Is capitalism really such a good system?

[Dave2002]

A recent article claims that capitalism is OK, it's simply the way that we (mis)use it which causes problems - http://www.cityam.com/1403122339/fre...ase-capitalism

[Serial_Apologist]

I've never read so much b*llocks in my life. Even advocates of capitalism wouldn't agree with what he says. If I knew how to cut-and-paste I'd transcribe that article and demolish what it says paragraph-by-paragraph. For starters capitalism IS about creating more needs than the consumer thought s/he had - and "choice" is an illusion under this system because advertising (apart from sanitary towels and Tommy Walsh's expanding garden hose) never tells you about the product, just how it will help you feel you belong by conforming to the latest unattainable model of you; and by the time you like it it's either obsolete or worn out. No wonder kids turn to fundamentalist this, that and the other because these are apparently the only alternatives to a sick system on offer. What the hell is the Legatum Institute in any case? What a fatuous name - typical!

[teamsaint]

here is a film that shows us all about (over)consumption, and how (literally) buying into the system is central to its success.

http://storyofstuff.org/movies/story-of-stuff/

I think its great.Aimed towards kids perhaps, but well worth a watch.

I don't think the over consumption thing applies to CDs, though.....(whistleysmileything).

[ahinton]

If I knew how to cut-and-paste I'd transcribe that article and demolish what it says paragraph-by-paragraph.

Then be our guest; here it is for you to take to pieces!

"SITTING in the Guildhall yesterday, attending the Margaret Thatcher Conference on Liberty, I was struck by two thoughts. First, Thatcher was probably the only British Prime Minister who truly understood capitalism, not just as an engine of wealth creation and efficiency, but also as a moral force for good. But secondly, while the economic battle for capitalism was largely successful in the 1980s, the moral case wasn’t really fought. Now it is in danger of being lost.

Milton Friedman argued that economic efficiency and wealth creation were not the primary benefits of capitalism. He believed that the intellectual defence of the free market should focus on its moral superiority. But that message is crowded out and ridiculed today. The word capitalism itself is seen as emotive and pejorative, conjuring up all manner of negative images – whether Gordon Gekko screaming "greed is good", or bank chief executives giving unrepentant interviews in the wake of the financial crisis.

Some of capitalism’s proponents haven’t helped either, by buying into the greed myth. Ayn Rand has sold 30m books, among them a collection of essays entitled The Virtue of Selfishness. Rand argued that capitalism and altruism are incompatible – a social Darwinian survival of the fittest.

So to Joe Public, the essence of capitalism is greed. But there’s a problem with this story. It's a lie.

The patron saint of capitalism, Adam Smith, wrote about self-interest not selfishness. Indeed, he was at pains to distance himself from the work of Bernard Mandeville who, early in the eighteenth century, articulated the view that individual greed was good for society.

The essence of capitalism is not greed, but service – serving customers and markets through a process of voluntary exchange. If the players have too much market power, the process becomes less effective. But voluntary exchange, free entry and exit, competition, innovation, property rights and the rule of law are the essence of capitalism.

The problem isn't with the system, it’s with the people. When individuals don’t have the right values and a sense of responsibility, excess ensues. As Irving Kristol has argued, to the extent that western capitalism has abandoned its Judeo-Christian values, the system has become "uglier".

Sorry to be blunt, but the best analogy is with sex. Play within the rules and responsibly and it's great. Play away from home irresponsibly and there’ll be problems. Sex is not the issue, just as capitalism is not the issue. The issue is with responsibility and values. And just to drive the point home, you can drive a car responsibly or irresponsibly. But if you crash it, don't blame the car.

Capitalism is the greatest system in history for wealth creation. Nothing comes close to it. The freedom and human flourishing it has provided is mesmerising – just look at the progress of humanity over the past two centuries. But capitalism is built on institutions, and those institutions are largely built on values such as honesty, freedom, responsibility and vitality. The attack on capitalism at present is both at the level of values and institutions. The pillars are crumbling.

Further, it’s not at all clear what else is on offer other than more statist solutions to state-created problems. There may be utopian dreams, but they’re a nonsense. As Martin Wolf has written: "Those who condemn the immorality of liberal capitalism do so in comparison to a society of saints that has never existed and never will".

Our consumerist, materialist society does appear excessive, but remember that it emerges from the free expression of tastes and preferences you and I have chosen. If we don't like it, we're free to choose something else. That's the whole point. We, personally, need to get a grip if we're running around with unlimited wants that can never be fully satisfied.

