From predators to prosocial—tycoons’ positive role in the new economy
The social unrest throughout the world and the demand for social justice express prolonged frustration, particularly in the middle class and the less affluent portions of society. These classes bear the majority of the burden of the global rise in the cost of living and growing inequality.
The current economic crisis is aggravating their distress, and this is primarily seen in the PIIGS countries in Europe, but also in the U.S., albeit protests have also erupted in economies whose growth seems currently solid, such as Israel and even Germany.
With a globalized and interconnected world, even countries that enjoy a robust economy are affected by the crisis, and there is tangible dependence and mutual influence among markets. Another issue is that the fruits of economic growth have not been evenly distributed and the economic and social gaps have grown significantly in recent years. Millions of people are being pushed below the poverty line and even into hunger, with the middle class bearing the lion’s share of the tax burden working harder than before to make ends meet.
Wage erosion in the middle classes is pressuring families in the middle and lower classes, creating widespread resentment by the majority of people, usually referred to as “the 99 percent.” That resentment is turned primarily against governments and policy-makers, who are perpetuating the current economic system, which has brought them into this hardship. Primarily, criticism is turned against the finance industry, which plays a leading role in the global crisis, and toward the centralization of the market in the hands of a few, who are known as “tycoons.”
A tycoon is an informal name for a business magnate—a person who has reached prominence and derived a notable amount of wealth from a particular industry, such as banking, oil, or high-tech. In some cases tycoons are dominant in more than one industry. The word “tycoon” derives from the Japanese word taikun, which means “great lord,” and was used as a title for the shogun. The word was first used in English in 1857. Interestingly, according to Adam Goodheart, author of 1861: The Civil War Awakening, “Abraham Lincoln’s secretaries, John Hay and John Nicolay, used … a nickname for their boss behind his back: ‘The Tycoon.’” Since then, the term spread to the business community where it has been in use ever since.
1% of the World’s Population Holds 40% of the World’s Wealth
One of the reasons why the anger is turned against tycoons is the disproportionate level of centralization. Currently, 1% of the world’s population holds 40% of the world’s wealth. Such extreme centralization affects the stability of the financial system and the economic activity throughout the market, since the companies’ dominance affects public welfare, which is subject to ties and interests of the dominant firms, their strategies, and the priorities of a ruling few.
A study conducted by S. Vitali, J.B. Glattfelder, and S. Battiston of the Swiss Federal Institute of Technology tested the links of 43,000 international corporations. The study located a relatively small group of firms, primarily banks, which hold a disproportionate share of the global economy. The study, titled, “The Network of Global Corporate Control,” found 1318 companies, each of which had ties to two or more other companies. At the core of the network, the study found, members averaged “Ties to 20 other members. As a result, about 3/4 of the ownership of firms in the core remains in the hands of firms of the core itself.” Through their shares, the 1318 companies collectively held the majority of production and technology companies, which represent 60% of the global income. In recent years, the growth engines of those companies have been acquisition of even more companies resulting in perpetually growing corporations. At the head of the pyramid is a tycoon, who usually owns 20-30 companies, and whose favor the banks and other financial institutions pursue. Thus, the system supports the tycoons and encourages them to keep growing.
The economics of scale that helps tycoons reduce their costs also helps them in their competition against smaller businesses. By pushing smaller companies and manufacturers out of business, tycoons not only grow more, but increase their per-unit profit because now they can scale up their prices unintimidated by competition.
But can tycoons really be blamed for their behavior? In an environment of untamed and ruthless competition, their choice (if they want to play in the market) is to either be hunters or hunted. Yet, instead of blaming the system, we blame the people who use it best, forgetting that their skills and resourcefulness could be used favorably if only the economic system encouraged collaboration instead of competition. When you have a person at the top of the pyramid, be it a tycoon or a president, it is easier to put the blame on them rather than mend the system that created them.
For the sake of argument, let us assume that two babies are born on the same day, one to a king, and one to the king’s gardener. Can you blame them for being born into their respective families? Each person has a different starting point in life, not only in wealth, but also in schooling, environment, and so on. How can one determine which of them is more successful? There are people who succeed because of an inheritance that they received, or who came into their fortunes on their own. Here, too, fate plays a part.
