In Defense of Capitalism…
A reader emailed me this piece tonight calling for the elimination of capitalism based on 6 points. This is an argument that I have seen cropping up increasingly with time so I felt a proper rebuttal was necessary. I offered my responses in bold:
- Amorality – increase of individual and corporate wealth is the only core principle of capitalism. Recognition of any social concern or relationship to the natural world that transcends the goal of increasing capital accumulation is extrinsic to the system.
CR: This is a broad generalization intended to demonize all capitalists. Individual or corporate wealth is not the “only core principle of capitalism”. Yes, it’s true that there are some capitalists who view the world through this prism, but there are a great many more who view themselves as part of society and utilize the power of the capitalist system to give back to society by providing goods and services that benefit society. The beauty of the capitalist system is that it rewards those who give much to society. The best and most prominent capitalists understand that great rewards can only be achieved through giving much back. Clearly, this is not always the case, but let’s be careful about sweeping generalizations here….
- Dependence on growth – capitalism relies on limitless growth, but the natural resources essential to wealth production are finite. Super-exploitation is exhausting those resources and destroying the ecosystems of which they are a part, jeopardizing human survival as well as that of other species.
CR: Growth is not merely an inherent component of capitalism. It is inherent in human life. We are evolving creatures who are always striving to become superior. It is misleading to claim that capitalism is dependent on growth. The human being in inherently dependent on growth. Capitalism is merely one system through which we achieve this. The French philosopher Volney wrote about this in his classic Empire of Ruins. He called man’s innate desire to improve and make progress “natural law”. He said:
“And what is the natural law?” replied the simple men. “If that law is sufficient, why has he given any other? If it is not sufficient, why did he make it imperfect?”
“His judgments are mysteries,” said the doctors, “and his justice is not like that of men.”
“If his justice,” replied the simple men, “is not like ours, by what rule are we to judge of it? And, moreover, why all these laws, and what is the object proposed by them?”
“To render you more happy,” replied a doctor, “by rendering you better and more virtuous. It is to teach man to enjoy his benefits, and not injure his fellows, that God has manifested himself by so many oracles and prodigies.”
- Propensity to war – since the only goal is to accumulate rather than distribute wealth, resources that produce wealth must be controlled; therefore war is inevitable.
CR: This confuses the term “wealth”. As I have previously explained, the ultimate form of wealth is time. With more time we can consume, produce (or not consume or not produce) to our heart’s content. It is primarily time that constrains what we can achieve, how we live, where we live, etc. Capitalists are the ultimate time creators through greater efficiency in our lives. See here for a fuller explanation.
Lastly, control is not synonymous with war. Any system that is corrupted by control will have a propensity towards conflict. That is not a flaw in the system. It is a flaw in the way the users allow the system to be regulated.
- Intrinsic inequity – without any constraining outside force or internalized principle of social equity, capital accumulation leads almost exclusively to more accumulation, and capital is concentrated in fewer and fewer hands.
CR: Capitalism works best when it is regulated. Money is a social construct and one of the primary tools used in the capitalist system. Money is organized through the institution of government. If it is unregulated it will inevitably become corrupted by its users. This is not a flaw of capitalism. It is a flaw of its users. Capitalism works best when there is a healthy (though not excessive) level of oversight to ensure the integrity of the system.
- Anti-democratic – democracies are corruptible: wealth can purchase most of the representation it needs to get the laws necessary for further accumulation and concentration of wealth. This means that as the concentration of wealth increases, democracy is degraded and ultimately destroyed.
CR: Capitalism does not destroy democracy. The users of democracy allow capitalism to destroy democracy. There should be no such thing as the majority being controlled by the few in a system in which the majority can always vote out public representatives. If the system is being controlled by a minority then the majority need to wake up to this corruption. Again, this is not a flaw of the system. It is a flaw of the users in understanding the system.
- Unproductive of real happiness – human happiness and wellbeing are demonstrably tied to other factors besides capital accumulation. Extreme poverty is clearly unproductive of happiness, but so is wealth, past a relatively modest level. Happiness is most widespread where there are guarantees that basic needs will be met for all, wealth is more equitably distributed, and bonds between people and the natural environment are still stronger than the desire to accumulate wealth.
CR: Money is a tool that is utilized by society in an attempt to advance prosperity. But money is not synonymous with wealth or happiness. Money is merely a tool which may or may not help one achieve happiness and true wealth. If the capitalist believes money will automatically generate happiness then he is misinterpreting this tool. The wealthiest capitalists are those who give much to their society through goods, services and philanthropy. They use the tool of money not only for their own personal gain, but understand that money is a social construct that offers the greatest rewards when one is able to give much to those around him/her. Capitalism, in fact, can be totally consistent with real happiness. However, if its users are corrupted into misunderstanding this powerful institution then they will inevitably corrupt the entire system.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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131 Comments
You’ve tied together a lot of my favorite points about your thinking here. It would be great if you could put this all together in one condensed version. Concepts like your thinking on time, entrepreneurs, etc would be really great to see in something like a little book or pamphlet. Something to think about.
If I had more time I’d write a book and give it away to the 200 people who would actually read it.
I don’t comment often, but I read daily. If you write that book I’d put it at the top of my reading list.
Agreed
+3
What Adam smith postulated was Free Enterprise that’s very different from what you term as capitalism ( may be it’s semantics). He inherently understood human nature and that’s what he explained in Theory of Moral Sentiments.He called it political economy. As free enterprise cannot sustain without a proper political will required by the people to support it, As free enterprise can be subverted when the political aspect wants it to. Most of all he distinguished between Wages, Salaries e.t.c those that earn interest and capital gains and he understood the asymmetry of their positions in life. He understood that wealth is the best form of insurance for the general vagaries of life ( does not include war, political witch hunting e.t.c). What he mostly tried to explain is that Standard of living can be improved and people have more free time with a free enterprise system. He advocated effective regulation and that to lean against powerful forces of the time ( either it’s investors or workers.)
Capitalism in the classical sense means one which favors Interest earners than wage earners.
Mostly I agree that free enterprise is the best system just like democracy is the least worst option of political formation.
But some of your explanations that it’s the users fault is quite dis-ingenious. As Adam smith quietly explained in many of his papers that the forces that be always try to subvert it to fulfill their needs ( like the early capitalists who exploited labor children as young as 8 were made to work from 6 am to 8 pm in inhuman conditions during smith’s time.) For you saying that it’s the fault of the users there always a conflict between forces and frictions exist, but it also leads to some to exploit it politically in a way that’s advantageous to them. If you read Schumpeter, Veblen, hayek, Kalichek they all agree that it might end due to extreme forms as many of them become short sighted which is quite visible now a days.
Superb rebuttal.
I generally agree with everything you said, but I have some thoughts. It kinda sounds like you’re saying “guns don’t kill people, people kill people”
True, but..
The problem with just saying “Growth is not merely an inherent component of capitalism. It is inherent in human life.” and “If it is unregulated it will inevitably become corrupted by its users. This is not a flaw of capitalism. It is a flaw of its users.” …
…is that it seems like a discussion blocker. ‘It’s the people, stupid!’ You’re right… it is the people. But saying that doesn’t really address the issues raised.
For example, in the case of necessary growth combined with limited resources, to just say “The human being in inherently dependent on growth.” seems like you’re saying “get over it… it’s not worth discussing because it’s just how people are.” What that kind of position ignores, or stops the conversation in its tracks, is the reality that necessary growth and limited resources may become a very serious problem at some point… and should we be considering ways to deal with it?
We do have ways to deal with it – productivity.
Read The Rational Optimist or Supertrends – they will show past productivity defeated past doomsayers (TRO) and the future is very bright (Supertrends).
Oh, I’m certainly not saying “it is what it is, deal with it”. I am saying, let’s better understand what we’ve designed so we can use it to the best of our abilities. The general system we’ve designed is quite superb, but still a work in progress. One of my primary goals here has always been to help describe how things work so we can understand them, better utilize them and understand potential problems so they can be fixed. For instance, in here I’d say that banks have been allowed to corrupt the system excessivle because we allow them to. That’s not a failure of capitalism. It’s a failure to understand capitalism, money and the monetary system we’ve designed….
Again, I generally agree. And I know you’re not saying ‘it is what it is, deal with it’ …I’ve read enough of your material to know you are on the side of bettering the system (by first understanding it as precisely as we can).
I was just saying that your short answers, as short answers often do, sound a bit dismissive of the concerns.
I tend to think of capitalism (more specifically the for-profit system) as a stage of our development/evolution. No one alive today will see the end of it. We’ve got a long way to go, but so long as we don’t eff it up in the meantime, I foresee a future time when abundance is everywhere and nearly all “work” has been automated and mechanized. Something similar to The Venus Project. In a sense, it gets to your point about Time being the ultimate form of wealth. In some distant future, that’s what people will have… time, to live creative and playful lives. I know, sounds utopian. To me it’s sounds inevitable… it’s just a matter of time
In the meantime (!), we ought to be using capitalism and the for-profit system to innovate our way there.
Cullen,
I mostly agree with your rebuttal, except for point 2, where in my view you conflate “more quantity” with “better quality”. The problem is that the soulless ueber capitalists always want more quantity of wealth and power and do not care much about quality. In their case more quantity easily buys more quality of life for THEM. For the rest more quantity has turned into worse quality of life. This whole GDP fixation is totally wrong. I can dig holes and have them filled up and here it goes – GDP grows. In the last 10-20 years people have been running like wild to stay in the same place. Zeitgeist movie part III – I hope you have watched it – presents some very valid points: cyclical consumption with products designed to last only for a couple of years is extremely wastefull, inequality produces the most psychological problems and crime, externalities are not properly addressed, the monetary system design is corrupted from the very beginning by FRL etc.
Where I think you are right is that every system can get corruted and this is a problem I have no answer so far how it can get adressed. Prosperity leads to cmplacency, which allows for corruption.
I think its pretty clear that what you describe as ‘soulless ueber capitalists’ are not what Cullen describes.
From his first retort- “Yes, it’s true that there are some capitalists who view the world through [this] prism, but there are a great many more who view themselves as part of society and utilize the power of the capitalist system to give back to society by providing goods and services that benefit society.”
There are many ‘soulless ueber capitalists’ who would say they are what Cullen describes in this quote, but their actions speak differently.
I don’t necessarily disagree with anything in your comment other than that I think you may be talking past eachother a little bit. Cullen’s saying ‘here’s what Capitalism, good Capitalsim, is. And here’s what a good/sucessful Capitalist does/looks like’, you seem to be responding ‘but there are bad capitalists that succeed in making great sums of money’. Perhaps that’s your critique, and its a fair one, but I think in general discussion like this serve to show that any successful economic system is successful based on the philosophy of the actors therein. Perhaps that means that the better the pairing of the economic system and the philosophy of the participants, the better off the populace is in general.
No my critique is the following:
1) The elite has become populated by psychopathic ueber capitalists that are destroying the quality of life of everybody below the top 10% for they always want more like black holes do. Capitalist ethics and sense of serving the society are gone. Every system corrupts. And the system is corrupted now. Probably because there is no alternative and threat since the demise of socialism / communism in the Soviet block.
2) Growth is not equal to better quality. It has become only more quantity with inferior quality.
What capitalism? The actual anglo-american version where failed banks are not allowed to go bust but get bailed out with limitless amounts of taxpayer’s money? Come on. There is no capitalism as long as there are TBTF entities.
The main problem is that this guy doesn’t understand what motivates people to strive. In communism, people are not motivated to do anything as the reward is the same (hence so many problems with alcohol). It’s very simple in capitalist system, it’s easy to motivate people to be productive, someone might find this disgusting that money is the primary motivator, but that is in human nature, you can’t change that.
