Crisis of democracy

From the Enron debacle to the BP catastrophe, the principal architects of our society have abused the trust they enjoy because of their specialized knowledge. It’s time, on the world stage, for the emergence of ‘omni-competent citizens’
Andy Yee
30 June 2010

In her article, Toward a new Alexandria, Lisbet Rausing has criticised the academic community for failing to share what they know with the public. In an age of disaggregating and democratising rupture of time and space, as she argues, this has profound consequences on the democratic vision of universal learning and education. This is true not only for academics, but also the ruling elites of our economy - both classes being guardians of specialised knowledge. The difference is that the public can forcibly feel the impact created by the latter. If we are to truly live up to democratic ideals, we, the public, need a greater sense of urgency to ensure that we are empowered with knowledge.

The principal architects

Walter Lippmann, one of America’s most influential journalists in the twentieth century, presented a penetrating analysis of democracy, popular participation and media in his classic work Public Opinion (1922). He saw the difficulty facing the governing class as ‘a chaos of local opinions’ in which any decentralized decisions would soon flounder. So the general population must be governed by ‘a specialized class whose personal interests reach beyond the locality.’ This elite class is to master information and knowledge that is not ‘common property, in situations that the public at large does not conceive.’ In other words, only the select few would be the ‘omni-competent citizens’.

This specialized class contained the ‘principal architects’ of national policies, a term coined by Adam Smith to describe the ‘merchants and manufacturers’ of his time, and reiterated by Noam Chomsky to describe contemporary multinational corporations. These principal architects have designed a system to concentrate wealth and power into the hands of the very few. They have ensured that their interests are attended to, whatever the grievous expense this has cost others.

Because this class act upon privileged information is not accessible to the public, Lippmann wrote that, ‘it is irresponsible […] and it can be held to account only on the accomplished fact.’ On this, Enron former CEO Jeffrey Skilling, speaking from prison, made a very relevant point in his interview with Fortune this month. Reflecting on lessons for business executives facing allegations of white-collar crime, he said he ‘talked too much and educated the prosecution on issues that they would otherwise have had to figure out on their own.’ He should have exercised his Fifth Amendment rights following his attorney’s advice.

However, honesty and trust are essential for the market economy to function. If the elite class is irresponsible, how can we place our trust in them?  In Lippmann’s words, they can only be held accountable based on ‘accomplished facts’. But Franco Moretti, writing in the New Left Review (Jan-Feb 2010), has suggested that honesty is retrospective, in the sense that ‘you can’t be honest in the future tense – which is the tense of the entrepreneur […] Even if you want to be honest, you can’t, because honesty needs firm facts.’

The specialization discourse

A fundamental paradox emerges: on the one hand, increasingly specialized knowledge and information have removed public understanding of common interests further away from the realities of public life. On the other hand, unfamiliarity with these languages of specialization and abstraction prompts us to impart legitimization and authority to multinational corporations and principal architects who have major influences on public policies. But whether they will behave honestly is an entirely different matter.

It was only weeks after US President Obama announced an ambitious plan to open up more US offshore waters to oil drilling that the BP Deepwater Horizon Spill, the worst man-made environmental disaster in the US, occurred. It was only last autumn that David Rainey, BP’s vice president for the Gulf of Mexico exploration, told the US Congress that the US Interior Department’s proposal to tighten federal regulation of oil companies’ environmental programmes was unnecessary: “I think we need to remember that offshore drilling has been going on for the last fifty years, and it has been going on in a way that is both safe and protective of the environment,” he said.

Moretti also reminds us of the Enron story, in which the mark-to-market accounting, entering as actually existing earnings those that are still years in the future, was invented. The day this accounting on asset values was approved by the Securities and Exchange Commission, Jeffrey Skilling brought champagne to the office: ‘It wasn’t a job – it was a mission… We were doing God’s work,’ Skilling said after his indictment.

In the decade following Enron’s debacle, the world would see how global financial institutions made record profits by selling complex financial instruments and mortgage-backed securities, only to end in a dramatic meltdown of the global economy at the cost of the general public. Naturally, the principal architects of a handful of these financial institutions, notably Goldman Sachs, avoided collapse by arranging for the taxpayers to pay for bailouts. ‘I’m doing God’s Work,’ said Goldman CEO Lloyd Blankfein. Private emails by Fabrice Tourre, a Goldman trader at the centre of SEC’s fraud investigation into the bank, illustrated vividly the abuse of trust: ‘More and more leverage in the system, the entire system is about to crumble any moment...the only potential survivor the fabulous Fab standing in the middle of all these complex, highly levered, exotic trades he created without necessarily understanding all the implications of those monstruosities !!!’, ‘I've managed to sell a few abacus bonds to widows and orphans that I ran into at the airport...’

Specialized discourse, which presents matters in a highly technical manner inaccessible to all but a few experts, has effects as far as the North Korean nuclear crisis. There is no doubt that North Korea plays a large part in the crisis with its nuclear brinkmanship. But Roland Bleiker, international relations scholar and former Swiss diplomat, has suggested that Pyongyang’s action has not taken place in a vacuum. It has been subject to clear and repeated American nuclear threats for over fifty years. The image of North Korea as an evil and rogue state is so deeply entrenched, that any crisis can be easily attributed to Pyongyang’s problematic behaviour, even in the face of contradicting evidence. Behind this threat projection is the specialized discourse on security and national defence. The public has become used to the techno-strategic language of abstraction used by  defence analysts to the point that these experts are politically legitimized to comment on these issues with moral authority.

With this insight, we can understand how it is possible that President Obama can ask Congress to approve a record US$708 billion in defense spending for 2011, at a time when US military power goes virtually unchallenged. Defense Secretary Robert Gates only has to point to sophisticated new technologies being developed by enemies overseas, threats posed by militant groups, and other unexpected scenarios. Of course, the public has no way to access these claims.

Omni-competent citizens

From what we have seen above, the principal architects, or what Pierre Bourdieu, one of the twentieth century’s most influential social scientists, called the ‘invisible hand of the powerful’, are creating a complex and refined mode of domination in virtually every area of life, ranging from finance and defence to the environment. The behaviours of the elite class, however, hardly instil any confidence in the public, as judged by the repeated occurrences of one catastrophe after another. But surely what we call the ‘crisis of democracy’ occurs not when we stop trusting the elites, but when we find ourselves not able to participate in an intelligent discussion in public matters. The Climate Gate Scandal, for example, raised a whole lot of questions about the accuracy of the prediction of global warming and public education.

Pierre Bourdieu therefore advocated new forms of struggle, in which researchers have a key part to play. He envisages ‘a political action with new ends – the demolition of dominant beliefs – and new means – technical weapons – based on research and a command of scientific knowledge, and symbolic weapons, capable of undermining common beliefs by putting research findings into an accessible form.’ In other words, only a programme aimed at the mass cultivation of Lippmann’s ‘omni-competent citizens’ could counter the abuse of trust by the principal architects of our societies. At a time when corporate power remains unchallenged as the financial crisis fades away, and our principal architects are once again bending their attention to global issues like climate change, food shortage and nuclear weapons, the stakes could not be higher.

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