Capitalism . . . Is it a failure, or is this just a blip!


The trouble is that you can't simply reform the focus on the short-term out of capitalism. It's central to it. If you look at the motivation of each of the participants in capitalist economics, they are all motivated to increase profits in the short term. Capitalist theory says that all those individual short term focused decisions will be led by the invisible hand to benefit the long-term interest of all. Unfortunately that just doesn't happen. If a CEO or a bank boss doesn't focus on short-term profits he will be replaced by one who will. You could attempt to regulate to avoid the problems that the short-term outlook of markets causes, but within capitalism, regulation causes its own problems. It also gets dismantled again on a regular basis since those with the motivation to dismantle it also have the wealth and influence to get it done.
 

Are you arguing that every economic and political system over the entire course of human history in every society in the world has led to the above and that those outcomes are therefore unavoidable in any system? If you're saying that Russia, Cuba, North Korea, China etc. led to all the above then you're absolutely right. That's the predictable outcome of an authoritarian state.

You've identified the problem in your comment. You are working on the assumption that a 'regime' will be in 'power' and will 'run a country'. That would be a State of one kind or another. As long as we believe that living in a hierarchy is a natural way of organizing ourselves we will have States, and that State will exercise power over its citizens. Power, and its distribution, is the problem. There have been alternatives in human history where people organized themselves, in free and equal associations, without hierarchy. Many tribal societies were organized in that way, as were early Christians or the city-states of medieval Europe. For modern examples you could look at the anarchist areas of Spain in the 1930's, or the Ukraine after the Russian revolution.

Liberal economics as you call it, or laissez faire to give it its proper name, is a blip in human history, as is capitalism. All of the problems you've noted with 'alternatives' existed in previous human societies to one extent or another. The Romans and the absolutist monarchs were pretty totalitarian, starvation is common throughout history due to crop failures, overpopulation etc, mass murder is ancient, as is poverty. They've also happened throughout capitalist history, including during periods of laissez-faire economics. 19th century imperialism coincided perfectly with laissez-faire beliefs. The native Americans weren't saved by 'liberal economics' and nor were the Irish in the famine. So if your claim is that liberal economics will save us from all of those things it just doesn't stand up.
 
The liberal economic "historical blip" - as you describe it - coincides with the greatest improvement in the general human condition and greatest increase in wealth ever in history. Before the 19th century, economic growth effectively did not exist in Europe - the vast majority of the population experienced subsistence - as had been the case going back to prehistory. Life expectancy at birth was roughly the same as it had been in ancient times. You talk of liberal economics causing the 19th century Irish potato famine which is nonsense - Ireland had been plagued by famines throughout history - the 18th century "Great" Irish famine was arguably more devastating than the 19th century one. Britain and Europe had been racked by famines before "capitalism" many of which were as bad or worse than our potato famine.

When the human condition of those living under the typical western liberal economic system collapses enough to begin to even approach that of tribal Africa, communist China or North Korea, the socialistic populism of South America, the nomadic system on the fringes of the Arctic, the feudalism of Afghanistan or the monarchism of the Middle East, I might consider taking you seriously. Until then, I think that while life for the average person in the "capitalist" west will not be easy for the next few years because of the bust, most people in Canada, the US, Europe, Australia, South Korea, Japan, etc. have enough objectivity to see that their condition is still an order of magnitude better than that of those who do not live in economically liberal countries.

By every single human development measure, the average person living under "capitalism" is far better off than any of the alternatives. And no - the short lived anarchist communes of Spain or the Ukraine do not provide a counter-example to the overall experiences of the 12 billion or so human lives which have existed in history. The fact that you include the medieval cities which were run by mecantilism or controlled by guilds as part of your pantheon of utopias is bizarre but shows how desperate you must be to produce counter-examples.

A final point is that nobody or nothing is stopping you - with a group of like minded people - taking over some bit of unoccupied bog in the middle of Mayo and living a life "free" of capitalism. To be true to the ideal, you should cast aside all of your possessions that were delivered to you by "capitalism" (lets say you start with underwear, shoes and toothpaste). Once you do this - free from the jackboot of "capitalism" - presumably you can enjoy an idyllic life. Good luck with that.
 
We’ve had industrial capitalism for two centuries, not 12 billion human lives. Not all of those two centuries were dominated by laissez-faire economics. Two centuries are a historical blip in relation to the time humans have existed. We have had greater economic growth in that period than in any other time. The industrial revolution could not have happened without the use of coal, a limited fossil fuel. It could not have continued without oil, again a limited resource. Most of what is described as economic growth results from the exploitation of these limited resources. A tiny amount of oil provides us with the same energy that previously had to be expended by 20 people. It provides us with all of our consumer goods, our chemically manufactured drugs, transport, computers, building materials, food, electricity and water. The exploitation of fossil fuels has allowed unprecedented economic growth. It also coincides with industrial capitalism. Of course it’s use in capitalist society has also provided us with soil erosion, deforestation, climate change, dead seas and dried up lakes and aquifers. It will also run out some day since resources are by definition limited. So capitalism hasn’t exactly been a miracle ideology, it had more than a little help.

