Madoff & Cultural Change in 2009

Bob Jacobson (Total Experience blog) recently posted about the Madoff scandal, and I quote:

“In every culture, the battle of the classes is so intense it overwhelms ethical considerations. Every apparent ally is lauded by those who constitute the culture’s moneyed class — and when the fraud betrays the ideology of wealth, it is he or she who pays the price, not those who enabled them to play their predatory games by idolizing them.”

Our culture has enabled them at every turn, symbolically and materially, through a lionizing media, aspirational pop culture, and the continuation of a false American Dream we’ve been sold. We’ve lived the last two decades in an culturally inflated bubble that protected us from having to consider smarter alternatives.

But during the good times, Madoff worked his community hard. It is during the so-called “good times” that people overly trust, and when hitting the bear market, they need cash and start to ask questions. Madoff was trusted because he represented a class and way of life people aspired to. In the spirit of irrational exuberance, he was a credible investor. The fact that the Ponzi scheme was exposed just NOW is a positive signal. A 3-decade long scheme was exposed, which had to happen at some point. The sign of the times to notice is that the Madoffs (and Fulds and Princes) are getting flushed out, the times of inflated CEgOs are ending.

Madoff does not represent a tipping point toward more bad times, but calls (in investment terms) a “bottom” where investors get flushed out of the markets so a new cycle can start at the depths of pessimism. It is also a culturally symbolic bottoming, with its Jungian synchronicity of occurring near the winter solstice when humans observe the progressively diminished cycle of sunlight. We may see a few more bottom signals in the year to come, however.

These patterns can be seen as historical, and therefore repeating and repeatable. We’ve gone through these cycles before, in the Gilded Age before the 1900’s, the 1920’s before the crash and what we call the “Great” depression. With some analysis of these earlier cycles, we can see that values changes once the shift is big enough. Mentioned in the prior post,  The Fourth Turning (1996) refers to the last cycle as an Unraveling, ending in the crash of massive debt, just as in the prior Unraveling cycles.

Kondratieff (1926) observed these secular cycles in Soviet and capitalist culture, and named these same cycles after the seasons. The lionizing of the rich is inherent in the last cycle. The Crisis cycle follows an Unraveling, and values changes when the reality of the economic and cultural change becomes obvious and accepted across a large population.

We are seeing a such a shift in values already, and we will see an emphasis on sustainable living, workable human scales in economics and systems, humane enterprises, cooperative (and less cut-throat) markets. The Millennial generation was not invested in Madoff’s schemes, and because they have largely observed the crash from a distance (not as heavily invested as the Boomers), they may be able to draw their own conclusions about value and sustainable practice and investment. They will be inclined to invest their energies in the new energy, infrastructures, and new agricultural projects that will sustain their future and away from the corporatist hold on things.

Because these changes are secular trends, developing over and lasting for many years, they seem to assume a kind of destinal trajectory. Our collective expectation that things will change positively will help to create a new foundation of values. And while Millenials are rejecting the Boomer’s last legacy that led to crisis, the Boomers will also help lead the way out of the crisis. What else can we do?

Creative Capitalism for a Crisis Time

One of my doctoral committee members, Alex Pattakos, blogs for HuffingtonPost and wrote Meaningful Capitalism: Change We Can Believe In

In response to the article and some of the comments, I said:

Organizations pursuing meaningful entrepreneurship are not in strong evidence by the media. We ourselves should become the new news media that changes the emphasis on what gets reported. People learn from success stories, and the meaning of success itself is and will be changing. People’s values will slowly change as their society shows these shifts in many tangible and subtle ways.

We knew this collapse was coming at some point. Capitalism was already being referred to as “late” by many writers and thinkers, over the last decade or so. Most of us just did not know what to expect our how it would appear on our national and global scene. The Crisis time we’re in now nearly exactly matches the historical theory of Strauss and Howe’s 1996 book The Fourth Turning.  And because we are now in a Fourth Turning, a Crisis era, the times are compatible with Alex’s recommendation.

The crisis of capitalism should not be framed in the “greed” dynamic – there have been greedy exploiters since before the time of Draco. Certainly Kim Jong-Il can be seen as greedy. The corporate form is merely a modern organizational framework, and is a structure developed in response to laws and conventions. It can be changed. People bring their values to work and their organizations, and as Americans facing a new crisis and a new era, we need to take responsibility for the redesign of these institutions.