As long as one’s manner of gaining wealth is within the accepted norms of that person’s society, there is no moral justification to demand of that person to share his or her fortune or relinquish it. It is impossible to demand social justice, and at the same time force the wealthy to donate more than others, provided they have paid the taxes they must pay by law. You can increase their taxes or regulate the centralization, but there is a long way between constitutional changes and regulations, and stripping the rich from their wealth.
The Criticism Is Not Without Merit
The criticism of tycoons reflects the criticism of the extremes to which capitalism has been taken—cultivating consumerism and extreme inequality, and compelling us to lead a life of stress and constant pressure as we pursue a never-achieved happiness from acquiring stuff. Studies indicate that people who focus on materialism tend to suffer from high levels of anxiety and depression. Tycoons have become a symbol of inequality; they are regarded as one of the causes for the perpetuation of the existing system. Neo-liberalism, which idealized individualism, free competition, and diminishing government intervention to the minimum possible, is what allows tycoons to utilize their natural gifts and increase their power and wealth.
Tycoons do not hesitate to act to maximize their personal benefit, but when a billionaire employs tens of thousand of workers at minimum wages, or subcontracts work to a factory in East Asia that employs people under slavery conditions, it arouses antagonism. The companies owned by tycoons are not altruistic entities. The state to which capitalism has evolved gives them permission and incentives to do all that they can to increase their profits and often exploit their monopolistic power to spike prices and maximize profits. As is well known, the ones who are hurt the most by this policy are the lower classes.
Also, as reported in the above-mentioned “The Network of Global Corporate Control” report, “Many of the top actors belong to the core. This means that they do not carry out their business in isolation but, on the contrary, they are tied together in an extremely entangled web of control.” This web of control allows tycoons to bind customers to them through engagements that exploit their customers. Moreover, they often use their ties to government institutions to promote their interests by employing lobbyists. Although greed is not unique to tycoons, they have more tools to realize it than others, with subsequently more adverse effects on society and the environment.
The global crisis hurt the business world in general and the tycoons in particular. The majority of their activities are heavily leveraged, having been financed with credit received from banks or institutional investors. When a business that tycoons purchase with credit (loans) cannot meet the debt with which it was bought, they do not hesitate to declare that they will not be able to fully repay their debt, and ask for the banks and institutional investors (where our pension money is invested) to partake in the damage.
In the short range this procedure causes great damages to many people, while the tycoons come out relatively unscathed. However, their financial wizardry is costing them heavily, tarnishing their public image and creating public pressure to restrain their power and regulate their actions. Some are heavily engaged in philanthropy, such as Bill Gates through the Bill Gates foundation, but for the most part that activity is perceived as a disguise and as inconsequential compared to their extreme wealth, clout, and the damages they inflict on the economy and the environment. Finally, the lavish lifestyle that many among the super rich have adopted arouses envy, or loathing, or both, but leaves no one indifferent.
Unjust Criticism toward Tycoons
There is a degree of dishonesty in the enmity toward tycoons and the desire to see them fall. We love to hate tycoons because we are not tycoons. In all likelihood, if I were a tycoon, I would defend with all my heart the economic and social system that allows for the emerging of tycoons, who are for the most part simply successful entrepreneurs. In fact, the American dream feeds on such rags-to-riches stories, and the hope to achieve that dream is what fuels the entire economic system. We hate tycoons because for them the American dream came true, and for us, it has become a nightmare, or at best, remains a dream.
Moreover, striving to destroy the tycoons’ businesses can destroy precisely those who fight them the hardest. For all their greed, tycoons provide work to hundreds of thousands of people. If they were to fall, all those whose livelihood depends on them would fall with them. There is merit to the demand of tycoons to sell some of their businesses in order to decrease the centralization of the market, but how will the buyers of the businesses behave? Will they be fairer to the public? Will they not be other tycoons who behave just like the ones from whom they bought the business? In fact, experience shows that sometimes the buyer actually raises prices and cuts jobs even more than the previous owner to boost profit, increase returns on the investment and repay the debt with which he or she financed the purchase.
Indeed, the question of the public’s approach toward tycoons has no simple answer. It is not a black or white issue.
