It’s always worth understanding an important ideology’s ethical calculus.
Capitalism’s is brilliant.
If someone is willing and able to give you money to do something, you are improving their life.
The corollary is:
If you have money, you have it because you have improved someone else’s life. The more you have, the more lives you have improved.
There are assumptions embedded in this logic: That people know what improves their lives, for example, and that everyone involved is buying and selling voluntarily.
Demand isn’t desire, mind you. If you want something that would improve your life a lot, it doesn’t matter if you can’t command enough money to get it. Adam Smith pointed out that bums may want coaches complete with horses, but this does not translate to “demand.”
Still, basically, the theory is that you get money by helping other people.
Roy Dalio, the fund manager famous for his book on principles, believes this one hundred percent.
Now, it’s important to understand that capitalism is an ideology and organizational principle sitting on top of a series of technologies. We can call those technologies “industrialization.” Industrialization is not capitalism; we can imagine there might be other moral and organizational principles which could work with industrialization. We tried, as a species. We called it communism, which was centralized industrial control, and it didn’t work out in the end. Some say that’s because it couldn’t work, others say it’s because the USSR had less people and resources than capitalism, along with a weak strategic position.
I’ve argued parts of both. The truth is we don’t actually know.
Both systems are ideologies which determine who gets to control a certain amount of other people’s time, and who got to tell people what to do. That’s what money does, and anyone who has spent their entire life working for money by doing what other people tell them to do should understand this (though remarkably, many people don’t).
Capitalism is also an argument based on scarcity. It says: “There isn’t enough, so we need to make sure the people who get what we have use it to help others.”
That’s the actual moral argument: Capitalism is the best way to use people and resources to help the most people. It’s why whenever someone suggests there might be another way, someone else will say “Venezuela, Venezuela, neener, neener.”
Here’s a strange thing, though. Every time I look into homelessness I find that there are more empty homes than homeless people. There’s probably an exception, but I’ve never found one in the Western world.
We also throw out far more more food than is needed to feed everyone.
So at the very least, we know that capitalism isn’t distributing goods to everyone who needs them. The capitalist argument to this contradiction isn’t, “That’s false!” It’s that, “Communism failed, so you’re stuck with this.”
Then there’s another issue: Capitalism has turned out to be terrible at managing scarce resources. We could make a lot of things we use more durable so they’d last longer. Instead we make them so they won’t, deliberately. We make them so they’ll break or wear out, and people will have to buy another set, because companies need to make a profit. It’s not that cell phones couldn’t be created to last much longer, it’s that the people who make them don’t want to. The same is true of light bulbs, clothes, almost all electronics, cars, and so on.
We’re wasting vast amounts of resources, and that waste also shows up as vast amounts of pollution and huge destruction of the environment.
Pollution, including pollution involving carbon, methane and other climate change gases is an important example of not managing limited resources. There’s actually a limited amount of room to pollute, and beyond that, the environment starts changing in ways which are dangerous to us and the rest of life. This is a genuine scarcity “pollution sink,” and capitalism isn’t managing it.
It turns out that capitalism (and state communism before it) isn’t very good at managing scarcity. Perhaps it’s better than an opposition which doesn’t exist any more, but it’s not good enough to avoid wiping out island nations and changing the climate catastrophically.
So what we have is a technology which is theoretically capable of managing scarcity (industrialization/science) and an ideology and organizing principle (capitalism) which can not.
We produce way more than we need, vast amounts are wasted, we still have people without homes or going without food, and we’re destroying the environment and changing climate in disastrous ways.
That’s an ideology which is, well, evil. To produce more than we need, and then say, for ideological reasons, “But some people have to sleep on the street, and others need clean out sewers by hand, and still others have to go hungry” is a simple failure. To destroy the ecosphere is another failure.
Capitalism doesn’t do what it is supposed to do: It doesn’t use resources efficiently or distribute them in a humane way. In fact, it uses resources inefficiently, vastly so.
It turns out that “if it makes money” isn’t a good proxy for “does good while using resources efficiently.”
By capitalism’s rules, destroying the world is rational. Not feeding people is rational. Having homes sitting empty while people freeze on the streets is rational. Making way more goods than people need, through planned obsolesence, is rational.
