The Heff.

Oh Dear.

There is no political system without flaws: however, some have more flaws than others. It has always struck me that capitalism is by far the best of the lot. It is the only way to allow personal freedom its most complete expression, and to build prosperity.

Capitalism isn\’t actually a political system. It\’s simply an arrangement about ownership of assets and property.

It has its strengths, to be sure, but to call it a political system is to sell the pass to the opponents of it.

If you look at our own situation, it isn\’t in fact "capitalist" anyway. It\’s largely a market based system (with the exception of those parts like health and education provided by the State) and within the market part of it we have some distinctly non-capitalist competitors. The famous example would be the workers co-operative that is the John Lewis Partnership but all those legal partnerships, in fact partnerships of any kind, would also be distinctly non-capitalist. Looked at this way we\’re in a distinclty non-capitalist economy: although we are largely in a market one and it\’s that latter which is much more important than the former.

Another way of putting it is that we have a market in forms of ownership, just as we do in other things: and we\’re all the better off for that reason.

And it is most certainly markets, not capitalism, that allow the expression of personal freedom. A system of capitalist monopolies would not allow much freedom, while one of workers\’ co-operatives competing in free markets would.

As, of course, the system of State monopolies in health and education does not allow much freedom.

Worth remembering this distinction, otherwise as and when it does come to trying to make a choice between two alternatives, markets or capitalism, we might make the wrong one.

6 thoughts on “The Heff.”

  1. So Much For Subtlety

    I have to say I don’t see what is non-Capitalist about partnerships. Is the claim here that only Joint Stock companies are Capitalist? Surely any capitalist system allows people the freedom to arrange their assets in almost any forms they like? The point of capitalism being that assets are (mostly) privately owned and they are managed for the purpose of making money.

    Tim adds: OK, maybe I’m defining capitalism a little oddly, or strictly. That the owners of the capital, and thus the firm or organisation, are not those who work in it.

  2. Good to see this distinction being emphasised and the crucial point being made – that conflating capitalism with other things is an own-goal. The most successful such conflation has been that made by the left, equating capitalism with greed and exploitation. This is an important framing issue.

  3. As long as we are subject to a Government monopoly requiring that we use their its fiat currency for many (or all) purposes, it’s a bit rich to summarise our troubles as solely a “failure of capitalism”.

  4. Reading that (dearieme’s, above) produces an enormous urge to buy the man a beer. But, on account of the distance involved, I’ll just have to drink one myself. Cheers!

  5. Naturally Tim, I agree completely with you. The only distinction I’ll make is that the competition regime we have doesn’t seem to favour co-operatives as much as they could, I’m sure there’re many studies people could point me at explaining demutualisations and similar.

    It’s free and open access to the market that seems to be the problem, capitalist companies can get the startup costs easily, co-ops don’t seem as able to. Hopefully that’ll change.

    Tim adds: I think there’s a logical explanation for that last. The system is set up so that those without capital, the entrepreneurs, can access those with the capital, by offering them a share in the business. Of course, this option isn’t open to the workers’ co-op, because the whole point is that they don’t want to have a share of the business owned by outside capitalists. So that initial capital has to come from the workers themselves. Actually, this isn’t so much how the system is set up, it’s simply a logical truism.

    Chris Dillow is very good on this subject when he points out that with the increasing importance of human capital (and the consequential decrease in finacnial capital) it is becoming easier in may service businesses to set up without the outside financial help: the capital the business needs is in the heads of the workers.

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