Interdependence Affects Tycoons, As Well
We can argue about whether or not the system is just, but the facts are that the majority of people depend on tycoons for their livelihood. We need to understand that we are all in the same boat, the same economic system, in which we are all interdependent. Evidently, the current method is not ideal, and manipulations of powerful people and institutions have a lot to do with its faults, but we cannot upend the system altogether. Attempting to create social justice by destroying the tycoons will destroy the society that destroys them, and the first to suffer will be those who depend on tycoons for their livelihood—nearly all of us—because they’ll be out of a job.
In fact, arguing in favor of destroying the tycoons indicates incomprehension of the economic system. If, for example, everyone stopped buying in big chain stores such as Walmart, and went back to buying at local grocery stores, those mega-stores would fire their workers, who would then have no money to buy at the local grocery stores. In other words, before we demand any changes, we must understand that all the systems are interlinked. In a socioeconomic system based on mutual guarantee (where all are guarantors of each other’s well-being), no one will force anyone to relinquish one’s property or funds. Coercion contradicts the very spirit of mutual guarantee.
If tycoons do not make concessions of their own volition, and the concessions are not supplemented and complemented with education toward norms of mutual guarantee, the existing situation will only deteriorate. A forced solution will hurt our source of income because while that tycoon is getting richer at the expense of numerous workers earning minimum wages, they at least have an income. The tycoons and the employees are all tied together; they are codependent. If the tycoons go down, all who depend on them will go down with them.
The Solution—Evolution, not Revolution
While it is tempting to head out to the streets and yell out demands for justice, actually doing so would only worsen the situation. After all, when has destruction led to good results? From the bloody French revolution, through the 1917 Bolshevik revolution in Russia, and up to the 2011 revolution in Egypt, rarely—if ever—has a revolution begotten positivity. While the situation that emerged when the dust settled and the blood dried may have been better and more just than prior to the revolution, if humanity could evolve into new states instead of revolting into them, it would be better for all.
When tycoons feel unsafe, they simply flee to other countries where they are more welcome, as is the case in Russia today., This is not a desirable scenario. A change for the better can only emerge out of reconstruction of our relations, and the economic and social systems resulting from them. This must be done by provision of information and education. The shift from the current state to the desirable one must be gradual, without irresponsibly breaking the power of tycoons or of any powerful element in the market.
Because the required shift today is from perceiving ourselves as separate entities into perceiving ourselves as connected elements in a global interdependent system, a change of perception is the only possible solution. A change of perception is a gradual, extended process, which people must take time to absorb. The more we advance into the new perception of the world, the more we will advance in decentralizing the market and dealing with the rest of the problems in the market. However, it must be done with mutual consent, not by force.
Explanation, Education, and the Influence of the Environment
The demonstrations throughout the world calling for social justice, and the damages to the economy and to society from over centralization, inequality, and unchecked power of tycoons, have pressured governments into acting to reduce the centralization and the phenomenon of tycoons. Traditional means have been tighter regulation, structural changes in the market, additional taxes on the super rich and on prestigious brands, etc. But given the clout that tycoons have, it is unlikely that such measures will be fully implemented, if at all. Moreover, even if they are implemented, it is unlikely that they will lead to reduction in the cost of living, diminish the social and economic gaps, and ease the sense of social injustice.
Such regulatory measures are instruments from the old toolbox used when the world still consisted of separate entities. In today’s world, with the global and connected system where everyone depends on everyone else, instruments that facilitate competition cannot work. The key to a positive change lies in voluntary transformation—agreement sitting by a round table and discussing as equals, and provision of information and education to the masses. In an interconnected system, how can one exploit another? It would be tantamount to self-inflicted harm. But if the social norms become mutual consideration, mutual concern, social solidarity, and cohesion, the issue of tycoons will find its peaceful solution in no time.
Such a change is achievable, but only through expansive provision of information, intelligent use of the media, and an education system that will enlighten every single person, stress the importance of mutual guarantee, and give people motivation to contribute to the best of one’s ability, regardless of whether one is a magnate or an indigent.