In any case it does not diminish the quality of life, quite the opposite in vast majority of cases, I’ll work for an extra hour to get extra money so I can spend my free time with more quality, I’ll work an extra hour so I can buy a better camera so I can take better pictures when I hike in nature etc… People see this as material way of thinking but quite the contrary, you buy better tools that enable you to do more and with grater joy on your free time. Sure, in some cases people get lucky and get the money, and destroy their selfs, but that’s not a general rule, it’s a personality issue and perhaps an educational one, that may be corrected.
People who haven’t lived through communism don’t understand how destructive and unmotivating that system is, at least such people could look at outcomes, USA, Germany, Australia, Canada, Singapore, South Korea, Nordic countries vs China (before they become capitalist), ex Yugoslavia countries, North Korea, Cuba, ex SSSR countries.
Capitalism is by far the best system for enrichment of human sole. As for greedy corporations, I was just drunk coffee in my favorite bar, having earplugs plugged in my ears, connected to my mobile phone, which was connected to the Internet and watched MIT lectures for free. That is also capitalism, which socialists fail to mention when pointing to apparent flaws.
Some issues here: China isn’t a capitalist democratic country at all. It is a former despotic oligarchy that has become a despotic command oligarchy. Because capitalism is ultimately amoral, it thrives there in its worst gangster forms.
Chile was the subject of quite a bit of US effort to prevent democracy from breaking out; one of many things Kissinger will be discussing in a lake of fire someday.
Capitalism as practiced in the US is culturally contradictory and expresses this conflict in a number of ways but mainly Social Darwinism and Mammon worship. We have lost the will as a country to harness the power of amoral capitalism as we did under the Square Deal, New Deal, and New Society; now the horses trample the garden and keep the best for themselves.
Like a natural force we are choking on an excess of capitalism and a shortage of moderation, much like a flood doesn’t really solve a drought.
Actually it isn’t money that is the primary motivator but it is what you can do with the money which is the primary motivator. If you couldn’t do anything with the money you would not want it
I agree with most of your points, just wanted to put some of my thoughts below (please forgive any mistake, not my native language
) :
• Amorality
First lets agree on the properties of capitalism : it is based on the private ownership of the means of production and the free market.
Adam Smith first put it on paper by his theory of the ”invisible hand”, which tells precisely the opposite of the assumption above -> every man, acting for its own interest, proves beneficial for the society as a whole. It is the base of economic liberalism. So it is not extrinsic, it is at the centre of the theory.
• Dependence on growth
That is linked to the theories of Malthus or Ricardo, which have been decried. This does not take into account the ingeniosity of the man, which can fully express itself (means and possibility) in a capitalistic and liberal society. Multiple inventions have been made in agriculture for example to improve the treatment of the land, to make it more productive.
• Intrinsic inequity/ Propensity to war
The free and competitive markets allow for three things :
- First the consumer has access to more and more goods, at a cheaper price (See the discussion on the toll-tax by Adam Smith : it favours the companies and not the consumer). This could seem consumerist but it is quite interesting I think : it gives people more time, which is the important resource as was noted, to think, to invent, to create, to observe the problems of the world and solve them (not all will do, but a small portion is enough..)
- Then as Friedman noted, competitive markets allow us to serve the minorities much more efficiently that some exogeneous policy. Let’s imagine a shop refuses to hire peoples from a minority. If the state dictates quotas, the owner will hire some against his will, with lower wage, and certainly no formation, the job market will be biased (price of work biased downward), and quotas are really hard to define and to regulate anyway. If we let the free markets act, the shop who hires the best people, regardless of their ethnic belonging, will have overall the best people, will perform better and eventually force the other ones to react.
- Finally it encourages commerce, which acts as an exchange of both goods and values between societies (and hence deters war in a way)
• Anti-democratic
Corruption is not a feature of capitalism. It is a natural flaw of man by which he abuses its power. I would tend to think once again that the market has the power to regulate it (sooner or later), looking at all the banking scandals that come up those days, and how the markets react. Of course we don’t live in a fantasy world, and there will always be circle of powers.
• Unproductive of real happiness
I agree on the fact that human happiness comes from something beyond capital accumulation. What defines individual happiness is more a philosophical question, but I would say that an important part of it comes from the possibility to express its talents freely. I would say that everyone is different, and everyone is a genius. I think capitalism and economic liberalism make it possible for everyone to be able to search and express its true nature, by giving them more time and individual freedom. Then what everyone chooses to do with that freedom is not controllable, but I don’t think any collective institution would be better placed to do it for him (reading Waldo Emmerson “Self reliance” at the moment, quite instructive).
You can’t have democracy without capitalism, or capitalism without democracy. All the rest is just beating down greed.
That is not the case. … China is not a democracy, but it has many elements of capitalism. South Korea for years was a dictatorship but had a capitalist economy. Chile had economic freedom and reforms before democracy.
Capitalism requires a certain degree of economic freedom, rule of law, etc., but that can exist without democracy.
Somehow my comment didn’t show up, probably I hit the wrong button…
I am sorry but I still don’t get it which version of capitalism this exchange is all about.
The actual one, where failed banks are kept in a zombie-state of life by taxpayer’s money, certainly isn’t capitalism: tt is socialism for the finance industry. And will be, as long as there are failed banks are not allowed to get bust, but are viewed TBTF.
Aside from that, I’d agree mostly with the views of Cullen.
Why is it that as soon as something is bad it needs to be called socialism?
What we have, plain and simple, is fascism.
“Capitalists are the ultimate time creators through greater efficiency in our lives.”
I have several friends who study/work in the field of Anthropology, and while most of the time I find there know-it-all positions rather annoying, it’s hard to blame them when people calmly pass along fallacies such as the one Cullen states here.
I agree that Capitalism seeks (and finds) greater efficiency, but to suggest we have more free time as a result is simply factually incorrect. Capitalism never focused on doing our daily tasks in less time, but rather on doing more tasks in the same time. And that eventually becomes doing even more tasks in even more time. Just a quick example relevant to my life- in my parents’ generation women were able to stay at home with the children. That option is long gone now.
You should read this one by Cullen. http://pragcap.com/the-role-of-the-entrepreneur-in-a-capitalist-economy
I have read it. I don’t disagree with it either. Capitalism increases efficiency. But that increase in efficiency has not led to increased free time.We don’t make the same amount of goods in less time. We make far more goods, but still consume a greater part of our day working.
Do you think we live a lower standard of living than our ancestors did 100′s of years ago? Do you think we live fuller lives currently? I would argue that we live very full lives. I do in a year what a man could have only wished to do in a lifetime 100 years ago. We experience things that were dreams to people 100 years ago. That’s having more time and a greater standard of living.
I have a much better standard of living now than I did over 30 years ago when I started working. But I do not have more time………..
Right. But it’s a semantic point to say that you only have 24 hours in a day, but can do much more in 24 hours today than you could have 100 years ago….You might not literally have more time, but your time has been far more optimized.
It’s not a semantic point Cullen. It’s a simple statistical fact that the average working age adult spends more time at work now and away from their families and loved ones. Capitalism has allowed a productivity that has allowed the world to produce mind boggling amounts of goods and services. And not just McMansions, but medicine creating long lives and other undeniably positive developments. I certainly don’t mean to imply these productivity gains don’t materially improve our lives.
Yet Capitalism has also produced this peculiar quality- our time may be optimized by 100 times respect to a hundred years ago, but people still find themselves with less free time than people had a 100 years ago.
West Europeans have more leisure time, most work less hours have much longer vacations and less worry about heath care and child care. But Americans deride them as Socialists.
And why do people work harder now? Because they all want a flat screen TV, the two cars, the McMansion, the Macbook, the Ipad, the cell phone, etc. You can’t compare the family of the 50′s to the family of the 2010′s. They’re not even remotely similar. And the family of the 2010′s has a much higher living standard….Seriously, go live like people did in the 50′s. Live in a 2 bedroom house with no AC, no garage, no insulation, no refrigerator, no TV, no internet, no telephone, etc etc. You can probably get by just fine on one salary if you did all that. Your life would be pretty miserable, but it’d be affordable!
Your comment suggests that people today value the consumer goods available far more than at any other time in history. Probably true, Ipads and AC are amazing inventions. You agreed here we’re working harder now. But at this rate doesn’t that suggest that we’ll be working even harder 100 years from now to get the newest amazing invention that put our Ipads to shame? Throughout human history family and human relations were generally valued far more than the contemporary consumer goods. Is our future really just swapping what little time with our family and friends we have left for the next must-have gadget? I swear I love technology as much as the next guy, but doesn’t the idea of that sort of future leave anyone else sad as hell?
I think the consumer goods we have today have increased our living standards far more than at any other time in history. So we work harder to obtain them because we value them more.
I work harder today than 10 years ago but I do not want more material objects. I have lots of material objects and I have become to value them less than I did before because my income flow allows me to go and get many objects without worry.
Today I have experience. Tons of it. I can put puzzles together I couldn’t do before. I can put them together quickly as well, if all the pieces are to hand. The future productivity will come from having large quantities of data and information to hand to solve puzzles.
Getting data and information today is still a chore that holds-up, holds-back producing the final product/service.
I can foresee a future that is much like certain Scifi TV series. The computer will do much of the leg work for you. Excel s/sheets and Word documents will be gone……………oh heaven
This standard of living discussion always disturbs me for some reason.
Yes, there is an opportunity to do more “things” compared to 100 years ago but whether we live fuller lives is debatable . The standard of living seems to have come at the cost of a large debt on the part of both the private sector and the public sector.
Also, if this is such a fuller life,why are so many people having mental illness and why are record numbers signing up for disability?
With regard to more free time, I know my grandparents had less money but ran a mixed farm even through the depression years and never wanted for anything and had much more time for community and friends then what appears now.
My father retired 25+ years ago and because interest rates were at record highs he has experienced a relatively risk free high return but this is now not possible.
I guess your point of view depends on where you live, your status in society and how lucky you may have been!!For example, an unmarried uncle living on the family farm required little income, lived of the land and sea, and had the freedom of time to fish and hunt more or less all he wanted. People around him were in a big rush and never stopped to think about what they were doing . He lived his whole life doing what people in cities were in a rush and stuck in traffic trying to get a small piece of for a few hours a few weekends a year.
He died at 80 years of age in the late fall having never been to the hospital in his life, with his freezer full of enough food to get him through till spring all obtained from his garden, and local fishing and hunting.
But he did not drive a BMW or live in the penthouse with a view of the skyline. He did not have the 55″ big screen or the fastest computer(never had one!!)
He did not have the 3 degrees needed to get a job today but was one of the smartest men I knew.
He did not spend time on a 10 lane freeway stuck in traffic going to and from work or stuck on a public transport.No, there was no Opera House, fine dining, fast food delivery (he had time to make his own meals with his own naturally grown food)or other “necessary” services that we more progressive members of society can’t live without but a question whether “fuller” defines the rat race that is our society if one wants to stay ahead of the heard.
Ask yourself a simple question. If living 100 years ago was so great then why don’t you go out and relive life as it once was. Honestly, give it a try. See what summer is like without AC. What it’s like to get around without a car. What it’s like to communicate with the people you love. We live in an incredible era where we fly around in 30 ton pieces of metal, communicate freely, have access to so many goods and services, etc. I know times are tougher than they should be. I totally sympathize. I am not saying life is perfect. But it’s also not the mess that some would have you believe. Everyone always likes to talk about how great life was back when….But no one actually wants to go back to those times….
Once human beings escape wretchedness (various definitions of what it means to escape exist of course), they crave stability above all else.
But stability is extremely difficult to maintain in an inherently unstable existence.
