Introduction He knows he must vote always for the richer universe, for the good which seems most organisable, most fit to enter in complex combinations, most apt to be a member of a more inclusive whole…(1) About values This book examines the values essential to creating wealth, but we must first ask what values are. Only then can we appreciate how various cultures deploy and organize them. In our very materialist age we often think of values as things, as dollars in the bank, as diamonds around a neck. Yet values are not things at all, they are differences or contrasts in what our minds experience. Contrasts can be between alternative good experiences, between good and bad experiences, and between bad experiences. Contrasts between good experiences include deep sleep and refreshed awakening, competing and cooperating, the excitement of taking risks and the pleasure of becoming more secure as a consequence, patience and rewards, etc. Those who satisfy their self-interest find they are better able to care for others. If you give to others you will often receive love and gratitude in return. A good supplier gains happy customers. A show of courage may be the most cautious act you can take for yourself or others in dangerous circumstances. If you systematically doubt a proposition you can become more certain of it. Change requires a measure of continuity or we lose our bearings. Great ideals need to be realized. If you assert your rights peacefully and politely, yet insistently, like Gandhi and Martin Luther King, these are harder for democratic systems to ignore. Contrast between good and bad includes life and death, worry and relief, rich and poor, love and hate, joy and woe. The one has to be contrasted with the other for us really to appreciate either. The prospect of death can make every hour of life precious. To worry about someone we love brings a flood of relief when danger passes and a reminder of our need for each other. When we love others we may hate some of their actions. Few unloved children ever grow to full humanity, but nor do uncorrected children. The two work as one. William Blake wrote: ‘Joy and woe are woven fine, a clothing for the soul divine.’ It is when we deeply empathize with the pain and misfortune of others that we come to realize the pleasure and good fortune we personally enjoy. The British author once had to sit up all night with a drug addict whose baby had been born alive but died soon after. She had suffered hours of agonizing labour. The hospital could not find a vein that had not collapsed and so was unable to anaesthetize her properly. Although the baby cried they refused to show it to her. ‘It’s not normal,’ was all they would say. The author had sat up with his own wife in some pain from childbirth not long before, so the trauma was very real. Subsequently he went home and saw his own young son peacefully asleep and wept with sheer gratitude, so strong was the contrast. He had always taken his middle-class life and college education for granted. You have to visit hell to know what heaven is. Only those who encounter misfortune can appreciate their own good fortune When bad confronts bad we speak of a rock and a hard place, of the devil or the deep blue sea. We think of Sophie’s Choice – having to yield her son or daughter to be killed by a Nazi officer. Comedy has contrasting values bouncing off each other playfully and harmlessly. Tragedy has contrasting values grinding against each other in the agony of being unable to decide, for example, the complicity of a mother in her daughter’s death. If you failed to laugh at the comedy festival in Athens during the winter you would weep at the tragedy festival the following spring. Humour is first aid in averting tragic outcomes. Tyrants are notoriously humourless. That theatre is a mark of a moral civilization is no coincidence. But even these terrible dilemmas are not without their value. We learn that only a creative and transformative resolution can lift us out of such an impasse, of killing or being killed, or shooting first to make ourselves less vulnerable, of curbing civil rights to fight terrorism, or deploying nuclear weapons to ‘defend’ ourselves from the heat-death of the universe. Our values also resemble the humble traffic light which signals stop and go with colours chosen from contrasting ends of the colour spectrum, an example of culture borrowing from nature. What brings order to the flow of traffic is the difference and the movement, of green, to yellow to red and round again. The pattern is circular. We know that if we stop for others we can soon go ourselves. A light stuck on either red or green is not just useless but lethal. Angry motorists will run the lights and collide. Value lies in constant transition between the two, in being wise enough to encompass both ends of the spectrum and move back and forth.2 Cross-cultural understanding as a path to learning It follows that moving from one culture to another, from one set of values to another, allows us to encounter people very different from ourselves and to appreciate values as never before. What are clarified are not just their values but our own values. Indeed we may be barely conscious of our own values until these clash and contrast with values different from our own. This process forces our own values, previously taken for granted, into conscious awareness. Numerous nations have absorbed and assimilated very different values from those they were once used to. In East Asia, for example, Hong Kong and Singapore are much influenced by