C.S. Lewis didn't just write about Narnia. He was also a major religious thinker, writing scholarly books about the nature of Christianity. Actually, this can be seen if you look at the Narnia books with more than half an eye. And somewhere in between these two types of writing was The Screwtape Letters, a piece done as a series of letters written by an older, experienced devil to his nephew Screwtape on how best to influence a human soul so that Hell can get it in the end. At one point he mentions as a sort of ideal the situation where upon death a person looks back and says roughly “I realize now I have been doing neither what I wanted, nor what I ought.” I'm not religious, but that did strike me—it seems that so often, the kinds of things you can do that are wrong and bad are also hollow and banal, leaving you with nothing, or less, in the end.
Which brings us to the right wing and hard-line “free market” capitalism. Looking at the economic meltdown that is beginning in the US, which I think clearly traces its roots to deregulated, financialist capitalism, I find a similar duality. The Harperites and Cheneyists and Gingrichers push for a system which does neither what we want nor what we need—it is neither moral nor efficient.
The stories have been spun for a long time that free markets will (given a little time) provide for everybody's needs—that rising tides lift all boats, and that in pie-in-the-sky theory all markets, including labour markets, will clear so there should be full employment and everything should be rosy. When this turns out to be manifestly not the case, often the fairy tale is referred to as proof that anyone who doesn't have a job or isn't doing well must be lazy or worthless—it must all be their fault because if they were willing to be prosperous, The Market would provide.
But at the same time, a very different story is spun. Whenever people complain about low wages, it turns out that actually, a decent living is not something you can expect from the free market. No, it turns out that everyone (at the bottom) must make sacrifices for the sake of economic growth and efficiency. In some versions that's the end of the story—growth and efficiency are ends in themselves which cannot be questioned; people must have lousy lives in order for “the economy” to be good and healthy. In others it is implied or claimed that after much pain, in the end the economy will grow so much that even a relatively small wage will be enough to gain paradise; we will be so productive that the economy will flow with milk and honey for all—but this can only happen if we hew to the straight and narrow path of virtue and market efficiency. Just when this will happen is unclear, as each increase in productivity in the meanwhile is matched by an admonition that it will all go to Hell if we fail to curb wages to keep up with other people who are curbing wages to keep up.
Many people who have basically realized that the first story is bogus nevertheless have internalized the second. OK, they think, so deregulated markets and austerity regimes with low taxes (for the rich) and lousy social programs, make a lot of people miserable. But, people think, they are the engine of growth and someday we'll reach the promised land. Except obviously they are no such thing. Industrial, mixed capitalism with low-to-middling wealth stratification and decent social programs, delivers the goods reasonably well. The owning class mostly have to get money by arranging for real stuff to get done; there's at least some degree of congruence between a country's real interests and the interests of its wealthy. The problem with that kind of capitalism is that the people on top want to be higher on top and they still have enough money and power to start monkeywrenching the system until they get a different kind of capitalism that does not work that way—which is where clearly the US, and in the main I'd say Canada as well, are now.
That different kind of capitalism is characterized by an emphasis on getting money by cheating. Let's face it, making goods and selling them, especially if you have to compete with other people also selling them, is not an easy way to make money. Selling commodities, which near as I can make out is the economists' name for goods that really behave kind of like theory says because there's no scarcity factor and they're pretty much interchangeable among brands, results in notoriously low profit margins. Sellers hate it when their goods turn into commodities. So if there's easier ways to make money, capitalists are on the lookout for them. Much industrial regulation in relatively healthy capitalist societies are dedicated to making sure capitalists don't have access to those easier ways, because they tend to involve making money without actually doing anything useful, or even by in effect stealing it, which if too many people do it kills the economy.
