Abolish capitalism!

Capitalism for and against. There’s a lot of it about, mostly against. But, this thing ‘capitalism’ – it doesn’t really describe anything in particular, does it?

Capitalism, at its most basic, is an arrangement where there are property rights and market relations governed, to some degree of effectiveness, by the rule of law. This now describes practically all of the world, with very minor exceptions, such as North Korea (more of a weird cult-state than an alternative model).

It seems that once societies achieve a certain level of wealth and complexity, the package of private property and exchange through trade under some form of law becomes the default arrangement. It just seems to have happened, rather like, at various points in human development, town-dwelling, agriculture, romance, and the practice of science.

A good way to test whether the term describes anything useful is to consider the improbability of its absence. Despite the banners informing us that ‘Capitalism is in Crisis’, I don’t believe anyone is seriously expecting the demise of property rights and trade. Or at least no-one who’s serious is doing so.

In the modern world, the idea of capitalism as something that we could choose – a ‘model’ – was only really tenable whilst there seemed to be an alternative which could be presented as potentially viable. Most notably, this was Soviet Communism. It’s now evident that the Soviet economic experiment was a journey down a dead end.

In much the same way, various strains of utopian communism sought to abolish other things that appear fundamental to developed societies; romance and town-dwelling, for instance. We regard these efforts as rather crazy, like trying to abolish gravity.

In any event, twenty years after the collapse of capitalism’s ‘other’ I think the word’s retirement is overdue. Tidying up our language in this way is well worth doing: if we stopped using the concept we’d see the options ahead of us more clearly.

When we look at things through the prism of capitalism we end up dwelling on systemic tweaks. Fairness becomes a matter of adopting the right economic model; if we get that right we can expect the right moral outcomes. It becomes easier to abdicate moral agency and personal responsibility.

Ralf Dahrendorf in his post-Cold War Reflections on the Revolutions in Europe concluded that we need to get away from the primacy of economics, that we should stop looking for our solutions in all-encompassing systems. The important thing is for there to be an open society. This will help ensure there is the best discussion and determination of how resources should be distributed.

Protesters’ banners say futile things like: “Replace capitalism with something nicer”. They would be more meaningful if they simply read “Be nicer” (or more responsible, generous, unselfish, etc.). For instance, I don’t think we should see excessive executive pay as the ineluctable outcome of our ‘capitalist system’, an intrinsic part of the package –  it’s more the product of a failure of moral restraint, a collective greed justified with what system-thinking made permissible.

You see, there’s no system to replace and we aren’t living in a model. There’s just you, me, others and what we believe – and, through our democracy, agree – to be fair and efficient. However, it’s at this point that the really hard thinking begins…

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28 thoughts on “Abolish capitalism!

  1. Worm
    October 24, 2011 at 13:38

    Down with this sort of thing! I blame the cupcake myself

  2. andrewnixon@blueyonder.co.uk'
    October 24, 2011 at 13:49

    Well expressed, Gaw.

    The sad thing is that there are so many things these iPhone-sporting Glasto divvies could usefully be protesting about in their trust-funded time, such as the crappiness of our state education system.

    It’s perfectly legit to be angry about greed and the failure to regulate banking but they’ve gone far too broad in their demands, like a anti-porn group demanding the abolition of sex. It’s not going to happen, and the longer St Paul’s stays closed the less funny it is.

  3. rory@peritussolutions.com'
    roryoc
    October 24, 2011 at 17:28

    I agree the protests seem to lack focus and I don’t know if they will achieve anything but can’t help having some sympathy for them. When was the last time I protested about anything – I’m too comfortable and it’s also raining outside. The state education system won’t improve soon with billions being diverted to bailing out banks. They have operated like casinos with a novel heads-we-win-tails-you-lose twist. It could take generations to absorb the cost. Companies will continue to “innovate” around regulation and the mug in the street will continue to (be allowed to) borrow too much or make disastrous investments where lack of transparency favours a tiny insider minority. Depressingly “Down with this sort of thing!” probably does cover it, but is it better to do something rather than nothing?

