2000s >> 2000 >> no-1153-september-2000

Capitalism – driverless train

For more than 90 percent of history and what we can deduce of prehistory, people were autonomous. They produced what they needed and consumed it, guided by millennia of inherited skills, whether as hunter-gatherers, herders, or cultivators. In some places, prisoners of tribal wars were used as slaves but this was nowhere the prevailing mode of production. Where conspicuous consumption required that some could reap where they had not sown, as Adam Smith put it, this was achieved by extortion, less frequently by wholesale theft. A law of logic, even more than of history shows why parasites rarely kill their hosts.

All this changed when the extortionists had the clever idea of stealing not only the produce but the means, i.e. the land itself. Done on a wide enough scale, it provided not only capital in the form of land but destitute people who had no alternative but to work for wages. The activity began in England during the reign of Henry VII (the late 1400s) and has been maintained ever since.

Out of control
The creation of order relies upon feedback, negative feedback, information that guides self-correction like the rudder on a boat, the sensor on a guided missile, or the thermostat on the radiator. Human societies behaved like this until those homesteaders were driven off their land in the fifteenth century and subsequently almost everywhere else in the world. The division of society into those who had land/wealth/power and the majority who did not have enough to free themselves from being beholden to the robbers and their heirs blocked the feedback or drowned the information in “noise”. Put simply, the homesteaders could always repair the roof damaged in a gale, or even rebuild the house with the help of neighbours. The salary earner who has just been fired has no means of paying the mortgage and has to face being put onto the street like those thousands stuck with “negative equity” at the end of the 1980s, and who had their houses “repossessed” by the building societies. There was no self-correction or feedback.

The experience of disasters during the 20th century, both natural and man-made, has led to demands for an explanation in the hope that action can be taken to deal with situations like the possibility of a stock-market crash, or when war, environmental devastation, mass starvation, or epidemics threaten us. The natural sciences: physics, chemistry, have always been looked to for an understanding of the non-living world, and tremendous progress has been made in recent centuries. No such progress has been made in the social sciences of economics and politics. The economist Paul Ormerod wrote recently in The Death of Economics that he had wasted his life on the subject. The financier George Soros was scathing and the electronic-engineer-turned-economist Brian Arthur turned his testing criteria on economics and concluded that most of its premisses were simply false. He argued that the market does not tend to equilibrium, does not supply the best product at the lowest social cost and that virtually all of the other assumptions dear to economists, whether free-marketeers or reformists, were false.

The same has happened in political science and sociology. Psychology, as other than a medical subject when it tends to be called psychiatry, flourishes only in the United States, along with astrology and witchcraft. The gurus of yesteryear, Freud, Adler and Jung, are mistaken for a pop-group by the young or are not taken seriously by the old in Europe, their place of origin.

None of the foregoing need mean that the social sciences are beyond scientific investigation, just that they have not been subjected to it. Instead of the routine observation-classification-hypothesis-and testing that the natural sciences have adopted since the end of the Age of Faith, the social sciences have wandered about in a fog of anecdotes, arguments from Authority (Lacan said or Freud found, etc) and an atomistic view of the subject matter, which is really about relations and not the human atoms themselves.

This last is the main source of the problem and comes as a consequence of taking the capitalist market as the paradigm. The division of society into those who live from wealth and the great majority who have to hustle because they have little or no wealth (many Americans whom we have been told are the richest of all, have negative wealth, because they are living on credit) means there is no community to analyse. A community can consist only of autonomous people; a business or an army cannot be a real community, neither can a country or a continent divided into employers and workers. A political, social, or economic analysis without this fact as the starting point is like Hamlet without the Prince.

World domination
American governments have enjoyed world domination at least since the end of World War Two. British governments enjoyed similar power until the beginning of the First World War which bankrupted the European powers and left the world market to American business. General Clausewitz said that war was the continuation of diplomacy by other means. He could have argued that trade is the continuation of war in a similar way. The inter-war years were characterised by conflicts over trade and charges of dumping, protectionism, and attempts to control the market. The US economy, which had grown up during the 19th century behind the highest tariff wall in history, was now the advocate of free-trade, or at least was until the Wall Street Crash in 1929, when, with a quarter of the labour force unemployed, it retreated back into its shell.

