It’s an
amazing state of affairs when you stop and think about it. Almost everyone in
the West enjoys lives which would be envy of any Roman Emperor or Pharoah of
ancient history, remarks John Lanchester, in his book about the financial
crisis, Whoops! Whether we appreciate it or not, we live in the
best societies that have ever existed.
Because of
our wealth, we are the most fortunate humans that have ever lived, says
Lanchester.
Do you feel lucky,
punk?
Anti-austerity
journalist Polly Toynbee was a mere seven years ago eulogising current society
as an overlooked golden age. There has never been a better time to be alive,
she said, despite the mood of pessimism. Supermarkets were “modern miracles of
splendour and choice … Unimaginable luxuries and choices are now
standard - mobile phones sending pictures everywhere, accessing the universe on
the internet and iPods with all the world's music in your ear.”
In previous centuries, most children died before they
reached maturity, epidemics and malnutrition were rife, most people did not
survive past forty and women bore so many children, they were used up and
exhausted by their thirties.
Larry Elliot, economics editor of the Guardian newspaper,
recently told the same story in economic terms. “Before new and more efficient
production methods for agriculture and industry were developed in the 18th
century, per capita incomes in the west had risen at a glacial pace for more
than 1,000 years,” he wrote. “Modern industrial capitalism generated surpluses
and it was this that differentiated it from the subsistence model.”
Is not, therefore, modern industrial capitalism responsible
for our “unimaginable luxuries” and the blessings of wealth? Should we not be
thankful?
“The reality of the world resists us”
If you are searching for a reason why a pervasive sense of
dissatisfaction has not led to a more widespread alienation from capitalism, I
think it’s because of an unconscious fear of killing the troublesome goose (and
its incurable troubles were laid bare in Parts 2.1 and 2.2) that lays the golden
eggs.
As an example, take foreign holidays. More and more people,
and young people in particular, experience them as a matter of course. In the
1970s neoliberal think-tanks in the UK asserted that secretaries flying
off on holiday to the Greek islands was a standing refutation of the Left. In
the film La Guerre Est Finie Yves
Montand, a Spanish Communist, says, “14 million tourists vacation in Spain every
year. The reality of the world resists us.”
Here is the appeal of capitalism in all its seductive glory,
its ability to achieve technological advancement and satisfy consumer desires.
Yes the same ability is inescapably linked to its faculty to eat up resources
and destroy the natural environment. Capitalism's failings may bring it down and
“us with it” said investment manager Jeremy Grantham last year.
Consumerism was and still is the glue that binds people most
tightly to the system. Everyone, says US economist Richard Wolff, from
economists, to advertisers, business, the media but also trade unions and left
movements bought into this idea. Modern economics was built on the assumption
that labour was the burden for which consumption, enabled by wages, was the
compensation.
Rising wages became the gold standard for what they could
buy but consumerism has been entrenched at the expense of other, possible
advancements of human freedom and welfare. Roads, not less traveled, but not
traveled at all. Wolff describes consumerism as a deal. Though he is speaking
of the US,
what he says is true of any western country.
“The deal might have collapsed at any time if US workers
rebelled against the organization of production in the US. This could
have occurred if rising wages did not suffice to make them ignore the growing
inequality of US life, or if they rejected subordination to ever more
automated, exhausting work disciplines, or if they refused to deliver ever more
wealth to every fewer corporate boards of directors of immense corporations
ever further removed from them in power, wealth and access to culture.”
Of course, now, one part of the consumerist deal – rising
wages – is falling apart. The golden age seems definitely over. Young people
may be able to fly to Barcelona
but they are also sinking further into debt to in order to pay for the
education to get jobs that don’t exist.
Yes the glue has retained most of it stickiness up to now.
You can’t always get what you want
But I want to argue that capitalism’s ability to deliver
utility, to provide satisfaction to consumers – the choice of multi-national
food, the EasyJet flight to Prague
for the cost of a pub lunch is (setting aside externalities like climate
change) more than matched by its capacity to create dis-utility. And both come
from the same source.