I would suggest that tt is the inability to viscerally experience the instability of the past, — indeed, the (likely incorrect) perception is that modern instability is ever-increasing compared to the relatively “slower pace” (perceived as more stable) of the “good old days” — that makes people long for the past.
As the old saying goes: Nostalgia ain’t what it used to be.
LOL, I don’t have AC now. Where I live it is really not needed but I am sure it is most welcome. That is why I said it depends on where you live. But I am sure glad for central heating in the winter!!
The main purpose for my “rant” was to just plant the idea that not all modern conveniences are leading to fuller lives and that the race to keep up to the “jones’s” is not without added stress and its possible mental disease.
Also sometimes the travel between the ears is more rewarding than in that flying piece of metal which is why I visit your site so I am happy for the internet invention.
I like the modern life but it does come at costs not always put into analysis which is why I have started to question what efforts I am willing to trade for things marketed as must have.
Besides that, I tried growing some vegies this summer and lets just say I still need the local grocer after this dry summer.
Both then and now are the best of times and the worst of times. Just depends on whose shoes you stand in.
Enjoy you weekend,
Cheers
Louis CK summarized this all best. “Everything’s amazing and nobody’s happy”.
http://www.youtube.com/watch?v=8r1CZTLk-Gk
The best line: “today’s technology is wasted on the crappiest generation of spoiled brats”.
Cullen, when people did not have cars local stores and services filled the need. I grew up walking to stores, library and school with friends. We played outside without fear of strangers. This was in Brooklyn, NY. Postwar prosperity had everyone working harder for electric toasters, cars and TV, but did not seem as happy.
I do not remember being unhappy because I did not have a TV. But I do remember being unhappy at not having a TV when other people I knew had one.
It is becoming clearer to me as everyday passes that your standard of living, your well being, your contentment and happiness is not wrapped up in material objects at all.
It is all inside your head.
Right, but the simple fact is, some of these material things represent substantial improvements in the way we live our lives. Material things are not synonymous with happiness, but they can sure make it easier to obtain happiness in many regards. I live on the other side of the country from my family and without planes and phones I’d probably never talk or see them. This is an invaluable advancement in living standards. I am able to live in an environment I love and still keep in touch with the people I love. Not the best example of how material things improve our lives, but you get the message….
Amen! If you did have a car, you were changing a flat tire ever 500 miles and driving on dirt roads; and glade to do it!
– Dependence on growth
Simple math tells us that growth (of any kind) cannot persist forever. It is like that old saw about doubling the number of pennies on each square of a chess board. At some point the pennies will weigh more than the earth before you complete the board. Even 2% growth has a doubling time of 36 years (rule of 72). It does not take that many doubling times before the human species consumes all the resources of the Milky Way Galaxy. And if the speed of light really is the limit, that constrains growth much more than the simple math of doubling.
Having said this, there is still a lot of room for growth in the present age. The main constraint today is chemical fossil fuels. With development of new and better sources of energy (nuclear or otherwise), Earth’s carrying capacity is probably on the order of hundreds of billions of people. The rest of the solar system hasn’t even been touched. Artificial habitats constructed in solar orbit might support trillions more.
Also, growth can go on forever if you have occasional crashes that reset the system, equivalent to wiping the pennies off the chess board.
Agree, except for the fact that growth need not to be in physical goods that requires natural resources. Services will however require some form of energy source in most cases though I guess.
Some famous scientist/economist (who?) said that man’s greatest flaw is the inability to understand the exponential function. I sometimes think that all the assumptions of percentage growth rates in modern finance (GPD, stockmarkets etc.) are just ridiculous, maybe the last 100 years or so of exponential growth is just a temporary blip in a linear function? Or worse a logarithmic (stagnating) function?
I’m so glad I will be dead before we reach hundreds of billions of people………….People is the one thing Earth has too much off….
Until now I have quite enjoyed this blog. But this is very weak. Growth is a natural law? It tells me all I need to know about the limitations of your perspective. Just another orthodox economist who cannot, or will not, see beyond the bounds of his own limited world view.
Your comment is void of value if you don’t even explain why you think he’s wrong.
Evolution is a natural law. Unless you believe in some weird stuff.
Orthodox economist? Cullen has combined some of the most heterodox views into an all encompassing understanding of what money and capitalism is. If you think his views are orthodox then you aren’t familiar with his views.
Cullen is far from orthodox. But there is something in his responses that suggest a blind spot. A belief rather than a thorough evaluation of society that may have its roots in parental influence…..
“The beauty of the capitalist system is that it rewards those who give much to society.” — Could you explain this?
Saying a “system works fine, it’s just the users’ fault” is kind of missing the point when it comes to governance. I feel like you and the letter writer actually agree on points of inequity and democracy (which are intrinsically intertwined), just the conclusion on whether each can be appropriately addressed in a capitalist economy.
Unfettered capitalism does increase inequity and result in a less “democratic” state. We have to consider human nature – something mainstream economics does not do. I find it pretty obvious that all sorts of regulations and reforms have eroded over time, casualties of greed. There is a long-cycle of societal evolution, and it involves the migration from boom to bust as the populace becomes younger and ignorant to the lessons of the past. The repeal of Glass-Steagal was sadly indicative.
All government spending is a redistribution. If it’s being redistributed inequitably then isn’t that a problem with the wait it’s being redistributed?
Is it all redistribution? What about at the municipal level? Taxes go to the local police force. Rich people may be paying more, but don’t they also see a greater benefit? This might be a semantic argument, but I can’t help myself.
You also imply government spending is driving inequity. I would disagree.
I think the big problem with capitalism is that we’ve allowed it to be overrun by neoliberals and neoclassical economists. So we don’t have regulated money and banking and as a result you’ve got growing inequality which makes the system more unstable. It’s a simple fix, but one that requires myth busting before the public wakes up to the causes.
Another sucker for the Austrians.
Okay, let’s go gold standard again. Now the population increases, or some company puts more of its profits on its piles.
Suddenly, we run out of liquidity in the system, and we go through a painful process of deflation. After a while we have lower wages and lower prices.
Guess who won? Yes – the guy with the gold pile from before. Suddenly his gold pile can buy even MORE than it previously could. Extra-big congratulations to the 1%!
The people who blame Capitalism do not understand that what we really have is a Fascist-Corporatocracy supported by a Plutocratic/Kleptocratic political system.
Please use everyday words………………the words you use are meaningless
I don’t blame you for being a typical stupid American who has no ability to think for yourself – the powers that be don’t want you to know the truth and they obviously succeed.
The internet and google are your friends – educate yourself:
http://rense.com/general37/char.htm
http://en.wikipedia.org/wiki/Corporatocracy
http://dictionary.reference.com/browse/plutocracy
http://www.merriam-webster.com/dictionary/kleptocracy
I guess you do not like Americans………..
I like Americans, just not stupid ones.
Forgot to mention that you also should read up on American history. Here’s some links about an attempted fascist coup in the 1930′s which was conveniently left out of American history books:
http://en.wikipedia.org/wiki/Business_Plot
http://www.youtube.com/watch?v=TFCGOCalqkE
http://www.prisonplanet.com/articles/july2007/240707fascistcoup.htm
You do know that Fascism is system where the corporations and government work in tandem to control the state for mutual gain. See Mussolini. Plutocracy is simply a government by the wealthy.
Midas II,
Obviously you did NOT read the links I provided because if you did, you’d know that there is more to Fascism than Mussolini’s corporatism. I’ll provide the link again here, so please read it:
http://rense.com/general37/char.htm
The author of the above article examined the traits of the two governments that formed the original historical model for fascism, Nazi Germany and Fascist Italy, and five other proto-fascist regimes that imitated that model, Franco’s Spain, Salazar’s Portugal, Papadopoulos’s Greece, Pinochet’s Chile, and Suharto’s Indonesia. The author identified 14 characteristics that were common to all of them. Currently the USA has 12 of the 14 characteristics of Fascism and one could argue for the other two as well. Here’s the link to the quote above: http://www.activistpost.com/2012/03/14-defining-characteristics-of-fascism.html
My point is the USA has evolved into what can be best described as a corporate plutocracy and at worse a fascist kleptocracy. Today, the USA is in no way, shape or form a capitalistic democracy – it’s all an illusion.
I am educated, which is why I know you do not need to use these stupid words that are meaningless….
Purchasing a degree from DeVry does NOT make you educated. The simple fact that you do NOT know the meaning of the words that I used proves you did not receive an adequate education or that you’re closed minded and only believe what you’re told. Obviously you can read, so open your mind and educate yourself. The truth is out there…
Oh I forgot to say, tell the Jews who got gassed that Fascism is meaningless.
Fascist-Corpratocracy is redundant. Plutocratic systems are by their nature Kleptocratic so that is redundant too. What you are saying is that we have a Fascistic Plutocracy. Correct enough but an inevitable consequence of human beings working within a capitalist system.
There is the capitalism of Schumpeter( production/growth) and the capitalism of Marx( finance/rentier) which are always vying for first place. At this point of time Marx’s version is way ahead.
Random question:
I was wondering if this would be a good comparison to use when trying to explain the MR realities to someone new at it.
Could you say that now, with a sovereign currency, deficit spending by the government is similar to the government obtaining more physical gold when on a gold standard?
Its a newbie type question, but figured I’d ask.
Tom are your familiar at all with the difference between MR and MMT? You’re analogy of “the government obtaining more gold” sounds more like MMT than MR.
In a sense, the MMT description of money creation is like the u.s. govenrment having a bottomless well of gold, during the gold standard. But it’s not exact, because during a gold standard there still exists convertibility between currency and gold.
It seems like a decent example to offer a newbie.
You really should think long and hard about this statement
“The beauty of the capitalist system is that it rewards those who give much to society.”
A Merriam-Webster definition of Capitalism
an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market
I thought the points made by the “writer” were well put and obviously well thought out and easy to understand………..
I’m all for capitalism. Problem is we don’t have capitalism, we have some sort of neo-liberal bankster fascism.
You’re one of the few who gets it. As I said below we have a Fascist – Corporatocracy with at best a Plutocratic or worse a Kleptocratic government.
It is interesting to note that this “neo-liberal” Obama gov’ment first term has had the highest growth in the stock market since Eisenhower. Of course you know the market has a history of doing better under the liberal Dems than the honest(?) GOP.
Industrial Capitalism lifts all boats. Financial Capitalism (FC) puts holes in the boats. Which type of Capitalism are we talking about?
Marx thought we would slide into industrial capitalism, where the means of production were controlled by that element of society. However, we have instead slipped into financial capitalism, where society is to have a toll booth at every onramp and exit. The idea is to put everything in debt, and then vector the wealth away from producers via debt payments. For example, if land is untaxed, then finance will step in and vector that stream of money instead to paying usury. Witness the effect of Prop 13 on California.
Already caretaker governments , who are arms of the banks, have usurped democracy in some European states. They are unelected, even though they have the name “prime minister.”
The funding taproot is credit money, which no longer goes toward industrial productivity gains, but instead uses its private money power to erect debts on the producers. How often do new loans today go to productivity gains? Expect FC next to toll our public commons in order to generate rents for our new rentier class.
Capitalism works fine when the money itself isn’t manipulated for rentier gain. The real question is “What is the nature of the capital, and who is benefiting from it?” To answer that question, we need to zero in on bank money.
REN,
I like your post. I’d like to add a follow-up thought. For Robert Brenner, the weakening conditions for capital accumulation in the core/”real” sectors of the economy (think industrial manufacturing) since the mid-70s has directly led to or created the conditions in which the system as a whole has had to turn to finance for not-so-much genuine wealth accumulation (wealth created through labor productivity gains) but via wealth “effects” of financial assets, the shadow banking system, etc.
