What comes after Capitalism?

Burn all the air! Be Free!The panel debated long and loud. Much argument both for and against. Civil society groups protested outside, each outdoing the next in plaintive cries and outlandish dress. Eventually the chairman spoke:

“Ladies and gentlemen, a decision has been reached. The system is beyond reform. We need something new that represents all. We have decided. Air will be replaced.”

Outlandish? Perhaps. But so is the argument against Capitalism.

Air may be dirty, or clean. It may carry the scent of long-forgotten memories, ancient tombs, mountain streams or religious catechism. But it is still all air.

Capitalism is the same. It may be focused towards redistribution and a political notion of equality and egalitarianism; then it is just Socialism or Communism. It may be focused on the needs of corporations or of sophisticated elites; then it is just Mercantilism or Corporatism.

Capitalism is no more an ideology than is Air. “Clean” air is certainly ideological for any given definition of “clean”. And so too for Capitalism.

We may debate the flavour of Capitalism much as we debate the nature of an acceptable quality of air, but we cannot choose to cast it aside any more than we can cast that which we breathe.

Unless you choose to become entirely self-sufficient (and that does mean entirely); unless you choose to cut your own hair, grow all your own food, make your own clothes, build your own house and find your own cures for any medical problems you may have there is going to be some form of division of labour. Once you have division of labour you automatically introduce trade as you bargain for things you want for the things that you have.

If all you have is yourself you may bargain for future things that you can give in return, like “help in time of need”. You’ve just introduced credit, which requires trust relationships.

With the complexity of modern living and the astonishing size of our societies we need a flavour of capitalism to allow those who don’t know each other to trust and interact.

The violence and vociferousness of anti-globalisation and anti-capitalist protestors gathered in the German city of Rostock, in the run-up to the G8 summit at Heiligendamm, belies an astonishing paucity of suggestions other than “scrap capitalism”.

It cannot be an all or nothing debate. There is no way that business and political leaders can even consider such a ludicrous suggestion.

Imagine the argument forced upon the politicians: “Air is dirty and unclean. It makes us ill. We demand that you get rid of it.”

You can ask them to clean it and then we can discuss what constitutes “clean” but asking politicians to get rid of air is nonsensical. It isn’t even something they can do.

As long as there are people and as long as we are delighted by different things there will always be Capitalism. What flavour we have will change with our own needs and aspirations.

Capitalism is a natural process. And will evolve to suit our needs. If we let it.

10 replies »

  1. …hmm all you say is probably a given considering that the business model has us all by the jugular.

    …but I cannot help but think of the ‘predictions’ of some University dwellers who theorize that ultimately all humans will cease to trade (too bloody hot due to Global Warming) and there will only remain a few, tightly knit groups surviving in the icy regions, just beyond Norway…

  2. Capitalism is an economic system based on private ownership of the means of production, in which personal profit can be acquired through investment of capital and employment of labor. Under capitalism, a small minority of exploiters appropriates the surplus created by labor, leaving just enough for the actual producers to survive. The exploiters dispose of the surplus to meet their private interests, regardless of larger societal needs.

    Is there anything wrong with accumulating wealth as a reward for creative innovation? Certainly not. But as the saying goes, “My rights end where the rights of others begin”. When the accumulation of wealth leads to irrational power that forces a great majority of the population to live in poverty and starvation, capitalism has overstepped its boundaries. The functions of “self-interest” and “free market” cease to benefit all participants, as originally intended, and capitalism has outlived its usefulness.

    Economies of scale provide owners of the means of production with profit potential that is infinitely greater than zero. But is it ethical or humane to race through a highly-populated residential district at 200-mph simply because your vehicle has the potential to do so?

    Implementing a policy of negative income tax in the United States could: 1) replace the existing income tax system, which robs the poor for the exclusive benefit of the wealthy, 2) provide a guaranteed minimum income, universal health care, public housing, higher education, and countless other basic human needs for all workers by 3) regulating profit — a) the means by which profit is derived, and b) how much is “enough” financial leverage for any one individual to have over the remainder of the population.

    Entrepreneurs in more innovative nations derive “efficiency” from increasing productivity, not from cutting the wages of workers or increasing the taxes of workers. Their advanced industries thrive, while others die. Progressive businesses prosper while others fail. But their economies remain competitive, because the system itself ensures everyone has enough to live on.

  3. David, please explain to me in which countries “a great majority of the population … live in poverty and starvation”. I have no doubt that none of these countries will have free-market economics with due respect for property laws and human rights.

    The US has 95% employment and very limited amounts of poverty with virtually no starvation. So do all democratic and free-market states. The only countries where the starving exceed the well-off are disaster zones like Zimbabwe, Somalia or the Sudan.

    Capitalism is not the problem. The issues under discussion are merely about “price theory”; how do we appropriately price goods so that we can incentivise behaviour that benefits the majority?

    Consider climate change. In the past year company investment into alternative energy research has gone from US$35 bn to US$72 bn and that is out of new business scenting an opportunity (and venture capitalists piling in) and old businesses fearing carbon caps as well as new, more nimble, competitors.

    In other words Capitalism can, very rapidly, provide solutions to clearly enunciated problems. Any problem for one person is a business opportunity for another.

