Cooking the Books 2 – What is capitalism’s true course?
Is capitalism inherently anti-human-welfare or is it just bad policies that make it that way?
An article in the Financial Times last year (11 October) by Raymond Baker and Jennifer Nordin entitled “How dirty money thwarts capitalism’s true course” put the case for the second view. According to them, capitalism’s “true course” is to take into account ethical considerations, what Adam Smith called “moral sentiments”, when pursuing profits. Unfortunately, they say, these days this is no longer the case (but was it ever?). “Global capitalists” have chosen to put “maximising profits” before “pursuing lawful and just business transactions”, with the result that a “dirty money” structure has grown up consisting of “tax havens, secrecy jurisdictions, abusive transfer pricing, dummy companies, anonymous trusts, hidden accounts, solicitation of ill-gotten gains, kickbacks”, etc, etc.
They ask themselves:
“Why has so much unethical behaviour become business as usual? One explanation is greed, pure and simple. But this does not adequately explain the phenomenon and demeans many in business who believe they are operating in an ethical manner. An overriding commitment to maximising gains, taking priority over principles comes closer.”
Not just “comes closer” , we’d say, but is the whole explanation. Capitalism runs on the basis of firms seeking to maximise profits which are then accumulated as further capital invested in further profit-making. As Marx put it, “Accumulate, accumulate! That is Moses and the prophets!“ (Capital, Volume I, chapter 24, section 3). But Becker and Nordin are right that this has nothing to do with personal greed on the part of individual capitalists. It’s something that is built-in to the system which those having to take decisions about economic matters have to abide by or risk the business they own or manage going under. Which is why the authors’ vision of a “free market system with a sense of justice and fair play” is no more than a pipedream.
A more realistic assessment of capitalism was given by Robert Newman in an article in the Guardian (2 February):
“Capitalism is not sustainable by its very nature. It is predicated on infinitely expanding markets, faster consumption and bigger production in a finite planet. And yet this ideological model remains the central organising principle of our lives, and as long as it continues to be so it will automatically undo (with its invisible hand) every single green initiative anybody cares to come up with. Much discussion of energy, with never a word about power, leads to the fallacy of a low-impact, green capitalism somehow put at the service of environmentalism. In reality, power concentrates around wealth. Private ownership of trade and industry means that the decisive political force in the world is private power. The corporation will outflank every puny law and regulation that seeks to constrain its profitability.”
This is well said. A green capitalism is just as much a pipedream as an ethical capitalism or, as we have been saying for ages, a capitalism reformed to benefit the workers. The only possible capitalism is the one we’ve got: a profit-maximising one.