Crises of capitalism trigger the moral question. The finance led economic crisis, which really gathered pace in the latter months of 2008, has caused an immediate response of moral outrage. Economic growth in all the major economies of the world has been stopped dead in its tracks and threatens to impose approximately 5 per cent drops in the current output of OECD countries. Taxation revenues are severely reduced because of the downturn, so that over the standard five-year forecast period all OECD governments will (after 2010) have to reduce their expenditure massively as well as increase taxation.
In all those countries that have undertaken financial liberalisation and opened national borders to free capital flows, the banking industry is suffering devastating losses. Many of these banks would have gone into administration as insolvent, had not the priority of central banks been to prioritise liquidity and to pour cash into the financial system. In the European Union the bank bailouts will cost the equivalent of 10 per cent of the EU’s GDP. The opportunity costs of such bailouts, i.e. what else could have been done with such funds, are colossal.
Inevitably the moral outrage has centred on the greed, stupidity and hubris of business leaders in the banking industry and the failure of regulators and government to provide effective oversight. Few top bankers have lost their jobs and the public’s indignation is further riled by the bankers maintaining their privileged position of influence on governments as the latter react desperately to the crisis.
What has been clearly a pathological experience to society remains unpunished, which by any standards remains a strange phenomenon. In Durkheim’s account of the functional nature of moral outrage, the deviant and the criminal are publicly punished, if not cast out. This has not happened, so far. In social democratic and Christian democratic countries, the moral reflexes of citizens have certainly been exercised, but justice has yet to be seen to be done.
However, it is worth pursuing a Durkheimian analysis a step further. One of the foremost neo-Durkheimians is the social anthropologist Mary Douglas. She reformulated Durkheim’s moral community as a boundary problem. There is not an absolute divide between the normal and the pathological. Instead societies reward those activities that maintain the boundaries of a society and punish those that threaten its boundaries. All societies, she reminds us, exist in a state of potential danger.
Morality is the enforcement of social processes that protect the boundaries of a society. In simpler societies this amounts to preserving the integrity of the group or the tribe, and various rituals and taboos are observed to maintain the exogamy of the group against outsiders, and when these taboos are infringed the penalties are savage.
In complex modern societies there is no such thing as a simple group. Or rather there may be many separate simple groups co-existing alongside complex large groups. When Douglas, writing together with Aaron Wildavsky, analysed attitudes to environmentalism in the 1970s (in their book Risk and Culture), they came up with a cultural explanation of why certain groups showed little concern on environmental issues whereas others saw the protection of environment as fundamental.
The latter group was absolute in their beliefs and recalled the boundary-maintaining mechanisms of primitive societies. Modern society is characterised by a variety of what may be termed circulating process – transport, the exchange of goods, the media – in a word, the complex mobility of modern society. Certain social groups are organised for the continuation and expansion of those activities. These groups are complex, are characterised by loose and flexible association, and are termed ‘grids’ by Douglas. The attitudes of members of ‘grids’ did not demonstrate strong feelings towards the protection of the environment and were reasonably complacent about dangerous activities such as driving fast. Simpler, more homogeneous like-minded groups, by contrast, can generate considerable outrage towards those activities they see as threatening to society.
Daniel Bell’s Cultural Contradictions of Capitalism, written in the early 1970s, prophesised that the threat to contemporary capitalism would not come from the labour movement but from within the professional cadres of capitalism itself. Bell was steeped in Max Weber’s analysis of the self-denying and sober features of the entrepreneur. Something akin to Weber’s moral discipline had been achieved in the decades after 1945 – in contrast to the adventurous and speculative capitalism before the war.
Corporate America in the 1950s and 1960s had established well-functioning organisational hierarchy, it produced the company man and a structure of the firm that respected to an extent the distinction between shareholders and managers. What he espied in the cultural conditions was a loosening of the professional group because of the enchantments of the counter-culture. This was perceptive and predicted the coming of the young urban professional as a particularly new type of deracination. What it did not do was to predict the irresistible rise of the investment bank which did so much to break the old corporate structure and to transform it, in Will Hutton’s terminology, from a stake holding capitalism to a stock and option holding capitalism.
Wall Street and the City of London became the epitome of the grid, the networking society of smart urban professionals. What is noteworthy about Bell’s critique, especially now, is his real sense of horror and recoil against the pleasures and ways of enchantment. This was the revulsion of the abstemiously pure in the face of danger. Since the financial crisis has impacted upon just about all groups in society, we await to see whether a sense of collective group morality now emerges to protest against those who endanger livelihood and community.