the British, while Taiwan and South Korea are much influenced by the USA. East and West have mingled in a way rarely seen elsewhere. Could this hold the clue to their competitiveness? While many of us have only one cultural context, they have two and can switch between them. Context switching may be vital to commerce in general since the views of producers and consumers, owners and operators, management and labour, leaders and led, centre and periphery are far enough apart to be considered opposites. Crucial to this equation are the values of diversity and inclusion. Diversity by itself is an extremely doubtful proposition. The Thirty Years’ War between Protestants and Catholics halved the population of Europe. The presence of Jews in Nazi Germany led to six million being murdered. Hutus (French speaking) massacred Tutsis (English speaking) by the million in Rwanda. Muslim fundamentalists currently run amok and many European nations are rejecting immigrants with mounting revulsion. Diversity on its own is like the broken traffic light. We need diverse persons and their ideas to be included or disaster befalls us. Unless we comprehend this strange infusion in our midst we will panic. Contrasting values must be joined and reconciled to make them virtuous. Polarized values are vicious in their mutual hatred. Yet our discredited politicians aid this polarization with their sterile jousting between ideologies. The irony is that those we reject could potentially make us whole, providing the missing pieces of the puzzles. Why immigrants succeed At a time when politics is wracked with opposition to immigration it is useful to explain why immigrants create so much wealth and why certain subcultures have been so valuable to their mainstream cultures. Some immigrants do end up in prison or become welfare claimants. Being different can break you or make you. Teams of diverse people do much worse when managed badly and much better when managed well.3 There is no cheap grace. But how can people subject to prejudice, racism and suspicion do better? A study conducted in Silicon Valley in 2000 found that one third of the Valley’s wealth, over US$ 58 billion in the currency of the time, was created by Chinese and Indian immigrants entering the USA after 1970.4 In Britain’s own industrial revolution one subculture of religious Quakers created forty times more wealth than their numbers warranted.5 They allowed women to chair their meetings, tithed themselves to pay for the education of apprentices and refused to doff their hats to anyone, but their strongest value was ‘my word is my bond’. This was enough to create much of Britain’s financial sector in a money culture where promises were often reneged upon. This book will show how values organized by cultures create, and sometimes destroy, wealth. The advantage of some subcultures, some minorities and those with very different values and/or skin colour is that they are different perforce, a condition they cannot change. They therefore decide to make a difference, to put products or services in the place of their personalities and see if these will help them to survive. They both cooperate with fellow minority members in tight networks of high trust AND compete with the mainstream culture. Immigrants bring to business a wider and more inclusive set of values than do the domestic elites that so often scorn them and subject them to prejudice. In the face of rejection minorities strive to participate. They meet exclusion with values of inclusion. They emphasize education and learned knowledge as a means of aiding their emancipation. Indeed the place of education in a subculture divides those who over-perform from those that under-perform. In America, Jews and Chinese, Japanese and Indian immigrants, tend to do better than their white American peers, both educationally and economically, while blacks and Latinos do worse. Diversity can help or hinder depending on whether you are included or rejected.6 Wealth creation as inclusive of all parties It is not enough for people in an economy to make money. This is because a great deal of money is made at the expense of other people. A community is only better off when it creates wealth, that is, when it generates more money among its members than they began with. If money has simply moved from one pocket to another then X may have outsmarted Y but no wealth has been created by that relationship. Competition is important but if this leads to a zero-sum game – wherein gains and losses total zero – then there is no gain for the society or the economy.7 For example, banks do not, for the most part, create wealth, although their lending facilitates this and may help industry. You must repay your loan with interest so there is a net transfer of money from one party to another. Banks are distributors of funds which help contributors to create wealth.8 If too much money is siphoned off in the distributive function industry will suffer and wealth creation will wilt. Permitting huge rewards to those who handle money is of very doubtful utility. So what does it mean to create wealth? Wealth is created when two or more parties to a business relationship end up with more value than they began with, having generated this between them. They began with some silicon sand and small pieces of metal worth a few cents at best and ended up with an intelligent silicon chip which could save the occupants in a car from being killed. Note that not only is the chip worth much more than its components but it has human purpose, direction and