Reform or Revolution?

I sent what I consider a rhetorical question into the twitter void some time ago:

But as it turns out an old friend of mine thought it not so rhetorical and decided to answer me by drawing on the educated/liberal zeitgeist and constructed in what I feel is a very good attempt to capture the contemporary, thinking-man's defense of capitalism. Here is his response:

The real question isn't what kind of economy we should choose. It's what kind of culture we should cultivate.

There is NO economic system that values people more than money as long as money is a part of that system. It's simply a ...matter of resource allocation. In every economic system, there will always be a certain price nobody would be willing to pay to save a life. For example, nobody would pay a trillion dollars to put a stop light at a busy intersection, even if it was absolutely certain that putting that light there would save a life, because more lives can be saved by allocating that money more efficiently.

Capitalism whether we want to admit it or not is incredibly good at getting people what they want, and is ruthlessly efficient in allocating resources (which hurts sometimes). In capitalism, if there is a desire for something, it'll happen because the desire will spur a monetary incentive. This is screwed up by stuff like politics, which totally destroys and manipulates market signals through policy meant to favor one group over others.

What you NEED is to make it so people WANT to value people more than money. There already exists a seedling of that, and that's where things like the nonprofit industry came from. If you change the way people think and what they want, you can use the ruthless power of capitalism to pursue humane ends, rather than greed. The way it is now, the PEOPLE are the ones who value money more than their fellow people. An economic system, after all, is just that - a system that PEOPLE control and use.

An oil executive's greed is not something that we can really blame on capitalism, it's the executive's problem, even if capitlism is the tool with which he quenches his greed's thurst. Yes he's driven to get profits for his share holders/board of directors, who will hold him accountable if they don't get a return on their investments, but those share holders (and thus the board of directors) won't fire that executive if they share the same values as that executive, and would have made the same choices in his shoes (whether it's a good decision or a bad decision). All this fuss about corporations being favored more than people doesn't have a lot of meaning to me because remember: corporations are made of PEOPLE, and it's their choice how they wield their power. Part #2 of a solution: improve business ethics to conform more to your value of valuing people more than money.

There's also the political side of it, which totally screws up incentives and efficient resource allocation from the ground up, which often DOES favor one group (sometimes poor, but usually rich) over others. Unfortunately the rich have a way bigger say than the poor in politics as a result of their greater ability to get politicians reelected. So part 3 of your solution should be a comprehensive campaign finance reform.

SUMMARY:
STEP 1: Change the way people think so you can harness the power of an already ruthlessly efficient economic system.
STEP 2: Improve business ethics to conform with your value of valuing people more than money (which will be easy if you do step 1).
STEP 3: Achieve comprehensive campaign finance reform so you can get democracy (which is basically political capitalism) to actually work.

I really hope to hear what you think on this.

 I drafted a rather lengthy response to this but I felt it was very important to do so, seeing as our disagreement summarized a much larger debate about the goals that progressives should set for themselves--a conversation that is particularly important considering the let down represented by the Obama administration. It's kind of lengthy (and, I admit, in some ways simplistic) but I think it represents a point of view all progressives should consider and one that I think represents the only path forward. I have represented by response below.


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Okiedokie.

I want to start by just saying that what I’ve written here is my attempt to make an entertaining and clear response to what you wrote and though it has become larger and scope and more exhaustive than I panned, I think it’s important to hash this out because it is the central argument I have with reasonable people who have no yet crossed over from progressive to radical. Getting these ideas down on paper has been good for me and I hope you find it helpful, too, though please believe that I do not expect to bully you into agreeing with everything I have written here, although I do hope that you take these alternative points of view as a chance to further complicate and add nuance to your own ideas and that you question anything that doesn’t make sense or is unclear. And that you ignore anything that seems unduly harsh—it is said in mirth not spitefulness. In other words, I intend this to be a resource for your consideration and not an “argument” or a “criticism” of you, though I will be critiquing some of your statements (obviously).

Anyway.

I’d like to begin by establishing a very specific definition of capitalism that lends itself to analysis. As you said, your claim that it’s free market economics is more of an ideal than the definition of our economic system—and in fact, there has never been an actual free market in the sense of one that is completely unregulated, nor could there ever really be. I’d even go a step further and say that this “free market ideal” is merely a characteristic of an economic system as opposed to a definition because I don’t think that as an ideal it applies only to capitalism. Additionally, there’s the question of whether the term is simply gibberish, a talking point that is impenetrable to empirical verification or critique, and what it implies—some sort of naturally arising, self-sustaining, internally consistent, mathematically demonstrable system—completely disregards the reality that all economic systems at all times are predicated on the arbitrary or not-so-arbitrary rules that humans have invented and maintain/observe for a variety of reasons, none of which pertains to the fact that it is somehow “free” as in an unbridled horse or someother loosed beast.

