based on personal charisma and popular affection. Leadership cults also seek to tap into the power of the sacred drawing links between modern leaders and chosen historical figures, developing their own iconography of places, people and objects blessed by contact with the leader. As Fitzpatrick writes: “Like freemasons they had many rituals…They had symbols they cherished, like the Red Flag, and a history, including a martyrology, that every community had to know. They had a body of sacred texts, comprising the works of Marx, Engels, Lenin and Stalin.”
Having often themselves been revolutionaries, totalitarian leaders understand the tribal nature of solidarity; its inherent tendency to divide the world into ‘in’ and ‘out’ groups. In part regimes address this through an aggressive nationalism that emphasises the depraved habits and aggressive intentions of other nations. But there are other aspects to the strategy; totalitarian regimes always develop a powerful narrative about internal enemies, a story which can be particularly useful when the regime in unable to deliver on its promises. The kulaks and bourgeoisie in Soviet Russia, the revisionists in Maoist China, and the Jews in Nazi Germany were subject to exploitation, terror and ultimately genocide. These groups played the crucial role of ‘out’ groups, not only providing a scapegoat for regime failures, but also encouraging greater solidarity among the ‘in’ group. Another strategy oriented to channeling solidaristic feeling involves the development of a vanguard of true believers who are allowed or encouraged to push the leaders to be even more zealous in their means and goals.
The attempt to generate and reinforce forms of strong solidarity in aid of hierarchical goals is one of the key strategies of totalitarianism. But it is rarely fully successful. On the one hand, where people had some choice over their beliefs, they often showed limited enthusiasm for the state religion of party loyalty and ideological purity. On the other hand, vanguards created to cement solidaristic commitment could take on a power of their own, fermenting a zealotry, which encouraged the regimes into brutal and ultimately counterproductive strategies of which the Cultural Revolution in China is perhaps the most stark example.
Totalitarian regimes have also to adopt a stance towards individualism. There are two broad strategies. For certain periods under the Soviet and Chinese system and (until recently) in North Korea, all forms of individualism including economic innovation and aspiration were discouraged on pain of brutal punishment. However, without the incentives or rewards that motor, individualism it is very difficult to sustain economic development. This may not have been a problem for the authoritarian regimes of a pre-industrial world of minimal economic growth, but 20th century totalitarian regimes had to compete politically, economically and militarily with liberal market economies. In the face of economic underperformance, regimes might try to replace the natural incentives of market competition with state endorsed systems of motivation and reward; instead of profits, citizens are to be motivated by threats, targets, state bonuses and privileges, and the award of public status. However, these elaborate planning-based systems are prone to perverse incentives, confused signals and widespread manipulation. Over time the weakness of state incentives versus market incentives leads to significant economic underperformance and, in the case of the Soviet Union, regime failure.
An alternative strategy has proven more successful. This has been to draw a thick line between forms of economic individualism – which are permitted or even encouraged – and intellectual or ethical individualism, which is prohibited. This was the approach of Nazi Germany in which (non-Jewish) capitalist enterprise and competition were allowed to flourish and, indeed, to benefit from state policies such as rearmament. It is also the approach that has so far been highly successful in modern China where the state has managed to combine one party rule and other aspects of authoritarianism with a vibrant capitalist system. Even North Korea has started to embrace this method.
This ‘give unto Caesar’ strategy of delineating between acceptable and unacceptable forms of individualism is more likely to be successful than attempts to drive out individualistic endeavour entirely. However, its frailties are predictable. The kind of capitalism that prospers in politically and culturally controlled regimes bears the imprint of that power structure; cronyism, corruption and market distortion are rife. It also proves difficult to avoid economic freedom leaking into expectations of political freedom.
The 20th century model of totalitarianism failed with appalling human consequences. Whether today’s authoritarian powers in countries ranging from China and North Korea to Russia and the Philippines can maintain a model of political control alongside market freedom will be one of the key questions shaping the 21st century.
Totalitarianism breeds fatalism but is also often ambivalent about the comforts of resignation. Regimes have adopted different approaches to religion including periods of brutal repression. But more often, so long as religion is not a focus for political organisation, but rather restricted to the personal domain, a place perhaps where citizens can receive private solace from the hardships and depredations of their day-to-day existence, then it is better for regimes grudgingly to tolerate it rather than create the scope for resistance and public martyrdom from true believers.