For more on this, I recommend:
http://www.sscnet.ucla.edu/issr/cstch/papers/BrennerCrisisTodayOctober2009.pdf
“The fundamental source of today’s crisis is the steadily declining vitality of the advanced capitalist economies over three decades, business-cycle by business-cycle, right into the present. The long term weakening of capital accumulation and of aggregate demand has been rooted in a profound system-wide decline and failure to recover of the rate of return on capital, resulting largely—though not only–from a persistent tendency to over-capacity, i.e. oversupply, in global manufacturing industries.”
“It is a flaw of the users in understanding the system.”
True.
But I would argue that it is not enough to simply point out the “flaw of the users”. We must also explore ways to promote wider understanding, and we must carefully consider whether there are those among us who do understand the system, and who have benefited greatly both from their own understanding and the misunderstanding of others, and seek to use their influence and power to perpetuate that misunderstanding.
It’s tough to always be fighting against human nature. But if “man’s innate desire to improve and make progress (is) natural law”, then I would argue that it’s a fight in which we must engage.
This is an important point, that we must find ways to “to promote wider understanding” of capitalism (and the other forces in our society as well); it is, in effect, a critique of our education system. Our basic education systems (eg Public High Schools) need to address these issues more directly, in the form of classes. This way everybody can have access to a solid understanding of how the system works. If we do not have this then what you say about those with the knowledge exploiting those without knowledge will continue to happen. Therefore we need to place more importance on education which mean allocating more resources to it.
It is too easy to blame the “corrupters”of any system for its failures. Communism and Capitalism both failed not because of corrupters but because they failed to account for the human compulsion to use the system to advance their own situation at the expense of both the system and the rest of humanity. Any system to be viable has to have an automatic counter to this compulsion by utilizing some other even more powerful human compulsion.
In addition, the swift growth in the population of non-human persons (software and hardware robots) that perform work vastly more efficiently at vastly less cost than their human counterparts means that the capitalist system of distributing wealth as it exists today is doomed to either be replaced or to lead to a breakdown of civilization. We are seeing the beginnings of this trend with Google and Facebook but the advent of the printing of physical objects we are on a path where the need for human labor will become less and less. The outlines of what a replacement for capitalism needs to accomplish are emerging, but how it will actually work is hard to imagine.
yes, I think this is important to think about. this is the crisis of the social relations of production of capitalism of today: the story of contemporary capitalism is a story of unnecessary human labor. society has not experienced this kind of transformation in the productive sphere since the **political process** in the 15th-16th centuries during which English peasant subsistence farmers were forced off the land, thus creating the **economic** conditions of possibility of the wage-labor class (i.e., the conditions of possibility of capitalism itself)
You are spot on.
I am not sure we have a good definition as to what passes for Capitalism. Private ownership of business and commerce has existed for centuries. However, governments had usually imposed severe restriction and burdens on private enterprises which had the effect of severely limiting the right of ownership. The term Capitalism arose in the late 18th and early 19th century to describe the phenomena of the rise of banks and banking, making credit and hence capital available to the masses. This coincided with a loosen of government’s grip on commerce, and the combination of the two resulted in a powerful engine for growth and technological innovation. All these problems that people associate with Capitalism: inequality, war, greed, unhappiness and man’s inhumanity to man have existed for centuries. They were certainly around long before Capitalism arrived on the scene. But wherever you go in the world, where there is a good measure of Capitalism, you will find people lifting themselves up out of poverty, a good measure of affluence, technological innovation and yes lots of inequality. I comes with the territory. In short, Capitalism is not the cure for the worlds problems, but it certainly isn’t the cause of all the world’s problems either.
Wow! It’s the capitalist calculation debate!
Some good thoughts here on this post in general, but I’d like to add a few original thoughts or, as I see them, corrections to commonly held ideas:
To begin, I like to remind people of a famous phrase from Marxist cultural critic Fredric Jameson: “It is easier to imagine the end of the world than it is to imagine the end of capitalism.” While this may not be quite as true post-2008 as it was during the height of neoliberalism (here we are talking about it on a popular pro-capitalist blog!), it is probably still the case that an overwhelming majority (95%+?) of the developed world’s intellectuals have no intelligible basis for thinking deeply about a form of society that is genuinely post-capitalist AND affluent. Lots of reasons for this; not enough time to get into it here. This is kind of a jab at CR’s reply to someone above: “Ask yourself a simple question. If living 100 years ago was so great then why don’t you go out and relive life as it once was.” Well, obviously this is a non sequitur. Just because capitalism has proven itself capable of great advancements up till today does not mean that it will always in the future be the form of production that maximizes social welfare. And it is a particularly weak argument to suggest that individuals who are willing to think about the end of capitalism would need to accept some prior historical condition as the basis for future social life. Read a little bit of Marx (open mind required!) and you’ll quickly see for yourself that he was the first one to suggest that capitalism as a system would not likely generate the conditions of its own demise until it had reached its maximum state of development. At any rate, suffice it to say that there have been historical periods during which the future of capitalism was in doubt by most or many intellectuals (Smith and Ricardo doubted the long-term prognosis of capitalism and Classical political economy even had a term for this, the “stationary state”; economists during the Great Depression). Peculiarly, capitalism as a social system is continuously haunted by the prospect of its own demise, its own neutralization, its own over-coming. 20th century forms of “socialism” (USSR) were just that: 20th century manifestations of the negation of capitalism. Again, we need not tie ourselves intellectually or politically to the last century. It just might be the case that the capitalist system has advanced (our) society to a point at which the pitfalls of previous experiments with “socialism” would not be our concern. Case in point: the Bolsheviks presumed a Communist revolt in more-advanced Germany, the Russian peasantry was 90%+ illiterate, etc. These are NOT our problems today, and any argument that anti-capitalist politics must be tied to the same problems of 20th century socialisms is false out of the gate. CR et. al may be heterodox, but this is a relative term, ha.
Regarding a definition of capitalism: Yes, it is private ownership of means of production, but this is contingent on a prior condition of a particular set of *social relations* in which the vast majority of people have to sell their labor-power in the form of wage labor to meet their material needs. This social relation did not adhere during the historical period of Feudalism. Whereas Adam Smith understood the bit about the private ownership of means of production, and although he offered an early version of the labor theory of value (i.e., division of labor), he did NOT grasp the centrality of the wage-labor/capitalist social relation that undergirds the productivity gains from a division of labor in the economic sphere (in early manufacturing, to be precise), nor its necessity before concentration of means of production in the hands of a few could become the dominant form of production in a capitalist society. Marx was the first one to grasp the specificity of the social relations of production of capitalism; he was able to conceptualize this because he wrote at a time of generalized capitalist production in England in particular, that is, when the capitalist system, although it was not the ONLY form of production in society, was *generalized and predominant,* i.e., it was the major source of wealth accumulation; Smith was observing an early form of capitalist production in a time before this mode became generalized. [In case you're wondering, Ricardo also failed to articulate the core social relation as a general condition in all sectors of economic production; he was still too embedded in an economic system (early 19th c. England) during which the relationship between agriculture and other sectors of economic production was not yet clear; he was still swayed, if you will, by previously extant physiocratic theories that conceptualized agriculture as the sole source of a society's wealth. Again, it was not until Marx could observe the tremendous gains from capitalist factory production in the post-1848 period of awesome capitalist production that the real basis of the system could come into focus for theory.]
So the question that some people might want to consider is: what is the status of this social relation? I dont think there is a clear answer, but it is seriously being undermined by (1) the liquidation of manufacturing in the U.S., (2) the rise of finance capitalism over the core sector of manufacturing, (3) the continuous drive by capitalist to extract productivity gains out of their workforce, thus eliminating their need for workers. Regarding #3, of course it has obviously been true that the capitalist system has proven time and again that it is capable of absorbing labor through R&D and investment in new lines of production, but whereas most economists PRESUME that the system will always have the capacity to create new lines of production to absorb wage laborers, it’s not clear why this HAS to be the case. Ford, GM, Boeing, etc., employed workers by the thousands. Facebook, Google, etc. employ a few thousand at most. You get the general picture.
Nicely put.
Where Marx went wrong was in the assumption that all value is created through labor. We know today that it is simply not true. Push button – make profits.
Kelso’s analysis of the situation, assigning value-creating capabilities to both labor and capital (tools, machines, land), is, in my view, much more accurate.
Whether or not Kelso’s Binary Economy ownership model is the answer for the future is another question entirely. But I do believe his basic analysis is 100% correct.
Dear Mikael,
Regarding your first paragraph on Marx’s labor theory of value: By “Push button – make profits,” I presume that you mean to suggest that we know now that value is not generated solely by labor because it is generated instead or also by technological advancements via capital investments. If so (disregard my thoughts if I’m misinterpreting your statement), then the question is, what precisely was Marx’s theorization of the relation between living, active wage labor and capital (by capital I mean factories, machines, etc.)? Overall, the key thing to keep in mind when answering this question is that he was advancing for the first time a **concept** of labor that never existed before in that it was not simple, not straightforward, and that it was multidimensional. Whereas for Smith, productivity gains came strictly from the division of labor, for Marx, that’s only part of the story of productivity and realization of value. First, Marx was very clear that capital (i.e., factories and machines, etc.) was not only made possible by active, living labor (in a previous time period), but also that–using a 19th century vocabulary or rhetoric that is hard for us to understand–capital should be conceptualized as an accumulation of congealed “dead labor”; so there is a temporal dimension to the realization of value that generally gets overlooked, but the idea behind this is sort of intuitive: what is the value of the machines that are producing value? Well, the machines’ value is the amount of active, living labor that went into creating them. Second, of course Marx was totally aware that capital investments that produced machines made active, living labor exponentially more productive. How else to account for capitalism’s revolutionary transformation of society? But for Marx–and this is something that most people dont realize, including most Marxists–the concept of labor, and hence his labor theory of value, includes qualitative changes to the form of the laboring process that machines make possible. In other words, one dimension of Marx’s concept of labor is precisely what you referred to: machines revolutionizing the production process ARE the laboring process itself. Third, and by far most important, the definition of value is probably the least understood aspect of Marx’s political economy. Value is a **social relation** that inheres in history in a particular, definite way in the capitalist mode of production. Value is not a number, it’s not profits, it’s not money, it’s not prices, it’s not productivity–these are all (necessary but merely) aspects of the valorization process.
I admit it. I have only read reader’s-digest versions of Das Kapital. What you say makes all sorts of sense. And of course the unavoidable conclusion for Marxists was to socialize all capital and reward only labor. (Which was more what I was hinting at)
Of course that solution, as we now know, fell short on knowledge of the human psyche in general.
This is why I believe Kelso’s ideas are more realistic. It still rewards investment, but does not concentrate the rewards as badly as neoclassical capitalism does.
Mikael,
Unfortunately your replies are going from one Readers Digest version of Marx to the next. How did he fall short on “human psyche,” exactly? I didn’t follow that. And how do they (who?) “reward only labor”?
Labor, for Marx, is a social relation and a social process. I understand what you mean to say. You’re speaking about it as if it is one thing only: a social class antagonistically opposed to the interests of capitalists. It IS this–in a capitalist system. But to only view it in these terms, even under capitalist conditions, would be reductive and unnecessarily polemical.
Marx was not a sycophant of 19th century forms of socialism. He was a prolific writer, philosopher, historian, and political economist who thought deeply about the structure (and contradictions) inherent to capitalism. He studied and wrote about German idealism, Scottish political economy, French socialism, the American Civil War. But to the point, many of his deepest insights on economics are still valid today; for example, the long-term dynamics regarding the ratio of capital to wage labor in the production process (Das Kapital, Vol.3). Anyways, it’s probably best not to talk about Marx until you’ve given it some time. All the best.
