Business Plans For Entrepreneurs

Business Plans For Entrepreneurs Introduction In todays environment, the business plan is the entrepreneurs most important document when setting up a new business. Without the help of a well-designed and well- presented business plan the entrepreneur will find it very difficult to express its business goals or secure financing. Without a business plan, it is almost impossible for someone to take your business idea seriously or even consider investing in it. Because this thesis is about setting up a business plan for the start-up of a new kind of social network, we will first start with an overview about the concept business plan throughout the literature. In this literature study the term business plan is defined as well as the main functions of the business plan followed by an overview of the typical structure of the business plan. Furthermore, a problem discussion on the topic business plan in the literature is displayed. In the next part the main focus will lay on the composition of the financial plan. Subsequently, in the section Location Based Social Network a brief explanation is given about LBSN to give the reader an idea about what the business idea is all about. An entrepreneur willing to start his own enterprise stands before a lot of obstacles. Building up a company does not happen over one night. Theoretical framework Introduction There was a time that entrepreneurs only had to write a letter to propose their business idea and send it to some investors to secure funding. Nowadays, investors are far more demanding and expect a higher level of expertise and preparation from the entrepreneurs they choose to fund. Kleiner (2007), a legendary venture capitalist states that when examining a proposal, investors want to see much more than just a good idea and a bright young man or woman: they want to see a business plan showing that the concept has been thoroughly assessed and that the entrepreneur has carefully thought through the issues for taking the necessary steps of taking the idea and transform it into a successful company.  [1]   The emergence of the business plan The term business plan is a word that found its origin during the Second World War period. Back then it was mostly used to define the long term strategies of big firms. The Business Plan was a highly confidential document and was only exposed to a very limited audience. During the 80s the term business plan became more popular and it was then that the first articles appeared discussing the issues behind the business plan. From that decade on, the term business plan was mainly used to indicate the start-up of new and emerging companies. (Karlsson, 2005)  [2]. This may be the reason that when the term business plan is mentioned the first image that crosses peoples minds is the start-up business, which has not to be especially so because The Ernst and Young Business Guide (1987) points out that even established firms can have formal written business plans to determine or evaluate the accomplishment of business goals. Definition of a Business Plan The literature on the topic business plans is awash with information and offers a lot of definitions.. Essentially these definitions have all the same meanings. Abrams Barrow (2005) define the business plan as a roadmap to the companys targeted destination. Ideally, it enables the entrepreneur to get from the basic business concepts to a healthy, successful business. Barringer (2009) describe it as a written document that carefully explains every internal and external aspects of a new venture (Barringer, 2009, p. 1) The format of the business plan We can distinct three main factors throughout literature from which the BP structure will manly depend. To begin with, the format of the business plan will mainly depend on the purpose for which the BP is elaborated. For instance Barringer (2008) states that a BP established for a start-up company to investigate the feasibility of the venture may somewhat differ from that of a business in expansion that wants to evaluate the accomplishment of the business goals. For example, a start-up firm will not be able to dwell much about the companys history or past successes. Further, Mason and Stark (2004) argue that whether the entrepreneur is pursuing capital from a bank, a business angel or even a venture capitalist, the format of the business plan should be adapted accordingly. So we can conclude that depending on the firms level of development or on what purpose the business plan serves, i.e. to raise capital or for internal purposes, the emphasis on the topics will be different and the format of BP will vary accordingly. Functions of the BP The academic literature provides an abundance of information on the topic: functions of the BP. A single search with GoogleTM Scholar found 2.3 million hits for terms function* AND business plan*. After going through books and relevant literature we can differentiate internal as well external uses for the business plan. External purposes Raising finance: Most of the time when people think about the reason why a business plan is written, the first thing that pops up in their head is to raise money. It is a fact that most lenders or investors will not put money into a business without first seeing the actual business plan self. If the purpose of the bp is indeed to raise finance, its test will be how much interest it can generate from reviewers in as little time as possible and ultimately how much money it can attract from investors. Attracting Human Capital Zetterberg (2004) assigns another interesting external function to the business plan: it can also be used as a tool for attracting human capital. It is not uncommon that a potential employee wants to see the companys business plan before making a decision whether joining or not. Internal purposes It seems very unlikely that the sole purpose of a business plan is only that of a fund raising device. Instead, Abrams and Barrow (2005) argue that the business plan has a lot of intrinsic value. The authors of the Business Plan Guide Plan for start-up companies also support this theorem that while developing the business plan has chance to take advantage of two big opportunities: Marketing plan First of all, it gives the entrepreneur the opportunity to learn about the industry and the market. When writing a business plan the entrepreneur will have to go to the process of writing a marketing plan. This should give the entrepreneur some valuable insights in who the most important competitors are, who will be his main customer, and also facts about the industry like for example, the market restrictions, market size, and so on. Internal planning doc. Secondly it can be used as an internal planning document. Developing a business plan enables the entrepreneur to make the vital business decisions that enable the entrepreneur to focus on his activities and maximize his resources. Immers, while developing the business plan, one will increase the understanding of the many forces that have an impact on your businesss success, which in turn will give a stronger sense of control. Like for example understanding the financial aspects of the business including break-even and cash flow requirements. It is also interesting to note that a business plan can be used within different timeframes. First of all it can be used to determine the Viability of a Future Business Allen et al. (2006) describe the BP as a plan which can be used to develop ideas about how the business should be conducted. According to the authors, the entrepreneurs have, by investigating all the different aspects of the venture, such as finance and marketing,  the chance to make mistakes on paper rather than making them in the real world and refine their strategies accordingly. Determine/Evaluate the Accomplishment of the Business Goals Secondly, Schultz et al. (1987) point out that a business plan can be a retrospective tool, against which a businessperson can assess a companys actual performance over time. For example, the financial part of a business plan can be used as the basis for an operating budget, and can be monitored carefully to see how closely the business is sticking to that budget. In this point of view, the plan should be used as the basis for a new plan. After some time has elapsed, the business plan should be re-examined to see if the company has accomplished its business goals and if necessary needs redirection. To write or not to write a business plan / The relationship between Pre-start-up Formal Business Plans and Post-start-up Performance The opinions on the topic whether a business plan is a useful document or whether it is more a waste of time are not unanimous throughout the literature. Despite a lot of researches that have been conducted within this field, the findings from studies that examined whether there is a relationship between the pre-start-up formal business plan and the post-start-up efficiency of the company are not consistent throughout the literature. The word efficiency in this particular circumstance means that it has not been proved that the Business Plan will help a new venture in succeeding. Some studies claim that they found no relationship between a formal written BP and performance. For example: Does formal business planning enhance the performance of new ventures? (Lumpkin et al. 1998) This study examined the relation between planning and performance among 94 firms of which 54 new entrants. Results suggest that new startup companies who use formal written business plans fail to outperform those who dont. Of course there are a lot more factors outside writing a business plan playing a role in the future success of the firm. Initially raised capital, experience of the entrepreneurs, used business model, the age of the venture, are just a few to be named. Recent studies conducted by Lange et al. (2007) took all these factors into account and examined whether pre-start up business planning affects the subsequent post-start-up performance of the new enterprise. Their dataset contained 116 Babson College alums graduated between 1985 and 2003 that started a new business since graduating. From the results of the study it appeared that there is no difference in performance between new ventures that started with a written business plan and those who chose not to write one. Of course one could argue that the studied dataset has a few limitations. First of all the dataset only comprises ventures started by Babson College which is somewhat limited and will compromise the external validity. It will be difficult to generalize the findings of this study to the rest of the start-up ventures in business world. However, there are benefits at this bounded dataset: the respondents have similar educations. This will limit and take into account the influence from the independent variable, education. On the other hand the taken sample frame is randomized and longitudinal which will benefit the internal validity. This means that the research design allows to formulate a correct answer to the proposed hypothesis. From their findings Lange et al.(2007) suggest that unless a would-be entrepreneur needs to raise substantial start-up capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business. Instead, the authors suggest that entrepreneurs should make financial projections, especially cash flow. It means that they should look at expected sales revenue and operating costs including material, labor and capital assets and open their business. That advice implies that they should do business planning but not write formal plans before starting their businesses. Then, if their business grows and needs external funding, they will be able to write a business plan that is more persuasive. In contrast to the studies from Lumpkin et al. and Lange et al. , some studies have shown that planning does go together with the success and growth of new ventures. Ford et al. (2003) conducted a study of 800 randomly selected American nascent companies and found a significant positive correlation between the degree of business planning formality and financial results in year 1 and 2. Liang and Gartner (2005) found, they found that the chances for survival of ventures in an uncertain financial and competitive environment was more likely when they engaged in planning in the early stage of the start-up activities. And that ventures were more likely to continue their activities if they started to plan late in the stage of start-up activities in a certain financial and competitive environment. For now, we will leave the discussion aside whether causality exists between writing a BP and the success of the venture and move on to asking ourselves why so many entrepreneurs bother to write the business plan. Many business people or entrepreneurs defend that the time that is needed to produce a formal written BP, would be better spent on pushing the new venture forward instead of writing a plan that no one will read. (Allen 2006) This might be true if we take into consideration that the venture capitalist or the firms that provide finance to businesses receive piles and piles of business plans and have no time to read them all. In fact, very few entrepreneurs have access to formal venture capital at the moment they launch their businesses. Bygrave and Hunt (2004), for example, estimate that in the US, fewer than one in ten thousand new ventures has the privilege to receive their financial funds of a venture capitalist. This is very rare, especially for the USA which has more than two-thirds of the total venture capital in the entire world. This means that receiving capital from VCs is by far the rarest form of funding. So why then go so many entrepreneurs through the process of writing business plans if the main objective of their plan is to secure funding from a venture capitalist and they know that they will almost always come up empty handed? One of the reasons may be that other sources of financial funding such as banks, business angels, equity investors require written business plans too. Another explanation could be that they write the plan for internal reasons. Although writing a business plan is a very laborious task and it takes typically several weeks to finish it could avoid costly, perhaps disastrous, mistakes later thanks to the planning process that helps the entrepreneur think through things thoroughly. (business plan guide 4 start ups) Furthermore, it is a fact that if you want your BP to be noticed by investors, the chance is greater if you get a personal introduction, instead of approaching them on your own (Barringer, 2008). This is definitely the case for all businesses in China. If you want to look for capital, or even if you just want to do business, you will need Guanxi. Guanxi literally means relationships. Since Confucius set-out the basic relationship rules 2000 years ago this has become the basis for conducting succesfull business in China. The reality is that the majority of Chinese people wont trust and will not do business with people that are not part of their Guanxi. If you win the confidence of a chinese business relation, he will be part of your Guaxi network and will be happy to do business or introduce you to other acquintances or information sources, thus expanding your Guanxi network. Seligman (2005) points out that it has been generally known for centuries that businesses in China with a widely developed Guanxi network are more succesful than those with a limited or no network. We conclude that is not about having a good or a bad business plan per se to secure finance but more about knowing the right people. This is why startup businesses have the disadvantage over established firms because they may not have such contacts. Anyway, a lot of authors recommend to do write the business plan because for the internal and external value that lies within the plan. Abrams and Barrow (2005) state that a good business plan for a sound business concept not only helps achieving the business goals, it also lets you save time and money by focusing on your business activities, giving you more control over your finances, marketing, and daily operations, and helps you raise the capital you need. Or as Kleiner (2004), a legendary venture capitalist states: Even if you have all the money you need, you still need a business plan. A plan shows how youll run a business. Without a plan, you dont know where youre going, and you cant measure your progress.