But capitalists want that easy money, and they will find ways to change things so they can get it. In our society they have basically managed to rearrange things so that the conventional wisdom says all those regulations are irrelevant because if a capitalist is doing it, it can't be wrong—anything anyone does with money is somehow by definition efficient (as long as it's a lot of money and he doesn't work for the government). So an awful lot of capitalists end up making their money by things like swindling poor people into taking out big loans at high interest rates, or doing highly leveraged gambling on the stock market, or simply by bribing politicians to subsidize them massively with taxpayers' money, or by moving production to other jurisdictions. The last is the least obviously cheating, but I see it like this. You have a country, and in that country you set rules about safety, unionization, minimum wages and so forth because the government has goals relating to the public good. If it's a democracy, the rules were arrived at by (or at least in the name of) the people, to meet the public's own goals for its own good. Production happening in that country is all competing together under those same rules and has to beat the competition in ways that don't infringe those rules. What they call “protectionism” is basically about protecting the public good by barring or compensating for places less concerned about their own public, where competitors can cut costs by doing things the country finds wrong or bad for society. So when you ram through “free trade” agreements, especially if they also include free investment, what you have is a situation where a capitalist can live here, take advantage of the society we built with our rules, but use their money somewhere else without those rules to produce cheap and make profits by selling back to us, thus dodging and undercutting our society's rules. I'd say that's cheating, if a somewhat more complicated kind than the one where you get a juicy military contract with tons of padding in return for giving the guy who gave it to you a plum job after they leave government.
Clever people will by now have noticed that the behaviours I'm describing generally aren't methods of efficient production--that most aren't production at all. Well, no. What we're seeing nowadays is that you don't have to be formally in government to be a kleptocracy. Most of these cheating methods of making money are worthless or worse than worthless, although they generally count as GDP. Even if they don't directly do anything actually harmful, they suck money out of the productive economy. And it seems to be possible to come up with tricks to paper over the problems that causes for a surprisingly long time. But sooner or later, people who've been fleeced out of all their money and aren't making either much money or many goods stop being able to buy things. They become poor. And economic growth grinds to a halt. All the “animal spirits” in the world, all the fresh printed money in the world, will not keep the merry go round going past a certain point once that starts to happen. I've been of the opinion for at least ten years that we're headed in that direction; the US seems to be finally reaching that point right now as the hedge funds unravel and the real estate bubble bursts and the foreclosures and bankruptcies mount.
So. Financial, cheating-oriented capitalism is neither good for actual people, nor good for “the economy” or “efficiency”. It does neither what we want, nor what it ought.
That's the conclusion for moderates. People may part ways with me on my coda: More radically, I'm also of the opinion that more workable forms of capitalism are always under strong pressures from capitalists trying to shift to the cheating kind so they can rake in more money. Ultimately, we'll be better off without people who own stuff for a living.
I call it "The Great God Marketplace" that is posited as the objective ruler of all things economic, but actually is manipulated by a lot of people behind the curtain for their own purposes.
Speaking of cheating and capitalism, have you ever seen honest advertising?
Thanks, PLG. It's always interesting to read something so thought-provoking during my second cup of coffee in the morning - gets the synapses firing.
One day, I'd love to see you debate the guy who taught my first-year Economics 101 course (way back when). It would probably be a brain-twisting riot.
Lovely. A very well-articulated riff on something I've been trying to express for a long time.
Almost, in fact, earned a "beautifully written", but you lost points for the 'protectionism' bit; protectionism is a more general beast than you define. (For instance, it would still be protectionism if you slapped high tariffs on goods imported from another country with a higher standard of social justice than your own, so as to protect livelihoods inside your country. Given what we're seeing with the economic efficiencies of European social democracies, that's not such a crazy idea at this point.)
If you haven't already, check out Kevin Carson's work (such as here). One of the most subtly mind-blowing propositions I've ever heard on the economic front is the suggestion that the invisible hand would work at least as well if capital were normatively hired at miserly hourly wages, and labour kept or reinvested all the profits. Apart from historical legacy reasons, why the hell aren't we using that model instead?
As you so richly say, the current model has richly proven its ability to tap out at mediocre when it comes to making more than a minority of us happy and prosperous.
good post. Monbiot saying stuff:
http://www.zmag.org/content/showarticle.cfm?SectionID=10&ItemID=13646
Excellent post. Nice use of literature. I had to take economics this year as a prerequisite to my fall program, and it was very interesting the immense amount of abstraction - people are practically erased from it. The economy has been given a life of its own and, like 50s sci fi robots, appears to be running us for its own ends, rather than the other way around. Eric, your link didn't work - can you repost it? It sounds interesting.
Interesting piece. If I may, let me challenge you an a few of your premises.
From a left-libertarian perspective, we do not now have a "free market". Indeed, most of the right-wing 'vulgar libertarians' who use the phrase use it as propaganda, rather than a descriptive. To them a "free market" isn't one where there are no barriers to trade and voluntary exchange, but one where their particular corporate interests get to make laws and regulations that favour their industry, sector or corporation. They are not libertarians or even free marketers, they are corporatists and neo-mercantilists, who wish to use the government and regulations to their advantage.