As for the greatest improvement in the general human condition, actually it hasn’t. It has if you limit your perspective to the present day developed countries. But capitalism in the 19th century produced Dickensian conditions, misery, child labour in factories and utter destitution for many. Capitalism is also a global system so you can’t assess its impact without taking into account the rest of the world. Their living standards have actually fallen since the 1970’s. Most of them were conquered, many used as slaves in the 19th century. That was capitalism. In the 19th century it was believed that in order to grow the economy you had to expand and bring in raw materials and labour from poorer countries. The legacy of imperialism can’t be separated from capitalist ideology. When you compare living standards in the west and the developing world, you’re ignoring the fact that capitalism is a global system completely.

Life expectancy has increased and medical science has made massive leaps in the past century in particular. But scientific knowledge did not begin two hundred years ago. Medical science in turn was not produced by capitalism. The invention of penicillin and the development of the germ theory of disease came from human beings, not from a capitalist system. Capitalism did not discover germs.

I most certainly didn’t say that liberal economics caused the potato famine. I said it exacerbated it. Most serious historians of the time would agree that government policy before and during condemned many more to die than otherwise would have.

Finally, this notion about bogs in Mayo…. Land in Ireland is owned, even bogs. If you ‘take over’ land owned by someone else you get evicted. Neither toothpaste nor anything else is produced by ‘capitalism’. It’s produced by human beings using machines and raw materials. Are you seriously saying that goods cannot be produced under any system other than capitalism? I'm pretty sure humans have exercized their ability to be inventive and have produced goods over the entire course of human history, regardless of how they organized their society.
 
Darag; great post.
Mallow; there's some great points and some awful rubbish in your posts.
I agree that anyone who works for their wage is working class... but you forget that most employers are PRSI workers who rely on their labour for their wage just as much, or more, than those they employ. You also forget/ignore that many people at the top of the capitalist system earning multi-million euro salaries are employees.

Anyway, capitalism is an economic philosophy; socialism is a socio-economic one. An economic system should always be subordinate to the greater societal good (as capitalism is in the Western World). If you want to know what unbridled capitalism looks like read up on the East India Company or The Congo under Leopold the First of Belgium.
 

I think I've already defined working class as anyone who lives in wages. That includes those earning multi-million euro salaries. An employer, by definition, is a capitalist. They work, certainly, but that doesn't make them working class. They also earn profits from the labour of their employees. That is what makes them capitalists. I haven't been forgetting that in my posts, I simply didn't spell it out perhaps.

I don't believe you can logically separate systems into merely economic, or merely socio-economic or merely political. And capitalist is not just a 'philosophy', it is a system of hierarchical relationships. That's very different to a philosophy. An economic system by definition impacts on society. The fact that most people must work a certain number of hours per week for an employer, the fact that they must pay mortgages and interest or rent in order to obtain housing, the fact that their income is subject to the fluctuations of the economy, have pretty massive social implications. It's also incorrect not to describe it as a political system. Politics, at its most basic, is simply how we organize our society, how we make decisions. In a society with a capitalist economic and social structure, you can't separate the political system from the socio-economic one. Each depends in fact on the other. The State (i.e. the political system) protects private property. Private property is a capitalist concept in that it creates hierarchy. So the State is actually inseparable from the economic and political system.

As for the economic being subordinate to the greater public good, that's not actually how it works in practice is it? In fact, the public good is subordinate to the economy. The public is now suffering because of the economic downturn. As they do in each cyclical downturn that capitalism has always and will always have. In a downturn, in order to 'rescue' the economy, the public are taxed more and public services are cut back. The public good suffers to save the economic system. Because the underlying belief is that the economic system is in the public good. If you believe that then the economic system is not subordinate to the public good, it equates to the public good. Doesn't actually hold up at present though does it?

I am aware that we do not have unbridled capitalism and am very thankful for it! However, this thread is about whether or not capitalism itself has failed. I argue that it fails us even in states where it is regulated. I don't need to address the East India Company to show that. Our complete dependence on the economic cycle has a severely damaging effect on our society. The lack of income and dependence causes depression, suicides, poverty and family break-ups. Every single time it happens. People's lives are damaged permanently. If a system cannot provide the economic stability for people to have security in their lives then it has failed. That's without even mentioning its other outcomes.
 
adonis said:
A lot of word written but they mean nothing. It is just a blip.
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A peculiarly repetitive blip. Which has a tendency to wreck people's lives at each repetition. But I'm sure all those losing their jobs today would agree with you. Nothing but a blip, nothing to see here, move along please.... (preferably to Australia or somewhere)
 
Ok I'm going to bow out of this after this. Mallow you really need to take a step back and look at the evidence of history without prejudice.