    “capitalism has outlived it usefulness” you say; then explain to me the system of incentives you would like to put in place to guarantee that the great problems of the day (climate change, AIDS, TB, obesity, cancer) will be treated and where the money will come from to pay for the development of those solutions?

  4. Comparing capitalism to air is literally sickening. Not only are there a multitude of alternatives that have been proven to work already in place (such as the democratically run factories of Argentina and the Zapatista Autonomous Municipalities), but we have plenty of time to democratically decide alternative economics one we free people’s minds and allow them to think of a world which may be truly post-capitalist.

  5. Furthermore, whythahawk, you can’t take a couple criteria you like and proclaim capitalism isn’t the problem. There are literally dozens of theoretical critiques of capitalism, all of which are extensively researched and professionally argued. With all the war, poverty, gender roles, racial tensions (xenophobia caused by ‘immigrants stealing our jobs’), and alienation in today’s society you can’t possibly think that the system is perfectly fine.

  6. In the sense of the word “capitalism” that whythawk is using, he’s right. Capitalism is fundamentally trade and bartering, and in that sense, it is nearly like air.

    Unless you’re doing EVERYTHING yourself (building your own computers, generating your own power, growing your own food, building your own house, etc.), you’re trading to get what you need. In the case of capitalism, you’re trading your time and energy (your work) for a convenient medium of exchange (cash) that you can then trade for the goods and services you are unwilling or unable to provide for yourself.

    You can criticize an insufficient explanation, but the fundamental point is still accurate.

  7. Brian explains, more eloquently than I, the basic inevitability of capitalism. Of course simplification will occur in a 600 word essay. People have written volumes on the topic and will continue to do so. I produce simple models to stimulate discussion.

    Capitalism is simply the organisation of wealth to produce things that we can trade. The debate isn’t about capitalism or alternatives to capitalism, but the expression of that capitalism.

    Communism is a redistributive form of capitalism, the “democratically run factories” are still selling things, giving ownership of things to employees. Ownership is capitalist.

    I never said anything about capitalism being fine or not, I said that the debate isn’t about whether we should have capitalism or not since that is a spurious argument (like deciding we need an alternative to air). What we need to discuss is how we’d like Capitalism to be expressed.

  8. I think I see your point, whythawk — and it’s an important one. As such, the key term “imperialism” seems conspicuously missing from this discussion. After several years of reading and thinking, I eventually concluded that “exploitation” can be either minimized or maximized, but never eliminated completely. As you suggest, “division of labor” (otherwise known as “specialize and trade”) makes some level of exploitation a fact of life. So it logically follows that “capitalism” cannot be completely eliminated either. Much like gravity is a physical law of nature, capitalism seems a socio-economic law of nature that can be harnessed either productively or destructively.

    Likewise, “democracy” seems a social/political/economic law of nature that can be either minimized or maximized, but never eliminated completely. As you suggest, capitalism can be “expressed” in a number of ways. Imperialism forces the majority (by law) to surrender the bounties of production (capital) to an exclusively entitled minority, while a democratic approach tends to promote a more equitable distribution of purchasing power (capital), resulting in a far more stable economy, overall.

    In this view, imperialism and democracy seem to be opposite poles of the “expression” you describe. So rather than calling for “The Death of Capitalism”, perhaps we should promote “Economic Democracy” instead. For some reason terms like “democratic capitalism” still seem like an oxymoron to me. But am I somewhere in the ballpark, whythawk?

  9. I’m not sure if you’re attempting to link democracy and capitalism? They don’t necessarily have to have anything to do with each other. China is very capitalist, but not in the least bit democratic. Zimbabwe could be described as very democratic (as far as voting is concerned) but without any property rights (so only the most minimal form of capitalism).

    Pure free-market capitalism removes exploitation. If the only thing governing a trade for any good (under any circumstances) is the desires of the direct parties to that trade then – it can be directly inferred – both benefit.

    It is only where a third-party to a transaction exists that you can get exploitation. I don’t approve of the way my taxes are spent. My government is exploiting my ability to earn a living in order to tax me to spend money on things I don’t like.

    There is nothing I can do about that. The majority voted that the minority of tax-payers should be exploited in this fashion.

  10. I’ve come to view democracy as a governing force that can be adjusted on a sliding scale, with pure imperialism at one extreme end of the spectrum and pure socialism at the other. The comfort zone for the larger majority probably lies somewhere between the two extremes. You observe that capitalism is merely a fact of life, a socio-economic law of nature, necessitated by the division of labor. I further suggest that capitalism is governed by the natural forces of democracy.

    At the low end of this democratic scale, capital is imperially managed by a small minority of exclusively entitled profiteers, who siphon productive capacity away from both producers and consumers through the protectionist rules of monopoly “law”.

    While the “high” end of democratically managed capitalism does not completely eliminate personal “exploitation” (as you suggest), it does eliminate the oligarchic and monopolistic “third-parties”, who deliberately impede productive innovation to minimize or prevent their financial risk.

    As you suggest, the removal of such non-essential personnel immeasurably empowers primary producers and consumers to mutually benefit from direct and equitable trade at both regional and global levels. As you further suggest, “incentive” seems the most conspicuously missing catalyst for democratic adjustment from imperialism toward more socially managed capitalism. Society will not voluntarily migrate toward the more equitable end of the democratic spectrum until it is clearly demonstrated more viable and beneficial than the current setting.