The Hungry Spirit: New Thinking for a New World

by Charles Handy

  The meeting of self and others, of individual, or individual institution, and the community, is probably the most complex issue of our time. In the Anglo-Saxon world the individual is the starting point, but in Germany, and Japan and the Chinese sub-continent particularly, the community has traditionally come first. Both individual and community, however, have finally to meet in this modern world, in a compromise between freedom and commitment. Irishman that I am, I cannot live without others, but my life starts with me. I call it Proper Selfishness, the search for ourselves that, paradoxically, we often pursue best through our involvement with others. To be Properly Selfish is to accept a responsibility for making the most of oneself by, ultimately, finding a purpose beyond and bigger than oneself. It is the paradox of Epicureanism, that we best satisfy ourselves when we look beyond ourselves.

  The argument of this book is that, in our hearts, we would all like to find a purpose bigger than ourselves because that will raise us to heights we had not dreamt of. If the individualism which is at the heart of capitalism became redefined as this sort of Proper Selfishness society might become a better place instead of the beggar-my-neighbour world it seems to be. This new individualism looks beyond materialism to something greater. The freedom and the choices which capitalism and liberal democracy make possible do not have to be squandered on yet more things, but can be used instead to liberate more people to be as well as to have. No laws can make this happen, only a release of the human spirit, which I suspect is hungry for it, waiting only for such a Proper Selfishness to be fashionable and admired.

  Proper Selfishness is an optimistic philosophy because it believes that we are ultimately decent people. There is good and evil in all of us and it is only sensible for society to attempt to control the evil. But much of life is a self-fulfilling prophecy. If you think the worst of people and show it, they will often prove you right. If the systems we design are based on the principle that people cannot be trusted, then those people won’t bother to be trustworthy. On the other hand, if you believe that most people are capable and can be relied upon, they will often live up to your expectations. Optimists are always prey to disappointment, but life without hope is dismal.

  Charles Handy

  Diss, Norfolk, England

  PART A – A CREAKING CAPITALISM

  In this first part of the book, I explore some of the puzzles and worries of the capitalist societies, societies which are not working as well as we expected them to, and which are not working for the good of all. The market, competition and efficiency, all good things in themselves, turn out to have unintended side effects. Capitalism has proved itself superior to communism and to the more extreme varieties of socialism, but has failed, thus far, to convince that it has the complete answer to our desire for progress.

  ONE

  THE LIMITS OF MARKETS

  IN AFRICA, THEY say that there are two hungers, the lesser hunger and the greater hunger. The lesser hunger is for the things that sustain life, the goods and services, and the money to pay for them, which we all need. The greater hunger is for an answer to the question ‘why?’, for some understanding of what that life is for.

  In the capitalist societies, however, it has been our comfortable assumption, so far, that we can best satisfy the greater hunger by appeasing the lesser hunger. It has been mightily convenient to think that better bread, and a bit of cake to go with it, would make us all content, because governments and business together might be able to deliver on that contract. The consequence of such thinking is that money ultimately becomes the measure of all things, as Karl Marx warned that it would, with the market as its handmaiden. The more competitive we can make things, the better things we will have at a better price, the richer we all will be, and the richer the more content we should be. We can measure our lives in pound notes, deutschmarks or dollar bills, and then compare our scores.

  THE TROUBLE WITH MONEY

  Gordon Comstock, the central figure in George Orwell’s 1936 novel about poverty in London, Keep the Aspidistra Flying liked to adapt the chapter in the Bible that some people use at their wedding, the one from the Epistle to the Corinthians about Charity, or Love, to make it more apposite to the times. He replaced ‘Charity’ with ‘Money’ so that it read:

  Though I talk with the tongues of men and of angels, and have not money, I am become as a sounding brass, or a tinkling cymbal. And though I have the gift of prophecy, and understand all mysteries, and all knowledge; and though I have all faith, so that I could remove mountains, and have not money, I am nothing . . . And now abideth faith, hope and money, these three, but the greatest of these is money.

  Two generations later, including one world war and fifty years of unparalleled economic expansion, he might want to do the same. Money not only satisfies our material needs; it is also, more often than not, the measure of our success. Adam Smith rules OK, with his comforting doctrine that the pursuit of our self-interest will lead inevitably to the general good, thanks to an ‘invisible hand’.

  There is, indeed, good news in all that. We are all of us, even the poorest, much better off, in material terms, than our grandparents ever were. Money breeds creativity. Money also brings choice, and freedom of a sort. Today, anyone with any intelligence and a bit of get-up-and-go can make money. Gordon Comstock, Orwell’s hero, or victim, decided to renounce money and materialism on principle, and then found life to be degrading, disgusting and depressing. No way did the poor seem to be blessed, in his experience. Gordon settled, in the end, for a return to bourgeois values, symbolized by the aspidistra in the parlour.