For the producers and wealth creators, how do we get back to a spirit of vitality, innovation, wealth creation and human flourishing, so that free markets and free people can truly maximise their potential? It rests on values and institutions.

In my view, part of the institutional answer is to acquire a much "thicker" concept of economic liberty. Economic liberty needs to be seen as just as important as other natural rights – the maximum property rights (less taxation) consistent with a small but sensibly sized state. There's an even stronger positive moral and economic message as well. Virtue requires freedom. More freedom requires less government. So less government can produce more wealth and virtue, building economic and social capital.

But make sure you take this away. Capitalism does not need greed, and it will only feed greed if you let it."

I don't necessarily but into every detail of this but will be genuinely interested in reading your analysis of them - and I'm sure that others here will be, too.

For starters capitalism IS about creating more needs than the consumer thought s/he had - and "choice" is an illusion under this system because advertising (apart from sanitary towels and Tommy Walsh's expanding garden hose) never tells you about the product, just how it will help you feel you belong by conforming to the latest unattainable model of you; and by the time you like it it's either obsolete or worn out.

No, it isn't - at least not by nature and definition. Of course it can be marketed that way ans sadly all too often is so and, when it is, it deserves all the approprbium that it can attract. By the way, at least most sanitary towels work in terms of being fit for purpose, whereas the expandable garden hose (at least from quite a few reviews of it that I've read - I don't have one myself) doesn't, as described by the marketing material.

No wonder kids turn to fundamentalist this, that and the other because these are apparently the only alternatives to a sick system on offer.

Can you present evidence that this is the sole or even main reason why those young people who turn to such things do so?

What the hell is the Legatum Institute in any case? What a fatuous name - typical!

http://www.li.com/

[Serial_Apologist]

here is a film that shows us all about (over)consumption, and how (literally) buying into the system is central to its success.

http://storyofstuff.org/movies/story-of-stuff/

I think its great.Aimed towards kids perhaps, but well worth a watch.

I don't think the over consumption thing applies to CDs, though.....(whistleysmileything).

Yes that's wonderful; thanks, teamy!

It's funny, isn't it, that more than 30 years after the fall of what they called "socialism" the ruling class still frets over its own legitimacy, as shown by articles of this kind. Why otherwise keep on banging nails in, when any reasonable cofflin only requires a few to keep the lid on?

[Serial_Apologist]

Then be our guest; here it is for you to take to pieces!

Thank you ahinton.

"SITTING in the Guildhall yesterday, attending the Margaret Thatcher Conference on Liberty, I was struck by two thoughts. First, Thatcher was probably the only British Prime Minister who truly understood capitalism, not just as an engine of wealth creation and efficiency, but also as a moral force for good. But secondly, while the economic battle for capitalism was largely successful in the 1980s, the moral case wasn’t really fought. Now it is in danger of being lost.

Well, let's see now...

Milton Friedman argued that economic efficiency and wealth creation were not the primary benefits of capitalism. He believed that the intellectual defence of the free market should focus on its moral superiority. But that message is crowded out and ridiculed today. The word capitalism itself is seen as emotive and pejorative, conjuring up all manner of negative images – whether Gordon Gekko screaming "greed is good", or bank chief executives giving unrepentant interviews in the wake of the financial crisis.

The moral superiority of which was visibly on show in the wake of the general's overthrow of the democratically-elected Chilean government of Salvator Allende in 1974 with the help of the CIA and on the advice of M Friedman, with thousands incarcerated, tortured and put to death.

Some of capitalism’s proponents haven’t helped either, by buying into the greed myth. Ayn Rand has sold 30m books, among them a collection of essays entitled The Virtue of Selfishness. Rand argued that capitalism and altruism are incompatible – a social Darwinian survival of the fittest.

So to Joe Public, the essence of capitalism is greed. But there’s a problem with this story. It's a lie.

What story?

The patron saint of capitalism, Adam Smith, wrote about self-interest not selfishness. Indeed, he was at pains to distance himself from the work of Bernard Mandeville who, early in the eighteenth century, articulated the view that individual greed was good for society.

The essence of capitalism is not greed, but service – serving customers and markets through a process of voluntary exchange. If the players have too much market power, the process becomes less effective. But voluntary exchange, free entry and exit, competition, innovation, property rights and the rule of law are the essence of capitalism.