But and so my view is that capitalism is a system which is designed for the proliferation of capital. In other words, the point of capitalism is to allow people to use their property in order to generate income, and so owning a building allows you to collect rent; owning a slave allows you to sell the cotton they pick; owning stock allows you to profit from appreciation or dividends; and owning the means of production allow you to profit from surplus labor (I’ll get into this in a second). This is why people who own the most property are the people who are always making the most money in capitalism (and actually making the least stuff for society). Notice that working (and, more specifically, producing goods) is not needed at all for a person to collect income—in fact, it’s by and large seen as a person failure if a person is still in the working class (that is, if a person is still producing with their own hands as opposed to managing others). Most impenetrable economic theories sort of base themselves on the idea that you create something for society in order to receive stuff in return, but this is in actual fact not true about capitalism.

Now the relationship between those who own the means of production and those who produce is, I think, the most essential relationship in capitalism (in fact, the existence of this relationship is in many ways by definition  unavoidable in a capitalist system) so I will go into detail here. By those who own the means of production, I am basically talking about those who own factories and/or farms and/or any place/machinery that creates goods for society. Typically these days the people who own the means of production are (major) stockholders via a company or corporation, but not always. These people, the owners, receive all their income because their employees have no choice but to create more goods than the workers themselves need in order to live, and then the owners take the extra goods and sell it for their own profit. The less cut they have to pay to the workers then the more they can keep for themselves.

To make it clear, an example involving cupcakes: I own a machine that makes cupcakes, and I’d like to use my ownership of this machine to generate income for me without having to do any work (because I am a good capitalist). If the universe consisted of me and three other people, then there has to be enough cupcakes created for all of us to survive. It seems like what should happen, then, is that everyone should just work at the machine as much as they need to in order to produce the number of cupcakes they need. But remember, I don’t want to do any work at the machine. Therefore, I need to get each of the other three people to work at the machine enough to make what they need, and then between the three of them they have to work an additional amount the make the cupcakes I need. This labor they do in addition to the work they need to do for them to survive is what is meant by surplus labor.

How can I get away with what is essentially stealing from the three other people in the universe in order to sit there and eat cupcakes, you ask? Well, it’s all because, for whatever reason, I own the cupcake machine—I own the means of production. Unless I allow these people use MY machine, then we’ll all starve, and so I can pretend that they owe me enough to give me some of what they make. It gets even better if there happens to be ten other people who want cupcakes too and are currently starving to death and are therefore willing to work at the machine for even longer and receive even less, and I can tell me current workers that they have to give me more and work more or I’ll pick new people to work at the machine who will (which means it’s in my interest for people to make sure there are as many people who are—literally—dying to work for me as possible). Expand this to the entire world (or at least those parts of the world the globalization is “helping out”), and you can see why all those who do the most producing of goods for society are the poorest ones, and those who do the least producing for society are collecting the largest incomes (of course, in our cultural we think of the very wealthy CEOs and managers as doing a lot of “work,” which is conveniently defined for them but not really what we think of when we use work to mean “creating something of value for society”).

This is what capitalism is at essence. The immoral, unjust, and just plain bad implications of this system are self-evident, but I will go into it anyway. I would like to do so by considering some of the claims you made that I disagree with.

Claim 1: Capitalism is incredibly good at getting people what they want.

Well, it depends on who you define as people. There are three groups of people in a capitalist system: workers, capitalists, and consumers (typically consumers are also workers but this is changing some). I think that your claim makes sense only if you consider the point of view of consumers. And, we cannot consider a system unless we consider all those who are intrinsically linked to that system, and so for capitalism we must consider not only consumers and owners of production, but also laborers (mostly represented by slaves, children, and sweatshop laborers overseas) as well as those who are deliberately kept unemployed for the purposes of negotiating down the wages of those laborers (see urban ghettos across this country and the world). If we consider everyone involved, and not just the consumers in the United States, then we know that the vast majority of people who are intrinsically linked to this system live in abject poverty. So no, I wouldn’t say that capitalism is good at getting most people anything.

Additionally, the number of created needs that capitalism generates in recent years is odd indeed. It’s hard to tell how many things are being sold now because we actually need/want them (needs being filled), how many things are being sold because we can’t avoid paying for them (health insurance, credit cards, banks), and how many we’ve been convinced we need in order to not be disrespected/shunned (thus the stereotype of women having so many shoes).

Claim 2: Capital is ruthlessly efficient in allocating resources. This is witnessed by the fact that if there is demand for something, the demand will be filled in the way that consumes the fewest resources possible.

This I think is perhaps the most dangerous justification for capitalism out there, both in that it is extremely commonly believed and very, very false. I’ll start with the theoretical reasons why and then provide some empirical evidence.