Also you should try to stick with the well understood definitions of the terms being discussed here. For example, you confuse capitalism with mercantilism or empire economics and proceed to criticize liberal economics on the basis of your redefinition. Even when you do this you are historically backwards; European imperialism started centuries before liberal economics but did not produce a noticeable improvement in the standard of living in Europe. A stark example is monarchist Spain plundering South America on an unimaginable scale and yet all this gold and silver did not produce a long term improvement in the standard of living in Spain - in fact the effect was the opposite. In fact once capitalism took hold in Europe imperialism fell by the wayside as it no longer made sense.

Neither plundering other countries nor plundering the environment leads to a sustained improvement in the standard of life; this has been shown over and over again in history. Did capitalist countries engage in such practices in history? Of course some did but so did/do monarchist, communist, tribal, nomadic and feudal countries. In the latter cases they lead to no general improvement in the standard of life so it is not these practices which lead to the historically remarkable progress in the human condition since economic liberalism was adopted on a large scale.

Just to clarify, my point in raising the context of 12 billion human lives was to attempt to make you judge liberal economics within the broad context of human existence. Of the 12 billion, most lives have been relatively brutish and miserable in terms of all measures of human development - subsistence (i.e. working from the earliest age possible until your death after 20 or 30 years just to provide shelter and enough to eat) was about the best you could hope for. About a billion people have lived under the principles of liberal economics and those lives have been longer, happier, healthier, more fruitful in terms of intellectual development, more just, wealthier, more educated, etc., etc. than the other 11 billion. And this isn't a historical effect; look around the world today and look at countries which resist economic liberalism and you'll see poverty, repression, misery, poor health, hunger, etc. To claim that capitalism has "failed" is simply nonsensical if you are prepared to look at the macro historic and geographic evidence.

Whatever about having to "tighten our belts" in the west, the current financial bust is absolutely insignificant compared to the equivalent "busts" which have happened elsewhere or in other times. In communist China, 30 or 40 million people starved to death. In sub-Saharan militaristic/tribal Africa millions starve due to "system failures". This is the stark reality of life outside of the comfort of a western liberal existence.

Finally, regarding your moving to a bog in Mayo, it's pretty amazing that the only thing preserving the entire western liberal economic system is that nobody in history has been able to afford to buy some bog in order to effect your superior (if unspecified) system. Excuse my skepticism but even Marx - a great thinker - got it absolutely and completely wrong in pretty much everything he predicted; I somehow doubt that your idea - whatever it is - is likely to be superior to his.
 
 

I have never argued that capitalism is the only economic system which plunders the environment or other countries. As above, anarchists oppose any hierarchical system. That includes the State communist countries such as Russia or North Korea, or state capitalist countries such as China. You are attempting to rename capitalism as ‘economic liberalism’. The latter certainly sounds nice and liberal and it avoids the baggage of the former, but what you are in fact referring to is capitalism. If we were disputing the difference between highly regulated capitalist systems and, for example, England in the 19th century then the concept of ‘economic liberalism’ would be relevant.

‘Plundering the environment’ in the sense of extracting fossil fuels, most certainly does improve our standard of life. That improvement can be sustained for as long as the fossil fuels can be extracted. Societies prior to industrial capitalism did not have access to coal at any scale, or oil. Not all resources are equal in terms of energy. Tribal, feudal and monarchical societies had access only to resources which produce less energy. For example, windmills, watermills, wood. Those provide an order of magnitude less energy than coal, gas or oil. So clearly the use of lower-energy resources cannot improve living standards as much as higher-energy resources. As for communist societies, Russia did actually raise living standards hugely from 1917 to the 1970’s. (Of course being an authoritarian state they also murdered millions along the way) But they did produce growth and improvements in general living standards.
 

Again, you refuse to use the word capitalism. You claim the entire period of capitalism, throughout the world, as a period of ‘liberal economics’. Liberalism is one capitalist school of thought. It does not equate to capitalism. Is there any context in which you can use the word ‘capitalism’? If not then you are attempting a re-branding exercise. I won’t rewrite the dictionary for you.