Adam Smith was writing at a time when capitalism was still a progressive mode of production and distribution; it was after his death that capitalism evolved into the monopolistic form it has to this day, with a comparatively small number of huge transnational firms able to sort things out to keep prices high. It was always ironic that Mrs Thatcher looked back on Adam Smith as validator of her "free market" ideas, while at the same time claiming that socialism had had its day.

The problem isn't with the system, it’s with the people. When individuals don’t have the right values and a sense of responsibility, excess ensues. As Irving Kristol has argued, to the extent that western capitalism has abandoned its Judeo-Christian values, the system has become "uglier".

Sorry, but the problem is precisely with the system! If you, Employer A, don't make a profit by keeping the one cost, your employees' wages, down, by selling your product to Employer B and his employees, whose wages he is trying to keep down, you're out of business. The Judaeo-Christian tag-on is an historical coincidence, albeit one that, with its idea of the individual with his prayer line up to God being more important than his human naturely defective fellow beings, coincided rather nicely with the religiously-justified image of some being stronger by God's ordainment than others and this bgeing the best option because human's are innately weak and need bossing around to rescue them from sloth.

Sorry to be blunt, but the best analogy is with sex. Play within the rules and responsibly and it's great. Play away from home irresponsibly and there’ll be problems. Sex is not the issue, just as capitalism is not the issue. The issue is with responsibility and values. And just to drive the point home, you can drive a car responsibly or irresponsibly. But if you crash it, don't blame the car.

You can be as blunt as you like, mate; do you really think that anybody concurs with the above twaddle? (Oh and BTW how much did you get paid for this speech?)

Capitalism is the greatest system in history for wealth creation. Nothing comes close to it. The freedom and human flourishing it has provided is mesmerising – just look at the progress of humanity over the past two centuries. But capitalism is built on institutions, and those institutions are largely built on values such as honesty, freedom, responsibility and vitality. The attack on capitalism at present is both at the level of values and institutions. The pillars are crumbling.

Well, why do you suppose that that is? Maybe because the greatest system in history for wealth creation has consistently frittered it away by exercising and inculcating greed and wars, the latter of which have also (by no coincidence) been the greatest in history in terms of violence and slaughter - much of which capitalism thrives on through the armaments industry. It also fosters gambling of the wealth created and period artifical scarcity through its unplanned operation. So much for institutions built on honesty, responsibility and, er, vitality.

Further, it’s not at all clear what else is on offer other than more statist solutions to state-created problems. There may be utopian dreams, but they’re a nonsense. As Martin Wolf has written: "Those who condemn the immorality of liberal capitalism do so in comparison to a society of saints that has never existed and never will".

Well no - what is potentially "on offer" (significant term that) is NOT state-created problems, whatever one means by that generalisation.

Our consumerist, materialist society does appear excessive, but remember that it emerges from the free expression of tastes and preferences you and I have chosen. If we don't like it, we're free to choose something else. That's the whole point. We, personally, need to get a grip if we're running around with unlimited wants that can never be fully satisfied.

Try choosing something different. From childhood you're taught that consuming is your passport to peer-group acceptance, and by keeping your nose clean you, or anyone almost, can work your way up the greasy pole to a nice income and nice nuclear family home with two point five children, car, foreign holidays etc etc. You need to have a Marxist analysis, or something close, to allow you to see you're not the identity capitalist society foists on you, together with a psychologically robust constitution so you aren't laughed out of the classroom. Most succumb to inauthenticity, pretending to be what one isn't, then forgetting this happened until it all comes home on retirement that one doesn't have to account for oneself via capitalism's authority symbols. When the whole meaning on which one has illusorily built ones life goes, death can quickly ensue: I've seen this. Why do people obey orders from people in uniforms? Adam and Eve weren't born in uniforms!

For the producers and wealth creators, how do we get back to a spirit of vitality, innovation, wealth creation and human flourishing, so that free markets and free people can truly maximise their potential? It rests on values and institutions.

Capitalism does it periodically through war destroying capital and starting all over again. Values and institutions only retain their power through proven trustability over time. Someone says, we'll help you off the ground because we need you to trade with: the US after WW2. You're then caught in their net again - look how Cuba has been treated: US-ordered trade embargo for 55 years.