  4. johngjobling@googlemail.com'
    malty
    October 24, 2011 at 19:00

    Without capitalism how can there be pigs, as an ex porker I would retain the word, erase the naysayers.
    A youth worked for me once, became surly, joined the socialist workers party (a contradiction as ever was) he went on a right to work march whilst claiming sickness, unfortunately for him he was seen on the television news. Upon his return to work I hauled him in, gave him his P45 and told him that he was now free to march as much as he wanted, and that he was being given the heave-ho for lying, not for his politics. That would have given them something to talk about, as they tramp, tramp, tramp their pointless existence away.

  5. info@shopcurious.com'
    October 24, 2011 at 19:08

    “The important thing is for there to be an open society. This will help ensure there is the best discussion and determination of how resources should be distributed.” This is the crux of it, Gaw – it’s about taking social networking to the streets, making it real. Communism + capitalism = communappism.

    The new world we’re in is one of communities and group consciousness, of pacificism, creativity and an eco-friendly, holistic lifestyle. The bankers are seen to be ‘fat cats’ interested only in the bottom line, though it’s interesting that the protesters seem to focus on the ‘virtual’ aspects of finance – the murky world of derivatives etc. The problem is in the extremes of wealth. The suited and booted commuter class that has supported all the hangers on for far too long (and is now massively out of pocket) has become a scapegoat for the mega-wealthy minority (included in which are the luxury designer goods endorsing celebrity idols of protesters – who are largely responsible for the recent riots).

    What’s needed is an equal distribution of education. The protesters should be informed that they’ll never get onto the X-Factor without the help of the old boys’ network, they should learn how derivatives are used – and how they can earn enough to upgrade their mobile hardware, whilst also giving lessons on new technology to old aged pensioners and helping out with gardening. .The bankers should form a group on Facebook explaining how hard they work to feed and clothe their families and provide for the future, at the same time getting some tips on urban farming and the new swaps exchange (swapping one thing for another). We need a flattening out of understanding. Most of us are on the same side, though some are lazier and have more of a sense of entitlement – and others expect to continue living the high life regardless of what’s going on around them…

    This isn’t a situation we’re going to be able to ‘muddle through’. We’re already in the middle of a social revolution, to which is likely to be added a severe financial depression. Things could rapidly get out of control without the right sort of communication – and education.

    • alasguinns@me.com'
      Hey Skipper
      October 25, 2011 at 22:32

      What’s needed is an equal distribution of education.

      Unfortunately, the Grand Designer failed utterly (presuming it was in the spec sheet somewhere) in providing an equal distribution of talent.

      Perhaps I’m being Pollyannish, but I think there is a fair chance of muddling through. In the US, the cure fixing the housing market, which can be achieved either through time, or doing things like buying up swathes of Las Vegas subdivisions and scraping them down right to the bare desert.

      Ironically, the real problem is Greece. (BTW, great quote from a recent Top Gear episode, doing their schtick about the Stig: “Some say he is waiting for a big check from the Germans, because he hasn’t done a thing for the last 2,000 years except sit on his butt.) Why ironic? Because Greece is pretty much Occupy [fill in the blank] realized.

      The problem is in the extremes of wealth.

      Really, or is it just envy?

      • info@shopcurious.com'
        October 27, 2011 at 08:17

        What I meant is that we need equal access to a certain standard of education that has value in the world (social, moral and economic).

        Yes it is envy, fuelled by the brazen materialism of both rich and poor in our media-led, celebrity-obsessed culture. But the extremes of wealth appear to have become vastly magnified in the UK over the past decade. It is all much more ‘in your face’.

  6. davidanddonnacohen@gmail.com'
    David
    October 24, 2011 at 20:33

    “Capitalism” is what we call freedom, when we want to limit it.