  Money obviously does matter, but – except to a minority, and to those who haven’t got any – it doesn’t matter most. Teachers don’t decide to be teachers because the job will make them rich, which doesn’t mean that they are happy to work for inadequate salaries or don’t believe that more responsibility merits more pay. But money, however necessary, is not their scorecard of success.

  At one time I taught a mixed bunch of businessmen, civil servants, teachers, nurses and voluntary workers, who were all eager to learn some of the rather dubious but fashionable theories of management. I sent them off to spend days in each others’ very different organizations. The businessmen always came back amazed. ‘We discovered levels of motivation beyond anything we experience in our own companies, and yet these people work for peanuts.’ Odd. Had they never met actors, artists, teachers or nurses before? Seemingly not.

  My guess is that most of us know that there are more important things than money, as Aristotle pointed out long ago: ‘Wealth obviously is not the good we seek, for the sole purpose it serves is to provide the means of getting something else. So far as that goes, the ends we have already mentioned (pleasure, virtue and honour) would have a better title to be considered the good, for they are to be desired for their own account.’

  We can all nod agreement to Aristotle, who has an annoying habit of pointing out the obvious, but much of the world that we live in speaks only with the language of money. Everything now has a ‘bottom line’, even schools and voluntary organizations. Meeting our budgets is the new priority. Without money we feel impotent. All of us imagine that we could do with more of it, whether to spend, to save, or to give to others. Money has come to be the common denominator in our societies, and greater wealth the first declared aim of every government of every persuasion.

  Money, too, is the only thing that counts in that league table of nations, the GNP. If the product or the activity does not have a price it doesn’t get counted. By default, the means have become the ends. Money has ended up mattering most. Or so we say, or so our politicians think we say, when they solicit our votes, on the pretext that they will put ever more of those pound notes or dollar bills into our pockets. But there is an uneasy feeling in the Western world that all is not what we say it is. We have become the prisoners of our own rhetoric, of the money myth.

  Maybe, however, the greater hunger is not just an extension of the lesser hunger,
but something completely different. Maybe money is a necessary but not sufficient condition of happiness, in which case, more money will not help, if you already have enough. More central heating does nothing to make you more comfortable when you are already warm enough, although everyone in a cold climate needs enough heating to operate.

  That could be disturbing news for governments and economists, because it would mean that there really were limits to growth – not physical or environmental ones this time, but psychological and philosophical ones – much more difficult to deal with. How do you please the people when the promise of more and cheaper bread does not work for everyone? How can an economy grow unless most people want more bread, always and forever? More awkward still is the growing awareness that the market philosophy, the route to cheaper and better bread, and the principle at the heart of capitalism, has begun to throw up some worrying side effects.

  THE TROUBLE WITH THE MARKET

  Neither Adam Smith nor his successors, with a few extreme exceptions, believed that the whole of public activity should be left to the market. For one thing, a market system depends on a legal framework and a way of enforcing those laws. No one has seriously suggested that the police and the law courts should be run by private concerns for profit. None the less, the recent vogue for privatization suggests that we should push the market philosophy as far as it can go. There are dangers in that approach, dangers which can distort our priorities.

  Businesses live and die by the market. It is a wonderful discipline, giving out its automatic signals as to where shortages lie, or unnecessary surpluses. It is, with its built-in incentives and penalties, a spur to invention and improvement, but many do die in the process. Even big corporations seldom live longer than forty years, or deserve to. But schools, hospitals and welfare agencies cannot be allowed to die when they are inefficient, because there might not be any others nearby to replace them. Unlike businesses, the better schools cannot expand indefinitely, or they would, in their turn, almost certainly get worse. Creating market situations for such bodies tends to mean, therefore, that the best get less good and the worse get worse. Not what was intended at all.

  Forget the institutions. Think of the individuals. Markets are uninterested in products that cost more than the revenue they produce, or in customers who cost more to service than they pay. If society worked to strict market logic, those individuals whose skills were so poor that they could not add enough value through their work to cover their cost of living would be discarded. Should we then export them, or condemn them to death? The insurance principle which, either explicitly or implicitly, guarantees health care to the citizens of all the democracies should not, in strict market logic, take on as risks those who are likely to have expensive and incurable illnesses. Should AIDS sufferers therefore be refused treatment, or the old put at the back of the queue? Unregulated, buses and trains would not run to remote outposts, or would charge so much to do so that no one could afford to use them, thereby justifying the removal of the service. Markets don’t work where the human cost of failure is unacceptable.

  This is not to deny the critical role of the market in any developed society. The extension of the physical reality of the town centre marketplace into a key economic concept was one of the most fruitful developments in the history of civilization. But we should not be idolaters. The market has its limits, and its unintended consequences. It is only a mechanism, not a philosophy. It is clear that the disciplines of the market don’t work everywhere. In particular, they don’t work where the outcomes are either unpriced or unclear, and they don’t work where the supply is limited or rationed.

