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Cooking the Books: What is Capitalism Like?

Whatever people think of Russell Brand – and you either like him or you loathe him – he has at least put apologists for capitalism on the defensive. One of these is the owner of a medium-sized business called Ian Baxter who wrote an open letter to Brand in the Times (8 December) under the headline ‘Capitalism is to prosperity what breathing is to life’.

Introducing himself,  he said he was a capitalist: ‘I  invest capital in my business expecting a return. The bigger the better.’ Yes, that is what capitalism is about – investing capital with a view to profit. And a capitalist is someone who lives off profits.

According to Baxter, ‘capitalism is a force for good’. It puts money into the bank accounts of employees. ‘It puts the food on our tables.’  It ‘enabled the world to meet the millennium development goal of halving global poverty by 2015 five years early.’

Capitalist firms do put money into their employees’ bank accounts. But this is not charity. It is payment for something the employees have sold them, namely, their mental and physical energies, their labour-power. It’s not philanthropy either. As Baxter said, firms invest capital ‘expecting a return’. Without the work of employees there would be no returns. In fact, since the only way wealth can be produced is by humans applying their mental and physical energies to materials that originally came from nature, workers create the whole of a firm’s added value, including the return on capital. Their work is the source of profit and that’s why they are employed.

So, you could say that capitalism is to exploitation what breathing is to life.

Capitalism ‘puts the food on our tables’. Presumably he means that, in pursuit of profit, capitalist firms arrange for food to be grown, transported, stored, and sold to us. This is indeed how capitalism works. Food is produced for sale with a view to profit but only to that extent. Capitalism will only put food on your table to the extent that you can pay for it. The more you can afford to pay the more and better the food you will get, and vice versa, the less income you have the less and poorer quality food you will get. And if you’ve no money at all, tough luck. Capitalism will not put any food on your table and you’ll have to starve or rely on charity.

Which brings us to global poverty. We all know that millions of people in the world are starving. After all, we saw all the appeals over Christmas. Less well known is that the world already now produces enough food, if distributed differently, to end starvation, and that the capacity exists to produce much more so that starvation could be ended without needing to take from some to give to others. So, why, if capitalism is so good, are there millions of people who are starving?

The millennium goal of halving world poverty may have been met but if capitalism did this, why did it stop half-way and not end global poverty entirely? We already know the answer:  it is not profitable to grow food, build houses, provide health care or clean water for people who cannot pay for them.

Baxter can’t have it both ways, attributing to capitalism all the good (or non-bad) things that happen under it while ignoring the bad things. In the 20th century capitalism caused two world wars in which millions died, not to mention the lesser wars and slumps.  So, why not ‘capitalism is to war what breathing is to life’? Why not ‘capitalism is to economic crises what breathing is to life’? Why not indeed.