I am no economist but when I studied for my PhD I did spend a lot of time reading the texts of Victorian economics, and books about economics. I read John Stuart Mill’s Principles of Political Economy (1848) I read selected highlights (if they can be called that!) of Das Kapital, I became familiar with Adam Smith and the ‘invisible hand’. I read, and even enjoyed, Joseph A. Schumpeter. Did I understand much of it? Yes, and no. This kind of philosophical economics is more accessible to the lay reader than the modern economics taught today in universities, which I believe is more mathematically and model-based, but still whilst I might have understood what I read at the time, and even retained it for a few years whilst I was writing my thesis, now I would struggle to tell you anything about it of any accuracy.
I remember the economics of the division of labour in the creation of pins, the foundation of the modern production line, and I remember the idea of the ‘invisible hand’ which is the idea that every economic individual’s self-interest brings about the circulating of money in a reasonably fair and beneficial way, without the need for sheaves of laws and regulations. Of course, like most of us, I have internalised Marx’s analysis of the exploitation of workers by the owners of the means of production.
Broadly speaking I would class myself as a laissez-faire capitalist. I believe in the right for people to make money, to own property, to try to increase their wealth and comfort in the world, and have money and perhaps property to hand on to their children in order to make their lives easier. I felt that in general the ‘invisible hand’, modified now into ‘trickle down’ economics, would work its magic and by-and-large people would be able to increase their wealth and improve their lives without too much intervention from the state in terms of controlling the behaviour of business.
I now think that this was, without qualification, hopelessly naive. I think my disillusionment began with the banking crisis of 2008. I was born at the end of a recession and have lived through three more. That four economic knock-backs should happen in Britain in fewer than fifty years is clearly a sign that the financial and economic structures of Britain, if not the world, are not working well, certainly for ordinary people. It was only after the 2008 banking crisis that I really began to take notice of these recessions because it happened at a time that was crucial for my family. We had two small children, we were in our thirties, a time when I think most people begin to realise they do not have an infinite amount of time in which to make money for themselves, or their descendants, and pay off the mortgage too. A setback at this point in somebody’s working life can have serious consequences, and it did have serious consequences for us. Wages stagnated, promotions were put on hold, bonuses were greatly reduced or disappeared altogether. We had to modify our aspirations. Even now we are not economically anywhere near where we would have been, were it not for the 2008 crisis.
For people not working in reasonably secure industries such as IT, engineering, and of course, government, the consequences were much worse, often devastating: lost jobs, a long period of unemployment, repossessed houses, lost savings. It was a crash that saw things happen that I thought I’d never see in liberal democracies, most notably the Greek government confiscating a portion of its own citizens assets directly from their bank accounts to put in its own empty coffers. As this article states “We believe that a State…will protect us, while we blindly follow the rules imposed on us by the social contract, without realising that this is a contract we never signed, and that we’ve never had any real influence over.”
It’s frightening but it is true that we are largely powerless against the powers of our state, even if that state professes to be a liberal democracy. Most of the time it is possible to ignore our powerlessness because, in general, western states do not do things that draw our attention to it. Of course over the last fifteen months, with governments imposing arbitrary strictures on our behaviour and freedom, that has changed for many people in many states, and I think has proved to be food for thought for many ordinary citizens.
So back to my thought this morning. In the light of financial crises, which overwhelmingly hurt ordinary people rather than the super-wealthy, and in the light of the vast wealth and power of, for example, tech monopolies, which have come to influence, if not control, our lives more and more over the last decade, do I think capitalism is a good thing?
Well, I grew up in a western democracy, I studied history at school and have always been interested in history, I have read independently about communist Russia, China under Mao and during the Cultural Revolution, and I’ve read a little about life in East Germany. Whilst I accept the contention that ‘true’, or ideal, communism has never existed, I think communism as practised in these countries is probably the communism any state would end up with, given the imperfections of human nature. So I do broadly speaking think capitalism is a good economic system and that individuals should not be ashamed to strive for material comfort and economic security. Endeavouring to earn more money through working harder, or climbing up the corporate ladder, or through working hard at your own business, is not immoral, with the proviso that the pursuit of wealth does not become an individual’s only purpose. In fact I would suggest it is morally good for people to pursue a certain degree of wealth, at least because financial security brings power.
In a capitalist society, wealth and power are inextricably linked and I think the power aspect of wealth is what brings concerns about the accumulation of wealth at all. We are all aware that vast amounts of wealth can give companies and the individuals who pocket the wealth those companies produce, far too much power. The personal fortunes of the richest people in the world now are equivalent to the GDP of small nations: Bill Gates - $133bn; Jeff Bezos - $177bn; Mark Zuckerberg $122.9bn; Elon Musk $165.9bn; Larry Page (Google/Alphabet Inc.) $107.1bn. For comparison the total GDP of Hungary is approximately $162 billion. Beyond a brief attempt some years ago to question the monopoly of Microsoft, little has been done to limit the accumulation of vast wealth by the CEOs of these huge companies. This apathy has been excused as a reluctance to interfere with the natural workings of capitalism.
