Critical Fortune

ON OCTOBER 14, TWO activists of the British ‘civil resistance’ group Just Stop Oil threw tomato soup on Vincent Van Gogh’s Sunflowers at the National Gallery in London with the war cry: “What is worth more, art or life? Is it worth more than food? More than justice? Are you more concerned about the protection of a painting or the protection of our planet and people?” Coming close on the heels of a climate change protester smearing the Mona Lisa with cake in May—or Just Stop Oil activists gluing themselves to a reproduction of The Last Supper at the Royal Academy in July—it’s tempting to dismiss the circus as the ignorant recalcitrance of youth. Or even as the weaponisation of leftist philistinism. Except, it’s much more than either.

The cost of living crisis in the UK is acute and although Europe could freeze this winter, the next one is likely to be even worse, as the eco­nomic consequences of the Ukraine war play out more fully in 2023. Thus, it’s difficult to refute one premise of the tomato-soup throwers—that people are suffering—or the fact that Putin’s bloodlust is setting back clean energy ambitions not just behind Liz Truss’ blinkers. But if you asked the Van Gogh defacers how exactly folks could stay warmer by burning even less oil or gas, you shouldn’t expect arithmetic or plain logic in answer. That’s because the true casus belli for smearing the glass protecting Sun­flowers is not saving the planet from the evil effects of industrialisation but a notional hatred of the idea of wealth, not its reality.

By their action, soup throwers and cake smearers acknowledge that their targets are objects of value, at least in monetary terms, even if militant ac­tivism tends to have little time for aes­thetics. Art is wealth. Wealth belongs to the rich. Attack a symbol of wealth and you attack the rich who keep the rest of us poor. And since you can’t get at the real wealth—including private art collections where the best stuff keeps disappearing—of the rich, target the most valued possession of a public museum that has otherwise helped democratise access to art for the education and edification of what used to be called the masses.

Random story No 1 with a moral: In The World’s Banker (2004), Sebas­tian Mallaby recalls his attempts in 2003 to find out how the World Bank’s promotion of a dam at the source of the Nile at Bujagali had run into trouble with Western NGOs led by the International Rivers Network based in Berkeley, California. When he reached Bujagali, the villagers, both men and women, said the “dam people” had promised gener­ous financial terms that they were happy to accept and relocate: “The only people who objected to the dam were the ones living just outside its perimeter. They were angry because the project was not going to affect them. They had been offered no generous payout and they were jeal­ous of their neighbors.” This story, an archetype, is the fate of uncount­able development projects across the world: “This story is a tragedy for Uganda, since millions of Ugandans are being deprived of electricity—de­prived by Californians whose idea of an electricity “crisis” is a handful of summer blackouts.” The motivating factor on both sides—pro and anti-dam—of the local equation? Money. And those who have little or none of it often understand its value best.

The suspicion of money, or rather of wealth, was institutionalised in socialist India where the virtue of poverty was its own morality play. Let’s set aside the fact that the Bujagali story is replicated every day in the context of NGOs and development here. That the state could and would efficiently create wealth, despite evidence to the contrary, from the Nehruvian “commanding heights” of the public sector was a policy call whose ideological basis was not adequately questioned even after the liberalisation of 1991. That’s not to damn the vision of the first prime minister who, at a theoretical level, may have more than had his reasons given the overwhelming poverty in just-independent India and its need for rapid industrialisation, despite being—in fact, because of being—an agrarian economy. Damnation ought to rather visit those who taught a young nation to believe that money was innately dirty and possession of wealth immoral. Worse, there was no civilisational justification for such a cultural construct. And quite like the Ugandan villagers, the Indian poor never had a problem with money—except for the fact that they had none.

Random story No 2 with more than one moral: “By 1947, the [Japanese] public was again becoming interested in shares. The brokerage firms began to hire young salesmen (most of the old ones had been killed in the war) and these new recruits beat the proverbial bushes. “Buy a share instead of a pack of Peace” was their pitch. Peace was the leading brand of cigarettes, and a pack sold for 50 yen, which was big money in impoverished Japan. This chain-smoking race averaged one or two cigarettes per person per day in the early postwar years. Those who bought shares made a fortune; those who smoked presumably suffered the consequences.” (Barton Biggs, Wealth, War and Wisdom, 2008)

Biggs, more famously the author of Hedgehogging and a pioneering investment strategist who had identified the dotcom bubble but missed the looming crisis in 2007, observed that the capitalist instinct, the cult of equity and speculation were “deeply embedded in the Japanese psyche” which, combined with Douglas MacArthur’s “creative destruction” of old wealth, such as by confiscating and redistributing farmland, killed off all chances of a serious communist threat from within and made Japan a more equal society, a more stable polity, and richer than ever before. Something similar happened in post-war West Germany too, but the Japanese example is starker because it is rather unique. Post-war Japan belied an axiom of wealth: that in a crisis, a cataclysm, land is the only form of physical asset that matters since everything else that stands on it might be destroyed. MacArthur’s confiscation and redistribution of farmland, but not industrial or commercial land, remade Japan by re-energising the renewed creation of wealth. The Japanese accepted this so-called creative destruction just as they accepted the occupation because their cost-benefit analysis had long ago figured out the speedi­est route to survival and recovery. The business house working out of the family kitchen becoming a big multinational corporation may be a cliché but that doesn’t make it unreal. That’s why it was sad that India had to wait till February 10, 2021 for a prime minister to stand up in Parliament and say: “The cul­ture of damning businessmen and entrepreneurs as outright crooks… may have served parties well… in the past. But that has to stop. Wealth creators have a crucial role to play in the economy.”

