The Loss of Fair Play

Posted on December 27, 2019 by Yves Smith

This site regularly discusses the rise of neoliberalism and its consequences, such as rising inequality and lower labor bargaining rights. But it’s also important to understand that these changes were not organic but were the result of a well-financed campaign to change the values of judges and society at large to be more business-friendly. But the sacrifice of fair dealing as a bedrock business and social principle has had large costs.

We’ve pointed out how lower trust has increased contracting costs: things that use to be done on a handshake or a simple letter agreement are now elaborately papered up. The fact that job candidates will now engage in ghosting, simply stopping to communicate with a recruiter rather than giving a ritually minimalistic sign off, is a testament to how impersonal hiring is now perceived to be, as well as often-abused workers engaging in some power tit for tat when they can.

But on a higher level, the idea of fair play was about self-regulation of conduct. Most people want to see themselves as morally upright, even if some have to go through awfully complicated rationalizations to believe that. But when most individuals lived in fairly stable social and business communities, they had reason to be concerned that bad conduct might catch up with them. It even happens to a small degree now. Greg Lippmann, patient zero of toxic CDOs at Deutsche Bank, was unable to get his kids into fancy Manhattan private schools because his reputation preceded him. But the case examples for decades have gone overwhelmingly the other way. My belief is that a watershed event was the ability of Wall Street renegade, and later convicted felon Mike Milken, to rehabilitate himself spoke volumes as to the new normal of money trumping propriety.

Another aspect of the decline in the importance of fair dealing is the notion of the obligations of power, that individuals in a position of authority have a duty to

The abandonment of lofty-sounding principles like being fair has other costs. We’ve written about the concept of obliquity, how in complex systems, it’s not possible to chart a simple path though them because it’s impossible to understand it well enough to begin to do so. John Kay, who has made a study of the issue and eventually wrote a book about it, pointed out as an illustration that studies of similarly-sized companies in the same industry showed that ones that adopted nobler objectives did better in financial terms than ones that focused on maximizing shareholder value.

Our Brexit regulars wound up talking about these issues as part of a UK election post mortem. Hoisted from e-mail. First from David:

Around the time of the cold dawn of Friday 13 December, I began to ask myself why the whole grisly Brexit business had turned out so differently to what I, and many others, had expected. Now it’s true that politics is unpredictable, but in 2015, any satirist worthy of their name would surely not have dared to imagine a sequence of events so bizarre as that which actually happened. And of course we can all be wrong, but I was basing my judgements not only on a lifetime of watching politicians at play, but also on the well-understood general principles of how politics, and especially international politics, operates.

The conclusion I came to involves conceding that, yes, politics is unpredictable, yes we all make wrong calls from time to time, but there’s something more profound than that. Simply put, the traditional rules and procedures of British politics have stopped applying. It’s not now possible to count on the British system for planning, forethought, rationality, strategy, tactical sense, political sense, common sense or any other kind of sense.

Consider. Cameron’s referendum promise was an error of judgement, but it could have been handled very differently even so. I’d assumed that there would be some kind of threshold (55% perhaps), and some provision for a later stage of reflection and time-wasting.

I assumed that the government would be wary of the possible result, and try to de-dramatise the referendum campaign.

I assumed that Remain would do a reasonably competent job, underlining the positive benefits of EU membership.

I assumed that the result, if it was “leave” would be the beginning of a long process of reflection and discussion. A Royal Commission, or something, would be set up, with several years to work out what kind of future relationship there should be with the EU. Bits of the UK most affected (agriculture for example) would be consulted in depth. Discreet soundings would be made throughout Europe to see what our partners might accept. Only after all this was done would it be time to press the Art 50 button.

At that point, I assumed, the UK would be well prepared and, in the traditional manner, have working papers and draft treaty language to propose as soon as the negotiations started. All aspects (including NI) would have been at least thought of.

I assumed that the Cabinet would have agreed a fairly detailed set of objectives and negotiating guidelines to give to the UK delegation, fine-tuned in the light of first reactions from partners.

I assumed that the Cabinet would have agreed fallback positions and some idea of what the Tories, and Parliament, would accept.

Literally none of this was true.