When the desirable change takes place, people will perceive tycoons as parts of themselves. They will recognize the tycoons’ contribution to society. On the other hand, the tycoons will begin to behave responsibly toward society and the environment. They will willingly adopt the required changes in the new economic system, changes that include a more equal distribution of financial resources. Such a solution, which is based on transformation in perception through education toward mutual guarantee, is the only solution that is positive and sustainable.
Tycoons in the New Economy—from Financial Tycoons into Social Tycoons
First, it is important to note that in a mutual guarantee based system in the global and connected world, tycoons have their rightful place. The equality required in a harmonious society is not absolute equality, but relative and idiosyncratic, where each receives according to one’s needs and contribution to society. If a businessperson frequently travels abroad and needs a private jet to be more mobile and efficient, thus providing his or her many employees with work, than that person should have a jet. In such a case, it is not a luxury but a necessary work tool from which the entire society benefits.
In that sense, the tycoon will not sense that the financial benefits have been taken away. Quite the contrary, these benefits will now have social legitimacy. Even in a society where equality is the highest value, some will excel and earn more. The question is, What they will earn? Will it be billions in the banks? We have yet to see that such billions help anyone in the current crisis. Billions in the bank have also not proven to be a guarantee for happiness, but to the contrary.
Instead of money, a new motive will give people a reason to keep active and working even in a society of relative equality—the appreciation and approbation of society for the benefits that they produce for society. Tycoons will be able to realize their personal and business potentials since the majority of them enjoy not only the profits, but view themselves primarily as entrepreneurs, enjoying the action, not just the profit that it yields. In the new society, there will be mechanisms for advertising people’s contribution to society and expressing due gratitude, which will guarantee that the entrepreneurs are well rewarded.
Equal distribution of income is not a just act, because not all people are the same or have the same needs. If equal distribution were to be implemented, its harm wilould be greater than its benefit. Equality must remain relative, addressing not only the most fundamental needs of people, but also expressing a person’s contribution to society and efforts in society’s favor. People have a natural need to be rewarded for their work—both socially and materially. An equal income will hamper people’s motivation to contribute and cause a drastic rise in depression.
The mutual guarantee economy will bring about a drastic, though voluntary reduction of the socioeconomic inequality. Society need not and cannot make everyone equal by arbitrary division of income, services, or material resources. Instead, the solution, as mentioned above, is based on relative equality, where one receives according to one’s needs.
There will be a minimum standard of living, set by the state. That minimum will secure basic provision and allow for reasonable and dignified living according to one’s particular needs or the needs of one’s family, and in relation to one’s social environment. It will, however, always be a standard of living that is above the poverty line, which will be defined in a joint round-table type discussion. The equality will manifest in fairness of resource distribution and transparency of the system.
When we all live in a society that has made mutual guarantee its prime value, the values of tycoons will change as well—from wanting to control others and maximizing their personal gain at the expense of others into prosocial values of contribution to society. The magnates and moguls of society will be appreciated by society not because of their lavish lifestyles but because of their contribution to society and to the environment.
Utilizing the skills and abilities of tycoons for society’s benefit are what will turn the “social” tycoons into fulfilled and satisfied individuals, just as in a family where the prime provider enjoys his or her contribution to the sustenance and well-being of the entire family.
A Dream or a Reality?
The harmonious way of life we have described may seem unrealistic and far-fetched, but the global crisis caused by the competitive and individualistic nature of our current way of life, compared to the way we ought to live in our global and connected world will accelerate the change. And when the change occurs, we will see that our natural reflex to stick to the existing system despite its obvious flaws does not serve our interests, and that we have a chance to build a beautiful, harmonious, and sustainable reality where everyone, even (social) tycoons, have a rightful place.
 http://www.cbc.ca/news/business/story/2006/12/05/globalwealth.html, http://www.guardian.co.uk/money/2006/dec/06/business.internationalnews
 S. Vitali, J.B. Glattfelder, and S. Battiston, “The Network of Global Corporate Control,” Swiss Federal Institute of Technology (arXiv:1107.5728v1 [q-fin.GN], 28 Jul 2011)
 Ibid, p 5
 Kasser, Tim, The High Price of Materialism Cambridge, (U.S.A., MIT Press, Oct 1, 2003)
 Vitali, Glattfelder, and Battiston, “The Network of Global Corporate Control,” p 32