On Capitalism

1. There is no ethos of capitalism, just exploitative rhetoric.

2. Capitalism, according to its champions, is meant to be fair, an alleged meritocracy. If you work hard, then you will be rewarded adequately. This is empirically false. The principal generator of wealth in capitalism is not hard work, but rather the good fortune of being born rich. To the extent that there is a correlation between hard work and wealth, it is largely an epiphenomenon.

3. Hard work does not guarantee wealth, and probably only raises the worker’s likelihood of significant financial rewards marginally. In a population of hard workers, only a small percentage will become wealthy. This is not merely to say that wealth is relative, but rather, the standards of wealth that many or most people have come to see as just rewards are materially impossible to dole out to everyone ostensibly meriting them. There simply is not enough stuff for everyone to possess the wealth of the 90th percentile.

4. Faced with this myth, capitalists then justify the massively unequal wealth-distribution from which they happen to find themselves benefiting with appeals to ability, the assumption being that this ability is innate. Thus, capitalism is not a system of meritocracy at all, but merely one that trades in social-Darwinism and genetic classism. If one is to point out the inherent unfairness of this system, the capitalists will reply, “Life isn’t fair.”

5. Here the capitalists are caught between their conflicting myths. The archetypal capitalist critique of socialism is that it is unfair – people do not earn their keep. But faced with reality that under capitalism people do not earn their keep either, the capitalists turn to myths about human nature to defend their system’s inherent unfairness.

6. Since there is no ethos of capitalism, certainly not one that can be considered ethical, what grounds is there to adhere to this system? The capitalists have already established that their system is not fair. The emptiness of the moral critique against socialism is revealed – even if socialism is “unfair,” at most we are just substituting one unfair system with another.

7. To this, the capitalists would respond that their system is more “natural” and thus morally correct. What the capitalists perceive as right is a system that upholds a form of eugenics – an economy oriented towards ideals of Darwinian natural orders.

8. But this is a myth as well, because successful capitalists are largely the product of social and historical circumstance. that is, luck – typically the luck of having wealthy parents. Indeed, luck produces many successful capitalists that are neither particularly hard-working nor above average in any relevant proficiency.

9. It seems we have two choices: either dispense with the artifice of the social systems that effectively distort the idealised Darwinian distributions of wealth and battle it out like animals, each taking what we can; or, we can act like human beings and reject the inherent unfairness of capitalism.

10. The ideological pervasiveness of capitalism is so complete that a New York Times columnist can unreservedly claim that “Over the past generation, global capitalism has produced the greatest reduction in human poverty in history. Over the past 10 years, American capitalism has produced 20 million new jobs. The productive dynamism of capitalism is truly a wonder to behold.”

11. That the ever increasing role of private capital in various economies coincides with improvements across a range of social metrics is, to put it simply, not indicative of a causal relationship. The notion that (big-C) Capitalism is the chief driver of the general increases in human well-being over the last 50 years – and measured on a global scale – is simply not empirically or theoretically borne out to any satisfactory or substantial degree. Thus to insist, without qualification, that it is, is simply to rehearse a myth (or ideology).

12. Could we even say that (big-C) Capitalism doesn’t exist? And not just as an ontological point about defining the referent of complex phenomena, or an issue of nominalism surrounding general concepts like “the average person.”

13. What should we call the prevailing economic systems, practices, credos, and philosophies of the last 40 years? The go-to shorthand is “neoliberalism,” but I prefer a much more unwieldy term: hyper-liquid financialized speculative global capitalism.

14. Certainly, the generation of wealth has something to do with the amelioration of people’s lives. But even this is a sticking point. That Capitalism-as-ideology (e.g. maximum deregulation, the mythical free-market, taxes are inherently evil, shareholders are sacrosanct) has played a major role in generating new wealth is not at all clear.

15. There is a real possibility that “growth” under “neoliberal” capitalism is an epiphenomenon of the real major kind of capitalist activity: wealth redistribution.

16. The point here is that not all wealth is created equal (even though modern commodified economic systems try to make it seem like it is). Some wealth creation is tied to new and better labour conditions, some to technological innovations and scientific breakthroughs, some to increased capacities of material production, some to more efficient resource use, and so on with a list of things that we might hold to be genuinely productive.

17. A lot of wealth creation, on the other hand, is tied to increasingly Byzantine financial systems, whose chief output is ever more esoteric “financial products” and knowledge economies. Much of this economic activity is merely illusory – lots of people are certainly very active, and many new infrastructures and systems are devised to manage the activity – but very little productive wealth is being generated, but rather redistributed to those owning most of the capital, and the middle men and managers who facilitate this redistribution comprise a vast financial sector of very busy looking and smart sounding people who get relatively rich (and thus appear economically productive) from being allowed a small cut of the total amount of wealth being moved around.

18. I think a fair analogy here would be to mercantilism. Not that modern capitalism is neo-mercantilist, but that the mercantile system was certainly responsible for all kinds of economic activity, but the underlying motivation was a fallacy. It was not the bullion that created wealth, it was all the subsidiary activity that went to increasing one’s reserves of precious metals.

19. On the other hand, as Adam Smith observed, mercantilism could be understood as form of rent-seeking. Contemporarily, this rentier capitalism is another form of epiphenomenal wealth creation. Rentierism is mildly productive, enlisting various productive industries like construction or computers, but the real wealth is generated simply by owning ever more expansive kinds of capital and exploiting labourers to use it, thus capturing their productive work.

20. The unwieldy set of different kinds of wealth creation has allegedly been produced by the implementation of a simple set of economic principles, which can be summed up with perhaps the most consecrated tenet (or symbol) of this myth: the “free market.” The zealous pursuit of the free market is guided by a central commandment: deregulation, which amounts to a fundamentalist rejection of any type of legislation, structure, or system, even hypothetically, that would hinder the unbridled pursuit of capital accumulation by the world’s most wealthy people. According to dogma, deregulation is the source of all the increased prosperity that humans have enjoyed over the last three and a half decades.

21. Unfortunately, the empirical and theoretical work establishing this causal relationship is non-existent. Recalcitrant and confounding evidence is ample. Most the economic growth of the 20th century, including periods where growth was greater than in the past 35 years, happened under conditions that were significantly more regulated than now.

22. Deregulation (or anti-regulation) is so overgeneralised as to be almost conceptually useless (and certainly practically pernicious). Artificial price ceilings and Pigouvian taxes (and taxation in general) are fundamentally different kinds of things.


1 Comment

  1. To be anti-regulation as a generalized position is so laughable. How long until we can agree that we all want the good regulation that keeps things safe, healthy and pleasant and very little unnecessary regulation, and that finding the right balance will always be a challenge?

    Is it too much to ask that public debate be focused on the specific regulations in question, and not on regulation as a moral concept?

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