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‘Wall Street’s excesses caused more deaths among children than the tsunami four years ago'
COMMENTARY | November 24, 2009
By Richard Parker
This is the text of the Kelman Seminar Lecture by Richard Parker at the Weatherhead Center for International Affairs at Harvard Nov. 10, co-sponsored with the Shorenstein Center, the Nieman Foundation and the Program on Negotiation at Harvard Law School.
“Attitude and action are linked in a continuing reciprocal process, each generating the other in an endless chain.”
—Herbert C. Kelman
The Kelman Seminars honor Herbert Kelman, Cabot Prof of Social Ethics Emeritus, and the singularly eminent Harvard psychologist. Kelman’s work on reconciliation has done much to advance our understanding of the underlying psychological processes determining both conflict and the opportunity for reconciliation.
Of perhaps even greater importance, he has pioneered applied invaluable practical means for achieving reconciliation among conflicting parties. In this Prof. Kelman represents a model for us all in the social sciences on how to use scientific research in the solution of some of humankind’s most daunting problems.
Much of his work has focused on inter-national conflict, the underlying personal and group psychological bases for national and ethnic collective identity, and the role of reconciliation in altering the very coordinates of both national and ethnic identity as part of the process for achieving reconciliation. Given that body of work, its enormous importance, and in particular Prof. Kelman’s invaluable contributions in recent years to the hard and often frustrating work of peace and reconciliation in the Middle East, one might reasonably ask a simple question:
Dr. Parker, who invited you here today? It is, I must say, a fair question.
I am not a specialist in reconciliation, not a social psychologist, not even a psychologist. Instead I am an economist, a card-carrying member of a profession that has spent the past century running away from psychology and toward physics, a profession that has long avowed an almost irrational belief in the rational nature of human choice and human motivation, a profession that disdains any idea of reconciliation save the role of price to reconcile supply and demand.
Yet there is precedent here that my presence is not entirely in error. In 2000, Daniel Kahneman, the distinguished Princeton psychologist, was awarded the Nobel Prize for Economics. His long-time research partner Amos Tversky would almost certainly have shared the prize, but Tversky by then was dead, and the Nobel’s rules allow its award only to living recipients.
Kahneman’s and Tversky’s work lies at the heart of a new field in my discipline called “behavioral economics”, which has rapidly become one of the hottest interests among a younger generation of economists—even as it has provoked widespread unease among many of the profession’s elders. The reason for excitement among the young and dis-ease among the elders of my tribe is simple: “behavioral economics” rejects one of the profession’s central tenets, that human beings are rational maximizers of their self-interest.
The goal of my Kelman Seminar lecture today is to explore with you some of the challenges that “behavioral economics” and its cousin “behavioral finance” are raising, specifically by looking at the current global financial crisis. I’ve chosen the global financial crisis, moreover, not simply as a heuristic opportunity to delve into this new paradigm in economics. I want to raise for you what amounts to a much larger, indeed for me, a daunting question: whether or not global civilization has reached a point at which the idea of “reconciliation” as Prof. Kelman and others have developed it requires new application to economics theory and real-world economic relations.
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As I understand reconciliation and its practitioners, to date most of their quite admirable work has focused on the consequences of the physical and psychological destruction caused by the hostility of large groups often within a single conflicted society (such as Rwanda or Northern Ireland), or to the aftermath of state-based oppression (as in post-communist Eastern Europe) or of more egregious state-based violence, especially when directed toward a large identifiable racial, ethnic, or political groups governed by the state (such as South Africa, Argentina, and East Timor).
My question is not whether such work is useful, indeed necessary—indeed that seems to me unchallengeable. Mine rather is a question about the extension of such work—whether the globalization of economic relations—the modern-day reconstitution and integration of societies as markets—has brought us to a new era in which we need to enlarge the scope of reconciliation’s work beyond the classic horrors of civil war, of political torture, and systemic political oppression to the consequences of economic relations, economic systems, and economic theories.
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The global financial crisis is in that sense an immediate and familiar arena in which to ask that question—but not the only one. As both anthropogenic climate change and species destruction accelerates, I think it is fair to say that almost every aspect of modern globalization raises profound issues for those doing and theorizing about reconciliation. The twentieth century was, by all assessments, the most violent in human history in terms of the total dead caused by wars and other mass acts of state-organized violence, accounting for some 175-200 million deaths.