Check out The Conservative Nanny State by Dean Baker.
Even your example of the stock market is an example of this - by government regulation, billions of dollars, including RRSP, union pension funds and CPP funds are forced into the stock market for tax shelter reasons. This money chases few investments, creates incentives to create poor investments and drives up prices and profits for those banks and firms that rely on the stock market. Without such regulations, the stock market would not likely be as large or as volatile - not something those banks and firms want. Ever wonder why you can't merely put money in a savings account and call it an RRSP? Or some other form?
Stefan Molyneux has a great article on it (though you will disagree with some of what he says, the gist of the article is what is important).
Those right-wingers and capitalists don't want a truly freed market - they want to control the levers of power (usually the government and the state) to their advantage, and tell you that is a "free market". Well it isn't.
Beyond that quibble, good article.
BTW I second the recommendation to look at Kevin Carson's work. He is brilliant and adds a new twist to the entire "capitalist" - "socialist" debate.
Hmm - not sure why that link didn't link. Try this instead. But that link is just one example - I didn't peruse Kevin's mighty body of work to find the very best example of the point, just a quick pick. I can enthusiastically recommend any of the links down his left sidebar under "Favorite Links."
This covers it reasonably well. Make substitutions as required.
Mike: I don't think I actually said anything to indicate that the right-wingers' markets were in fact "free" in any significant sense. I don't in fact think the premises you challenge were in my little rant. I did mention free markets once or twice, but given that once I put 'em in quotes and another time I mentioned them as "The stories have been spun" . . . I wasn't intending that to indicate that these free markets were a genuine thing.
Eric Finley: Yes, I drastically oversimplified the question of protectionism. I would however contend that whenever corporations and elites complain about protectionism, the phenomenon I'm describing is what they're complaining about. They don't so much mind other kinds. In the interests of brevity . . . my posts tend to go on forever at the best of times.
A tip to Eric: as well as the the code, you have to insert double quotations marks around the URL to make the link work.
Aha. Sorry, Eric. We cross-posted, and obviously you caught up faster than I did.
No worries. Too much bbcode recently, too little HTML. ;)
While I certainly can see the bad what worries me the most is that they could be making almost as much money without gutting our country, ruining middle class and starving the poor. That “civility deserts a starving mob” [my own quote] should be a warning put in front of every headquarters office of corporations exercising fraud against us, because they wrote all our laws there is no possibly of punishment, nor will they be as long as their kind hold the white house and the majority of at least one of the houses.
Halliburton and Carlyle groups are a plain example hanging out right in our face everyday, total robbery of our treasury and even kicking back profits to the VP is blatantly shows that it is already to late for us to get our country back except if we over throw the entire government. Followed immediately by a tribunerials for the real criminals, these traitors that have led our country down this slippery slop utter chaos and third world paid workers.
Eric Finley skeptical observations very much sounds like what my feelings are about the lack of morality of these big boys and their tactics. Cruel and unusual seems to exactly describe the war profiteers feelings about killing our children to steal another sovereign states oil, by the way I asked my congressperson and senator to tell me how many oil tankers have left port of Basra since we took over, none respond. Do you suppose the CIA is not counting? Could they be that politicized that they would but have been ordered not to?
Even worst yet is the very real possibility the US, under these racketeers seems to be getting ready to give Iraq over to a corporation when they leave, otherwise why 4 huge military like complexes that are bunker like structures meant to last 30-40 years? Think of it, not capitalism of old, at least for me it was suppose to be a system opened to bright minds with hard thinking/working folks willing to do the extra things to bring wealth to themselves, not American citizens who wreak their own neighborhoods for the sake of making another million extra this year.
I refer to it as the next Maritime Traders Scam, another global corporate bible like idea to seize all the worlds’ resources, to in effect control the economy of the world in just a few unelected, unchosen rich white guys, not countries. Image ten years from the day the corporations take over Iraq the entire operation of any country with the resources Iraq has, Christ in a decade they could in fact have seized all governments power and we could be living in a exterminators future, except the beasts would not be made of polymers and chips, but dead black hearts of those who would eat our children if it meant more profit, not a leadership I would choose.
Capitalism should be a device to help people pull themselves up from a poor position to one of some minor wealth in a lifetime. Not a stalking predator that not only cuts life short for petty reasons like oil profits, but try’s to sell off America’s harbors to the highest bidder, the future left unchanged will end the capitalism we knew and be replacing it with plantation mangers paradise.