And these aren’t corner cases. This is what the logic leads to. This is the system running on its core logic loops. Someone is paying for all of these things, so it must be making them better off, so therefore doing these things is good. More, the people doing those things are given MORE resources (money) so they can perpetuate same behaviours, because the system assumes the behaviour must be good, or someone wouldn’t be paying for it.
This isn’t just, well, evil. It’s insane.
When your ideology says: “Destroying the world’s climate and environment, starving people, and making people homeless is rational”? There’s a problem with the ideology.
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bruce wilder
So what we have is a technology which is theoretically capable of managing scarcity (industrialization/science) and an ideology and organizing principle (capitalism) which can’t.
Yeah, no.
I think we are in denial on both counts.
Considering only “technology” for a moment, we do not readily accept that any use of energy in the application of science to organize production entails both error and waste. It is built in, logically entailed. Physics, not capitalism.
The popular consensus is a naive and unfounded expectation that technology is a magic that can save us, and overlooks the critical need to constrain severely the growth of population and the population’s use of energy from all sources, not just fossil fuels (but especially fossil fuels).
Capitalism as interpreted by neoclassical economics is a mythical triumph of virtue in a just world, just as you tell it. It talks of “markets” that mostly do not exist, has no theory of production beyond a nod to specialization of labor, ignores the mechanics of money and hierarchical power, and focuses its attention on the ritual “proof” of optimality, all is for the best in this, the best of all possible worlds.
The reality of the economy — the systematic organization of people and resources in production and distribution — is that it is deeply problematic: a complex shambles of conflict and unsolved, often unsolvable problems and solutions that aren’t.
When the communists or the Christians or whoever else went very far down the road toward utopia, they tend to find themselves trying to fix human nature. And, maybe that is necessary. We are not a very nice species. A social animal given to cruelty, violence and cannibalism, we are liars and cheats. With deliberate effort, we can improve ourselves by the construction of fictions in the form of social institutions. I would say that what is wrong with capitalism as an ideology, which is to say, an architecture for institutions, is that it is so deeply into denial of the problematic nature of economic cooperation among highly specialized people that it neglects the necessity of opposing and constraining the inevitable cheating and predation. That unaccountable belief that profit signals virtue deprives the public spirit of righteousness, and the shortage of public righteousness results in capitalist degeneracy.
450.org
What’s key to this is the traction that one transaction gets, or got, and the stultifying, straight-jacketed, unnatural sociopolitical system it’s historically set in place. A system from which there is no escape. A system that precludes an alternative. A system that is so oppressive, trying to fight it to change it is a fool’s errand. That’s not improvement. That’s slavery. Slavery borne of a simple transaction. Someone paying another to do something they could have and should have done themselves because they would have been better for it. In the least, something that could have and should have been done together collaboratively with no money changing hands, because it was mutually beneficial to collaborate and cooperate.
So many invalids are wealthy beyond imagination because of this one transaction, the original sin, that blossomed into a system of servitude. I know many. They are incapable of the most basic tasks. Their status is entirely predicated upon the bank they’ve made on a pathological obsession they’ve honed and perfected that the servile system finds valuable, no matter how grotesque and dysfunctional that valued pathological obsession is.
As an example, there is a person in my life, more than an acquaintance, who is an invalid in every conceivable way. He can’t change a tire. He can’t change an air filter. He can’t plant a tree. He’s never pulled a weed. He can’t ride a bike. He cannot do anything, and I mean anything, for himself. He is a textbook obsessive-compulsive. He has an expansive closet overflowing with dress shirts that are identical to one another that he never wears. They’re there just in case but there’s never any just in case. Yet, he thrives within this servile system. He’s a multi-millionaire. And yet he can do nothing for himself. He’s a savant at picking games and setting odds. This ability, that is an all-consuming pathological obsession for him, has been richly rewarded by this pathological servile system from which there is no escape. He is as much an invalid as Stephen Hawking. In fact, Stephen Hawking is another great example of how insane this pathological, servile system we live in and under is. His entire existence once he was debilitated depended on the generosity of others bought and paid for by the value of his perceived image, by his reputation. Yet he couldn’t wipe his ass or even speak. That is held up as progress when in fact it’s the exact opposite of progress. While this pathological servile system holds the likes of Stephen Hawking up as the pinnacle of its success, those deemed lesser are kicked to the curb and perish in the gutters. And this same pathological servile system, when you point this out, will send its minions, its bots, to attack you mercilessly when you point any of this out. Even its critics, and yes, this pathological servile system produces its own ordained critics and if your criticism of this pathologically insane servile system doesn’t Hugh to the ordained criticism of the ordained critics, you will be squashed and pummeled by the system’s voluntary and involuntary assassins who help hold it all in place until it and we are no more.