The Importance Of Oil Price In Market Economy

The Importance Of Oil Price In Market Economy Oil price has become a fundamental factor of todays market economy as it influences financial markets as well as consumers, corporations and governments. Oil fluctuation has not only a tremendous impact over the stock markets but also a major influence on the global economy: oil is needed for industrial purpose such as power generation, chemical products, transportation etc. In particular oil demand and supply drive volatility and any upward or downward price movements is tracked by any financial market player as it directly influences future outlook and real growth of exporting and importing countries. Higher crude oil price implies higher price of energy leading to a slower economic growth, inflationary pressure, asymmetrical results on consumers and producers side and global imbalances. Oil scarcity and increasing demand of emerging market countries have changed oil market as well as political uncertainty leads to an increase in oil volatility. Since 2000, crude oil has experienced an incredible price rally, moving from $25 in 2000 to over $144 in July 2008 and getting back later December 2008 to $35. These huge price changes are mainly undesired because they increase uncertainty and undermine investment in oil as well as alternative energy sources. Even if we are getting more and more familiar with this price uncertainty or at least with oil price volatility, it is necessary to understand the key driver of this commodity in order to be able to conduct accurate studies and to forecast and prevent new worldwide market chock: there are mainly two different explanation to oil price behavior. The first one is related to the idea that markets are experiencing a structural transformation in oil price fundamentals; the second one is related to substantial speculation in oil market. The supporters of this second view argue that the massive oil crude price cannot be explained by simple change in market fundamentals but can be rather explained through a market distortion caused by speculators. This dissertation will investigate oil and the oil market players trying to understand the different price determinants and the interaction of key players: it starts with an historical overview of oil price and it successively analyzed oil as a commodity, oil as a financial asset, the role of expectations in the formation of oil price, the industry outlook for the next years, oil derivatives on the financial markets. Oil Fundamentals History Oil industry was born in the 1859 in Pennsylvania, United States when Edwin Drake opened the first oil well. The industry grew slowly during the second half of 1800 when the business pioneer George Bissell together with the banker, James Townsend, established the first oil company: Pennsylvania Rock Oil Company. The industry became more and more attractive and in 1870 John D. Rockefeller established the Standard Oil Company. Boosted by the introduction of the internal combustion engine and by an increasing energy demand caused by the outbreak of World War I, the oil industry became one of the foundations of modern industrial society, ready to overcome coal as the most used and requested energy source. As the graph points out the price of oil remained steady from the beginning of the century until the first energy crisis, risen by less than two percent per year. Spot crude oil price moved from $2.83 per barrel of 1973 to $10.41 of 1974. This increase in price was caused by the oil embargo proclaimed by the OPEC, Organization of Arab Petroleum Exporting countries in response to the U.S. decision to re-supply the Israeli military during the 1973 Arab-Israeli War, fought between Israel and a coalition of Arab states backing Egypt and Syria. The OPEC countries limited their production as well as the shipment of oil cargos to United States and other countries. The embargo led to quadrupled and extremely volatile oil price and it showed how high was the dependency of western economies from the oil reserves controlled by the OPEC members. Following the first oil crisis, in 1979 took place another sharp rise of oil prices following the Iranian revolution: the overthrow of the regime of Sha h Reza Pahlavi triggered a strong speculative movements of oil price. The price increased from the $14 needed to buy a barrel in 1978 to roughly $30 in 1979 causing a widespread panic and affecting geopolitical forces. Moreover in 1980, Iraqi invaded Iran leading to oil cut production of Iraq and a total stop of Iranian production. All these events strongly influenced oil price and demonstrated how pure supply and demand get overcome from sociopolitical facts. The so-called oil glut of 80s changed again the oil market environment as the price of the black gold fell from $35 to $15 in 1986 due to a falling demand, slowed economic activities in industrial countries and an increase in production. The crude oil price fluctuated between $15 and $25 until 1999. At the beginning of the new century the oil price increased exponentially and reaching $30 in 2003, it moved to $60 dollar in 2005 and peaked at $148 in 2008. This incredible ride of oil can be explained by different factor such as decreasing US Dollar value against other currencies, declining petroleum reserves, speculation, increasing demand from emerging market and OPECs lower than expected increase in production. But after reaching the peak on July, 11th 2008 the price declined consistently falling below $100 on September 2008. Because of the financial crisis world oil demand fell rapidly and in just a couple of months it touched the lowest point at $34. Until April 2009 oil price flu ctuated between $35 and $40 and recovered to roughly $70 in early 2010. Oil as a product People are more familiar with refined oil products such as gasoline, diesel, kerosene and heating oil rather than with crude oil. The basic oil refining process is distillation: crude oil is heated and oil products bubble off at different temperatures, the lightest at the lowest temperatures and the heaviest at the highest temperatures  [1]  . Afterward these products are treated further to make finished oil products such as gasoline kerosene etc. Gasoline is commonly used for cars while kerosene is widely developed for airplanes and households illumination heating. Diesel is widespread as combustible for tracks and agricultural machines while heating oil is mainly used for space heating. Oil this different refined products come from crude oil and even if crude oil is considered as a commodity, there are several qualities of crude depending mainly on two different chemical properties: density and sulphur content. Crude oil is therefore divided into heavy or light according to the density level and sweet or sour according to the sulphur content. Nonetheless, in financial market, the three most quoted products are: West Texas Intermediate Crude, WTI very high-quality, sweet, light crude widely traded in Nord-America Brent Crude a basket of 15 similar middle-high quality, light, sweet crude oils extracted in the North Sea Dubai Crude light sour crude oil extracted in Dubai Even though West Texas Intermediate Crude has the highest quality, Brent is used to price two thirds of the worlds internationally traded crude oil supplies according to the International Petroleum Exchange (IPE). Oil characteristics: Exhaustibility One of the leading feature of oil is that oil is a non-renewable resource as once it is consumed, it is no longer available. In particular once extracted, oil is consumed quicker that it is naturally produced: oil is therefore not replaceable within short time. Another very important feature is that supply of such as product is limited relative to demand. This two characteristics are essential to understand that oil can only be analyzed through dynamics models and that unlike standards goods, oil provides oil holder a positive premium known as scarcity rent. When demand for crude oil exceeds supply, oil price earns an economic rent due to its scarcity: in other words, it worth keeping oil underground waiting for increase in demand not covered by an increase in supply. The framework which is widely widespread regarding non-renewable resources is the Hotelling model: first introduces in 1931, the model questioned which is the amount of resources that should be extracted during a certain time frame in order to maximize the profit of the resource holder? Assuming no extraction costs, a risk free rate on investment equal to r and a certain price per barrel, according to Hotelling model, the optimum extraction quantity is the one that leads the price of oil to grow over time at a interest rate r. In other words, the resource holder has two opportunities: he can extract oil today or he can leave it underground waiting for a rose in price. Assuming that he decides to extract a certain amount today, he can invest the proceeds at a risk free rate r; otherwise, if oil price is expected to grow at a higher rate than r, the resource holder is not incentivized to extract oil. Thus, if all the resource holders behave the same way, it is highly probably that oil price will increase. Therefore, according to Hotelling models, the optimum extraction is the one in which oil price grows at the rate of interest. This model suggests and implies that oil price will increase over time: due to oils exhaustibility oil price must increase as fast as it is consumed. Even though Hotellings model is commonly used to predict the shape of oils trend, one of the most important Hotellings assumption is that the reserves of oil are fixed: as can be understood later on in the dissertation, oil reserves calculation is far from being detailed and exhaustive. Oil is extracted as well as found continuously: new reserves become continuously new available resources. Thus, an argument against the Hotelling approach is that it is not possible to evaluate scarcity rent and therefore it is not possible to use models such the Hotelling one which are based on this data. Demand and supply. As for any product, the main drivers influencing oil price are demand and supply. In the long term oil price is determined by the match of demand and supply; however, due to the peculiarities of oil, it is really difficult to predict future price: unknown future events, wars, natural events, OPEC decisions on cutting production and demand elasticity shape different demand-supply equilibriums. While price and income are demands main drivers, on the supply side it is necessary to take into consideration several factor such as reserves, oil depletion, technologies and oil cartel decisions. Oil Supply In January 2010, global oil supply accounts for 85,8 million barrels per day, out of which 51,6 has been produced by non-OPEC countries. There are different factors that are needed to take into consideration analyzing crude oil demand. Evaluating the supply is more complicated