First of all, it is theoretically impossible that a system based on competition can be more efficient at using resources than one based on cooperation. You constantly live this fact out in your daily life; for instance, if we were assigned to do a presentation for class, we could either agree to work together to create the presentation, or we could agree to make our own presentations and then compete to see who made the better one, and that one we could give to the class. It would be completely irrational for us to pick the latter. Similarly, expertise and labor being pooled into one production, instead of competing productions, consumes less resources. The fact that toothbrush companies are wasting resources and creating an inferior product by competing instead of cooperating does not concern those who control the production because, unlike the dominate myth, capitalism is completely unconcerned with the efficient allocation of resources unless efficiency in a particular situation is correlated with the proliferation of capital.

I’ll explain what I mean: every system has ends and means. Unless a system has its ends as efficiency, or its means as efficiency, then that system will be inefficient in cases where the ends or the means are in conflict with efficiency. The purpose, or ends, of capitalism, like I said, is the proliferation of capital. Because the ends of capitalism are this proliferation, then efficiency cannot be its ends. Efficiency is also not its means either, because we can conceive of situations where efficiency undermines the proliferation of capital. Or something like that…this may be too theoretical, so I will demonstrate how this fact is empirically showed.

In fact, the example you yourself gave (“This means jobs can be outsourced to other countries where workers are paid less”) is a great example of how capitalism is inefficient at allocating resources. Think about it; in order to ship jobs overseas, companies need to a) build new factories, b) train new laborers, c) hire new managers, and d) extend their supply lines further from where they make their product to where they sell it. Meanwhile the old factories decay in cities with huge unemployment because the people there who have been trained to work cannot find a job that needs those skills anymore. All of these things waste available resources in ways that do not produce any goods for society whatsoever. But since the company is now able to hire laborers at cheaper cost for doing more work, which is to say they can take more of what is produced by their laborers for themselves and give less to the laborers, which is to say they can create more capital, than this is somehow justified as “efficient.” Mostly what this means is the consumer pays less, but only because the entire cost of the product is not being paid by the consumer, because some of it is being paid by the laborer. In fact, this new product, which is identical to the old one, has cost quite a lot more resources to produce than it used to, but there is just much more egregious stealing going on.

You may have heard that the earth is capable of producing enough food to support a much larger population than it currently has. And yet people everywhere are starving. Why is this? They are not starving because their governments are not capitalist—in fact, the countries that have embraced the sweatshop (and thus capitalistic exploitation of their people) are the countries that are the poorest (see Haiti before the earthquake). The reason they are starving is because capitalism is wasteful of the resources that could be used to feed everyone, and because there is no incentive to feed those people because it would waste capital, which is something capitalism is very concerned with not doing. And so the food industry daily wastes enough food that could feed large portions of Africa and yet it is too much of a waste of capital to collect it and distribute it, because it is impossible for the owners of production to create capital from this endeavor.

Another thing to keep in mind is that capitalism is a linear system, as opposed to a cyclical system. Most societies in the past relied on a cyclical system where things that were planted or hunted (resources) could be planted or hunted indefinitely because the resources were cycled back into the system. Capitalism, on the other hand, requires that resourced be used up and discarded in order to ensure that capital is being produced. Unless we as consumers need the owners of production to continually produce more, instead of reusing what we already have, then there would be no way to produce capital and the system would collapse. This is why companies create products that break after a certain time (ever had an MP3 player die for no reason?). This is a phenomenon called planned obsolescence (the following is a great movie about this which you may have seen already: http://www.storyofstuff.com/. )

Another empirical example of capitalism’s waste of resources is exemplified by Naomi Klein’s thesis of disaster capitalism (very extensively demonstrated in the book The Shock Doctrine). The use of disaster capitalism is based upon the reality that building new things is more profitable than using what is already there (previously discussed). Therefore, when disasters occur and destroy what has already been built, an opportunity for creating a lot of capital presents itself. The incentive for creating capital, coupled with the limits of expansion (and thus opportunities for creating capital) means that where and when destruction happens, capitalists flock. This includes both natural disasters (like the earthquake in Haiti, though I hate to classify it as natural because the a great deal of the suffering there is because of how badly exploited the people there were for such a long time—there’s a really great Harper’s article about this if you can get your hands on it, unfortunately it’s for subscribers only of which I am not one) as well as man-made disasters, such as urban decay or the Iraq War—thus the military-industrial complex (that the Iraq War was a war for profit is barely worth going into but I will if you wish). Ultimately the principle behind disaster capitalism is that using existing resources does not create as much capital as destroying existing resources and starting over, which is of course wasteful in that a) it negates what was already there and b) wastes resources to recreate, both of which could be used to create goods for society and end up producing none.

Okay, enough of that.

Claim 3: Change the culture, and the economics will follow.