Dan Lynch
Well said, Ian. Even though most of what you say is obvious stuff that doesn’t take a degree in economics to understand, it’s seldom acknowledged. I’ll probably be linking to this essay again and again as the subject comes up in future discussions.
Ten Bears
What I find most disturbing about these discussions are the attachment to evil sentience. In a nutshell: One of the tenants of Alcoholics Anonymous is alcohol is all powerful, is cunning, baffling and and powerful over which we have absolutely no control. It ascribes to it sentience, consciousness, perhaps even free will. It is “alive” only in the sense that any other chemical process is “alive”, and other than that is no different than a rock. So too evil.
Like alcohol, it becomes what men make of it.
Sid Finster
There is a long line of literature which demonstrates that the behavior of a publicly traded corporation is indistinguishable from that of a sociopath.
For that matter, taking Ayn Rand’s “philosophy” to its logical conclusion, a rational selfish hedonist with no belief in an afterlife would not resemble the Galts and Taggarts that Rand describes. Rather, that person would be a sociopath, something like the character in “Dogs” by Pink Floyd. The high-flown talk about “honor” and “pride” would be for other people, but the rational selfish hedonist would never hold himself to the same standards he holds others to. That is for fools.
But it’s not just capitalism. Look at the behavior of empires. You don’t need to go all Hannah Arendt to recognize that empires require sociopathic behavior, even from otherwise seemingly decent people.
For that matter, one can look at the functionaries of the Soviet Union. Calling them “capitalists” is a bit of a stretch.
The problem isn’t capitalism per se, although capitalism can be one way in which the problem manifests itself. The problem is power.
bruce wilder
The problem is indeed power.
Willy
I call it the Riddle of Power. Cant live with it cant live without it.
I’m not so sure if it’s the ideology itself that’s insane. Most ideologies really. It’s been said right here in this place, that the insanity lies in ideologies allowing their ruling, guiding, intellectual elites to be insulated from failure.
During the North Korean famine reputed to have killed millions, it’s said that Kim Jong Il was having chefs flown in to handcraft his meals. The last people he would short food-ration were his military, for the obvious reason to insulate him from his starving population. Not that starving citizens can mount much of a raid on an imperial palace all boney zombielike.
As for capitalism the same principle applies. Well functioning companies are driven to ruin by incompetents who care less then they could because they’re being paid kings ransoms whether they win or lose.
I’d think that if every ruling, guiding, intellectual elite risked execution if their policies failed, they’d be a bit more on the ball. And “being there” would be less of an attraction for sociopaths who couldn’t care less anyways.
450.org
The problem is the communal cultivation of the perverted impulse to acquire & possess & hoard. Civilization lit a match to that potentiality and here we are. It’s a massive conflagration. A bonfire of the vanities. Power is derived from acquisition, possession and hoarding. Once derived, it is now also a motivation for acquiring, possessing and hoarding in a feedback loop of sorts. Civilization is a suicide pact.
Dan
If the problem is power, and I believe it is, then there is no answer in politics, because politics is all about power.
Willy
Then we best get cracking at figuring out liberal democracy, the choosing of who, what, where, when… our power centers operate. I am open to a Forbin Project solution though.
The problem is the communal cultivation of the perverted impulse to acquire & possess & hoard.
It’s part of the survival impulse. But that thing has gone pathological, for sure. And been encouraged to by pathological PTB. It’d be nice if such things could be seen simply, like drinking, where a little red wine can be healthy but so much to the point of addiction will inevitably ruin everything.
johnm33
The problem is that a small group has usurped the right to create ‘money’ from the state/people. They create money out of thin air, lend it to the government at 2.5% then borrow it back at .5% if everyone could do this we would all have enough money. Until money creation is democratised the small group will continue to buy the politicians, and every income stream, decide the rules and force all those who cannot create ‘money’ to find some way to provide them with a service, or drop down the food chain and serve the primary service providers, or drop down the food chain rinse and repeat until they drop out of the food chain because all the services the small group and their servants require have been met and beyond lies irrelevance, homelessness and despair.
someofparts
This conversation makes me remember a favorite movie scene. A father is advising his young son about life. He explains that as he grows the boy will learn that everything in his world is bullshit. So that means the task the son will have as he grows will be to figure out which level, which corner of the overall bullshit he can tolerate best and then that will be his bullshit, in a manner of speaking.
