Andrew Lilico writes at CapX, to tell us that lefties are wrong to criticise capitalism as being morally deficient. He says that we criticise Capitalism for its morality whilst generally conceding its efficacy at making people wealthy. He further says that we are wrong and capitalism is both virtuous and effective – the dilemma of head vs heart is false.
He’ll be happy to learn I agree. Personally at least, my problem with Capitalism in the form he describes is that it is such an obviously impractical and unworkable fiction as to be useless in practice – even if it is appealing from a moral perspective. This is because he describes a world where relations of power do not exist. Andrew tell us of Capitalism:
“It is thus by definition a system in which there is the opportunity for those with good ideas, but without funds, to seek funding to allow them to try those ideas out.”
That would indeed be a good kind of world. Does it bear any relation to the world we live in? No. In our world – ‘funds’ are created ex-nihilo by the decisions of a small cabal of powerful financial institutions run by rich white men, and lent mainly for the purchasing of existing assets (ie, for mortgage lending, or for purchasing financial assets). Not all leftists believe this is a massive problem, but Andrew certainly ought to. The realities of a modern financial economy run counter to the nice system he describes. And what are these realities? They are realities of power – the pesky things that leftists bang on about all the time and which prevent Capitalism from being what Andrew says it is.
Because of an inability to address power, Andrew misses the entire solution set that would allow his virtuous world of fair reward for labour (which is what he says property is), opportunity for anyone with a good idea to improve society (which is what he says capital markets should do) and economic actions free of coercion (which is what he says the market is). The trouble is that his definitions are actually idealised versions of the things they describe. Private property could mean the right to benefit from ones own labour, but throughout history it has meant the defence of the ability to benefit from others labour – to confiscate their output for ones self. We have seen this come a long way, from Serfdom to the modern employment contract – but the ability to enjoy the fruits of ones labour is limited by the way that property rights are structured. Socialists want people to be rewarded for labour. Capital markets could be a way to allocate resources to socially beneficial projects, but most of the time, and most capital markets transactions are about assigning or trading rights to existing resources. More generally, markets could be where people transact free of coercion, but they are most frequently not, or not entirely.
Relations of power mean that Andrew’s definitions will never encompass the reality of capitalism. This is where his thinking is limited. Socialist, or marxist views of markets and property encompass the potential for exploitative relationships, of systems which violate Andrew’s ideals. We are wise to it – and he is simply not. Socialists absolutely strive for Andrew’s world. We want Capital markets to be limited in scope to allocating resources to socially optimal projects. We want workers to enjoy the full fruits of their labour. We want all economic activity to be free of coercion. He should join us.