This is awfully familiar to another dangerous notion I’ve encountered many time: that the problem with capitalism is just human nature, that is, just like you can’t blame the wand for Voldemorte’s evilness, you can’t blame capitalism for the abuses of capitalists.

Phewy.

Basically we are engaging in a chicken-or-the-egg debate turned culture-or-the-greed debate but I think that a closer look will have you on the egg team. I’ll try to answer your question specifically, though. To do so we’re going to have to separate out two different kinds of “culture” (this is not an academic distinction as far as I know but I think it will help introduce two very important concepts: power and privilege). There are facts about culture that perhaps exist independently from power and privilege (though some would argue that this is impossible). For example, you might say some facts about music are neutral.

Then there are facts about culture that exists because the serve the dominant interests of society, that is those who own the means of production, that is capitalists.

I can go on and on about this. One idea posited by some Feminist theorists is that all –isms (racism, sexism, agism, etc, etc) are not about personal prejudice—which is what all conservatives want us to believe –isms are—but about the existence of power and privilege which are manifested institutionally and are displayed by cultural norms. This is a lot to go into (considering how much I’ve already opted to go into in a fashion that I can only imagine is against your will) but suffice it to say that some cultural norms exist because they benefit the people with the most privilege and power in that culture. For instance, blacks are more likely to be in prison for illegal drug possession—even though drug use between whites and blacks is the same—and men on average receive higher salaries than women regardless of education and/or talent. These are oppressive practices, but they are informed by cultural ideas and stereotypes that allow them to continue. The point here is that some cultural practices have persisted simply because they are good for the people who have the most power to, in large and small ways, prod the characteristics of our institutions and the tone of our culture. And who has this power?

That’s right. The owners of the means of production.

Capitalists.

Examine: individualism; commercialism; professionalism; neocolonialism; patriarchy; the proliferation of drug use; the emphasis on the family; the over concern with dress, appearance, possessions—these are all cultural norms that have taken root in this country and indeed in most of western civilization that have been encouraged by the desires of capitalists. This is not to say there is some conspiracy by a group of cigar-totting, top-hat-donning, mustache-curling rich white guys in a backroom somewhere. Not necessary. It’s simply that capitalism by its very nature gives power and privilege to certain members of society, so that when everyone pursues their own interests, the interests of some are more important than the interests of others, as opposed to an egalitarian system where everyone’s interest is equal.

And therefore you can’t change the culture until you change the economics.

And, anyway, even if it is greed before culture and not the other way around, why should we stick with a system that allows a few greedy people to have some much power over society? It’s like, just take the wand out of Voldemorte’s hand already, cause let’s face it, it’s doing a lot more harm than good to let him keep it.

Claim 4: What you NEED is to make it so people WANT to value people more than money.

People value money more than people because in capitalism your survival is in jeopardy if you take the actions required to value people than money. See: Malcolm X, Martin Luther King, Che Guevara, John Brown, Angela Davis, Emma Goldman, on and on and on and on (these people were punished for taking the actions required of valuing  more important than money, just like you and I would be today).

Claim 5: Business ethics can help.

The field of business ethics is the art of using rhetoric to justify whatever is in the interests of a company. I’m not making this up—it’s literally modern day sophism. 

And, a small correction: it is not simply the responsibility of the CEO of a corporation to bring in the highest possible returns for stockholders, it is actually illegal for a CEO to take any action that undermined the cooperation’s bottom-line in any way for the sake of anything you and I might call ethical. That’s right—being in any way good to people at the expense of profit is an illegal action for a CEO to take.

Claim 6: Campaign finance reform will make our system more democratic

…but will never happen unless the very rich and powerful, who would have to allow this to happen against their own interests, either a) find another way of rigging the system or b) are stripped of their power vis-à-vis the end of capitalism. Why?

Because capitalism and democracy are incompatible. Which leads us to our last claim…

Claim 7: Democracy is basically political capitalism

Democracy is defined by Merriam-Webster’s as “a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections.” Alternatively, the supreme power in a capitalist system is vested in those who control the means of production, which is certainly not the people, the majority of which must necessarily be laborers. Now, remember, we must consider all the people intrinsically linked to our economic system, and so we have to include not only the great deal of disempowerment and inequality capitalism has created in our own country but all those people who labor to make the goods we use. Just because the slaves we live on (and don’t for a second pretend that it’s not in all practical ways slavery that we live on) no longer reside within our political boarders doesn’t mean that we don’t need to consider the fact that they have absolutely no power at all much less the supreme power, and never will as long as there is capitalists.

And as equal as things can (theoretically) get, which they have never, ever been that close, but even if they were in some ways closer than they are now, it still is impossible by definition for everyone to have the same say in how the government is run in capitalism because there has to be difference in who own property and thus who has power. And therefore, I think it is clear that the only way to actually achieve democracy, which I am fully in favor of, is eliminating capitalism from this earth.

Who’s with me?