I’m back again from a long period of blog-silence. In the following months Nicolai at The Ethical Economy Ltd. and I will be finalizing the manuscript of our book : “The Ethical Economy. Business and Society for the 21st Century”, which will be coming out with Colombia University Press in 2010.  I will however start publishing parts of the final manuscript on this blog as we move along. First out is a the first part of an essay that looks at the financial crisis form the perspective of the ethical economy. You can find the whole text here, or just wait for the next instalment to appear on this blog (next week).

We are, it would seem, in the midst of a historical crisis of the capitalist system. As the dynamo effects of the sub-prime collapse ripple through the economy, from financial markets to consumer spending and industrial production, it has become common to point at how our present capitalist system lacks long-term sustainability. If this used to be the privilege of a handful of left-leaning economists like André Gunder Frank (2005) or Robert Brenner (2004), economists, politicians and business leaders who used to be more than happy with the existing order of things have now joined the ranks. Even Richard Florida, whose theories of the ‘creative class’ stood at the heart of the gentrification-driven real estate boom that preceded the present crisis now proclaims that'[t]he housing bubble was the ultimate expression, and perhaps the last gasp, of an economic system some 80 years in the making, and now well past its “sell-by date” (Florida, 2009:9).
However, in order to understand why the ‘system is past its “sell-by date”‘ and, by implication, what can be done about this, it is not enough to go beyond populist cries of managerial greed and corrupt banks. We need to move even deeper into the heart of the matter, beyond even most current explanations that focus on the perversities of advanced financial instruments and the need for tighter regulation of financial markets; we need to ‘descend into the depths of production‘ to quote (an increasingly popular) Marx (1939[1973]:105) once more, and engage with the fundamental concept of any economic analysis: value.

This article will attempt a couple of moves in that direction. It will argue that we are witnessing a fundamental re-configuration of the very core logic of value with which our economy works: We are moving from a capitalist economy where value is directly related to investments in productive time, to an ever more influential ‘ethical economy’ where value is related to the quality of social relations. I will develop this argument by presenting five (interconnected) ideas: One, that our crisis is a crisis of transition from one system, industrial capitalism, to another economy that has yet to find its political, juridical and ideological form, its ‘superstructure’ to keep using Marxist terms. Two, that this crisis of transition is driven by the emergence, within the institutional framework of capitalism itself of a new mode of production that works according to a logic of value that is different from that of industrial capitalism. Consequently a lot of the wealth actually produced by the economy cannot be adequately valued and, by implication, managed within existing structures of accounting, control and measurement. Seen this way, the crisis we are now living through is essentially a value crisis, where, as the opening quote claims, exchange value no longer adequately reflects use value, or, to put it in less cryptic terms, there is a general sensation that a lot of the real values that circulate in our economy cannot be adequately represented. Three, that the emerging ‘new economy’ has a distinct value-logic of its own. It is an economy where value is related not to productive time as in the capitalist economy, but to the ability to build ethically binding relations: it is, in this sense and ‘ethical economy’. Four, that the emergence of such an ethical economy is the outcome of a dialectic that has been immanent to the very development of the capitalist economy, and in particular to its post-War globalization- phase. Five, that since, as recent economic sociology would argue,’value’ is essentially a shared convention as to the representation of economic processes (cf. Barry & Slater, 2005, Chiapello, 2008), the solution to the present ‘value crisis’ is contingent on the establishment of a new shared convention. Given the nature of the ethical economy, such a convention must be centred on a transparent and systematic measure of the social impact of companies and organizations.
I am aware that a bold statements like these are risky in an academic setting, particularly when expressed in the condensed format imposed by the medium of the journal article. (This article is in fact an attempt to summarize the ideas behind an ongoing book project.[ii]) As a sort of pre-emptive defence against the (legitimate) criticism that this article will no doubt produce,I want to remind the reader that its purpose suggest ideas that can guide our interpretation of current events. Although such theoretical work needs to proceed in close dialogue with the available facts, it stands no chance of even approaching the empirical rigour needed for a thorough substantiation of the hypotheses proposed. All this article aims to do is to present a number of ideas that can serve as heuristic devices, that may be, hopefully, developed, corroborated, criticized or refuted by others.