More on that capitalism story
Uit de keuken van de curator

More on that capitalism story


I seem to have got rather stuck on the capitalism trip over my brief holidays…but anyway, here is an extract from a Guardian blog where I tried to answer Evil Tory’s quite reasonable questions. As it will be lost in the masses of Guardian comments…I thought I would be vain enough to post it hear together with the original post from Evil Tory. His post starts it off, mine replies below…


It is the job of business, whatever business, to make a profit. Only by making profit can a company continue to run. Investors put up money to buy part of a business because they want a share of that profit; if said investors did not believe the business was fundamentally healthy, they would not put up their money. More successful companies generate more investment which in turn generates, if correctly used, greater profits and more often than not greater market share at the expense of less well-run companies. That’s basic capitalism. There’s nothing magical about it, and to attribute any sort of moral dimension is to misunderstand the nature of commerce.

So, first and foremost, it is not government’s business how or how much a company pays its employees. Nor is it any business of anyone else other than the shareholders of the company and the employees in question. Government is, regrettably, entitled to a share in business profit and employee remuneration via taxes. While I personally consider this to be legalised theft, I accept that there are certain necessities which can only be met via taxation (we probably disagree over what constitutes a necessity but that another argument). Thus when a company makes larger profits and pays its employees more, the government should be pleased because its taxation revenue increases.

Regarding the current recession and its most proximate symptom, the credit crunch, those banks which best weathered the crisis are now in a position to take advantage.

For example, Goldman Sachs, much complained of, did not bankrupt its competitors; they managed that all on their own. The analysts at GS saw much of the ‘toxic’ assets for the dangers they represented and smartly got out before the crunch hit. In so doing they saved their employer (thus securing their own jobs) and made a lot of cash for the owners of the business, and were rewarded accordingly. Good for them. Had their competitors done likewise there would have been no credit crunch at all.

Barclays managed to broker a deal which kept HMG out of their business. That’s good for their depositors and good for their employees and shareholders; HMG is a remarkably incompetent business manager as anyone who lived through the seventies should remember. Whether their new shareholders will prove a useful asset is a matter for Barclays, not anyone else.

HSBC has likewise put itself in an envious position, and in doing so can now take advantage- and its advantage works also to the advantage of the fiscus.

IMNSHO, it is utterly false for the ‘left’ to complain about the very same profits that pay for their cherished government programmes. Business is the engine that pays for the NHS, for schools and police forces and roads and armies and all the rest. Business – mostly it has to be said, small business – and the people who own it and who work in it, pay for the good things government alone has the structure to provide. They also pay for all the crap and waste of government; the endless petty bureaucracy, the uncounted milliards thrown away on unworkable IT, the tens of thousands of useless jobs for PC nonentities advertised at large salaries in the Guardian every week, the streams of pointless regulation and legislation emanating seemingly without end from an increasingly detached and incompetent Whitehall.

I’m sorry, but you’re all tilting at the wrong windmill. If you really want to solve the problems of this country, you should be attacking the government and its accompanying over-mighty and utterly wasteful State, not the banks or any other business.

But I don’t expect you to do that. And honestly, I don’t understand why. Maybe you could enlighten me?

TO: EVIL TORY (and the rest of Guardian)

Evil Tory,
Ok I will have a go at answering briefly
That’s basic capitalism. There’s nothing magical about it, and to attribute any sort of moral dimension is to misunderstand the nature of commerce.

Herein lies one of the crucial failures of our current political system. I agree with your statement above but what follows from it is that capitalism should know its place in a system of values.. why know its place? Because society, neighbourliness, culture (call it what you will) needs an ethical system to give value to life.

The problem is that neo-liberal politicians have given capitalism the task to determine the ethical and moral order through the mistaken mantra that “free markets = free men”.

Historically, it is obvious that democracy and capitalism have nothing to do with each other, as China is proving very adequately today. But we in the Euro-America political zone have decided to elevate the free market beyond its role in determining trade relations between (small scale) private interests to a point where it is the arbitrator of our way of living and our system of values.

If, as you rightly say, capitalism has no morality, then that is why it produces the kind of insane and horrific dysfunction that we see across the world, with the huge waste of resources, conflict and environmental devastation. This comes about, I think, not because capitalists en masse want it (though many benefit) but because they have no ethical or moral reason to address it. Our social ethics have to come not from commerce and the free market but from some other source. Ideally that source should be some form of democratic government and that is what we leftists argue about (again ideally, but I won’t go there). Our questions are how to make the right collective ethical choices, which include whether bankers should throw their wads of cash around or not.

The evilness of the Tories is that you accept that capitalism has no morality but you are not willing to invest in making the right collective ethical choices on any other basis. This results in making only pragmatic solutions that keep the wheels of commerce turning. You then (generally) leave it up to religious guilt to take care of what little morality might be needed.

IMNSHO, it is business and capitalism that relies on a orderly, peaceful and social state (with provide such things as an NHS) in order to prosper. It is not, as you say, the other way around.

And finally…could we one day really look at what the great problem with the seventies was instead of hurling ignorant insults at the decade? If you look at the health, education, wealth gap, infrastructure figures there were mostly significantly greater improvements in these areas then than in the 1980s and 1990s. But I am only pleading from some more thoughtful research here…a Guardian article anyone?