The capitalist system, which we live and breathe, rests on a
remarkable logic: a group of selfish individuals, each one seeking private happiness, produces a society where
the greatest possible number get what they want – or something like it. Through
the magic of the free market, Adam Smith’s too-oft-quoted ‘invisible hand’, selfishness
actually produces its opposite, a functioning and prosperous society broadly
advantageous to its members. Private acquisition agglomerates into public good;
from competition comes community; greed spawns gregariousness, or at any rate its mercantile analogue. This central
paradox, which has its origin in utilitarianism’s pursuit of the maximization
of pleasure across society, is quite dizzying when you think about it. How can
the pursuit of A, by the alchemy of the market, produce not-A? Yet this system,
based on the private pursuit of capital and so known as capitalism, has
achieved remarkable things. Over two centuries or so, it has raised the living
standards of most of the world and dramatically reduced global poverty. The
technology, medicine, comforts and luxuries many of us take for granted today
would have seemed a miracle even a generation ago. No other economic system is available as a
credible alternative: feudalism has disappeared into history, leaving only a
quaint residue such as the peerage system and the royal family; communist
central planning collapsed dramatically (economically speaking: central
planning in other areas, such as education, is pursued ardently across the
bureaucratised West). Other than capitalism, what economic system is going to
bring, say, a Bangladeshi or a Somalian the standard of living I enjoy –
running water, hygiene, education, all the rest of it? If you agree that they
are as entitled to these things as I am (and what rational basis could there
be for disagreement on this point?) what is there to do but to espouse the market
as the most likely source of this development? Capitalism has triumphed over
its rivals and has a long list of achievements to its credit.
Yet gung-ho, Gordon Gecko ‘Greed is Good’ celebrations of
capitalism are rare these days; and Capitalism is presently assailed by many
critics, from many shades of the political spectrum (only a very selective
observer could say they are all ‘left wing’). For one thing, the fact that it
is posited on human selfishness makes it ethically dubious, whatever the alleged long-term
beneficial consequences of this greed may be. Moral intuition and religious
systems alike persuade us that avarice is a vice, corrupting of the self and
damaging to others. And the model of a rational consumer going into a free
market , and thereby helping it to function efficiently for the good of the
majority, exposes itself to critique at every point: are we really rational
consumers? Do we not desire and buy things on a whim, yielding to the tide of
fashion, or sometimes - perhaps regularly - in an act of madness? And what does it do to us psychologically,
ethically, to think of ourselves as essentially ‘consumers’ anyway? To make us
into non-stop consumers, a massive advertising industry is necessary, playing
on every conceivable fear, anxiety and fantasy to make us think that buying
stuff will make us happy. And to make all that stuff that we are duped into
thinking we need, the planet is steadily raided for its resources, polluted and
spoiled. We are consuming the earth we live off; and if that sounds eco-hippy,
then capitalism’s purchase of the channels of information in education and the
media has been a success. And how free, we may then ask, is the alleged ‘free’
market, where government intervention and policy massively influences trade and
production, favouring some in the market at the cost of others? How can we call
it efficient, we may persist, when it is
so obviously inherently unstable, with a rollercoaster of booms, busts,
frenzies, and recessions? And rather than the greatest good of the greatest
number flowing from this market - a market so intrusive and ubiquitous we now
carry it around with us on our phones - we see instead ever-widening gaps
between the haves and the have-nots as goods are unevenly distributed, partly
because the governments that might do something to distribute wealth more
equitably are themselves owned by the rich who want to keep their treasure
hoard to themselves. Consumerism, materialism, waste and pollution, injustice
and inequality, the destruction of the planet and the trivialisation of the
human spirit. Capitalism’s defenders face too many sane and sagacious critics
to be blandly complacent.
John Plender, thankfully, is anything but complacent, and
interested in serious debate. Capitalism
leads us through the subject with great dexterity. As a writer for The Financial Times and a member of
various financial groups and forums, Plender is what one might think of as a
member of the establishment. Yet far from the closed-mindedness one associates with this rather fictitious
group, Plender shows common ground with many anti-establishment critics. He
does not believe the mess of 2007-08 has been anywhere near cleared up through
improvements in analysis, assumptions and regulation – indeed, he fears another
and bigger crash is on the cards. He points out inequitable wage differentials,
and notes the waste of human resources as the talented young are drawn into the
financial sector and away from productive parts of the economy; and his
brilliantly lucid analysis of the Eurozone crisis is pretty severe at the
behaviour of the northern countries towards the south. In an interesting
chapter on the art market, the author clearly feels commodification, the
equation of financial value with other kinds of value, has to stop somewhere. Capitalism is not a defence of the
status quo and makes clear that capitalism needs to get its house in much better
order if further gains are to be delivered and catastrophe avoided. Like
Erasmus on the Catholic Church, Plender believes the system needs to reform
from within, not be dismantled and replaced with an unclear substitute.
An attractive feature of the book is the use of literary
sources to investigate topics. It is refreshingly historically grounded. So we
have passages of Defoe and Addison on the London Exchange, Goethe’s Faust as a commentary on externalities
and social dysfunction, and apposite quotations from Dickens, de Tocqueville
and many others besides. The author is open to the ideas of many different
kinds of economist, too. Like Ha-Joon Chang, Plender thinks it is a pity that
many economists today take the Chicago school as a comprehensive explanatory model
and ignore other perspectives. Certainly some young students of economics I
meet come across as acolytes of a faith rather than serious analysts of events.
How satisfying it is to find here a range of writers being drawn on and engaged
with: across pages 282-4, for example, we come across Marx, Keynes, Friedman and
Raghuram Rajan in a discussion of public debt. Capitalism might perhaps have said something more about the
psychology induced by capitalist ideology; and somewhat surprisingly there is
no chapter specifically about environmental damage, which the author himself
mentions as one of the greatest challenges to be faced. This is also not the
book to read it you want to find out what ‘derivative’ or ‘futures market' means, since the author has to take some things for granted just to
get going (that said, some terms are defined deftly along the way). However, no
one book on this huge subject can do everything and the topics covered by these
chapters, from the nature of money itself to debt, speculation, banking and
gold are described with style and insight. I learned a lot from Capitalism and would certainly recommend
it as a guide to a subject, and debate, which is far too important to be left
to economists, establishment or otherwise.
No comments:
Post a Comment