I am fully aware that Marx did not set up the soviet union. I did say “unavoidable conclusion for Marxists” and kept talking about those same “Marxists” we know from history, not Marx himself.
I guess I could have made that more clear.
Thank you for the thoughts and pointers to further reading though, I’m sure I’m not the only one appreciating them!
Good thoughts. I touched on this here. http://pragcap.com/capitalism-makes-socialism-acceptable In short, we are more willing to accept socialism as capitalism advances our living standards. But I do think it would be a dangerous world where this view becomes imbalanced and we take our advances through capitalism for granted. Kaldor’s circuses of Rome quote comes to mind….
That’s the risk we run. Capitalism has improved living standards in ways that we can only fathom. And it’s allowed us to be able to afford much more than anyone ever thought. But the risk is that we fall into the trap of believing that we can rest on our laurels and just allow socalist programs to overrun productive use of resources resulting in high unemployment, stagnancy, and ultimately an unstable system.
But the problem today is not lack of productive resources, it’s lack of demand. Which comes to be because the producers no longer need to employ as many people. Putting the profits on piles ends up shooting itself in the foot, killing future profits. The big owners of productive capital have forgotten their part of the social contract – reinvesting a big chunk of it in new great things, not just putting it on a pile!
Don’t want to acknowledge an implicit social contract? First against the wall when the revolution comes.
Myself? I’d prefer to find a solution that doesn’t involve revolution. Even if that solution is burying piles of money and making people work to dig it up.
It’s not really just lack of demand; it’s that productive capacity can easily outstrip even robust demand now. Our computers and robots are simply too good. We can make “stuff” much faster than we can consume “stuff”, especially since we have eliminated a lot of jobs that used to be necessary to make the “stuff” in the first place. Those people who lost jobs are not consumers, and the producers are ever faster and more efficient. The imbalance is unfathomable. It’s a problem we haven’t figured out how to solve yet, but we must.
I eagerly await the results of the first country attempting helicopter drops of money as a cure. I think it may be educational.
Dear Cullen,
I’ve read your post at the link you provided. Thanks for sharing. I actually spent a Friday night not too long ago reading through a long discussion about that equation! Of course I only understood a fraction of it, I’m hoping because it’s not my field of training. (Part of the discussion seemed to revolve around differences among mathematicians and economists over how to read identities? Not sure. More importantly, I’m still studying the categories “S” and “I”…)
Intellectual history is a funny thing. It’s unlike other forms of history, so studying it requires a rather different mindset. Intellectual history “advances” by way of (1) steps backward that are necessary from time to time to reconsider a vexing problem; (2) erasures of concepts that only reappear under certain social conditions; (3) lapses in collective memory of this or that form of thought, set of arguments, etc.
For example, the absolute inability of contemporary economists to think through the concept of value.
Production is an interesting category, one to which you refer in your post. Interestingly, Marx wrote a very nice piece in 1857 that came to much the same conclusion as you’ve briefly intimated. In his preparatory notes to his scientific treatises on political economy (e.g., Capital, Vols. 1-3), he wrote a short piece that specifically addressed the discourse on production among classical political economists, Smith, Ricardo, J.S.Mill included. Marx had great respect for both Smith and Ricardo (less so for J.S.Mill and others, including early socialist thinker Proudhon, whom Marx seemed to enjoy making a fool of). At any rate, in the Grundrisse piece, Marx analyzed the important differences among production, consumption, distribution, and exchange. He also argued, however, that it was critical to abstract from all of them to arrive at the conclusion that production “sits atop the hierarchy,” to use your phrase.
Anyhow, in case you’re inclined to dive into 19th century debates on classical political economy(!) in which your own realization over the centrality of production was at front and center of a raging debate, refer to:
http://marxists.org/archive/marx/works/1857/grundrisse/ch01.htm
For me, what’s interesting to think about from an intellectual historical perspective is the following: whereas the centrality of production was coming into view in the mid-19th century when capitalism was coming into full and clear view as the dominant mode of economic activity, you’re thinking about its centrality at a time when the system is not merely highly advanced but also at a time when the centrality of industrial manufacturing is a thing of the past. How does this difference in historical-economic context impact our conceptualization of production (what it is, how it’s best organized, its conditions of maintenance and continuation, etc.)
Thanks MR. I’ll have to chew on that link you sent. It looks dense. Personally, I love the differing opinions so your thoughts are a breath of fresh air. I’m not nearly as well versed in Marx’s work as I should be. I’ll have a read and get back to you with some more complete thoughts.
Cullen
CR,
one of the things capitalism could ‘not’ do on its own was produce the ‘awesome’ USA women athletes. It took government redistribution called Title IX to make that happen. And the for-profit ‘colleges’ (which are getting fat feeding on student-loan trough) did not produce a single college athlete – male or female.
Capitalism cannot thrive where there is not equal opportunity and fair competition. Govt needs to regulate capitalism in this regard. But make no mistake – govt did not “produce” those women either. They became great athletes through their own hard work, perseverance and CHOICE to become what they dreamed.
God, I hate stuff like this so much. Not your response, Cullen, but just the entire enterprise.
Capitalism itself is an ill-defined weasel word, with indictments usually written by someone who sounds like they’re OD’ing on granola.
The only thing that’s just about as bad are the defenses of capitalism, usually written by a money-man trying to justify his way of life ex post (“I am a money-man – therefore, it must be a noble undertaking.”) and usually involving a foray into philosophy where the money-man is ill-equipped to comport himself.
Example of the former – the assault:
Amorality – increase of individual and corporate wealth is the only core principle of capitalism. Recognition of any social concern or relationship to the natural world that transcends the goal of increasing capital accumulation is extrinsic to the system.
Core principle? I’m sorry, I must have missed the day when Mammon came down from his Pilfered Palace to give us the Laws. We got here more or less by accident, with customs and institutions growing up in ad hoc fashion as we stumbled forth. Philosophical ruminations about capitalism, describing the virtues and vices of different iterations of the “system”, invariably arose after the fact. There are no principles that aren’t totally subjective inferences. It’s like talking about the “principles” of a traffic jam – it doesn’t have any, just emergent features.
In reality you’re pissed off about the current hierarchy of concerns that some actors have in the capitalist system. You can change the law. You need to approach it like a systems theorist rather than a pissed off philosophy student.
An example of the latter – the defense:
CR: Growth is not merely an inherent component of capitalism. It is inherent in human life. We are evolving creatures who are always striving to become superior. It is misleading to claim that capitalism is dependent on growth. The human being in inherently dependent on growth. Capitalism is merely one system through which we achieve this.
Why go there? You’ll end up on shaky ground if you attack a boneheaded critique of economic growth with examples of “growth” elsewhere and start making strong statements about the nature of humanity. It drops a pseudo-mystical vale on the quest for return – you end up sounding not unlike a Marxist talking about the alienation of labor or an “Austrian” kvetching about how we must have his own personal definition of uber-freedom even if it makes our 401k’s commit seppuku.
The best critique of finance capitalism I’ve ever read:
http://www.leftbusinessobserver.com/WSDownload.html
It went out of print, so the license reverted to Mr. Henwood and he put it online for free. If you read it, you can actually see where Justin Fox ripped off the ideas for his book The Myth of the Rational Market.
Henwood’s Left Business Observer should pretty much be required reading as well.
This comment made me feel less shitty about reading internet comments. Thank you for the perspective, Ed. There is far too much of this general undefined bullshittery out there.
People tend to forget what capitalism is about. It is not only about productivity, private property, capital and so forth. I think we all agree that Marx showed some flaws of the capitalistic system but capitalism of the 19th century is dead. And many people debated and defeated Marx’s theories even during his lifetime. And history shows that Marx was dead wrong. So therefore I do not know why we still debate about Marx and socialism.
We live in a free market society (better term for capitalism) where governments (should) regulate monopolies, competition and so forth. For some the government is already involved to heavy, for others not heavy enough.
Anyway, if we want to live in a free society we need an economic based on free markets. It is as simple as that. There is no arguing about this. Everyone telling you something else does not know what a free society means. The greatest good we have is our freedom and this freedom can only be protected if we have a free market economy.
There is a never ending way to improve our free market society and eventually we will never reach the perfect economic system. But every step towards any kind of socialistic economic is and will always be a step backwards. This should be clear to everyone.
So all these Marxists and Socialists out there, please stop your dangerous anti-human nostalgia.
Several problems here:
1. The free society / free market: every system gets corrupted and you do not live in a free society anymore (it is a plutocracy / oligarchy / fascism / crony capitalism / corporatocracy / socialism for the rich / kleptocracy – choose your poison) and there is no free market (the Fed’s existence itself is proof enough). I would love if we had true capitalism and a free society.
2. The free market cannot produce public goods. The free market cannot regulate itself (e.g. pollution, product safety, working conditions safety). So it needs regulation.
3. Currently we have too little regulation that is needed (e.g. banks) and too much regulation that is not needed (e.g. curvature of a banana)
4. It is not given that a past system that has worked well so far cannot be replaced by a different system that works better, given the wealth accumulation, production techniques, population growth, people’s needs for a fuller life etc. A different system needs not be socialism or what you thought socialism was. Maybe there is a system not defined yet.
Answers:
1. As CR already described (in a much better way) it is the governments job (jurisdiction) to fight corruption, fascism and so forth. If people are getting corrupt one can not blame the system. Its like you play football. If you commit a foul you can’t blame the game. The referee is responsible that everyone sticks to the rules and to penalize you.
2. I never claimed that there shouldn’t be any kind of regulations. And if you have a free market customers can avoid companies with bad products. If you don’t have free markets you don’t have a choice. Regulation is important, the problem is just to make the right regulations. That’s why any kind of economic system will never be perfect.
3. Completely agree with you. The problem is just to make the right regulations. See answer above.
4. Fact is: If you want to live in a free society you will need a free market system where people have a free choice to buy, to create, to serve, to live as they prefer to find their own satisfaction, peace and luck (within the rules). There is no research needed for any other system because every other system which is not based on the free market principle can’t have a free society and is an oxymoron.
Ok let me clarify:
1. The current state of capitalism is (probably, maybe) not a flaw of capitalism per se, similarly like CR says. But it is not free market / society worth defending as a status quo either. It needs a change in my view. It is not government that has or can fight corruption of the system. It is every citizen. You cannot have democracy with sheeples. CR calls for people taking the system back as well.
2. Ok agree. But do not mistake having a choice for a free market / society. I see no material difference B/w the 2 US parties. Companies can easily sell you bad goods if you do not realize they ae bad and so on.
4. I agree that this free market system is the best currently available. But do not close your eyes to the future. The current system uses the lowest common denominator – namely greed. One could find someday a more noble human trait as a motivator. Also do not forget that here we are in financial capitalism and the good capitalism we crave for is the industrial / production capitalsim. The current indebtedness of the system calls for exponential growth in both production (I think it is achievble given human ingenuity) and accelerating growth in indebtedness (the latter I think puts limits on the system). So the system needs either a reset (a second greater depression) or it will fail and will probably be replaced.
Answers:
1. This is exactly what I mean. The current problems are not flaws of capitalism itself. It is a problem of regulations and the people who should protect and survey the regulations but also of the participants (banker, greedy entrepreneurs, people taking advantage of social benefits…). Think of Chevrolet, AIG etc. It is not in the sense of capitalism to save companies which are not competitive. The regulator created a moral hazard. You can’t blame the system if regulators disrespect the rules. And don’t forget there are many theories around how capitalism should work. There is not only “the capitalism”.
