Deciphering capitalism's corrupt metaphors

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Angry looking pigs sit at typewriters in an animated adaptation of George Orwell's 'Animal Farm'George Orwell in his book Animal Farm famously parodied the vicious use of language in communist states. 'All animals are equal, but some animals are more equal than others' was one of his memorable depictions of how the absurdities of language not only reflect but also predicate evil.

The demise of the Soviet Union is viewed as confirmation that capitalism is superior morally and economically. But materialist and illogical use of language is evident in capitalism, too. In communist states language became a tool of state oppression, in capitalism it is a tool of money. But there are many similarities in the language use, especially in the tendency towards dehumanisation.

This is most evident in the disciplines of economics and management. Consider, for instance, the use of the word 'capital'. Capital, whether it is in the form of shares, bonds, cash or bank debt, is the formalisation of a transaction. Transactions are agreements about value and obligation.

Can agreements 'flow'? One would think not. But economists routinely talk about 'capital flows'. A metaphor is slyly created whereby capital is depicted as some kind of fluid that oozes around the world. Then the pseudo-scientists in economics can analyse how that fluid will behave. Instead of capital being correctly seen as something created by people, it is turned into a sort of natural physical phenomena. People are shifted on to the margin in a way that is reminiscent of communism's use of the idea of historical determinism.

Such use of false metaphors about capital almost led to the destruction of the monetary system. By creating a metaphor of money as a kind of fluid, proponents of economic libertarianism were able, over a period of about two and a half decades, to mount an argument that there was a need to 'deregulate' the financial markets.

This is nonsense. Capital relies on rules to exist. If one buys shares, there are rules about how they are traded, valued, and so on. The same applies to any financial transaction. They are, by their nature, rule based, and heavily regulated. It is not possible to 'deregulate' regulations.

But because the free marketeers succeeded in creating a metaphor that capital is a kind of fluid, then it is possible to sound reasonable by saying that the fluid should be deregulated. An image is conjured up whereby barriers (regulations) are removed, allowing the fluid to flow to where it naturally should.

This is rubbish. In reality there was a shift from governments setting the rules of money to the traders setting the rules of money, and this almost brought down the entire monetary system of the world.

According to US Congressman Paul Kanjorski, in September 2008 some $500 billion went out of US money markets in one morning in what was an electronic run on the banks. Treasury threw money at the problem — the 'deregulation' solution. When it was realised this would not work, Treasury decided to aggressively regulate. It shut down every money market account temporarily and underwrote bank deposits up to $250,000.

That is, Treasury said: 'These are the rules now.' Had they not done so, according to Kanjorski, $6 trillion would have gone out of the US banking system by the end of the day (where to is not exactly clear). It would have spelt the end of the American banking system and destroyed the monetary system of the world.

That is what 'deregulation' of financial systems can bring. The false metaphor is not just a linguistic oddity, it is downright dangerous. Neither has the danger gone away, because the appalling metaphor has not gone away. Impoverished language use puts people in thrall to their own artefacts, much as communism did.

The same sort of barbarous language appears in management thinking. Take the phrase 'human resources'. Now, humans are not valuable as a 'resource' (they are mostly water, plus a few trace elements). Humans act, resources are acted upon. But the metaphor makes it easier to dehumanise staff. Instead of having to consider how self-aware people might behave, in all their complexity, employees can be seen as objects.

This type of dehumanisation is rampant in management language. When managers speak of 'outsourcing their core competencies across the full spectrum of capability offerings' they are not merely speaking nonsense. They are treating people as objects to be manipulated.

Orwell once commented that if thought corrupts language, language can also corrupt thought. It is worse than that. The corruption of thought and language leads to corrupt action. Writing in 1946, he said:

Writing at its worst does not consist in picking out words for the sake of their meaning and inventing images in order to make the meaning clearer. It consists in gumming together long strips of words which have already been set in order by someone else, and making the results presentable by sheer humbug. The attraction of this way of writing is that it is easy. It is easier — even quicker, once you have the habit.

That is a good description of the habits in economics and management language. At least in 1946 most of Orwell's audience would have known what a metaphor is. In 2014, it is rare for people to have the ability to identify a metaphor in their own language.

Worse, the language of management and economics is infecting the education system. This was pointed out by Chris Fotinopolous in The Age, citing Labor's 'New Directions' paper for the education system, which identified 'productivity growth' and 'human capital investment' as 'the critical link' to 'long-term prosperity'.

What exactly is 'human capital'? Another bad metaphor designed to dehumanise, much like 'human resources'. It deliberately blurs the distinction between money and a person, implying that a person is just a store of value that can be financially measured.

What is 'productivity growth'? A measure of economic output whose relationship with education is speculative at best. Technical training is important, but the level of productivity mostly depends on the quality of management, little of which can be taught in school. It is mostly dependent on institutional structures and cultural habits.

Many factors affect productivity, including currency movements and investment trends. Australia's recent declining productivity is largely due to excessive investment in mining and over-investment in utilities, as the Reserve Bank pointed out. As the mining investment declines, Australia's productivity will rise. This will have nothing to do with the education in Australian schools.

As there is so little critique of the appalling language use in capitalism and the persistent misuse of metaphors, the situation is unlikely to improve. Perhaps we should all just turn ourselves into 'human resources leveraging our intellectual capital across a market based outcome with respect to capital flows' and be done with it.


David James headshotDavid James has been a business journalist for 25 years and is the author of Managing for the Twenty First Century and The Business Devil's Dictionary. He has a PhD in English Literature from Monash University.