Authoritarian regimes can also instill forms of fatalism as a way of discouraging a belief in resistance and change. The experience of the victims of Nazism and Stalinism often included the arbitrariness of the regime. Partly this reflected the leadership styles and idiosyncrasies of rulers. Stalin would often be ambiguous about his views, forcing people to try to interpret the meaning of phone calls, conversations and letters to newspapers, knowing that a misinterpretation could be fatal. This generates a profoundly demoralising mixture – recognisable to anyone who has suffered bullying - of not being able to fathom what the leader wants while fearing the life-threatening consequences of getting it wrong. But arbitrariness was also the inevitable outcome of regimes in which authority was devolved to corrupt or incompetent local Nazi Gauleiters or Communist, upon whose decisions and patronage the life and death of local citizens relied.
Systems of hierarchical domination have been the norm for human civilisation. For most of this time authority was constrained by limits on the scope of central control and thus co-existed with strong forces of sacred, local and familial solidarity. As systems that seek to control every aspect of life totalitarianism must deal with the range of human motivations either by co-opting them or suppressing them. But, as coordination theory suggests, these attempts are likely either to be unsuccessful or ultimately counter-productive. So it has proved. 20th century totalitarianism was a failed experiment with murderous consequences. Today’s authoritarians generally have more sophisticated approach to sustaining control.
Back to the commune
Many organisations place solidaristic values at their centre. Co-operative and mutual employers, community projects, charitable and civic groups operate on principles of equity, reciprocity and shared values.
To gain insights into the nature of the solidaristic form as a monoculture, we can turn to the chequered history of communes and other alternative communities cut off from mainstream society.
These communities are characterised by the depth and scope of their commitment to explicit values, encoded not just in broad organising principles but also in strict rules and expectations covering many aspects of day-to-day life: clothing, diet, use of technology, division of labour and gender roles. Alternative communities place great emphasis on rituals and taboos. For many, such as the Shakers (now almost extinct) or the Hutterites (still functioning) in the US, this is expressed through a rejection of certain aspects of modern culture including dress and forms of technology. These rules and prohibitions both provide the rationale for communities cutting themselves off from wider society, but also a mechanism for maintaining that internal exile.
The history of alternative communities highlights key features of idealistic solidarity in the modern world. There is something deeply attractive to many people about the idea of solidaristic living. Despite the ubiquity of hierarchical forms and individualistic values in modern society, both are subject to frequent and well-rehearsed critiques. From the novels of Kafka to David Brent the anti-hero of the TV show “The Office”, from populist political movements to t-shirt slogans, the idea that organisational command and bureaucracy is soul destroying, and that those who resist it are heroic, is an instantly recognisable cultural trope. There is an equally well-worn groove of anti-individualistic and anti-materialistic imagery and rhetoric, ranging from serious political critique from the radical left and conservative right to religious injunctions and the anti-capitalist slogans of popular culture.
But it isn’t just our resistance to forms of individualism and hierarchy that make solidaristic idealism strike a chord. Human beings have spent most of their time as a species living in small, largely egalitarian communities of hunter-gatherers. Our brains evolved to survive and succeed in solidaristic circumstances. For most of us, in our early years, as we start to interpret the world and become aware of others, the institution that surrounds and shapes us is our close family, based on solidaristic principles of shared values, mutual responsibility and togetherness. The family, as Christopher Lasch puts it, is “the haven in a heartless world” and many communes and cults have used the idea of a family as an organising principle.
However, there is a critical difference between, on the one hand, the organic, ‘primitive’ solidarity of our prehistoric past and the prevalence of solidaristic enclaves in pre-industrial societies – in the form, for example, of monastic communities – and, on the other, attempts to create alternative communities in modern societies. This lies in the necessity for the latter to separate and protect themselves from the outside world. This is one reason it is often hard to tell whether alternative communities are genuine collectives pursuing their mission together, or more like sects following a powerful leader. Without the conviction and authority of a leader it is very hard to generate the kind of belief and commitment needed for people to choose to take the big step of removing themselves from mainstream society. Founders and early leaders such as Étienne Cabet of the Icarians, Mother Ann Lee of the Shakers, or Jakob Hutter of the Hutterites are essential figures in their movements, despite the rhetorical commitment to collectivism.
The key dynamic for many alternative communities leading to their establishment, shaping their evolution, and almost as often, leading to their decline and dissolution, involves the relationship between the community and the charismatic leadership of their founder or founders. Although not representative of alternative communities in general, charismatic cult leaders have overseen horrific acts perpetrated by or on their followers. Charles Manson convinced his followers to commit nine murders in the late 1960s; David Koresh led his group, the Branch Davidians, in resisting a two-month siege by the FBI where 79 of his devotees perished and, Jim Jones, leader of the Peoples Temple orchestrated the mass murder-suicide of more than 900 people in Jonestown, Guyana, a tragedy that launched the phrase “drinking the kool aid”. These men all manipulated the solidaristic values and bonds of their movements toward terrible ends. Solidaristic monocultures create ambivalence about authority, which can be exploited by the deranged or ruthless.