One scholar, Matthew White, has summarized the principal causes as follows:
Genocide and Tyranny: 83,000,000
Military Deaths in War: 42,000,000
Civilian Deaths in War: 19,000,000
Man-made Famine: 44,000,000
TOTAL: 188,000,000
Now if one estimates the total human deaths in the 20th century at four billion (a number subject to serious estimation error, given lack of systematic mortality records, but probably order-of-magnitude correct), that means that roughly five percent of all human deaths in the 20th century were induced by state-organized means, what one scholar has helpfully classified as “the democides” of the past century. If we are to avoid the cynicism alleged of Josef Stalin, who is said to have remarked that “one death is a tragedy, but a million a statistic” we need not only to reflect on the sheer scope of those 200 million dead but their nature, and their relevance to the work of reconciliation going forward.
Given that much of reconciliation’s work has been concentrated on post-conflict societies, four questions stand out for me:
Are we likely to see the sort of massive concentrated deaths caused by World War II repeated in this century, the kind that resulted in Nuremberg Trials as primogenitor form of systematic justice-seeking by means other than violent revenge?
Are the wars of the 21st century much likelier to be smaller in terms of casualties, but durable or even expanding in terms of number of wars, and hence total casualties? If so, have we in fact systematically been able to distinguish even analytically among causations that are ethnic, religious, political, and economic, and if possible analytically, are the distinctions of some significant use in shaping efforts at reconciliation?
Pertinent to my concerns about economics and reconciliation, what should we conclude from the list of 20th century democides which shows that a quarter of those deaths, nearly 50 million, were caused by famine—a figure equal to the number of military war deaths and twice the number of civilian war deaths?
Are we yet able to understand that an entire category of deaths not measured above—the category development economists now refer to as “preventable death, particularly from disease and malnutrition”—may indeed come to represent a greater challenge that the sum of likely wars and civil wars combined?
One recent estimate of such preventable mortality—measured as the gap between actual population size today and population size assuming globalized standards of modestly modern but not cutting edge nutrition, public health, and collective violence levels common among today’s OECD countries—estimates that more than 1.2 billion people, the great majority of them children under the age of five, have died needlessly by these standards since 1950 alone, a figure SIX TIMES the 200 million “democides” estimated above.
Why am I tracing out these differences? Because if in fact the concern of reconciliation is to reduce conflict, promote healing post-conflict, and generally create conditions for productive human life globally, these data suggest that the deep challenge of our age lies in grappling with systemic economic deprivation measured through means such as the UN’s Human Development Index.
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Why is this so, and why is economics relevant?
Let’s pause for a moment here and look back on those 50 million famine-induced deaths. What’s so singularly striking to me, first, is that the majority of them were caused by human beliefs about the proper economic organization of society rather than failures of nature. That is, by far the largest single cause of famine-induced deaths in the past century was in effect faith in scientific rationality: Stalin’s forced collectivization of agriculture in the 1930s and Mao’s in the 1950s. Put in none too bald terms, nearly 40 million people died in the 20th century as the result of an experiment in the economic organization of human societies meant to improve well-being.
When one looks at other large modern famines—which account for the bulk of the remaining famine-related deaths, what’s no less striking is the conclusion of Amartya Sen (in “Poverty and Famines: an Essay on Entitlement and Deprivation”) —that the vast majority of those dead fell victim not to an absolute shortage of food but to human-induced scarcity caused by hoarding and other forms of social misallocation in time of crisis. Not to put too fine a point on it, but in essence a second experiment in the economic organization carried out by those most likely to deplore Stalin’s and Mao’s handiwork.
These two factors—both of them ideologically-driven economic experimentation and allocational failure based on the exercise of unequal political and economic power—are, it seems to me, at the very heart of why I am so concerned about the need to advance the work of reconciliation beyond the classic boundaries it has to date assumed.
And this brings me to today’s global financial crisis in the first of several ways.
Perhaps the most overlooked feature of the crisis, at least here in the US, are the ways in which we have failed to recognize how it is actually increasing hunger across the planet as I speak.
According to the Food and Agriculture Organization, the number of human beings living in outright hunger has soared past 1 billion—one in six of the world’s inhabitants, more than the combined population of all the developed nations of the world. That explosion is because 75-100 million have been added to their ranks in each of the last two years, and with similar growth expected ahead for three to five more years at least. The FAO is excoriating in linking this massive increase in malnutrition to the global financial crisis, including the role of commodity price speculation in foods, fuels, and fertilizers, as well as the collapse in both private-market credit and public-sector aid to the most vulnerable. (See also the World Bank’s analysis here.)
UNICEF has meanwhile estimated that global infant mortality has soared by 300,000 a year and will not begin to fall back to pre-financial crisis levels before 2014. In other words, Wall Street’s financial excesses caused more deaths among children than all those killed by the tsunami that struck Southeast Asia four years ago. Over the estimated cycle, it moreover will produce twice the total estimated death count for Rwanda, Darfur, and the Balkans combined.