intelligence. Similarly a Rolls Royce engine with more than a thousand components is worth much more than the sum of its parts. But its real wealth-creating potential lies in what it DOES. It delivers power-by-the-hour and propels four hundred people thousands of miles to their destinations nearly every day. The contract may specify that it does this effectively. There is ‘surplus value’ left over at the end and the company, its suppliers, employees, customers and passengers all benefit. Wealth has been created. What creates wealth is the transformation of money into products/services and the transformation of these back into money via revenue received from customers. The wealth is generated by this transformation. No two coins have ever created a third coin and they never will. All those who are parties to a transformation share any gains. We will be calling these stakeholders. They have a shared stake in the success of industry and they need fellow stakeholders to excel at their functions. Ironically, manufacturing creates more wealth than almost any other business activity, while speculation in a world casino creates very little, if anything. When Britain and the USA were workshops of the world they prospered. Now that British manufacturing is only ten per cent of the economy and American manufacturing only eleven per cent, they grow fitfully and slowly, while China, to which their manufacturing has been outsourced, is growing three times as fast. Manufacturing tends to double its productivity every decade while cutting hair, drafting wills and insuring lives are services that remain much the same now as they were fifty years ago. What creates wealth are certain kinds of mutually beneficial relationships, not just relationships between diverse people but relationships between their diverse values. Suppliers are different from customers and want different things. Employees are different from owners, producers from consumers, managers are different from labour, lenders from borrowers and so on. What creates wealth is an inclusive relationship between diverse parties. Indeed the interests of such parties are not just contrasting but often opposite. The supplier wants the customer’s money. The customer wants the product or service in exchange for money and only when both are satisfied is wealth created. If a customer has a choice between eating and keeping warm in a cold winter then little or no wealth has been generated. Exploitation is usually zero-sum and cripples an economy even as it makes money for predators, so that tobacco products and high interest pay-day loans almost certainly destroy wealth on a massive scale. Another characteristic of true wealth creation is that parties benefit indirectly. It is because you have given more value to other people that you get more value for yourself. It is because you pay employees more that the best offer to work for you and are much more productive. It is because you train and develop your people on the job that they are more innovative and responsible and the very quality of their work repays your training costs. In the West we have been raised to believe that we should manipulate in our own self-interest. We try to pursue life, liberty and happiness as if they were quarries in some chase. The truth is that if we care effectively for others happiness will ambush us along the way. All important values are achieved by indirection, by committing ourselves to something in contrast to self-interest so that through reciprocity that self-interest is served. Unless we first encounter diverse people we cannot include their ideas. By first caring for customers it becomes much easier to make a profit. We succeed through their grateful contributions. Minority cultures which are inclusive create most meaning and most wealth This book examines nine very different forms of free enterprise, all of them effective in certain circumstances. It inquires as to how, when and why these succeed or otherwise. This includes minority cultures within nations, since it is often its creative minority that renders a nation prosperous. There is not, as many believe, one universal model of business success, pioneered by Britain and exemplified on a world scale by the USA. Rather there are multiple paths, some demonstrably more successful than others. It is not a question of simply identifying and adopting ‘the best way’, since all ways have some validity in certain circumstances and each has something to teach us. Moreover, we cannot just change our cultures like we change our clothes. These are deeply ingrained within us via our upbringing. We need first to assert where we stand and who we really are while taking other values on board. If values are differences then we need to recognize and respect those differences yet anchor them upon our own culture. Others differ from us and our own culture is the touchstone for all comparisons. This is why this book begins with the Anglo-American and Northwest European culture of capitalism. We must begin with where most readers are and how we have been socialized. Only if this is valued and understood can we move on to encounter others without fear. Each of our subcultures is less a rival than an extension of our repertoire, an additional way of engaging the environment. Particular cultures are suited to particular kinds of products and if we want to be more versatile we must try to master them all. We must strive to be at home everywhere, in a variety of climes. (1) William James, Essays in Pragmatism, New York: Haffner Publishing Co. 1949, p. 83.