  7. wormstir@gmail.com'
    October 24, 2011 at 21:25

    reintroduce and reinforce noblesse oblige I say

  8. johngjobling@googlemail.com'
    malty
    October 24, 2011 at 22:17

    What we have here is a solutionless problem, an action with no known reaction. We are, I would guess, all reasonable people here who would wish a more egalitarian society that is, within pragmatic boundaries and is a fit within the limits of human nature, not the Utopian daydream so beloved of the left leaning, well educated and mainly sightless liberal social engineers.
    It ain’t going to happen, unless there is first a catastrophic financial collapse, only from it’s ruins can the new dawn break, the numerous fingers that are at present in the pie will have all been burnt, from that may grow common purpose.

    Meanwhile we have a Bundeskanzlerin, running scared, sharing a throne with yet another greedy French megalomaniac, running a show that has lost all credibility and, whether we like it or not, has our future in its hands, there is a not unreasonable chance that we will go down with the ship, we will be damned if we leave them, damned if we don’t.

    If so that will be the third time within one hundred years that we will have been sucked into their vortex, itself having its roots in the nineteenth century or possibly earlier.

    Egalitarianism may not then be on everyones lips, other, darker forces will be at play.

    I agree with the viewers, Rory can’t dance, sock it to ’em Nancy.

  9. Gaw
    October 25, 2011 at 08:24

    Brit and Rory, there is lots of useful stuff to be done. The Occupy people don’t seem to know or care that it was old-fashioned democratic politics that got us legislation like Glass-Steagall, a major part of why Big Finance didn’t wreck the economy for a few decades.

    Susan, I think one of the big problems we have is a lack of coherence in our morality as it applies to material things. If it’s not illegal too often it’s deemed acceptable, help yourself and don’t give a damn about anyone else. Can education reintroduce self-restraint in this area, i.e. reintroduce Worm’s oblige? No idea.

    David …and freedom is what we call anti-social greed when we don’t want to limit it.

    Malty, I don’t agree we can’t begin to retrieve things. For instance, I think executive pay has got out of control as there’s something of an informal and broad conspiracy in the world of big company remuneration. It’s quite complex but could be unwound if we had the will.

    The big problem at the outset is to unpick it all from system-thinking so such a move doesn’t become an attack on ‘capitalism’; rather it would be a remoralisation of an area that has become something of a free buffet. It’s no coincidence that it’s traditional Tories such as Charles Moore and Peter Oborne who have been the most acute critics of the current settlement – for them, traditional moral codes trump economic theorising. From the other side, the peculiarly British form of Christian Socialism seems to have died, at least in influence.

    • johngjobling@googlemail.com'
      malty
      October 25, 2011 at 09:52

      Gaw, if only, the major stumbling block would appear to be apathy wedded to complexity, so many angles, so many strings working the puppet and how would the necessary willpower break free from its shackles, the first move, a push from below may happen, reaction by those above probably not. The administration of this country, never pragmatic, always political, is smothered by a media that becomes orgasmic at the drop of a politicians hat, everything is entertainment, nothing serious. Browsing the extremes of the British media is akin to staring into bedlam, unfortunately there is nothing else between us and the excesses of politics, the law and the moneychangers, the media itself is one of the cast. Whither thou goest western democracy?
      Who will rid us of the burden, ourselves? only if we are first reduced to poverty, all of us.

      Who?

    • info@shopcurious.com'
      October 25, 2011 at 12:30

      Gaw, I agree on the morality front – and with Worm’s call for noblesse oblige. Some chapters of my book Trends Beyond Life: In Search of Immortality (2006) are:

      The Disposable Lifestyle of a Virtual World – Dealing with Rapid Cultural Change

      and

      Rights vs Responsibilities – Coping with a New Morality

  10. tobyash@hotmail.com'
    Toby
    October 25, 2011 at 10:42

    Brilliant post Gaw.