In other communities the rejection of hierarchy and the pursuit of genuinely collective control and decision-making is integral to the belief system. However, the demands posed by modern life mean those communities that persist for any time end up generally evolving their own forms of governance, including hierarchical arrangement whereby certain people are empowered to make decisions.
Prehistoric communities were small and family-based. Modern solidaristic communities must develop more sophisticated and explicit forms of decision-making. This means that some people may have more say in decision-making than others, based on either traditional models in which, say, older men have more authority, or rational legal ones in which expertise or representativeness is the criterion. Once leaders are charged with making decisions then there has to be system for carrying through decisions; in other words, some form of bureaucracy. Where governance and bureaucracy exist, contest over control and authority are inevitable. Josiah Cohen, who established the short-lived Sunrise Jewish anarchist commune in 1930s America, said poignantly: “Among the other universal human weaknesses that helped to undermine our experiment in freedom and equality before it was even properly established were the desire for power and the tendency to abuse that power once it was acquired”.
As Cohen saw, the problem of establishing and maintaining enclaves of solidarity in the modern world also has an individualistic dimension. In modern society the collective has to protect itself and its members from the power and fruits of the market, which exists beyond the commune’s borders. Inevitably, two issues arise. First, how to incentivise people when all goods are held in common ownership. Second, how to hold on to people when either the state of the external economy or their own skills and aptitudes makes exit more attractive. In his survey of why communes fail, Stanford University economist Ran Abramitzky presents a view of “communes as communities striving for internal equality while mitigating the inherent problems associated with a high degree of equality/redistribution, namely the tendency of more productive members to leave (brain drain), the tendency to shirk (moral hazard), and the tendency of less productive individuals to join (adverse selection)”.
For the Kibbutz movement in Israel there has been a clear move away from collectivism and particularly collective ownership towards Kibbutzim being communities in which private individuals with their own incomes, and even assets, share certain values, facilities and rituals. For the Hutterites, a highly structured approach including limiting community sizes to a few families, enforcing strict admissions criteria and promoting a high fertility rate, has combined with a willingness to use new technologies in their farming and manufacture to ensure that general living standards remain at a reasonable level. But, as Abramitzky says, for many other communities the attempts to suppress individualism either fail or lead to the community declining.
We can draw two general conclusions from studying the attempt to create solidaristic enclaves in modern societies. First, despite many and continuing attractions, for such experiments failure is very much more likely than success. Second, that in order to survive, much less prosper, these communities must develop hierarchical processes and find ways of addressing individualistic incentives.
The history of alternative communities is of a fascinating but marginal social phenomenon. Nevertheless, it should offer pause for thought to those movements who seek to privilege the solidaristic form in more mainstream society, either explicitly by advocating full equality, or implicitly by attacking all forms of hierarchy or individualism. The pursuit of pure solidarity in the modern world generates challenges that solidarity alone is unable to resolve.
From the nation state to the local residents’ association, organisations espouse democratic values and processes of accountability. But the solidaristic ideal that every voice is equal and that the majority view must prevail is constantly compromised by practical reality. Within all but the very smallest democratic associations, people will emerge as leaders and these leaders will inevitably start to see things from a different angle to the rank and file. As a consequence, ostensibly democratic regimes in civic groups or mutual enterprises tend to have two characteristics; first, an almost inevitable story of the betrayal of pure democracy by leaders; second, a tendency among those who have substantive disagreements about decisions, to amplify or disguise their grievances by expressing them in terms of the denial of democratic rights or process. The same solidaristic energy that is powerfully summoned to fight for greater democracy in undemocratic regimes also gets expressed as an idealistic, but often unreasonable, critique of whatever form of democracy is created.
Indeed, one of the refrains often heard from people who join or work for organisations with an explicitly solidaristic mission is that the cultures of these organisations turn out internally to exhibit just the same tendencies to individualistic competitiveness and hierarchical stratification, which they rail against in wider society. Wherever solidaristic ideals are championed, the charge of hypocrisy is never far away.
In a sense the very idea of a monoculture contradicts the tenets of coordination theory. Not only is there the certain presence of fatalism in unbalanced social structures but also, in all systems, each of the forms can be somewhere however suppressed or hidden. However, in the examples of individualist investment banks, hierarchical totalitarian regimes and solidaristic communes we see some of the consequences of systems in which the logic and methods of one form are highly dominant. One of the most intriguing aspects of monocultural systems is how they deal with the absence of suppressed forms. In my next blog I will look at this issue through a different lens; the much more common phenomenon of ‘deficit cultures’: social institutions marked less by the dominance of a single form than by its endemic weakness.
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