The Age of Relativism

This idea has little chance of succeeding. It should be read as an optimistic work of fiction about an alternate reality.

Communism doesn’t work. It’s a great idea in theory, but it fails in practice. In simple instances, such as sharing pizza or chores, equality is possible, but as soon as we enter complex situations, equality fails us.

I sold more books than my neighbour.

 Why should he or she have the same income, home or possessions as me?

I am general secretary of the communist party.

Why should I receive the same reward as my fellow politburo members who carry less responsibility than me?

At a basic level, communism fails to incentivise people by appealing to their greed, and communist societies often experience corruption and oligarchy to compensate for this perceived gap between achievement and reward

I’ve previously written about the greed and short-sightedness of capitalism and it’s pretty clear it’s failing us. Capitalism isn’t very good at incentivising people to think long-term and to solve massive, low-profit problems. In fact, it is arguable capitalism thrives on serial crises and that it is more profitable, at least for now, to deal with the flooding and extreme weather of climate change than it is to address its underlying causes.

We need something different, and I think relativism might be the alternative we need. By balancing self and common interests, relativism works with human nature, rather than against it.  Before I get into why, I’d like to explore one other reason the capitalist system fails.

If I am a low-empathy, borderline psychopathic shareholder, who is interested in ‘winning’ at capitalism by acquiring the most wealth, who will I hire to run my business? Do I hire the empathetic CEO who operates by consensus and thinks about the common interest of employees and the wider community? Where is the profit in any of that? I’m more likely to hire a self-interested, low-empathy, borderline psychopathic executive, not only because I think those characteristics, which I share, are the markers of success, but because this individual is more likely to make difficult decisions that are contrary to the common interests of employees and the wider community if they will increase profit. And if this CEO is incentivised by having their accrual of wealth tied to my accrual of wealth, they will do whatever it takes to make me richer.

We are used to the idea of checks and balances in politics, the idea of peer review in science, appeals and assessments of law by higher courts in law, but in business the only check on abuse of power is industry regulation and shareholder review. Compliance departments and non-executive directors try to ensure corporations operate within the laws and regulations relevant to their industry, but with lobbying power vested disproportionately in the hands of corporations and wealthy individuals, the law and pesky regulations can often be changed. And many of the reprehensible decisions taken by chief executives don’t even go near the edges of regulation.

If a CEO decides to make 200 people redundant in favour of a technology solution, as long as proper process is followed, no law or regulation is broken. But those people might have had their lives turned upside down to add a few pennies on the dollar in profit. There is no way of checking the benefit/harm of a decision in the corporate world. CEO’s are the ultimate arbiters and they serve at the pleasure of their shareholders.

This is relevant to the concept of relativism because we trust CEOs and their boards to behave fairly, but as I’ve written before, the evidence suggests that trust has been misplaced, with CEO earnings now almost 400 times those of the average worker. If we can’t trust people to temper their greed, we need safeguards to do so.

Relativism is the idea that those at the top of a value chain should have a direct relational value to those further down. A CEO should have a remuneration package that is capped as a proportion of the remuneration of their lowest paid worker. The cap could be generous, let’s say 100 times that of the lowest paid worker, but it would align the CEO with his or her employees and prevent the most severe forms of exploitation of workers by those who would take a ridiculously disproportionate share of the fruits of their labour. The exact proportion of the relative ratio isn’t important at this point and it might vary by industry sector; establishing the principle of relativism and giving it life as an idea to be explored is what matters now.

In the public sector, employees might have their salaries tied to the chief executive of their NHS trust, or teachers could have their salaries proportionately linked to those of Members of Parliament. If pay rises are tied to the pay rises that CEOs or MPs give themselves, people with power might think much more carefully about self-enrichment because they would no longer be doing it at the expense of others.

What about the owner class of superrich, the billionaires whose wealth and lifestyles are so disconnected from the rest of the planet, but whose wealth is derived from the leveraged exploitation of the labour of others?

Well, if governments implement versions of relativism, ensuring there is a limit on the gap between executives and their employees, a natural outcome would be reduced dividends, because executives would still want high rewards, but they would be forced to reward their employees at the same time. Profit is the extraction of value from the productive members of a company by the non-productive owners of the company. If relativism reduces such extraction and ensures more of the value stays in the hands of the people who created it, that will be no bad thing.

Which is, of course, the biggest weakness of relativism: those in power with most to lose will attack it as a dangerous concept that threatens the capitalist system. In truth it doesn’t threaten anything but the growing disparity between rich and poor.

I think some version of relativism is a stepping stone towards fundamental economic reform that will be essential in the era of automation and AI. When production, labour, and technological advancement are the work of machines, no one will be able to justify inequality without appeals to divine right, modern day feudalism, or similar concepts of inherent privilege. Societies based on such justifications are necessarily rooted in force and typically don’t last.