Ché Pasa
The same rationale/ethic behind capitalism is behind Anglo-American imperialism as well as the forcible spread of Christianity: bringing the benefits of “civilization” to the benighted and primitive masses of the world.
The Iraq invasion was supposed to inaugurate a new era of Anglo-American imperial power — ostensibly to “save” the Middle East and the world from the perfidy of the Saddam family and their stockpiles of weapons. It’s not a lie if you believe it, right?
It hasn’t worked out very well, and it won’t. It can’t. We’re living in a post-capitalist, post-truth, post-imperial world, and there’s no going back. Something the reactionaries and fascists are only just beginning to (sort of) recognize.
Now what? They don’t know.
Nor really does anyone else.
Steve Ruis
Civilization is based upon the ability of the religious and secular elites to coerce the labor of the masses to serve their interests. It always has been since the dawn of civilization. The roots of religion are human psychology but religion quickly became a tool of the elites to control the behavior of the masses and not much else.
Capitalism is one such tool. Gosh, it enriches the elites and impoverishes the masses. How can that not be civilized? And how can “making a profit” be a motive in and of itself. It is a means to an end and not an end in itself … until you get to economic theorists who insist it is and have made up bizarre theories proving it, thus encouraging the elites to use it as a guiding principle.
450.org
You’re correct, Steve, but let’s take it one step further and determine the flashpoint of when hunter-gatherer transformed into civilization. It’s been claimed it was the cultivation of agriculture that provided the impetus. Is that entirely true? Is there something more? We know civilization is ultimately what you mention and what I mentioned above. Acquiring, possessing and hoarding was used to attain power and those who figured this out early in the endeavor of civilization, psychopaths if you will, created social systems that perpetuated their hold on power through the centuries and millennia. It’s so thoroughly entrenched at this point, there seems to be no escape. The only escape if you can call it that is our extinction. Thus, civilization is a suicide pact that will soon enough put us out of our misery. How the final act plays out is anyone’s guess. Will it happen with a bang, or a slow, grudging, brutally-suffering whimper?
Civilization is drunk on growth. It’s addicted to it. It’s the purpose of civilization. Civilization’s intent is to consume the planet until there is no planet left to consume with the idea in mind it can move to the rest of the universe when it’s done with this planet. Greening our growth does not eliminate the fact we are depleting all of the resources not only needed to grow further but also to just merely survive even at greatly diminished numbers. Innovation is Noah’s Ark. The high priests of engineering and science believe they can find ever more fertile pastures to denude and destroy in civilization’s quest to consume that which allowed its existence.
This goes well beyond capitalism. Capitlism is just one form of this addiction to growth. The addiction has a myriad of forms, and yes, socialism is one of those forms as is fascism.
Rangoon78
By the seventeenth century , the word “improver” was firmly fixed in the language to refer to someone who rendered land productive and profitable. in the eighteenth century, in the golden age of agrarian capitalism, “improvement,” in word and deed, came truly into its own. …productivity and profit were inextricably connected in the concept of “improvement,” and it nicely sums up the ideology of a rising agrarian capitalism.
The same ethic of improvement could be used to justify certain kinds of dispossession not only in the colonies but at home in England. This brings us to the most famous redefinition of property rights: enclosure. Enclosure is often thought of as simply the privatization and fencing in of formerly common land, or of the “open fields” that characterized certain parts of the English countryside. But enclosure meant, more particularly, the extinction (with or without a physical fencing of land) of common and customary use-rights on which many people depended for their livelihood.
https://monthlyreview.org/1998/07/01/the-agrarian-origins-of-capitalism/
Willy
If only Milton Friedman was still alive. I would’ve loved to psychoanalyze that guy. Or Karl Marx for that matter. They’d come up with some pretty cool stuff but then negate it all with gaping holes in some pretty basic human nature knowledge, stuff your average street smart Joe understands.