than evaluating the demand as there are different player involved, OPEC and non-OPEC countries and there is the central issue related to oil reserves level. First of all, exporting countries do not incur in any storages cost for crude oil as they can simply decide to leave oil underground while importing countries, in order to establish a minimum reserve level, need to built storage facilities. In regard to production countries, the most important and influential player is the Organization of the Petroleum Exporting Countries. While non-OPEC countries act competitively, OPEC is a cartel whose aim is to maximize revenues and profits. OPEC The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental organization founded in Baghdad in 1960 and at that time it encompassed 5 countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The founding members were later joined by nine other members: Qatar (1961- 2009); Indonesia (1962 2009); Socialist Peoples Libyan Arab Jamahiriya (1962); United Arab Emirates (1967); Algeria (1969); Nigeria (1971); Ecuador (1973); Angola (2007) and Gabon (1975-1994). Since 1965 OPEC headquarters is Vienna. It is interesting to highlight that the declared mission of the organization is to coordinate and unify the petroleum policies of member countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital to those investing in the petroleum industry  [2]  . In order to understand the relevance of the OPEC countries over oil market, it is important to quantifies to what extend are worldwide oil reserves in OPEC territories: at the end of 2008, world proven crude oil reserves stood at 1,295,085 million barrels, of which 1,027,085 million barrels, or 79.3 per cent, was in OPEC member countries. In 2008 OPEC countries produced around 33 million barrels per day of crude oil, or 45.9 per cent of the world total output  [3]  . Besides owing the largest oil reserves, OPEC countries have the lowest production costs: roughly $4.00 per barrel for Saudi Arabia or $ 4.50 for Iran, as compared, for example, with $9.85 for the North Sea and $12.50 for Brazil.  [4]   Non-OPEC countries Non-OPEC countries are generally considered as price taker and even though in the last decade oil price has grown consistently and observers would expects a proportional increase in non-OPEC supply, the response of oil producers countries outside OPEC has been weak. There are several factors that are needed to taken into account in order to understand this behavior: first of all it is becoming more and more costly to develop oil reserves in this countries and the level of technologies needed to increase or at least maintain stable the production output is really high and expensive. Moreover, price volatility has increased uncertainty, changing the risk profile of non-OPEC countries: they are becoming more sensitive to oil price cycle. Investment are therefore asymmetrical: during tremendous increase in oil price, investment are modest, while during a decrease in crude oil price investment rate in exploration or new technologies decrease consistently leading sometimes to underinvestme nt periods. In order to analyze non-OPEC countries oil supply, it is possible to use a model introduce by Marion King Hubbert in 1956. According to Hubbert model, known also as the Hubbert peak theory, oil production tends to follow a bell-shaped curve which can be divided in three different phases: the first one, the pre-peak phase shows a exponential growth in oil production; around the peak, the production reaches the maximum production level and the production becomes stagnant; in the following phase, the last one, oil production starts a terminal decline due to resource depletion. The peak is reached when half of the oil reserves has been discovered and used: in order to draw the bell-shaped curve, it is necessary to calculate historical cumulative production, discovery rate of new oil deposit and the size of the URR, ultimately recoverable reserves. The main idea of the model is in fact that oil is a finite resources and therefore, when discovery rate is less than the oil consumption rate, oil production starts inexorably to decline with all the related consequences on oil price. The bell curve is drawn considering both the cumulative production and the remaining volume of oil that will be produced as a percentage of the total oil already produced in past. As a consequence it can be used in order to calculate and forecasts oil production and consequently price forecasts. According to Hubbert, North America reached the peak point in 1960, while in United Kingdom and Norway the maximum has been touched in 1999. The limits of this approach are related to the difficulties to calculate ultimately recoverable reserves: improvements in technologies and discoveries of new deposits or higher exploitation of existing deposits are pushing the oil peak to the right. Instead of being static, ultimately recoverable reserve is a dynamic measure: underestimation or overestimation of oil reserves as well as higher rate of technological improvements lead to mistakes in calculation of the year in which world will reach the peak oil. Oil reserves A proper forecast of existing oil reserve is a fundamental aspect of oil supply as it is central to Hubbert peak theory. First of all, it is necessary to define the different type of reserves available: Proved reserves are crude oil reserves that once calculated, provide at least with a rate of 90% of certainty at least the oil crude amount estimated. This depends on how accurate are the geological researches Unproven reserves are crude oil reserves similar to proved reserves but for several reasons such as political or contractual are certain for a rate lower of 90%. Therefore unproven reserves are divided into probable reserves which are reserves that are certain for at least 50 % of the amount estimated and possible reserves which are unproven reserves that are certain only for a 10% of the previous amount estimated Given the different definition of oil reserves, it is very important to highlight that there is not a convergence estimation of oil reserves: several studies calculated different reserves level according to different study methods and according to the extent of proved and unproved oil definition. Another distortion of oil reserve calculation is due to the fact that exporting countries are willing to overestimate their reserves because higher are the reserves, higher is the quantity that they can sell or export. Moreover, higher are the reserves declared, higher are the loan that these countries can raise. There is another issue related to the difference between conventional oil and unconventional oil. Unconventional oil refers to the oil extracted using other techniques than the common oil well method such as biofuels, oil shale, oil sands etc. In addition to these, there are reserves of oil that are yet to be discovered but given the current level of technologies are too difficult to be reached and explored. It is therefore clear that oil reserve calculation is really complicated: according to OPEC annual statistical bulletin 2008, world proven crude oil reserve are estimated to be 1,3 trillion barrels out of which 79, 3% are maintained under OPEC countries ground  [5]  . According to the Oil Gas Journal  [6]  , in January 2009, proved world oil reserves were estimated at 1,342 billion barrels-10 billion barrels (about 1 percent) higher than the estimation for 2008; 56 percent of the worlds proved oil reserves are in the Middle East while just under 80 percent of the worlds proved reserves are concentrated in eight countries out of which only Canada and Russia are not OPEC members. According to BP Statistical Review Of World Energy of June 2009 proven reserves accounts for 1258 billion barrels, AGGIUNGI Oil Demand In 2009 the worldwide oil demand fell by 1.4 percent in comparison to 2008 due to the financial crises that invested mainly OECD countries: this was the biggest drop since early 1980s. During the previous period, 2003-2007 growth rate in oil demand averaged 2,0% per year, 0,8% faster than during the preceding 5 years and 1,2 % faster than it average since 1980  [7]  . Around 90% of demand growth during this period came from non-OECD economies. Indeed, OECD demand has been falling year on year since the end of 2005. Daily crude oil demand in early 2010 has reached 86.5 million barrels as the last quarter of 2009 has been the first quarter of demand recovery after 5 consecutive quarters of decline. GO ON Oil market volatility and elasticity Price elasticity to crude oil demand The relationship between oil demand and price can be analyzed looking at elasticity of demand: elasticity measures the relationship between the change in quantity of oil demand for a given change in oil price. As the chart XX shows, both short term and long term price elasticity of demand are really is low ranging from 0 to -0.6. Furthermore it is clear that short term elasticity of oil demand is even smaller with a range from 0 to -0,1. This means that change in oil price have a very little impact on long term crude oil demand an even lighter effects on short term oil demand. The difference between short and long term demand responsiveness to change in oil price is due to bigger rate of substitution and energy conservation in the long term. What is really important to notice is that oil demand may respond asymmetrical to changes in oil price  [8]  ; in other words there is a substantional difference of demand elasticity for either an increase in price or a decrease in price. For an increase in oil crude price it is expect a reducing demand, but it is not necessarily true that a decreasing oil price would lead to an increase in demand of the same measure: for example an increase in oil price can be exploited in order to invest heavily on innovation and new equipments that would increase oil production leading to a positive impact on price. Last but not least, there is another important aspect concerning demand elasticity that has to be taken into account: the responsiveness of oil demand to a new peak price is different to the responsiveness of oil demand to a price recovering  [9]  . It is possible to describe two different elasticity scenarios at different price levels: elasticity of demand during increase in oil price that lead to new price records, elasticity of demand during increase in oil price following a low point in price history As expected, some studies argues that higher responsiveness of change in oil price can be seen when oil price is reaching new records, while there is a lower elasticity for other changes in price level. Thus, to summarize, elasticity of demand is not always linear, it may respond asymmetrically to changes in oil price and it can be different depending to historical price level. Income elasticity of price crude demand Income elasticity of crude oil demand measures the change in quantity of oil