Most likely that explanation is used because it is one that ordinary people, especially Americans (and America is where most of those huge corporations are based) are most likely to agree with. However the real reason for the reluctance to interfere in such monopolies is most likely lobbying and the wealth, connections, and donations these companies provide to the politicians who are in a position to be able to call a halt to these massive accumulations.
Big Tech and other monopolistic organisations, as well as banking and finance, provide jobs for retired politicians, as Facebook did for Nick Clegg in 2018, and countless board positions with which to occupy their ‘retirement’ years and fill their coffers. What politician is going to alienate the whole of Big Tech by being the one to decide to begin breaking them into less powerful pieces?
Alongside concern about the huge and wealthy corporations, run anxieties about the power the state wields over the individual. Earlier we considered that the power western, democratic states hold over their individual citizens is mostly invisible and rarely exerted. In bygone years government, corporate, media, and legal interests worked to some extent against each other and operated as checks to each others’ power. Politicians, in an age when they looked forward to time spent cultivating their roses, rather than as a non-executive director at Google, might reasonably be expected to rein in monopolistic businesses. The newspapers with a substantial and relatively independent income from their large circulations, would criticise politicians and business moguls alike. Now, politicians are leery of annoying big business. Newspapers run their digital editions on Big Tech’s platforms and their advertisers are the government. The possibility they will criticise big business or the government is vanishingly small.
As the shutters came down on bricks-and-mortar businesses, large and small, all over the world, and slammed shut on individuals’ rights and freedoms, it became increasingly clear that money is power. To accumulate money to the extent that it gives you some power and freedom in your choices is not then, in this society, a bad thing.
Having some money in the bank has always meant the freedom to leave a job where you are miserable. It has always given you sufficient power not to be oppressed by the power of somebody else. As fines were handed out in free nations for such previous non-crimes as travelling on public transport without wearing a mask, freedom constituted having enough money to fight those fines in court, or indeed enough money to keep paying those fines and carrying on as normal. Money equalled freedom. In extreme cases people have used their money in order to re-locate to countries where the lockdown regulations were not so authoritarian and all-pervasive.
In a similar fashion, if you own your house without a mortgage from the bank, should an economic crisis strike, the bank will not be able to foreclose on your mortgage and take your home from you. If your local schools are failing you can afford to pay for your children to go to private school. If you cannot wait for the subsidised health care system to provide your treatment you can go privately.
Money means choice, and choices mean power. The amount of money most ordinary people can hope to accumulate does not result in a lot of power, but perhaps just enough power to evade being oppressed.
This is why the hollowing out of the small business class, over the last year and more, has been extremely worrying to me. It seemed to me that beyond this being a way of making sure more money goes into Jeff Bezos’ pocket than in the till of your local bookshop or cookware store, it was also a way of reducing the class of people that have some power and choices. Small and medium-sized businesses not only provide wealth and a modicum of power to their owners, but they also provide ordinary people with choices. In a world in which the ruling elite seem ever more motivated to centralise every service and business, the better to control us, it seems that these small and medium-sized businesses were seen as a threat to this hegemony.
Academics, economists, and writers have noticed this hollowing out of capitalist economies attendant upon the exponential growth of those few monopolistic businesses. Some, such as Joel Kotkin, have written about the new feudalism, which seems to be coming about before our eyes as vast fortunes are concentrated in a few hands, the state supports the poorest, and those in the middle are left grasping for a living in the gig economy, in the vast Amazon warehouses, and as overworked and underpaid programmers for the Big Tech companies. The WEF’s assertion that ‘you will own nothing and be happy’ seems not so much an exhortation to communism’s unrealisable fantasy, as a sinister prophesy.
The interplay and balance of power, as wealth, is what keeps people free and protects them from being oppressed by others. We need as individuals to try as best we can to shore up our finances, pay off our mortgages, save some money, use what we spend to support the small businesses that in turn support us by providing employment, a thriving economic ecosystem on our high streets where other businesses, businesses we might want to start, can thrive. If we run online businesses we should avoid using the Big Tech platforms. We need to keep our cars, because if all the transport is public and communal it can be stopped at any time, or we can be prevented from using it. We need to resist digital IDs at all cost. The Bank of England is considering programming digital currency to control its use, it would be a simple matter to adjust our digital IDs so they would allow us to only do certain, allowed activities. The Chinese social credit system has already been used to prevent people taking trains and planes, and even taking up places at university (this article attempts to give a neutral analysis but it still makes chilling reading). Having money, owning a home, and a car is not selfish materialism, it is resistance to tyranny. What the WEF, and others, do not want us to understand is that owning nothing does not make us free, it makes us serfs.
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