  It is not clear, for instance, how the outcome of a prison should be measured, partly because we haven’t made up our minds whether the purpose of prison is to punish, to deter, or to rehabilitate the inmates. Unless and until we work out what the purpose is we can’t measure the results. Without a clear definition of desired results, any market for prison management would have to focus on the one thing that can be measured: the costs or the inputs. But competing on costs does not necessarily guarantee the best outputs. The same argument applies to most public service institutions. Where outputs cannot be measured the competition has to focus on inputs, but the cheapest hospital or school is not necessarily the best.

  A limited, but desired, commodity creates the monopoly situation that all suppliers hanker for and customers fear. Some monopolies, however, cannot be avoided, usually because duplication or triplication of a facility, such as a pipeline, an electricity supply line or an extra research hospital, would be unduly wasteful and expensive. The cost of the extra resources would more than outweigh any benefit to be gained from the pressures of competition. In such situations a regulatory body steps in to make sure that the facility is made available to all who want to use it at a fair price for all concerned. The market, left to itself, would not work. But regulators are not all-wise and all-knowing. They themselves have a monopoly power which is not always exercised fairly.

  The difficulty lies in deciding where the market can be allowed to operate and where it would be harmful. Respect, not idolatry, is needed.

  Artificial markets don’t work

  In the early days of Gorbachev’s perestroika, when the first Russian managers arrived for a course at the London Business School, some of us joked that the Russians knew about costs and knew about prices, they just didn’t realize that the two were connected. Thinking about it, later, I realized that this was, of course, also true of all our own government activities – hospitals, schools, the civil service agencies and so on.

  The beauty of the market is that it connects prices with costs, which is why privatization is a good idea, but it only works if the customers know the prices and if they have a choice. Putting public utilities into the marketplace creates private monopolies until alternative suppliers arise, and an official regulator, no matter how determined or how clever, is not the same as a free choice for the customers.

  At the other extreme, offering a service free of price to the customer, as in the British National Health Service, but encouraging the doctors and hospitals to compete in an artificial internal market, is to substitute bureaucracy for customer choice. Any business that concentrates on its internal mechanisms more than on the customer is, ultimately, a bad business. Markets are great inventions but they work because they provide customers with a price and a choice. Leave either of these out and you end up serving the bureaucrats rather than the customer.

  Markets can lower standards

  The market plays to the consumer, but it is not always the case that the consumer wants or gets the best, even when the price is the same.

  Bringing competition into television in Britain, with 230 channels in place of 5, will almost certainly result in a lowering of standards as more broadcasters fight for the same pool of advertising money.

  University degrees in Britain are graded as First, Second or Third class degrees. The understanding is that a system of mutual inspection maintains a common standard, but the universities are competing for students and the temptation to apply less stringent standards and to award a higher number of Firsts in order to attract more students is strong, and, by all accounts, is not always resisted.

  In 1967, there were two courses in Britain offering the MBA degree in Business Studies. Thirty years later there are 120. Obviously the quality must vary, but the degrees are the same. There are two markets here. The immediate market – the would-be student – wants as short a course as possible, provided it has the right cachet. The ultimate market, the employers, is not always as discriminating as it would like to be because it is largely based on hearsay. There is a temptation to compress and to massage the courses to make them more attractive to potential students, as long as this does not deter the ultimate customers.

  Markets are now global

  The market is now international, global even, for certain products. The idea that the invisible hand of the market would work to ‘the
benefit of all’ must therefore also be interpreted on a global basis. It may be more efficient, in market terms, and therefore more profitable, to have your airline tickets processed in India rather than London, or your cars assembled in the Czech Republic rather than Stuttgart. But the people who will benefit the most are the workers in India or Prague, or the shareholders in New York, while the people in London or Stuttgart will only benefit indirectly from some possible tax on the profits.

  In Adam Smith’s far simpler world, those who lost out could still share in some of the resulting benefits to the community, could at least envisage, perhaps even meet, those for whom they had been forced to make a sacrifice. It may all be a win-win game in the end, but that depends on how large you think the playing field is. The world may be too large a playing field for people to comprehend. It is asking a lot of people to work for the good of humanity at large if it has to be done at personal cost. The global market can seem a cruel place, yet protection is only a short-term device.

  Markets can deepen differences

  The theory is that markets force everything to a common standard. Everything catches up with the best, or the cheapest, in the end. What seems to be happening, however, is that the markets for some products – computer software, films, legal services, sports stars – are now so huge, as a result of going global, that ‘the winner takes all’, as the title of Robert Frank and Philip Cook’s book aptly puts it.