demanded for a given change in income. As the graph xx points out, income elasticity is more responsive in comparison to price elasticity: the long run elasticity ranges from 0,4 to 1,4. Moreover there is an important difference between income elasticity of emerging market and OECD. Emerging markets shows higher income volatility demonstrating how important is oil in their production processes. Spare capacity A very important component and determinant of oil market is oil spare capacity, the amount of excess production that oil producers can bring online quickly. The volume of spare capacity is fundamental as it can be a driver of oil price: spare capacity is in fact utilized to balance excess of oil demand and it can be used to counterbalance temporary oil shock. In other words, spare capacity is a tool that offers flexibility to the market: the higher the spare capacity, the higher is the ability to absorb oil price shock or respond to unexpected increase in demand. Thus in the short term, spare capacity can be exploited to offset increase in demand until oil supply is adjusted to meet demand. As the graph points out , there is an inverse correlation between oil price and spare capacity: high spare capacity level is associated to weak oil price, while when spare capacity is low oil price is expected to be high or increasingly. Spare capacity evolution over years have dropped from 10 million barrel per day of the late 90s to less than 2 million barrel per day or 2% of global oil demand in 2004. In particular, the increase in demand not covered by an increased in supply of non-OPEC countries has been met by OPEC using also spare capacity and therefore diminishing them. As expected, during the credit crunch that took place in late 2008, oil price fell dramatically while the spare capacity increased reaching 6% of global oil demand. According to the International Energy Agency, OPEC spare capacity excluding Iraq, Venezuela and Nigeria, accounts for 5,54 million b/d.. in addition to this, other 5,8 million b/d are estimated to be producible by OPEC countries within 3 months. To sum up, it is clear the role of spare capacity in oil market economy: a relevant inventory allows to maintain the flexibility required in order to play an active role once an oil shock is predicted or strong is conducting price to new records. The key issue is whether it is possible in the current scenario to maintain or even increase spare capacity and which is the player that should take this responsibility. Should oil companies create bigger inventories, even if it is uneconomical from a profits maximization point of view to hold higher reserves than needed, or should national oil companies keep bigger reserves? Oil demand projections According to the World Economic Outlook of the International Monetary Fund issues in April 2009, global oil demand is expected to grow by 0,6% or 540000 barrel per day per year on average between 2008 and 2014. World oil demand will therefore increase from 85,8 mb/d to 89mb/d while in a more conservative scenario it is expected that demand will remain stable around 85 mb/d depending on how fast and how strongly global recovery will take place. Given the recent historical pattern of oil demand it is highly probable that non OECD countries will drive oil demand growth within the next future; oil consumption in OECD countries will tighten. Asia, Middle East and Latin America will increase their oil demand by 2,6%, from 38,3 mb/d to 44,6 mb/d over 2008 to 2014 on average per year while at the same time, OECD consumptions will declined by 1,1 from 47,5 mb/d to 44,4 mb/d. As the graph points out, by 2013 non-OECD oil demand will be equal to OECD oil demand. The growth in oil demand of non-OECD reflects higher GDP growth expected as well as higher income elasticity to crude oil. In fact in several emerging market, oil price is administered: in Iran for example gasoline costs just à ¢Ã¢â‚¬Å¡Ã‚ ¬0,8 per liter while OECD countries are usually more responsive to oil price changes Macroeconomic Variables Exchange Rates The relationship between exchange rates and oil prices is complex and it is necessary to note that generally when there is a depreciation of the dollar, oil price expressed in dollar increases. Being dollar the most widespread currency for oil price, a lower exchange rate of the dollar to another currency leads to a minor foreign currency cost of oil causing a rise in oil demand. This increase in demand put upward pressure on the price of oil. Having said that, it is not possible to estimate a precise relationship between oil price and the value of dollar exchange rate: all it is possible to say is that oil price moves roughly proportionally to change in dollar value ceteris paribus. Thus a 10% increase in nominal exchange value of the dollar causes a 10% decrease in oil price expressed in dollar, ceteris paribus. As the graph XX shows, the dramatically decrease in exchange value of the dollar since 2002 and the strong increase of WTI crude oil price in different currencies, would su ggest the inverse relationship between oil price and dollar exchange rate is true even if it is not possible to evaluate to what extent. Looking at the relationship between oil price and exchange rate, another important factor that should be taken into account is the decision of leading oil exporters: if dollar depreciates against other currencies, oil exporters international purchasing power declines. In order to protect their interest, leading oil exporters tend to tight oil supply, leading to an increase in oil price. Another issue that should be taken into consideration looking at the exchange rate is that United States is a major oil producer and oil consumer; an increase in oil price has therefore a double effect: it leads to a deprecations of dollar against the currencies of exporting countries and an appreciation against the currencies oil importing countries. Even if this two divergent movements of exchange rate should be cancelled out each other, in the last years oil imports of oil in the Unites States has soared causing a major concerns in the American capability to respond to and increasing trade deficit influencing negatively the value of the dollar. Interest rates The relationship between oil price and interest rate is not univocal as it is impossible to identify a singular and unique effect of changes in interest rate on oil price. Generally the correlation between these two data is inverse as a decrease of interest rates would lead to increase in price. On the contrary, a decrease of interest rates in order to recover from a financial downturn would lead to a decrease in oil price which would suggest a positive correlation. An explanation of the reason why there is a negative correlation is that an expansionary policy causes a cost reduction of storing cost for commodities goods, driving up the oil price. On the other hand, a change of U.S. interest rate will have an impact on the pegged currencies to U.S. dollar or to the currency currencies which are traded against the American one: too expansionary policy in the U.S. may not be proper to foreign central banks influencing foreign economic growth and consequentially oil prices. Oil price speculation or massive change in oil fundamentals? One of the main issue related to oil price is whether increasing volatility and rise in prices during the last decade has reflected a massive change in oils fundamentals or if market speculators played an active role in massive price fluctuations. In particular it is necessary to understand if the oil price reached the high ever level in 2008 due to growing flow of money in oil derivatives or due to enormous change in underlying fundamentals, supply and demand. An increase from $28 per barrel in early 2002 to over $100 per barrel at the end of 2007, heading to the record $140 in 2008 and then falling below à ¢Ã¢â‚¬Å¡Ã‚ ¬40 by the end of 2008 is the result of the burst of an energy bubble or it the natural evolution of oil price during a worldwide financial crises? In other words, it needs to be investigated if the strong increase followed by the collapse in oil price is a cause or a result of the main worldwide financial crises. As analyzed in the first part of the dissertation, oils demand and supply during the period 2002 and 2008 changed significantly: emerging countries such as China and India drove oil demand while at the same time, oil suppliers reacted slowly and they tighten spare capacity. Those that support oil demand a

gatillus American Illusions in F. Scott Fitzgerald’s The Great Gatsby :: free essay writer

American Illusions in The Great Gatsby    The American dream. Every American has his or her own ideals and preferences, but all share more or less the same dream. In The Great Gatsby, Fitzgerald explores what happens when this dream is taken too far.   What is one to do when the dream begins to overshadow reality?   What are the consequences when a successful man allows the dream to matter more than life itself?   Fitzgerald tells all through the hopeless Gatsby, idealistic Nick, and ignorant Myrtle.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Mansions, cars, jewels, and extravagant parties- what more could a person want? Gatsby had it all, yet he was still empty inside, craving more. All the riches Gatsby has mean nothing without his great love, Daisy. Gatsby strived to become successful for the sole purpose of capturing Daisy's heart. However, Gatsby's dream is an unattainable and hopeless dream for he can never win her love. Daisy and Gatsby live only miles apart, but their relationship is eons apart, as Daisy is already attached. Gatsby is pursuing "a transcendent significance outside of society and beyond the notability of history" (Lynn 180). Gatsby is dreaming "the American dream" that anything is possible, but the tragic flaw within him is that he is living in the past and cannot see the destructive future that lies ahead. Gatsby says, "I'm going to fix everything just the way it was before,... She'll see," and he does not realize that he cannot make it the way it was be fore (Fitzgerald 114). When Gatsby does get the chance to prove himself to Daisy, it is already too late. According to Fitzgerald, "the whole caravansay had fallen in like a card house at the disapproval in her eyes," (Fitzgerald 114). Gatsby's downfall is in the fact that he is unable to determine the fine line that divides reality and illusion in his life.   The green light at the end of Daisy's dock burns bright for Gatsby, but Gatsby does not realize that he cannot ever capture the light. He continues to dream blindly.   This is evident when Nick tells Gatsby that he cannot relive the past and Gatsby replies, "Why of course you can, old sport!" (Fitzgerald 116). Gatsby's dream of capturing Daisy's love is based on a fantasy of romance, but the truth is that Daisy is already taken and no amount of money or popularity can change that.