The biggest mistake people make is to think if a problem appears (not only in capitalism) they start to doubt and question and want to change everything from scratch. Nature cycle on earth needed millions of years to get to the point everything works (more or less) well together. And now people think that a complex economic system, which basically evolved and was formed 200 years ago should just work smooth and perfect.
2. You can’t always avoid bad products. But you won’t buy it a second time and you will never recommend the product to your friends.
4. As long as population is growing and there are people on this earth which do not have access to clean water, do not have enough food, do not have a shelter or even enough clothing we will need growth.
By the way growth is not only a matter of quantity but also quality. An economy can grow only by adding value to the products and services it produces.
And think of all the recessions (on average every 4 years) we had since statistics are made. The economy is by far not only growing. Companies come and go. The vast majority of companies do not even survive a decade. And go to Greece where you can experience what it means if an economy does not grow anymore.
Every system that is based on noble traits will fail. Socialism is based on noble traits. If you want to change human minds to serve noble goals you’ll need concentration camps, gulags etc. But even after 70 years of brainwashing Russians were and are still greedy, selfish etc. but also generous, big-hearted and so forth. Its human nature. The system has to serve humans but if you change the human mind humans will serve the system. This is a complete wrong approach. And capitalism works as well if people one day will not be greedy anymore (of their own volition). To serve society and build products and services for them you don’t need to be greedy. You need humans taking actions.
You are right. You do not have the same needs as I do, or your neighbor, or your friend etc. to live a happy and fuller life. Therefore it is important to have a free choice. At least you got a chance to pursue your goal of happiness.
I do not know if people in general are really so unhappy as you describe. I just know that never ever in human history lifespan was higher and the masses of people had never so much spare time to travel around, to discover other countries, to work out, to hang around, to party etc. And this spare time we got through the rise in productivity through competition in a free market environment.
When I compare how my parents or grandparents had to work (six days a week and more hours a day) just to get food and give their children a good live it seems just laughable all this talk about how hard our lives are.
Don’t get me wrong, there are many problems to solve but I do not think that the answer is just to get another economic system.
In the USSR people were not happier then in western countries. Lifespan was much shorter and child mortality was high. Alcohol was a common way to drown sorrows and became part of the society. All the noble goals and free cultural events did not make people happier and fulfill their lives.
Basically one should understand that not every problem of society has its roots in capitalism. The world today is as it is and it evolved since billions of years and not only in the last 200 years of capitalism.
Think about how we live today. We are organized in mega cities where everyone can be anonymous. Many people live as singles in an apartment. Before then humans lived in small clans under guidance of leaders and stayed together all their live. If people grow up in constant anonymity they get probably more selfish and greedy, don’t you think.
As I said. The problems of todays world are so complex that one must be very narrow minded to reduce all this to capitalism and think if we change the system from scratch we will live in the promised paradise.
Ok so we agree obviously on many points, with the difference being that you think the free market / society is the holy grail and everything that is not that is socialism or USSR. Here I am open minded to a system that is neither USSR/socialism nor capitalism and looking towards the future. Of course unfortunately people have not changed at all in the last 5000 years and they maybe will never change, but hope never dies.
To add on to 4.
I do not want to live in a free society. I want to live a happy and fuller life. Now it can be true that free society is the best way to get a happy life – at least most people seem to assume that without really thinking about it. But the system we have currently is starting to accentuate more and more the negatives of financial capitalism. My impression is that this mindless and accelerating running around, trying to make money often in jobs useless to society, and having less time (and priority) for spiritual, cultural and social personal growth is making people’s lifes less fuller. You have the choice to be a drone in the matrix, feeding in the end the elite with your energy and wealth generation so that they get “more” of what they already ahve way too much, or be a drop out of the system / society. Both choices are sub-optimal in my view – they are not real choices.
By the way. If you don’t want to live in a free society be prepared to live in a dictatorship. And if this system doesn’t agree how you pursue a happier and fuller life… good luck – I mean gulag.
Regarding the government’s “jurisdiction” to “regulate” detrimental behavior/forces:
The notion that the social function of government in a capitalist society is to regulate is fine in a limited sense; it is an important and useful ideology that commits those in power to prevent themselves from benefitting personally from the worst excesses of capitalism. But it is very limited. It not only fails to address the fundamental, underlying structures and conditions within the sphere of production that generate the need for regulation in the first place, worse, it papers over those conditions with the fanciful belief (religious in its structure and tone) that regulation will take of the more unseemly aspects of how we do things in reality, in our concrete material existence. But of course in so far as proper regulation is something that the elite of a society commit to do **to themselves**, they also retain the prerogative to ignore regulation when it no longer suits their interests. The crisis of accumulation from the mid-70s onward set the stage for the de-regulatory policies of neoliberalism in the 80s onward.
When you analyze these things from the perspective of social groups with distinct interests (I’m purposefully avoiding using the term “class” here), it becomes very clear that regulation is something that the elite do to themselves when it is in their interests.
Getting out of this conundrum requires engaging a set of critical questions that are almost always off-the-table for anyone who has already made up his/her mind that capitalism is the best social system. So, at the risk of saying things that are inherently unintelligible or unwelcome: we need to re-think our fundamental abstractions when we do social theory/analysis. I dont think there is any way around this central dilemma. When one commences all critical thought with the presupposition that our form of state (i.e., “public sector”) is a *given*, then the relation between that form of state and civil society in toto (of which the “private sector” is only one part) can never come into focus. The state is always already there in our thought, and the task becomes determining how to best configure this state so that it comports with the economy, culture, private life of individuals, etc. “More” regulation and “less” regulation are actually just two sides of the same thought process in which the form of state is presupposed.
But if one is willing to suspend this initial abstraction that the public sphere simple exists, one can then ask the critical question, where does this state come from, and why/how does it take the form that it does? This is why, before settling into an abstraction of “public” versus “private” spheres in society (as CR’s paper does), we will have to probe a prior question: what is the relation between our mode of production in its totality and the form of state that is commensurate to it? Stalinists made the mistake of presuming that the political order came directly out of the economic order of production (we call this fallacy “economism”; it is also the insightful “base-superstructure” debate in social theory).
At any rate, it is very helpful to consider the possibility that our mode of production (i.e., capitalism in which the wage labor and capitalist classes uneasily co-exist), in so far as it is how we reproduce our daily existence as individuals and society, is partially constitutive of two things: (1) a form of civil society in which individuals have individual self-interests that MUST over-ride the interests of society (which explains why to this day the only way for apologists of capitalism can conceive of the benefits of self-interest is in terms of a nebulous and magical “invisible hand”); (2) because our mode of production is structurally based on a particular form of social relations (loosely, wage labor and capitalist) wherein those social groups have diverging interests, society **requires** a form of state (public sphere) that stands above and over civil society (private sphere) in order to manage, “regulate” the antagonisms that find their source in economic production.
“The notion that the social function of government in a capitalist society is to regulate is fine in a limited sense; it is an important and useful ideology that commits those in power to prevent themselves from benefitting personally from the worst excesses of capitalism. But it is very limited”.
Couldn’t agree more. But what you as a Marxist/Socialist don’t seem to understand is that the socialistic system needs even more regulation and regulation is always done by the “ruling class”. So Marx was wrong when he stated that if the production belongs to everyone there is no ruling class needed and class warfare would be over. The guys in Kremlin were always a ruling class.
In a free market the participants have freedom to make their own choice, contracts and to organize themselves among each other and this is a huge advantage. Not everything gets decided by some out of touch bureaucrats. The cluster risk of failing or wrong regulations is in socialism even bigger. There is many evidence to proof the incompetence, waste of resources and even waste of human live in socialism.
And when we divide civil society in a public sector and a private sector everyone should admit that a society organized either 100% through public sector or 100% through private sector that this is a radical form either-way.
So our free market system which allows a private and a public sector is a great compromise and minimizes the cluster risks. And the private sector minimizes the cluster risk even more because not everyone works in the same field. Of course if everyone (public and private) is dependent on banks and this sector goes down, everyone goes down. But regulators failed to keep competition up (one of the key principals of capitalism) and to ban huge mergers among big banks and other entities which are now too big to fail.
One should understand that capitalism, contrary to socialism, evolved from society, their behavior and acting among each other during all the centuries. Whereas socialism is, as I would call it, a drawing board system. We live in such a complex world that even todays most powerful computers can’t factor in all consequences to form a model economy which would work without any major crisis and unintended consequences. But there are still some “intellectual” guys out there who think their brainpower is so exceptional that they can / or hope to create a much better economic system. And I’m pretty sure there are (unfortunately too) many people out there who think they are smarter than the whole rest of us. And if there would be a revolution to establish such a new system these so called intellectual guys will let the dumb guy from the street die for his ideas – and that’s for sure.
But both Marx and marx-reloaded fail to show us this system that will work from the beginning till the end of humanity without creating any problems, unintended consequences, crisis etc. which will bring to all of us peace, happiness and fulfill our lives and hopefully from the very first beginning. This might probably put your dreams of a new system in perspective.
Haha, a good one. As I said above, I still hope humanity can find an even better system, maybe not invented yet. But this thing with the drawing board captured my attention. On the other hand the current iteration of “capitalism” is already in the hands of the “drawing board” crowd – Krugman, Bernanke, Monti, Draghi, Baroso etc. Their arrogance and self-interest know no limits, not that different from say Mao or Stalin. Before we find the “better system” I would be extremely happy if we return to true free markets.
Let us hope for the best.
Go to Somalia if you want “true free markets”. There is a balance that has to be achieved between state-controlled commerce and complete free-for-all. I think it’s illustrative to see North Korea as an example of the former, Somalia as the latter. Free market fundamentalism is just as dangerous as Maoist communism.
I read this out of context, forgive my tone. I see you aren’t a free market fundamentalist from your earlier comments.
Haha, I guess the joke is on me! Very quickly, however: a society can call themselves or be called “socialist” or “communist,” but if there is a ruling class, whether in the form of an economic elite on Wall Street or Beijing or stodgy bureaucrats in the Kremlin, then it is simply is NOT socialist/communist. Your concept of socialism is limited to the 20th century, Dave (and perhaps InvestorX). Time and again you keep reiterating all of these painful lessons of the past, and then your analysis is predicated on those things. We’ve heard it all before. Well guess what? At the end of the Cold War, elated Washington elites embraced the “end of history” in the triumph of democratic-capitalism (see Francis Fukuyama, “End of History and the Last Man,” 1992). A mere twenty years later, the global capitalist system nearly falls off a cliff. History, it seems, isn’t ended just because a tiny worldview stops thinking historically.
Capitalism has fared no better at avoiding major crises. Actually, its crises have been far worse than any of the socialist experiments of the 20th century! I’m not defending those tired forms of socialism, I’m demystifying the benevolence of capitalism. Both world wars were “caused” by capitalist nations. 20th century Europe imploded under the weight of capitalist crises. No serious thinker would disagree with this. The Bolsheviks even tried to pull out of WWI but could only do so under the punitive terms set demanded by a German capitalist nation. Perhaps if the fledgling USSR didn’t have such odious and vulturous and hostile capitalist nations surrounding it (including the US), it would have fared a little better in its attempts to modernize. But what happened is what happened, and what started as a bold experiment devolved into a violent and ultimately failed state. Nobody would argue with that, so how does your analysis that “it has been proven wrong” even begin to move the discussion forward? It doesn’t.
During WW2, the US actually had something like a command economy. FDR pulled all the big corporate heads into DC and told them to organize production in a way that would win the war. They did it. And the knowledge for how to do it came from the capitalists, themselves. This is to say that the capitalist system, in its very nature, revolutionizes and transforms the productive capacity of society in such a way that augurs its own passage to another form of society. Like InvestorX, I have no problem calling it something other than socialism because I’m not interested in semantics. But for anyone who is interested in thinking about these things, it cannot be denied that Marx himself was very prescient and precise in his analysis of the underlying structure, dynamics, and contradictions of the capitalist system. Even if that’s all we learn from studying that old bearded uncompromising radical who spent over ten years in the British Museum before publishing his scientific treatises, that will be a huge step forward in 2012.