In my view, part of the institutional answer is to acquire a much "thicker" concept of economic liberty. Economic liberty needs to be seen as just as important as other natural rights – the maximum property rights (less taxation) consistent with a small but sensibly sized state. There's an even stronger positive moral and economic message as well. Virtue requires freedom. More freedom requires less government. So less government can produce more wealth and virtue, building economic and social capital.

So why all the CCTV and surveillance?

But make sure you take this away. Capitalism does not need greed, and it will only feed greed if you let it."

Nuff said.

[Richard Barrett]

"Less government can produce more wealth and virtue..." - but presumably not so much less that they can't be relied on to suck public finances dry in order to keep bankers in seven-figure bonuses etc. Periodic crises are the life-blood of capitalism, and somehow (as in wars, financial meltdowns, colonial exploitation, environmental destruction and so on) it's always those least able who end up paying. That's not some kind of bug in the system, it is the system. If "Joe Public" had really realised that the essence of capitalism is greed, there would have been some changes by now.

[ahinton]

Thank you ahinton.

You're very welcome!

Adam Smith was writing at a time when capitalism was still a progressive mode of production and distribution; it was after his death that capitalism evolved into the monopolistic form it has to this day, with a comparatively small number of huge transnational firms able to sort things out to keep prices high. It was always ironic that Mrs Thatcher looked back on Adam Smith as validator of her "free market" ideas, while at the same time claiming that socialism had had its day.

Indeed, though not, perhaps quite as much so as the writer's assertion that Margaret Thatcher "was probably the only British Prime Minister who truly understood capitalism, not just as an engine of wealth creation and efficiency, but also as a moral force for good", for if indeed she understood it at all, she certainly acted for the most part as though she had no desire or intention of understanding it. If capitalism is to regain anything approaching widespread credibility across society, its proponents will have to consider what's happened to it since Smith and the negative effects that have often been wrought; I'm not suggesting going back to Smith in every detail, but It's pretty clear that his vision of capitalism was such that he'd probably find it impossible to recognise capitalism as it is widely practised today as anything other than an alien force.

Maybe because the greatest system in history for wealth creation has consistently frittered it away by exercising and inculcating greed and wars, the latter of which have also (by no coincidence) been the greatest in history in terms of violence and slaughter - much of which capitalism thrives on through the armaments industry.

No maybe about it - most definitely, I'd say!

Try choosing something different. From childhood you're taught that consuming is your passport to peer-group acceptance, and by keeping your nose clean you, or anyone almost, can work your way up the greasy pole to a nice income and nice nuclear family home with two point five children, car, foreign holidays etc etc.

No one ever taught me that, or even tried to; maybe I got brung up in the wrong "class"...

Why do people obey orders from people in uniforms? Adam and Eve weren't born in uniforms!

!!! - nor did they care about the price of apples, I imagine...

So why all the CCTV and surveillance?

Why indeed? What that fosters more than anything else (apart from fear) is distrust.

Nuff said.

Thanks for what you have said - and I'm sure that you could indeed say more!

[waldo]

I've never read so much b*llocks in my life. Even advocates of capitalism wouldn't agree with what he says. If I knew how to cut-and-paste I'd transcribe that article and demolish what it says paragraph-by-paragraph. For starters capitalism IS about creating more needs than the consumer thought s/he had - and "choice" is an illusion under this system because advertising (apart from sanitary towels and Tommy Walsh's expanding garden hose) never tells you about the product, just how it will help you feel you belong by conforming to the latest unattainable model of you; and by the time you like it it's either obsolete or worn out. No wonder kids turn to fundamentalist this, that and the other because these are apparently the only alternatives to a sick system on offer. What the hell is the Legatum Institute in any case? What a fatuous name - typical!

There has to be some economic system in place. Goods have to be made, services provided. Resources have to be used; people (some of them, anyway) have to work. Goods and services also have to be allocated in various ways; there has to be some means of "deciding" who gets what. If capitalism isn't the right system, what is the alternative? Do you have anything in mind?

Just a very general idea would do.........a brief sketch, say.

[waldo]

duplication!

[Serial_Apologist]

There has to be some economic system in place. Goods have to be made, services provided. Resources have to be used; people (some of them, anyway) have to work. Goods and services also have to be allocated in various ways; there has to be some means of "deciding" who gets what. If capitalism isn't the right system, what is the alternative? Do you have anything in mind?

Just a very general idea would do.........a brief sketch, say.