Of course, post-1947 India didn’t have a monopoly on the suspicion of wealth and wealth creators. Ron Chernow, in The House of Morgan (1990) and The Death of the Banker (1997), recalls how, in response to JP Morgan’s casual remark “America is good enough for me”, a populist newspaper had retorted, “When­ever you’re tired of it, you can give it back.” That’s the universal hate-the-rich sentiment which, in India, was subsumed under a statist disparage­ment of the wealth creator. There’s a further irony here: this suspicion of wealth pertains to its conception as financial and physical assets distinguished by their innate or relative transactional value. That’s a mere quantitative idea of wealth which owes its origin as well as global preponderance to Greek ra­tionalism wherein, as in Aristotle’s Nicomachean Ethics, it was primarily an instrument of measurement. The Sanskrit artha, on the other hand, is a Chaturvarga or Purusartha and thus, an aim of life. Anything of value, and not just material wealth, constitutes artha and, therefore, it is both an end in itself and a means to another end—that of moksha. Nor can it separate itself from dharma (virtue) and kama (pleasure). The ethical question, raised after the Upanishads, is whether one pursues wealth as self-indulgence or for the greater good—and one need not cancel out the other—which takes us back to the debate on the necessity of wealth creation and the equitable distribution of wealth.

The ethics of the former may be con­tested, but the latter is not possible without the former.

THE SUDDEN disappearance of money—as a medium of exchange—is inconceivable and wouldn’t help anybody if it weren’t. But the destruction of wealth—liq­uid cash, moveable and immove­able assets—has been, and can be, real because there isn’t a law like the conservation of energy pertaining to wealth. So it’s imperative that there always be money in someone’s hand. In our ev­eryday, narrow view, without incentive one wouldn’t seek wealth and that incentive is to improve one’s material condi­tion. Competition is built into the pursuit. That’s not to ad­here to the trickle-down myth but to hope that it can still work for the fulfilment of that greater good in its impact on the political economy. Every crisis on the planet threatens accumulated wealth. The formalisation and increased sophistication of our systems don’t lessen that threat; the 20th century, which wasn’t all that long ago, has been the definitive proof of that. The last century’s abiding lesson is that every couple of generations, a calam­ity occurs that destroys accumu­lated wealth. While that wasn’t the Indian experience, it’s all the more reason why we should look back and look around to look ahead.

Earlier this month, the Interna­tional Monetary Fund (IMF), while keeping its global growth forecast for 2022 unchanged, lowered its projection for next year to 2.7 per cent, which is 0.2 per cent below the July forecast. An IMF analysis on Oc­tober 11 said: “The 2023 slowdown will be broad-based, with countries accounting for about one-third of the global economy poised to contract this year or next. The three largest economies, the United States, China, and the euro area will contin­ue to stall. Overall, this year’s shocks will re-open economic wounds that were only partially healed post-pandemic. In short, the worst is yet to come and, for many people, 2023 will feel like a recession.”

A crisis of the sort we are cur­rently in is likely to linger in one form or another, fracturing and multiplying and, at any given mo­ment, being really a permutation and combination of several crises. The worst is always yet to come. It’s not the fear of even a single tactical nuclear weapon being fired that could indeed escalate a localised conflict into a global conflagration or an energy and inflationary crisis compounded by the OPEC+ deci­sion to cut production. Economies that are doing relatively well, and India is a prime example, would do better to remember that it doesn’t take a lot to bring the house down. The contagion of southbound global sentiment is accompanied by the fact of increasing geoeconomic fragmentation. A world that had got smaller is fracturing and the odds are against its healing anytime soon.

If that’s the trajectory for the near-future, analysts would be challenged to pay equal attention to the movement of wealth at the micro level—which always makes all the difference. The preservation of wealth and continuous wealth creation are a necessity but compla­cency is the enemy of both. And a lack of perspective is the mother of complacency.

From $125 trillion in 2000, global household wealth had risen to $280 trillion in 2017, as per Credit Suisse’s Global Wealth Report (2018). Accord­ing to the 2022 report, aggregate global wealth rose to $463.6 trillion in 2021, a 9.8 per cent increase from 2020 and well above the 6.6 per cent average since 2000. The significance of wealth, both as a repository of resources to tap as well as invest­ment to help turn the wheels of the economy, becomes all the more pronounced in an emer­gency. The comparative perfor­mances of national economies and individual households during and in the immediate aftermath of the pandemic are the freshest instance. However, as with the 2008-09 global finan­cial crisis, hard times usually see attacks on the idea of wealth, which is counterintuitive since the only means of meeting a crisis of wealth is wealth itself.

Wealth per adult in India, ac­cording to the Global Wealth Report (2022), has risen at an average annual rate of 8.8 per cent since 2000. It’s an understatement to call that impres­sive given where we had started. And the average annual rate of growth of wealth per adult worldwide is 5 per cent in the same period. However, in total terms, at $15,535, India’s aver­age is well below the global mean of $87,489. We have come a long way but have much farther to go. Shedding the dead skin of defunct ideology is the key, especially since there’s trouble ahead.

critical timeNarendra Modiprejudicesprotestswealth creationWealth Issue 2022