Markets continue to be very fragile, but it is the London riots which are most on my mind.
Financial crisis seems almost familiar now. But breakdown in physical law and order across much of a major western city for several nights is something distinctly unsettling. There has been nothing like it, at least since the LA riots.
There is so much talk in the media about the causes. I've been talking in this blog about material saturation and the fact that it leaves so many of our problems unsolved. And I think it explains some of what we are seeing on the streets.
The use of money and the market mechanism is an excellent way to achieve economic growth and allocative efficiency. It is an extremely useful social technology. It has generated remarkable abundance and wealth.
But it is not necessarily a way to build and maintain culture. And many of the things people most want and need depend on culture. You need some degree of responsibility and honesty and ethical norms.
Redistribution of money and resources alone is not the answer to social problems and the evolution of society.
London is one of the wealthiest cities in the world. It is not equally distributed, for sure. But billions are handed out in benefits each year. London offers every kind of excitement and variety, much of it for free. It is filled with immigrants who have flocked to find work and opportunity, and succeeded. As Dr Johnson said a long time ago, the man who is tired of London is tired of life. It is hard to believe this is just a matter of just income equality.
It reminds me of the famous saying by former Senator Daniel Patrick Moynihan:
The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself.
An additional truth is you can't solve cultural problems with money alone. Indeed, it has been a commonplace criticism for centuries that too much material wealth can undermine a culture. It recalls the decadence and collapse of Rome, or the ancient conflict between the latest tightly knit nomadic tribe sweeping in from the steppe and the settled, wealthy city. The vigorous merchants of medieval Venice, sailing to Constantinople and Alexandria, declined in later centuries into rentiers living off their land in the Veneto.
And there is also Daniel Bell's argument about the Cultural contradictions of capitalism, that capitalism can undermine over time some of the values that sustain it. I will come back to that in the future.
There is also a problem with most forms of liberalism, which aim to be both value neutral and neutral between cultures. Far from thinking about how to sustain a culture, mainstream liberalism suggests that is not a valid aim for the state. It only thinks in material welfarist terms.
In that sense the Moynihan quote is wrong. When liberals think of changing a culture, they tend more towards making it procedurally fair and tolerant. They rarely think about what makes a culture work. But any business knows culture can make all the difference to the bottom line, for example. It matters for success.
Libertarians are also wrong to think that market exchange and voluntary individual contracts are sufficient in themselves to make a society work. You need a cultural and ethical fabric that is deeper than an Ayn Rand novel alone.