Any socio-political system devised as a replacement for capitalism will take from the best of what capitalism and socialism have purported to offer (choice, individual rights, freedom of expression, the fullest possible development of the individual's potential in the case of capitalism; narrowing of the income and wealth gap and eventual free use at the point of need for essential services, in socialism). But, above all, unlike capitalism and socialism as thus far practised, it will need to be grounded in sound ecological principles of minimum resources wastage and sustainability, and underpinned by a fundamental philosophical change of heart whereby humankind no longer seeks to place itself above the natural order but sees us as part of it, and acts in accordance with that profound understanding. The last-described part invokes a spiritual dimension to human experience at present largely marginalised into peripherised forms of creativity, or religion-based "truths" rather than evidence-based assumptions and practices: secularisation of what for want of a better word we call the spiritual, given the importance of how we interconnect, is I think a vital precondition for the success of any alternative human undertaking of the running of the world, of which there are tried and tested models on which to draw, so far neglected or ignored to the detriment of the consequences of change.

That's my vision, fwiw. How we might get there - what maybe we have to go through in the interim - and the practicalities involved, are of course implicated, as in any outcome.

[waldo]

Any socio-political system devised as a replacement for capitalism will take from the best of what capitalism and socialism have purported to offer (choice, individual rights, freedom of expression, the fullest possible development of the individual's potential in the case of capitalism; narrowing of the income and wealth gap and eventual free use at the point of need for essential services, in socialism). But, above all, unlike capitalism and socialism as thus far practised, it will need to be grounded in sound ecological principles of minimum resources wastage and sustainability, and underpinned by a fundamental philosophical change of heart whereby humankind no longer seeks to place itself above the natural order but sees us as part of it, and acts in accordance with that profound understanding. The last-described part invokes a spiritual dimension to human experience at present largely marginalised into peripherised forms of creativity, or religion-based "truths" rather than evidence-based assumptions and practices: secularisation of what for want of a better word we call the spiritual, given the importance of how we interconnect, is I think a vital precondition for the success of any alternative human undertaking of the running of the world, of which there are tried and tested models on which to draw, so far neglected or ignored to the detriment of the consequences of change.

That's my vision, fwiw. How we might get there - what maybe we have to go through in the interim - and the practicalities involved, are of course implicated, as in any outcome.

A noble vision, Serial Apologist.

Unfortunately, it isn't a "system" - only an ideal. That's the problem. I think many people understand that capitalism is flawed. It's just that it is hard to understand what an alternative looks like - apart, of course, from a soviet-style command economy, which no-one in their right minds would want.

As far as I can see, there really isn't an alternative. Either individuals make decisions about what they produce and what they consume, or the government does. The former is capitalism. Sadly, the fact that it is truly awful in all kinds of ways doesn't mean there has to be something better.

[Richard Barrett]

As far as I can see, there really isn't an alternative.

Of course there is - human society has changes radically so many times in the last ten millennia, I don't see what reason there is to think that's come to an end. My hunch is that advancing ecological destruction will force some kind of change.

[Serial_Apologist]

A noble vision, Serial Apologist.

Unfortunately, it isn't a "system" - only an ideal. That's the problem. I think many people understand that capitalism is flawed. It's just that it is hard to understand what an alternative looks like - apart, of course, from a soviet-style command economy, which no-one in their right minds would want.

As far as I can see, there really isn't an alternative. Either individuals make decisions about what they produce and what they consume, or the government does. The former is capitalism. Sadly, the fact that it is truly awful in all kinds of ways doesn't mean there has to be something better.

There's always something better for the rich and powerful because they can protect themselves against privations meted out on the rest of populations during recessions and depressions. Capitalism actually engenders the divisions, envies and wastes it blames on initiatives, eg government limitations on monopoly, welfare state provision to try and prevent social breakdown, however partial their effectiveness, which are designed to keep it going.

[waldo]

Of course there is - human society has changes radically so many times in the last ten millennia, I don't see what reason there is to think that's come to an end. My hunch is that advancing ecological destruction will force some kind of change.

I suppose I am referring to something we can talk and think about today. The future may well look very different, but when someone today says that they are against capitalism, I think it is a fair question to ask what the alternative is. I can't see one. That doesn't mean there isn't one, of course........

As to ecological change forcing some kind of re-think, you could be right. My "hunch" is that it won't, but that's only a hunch.