Now we’re not talking rocket-science here. Yes, the UK system was once pretty Rolls-Royce, but the kind of list I’ve given above would have seemed obvious to any middle-level functionary of any medium-sized country. Actually achieving all of it is not necessarily easy, but at least you can make a serious attempt: there are important stakes involved.

So what does this imply for the future?

Well, things are getting worse, not better. The Cabinet hasn’t even begun to think yet about the future relationship. Some of them probably think Brexit is all over. I don’t think there’s any agreement even about the vaguest outlines of this future relationship, which means that it could be months before any political objectives emerge, if they ever do.

Which is to say that we are in for another year of Keystone Cops diplomacy, with the stakes if anything even greater.

From Clive:

Your thought-process sounds like my trains of thought. And when I think those sorts of thoughts, I think that I’m a remnant or a bygone era. Which I am.

What disappeared from that world was playing fair. Everyone played fair, or, at least, playing fair was a bedrock than you could drift away from, but, sooner or later, you fell back on it.

There will be a lot of casualties until our societies get to the stage where they can rediscover fairness. I bought a book from a second hand bookstore about the founding of the EEC, from 1978 I think the copyright said it was. When I read it, it’s like it was written by some long-since vanished ancient civilisation. There were honourable intentions, strategies to deliver them, honest evaluations of emerging problems and, above all, a shared shouldering of responsibility to resolve them equitably. There was a sense of pride which leaps off the pages not at what had been achieved, but at what the prevailing culture intended to achieve. The book went on about the European ideal — and didn’t think it was in any danger of naivety.

That world has vanished — and it’s not coming back any time soon.

Brexit was a reaction to that. We can’t fix it, think a majority of the U.K. population, and we’re not even going to try. This is why Leave has progressed the way it has. The last thing the Leave majority (or maybe the smidge over 50% who think Leave is the best option) want to do is try to return to the failed common-cause based solutions. Johnson has no intention whatsoever of anything other than the lightest of lightweight FTAs — or even no FTA. Anything more would be an anathema to the Thatcher-esque approach the Conservatives have on remaking UK society by severing all EU ties. This isn’t really Thatcherism — a common misconception. It’s the sort of response which Thatcher would have devised, had she been placed in the same position, so is easily confused.

So this isn’t some unplanned, accidental stumbling along to an unexpected surprise conclusion. It is, rather, a laser like focus on an intended destination.

Anyone expecting some great effort or thought-process to be applied by the U.K. to salvaging a relationship with the EU will be disappointed. In effect, they’d be asking for the U.K. to spend time and resources saving something that isn’t, in the U.K.’s prevailing worldview, worth saving. The EU has been nothing but a bother, so the thinking goes, what’s the point in trying to flog the dead horse that is the European ideal? What did it ever do for us, anyway..?

Brexit is just a here’s-one-we-made-earlier example of a long-term global trend. If humanism — or fairness as I reduced it to earlier — makes a comeback, it might all be fixable. In the meantime, prepare for an increasingly atomised, separatist world.

Vlade’s response:

I’d like to agree with you. Except I believe you’re idealising it. The world was never playing fair – but it did cooperate more, because the US needed the Europe more in the cold war than it does now (when it’s more of a rival, definitely in Trumps’ eyes). Hell, the Soviet Block cooperated – except it didn’t really, it did what the SU told it to. But it definitely didn’t play fair. It did follow the rules, because the cost of breaking them was seen as too high (US was terrified I believe of France and Italy doing a deal with the SU). At least to me, following the rules and playing fair are distinct.

It’s possible that the western society was more fair before 90s, I can’t know. But again, I suspect that a lot of it was almost a self-protection against the SU and “communism”, which disappeared in the 80s., but possibly started disappearing even in 70s (when you live with some danger for a while, you get oblivious to it).

I do think that the Brexit was a reaction to the word that was. But I disagree that it was really the EU specific reaction, as in “the EU is the source of all this”. It played the part, but the underlying reasons were IMO much more varied than the EU – where I have doubts many of the people there really understood in any way, except as an externality you can rail against.