It was only the beginnings of preparation for the Second World War that revived capitalism in the middle 1930s. At this same time the American government found itself in control of the world monetary system. Britain’s government had taken the pound off the gold standard and the dollar took over. Keynesian economics preached that the cause of capitalist crises was lack of demand and the solution was to print more money. Under FD Roosevelt the American government took it up enthusiastically, using dollars printed in the back room to buy up raw materials, companies and markets around the world, and also gold, which lent credence to the dollar.

The size of the American economy allowed it to increase this dominance after the war. Competition from European film-makers was crushed and the only work for actors and directors was in Hollywood which could dump the ends of its production runs on Europe for little more than the cost of the celluloid. Publishing and television has gone the same way in Britain where a common language does not present any barrier whereas Continental media industries can use theirs as a partial defence.

With the advent of television the take-over continued and similarly with recorded music and book publishing. Seventy-eight percent of the “British” press is foreign-owned, mostly identified with American-based interests. We are not in the business of defending British capitalism or any other version; workers do not, by definition, own newspapers, but it is hard enough identifying our interests filtered by London, let alone through Washington.

Most of the old publishing houses, Hodder, Unwin, etc are now merely a floor in a New York corporate skyscraper and while the reason for publishing is sale and profit, as it always was in the last analysis, James Joyce and Marcel Proust could today not expect anything more than a rejection slip. The first because he is too obscure for the mass market, and the second because a twelve-volume novel would take up too much space in an airport kiosk.


No community in driverless capitalism

With scholarly work, most of the writers tend to be American because the new requirements dovetail into their academic system where universities function like businesses competing for government and private funds. Teachers are expected to produce written material to promote the university, under the maxim: “Publish or Perish”, regardless of whether the writer has anything of value to say or not. American teachers complain that their students are interested only in making money. The most popular degree is that of MBA (Master of Business Administration). Ideas and scholarship are for nerds and losers.

What’s it all about?
The business columns are always full of booms or slumps. Ten years ago the Japanese economy crashed. In Tokyo property is worth one-seventh of what it was before the crash. The American stock-market is propelled by people borrowing to invest in the electronic media, often in companies which have not even traded, let alone made a profit. The shares are being bought upon the assumption that they will continue to rise on the Exchange. This is just what happened in 1929 and it ended up with half the workforce unemployed.

Could the integration of the European market and economy save us from such a threat? Short-term, possibly. The anticipation of longer production runs, easier access to the richest market in the world, and protection from American producers where it is sought—in effect, to enjoy the privileges American producers enjoyed for most of the last century—could generate a euphoria to keep production running for a while.

But ultimately the logic, or lack of it, peculiar to capitalism must take over. The “information” from consumers as to their needs and wants is impeded by the “noise” from the market—and from the lack of means, of what economists delicately call “effective” demand, i.e. consumers lack the money, so production has to stop.

Political organisation even on a continental basis will still not match the economic spread of the market which is world-wide, but it would still not affect the issue anyway. The real cause of capitalist crises lies in the division of people into producers and consumers: gain for the one is loss for the other, there is no common interest and therefore no community. The disequilibrium that results is at the bottom of all the stop-go, booms and slumps, that characterise the “system”—or lack of it.

It is at this point that we part company with George Soros, Lester Thurow, Paul Krugman, Benjamin Barber, Daniel Burstein, Manuel Castells, and all the other writers and academics who are trying to make sense of what is happening. This is not to minimise their contribution. But the mass of facts they produce is not matched by any paradigm or hypothesis to make sense of them, and to guide any action to deal with them.

Whether globalisation is a good or a bad thing is neither here nor there. For the great mass of people there is no choice as long as the market-based system is maintained. The forces driving capitalism do not include their/our wishes. A class-divided society does not have control via feedback, or self-correction, merely random behaviour like a driverless train, an avalanche, or a rockfall.


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