And the ILO calculates that by the end of 2009, given the global slowdown of output and trade, 45 percent of all the world’s workers will be earning less than $2 A DAY. (See also IOM’s assessment of the impact on global migration and worker remittances here.)
I cite these data to underscore the scope of the impact of our global financial crisis on those whom I think of as the world’s invisibles—invisible that is to those of us with eyes to see. Here in America the tragic and malign consequences of Wall Street’s meltdown are by no means as horrific, but they are no less shocking.
By narrow measure, US employment is now 10 percent, and by better measures including those working part-time who want fulltime work, those who’ve given up looking for work, etc.—the figure is growing perilously close to 18 percent. The average length of unemployment is now twice what it was a decade ago, and there are 6 jobseekers for every job currently on offer.
Measured from the start of the current collapse, ten million American families will have lost their homes by the end of this calendar year. One in five homeowners owe more on their mortgages than they have equity in their homes.
Fifteen percent of Americans live in poverty, but forty percent will spend at least a year or more in poverty in the next ten years—and two-thirds of Americans will spend a year or more in poverty before the end of their working lives.
(On poverty per decade, see Michael Zweig, “What's Class Got to do With It, American Society in the Twenty-first Century.” On poverty rate over lifetime, see Jacob Hacker, “The great risk shift: The new insecurity and the decline of the American dream.”)
Over the past thirty years—the three decades that have defined the slow but steady deregulation of Wall Street, and the increased globalization of the American economy, the share of US income received by the top 1 percent has doubled from 10 percent to 20 percent. This represents the highest level of income inequality since the US began recording income data in the early 20th century, and now demarcates the US as the single most economically inegalitarian country among the developed nations of the world.
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All this—the compelling evidence of millions of needless deaths particularly among the youngest and most vulnerable, the measured increase of malnutrition by over 100 million in just two years, the troubling problems across the industrialized work including the US—all point, in the context of conflict resolution and reconciliation to what I think is a profound question:
In seeking to address and remedy sources of conflict and suffering through principled acts of reconciliation particularly in post-conflict societies, have the theorists and practitioners of reconciliation somehow misidentified a principal—if not the principal—identifiable cause of such conflict, i.e., unresolved issues of economic wellbeing, power, and identity, both individual and collective, arising from the very nature of our current economic relations globally?
In short, has the global financial crisis of the past two years—its effects visible far beyond the esoterics of collateralized debt obligations, credit default swaps, and the oblique questions of what new regulatory conditions (and whether they ought to be market-generated in the manner of the Basel II accords or resemble something more akin to the era of Glass-Steagall)—exposed a level of consistent global harm sufficient for us to redefine the work and scope of reconciliation itself.
It strikes me that we cannot here begin to define precisely what the shape of a new and better global financial architecture can look like without those of you most committed to the work of reconciliation asking the following four fundamental questions:
Will the rapid advance of globalized finance and globalized markets, with the systemic integration of economies from the most advanced to the most primitive, give reason to reorient the perceived primary challenge of reconciliation away from the geographically local nature of wars and civil wars and their consequences?
Has this process of market globalization—of highly mobile capital and means of production set against the fixed immobility of states and mostly fixed mobility of citizens—in some way marginalized the state, and the power of the state, that requires reconciliation workers to think increasingly in post-national terms?
Is the corporation—in particular the multinational private corporation as well as the growing role of state-owned and state-controlled corporation the fulcrum for conflict resolution in ways that only states were a century ago? That is, have we reached a century in which the control of the behavior of large corporations is as seminal to human wellbeing as control of state actors was in the 20th century?
In what sense does reconciliation work increasingly require a morally-framed vision of universal citizenship with universal rights and duties incumbent on both human beings and corporate legal entities alike as the necessary teleological goal toward which we must aim?
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I wish I could give an easy set of answers to those questions, but I cannot. What I hope I have done today is encourage those of you who work with far greater skill, knowledge, and experience in the field of reconciliation to use these reflections to enlarge and orient the ambit of your work, scholarly and applied.
Prof. Kellman long ago insisted that we must learn to distinguish ontological needs from values from interests in order to seek negotiable goals in the work of reconciliation. It would seem to me that something like this work remains to be done across the entire range of economic questions that encompass not only our current economic crisis, but the roles and identities we draw from economic life itself. Perhaps the greatest challenge to liberal democracy in the 21st century lies in using the skills of reconciliation to re-appropriate from the economic not simply the means but the purpose of being human.
Richard Parker is Lecturer in Public Policy and Senior Fellow of the Shorenstein Center at Harvard Kennedy University.