Rangoon78
Winstanley was more of a ‘Democratic Socialist’ than a Communist. On 1 April 1649, Winstanley and his followers took over vacant or common lands on St George’s Hill in Surrey. Other Digger colonies followed in Buckinghamshire, Kent, and Northamptonshire. Their action was to cultivate the land and distribute food without charge to any who would join them in the work. Winstanley stated that if some wished to “call the Inclosures [their] own land . . . we are not against it,” though this may have been just a diplomatic gesture. Instead they wanted to create their own alternative Inclosure which would be a “Common Treasury of All” and where commoners would have “the freedom of the land for their livelihood . . . as the Gentry hathe the benefit of their Inclosures”.
https://www.thelandmagazine.org.uk/articles/short-history-enclosure-britain
ven
The fault, dear Brutus, is not in our stars, but in ourselves that we are underlings.
The UK had a chance to elect Corbyn, and we elected an elitist, narcissistic buffoon. The US no doubt will let Sanders slip away. The population consistently shows itself to be stupid, believers in corporate / government lies, and easily prone to fascist promises.
someofparts
Before I give up on my fellow voters I want to see honest elections. How can we tell what voters want if our elections are brazenly rigged?
Gaianne
Ian, I love it when you do simple essays on simple topics that, somehow, nobody understands.
Thank you.
–Gaianne
scruff
I’m not at all sure that agriculture provides the impetus, but it does seem to enable the behavior better than hunting/gathering methods of food capture. One of the difficulties with making arguments involving pre-agricultural ways of living is that the diversity amongst that category is so high that no simple statements about universal behaviors can ever be said to be universally true. Some groups practiced cannibalism, some never practiced cannibalism. Some groups were very egalitarian, some groups were under strong control of powerful individuals. Some groups achieved balance with their habitat, some groups adopted strategies that destroyed their habitat’s ecological viability.
Here’s a possibility I’ve been considering: all of these motive forces are effectively present in every group at all times, through something analogous to the random mutation idea in evolution. It is only when local conditions enable one of those motive forces to survive and reproduce that it becomes historically noticeable and attributable. Thus, when agriculture develops, the latent authoritarian impulse is enabled, survives and reproduces due to the conditions it grows in, and becomes historically set as the way civilization behaves.
It makes sense to me as a reductive mechanistic theory; but where is the room for free will and morally/ethically good behavior?
Creigh Gordon
johnm33, people keep saying that the Government lets banks create money and then the banks lend it to the Government. That’s just not reality. Banks don’t create money in any sense as it would be commonly understood.
What banks create is promissory notes payable in state money. In the days before state money was much of a thing, banks accepted gold for deposit and gave certificates of receipt in return. These receipts were promissory notes payable in gold, and because the paper receipts were in usual circumstances safer and more convenient for the purpose than actual gold, they circulated as money and rarely returned to the bank for redemption. What banks realized as they sat there with their pile of gold is that they could create other certificates payable in gold which would also circulate as money and rarely return for redemption, and they could charge interest for those certificates. This is what banks do, and they could, would, and historically have done this with or without government sanction or involvement. The banks didn’t create the gold then, and they don’t create the state money today.
Ten Bears
The three body problem: “civilization” requires growth, resources are finite.
Doug
Sorry, but this post is misguided. There\’s no such thing as pure capitalism or pure socialism, and every modern society includes both some free markets and some social programs. The devil is in the details – and not in the labels.
Our foundation has to be morality. We need to use our commonwealth to make sure that everyone has decent housing, decent food, and decent healthcare, and we need to regulate our markets so that businesses have to focus on quality and sustainability, instead of just quarterly profits.
Calling capitalism evil is like calling Apples evil.
Ian Welsh
Nah. It’s like calling Feudalism evil. This is an ideology. It needs to be regulated or it will do vast evil, and it works systemically to make sure it isn’t regulated.
realitychecker
Capitalism might work well if rule-breakers and cheaters were appropriately punished. But they aren’t. The fault for that does not lie with capitalism, but with a population that stupidly shirks from punishing evildoers.
OTOH, central planning ALWAYS results in a loss of personal freedoms.
What does freedom mean to you?