Our alternative title could be that Giles Fraser is an ignorant twat:
Viscount Ridley argues that capitalism makes us better people as well as richer. It is a morality driven by enlightened selfishness in which my own interests are only advanced if I look after yours as well. This is supposed to be the moral case for market capitalism: I only get to be extremely rich if you get to be a little bit richer too.
Well, no. This has been studied, in detail. Entrepreneurs get to keep around 3% of the total value created through their activities. Near all of the rest goes to the rest of us as the consumer surplus. The basic contention by Fraser is therefore wrong. Just not a description of this universe.
This is the economy of the “invisible hand”, powered by greed, where my own desire for ever greater wealth drives ingenious new opportunities for this magical thing called growth, which in turn creates greater wealth for everyone else. Yes, capitalism is basically a superstition, a belief in the power of magic. I’m with David Attenborough: “We have a finite environment – the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist.”
Again this has been studied extensively, the economists are right. That limitation of the environment does indeed mean that we cannot have unlimited physical growth. Sure, that limit might be a lot further away than many think but it is still there. But economic growth isn’t merely physical growth. GDP, say, is the value added in an economy. Increasing the value added is thus growth. We can do that without abstracting more from the environment. Thus, the environment is not the binding limitation upon growth. This is exactly the same as Herman Daly’s qualitative growth.
Of course, I am not the first person to argue that capitalism is based on a superstitious belief in the efficacy of magic. Marx’s Kapital, one of the great works of 19th-century atheism, is a genius attempt to disabuse us of this dangerous mystification. Of course, the god in Marx’s sights is not the one of the Bible but one celebrated by the philosophers of Enlightenment rationalism: the god of capital.
Idiot. Marx’s point is that there will be more such growth without capitalism. That was also the promise of the scientific socialism of the Webbs and the Fabians.
Those with money are able to own the means of production and the labour needed to operate it. Throughout the whole cycle of making things and selling them on, the capitalist creates more money for themselves by getting employees to work longer and longer hours. This extra labour creates surplus value that results in profits for the capitalist.
Again we come up with this comparison with the real world problem. Working hours have fallen over this couple of centuries of capitalism. They’re still falling too. A theory which fails comparison with the facts fails as a theory.
Profit here is intrinsically exploitative – it does not exist without the extra hours worked by the capitalist’s employees.
Again, failing at the real world. The current contention is that the capital share of the economy is growing. Yet working hours are falling. Thus it cannot be true that increasing profits comes only from increasing hours.
All of this becomes more and more obvious as global capital seeks new and ever more ingenious forms of concentration.
Interesting that global inequality is falling at the same time, no?
As with Mark Twain, it ain’t what you don’t know that’s dangerous it’s what you’re certain is that ain’t.