In his greatest work, Crime and Punishment, Fyodor Dostoyevsky tells the story of Rodion Raskolnikov and his decision to kill an unscrupulous pawn-broker for her cash. Raskolnikov is a former law student and he rationalises the murder by the greater good that the money can do if it is in his hands. What follows is the finest psychological thriller in world fiction as Raskolnikov is pursued by the authorities and his conscience alike across the ravaged landscape of Western rationalism.
Dostoyevsky’s main theme and point was to attack the radical thinking of Russian nihilism: to cut a long story short, those politicians of his day who were driven by a credo that the ends justified the means so long as enough impoverished folk benefited. Dostoyevsky was no communist.
But the story is broader still and holds important lessons for capitalism. Indeed, radical rationalists in all forms are the book’s target, and that can just as easily apply to those on the Right as those on the Left. Which is why Dostoyevsky’s work has something to add to an assessment of the state of Australian capitalism and business.
As an entrepreneur myself, I understand the compulsion to bend (and sometimes break, eek!) the rules to push a business forward. Sometimes rules, legal or ethical, get in the way of common sense business decisions and it is very easy, and sometimes right, to push back the boundaries for the personal and the greater good. But there is also the danger of misjudgment by these ubermenschen and over time mistakes can add up to a softening of values themselves.
We have just now a range of high-profile scenarios playing out in Australian capitalism that Dostoyevsky may recognise as a symptom that something has gone more fundamentally wrong with the values that underpin a rules-based liberalism that balances the benefits of individual merit with the collective need for behavioural norms. In the public sphere, the scandal engulfing the highest levels of the Reserve Bank of Australia amid bribery charges surrounding its note-printing offshoots is a case in point. One has to question the process of accountability handled by the bank as it has been forced by Fairfax Media investigations.
In the private sector we have two other recent high-profile examples of unaccountable behaviour. The first has been the convulsion of blame-shifting to labour of the cost blowouts in the oil and gas sector. While labour costs have certainly played a role, as have unions, more important have been the decisions by executives to charge into moon-landing levels of capital spending all at once. As a result they have inflated asset prices, as well as input costs for everything from welders to tyres. That many in this same sector so violently opposed the minerals resource rent tax, which may have eased some of this cost inflation, is one irony. The other is that we have seen this story before (it is called “a bubble”) and it will hopefully culminate in a shareholder rebellion that holds those executives who have destroyed value to account.
The other recent example of unaccountable behaviour brings together both public and private spheres in the ongoing Qantas imbroglio where former chief executive Geoff Dixon is attacking the national carrier’s current management with a view to destabilising it for his own purposes. This is all to the good and if the market backs a better strategy championed by Dixon then that’s progress. But doing this from the chairmanship of Tourism Australia, a taxpayer-funded organisation that had very large commercial contracts with Qantas, is a conflict of interest, as Qantas management has made plain.
It’s not easy to tell if these examples represent a worsening of business probity in Australia. After all, a thin grey line between public and private benefits is not new: in the lead-up to the global financial crisis there was a remarkable dissolution of boundaries between investment banking and former public servants as privatisation passed assets from public to private hands. Accompanying that reform, an open-door policy developed between senior public and private executive roles.
There is also the role of globalisation to consider. As Sell on News has described, American historian Philip Bobbitt sees three models for capitalism emerging in the form of market states: laissez faire (America), managerial (Europe) and mercantile (Japan). As countries become more beholden to flighty international capital, it may be that the pressure upon governments to do special deals is growing. And in a post-GFC context of demand deficit, there is a global push towards closer integration between big business and government that protect them, with all of the “behind closed doors” connections that entails. This might give you the sense that, for the time being at least, the Eastern market state which privileges connections (especially filial) over transparency and meritocracy, is in the ascendancy.
But Australian capitalism is, at the best of times, a boys club. I don’t mean that as a comment about gender but rather an assessment of how the culture of Australian business works. It is, much like a footy or cricket team, a gang of mates. Often times, deals get done by pulling favours, regulators move against businesses behind the scenes, most sectors are so concentrated that success is often a case of trading assets between friends and, more to the point for this discussion, accountability in both the public and private spheres of our version of the market state is administered with such delicacy that punishment more often than not looks like reward.
This is not without its benefits. Familiarity makes crises more manageable and solutions more swift in the finding. But it also comes with problems. Anyone familiar with Paul Kelly’s seminal work The End of Certainty will understand that liberal capitalism is only lightly tolerated in Australian society. The default position for the nation is a noncompetitive, oligarchic business structure that unites big business and government in a productivity-killing partnership that perennially erodes the nation’s standards of living. Who could deny such an undercurrent when the past few years has re-established an untouchable banking oligopoly with few offsets for the public, a clique of big miners that write their own tax rates and a car manufacturing sector on public life-support (that I agree with, to risk your wrath!) but for some reason must be kept secret.
If you want to have a functional liberal capitalist system, one that lays claim to the benefits generated by individual genius, innovation (and occasional pushing back of boundaries), then you must also lay claim to individual responsibility when things get cocked up.
Ironically, I think Dostoyevsky would get the point.