Also, the advantages of a “compromise” of a public and private sphere that you refer to is not a critique of what I wrote. I never said there would be 100% private sector or 100% public sector. I agree with you–let’s have both. But let’s have both in a very different manner. [In ancient Greece, the private sphere was that of the household and the public sphere was that of the city-state polis; in this ancient world, the subjective relation that individuals had with their state was one of non differentiation; in other words, individuals in society did not view the public sphere as exploiting them when money was needed for wars or to build temples to the gods or whatever, and their identity as individuals (as such) was predicated on their being a member of a community. We dont have anything like this in Western culture.] The critical question as I posed it: how and why does the mode of production generate the form of state? It follows as a possibility that even in socialist society in which all individuals are thriving and affluent there will still be both a private and public sphere; but each and their relation to each other will be radically different from what we have today. Today, the state is utterly limited to negotiating the interests among different, antagonized classes and keeping a false peace among them.
Why do apologists of capitalism always presume that “compromise” is an appropriate concept on which to hang your hat when it comes to social analysis? It is the single most despicable aspect of all liberal thought. The best and most interesting aspects of capitalism are precisely those that are NOT based on compromise, such as the productive benefits of competition. It’s as if capitalist-intellectuals are willing to accept philistinism in their thought for the sake of boldness and daring in their entrepreneurs. Sorry, but I want boldness and daring in both.
“both Marx and marx-reloaded fail to show us this system that will work from the beginning till the end of humanity without creating any problems, unintended consequences, crisis etc”
I quite honestly have no clue what you are talking about here. I do not recall putting forward a single policy let alone a “system”(!) that will work until the end of time(!). If anything, I’ve merely insisted on the historicity of everything, from our thoughts and concepts to the forms of state and social systems.
“One should understand that capitalism, contrary to socialism, evolved from society, their behavior and acting among each other during all the centuries”
If there is only one, single ideological belief that apologists of capitalism are going to have to get over it’s this one, the totally uncritical notion that capitalism sprang naturally from the deep insides of human nature, as if it was always, from the beginning of time immemorial, just waiting in the shadows for its moment to shine in the light of an enterprise market freed from the constraints of the king or Church. In reality, capitalism had a beginning in history; it will no doubt have an end. It’s history up to this point is very short, only a few hundred years at most. I highly recommend for reading the utterly fascinating history of the transition to capitalism in agrarian England. It had its roots in political policies that separated subsistence peasant farmers from their land by force (and threat of violence), thus creating the social conditions of possibility of a wage labor class who could be put to work making pins and things, the very commodities that became the basis for Adam Smith’s landmark study in Wealth of Nations.
The ad hominem attack that I consider myself smarter or some smug intellectual is not appreciated. I dont think anything I’ve said or written suggests this, and I dont accept this as a valid point of discussion. I’ve been careful to critique concepts, arguments, etc.
Marxist analyses, when intellectually provocative and honest, should be thought of first and foremost as an attempt at a **total critique**. I think it is important to avoid reacting in a knee-jerk fashion to the word “Marx” or “Marxism” with whatever we grew up learning during the Cold War. There can be no arbitrary decisions limiting a critical discussion to a return to “healthy free markets” because there is the possibility that no return is possible or that such a return, even if the market will be ideologically pure, will be an actual disaster for everyone subject to its terms. It seems to me, however, that since 2008 in particular, it is the private market sector that society cannot afford (whether individuals who are heavily indebted or a failure of aggregate demand, etc), not the public social sector, which is basically being relied upon to shore up the former, even if in a way that favors the wrong people and is ultimately short-sighted. Difficult and painful times are on the horizon.
It seems like this post has served its purpose. Again, thanks for the discussion. I’m not really convinced that the questions I put forward were understood or considered in the manner that I was attempting to put them forward, but I accept partial responsibility for that due to my manner of prose, etc.
First of all dear marx-reloaded I do not just repeat some 150 year old theories which are empirically proven wrong. I and even more my ancestors experienced socialism first hand. My grandparents had to leave their country in fear of death.
“Your concept of socialism is limited to the 20th century, Dave (and perhaps InvestorX). Time and again you keep reiterating all of these painful lessons of the past, and then your analysis is predicated on those things.”
This is called empirical evidence and it is still better then to guess and try a shot in the dark…
…and that’s why I can use your argument but just vice versa. Your concept is based on future predictions about how society will evolve. What makes you so sure that future generations are so different from todays? What make you so sure that future generation do not think, feel and act the same as they did the last 200’000 years?
“Capitalism has fared no better at avoiding major crises. Actually, its crises have been far worse than any of the socialist experiments of the 20th century!”
I never claimed that crisis can’t occur in capitalism. Quite the opposite is true. I said this system is not perfect and crisis are part of that system to clean it out, which is actually an advantage. Even nature itself has this cleaning mechanism. This makes the system not vulnerable but strengthens it anew and is therefore necessary.
But you are dead wrong when you think that socialism didn’t have its major crisis. The whole industrialization of the USSR is based on murder, deportation and enforced labour. Is this a role model to you?
Of course this was never intended by Marx but this is the way your theory got transformed into practice. I call this reality.
The history of USSR was just one major crisis. I experienced this many times first hand. Since I was I kid I travel regularly to Eastern Europe and back then the iron curtain still existed. On average the gap in infrastructure is today still at least 20 – 40 years. In 70 years of socialism the resources were just wasted.
Somehow you promise an economic system which will never get into a crisis or have any kind of problems and create just happy men. At least your argumentation implies that your “socialism” will be somehow perfect and superior. This should actually wake up people and be suspicious. The same tactics were used by Marx, Engels and Lenin. They all talked about the “Promised Land” and all the peasants will be free and happy forever.
I fear the day mankind will make that step backward and establish some sort of socialism. We had this experiment already and it created not much good. And as you noticed unfortunately young people have already forgotten about the Cold War, about socialism, USSR etc. And in our western countries most never experienced “true socialism”. And this makes it possible for people like you to influence them for this anti-human idea.
Unfortunately you even deny history and empirical evidence and just repeat the arguments from Marx. These arguments were wrong back then and they are still wrong but in todays world many people are impressed again – because people forget and that’s why history doesn’t repeat itself but it has always the same ending.
By the way why do you think socialism was never implied in Germany the birthplace of Marx and Engels? Back then was a huge argument about socialism in public, media etc. but Marx was defeated and people were somehow more “intelligent” in Germany then the poor Russian peasant who caught at every straw and never experienced a public dispute about socialism .
What dont you understand about the following line: The productive powers of capitalism revolutionize the concrete conditions of (capitalist) society, thus setting the stage for its own transformation into another form of society.
Nothing in this claim is predicated on (1) some airy, utopian prediction of the future; (2) the pathetic forms of socialism of the 20th century. You keep repeating both of these (by now hackneyed) ideas. They are quite possibly clouding your ability to think critically about OUR form of capitalism in 2012. This is called ideology. It’s regrettable what your forebears had to go through. My grandfathers both served in the Pacific theater. But appeals to personal experience are NOT what empirical verification means (though the conflation is an easy one to make, especially when it involves trauma.)
The Holocaust, Maoist Cultural Revolution, Siberian gulags and Stalinist assassinations, American atomic bombs over Japan and firebombing German cities, European colonialism and Third World revolutions, so on and so forth. The 20th century was sooo bad. Words cannot express the horror. –We’ve heard it all before.– Ah, the simple pleasures of consumer capitalism in the postwar Pax Americana. Why can’t we just go back to THAT? A capitalism whose rising shores lifts all boats. That would be a great “compromise” between the truly bad and the dangerously utopian. –We’ve heard all this before, too.
Forget all of that. It’s just hyperbole, anyways. To the point: you actually have not adduced one single idea of Marx’s that I’ve used in all my posts that you’ve proven wrong. You just assert it all as wrong, “proven wrong,” “defeated,” or whatever your mind has confected in some ad hocery of anti-Marxist polemics.
What I’ve tried to say–notice that it’s not very different from what others and even you have said–is that the US in 2012 is in a pickle. The way I think about it is in terms of a crisis (contradiction, really) between the social relations of production and the mode of production that those social relations posit. Capitalism is kind of a victim of its own successes: its ever-constant search for greater efficiencies makes the system more productive in general, which is the same thing as saying that fewer workers are needed to produce the same amount of commodities (whether real OR financial). But since capitalist society is one where human beings are coerced to work as wage labor or as entrepreneurs to meet their material needs, this trend towards labor redundancy portends a social crisis in both the economic AND political spheres. This is a Marxist analysis. Who would argue with it? It is merely laying out a problem in the sphere of production that will be hard to overcome.
Now, in the past, capitalism has proven very successful at generating new lines of production (via R&D and investment) that could absorb redundant labor. This is no doubt something that Marxist theory failed to anticipate. It has done wonders at avoiding catastrophic crises. Question is: does it have this capacity to do so again on a scale necessary to avert a general crisis? I think many of the people on this blog are aware of this already. There is probably more than one way of conceptualizing it. I never, not once, predicted when this might happen or even that it would in fact, especially not in the short-term.
To be honest, I’m more concerned, given American political culture and the pathetic state of public discourse, of a turn to the far Right than the possibility of something from the far Left. At any rate, nobody in their right mind would claim that the capitalist system is about to collapse in the short-term (so maybe you can get off my back now, ha!). But problems in the economic sphere cannot be solved overnight; they sometimes require 5-10 or more years to correct. Having the right set of conceptual tools is therefore critical to begin addressing the problems of the post-2008 context. All I see in Washington, throughout Europe, China, and all major capitals where political-economic elites are living the high life are small thinkers in the face of big problems. It’s how Nietzsche characterized the German bourgeoisie in the years prior to WW1: exhausted.
For me, it would be myopic to limit our analyses to monetarism or to economic production, though these forms of thought are no doubt crucial. I believe that the **social relations** that make capitalist production possible in the first place–something we’ve all become so used to that most people actually believe that humanity has lived like this forever–are an important variable in any complete social analysis. But with this, I’ve no doubt strayed beyond the general intent of this blog, so I feel like I’m over-stepping what might be reasonable to discuss insofar as a restricted domain is a useful guide to decide what to post in a blog.
If you cannot agree to what I’ve written here (except for the immediate preceding paragraph), then I really would have to begin doubting your commitment to think rationally and critically about our current state of affairs. That might be going too far, so I’m sorry. But you certainly dont seem willing and/or able to integrate different concepts (for purely ideological and polemical reasons) into your analysis.
Dave, good question regarding: “By the way why do you think socialism was never implied in Germany the birthplace of Marx and Engels? Back then was a huge argument about socialism in public, media etc. but Marx was defeated and people were somehow more “intelligent” in Germany then the poor Russian peasant who caught at every straw and never experienced a public dispute about socialism”
In the wake of WW1, there were two socialist leaders of a very strong and active Leftist movement. One of them called for a revolution. The other one, Rosa Luxemburg, thought this was a bad idea. They were both assassinated and this was used a pre-text for violently crushing labor movements throughout Germany. Socialists remained very active during Weimar. Communists, by the way, were the **only** political faction to fight in the streets against the Nazis. German capitalists basically welcomed Hitler with open arms…out of fear of communism. Bad idea? I’ll let you decide.