Modernism and New Criticism Essay -- Modernism New Criticism Literatur

Modernism and New Criticism The ways in which we define the importance of texts is constantly changing. We can look back and see critical theories used, such as Historical Criticism, Reader-Response Criticism and Psychoanalytic Criticism. Each of these theories offers a different way to interpret a text. However, when looking back over the texts of a specific era, shouldn’t the type of criticism we used for a book be based on that time period? Defining the Modernist Era of literature seems almost impossible, since the definition of modernism often seems to constitute anything from being â€Å"new and common† to â€Å"new and uncommon† (Barzun). This term seems to be able to stretch from the 1500’s to present; but for the sake of this essay the Modernist Era in question is that from the early twentieth century (circa 1910-1940’s). Out of, and during, this era the critical theory named New Criticism came into play. Although, nowadays, the use of New Criticism is unpopular, it is essential to use when defining the Modernist Era. Even though New Criticism isn’t used anymore, many of its basic constructs are. For example, the idea of close reading and using textual evidence (as will be done in this essay) are characteristics that were important to New Criticism. Now it is practically impossible to be in an English class, be it high school or college, and not have to use these skills when talking about a text. New Criticism basically theorized that the text itself was the most important aspect of writing; therefore, to understand the meaning of a piece of literature one must look to, and in, the text, rather than trying to define it by outside components, such as those used in Historical and Biographical Criti... ...120). The text itself is one we can always count on and find meaning in, since it always there, unchanging. Work Cited Barzun, Jacques. â€Å"The Artist as Prophet and Jester†. The American Scholar. 69.1 (Winter 2000): 15-33. Bressler, Charles E. Literary Criticism. New Jersey: Pearson Education Inc., 2003. Eliot, TS. â€Å"The Waste Land†. The Norton Anthology of Modern and Contemporary Poetry. Ed. Jahan Ramazani. New York: Norton, 2003. 472-487. Eliot, TS. â€Å"Tradition and the Individual Talent†. The Sacred Wood. London: Methune, 1920. http://www.bartleby.com/200/sw4.html Faulkner, William. Light in August. New York: Vintage Books, 1932. Thody, Philip. Twentieth-Century Literature: Critical Issues and Themes. New York: St. Martin’s Press, 1996. Tyson, Lois. Critical Theory Today. New York: Garland Publishing Inc., 1999. 117-152.

Medical Testing On Animals :: essays research papers

Animals have been used in medical research for centuries. Most of the animals used for research are rodents - rats, mice, hamsters and gerbils. Some dogs, cats and a variety of goats, ferrets, pigeons, monkeys and rabbits are also used .The struggle against this tyranny is a struggle as important as any of the moral and social issues that have been fought over in recent years. Animal rights are an emotional issue-second only, perhaps, to the bitter abortion debate." For decades the value of animal research has been grossly overrated. Although researchers have depended on animal test data to achieve medical advances, there should be other means of research because testing on animals is cruel, inhumane, and often unnecessary. The American Medical Association believes that research involving animals is absolutely essential to maintaining and improving the health human beings. They point out, that virtually every advance in medical science in the 20th century, from antibiotics to organ transplants, has been achieved either directly or indirectly through the use of animals in laboratory experiments. They also emphasize that animal research holds the key for solutions to AIDS, cancer, heart disease, aging and congenital defects. Lastly they insist that, the result of these experiments has been the elimination or control of many infectious diseases. This has meant a longer, healthier, better life with much less pain and suffering for humans. For many patients, it has meant life it self.However, there should be other means of research because the whole process of animal research remains cruel and inhumane. Animal rights activists have gathered a large amount of information that has closed down many laboratories that violate anti-cruelty statutes. In the past, research labs have had to be subsequently suspended due to animal cruelty. Reports involving horrifyingly painful experiments on monkeys and the filthy laboratories the animals must live in. Animals limited to living in tiny metal cages in which they can barely move. From the capture of primates in the wild, to the "factory-like" breeding of mice and dogs, to the confinement and isolation of cages - research is inherently cruel.Animal research is often unnecessary, history has shown that many important medical advances have been made by clinical research and close observations of human patients, not animals. There are countries that don't use healthy animals to train veterinarians or teach surgical techniques. In England they use only sick or injured animals and do most of their work on animal cadavers.

James Joyce Concept of Epiphany Essay

James Joyce concept of epiphany is one concerned with a move away from religious transcendentalism towards secular moments in which the subjective experience of the moment harks to a transcendental sense of belonging, awe or inspiration (Barry 2002). This is notably captured in two of his texts known as A Portrait of an Artist and The Dubliners. Using two examples taken from these two texts alongside critiques put forward by certain literary critics, we will attempt to analyse his concept of epiphany in relation to other significant literary devices that he employs. In Joyce’s text A Portrait of an Artist, the narrative can be viewed as moving away from the notion of an objective account of reality. This rejection of realism, prevalent in the realist novel of the early nineteenth century, results in a certain form of ambiguity that has come to define many fellow modernists. Divorcing from the associated omniscient narrative styles of the earlier periods, modernist writers began to take on a great range of new forms and styles, one of which being the employment of the epiphany formerly used commonly in religious writing (Bennet & Royle 2004). In A Portrait of an Artist, this acts in changing the perspective of reality that is being explored by the author, which is achieved through an indulgence of ambiguity rather than process of deduction. This ambiguity is captured in a vagueness in both the author’s narrative and the protagonist’s thoughts throughout the text. For instance, in one extract taken from the text expressing the thoughts of the protagonists direct experience, we can see this ambiguity turn into an epiphany that refers to the experience itself and acts in combining it with other subjective experiences. For instance, on reflection of his own reaction or response to the direct experience he is accounting for, the protagonist enters into the ambiguity of his own thoughts, stating that: ‘O how cold and strange it was to think of that! All the dark was cold and strange. There were pale strange faces there, great eyes like carriage-lamps. They were the ghosts of murderers, the figures of marshals who had received their death-wound on battlefields far away over the sea. What did they wish to say that their faces were so strange?’ (Joyce 2003, 59) In this extract we can see through the division of perspective and perception that the narrator is not observing, documenting or accounting for the experience of the protagonist. Rather, he is allowing the subject the freedom to recall the experience and, in doing so, transcend both the objective reality being accounted for and the form of the literary function. This allows the conscious mind of the character to question their own direct response and reinterpret the reality of the moment by way of an epiphany. This shift in perspective from the reality being charted by the omniscient observer to that of a reflective and ambiguous account being drawn out in the description of the experience itself is referred to by the scholar and critic Peter Barry. In his text Beginning Theory Barry suggests that this is ’the loss of the real’, that he warns can lead to legitimizing ’a callous indifference to suffering’ (Barry 2006, 89). However, this loss of the real is perhaps the antithesis of what Joyce is attempting to evoke in his concept of the epiphany. In essence, the loss of the real is something of an awakening of the transcendental marking the beginning of a psychological reality. This premise could perhaps be seen as a stream of consciousness that could be used to examine the transcendental connectedness between the people and members of a community on the basis of intellectual, as well as objective, reality. Through the techniques incorporated in this style of narrative it is possible to allow the reader to see the psychological reality of the character and have access to their experiences, making the relationship between objective reality and the subject a semiotic one. In this sense, the epiphany is a challenge to the reader. Furthermore, the transcendental reality that it refers to is also secular, as it refers to the subjective experience as the catalyst, rather than any form of divinity as a measurement. In Dubliners, we can see that the premise of Joyce’s city is based upon the idea of nationalism and modernism that was prevalent throughout Europe at his time of writing. This nationalism is personified in the city, which acts as the source of experience and reflection. In many ways, this may be understandably regarded as the replacement for the transcendental God at the heart of religious epiphanies. This is because the object of the city is given as being in natural sync with the individual‘s subjective experience. Essentially, it is the catalyst for the individual’s semiotic relationship with the world and the source of their reflection. Essentially, the city, or city life, is the source of this transcendental epiphany, which makes it a very different environment to the objective and macabre city of some of Joyce’s contemporaries. In one extract, Joyce reveals this transcendental moment and how it combines with other experiential referents through the means of the epiphany. He states that: ‘Walk along a strand, strange land, come to a city gate, sentry there old ranker too, Tweedy’s big moustaches leaning on a long kind of a spear. `Wander` through awned streets. Turband faces going by. Dark caves of carpet shops, big man, Turko the terrible, seated cross legged smoking a coiled pipe. Cries of sellers in the streets. Drink water scented with fennel, sherbet. Wander along all day. Might meet a robber or two. Well, meet him. Getting on to sundown. The shadows of the mosques along the pillars: priest with a scroll rolled up. A shiver of the trees, signal, the evening wind. I pass their dark language. High wall: beyond strings twanged. Night sky moon, violet, colour of Molly’s new garters. Strings. Listen. A girl playing one of those instruments what do you call them: dulcimers. I pass.’ (Joyce 2007, 124) In this extract, we can once again see this shift away from any objective detail and move towards a reflective and subjective account of the experience. Joyce describes the city in relation to the referential meaning of each individual sign as the protagonist combines the account with their experience. This subjective and fluid account of the environment and its many innate objects is then transcended via the epiphany of the experience without reference to any God. Rather, it is the relationship with the city that evokes such the depiction and seemingly alive narrative. Referring to this detail, literary critic Raymond Williams states that: ‘In Joyce, the laws and the conventions of traditional observation and communication have apparently disappeared. The consequent awareness is intense and fragmentary, subjective primarily, yet in the very form of its subjectivity including others who are now with the buildings, the noises, the sights and smells of the city, parts of this single and racing consciousness.’Â   (Williams 1973, 1) It would appear that Joyce is conscious of his use of the concept of epiphany. It would appear that in applying it in a secular manner, he is rejecting the notion of a God or objective transcendental truth. It would seem that this is because Joyce believes that it is the experience itself and the reflection rather than response of the individual that can awaken the transcendental realm and semiotic reality that lies within experience itself. Essentially, without the notion of the epiphany, the narrative would be veering away from the truth of experience itself and would negate the very social and relative apparatus that constitutes our being. Bibliography Barry, Peter. Beginning Theory: An Introduction to Literary and Cultural Theory Manchester: Manchester University Press, 2002. Bennet, Andrew. & Royle, Nicholas. Introduction to Literature Criticism and Theory Harlow: Pearson Education, 2004. Joyce, James. A Portrait of the Artist as a Young Man London: Penguin Classics, 2003. Joyce, James. Dubliners Oxford: Penguin Classics, 2007. Williams, Raymond. The Country and the City London: Chatto & Windas, 1973.

Humanities of Hamlet Essay

The humanities, like most academic disciplines, face questions of popular and public perception. The sciences, for instance, increasingly attract challenges, sometimes of dubious validity, from passionate advocates of so-called ‘deep ecology’ outside the academy, and from postmodern science studies within it. Educationists worldwide face growing discontent with the quality and character of public education. Anthropologists fend off endemic charges of political incorrectness while struggling with the possible demise of their discipline. The fine arts have become inured to occasional ugly public confrontations and persistent bland dismissal by majority opinion. The humanities, it seems, are not alone in feeling the need to clarify their relations with the public. Some of the needed elucidation is trivial, but deserving of wide public dissemination, debate and consideration: for instance, the vocational contribution of the humanities is often misunderstood. Other matters are more fundamental. They have to do with understanding the value of the humanities in relation to the cultural formation of human beings. In South Africa the humanities stand in particular need of winning broader public acceptance and support because they are repositioning themselves in what is in significant respects a new country. Internal scrutiny and revision need to be accompanied by renewal of public understanding, both with regard to potential recruits to the disciplines (students and their parents, for instance) and in terms of the value placed on the humanities by employers and decision-makers in society. Vocationalism Let us begin with the trivial. It is often said that the university is the natural home of those who seek answers to the big questions. Well, here are some big questions: The science graduate asks, ‘Why does it work? ’ The graduate in accounting asks, ‘How much will it cost? ’ The management graduate asks, ‘When can you have it ready? ’ The humanities graduate asks, ‘And will it be French fries or a jacket potato? ’ The apocryphal charge here is that the humanities are all very well, but they don’t put supper on the table. They don’t lead to satisfying and lucrative careers. This is a very common public perception, especially in South Africa where the newly enfranchised middle classes are keen to  consolidate their financial position, while those who anticipate the pressure of redress and affirmative action policies want blue-chip international career qualifications to protect them from policy-weighted competition. How valid is the perception? Confronting the issue in their own particular context, the Social Sciences and Humanities Research Council of Canada set out to demonstrate to society at large, and those who carry weight in the central economy in particular, that the humanities are in fact a good social investment. The Council commissioned a well-respected economist from the University of British Columbia, Robert Allen, to study the impact of investment in the Social Sciences and Humanities on the country’s economic viability in the global arena. He produced two reports (Allen 1998, 1999), and some of his key findings were as follows: Graduates in humanities and social sciences readily find jobs and generally earn high incomes (according to data obtained from Statistics Canada) The unemployment rate among university graduates in humanities and social sciences aged 25-29 is significantly lower (5.8%) than the unemployment rate among graduates of technical, vocational or career programs (findings based on 1991 census data) Most graduates in humanities and social sciences are employed in a professional or managerial capacity (50-80%). That is compared to 60% of counterparts with university degrees in commerce and 23-35% of individuals with technical or vocational diplomas Cost-benefit analysis shows the rate of return to society as follows: Education (10%) Social sciences (9%) Engineering (7. 9%) Humanities (7. 8%) Maths and the physical sciences (7.4%) All university programs analysed in the report in terms of their costs and benefits yield a social rate of return that exceeds the real interest rate in Canada today. These economic analyses were accompanied by other measures. For instance, in support of the findings, a meeting of 15 chancellors of universities in the province of Ontario issued a statement on the value of the Liberal Arts: The liberal arts and sciences must continue to be a seminal part of Ontario’s higher education. This is a practical idea as well as a philosophical one. A number of recent studies have clearly underlined that a well-rounded, general education – learning to think, to write and to express one’s ideas clearly – is as valuable to future employability as technical or technological training. (http://www. trainyourbrain. ca/english/supporters/chancellors. html) Perhaps carrying more weight in relevant quarters than the views of the chancellors (which might, of course, be interpreted by sceptics as merely selfserving conservatism), was an associated statement put out by 30 CEO’s of leading Canadian Hi-tech companies in which they affirmed, ‘We stand with the chancellors of Ontario’s universities. Their document urges: Yes, this country needs more technology graduates, as they fuel the digital economy. But it is impossible to operate an effective corporation in our new economy by employing technology graduates alone. We have an equally strong need for those with a broader background who can work in tandem with technical specialists, helping create and manage the corporate environment. A liberal arts and science education nurtures skills and talents increasingly valued by modern corporations. Our companies function in a state of constant flux. To prosper we need creative thinkers at all levels of the enterprise who are comfortable dealing with decisions in the bigger context. They must be able to communicate – to reason, create, write and peak – for shared purposes: For hiring, training, managing, marketing, and policy-making. In short, they provide leadership. (http://www. trainyourbrain. ca/english/tools/ceo. html) Clearly, these CEOs are no apologists for irrelevancy, ‘fuddyduddy-ism’ or aristocratic, leisure-class values. They are arguing in the best interests of their companies, as part of a concerted campaign to counter popular misperceptions concerning the value of the humanities to the Canadian economy. What about South Africa? This is no doubt heartening for advocates of the humanities; but that was Canada, this is South Africa. In the years immediately following our transition to democracy, Canada was ranked first in the United Nations’ Global Human Development Ratings: South Africa stood at ninety-third (Africa Institute 1996: 24). 1 Might there be grounds for comparison? Would similar findings emerge here? The late Jacob Bronowski, well-known for his contributions to the public understanding of science, put forward with admirable lucidity his view that the kind of society humanity seeks to create is identical with one which enables the work of science (and the arts) to proceed. He writes: As a set of discoveries and devices, science has mastered nature; but it has been able to do so only because its values, which derive from its method, have formed those who practise it into a living, stable and incorruptible society. Here is a community where everyone has been free to enter, to speak his mind, to be heard and contradicted – – The society of scientists is simple because it has a directing purpose: to explore the truth. Nevertheless, it has to solve the problem of every society, which is to find a compromise between man and men. It must encourage the single scientist to be independent, and the body of scientists to be tolerant. From these basic conditions, which form the prime values, there follows step by step a range of values: dissent, freedom of thought and speech, justice, honour, human dignity and self-respect. Our values since the Renaissance have evolved by just such steps. (74-75) Let us accept, for the sake of argument, Bronowski’s idealistic description of science and the community of scientists, and fully acknowledge the tremendous achievements of science, associated with the pursuit of these values. For all its omissions and exclusions, the kind of society portrayed by Bronowski is attractive both to those who adhere to creative exploration as a primary human motivation (mainly the well-to-do), as well as those for whom the increasingly widespread satisfaction of basic human needs is of primary importance. Yet can it plausibly be argued that the stable, ordered society science needs to make its optimal impact will result primarily from a concentration on science or, more mundanely, on maths, science and technology in general public education? Science (as opposed to scientists) has very little to say about how human life should be lived, even by implication. Secondly, the serious pursuit of scientific knowledge has always been a minority undertaking, and the delicious puritanism celebrated by Bronowski is undermined at every point by human nature. Truth-seeking is compromised by self-aggrandisement, lack of initiative, cultural dissonances, wayward appetites, untoward psychological complexities, sloth, factionalism, poverty, dogmatism and stupidity – all the regrettable variations that complicate (and embellish) human experience. Material progress alleviates some of these features and aggravates others, but in all societies, the