Topic tags: David James, capitalism, communism, George Orwell, GFC

 

 

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“Wait a minute Steve tell us what happening”…”It deliberately blurs the distinction between money and a person” http://www.youtube.com/watch?v=TdUsyXQ8Wrs
Annoying Orange | 06 February 2014


I have lost my glasses...Thank you- great piece David, BTW.
Annoying Orange | 06 February 2014


As a keen student of economic libertarianism since my schooldays in the mid-70's, I don't recognize myself or my mentors in any of Dr James' targets. Certainly, serious free market "capitalist" - Austrian - economists such as Murray Rothbard, von Mises, von Hayek, etc, would have scoffed at the irrelevant and superficial 'deregulation' of the financial markets that came about in the 1980's. They and their followers are much more radically aligned against the whole fractional reserve system which, with state approval, has been in operation for several hundred years. In a radical departure from this embedded crony socialism/capitalism (whatever), they advocate, pretty much, a return to a gold standard, or whatever the market defines as a worthy substitute for the same. So, sorry, but, despite the occasional valid insights, this article is very effectively shooting down a row of straw 'capitalists'. Test: do a "find" in Rothbard's "Man Economy And State" (available online, free download) on "deregulate" and "financial markets" and the cognates. Or the same in Mises' "Human Action" (also freely available.) Or go to mises.org and check out the articles on "deregulation" and "financial markets" and see for yourself what economic libertarians actually mean by these terms, as opposed to what the author is (mendaciously?) suggesting here. Even better, in the spirit of tolerance and understanding, try reading and actually undestanding what Rothbard, Mises and other Austrian economic libertarians say.
HH | 06 February 2014


Dear HH. mid-70's and 1980's (sic) do not need an apostrophe. 70s and 80s are plural, not possessive.
Angela | 07 February 2014


... Business transactions as fluid dyamics and kinetic theory; the popularity of mathematical models - and the egregious renumeration for wielders of such, in the derivatives scams. Only one problem: in physics there is a well-defined microscopic basis for the elements on which to build a collective model. There is no such basis in "econophysics". It is nothing but alchemy and its Grand Elixir, redux. But it'll inevitably sell any equitable economic life down the gurgler.
Fred Green | 07 February 2014


This is a long long article It criticises the concept "capital flows" - the fact that money moves to where there is a better return - a simple, useful concept and easy to understand - don't waste the reader's time investing this simple concept with a Machievellian purpose - I gave up at this point - and looked for something useful to read
frank hetherton | 07 February 2014


Nice article! Human Resources use to be called Personal. When did this change?
Peter Sellick | 07 February 2014


Dear Angela, I stand corrected and chastened! Thank you.
HH | 07 February 2014


No, Peter Sellick, not Personal but Personnel. But you're right; employees used to be persons but now (since about twenty years ago, I think) they're resources.
Gavan | 07 February 2014


Dear Angela & HH, I guess that 'seventies' -> '70s' and 'eighties' -> '80s' don't qualify to be indicated, by apostrophe, as contractions. [Is that a rule or just commonly accepted?]
Bob | 07 February 2014


Fortunately I have no idea what most are talking about, but I did enjoy the article. I'm off to buy some new clothes for the emperor, no hiding behind language for him. Btw, I agree and add protocols, perfect for obfuscation rather than elucidation.
Jane | 07 February 2014


Phillps, a New Zealander and an electrical engineer, built a hydraulic analog computer to model the economy in the late 40's at the London School of Economics. (Phillips, A.William. “Mechanical Models in Economic Dynamics.” Economica, 1950, 17(67), pp.283-305 and http://www.academia.edu/745496/The_Economy_Machine_The_Moniac_). It led to a much better understanding of the dynamics of economic systems. In this context, capital "flows" by analogy like the water in the analog computer. But, the machine allowed queries to be made by analogy: "If we stimulate the economy by adding money here, what happens?" and the analog computer shows what happens when we add more water - the analog of money in this example. The resulting behaviour suggests what happens. It is quite legitimate to draw analogies and then model systems. But, of course, one must remind one's self that they are analogies which must always be tested for accuracy. The models are not the system they model. Of course, I concede that language is very important: "asylum seekers" -> "illegal entrants"; "global warming" -> "climate change"; and so on. But, as Phillip's machine suggests, "capital flows" is a reasonable way of talking about the economic system "in the large". But, as with any analogy or metaphor, one must ask does it apply in this instance? And, at the low level, it does not. The free marketeers did not create the metaphor, which is legitimate, but have persuaded the various bodies that because capital flows, they should remove barriers. But, barriers (regulations) are there to prevent damage from floods.
Peter Horan | 07 February 2014


One of the problems with the contemporary world, as you correctly point out David, is that most specialist disciplines: Economics; Management; Literary Criticism etc. have developed their own particular form of Newspeak, which tends to be artificial, arcane and intended to keep outsiders befuddled and in their place, so that the High Priests and High Priestesses of those disciplines can get on with what they consider their (and only their) God given duty to administer things in their own particular spheres. It always strikes me as interesting that Paul Keating, one of the most effective Treasurers and PMs, had no paper Economic qualifications but was able to operate effectively in the field and to explain in very clear English what he was doing.
Edward F | 07 February 2014


Peter H, I was told in the '80s that there's some kind of mechanical model of the economy in the top floor of the Economics building at Uni Melb. Our lecturer John Creedy (good bloke) also remarked that a lot of seminal 19th century economists began their careers as railway engineers. A la the inimitable Rajendra Pachauri. A propos of nothing.
HH | 07 February 2014


I don't know where the term "capital flows" comes from, but I suspect Keynes is at the bottom of it all. It's a macro term, and macro-economics really began with Keynes and his "aggregate demand", etc. Hardly a "capitalist" or "free market" economist - quite the opposite, at least if we're thinking of his legacy.
HH | 07 February 2014


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