It’s almost a truism to note, although still worth noting,
that capitalism’s ability to satisfy consumer desire is a by-product. “It is
not from the benevolence of the butcher, the brewer or the baker that we expect
our dinner, but from their regard to their own interest,” said Adam Smith. You
are not given the choice to buy a new Smart Phone by the pure, unadulterated
desire of Apple to enhance human communication, but by that corporation’s need
to make a profit.
But, just as intrinsic to capitalism, although less
frequently observed, is that it is an accumulative
system. “Every year,” writes David Schweickart, “enormous quantities
of commodities are produced that, when sold at anticipated prices, generate
enormous profits, a large fraction of which are reinvested back into the
economy in anticipation of still greater production and still more profits.”
For capitalism to function
smoothly, this money must find somewhere to go. That it can’t find somewhere to
go – corporations in the UK
are sitting on £750bn – is one reason why it’s not functioning smoothly. But
the use and re-use of money is at the heart of capitalism. That’s why it’s
called capitalism – money becomes capital by virtue of the fact that it is
employed to make more money. This explains why it grows but also why there is
unrelenting pressure to find outlets for investment. An alternative name, given
by one economist to capitalism, is
'the profits system'.
There is no conscious choice in
this. It is why Apple don’t respond to consumer desires so much as think of
products and then try to get consumers to want them (which they seem to be very
good at. Steve Jobs, said one journalist “anticipated technological desires you
didn’t even know you had”). The idea of
voluntary choice is the basic error of writers like Lanchester. He argues that,
despite the credit crunch, he could discern no general desire to slow down.
Actually I think this desire does exist but it can’t be translated into
tangible action.
If you feel like you are on a
treadmill, that’s because you are.
I can’t get no satisfaction
This inherent characteristic of
capitalism, its machine-like ability to create profit which then needs to be
re-invested to create more money, explains why it manufactures dis-utility as
much as utility.
The credit crunch and subsequent
economic depression are a prime example of dis-utility. Banks seeking profits
lent to consumers who eventually couldn’t pay back. Those same banks created
asset-backed securities as a means of making more money, thus spreading the
credit crunch around the world. “The crisis was generated by the system
itself,” in George Soros’ words. The same system that generates Tesco and Ryan
Air.
The fact that now many businesses
cannot get credit from the institutions – banks – that in any rational economic
arrangement are supposed to supply credit as a matter of course, is another example of mammoth
dis-utility.
The pharmaceutical industry is
another case of dis-utility. In France, it has been estimated that over half of prescription drugs are either useless or dangerous. Why is this happening? Because of the overriding need of
pharmaceutical companies to use their profits to produce more drugs for sale. The
consumer – which capitalist genius is to suppose to satisfy – does not benefit
from this need. The opposite is true.
Public services are now a major
destination for private investment and thus dis-utility. The director of the
British Confederation of British Industry, John Cridland, states in one breath
that only business can create jobs, and in the next that a third of public spending should be opened up to competition from business.
In other words, public services
should provide an outlet for the investment of private funds.
That this will create spiraling
dis-utility is shown by recent history. In Britain, the Private Finance
Initiative has seen new hospitals built by private companies, which they then
own. It has resulted, on average, in a 30% drop in the number of beds in PFI hospitals compared
to ordinary public hospitals. Thus, there has been a large increase in the
‘through-put’ of patients using the reduced number of beds, a major cause of
the spread of the lethal MRSA virus. Capitalism in health services has resulted
in mammoth dis-utility for “consumers” of hospital services, as well as being more
expensive for the taxpayer.
The management theorist, Peter
Drucker said in 1939 that the Great Depression revealed capitalism as a system
that didn’t serve any purpose but it’s own. That is becoming increasingly
apparent again.
Virtuous consumerism
Is it possible to have an economic
system that does not spurn consumer desires as inherently worthless and
strives, within reason, to satisfy them, but one that avoids the glaring
systemic flaws and downsides of capitalism?
David Schweickart would say that
you can – through a largely market economy made up of worker, not capitalist,
controlled enterprises. He argues you can have a market without that becoming a
capitalist market and that makes all the difference in the world. But thinkers
throughout history, from Aristotle to Karl Polanyi and Murray Bookchin, have
criticised markets as inherently destructive of human solidarity and the
environment, and the ‘market economy’ is frequently used as a synonym for
capitalism. It is to this question of markets, good or bad, that we turn in the
last part of this review.
