In Praise of the Small


I’ve been having a drawn out debate with a Russian expat communist, who never lost his ‘religion’. Like most debates, a large portion of the bounty produced stems from challenging one’s own priors. I thought I was embarked upon an exercise of defending Capitalism and critiquing Communism, but in reality I was sleepwalking towards my belief that virtue is to be found in the small, at the level of personal and reciprocal, where all human trust and loyalty resides. Anyway, here are the results.

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I’m actually quite warm towards Russians, but not the Soviet system. Look it’s not a problem unique to communism. I’ve looked extensively at foreign aid as an issue, and what I can tell you is that when an ‘engineered’ approach is taken from thousands of miles away, the result is almost always failure- but when the problem-solving occurs on a local level, from the ground up, the result is much more often success, though obviously results are variable depending upon the players.

It’s also a problem with large corporations, when the management is unwilling to adopt a ground-up, instead of top-down approach- I’ve seen both approaches in action and there really is no comparison. Here is the problem- the inherent complacency of intellectuals. Basically, intelligence can be an absolute gift to the world if it is humble, if it draws upon real world data and observation with a view to challenging the internal model we’ve constructed of the world, with a view to excitement to the prospect of often painful correction, as we are stripped of our illusions. But all too often hubris sets in and the intellectual tries to make the events and information fit the worldview he or she has constructed in their mind.

You may think I sing the praises of capitalism- but this is far from true, and it too possesses its own ideology, most notably incorrect in its belief that most people pursue their own self-interest to the exclusion of all else. If I do often express scorn and derision at most attempts to critique capitalism is that often the people making the criticisms are woefully short on knowledge, and fail to recognise capitalisms successes. Personally, where I see capitalism as lacking in its glaring inability to engage in self-critique, to take into account how we are geared towards status and yearn for reciprocity. The view of man as a primarily self-interested being, pursuing his own interest, is a woefully inadequate understanding of our complex drives and needs, our desire for psychic profits as well as real ones. In particular, stating this somewhat true axiom out loud can have a detrimental effect, as it gives the cognoscenti an excuse for amoral action, ignoring the deeper and more reciprocal aspects of our nature.

In practice, the fact that few capitalists have read Adam Smith’s first book, means that for the most part they are incapable of harnessing most human potential through reciprocity and high morale. With front end selection, method study, modest capital expenditure and high morale it is quite possible to hit productively figures around 400% of industry standards (barring machine imposed capacity limits, although even these can be worked around), but most managers leave a large portion of this figure on the table, because they refuse to work to the rule of valuing trust, consistency and reciprocity above all else- imposing arbitrary limits which lose at least a third of the 400% limit.

An interesting titbit of history- when the Japanese were brought into German car manufacturing as consultants, to introduce the unparalleled levels of success and productivity they had developed in places like Toyota, they became highly irate that German managers had a habit of resoling their work shoes. Apparently, this was one of the ways they used to determine whether a particular manager was going to the root of the problem to create solutions and consulting the workforce. And, of course, it goes without saying that at the same time the Japanese had created one of the most loyal worker, manager and business owner systems in history, in which trust and reciprocity were practically encoded at a cultural level. They even had to hire in the gaijin when many made mistakes in investments (based upon faulty assumptions which didn’t see the perils of a lack of population replacement and an aging workforce), and were forced to violate this trust- Japanese owners and managers simply couldn’t do it culturally because it would have been too shameful, so they bought in the Westerners.

My point would be this- the communist system elevates the lazy intellectual or pseudo-intellectual by allowing them the ability to make changes to the system- and all too often when things failed the failure was blamed upon external factors of human opposition. In the worst cases it resulted in situations like the Kulaks, the gulags or the Cultural Revolution in China. What the unconstrained view of the ideologue fails to recognise is the lack of malleability of people- yes people are malleable to a certain extent, but its an organic malleability rather than a mechanistic one- and one which is most successfully undertaken through the Pavlov’s dog of learned trust and reciprocity, with people often working harder for praise and esteem than they will for token material gain.

This is also the reason why large scale corporatism, with its crony capitalism and dark alliance between business and government is failing, to the extent that corporations are forced to increasingly rely upon exotic financial instruments and exploits to ensure business survival. To deny trust and reciprocity, by treating a workforce like economic serfs unworthy of tending to as human beings, creates circumstances very similar to the unaccountability witnessed with the pseudo-intellectual apparatchik. Gold is to be found in the small- if we treat those we work with like an extended family, many things are possible. It’s why the benefits of capitalism are most seen in SMEs (small and medium enterprises), and less so in large corporations.

In many ways Marx was right, diagnostically, but he failed by focusing exclusively on the might of large industrial operations and failed to recognise the unassailable power of the small. In the UK, SMEs account for 61% of all employment. Just over 20% of employment is government and the large corporations only account for a relatively small portion of the workforce, just under a fifth. Government on the other hand, is big. It may cloak itself in the veneer of altruism, but make no mistake, Pournelle’s Iron Rule of Bureaucracy applies at every level. Elon Musk was right- government really is a corporation at the limit.

So really, we are looking at a twin threat- with the rise of corporations on the one hand and the power of government on the other, and the most alarming thing of all is that in many countries and jurisdictions these twin threats are cooperating, entering into collusive and mutually supportive relationships and squeezing out the inherent virtue of the small. Think of it this way- it is far more difficult to make ruthless decisions when people are just names and numbers on a sheet of paper, one doesn’t see or feel the brutality of occasional necessity- these decisions are far more difficult when one knows the people one’s decision affect.

We should fear the scale of human endeavour more than the system which produces it- small is the place where humanity and humanism reside- at scale, all manner of causal atrocities are possible.

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