You get the crawing for the world-that-was in the US, and it doesn’t have any EU. You get it in Russia, and it has the EU and the US, or, if you want, “the West” which puts conveniently both of them together.

The world as most people knew it is coming apart, and chances are it will get worse (and who knows it it ever gets better). In times like those, people want the world-that-was. Sometimes it can actually be a force for good, like after WW2 in “the west”. Except even there it wasn’t the world-that-was, but more of the world-we-want (on both sides of the iron curtain, there was a reason why the communist regimes were, at least initially, strongly supported by the populace). But wanting the world-that-was was also what brought Nazis and Fascist into the power.

And PlutoniumKun’s:

A key casualty of neoliberalism was corporatism in its more benign form. It used to be that policy was made in the early hours in those proverbial smoke filled rooms where different groups at least made some type of attempt at compromise. This is still a feature of many countries and sectors, but I think its significant that the rot is most advanced in the neolib early adopters. It’s not just the formal art of making compromises, it’s the simple force of human contact when people in the same room together. It’s unfortunate I think that the UK joined the EU just as it lost interest in being run by civil servants having endless meetings with sectoral interest groups. This is a core reason I think why the UK never really engaged with the EU, even if in the short term its engagement was quite effective (essentially bullying other countries into getting its way on issues like agriculture and competition policy).

But as we’ve discussed before, the long term destruction of the British civil service has in many ways been just as stupid, and just as damaging, as the long term destruction of Britain’s manufacturing base. In both cases, the reasons have been ideological, not pragmatic.

Outsiders I think see it more clearly. I was travelling in Asia for a while and I was really surprised at how casually people would discuss what they see as the once admired anglosphere fall apart. Most Asians in my experience viewed Britain with a mixture of distrust and some awe and admiration. Now the commonest response seems to be a shrug of the shoulder or just plain schadenfreude.

This bodes particularly badly for the UK’s trade negotiators when they start face to face meetings. They will be a little like late 19th Century Russia or Turkey -seen as a country who’s only right to be at the top table is due to history, not present circumstances. The gradual retreat of the US from the eastern Pacific is pretty much seen as a done deal, everyone is frantically scrambling to ensure they are not caught on the hop. I’m a great believer that the true indicator of what a country sees as its future can be seen in what it spends its military budget on. Every major Asian country is spending serious cash on domestically sourced air superiority, long distance strike capability, in addition to A2AD for its brown water coasts.

There are many parts of the world where the ‘old ways’ are still pretty much intact – much of Europe still likes the EU and the way it works and vaguely corporatist/social democratic ways of doing things. Its easy to get carried away with stories of austerity and decay, but when I travel in Europe much of it (including countries like Spain and Portugal) look pretty good and no more or less full of discontent than they ever were. Much of northern Europe and individual countries like Portugal are doing very well indeed, and France has been defying the naysayers for as long as I’ve been reading English language economics papers and magazines. Its not clear to me that the foment in those countries – even in France – is much worse than its been in any given post war decade. There are cycles within cycles for these things. Ireland is, all things considered, booming economically and culturally content, austerity a long forgotten problem for most people.

What we are seeing is the postponed breakdown of the traditional centre left and rights. The wipeout of traditional left wing parties has been much commented upon, but less obvious is the breakdown of the old Christian Democrat/centre right tradition in much of Europe and other parts of the world in favour of a more libertarian/populist/nationalist form. It’s just that the change has tended to be more within parties, while the left is always more fissiparous.

I think the left is slowly, very slowly, reformulating along lines closer to the older anarchy tradition, as seen by the rise of Green Parties – but it will take time before a more grassroots, collaborationist form of left wing politics really starts to make a difference. I think the libertarian/neolib wing of the right is being well and truly wiped out by the more ruthless nationalistic (I hate to use the F word) tradition. The transformation of the Tory party into an English nationalist party with a focus on serving its new working class/lower middle class base has been carried out with quite remarkable speed. The Tory business class will come to deeply regret its silence over the internal revolution that took place post the Brexit vote.

All this of course is within the context of slowing growth and a rapid climate deterioration. All bets are off in significant parts of the world as the fires rage. The only certainty about climate change is that there will be completely unforeseen negative impacts.

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