Your summation of life for the human race prior to capitalism is limited to a Hobbesian worldview and therefore ridiculously simplistic. Subsistence has not been the best one could hope for throughout human history prior to capitalism. A citizen of ancient Egypt, Greece or Rome would dispute that. Even primitive tribes were in fact very healthy (healthier than the early farmers) and studies have shown that in fact they spent less time working to obtain food and shelter than we do nowadays. During period of medieval history peasants in fact had large amounts of free time. The number of feast days they enjoyed amounted to at times almost 1/3 of the year. Most had their own land and limited obligations to their feudal lord. You’ve also completely ignored the wealthy throughout history.

The lives of all of those who have lived under capitalism have not been better than those who lived before it. I think you completely ignore the 19th century! You also seem to refuse to accept that the developing world is part of the global system of capitalism. The developing countries you refer to as poor and repressed did not become so by some accident of history. Nor through their own obtuseness. They are a part of the same economic system of capitalism. What you are arguing is that they should liberalise their economies more. You want to impose the same neo-liberal dogma on them that has failed so spectacularly in the developed world. Undoubtedly you also believe that the free market is efficient and the current crisis is caused by too much regulation…
 

To say that we are better off than those who have or are starving to death is a truism. So what? I am as opposed to ‘communist’ China and tribalism as I am to capitalism. You seem to imply that it is impossible for human beings to feed themselves regularly without capitalism! The causes of famines are more complex than ‘They need more capitalism’. That should really be obvious. Ireland in the 1840’s was capitalist. We had famine. It’s a little fanatical when you attempt to prescribe capitalism as the solution to every problem throughout history and the globe….

I have specified my alternative system before. Just to be clear it’s anarchism. It requires rather more than a bog. I don’t have much to do with Marx and don’t know much about him. Again, your attempts to simplify lead to inaccuracy. Marx has little to do with anarchism although you right libertarians would like to equate us all with Marx and keep things nice and simple. You might like to write off ‘my system’ as something someone far less intelligent than Marx came up with (would an IQ test resolve the issue?!). Anarchism isn’t exactly ‘my’ idea! Any more than capitalism is ‘yours’. Tolstoy, Gandhi, Bakunin, Thoreau, Malatesta, Proudhon, Shaw, Berkman, Goldman, Chomsky are all part of the anarchist tradition. I haven’t exactly just invented it…
 
Very interesting mnaseersj, how about just posting a link along with your own overview?
If the author does not expressly state that the content can be reproduced then you may be breaching copyright.

On the substance of the post given that the author is a Muslim his thoughts are framed in the context of the overarching theological presumption that one of the basic requirements for happiness is the establishment of Islamic Law on earth. This law covers all aspects of life and as such there can be no separation of Church and State. Given this capitalism, as the inevitable economic model of a free “Liberal” and democratic society, will always be at odds with Islamic teachings, as well as true Christian teachings, since both seek to limit the scope of human freedom within the boundaries of authoritarian, infallible and unalterable “truths”. Since these truths are the direct or inspired written work of God they cannot be subject to democratic change ergo liberal capitalism is the enemy of religion.
 
Thanks for the reply mnaseersj. I really want to reply in turn but at 1am I won't to it justice but the crux of my point is that capitalism is just an economic system. Democracy (real democracy which allows freedom of speech and freedom of expression not the sham they have in Iran) is the best political system. How the conscience of the people is informed is up to the people. As long as they do not seek to limit the freedoms of others based on their religious beliefs it all works. I do not propose that the ethical values in secular countries are perfect, far from it, but they are better than those I have seen (first and second hand) in any country where the laws are subject to the limiting framework of religious teachings. That also holds true for the Ireland of now compared to the Ireland of 30 years ago.
I do not see this as a fundamental flaw in the ethical codes at the core of any particular religion but rather the human failings of those who administer a system in which there is little accountability or room for reform. Such a system is inevitable where democracy is not underpinned by an electorate informed by a free press unencumbered by state control or censorship.

By the way the notion of a secular state built on trade is in no way the reserve of the West.
 
mnaseersj said:
in ordinary people around the world facing financial hardship and ruin.
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Mnaseersj. Interesting perspective, but one which makes me ask if you have ever actually lived in an Islamic state?

I have by the way.
 
So like the perfect communist or capitalist state, no-one has been able to get one off the ground yet?
 
mnaseersj said:
^ An Islamic State is one based on the model of Prophet Muhammad (PBUH), the Caliphate, and it is a State which people around the world are working to re-establish.
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Did the Caliphate as you describe it ever truly exist? From my reading of Islamic history it didn't.

How can any “perfect system” ever work when it does not take human frailty into account? If a perfect system requires that vast numbers of people be subjugated and forced into a pattern of behaviour which they find undesirable then such a system is just another form of fascism.

Please don’t take my comments as an attack on Islam; I am simply arguing the general point.
 
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