true scientific proclivity is a minority interest, even among those equipped merely to make use of scientific findings, and who rely on them in their daily work and other interests. Bronowski has, in important respects, got it wrong. Science depends for its very survival upon the creation of a society which respects the values of science and permits them to thrive, and that can only be a society in which the values of the humanities have taken root, are constantly reviewed and renewed, and are shared by the overwhelming majority of the citizenry. It could plausibly be argued that this country needs the humanities even more than a society like Canada. Consider, as one example, the AIDS crisis in South Africa: the belated response to the situation, the culpable delays, the fatuous controversy over antiretrovirals and their provision to sufferers. Is this crisis the result of scientific failure? No, the science is there. The crisis has been the result of poor leadership, political obfuscation, power-plays, cultural regression, lack of social integration and poor, under-trained governmental bureaucracy. Similarly in the local government environment: it is not paucity of maths and science education that challenges programme delivery; it is the poverty of middle-order leadership, the inability to delegate effectively, the lack of initiative and capacity in ordinary civil and bureaucratic functions. The planning is often in place, but the general level of education and its social orientation is inadequate to make effective use of it. In addressing such shortcomings a key misapprehension is the assumption that because the country is desperately short of scientists and technologists, maths and science must be an absolute priority in our schooling system. This is to mistake the part for the whole. The fact is that many children – not only South African children – because of innate disposition, home background or poor education, are light-years from the possibility of attaining a marketable competence in maths or science2, yet they may be highly intelligent and suited to a great many useful, even exalted, functions in government and the economy. Given good teaching, they can learn to think well and searchingly about deep issues that plague contemporary society. It does not take profound mathematical understanding to read a balance sheet, or even to lead a large corporation. Statistical projections, financial control and scenario-planning are service functions, not necessarily leadership tasks. Yet the myth is steadily propagated that mathematical intelligence, more so even than scientific literacy, is what South Africa needs. This is a harmful distortion. Of course we need mathematicians and scientists, as many as we can produce, but unaided they will not be able to deliver the kind of society in which we all want to live. There are no scientific solutions to the problems of underdevelopment and civic education, only important ancillary contributions. Science functions optimally in a democratic, relatively stable and wealthy society. On its own, science is powerless to create such conditions. These conditions are attained and sustained, not through science, but in societies that are absorbing at depth the lessons of the humanities. People want to believe that because science and technology are integral to modern developing economies, such economies will develop if only sufficient emphasis is placed on maths and science in the education system. In fact, the sequence has to be reversed. The conditions of stable governance, effective bureaucracy, adequate infrastructural maintenance, basic skills development, and responsible social services are pre-conditions for the adequate functioning of a scientific and technological culture. Well-educated scientists obviously acquire and exercise their civic imaginations in support of such conditions, but it is more than likely that the products of an education system that marginalizes or travesties the humanities will fail both science and society. The upshot of this realization, if decision-makers could be persuaded to look it in the face, implies, not a down-grading of the emphasis on science and technology, but a much closer and more concerned look at what teachers in schools and universities are doing with the humanities. Successful socio-economic and cultural development requires a conscious balance between the sciences and humanities, and it is far from certain that humanities education in South Africa is sufficiently strong and healthy to carry its share of the burden. Here we come to the second challenge. Do humanities practitioners in South Africa have adequate answers to the questions society is implicitly (and sometimes explicitly) putting to us? Can scholars in the humanities explain their contribution to the public good? Vocationalism in the university Let us start by considering the humanities in the universities. This after all is where much of the understanding that gradually works its way through the schools and into society originates. One of the first things advocates of the humanities would need to make clear to interrogators is the character of a university education as distinct from a purely vocational one. It is not the existence or otherwise of a more or less direct linkage to specific career opportunities that determines whether or not such an education can be described as vocational, but the character of the education undergone. The distinction may be characterized as follows. A vocational education transmits a particular range of knowledge, ideally in its current, up-to-date state, in a mode designed to relate it most nearly to a context of application in society. So, accounting studies emphasize principles and best practice in relation to the legal and policy framework pertaining today, and the present state of the South African business and corporate environment. It is of course possible to teach accounting at different levels of complexity, finesse and specialization, but there is little incentive to move the subject away from its severely practical orientation. PhDs in accounting are rare. With management, the situation shifts slightly, in that a range of management theory will normally be explored, emanating from diverse situations, and whose applicability becomes very much a matter of contextual judgment. It is certainly possible to earn a PhD in management studies, but the subject matter is likely to edge towards issues that belong in the social sciences and humanities proper. The paradigmatic qualification in business studies is the MBA, a programme designed to develop cutting-edge managers and business leaders for different contexts, and among the entry requirements is typically a substantial period of practice. This stipulation is there to ensure adequate integration of theory and practice in the educational process. Law has the potential to move fully into the university paradigm, in that practical legal training can be (and, depending on the level of qualification, should be) supported by rigorous emersion in the history and philosophy of law. In fact, it would be difficult to conceive of adequate legal practice emerging from an academic culture divorced from the humanities. It should be apparent, then, that while many popular career options can be placed along a continuum running between the poles of the narrowly vocational and the so-called purely academic, it is always the degree of emphasis placed on the ‘other-than-vocational’ component that qualifies the programme for inclusion in the domain of true tertiary study. When we turn to the core disciplines comprising the humanities, the connection with a specific profession or career is weak or absent (unless transmission and extension of the discipline itself comes to be counted as such). True, there is often a loose affiliation between the humanities and vocations such as librarianship, teaching, advertising, writing and publishing, but the connection is not intrinsic or necessary. This fact in itself can be problematic, because students whose thinking is constrained by the vocational paradigm, whether through the influence of parents or other social  pressures, will tend to define the value of a humanities degree solely in terms of particular vocational outcomes. ‘Text’ versus ‘language’ If then, humanities undergraduates are not preparing directly for a vocational career, what are they doing? And why aren’t they preparing directly for a career? I want to answer, first, in terms similar to those proposed by Michael Oakeshott (1967: 308-312). The paradigmatic distinction is that between knowing a text and learning a language. A university discipline expresses a particular mode of enquiry, one ‘language’ in the array of languages that makes up the intellectual capital of humanity. Each particular language of enquiry is embodied in a vast array of performances in these languages – good, bad and indifferent – performances that we might call ‘texts’. Vocational education exhausts itself in knowing particular texts, and these texts are chosen because they are current and relevant in the world of practice and application. Learn the text, become expert in it, and you’ve attained the end of vocational education. Once you leave the educational institution – let’s hope it doesn’t call itself a university – you may lack experience (though, as has been indicated, many vocational programmes strive to incorporate work experience so as to minimise this gap), but you are, or should be, ready to perform the text or texts you have learned, this time in the workplace arena. Because of the rapidity of social change, your text, or range of texts, will soon become redundant, out-of-date, and then you must learn additional texts. You trained in servicing VWs, now you must learn Renaults. You learned to programme Fortran and Basic, now you must master C++ and XML. You studied Management by Objectives, now you must re-shape your style to fit transnational corporate policy. You will gain broader experience, you will always be learning, but what you will be learning is text after text after text – and thoroughly necessary and rewarding the experience may well prove to be. The point of higher education from the outset is to learn the language. In higher education, texts are studied not simply for their own sake, but for what we can learn from this study about the mode of enquiry of which they are a good example. In other words, texts are treated as emblematic of some aspects of the language, and we choose the particular texts we study as part of a higher education because they are in a proper state to yield insight into the language they exemplify (Oakeshott: 314). Our object of study is not only the text but the language, and, usually at graduate level, we go on to reach towards a language of languages, which we might call philosophy. The ‘swerve’ from higher education The distinction between ‘text’ and ‘language’ on which I am harping, is rather mysterious and fascinating. Consider this. In order to appreciate, say, Hamlet, I must know the language. In order to know the language, I must read Hamlet. The apparent circularity is embarrassing, and the sort of thing that tends to compromise the humanities in the eyes of the uninitiated. M. A. K. Halliday explores the distinction between text and language – and it is fundamental to the mission of the humanities in general no less than Halliday’s particular discipline of linguistics – by means of an illuminating analogy: – – – the analogy whereby language is to text as climate is to weather is useful to think with. It reminds us that these are not two different things, or rather what we call ‘climate’ and what we call ‘weather’ are the same phenomenon seen from different angles, or different moments of time, and so it is with language and text – – – much misunderstanding has been caused by counterposing these two terms, with language and text being treated as if they were different orders of reality. He goes on to point out a significant limitation to the analogy: Like all analogies, it’s very partial. It’s an abstract tool for thinking with, not a strict proportion, because semiotic systems are not like physical systems. In particular, an instance of a semiotic system carries value; instances of physical systems do not. Of course you may prefer one kind of weather to another, but that’s got no relevance whatever to the status of an instance of that weather in relation to climate: it’s just something to be observed and measured like any element. But a text has its own value, not necessarily, in fact, probably not usually, fixed and determinate – – – And the relation of the discourse value to the underlying system is in fact highly complex. I refer to this as the ‘Hamlet factor’. (Halliday 2001, transcr. Kilpert) A good teacher of the humanities must know the language the text under discussion instantiates, and must be able to move the student from reading ‘text’ to exploring ‘language’, to reveal the distinctiveness of text in relation to the homologies and contrasts available in the language. Some texts disturb, redefine, modify the language in which they are formed. They have a perennially evolving afterlife. In the broad historical perspective of cultural ‘climate’ they remain instances of ‘weather’ that are of intrinsic and perennial interest. This is what Halliday means by the ‘Hamlet factor’. Indeed, not altogether coincidentally, to the best of my knowledge, Hamlet is the only literary work to have a fully-fledged academic journal devoted to its study. 3 Ignorance of the distinction between text and language, and all that it implies, is symptomatic of the kind of confusion that influences well-intentioned but ignorant tertiary institutions to swerve from true higher education towards reductive vocationalism disguised as higher education. What can philosophy do that society values? Aha! – ‘critical thinking’. Right, let’s forget about philosophy and teach critical thinking. What useful outcome can we expect from the literature student? Aha! – ‘communication skills’. Right, let’s forget literature and teach communication skills. And so the reduction goes on, relentlessly impoverishing the tertiary environment, the individual student and society, in the name of relevance, vocationalism, contextualised learning, public accountability (in the shallowest of senses) and all the other misnomers that disguise a lack of educational understanding. Why we still need the humanities today Each of us is born into a relatively narrow life-world. This is as true for those fortunate few who enter upon the human scene embraced by sheltered luxury as it is for the many who expend their years in poverty, far from the seats of wealth, power or influence. Moreover, the character of the world as it impinges on the individual is changing rapidly, everywhere. (This statement is probably valid even for those who strive most to avoid the world, such as those who spend their time in religious retreat. ) What this suggests is that ordinary means of social transmission, where values, attitudes and judgments are passed from generation to generation within the family, or from mentor to ‘apprentice’ in society, are no longer adequate or may prove so only in the most exceptional of cases. These processes may still be necessary, indeed fundamental, to individual human development, but they cannot be sufficient. Rapid technological change and the shifts in values that result, increasing mobility, population growth, the communications and information revolutions, the differential impact of social change on pre-established world views – in fact all the cliches of the globalizing world – add up to an uncertain field of potential experience for the individual. The resources of the family, even in optimal or exceptional circumstances, are insufficient to interpret, let alone adequately to evaluate, this complexity, especially since it is increasingly likely that the individual’s activities and proclivities will shift to arenas and predicaments beyond the experience of the senior generations. This is where the educational potential of the humanities becomes such a powerful resource. By exposing students to detailed study of particular artifacts – works of literature, examples of fine art, philosophical systems, political  prescriptions, musical compositions, social theories – we avail them of the opportunity to form and test their own judgments, to challenge received opinion, to argue positions within a community of informed discussion and debate, to think and re-think their views in the company of major artists and diagnosticians, each of whom has put their work forward for exactly this purpose, namely, to help shape and re-shape human beings. The power of critical thought, trained and developed in this manner, is central to the formation of a creative democratic citizenry anticipated, for example, in South Africa’s White Paper of 1997. 4 As a society, we need the formal space of the humanities in which to engage with a full range of estimates concerning human potential, past and future. In the course of such studies students will also, no doubt, learn to think clearly and write well, but this is incidental. The mission of the humanities is to mould human identity and purpose in relation to changing times and circumstances. No other field of enquiry, not science, not sociology, not established religion, can meet this imperative need quite as well. Some will claim never to have felt such a need, or to have abandoned it for ‘the real world’ after fleeting initiation at school or university. For these, the humanities are so much frippery, a merely decorative intellectual surplus, or shallow entertainment which ignores the imperatives of the way the economic world works. Such people intend to stick to the ‘text’ they inherit, and perform it unthinkingly to their own best advantage. The abject misery of thousands, though it seems melodramatic to say so, comes to rest on the shoulders of those who have reached this conclusion. The founding impulse of the humanities To counter such views from a fons et origo, we might go back to a period before the Romans, before Plato even, to the founding moment of the humanities. It is commonplace to acknowledge, as do scientists and everyone other than proponents of ethno-science, that science arose once only on planet earth, among the ancient Greeks (Wolpert 25). 5 It is less commonly acknowledged that the western humanities, too, rose at a particular moment among the Greeks, though in all probability similar moments passed unrecorded in other cultures. The originary impulse is expressed (or invented) during Socrates’ famous discourse in the Apology, as recorded and fictionalized by Plato: If I tell you that this is the greatest good for a human being, to engage every day in arguments about virtue and the other things you have heard me talk about, examining both myself and others, and if I tell you that the unexamined life is not worth living for a human being, you will be even less likely to believe what I am saying. But that’s the way it is, gentlemen, as I claim, though it’s not easy to convince you of it. (Apology 38a, trans.Nussbaum 1) ‘The unexamined life is not worth living for a human being’ (emphasis mine): ‘that’s the way it is. ’ This is the bald standpoint of the humanities expressed in a nutshell, and it is not the easiest position to justify to defenders of the status quo, either inside or outside the academy. Let’s look at some of the issues. Why was Socrates on trial for his life? He was teaching that the young ought to devote time and intelligence to finding satisfactory arguments to justify their beliefs, rather than simply following those of their parents and the civic authorities. Not even the gods were to be exempt from rational enquiry. Aristophanes, in his comedy The Clouds, viewed Socrates as dangerously subversive of orthodox education, which he took to be a process whereby the young are indoctrinated in the traditions and values of their culture, as is the case in traditional societies everywhere. In other words, for Aristophanes education meant learning the text of your society. Not so with Socrates. He wanted people to study the language of humanity, though he recognized that this was no easy matter. We are back to the relation between ‘text’ and ‘language’? Socrates held that by systematically questioning text, probing it from all possible perspectives, exploring alternatives, we may by degrees arrive at the language, or at least important elements of it. It is important to stress, ‘from all possible perspectives,’ because Socrates was also an early advocate of truly democratic learning. He was willing to engage in philosophical discussion with anyone and everyone, in the hope that they might know more than he did, or contribute something uniquely valuable. Plato, by contrast, wanted to restrict radical questioning to an elite who, through philosophical investigation, would gain access to timeless truths, enabling its members to rule justly over the masses. Here we have the origin of the tension between the humanities as a source of elite leadership – the Platonism of government and corporate management – and the humanities as a democratic investigation of human meaning and value. 6 Socrates was utterly serious in his claim for intensive rational enquiry as essential to discovering a true mode of living, the good life. The unexamined life is fit only for something less than a human being. Those who unthinkingly follow tradition, who defend and reproduce text uncritically, are trapped in what Wittgenstein might call a ‘form of life’ (241). Plato likened it to living imprisoned in a cave, pursuing a troglodyte existence ruled by convention and fear of the unknown (Republic Book 7). It is interesting to speculate that the tame Platonic ‘puppet show’ may have primitive origins in the image of early humans huddled in solidarity round a fire, the cave walls patterned by flickering shadows, their shapes shifting and unaccountable, while outside lie unknowable dangers, not to be faced in the dark, and largely indecipherable within the cave despite the artificial fire-light. It is a potent representation of fear. Those venturing forth on the intellectual scramble to seek the source of the shadows (to find truth) must be prepared to risk themselves on two counts: first in view of what they might find outside, and second on account of what their fellow humans might do to hold them to the text that currently governs behavior in the cave. Those leaving the enchanted circle may not return. Those remaining have to learn to tolerate the courageous quest of those who ‘go beyond,’ and to deal with the emotional disturbance and communal risk involved. We know what happened to Socrates. We worry that today’s South African society, focused wholly on instrumental programmes directed to immediate ends, will not have the courage, vision or knowledge to support the quest.