  11. rory@peritussolutions.com'
    roryoc
    October 25, 2011 at 10:47

    The unwinding of some of the Glass-Steagall provisions in the 80s & 90s has led to the current difficulties.
    The Occupy movement having no demands may not be so dumb – having demands means you can be bought off by concessions that are later watered down. Maybe the goal is simply to keep the fairness debate current. If that’s the case they are succeeding.

    • davidanddonnacohen@gmail.com'
      David
      October 26, 2011 at 00:02

      So you want to bring back Regulation Q?

      (In other words, you actually have no idea what Glass Steagall did, or what the “unwinding” consisted of.)

      • davidanddonnacohen@gmail.com'
        David
        October 26, 2011 at 14:53

        So this was a little testier than I meant to be, especially at The Dabbler, which I think has no desire to host flame wars.

        I have spent some time thinking about the causes of the financial crisis. In fact, I have published a peer reviewed academic article on that subject and am working on another. I also know much more about bank regulation and accounting than is good for me, having represented lots of banks when I was practicing law.

        Nothing in the social sciences is monocausal, lots of stuff is interrelated and the banks, in particular, are embedded in a complex network with both cultural and global connections. In other words, I can’t say with complete certainty that unwinding Glass-Steagall didn’t “cause” (that is, contribute in some small amount) to the crisis but I do know that people who state with confidence that unwinding Glass-Steagall led to the crisis don’t have a good argument. In fact, mostly they’re repeating a talking point that they’ve heard from ideological allies so often that they just assume that it’s true.

        Glass-Steagall was a complex law that did a lot of things that, mostly, are clearly unconnected to the current financial crisis. Regulation Q, for example, prohibited commercial banks from paying interest on deposit accounts. Repealing that regulation, which was a boon to bank customers, had nothing to do with the financial crisis.

        What people who know a little bit about Glass-Steagall tend to mean when they claim that unwinding it lead to the financial crisis is that they think the problem was ending the enforced separation of commercial and investment banking. There are lots of problems with this, of which I’ll highlight three:

        1. The crisis caused by the collapse of the mortgage backed securities market was brought about by the failure of Lehman Brothers and the likelihood that, unless something was done, Bear Strearns and Merrill Lynch would also fail. That could have lead, in turn, to the failure of Goldman Sachs and, arguably, the entire international financial system (although I tend to think that Goldman was never in serious danger of collapse, since it was still able — just before TARP — of raising $5 billion from Warren Buffet, who had previously declined to rescue Lehman). Lehman, Bear Stearns and Merrill Lynch were pure investment banks of the type allowed under Glass-Steagall. The only commercial-investment hybrid in any danger of collapse was Citibank, obviously a big deal, but if it had only been Citibank it probably would have been allowed to collapse and the regular instruments of government could have dealt with it.

        2. The way the Fed rescued Bear Stearns and Merrill was by forcing their mergers with commercial banks, which would have been illegal if that portion of Glass-Steagal hadn’t been repealed. So far, it has worked pretty well (Bank of America’s current problems not being traceable to ML but to its acquisition of Countrywide Mortgage, which has nothing to do with Glass Steagall (mortgage origination being a core function of commercial banks under G-S), but which was a terrible idea.

        3. Most puzzling, on a British blog, is that the crisis was international, with British banks in particular hard hit, but both Glass-Steagall and its repeal were purely American laws. Why did Iceland’s financial system collapse if the problem was repeal of Glass-Steagal? Why was Canada the only OECD country to escape almost unscathed when it never had G-S like regulation and, in fact, went in the opposite direction towards a small number of large national banks?

        So while I can’t say that G-S had nothing to do with the crisis, I can say that G-S would have made the rescue more difficult and isn’t well correlated with the crisis geographically. In other words, the likelihood that unwinding G-S in any sensible way either “caused” or “failed to prevent” the financial crisis is vanishingly small. (I’ve tried to avoid the word “repeal” mostly, because G-S is an incredibly complex piece of litigation that has been toyed with, one way or another, since it was passed.)