But your question raises an important point about Marx’s theory. Marx suggested that revolution would work in the **most advanced** capitalist states, not the most backward societies. But throughout the 20th century, the ONLY states where socialism was attempted was in the most backward or least developed countries. Third World postcolonial societies often turned to socialism not out of a belief in those ideas, but as a way of throwing off the oppressive yolk of capitalist colonizers. Therefore, one reason to never think of 20th century socialisms as an adequate frame of analysis for what Marx actually theorized was that it has never been tried in the most advanced states (US, UK, Germany, etc.). This is what he actually had in mind. The reasons why it has never occurred are complex and uncertain. This blog is probably not the place to discuss all that.
Nicely put:
“Maybe there is a system not defined yet.” (And all of your #4)
“capitalism of the 19th century is dead. And many people debated and defeated Marx’s theories even during his lifetime. And history shows that Marx was dead wrong. So therefore I do not know why we still debate about Marx and socialism.”
These are usually ideas that get thrown around a lot, but very few people actually have the background to give any details. The marginalist revolution? Is this what you’re referring to?
“Anyway, if we want to live in a free society we need an economic (sic) based on free markets.”
In my opinion, this is also the kind of logic that gets tossed around without any real basis in social analysis, not to mention knowledge of political history. Somehow, the presence of “free markets” magically guarantees political freedom. Can somebody explain to me how exactly this works? (1) Didn’t somebody on this post already make the point that fascism was more than happy to accommodate capitalist production in Germany and Italy? What exactly was WW1 and WW2? It was a 30 year long war to determine which form of political system would work best with a capitalist mode of production **at that point of time in history.** The American form of representative democracy proved mid-century that it could and would neutralize fascist capitalism. It was also willing to bring to an end European capitalist-colonialism. Hence Pax Americana/Empire. But fascism happened in capitalist democracies (weak democracies, to be sure). Anyways, these are all historical phenomena. Nothing is written in stone. Not free markets, not political freedom. (2) The free market in the U.S. did not bring political freedom to American blacks. Revolutionary blacks brought freedom to blacks. The free market did not bring equality to women. Radical feminists brought greater equality for women. Now, it just so happened that capitalism learned it could accommodate both “free” blacks and women because their political emancipation promised a new, highly exploitable class of wage laborers. This is the real story of affirmative action for African-Americans and of “breaking the glass ceiling” for women. So next time you want to equate the virtues of the free market with freedom in general, please just dont.
In the West, the current ideology de rigeur that “guarantees” your freedom in the political sphere of society is abstract human rights (e.g., the U.S. Bill of Rights, UN Declaration, Rights of Man, etc.). In the economic sphere, what does freedom look like? Well, for the vast majority of people (which is exactly how it MUST be), it’s the freedom to work as wage labor or go hungry, i.e., not have your material needs met. Marx was actually the first economist to comprehend that one of the main advances of capitalist social relations over feudalism is that it **separated political coercion from economic coercion,** thereby creating the social conditions in which political freedom could/should be guaranteed for the sake of economic coercion. This is not real freedom.
And on a larger scale of analysis at the level of nations, it’s also the case that political freedom is not guaranteed by the free markets. The French Revolution did not take place in a bourgeois society properly conceived; it was a semi-feudal, peasant-based social system (quite backwards compared to England at the time). The Fr.Rev., however, created the conditions throughout the Continent for the proliferation of the social relations of capitalism. (The transition to capitalism in England was unique, as I alluded to in a previous post already in this thread.) The U.S. presented a third and unique transition to capitalism, but suffice it to say that capitalism was not the dominant economic system at the time of the American Revolution. England, the European Continent, the U.S. all have at least two things in common: First, your thesis must be reversed–it is political emancipation, the Man of Rights, that is a necessary condition for the proliferation of the capitalist social relation of wage labor:owners. Otherwise, on what basis can someone walk away from a job without facing any consequence? The contract between labor and owners is based on the figure of Man who has the freedom/right to walk away from the job. [In case this is not clear, then consider that under Feudalism, political elites could politically coerce peasants to produce or hold them to the land, etc.] Second, regardless of what you think about 19th century capitalism being dead (many aspects of it of course are), this social relation still exists in our society. In fact, “neoliberalism”–the part of it committed to liberalizing the labor market, anyways–was an attempt to shore up the social relations of capitalist production.
Like I already said in an earlier post, over 95% of (more-or-less) smart people have no intellectual basis for even beginning to think about Marx. The lame arguments that I’ve had to address in some detail (the fear of a return to the USSR, that free markets guarantee freedom, etc.) are proof that most people are just re-hashing polemical attacks (from the Cold War or whenever). The rationale for such polemics is understandable. A lot is at stake. But I prefer intellectual honesty.
“Somehow, the presence of “free markets” magically guarantees political freedom.”
This is a common fallacy people make. I never claimed that a free market is a guarantee for a free society or political freedom (see China) but free markets are a necessary condition to have a free society.
Going back to WW1, WW2, colonial imperialism, slavery and so forth will not get us any further. Prior WW1 almost all of Europe was in a monarchy. People where not free at all and protectionism was common. People often refer mercantilism as capitalism or even free markets and this is just wrong. Its a common technic of Marxists to refer to capitalism for every chapter in history where something went wrong. Therefore I won’t refer to the biggest mass murderer in human history like Stalin and Mao. I’m pretty sure this wasn’t Marx’ intention as well.
Slavery, inequality of women and other minorities is not a followup of capitalism but rather of religion and other cultural factors. Again this Marxist technic to blame everything on capitalism and free markets is not getting us further. Women in socialist countries are not equal at all (see China, Iran etc.) and again this is a religious and cultural thing. Please stop this arguing way below the belt.
And again, Marx was defeated and history proved him to be wrong. The so called dictatorship of the proletariat is an oxymoron and it seems no Marxist recognizes this.
To blame every problem on capitalism is very narrow minded. There are many reasons why our world is today as it is. Not all good things come from Marx or socialism and all the bad things from capitalism.
“Like I already said in an earlier post, over 95% of (more-or-less) smart people have no intellectual basis for even beginning to think about Marx.”
Well this shows again the polemic of this Marxists. Everyone with a different opinion is just not smart enough and certainly not as intellectual as a Marxist because they are the only wise guys in the universe. You can’t argue against such narrow minded people because if they do not have any argument the just say that you are basically dumb and evil comes from capitalism and this will be the end of the discussion.
By the way. In our free society with free markets we accept even people with a socialistic or marxistic view. I do not know one socialist country where people can think free about new social and economic systems.
Dave,
Thanks for your thoughtful response. The purpose of almost all of my message was not to reduce all problems to the ills of capitalism (which would be reductive). What I was doing was debunking the ideology that says free markets come prior to and/or are necessary for there to be political freedom in society. This MAY be true in some societies, but there’s no reason to abstract from those experiences to the paradigm itself. In fact, as I tried to show, it’s actually more accurate to say the opposite, because the kind of “freedom” that you have in mind is specifically political freedom, which is only partial freedom. The abstract concept of Man with Rights is the necessary (or a priori) condition of capitalist social relations.
One of the great advances of capitalism (as Marx saw it) is the separation of politics from economics (relative to, say, feudalism, where they mapped onto each other very tightly). In our society, we have complete political freedom–the kind of freedom that you cherish, that we build monuments to, etc.–and I’m telling you that it is perfectly commensurate with economic coercion. No one is saying that this political freedom is a bad thing. I’m just saying that it is partial and that humanity might–just might–be able to do better.
When you repeat without explaining that Marx was proven wrong without really saying what specifically he got wrong, then I have to assume you either are not really sure or you are simply recycling polemics that you picked up somewhere along the way. We all do this, no big deal, but these moments should be where critical thought begins anew, not shut down.
As for the term “dictatorship of the proletariat,” you have to know what the term “dictatorship” meant at its various moments in the 19th and early 20th centuries to be able to talk about it. But I can tell you that it did NOT mean anti-democratic, which is what the concept means for most people today. Lenin was crystal clear that a dictatorship of the proletariat would be a vast increase in democratic forces in societies because the tiny Russian elite would no longer be ruling over everyone else. (Then there was that nasty civil war in which Great Britain, USA, i.e., hostile capitalist nations, sent military aid to the pro-czarist camp…) But I adduce the Leninist citation in order to demonstrate that the concept dictatorship meant something very different than what it generally means today.
At the risk of repeating myself, when you say, “I do not know one socialist country where people can think free,” I have to say again that the social, political, economic concerns of socialists in the 20th c. are just that: 20th century. Why do you presume that the same political exigencies would plague a future form of socialism? It is a non sequitur. Consider this: many young people today do not know a single thing about the Cold War. The USSR is a totally abstract notion to them. What they do know is the Great Recession of 2008 and that capitalism gets them a job as a coffee barista after college. Not a great way to build loyalty to your economic ideology among youth…
Stalin and Mao were no doubt brutal. FDR was fine with fire-bombing almost every Japanese city. Dresden. Hiroshima. Nagasaki. The kill rate of the US military in Vietnam. Must we really go to that totally banal conversation–we’ve heard it all before–about which political leaders killed the most people, as if a body count somehow tells us anything useful about our politics? The 20th c. was obviously awful! The USA has been “blessed” with political stability since Lincoln put paid to the Southern white aristocracy in the interests of Northern industrialists. But one could just as easily interpret our recent political stability as the condition of possibility of a non-catastrophic transition to a post-capitalist society…
But thanks for being an interlocutor. I never meant to imply that others are not as smart. Far from it. There are so many things, esp about MMR, that I dont understand yet. How to conceptualize contemporary finance and monetarism in terms of a long-term, secular history of capitalism is one thing I think about. Lots of interesting stuff and plenty of room for intelligent input from everyone. Take care!
“Stalin and Mao were no doubt brutal. FDR was fine with fire-bombing almost every Japanese city. Dresden. Hiroshima. Nagasaki.”
FDR was involved in WW2 and helped to save the world from nazism whereas Stalin and Mao killed their own people just to keep the power. Sorry but this makes a huge difference.
“Why do you presume that the same political exigencies would plague a future form of socialism?”
Every economy based on noble goals that first needs a change in human nature will fail sooner or later. The economy has to serve humans and therefore it must consider human nature. As the bankers on Wall Street showed us humans are very creative to take advantage of a system and to work around the (noble) rules. True capitalism would have punished them.
The same was in the USSR. Black markets and hidden economy were booming and the only productive sector back then and working under capitalistic rules.
As I already told we should not waste our resources by trying to establish a new system or even worse some kind of socialism which probably never will work or only in 100s of years. We should use our resources to establish a better capitalism which helps us in the near future. Of course it is not prohibited to think about other systems. But if you have a breakdown on the highway with your car you do not waste your thoughts on how to construct a new transport system right now. You use your resources to fix your car ASAP to get home.
“When you repeat without explaining that Marx was proven wrong without really saying what specifically he got wrong, then I have to assume you either are not really sure or you are simply recycling polemics that you picked up somewhere along the way.”
Marx was wrong in many ways. He claimed that capitalism will be overcome by class warfare. We live in a post 19th century capitalistic world and class warfare has still not overcome capitalism. Quite the opposite happened. The most important socialist “countries” like China and USSR are gone. People there are even more eager to achieve capitalistic goals then nowadays we are in the west.
Marx claimed that socialism is the inevitable consequence and the next level after capitalism. Kondratiev / Schumpeter (and others) proved that capitalism works in waves and will be reinvented after each crisis. So there is not necessarily an inevitable consequence after capitalism. Kondratiev had to pay with the gulag for his research.
And like the great Karl Popper said: If socialism is the inevitable consequence of capitalism, why has one to call for a bloody world revolution in his manifest if it will be established be itself?
http://hat4uk.wordpress.com/2012/08/14/revealed-the-awkward-truth-about-iceland-that-the-eu-and-the-neocons-wont-face/