        • rory@peritussolutions.com'
          roryoc
          October 26, 2011 at 16:55

          Thanks for your more balanced comment David. Perhaps I should have said the unwinding of G-S fed into rather than led to the financial crisis. Gaw suggested it was “old-fashioned democratic politics that got us legislation like Glass-Steagall, a major part of why Big Finance didn’t wreck the economy for a few decades.” The US Senate report on the crisis found “conflicts of interest” to be among the key causes of the crisis, something G-S sought to reduce. I appreciate the crisis was international but it appears to have been triggered in the US banking system and the US (regrettably :-)) is not on another planet and there was a contagion effect on other countries whose own financial systems were vulnerable. I note you mentioned “freedom” in an earlier comment. Bankers seem to ultimately want freedom from risk. Embracing socialism when the bets get too big and go belly up is the part I have a problem with. I also note “envy” popping up in some comments. I am not a leftie student or an unemployed free loader, I am modestly successful business owner. Talented people earning more is part of the natural order. However we seem to agree certain actions are morally wrong or reckless in other walks of life and have laws against them – why not in finance?

        • Gaw
          October 27, 2011 at 15:10

          Crumbs, what a masterful exposition.

          I take your point that it’s difficult to draw straight causal lines between the gradual unwinding of Glass-Steagall and the recent crisis. However, isn’t it surely the case that elements in the G-S legislation played a part in restricting financial outlets for capital, which helped keep the financial sector smaller and more fragmented?

          I suppose London’s Big Bang and the ending of the traditional compartmentation of financial services had a similar impact on Britain’s financial system (also incidentally providing US banks with an international playground free of G-S constraints).

          Lehman Brothers was practically bust a couple of times in the ’70s and ’80s without blowing up the global financial system. This may well have had something to do with the financial system and its component parts being smaller and less connected.

          As you rightly point out, there are lots of other reasons why our banks are in the mess they’re in.

  12. danielkalder@yahoo.com'
    October 25, 2011 at 12:52

    I think, because they stand for nothing other than some vague feel-good nostrums, they are a canvas onto which a broad swathe of the ‘left’ can project its fantasies, viz. former Enron adviser Paul Krugman in the NYT, etc. I’d say that the right could project its fears onto them, only since they are patently absurd they provoke little more than ridicule and irritation.

  13. alasguinns@me.com'
    Hey Skipper
    October 25, 2011 at 22:20

    Protesters’ banners say futile things like: “Replace people with something nicer”.

    Fixed.

    Give them a chance, and I’m sure they’ll get right on it.

    • Gaw
      October 26, 2011 at 07:06

      Ha!

  14. peter.burnet@hotmail.com'
    Peter
    October 26, 2011 at 10:29

    I am enraged by the misdeeds of our greedy bankers. My vote will go to the candidate who promises to replace them with the sharing, compassionate bankers of my youth.

  15. johngjobling@googlemail.com'
    malty
    October 26, 2011 at 11:14

    Dabblers, you do realise that, if you do not respond to the call to arms, then come the revolution you will be the first to be stood against the wall.

    To shoot all
    Who put up with things as they were.
    For there are many who are afraid to grumble,
    Saying Yes and Amen to all.
    And these would have to be shot,
    So that one at last might know what’s what.

  16. owls001@gmail.com'
    October 26, 2011 at 12:18

    I was in the park the other day discussing capitalism with an oldie gent, like you do, and he asked me to describe it to him.

    Well I said, words wont be enough, but I can show you. And I throw the ball with the launcher and the dogs all chased happily after it. One was happy he got it first, another 2 wanted it badly and the little one came back quickly to see if I had another ball.

    I kinda think what is capitalism is a sort off why is the sky blue sort of question. We are wired that way and its the reason socialists start with roses and end shooting peoples brains out in frustration that they cant change whats in there.

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