The Ethics Of… Capitalism

It may not be immediately clear to the casual reader, but I come from a social and professional background that tends to favour the left-hand side of the political spectrum. Getting progressives to agree on anything is more like herding cats than herding cats actually is, but one of the things you can nearly always guarantee is that they don’t like capitalism very much. At all.

But why is that exactly? What’s to hate about the basic function of the market? I have something to sell, you want to buy it, we make a deal. The better you are at selling things people want to buy, the richer you get. Not exactly controversial is it? What’s so controversial about this that it could inspire the entire Communist ideology specifically in opposition to it, not to mention the whole left wing of politics constantly ragging on it to one degree or another?

The thing is that capitalism has never been just an economic system, the same way economics has never been just about buying and selling stuff. In a capitalist society, money represents power; the ability to influence things the way you want them to be. Want that handbag? All you need is the right sum of cash and it’s yours. Want to drive instead of walking? Pony up the cash (plus the expenses for fuel, etc) and you can do that. Want a elite education? Or to buy a house that you can paint fluro orange? Or run a campaign to get yourself elected to government? Or make a massive donation to encourage said government to see things your way? Or start up a political organisation specifically designed to promote your values throughout society?

All you need is the cash, and you can make it happen.

At this point, capitalism is no longer just a matter of economics; it’s phasing into a political system where the person with the most money, wields the most influence. Government regulation usually serves as a balance against this, ensuring that certain standards are maintained regardless of how much money you throw around – minimum wage, anti-discrimination laws, legal due process and so forth are all good examples of things you can’t bypass with a cheque.

Similarly, governments tend to have a list of things you must and must not do regardless of your income – in Australia you have to vote, have to do jury duty, have to pay your taxes, and generally have to fill out a fair volume of paperwork if you want to get anything done. On the other hand, you can’t pay a guy to knock off anyone who annoys you, or straight up bribe a politician to get your way.

But here’s the thing; there is an entire ideological movement dedicated to getting rid of this government ‘interference’ and letting the market run itself entirely unregulated. These guys, broadly grouped as Neo-liberal economists, believe that governments are dumb, lazy and corrupt and generally a terrible way of getting things done. By removing government control over the market, the people will be left to decide what is good and bad without having to refer to a paternalistic government all the time.

What we’re talking about here is nothing less than replacing democracy with this form of political capitalism. Neo-libs believe that raw, unrestrained capitalism is the way we should live and that it will do a better job of improving our lives than formal government ever did.

And here’s the kicker; in the right circumstances, they’re absolutely right.

Didn’t see that coming did you? Let me explain.

The absolute bare-bones point of democracy is that it divides up power into the hands of everyone affected by the government’s decisions. This prevents corruption, ensures everyone affected is heard equally and every decision draws on the as many perspectives as possible, greatly increasing the odds of getting the answer to a situation right.

But as I’ve pointed out before, it rarely works out that way; we delegate our votes into the hands of representatives, who in turn are far more beholden to their parties than they are to us. Our politicians rarely have any actual idea about what they’re voting on or about what we want done, and let’s be honest, even if they did check with their constituents the majority answer would probably be even more idiotic than what their party came up with. People simply don’t have the time and energy necessary to keep their political representatives accountable and make sure all their decisions are informed.

Capitalism on the other hand, can do this. Since under a capitalist system power is invested entirely in money (whereas in our current system it’s split between money and the power invested in being an elected representative) every single purchase you make is a vote. When you chose Brand A over Brand B, you vote for them and transfer your power to them, enabling them to grow. Bob does a better job fixing you car than Frank? Employ him and you vote for that quality as the standard – Frank either picks up his game or goes out of business. BP dumped oil all over the ocean? Get your fuel from somewhere else, and since government isn’t tying up the market in red tape anymore, anyone with enough cash can start up their own oil company in competition giving you more options who’s business practices you vote for.

Over time, the market is defined entirely by what the people want as they invest their money/power into the people and products they like and approve of. Those who successfully cater to what the people want gain money/power and everyone else either follows their lead or goes out of business. If people value the environment, environmentally friendly products with flourish and the polluting will fail. If people value businesses that treat their employees well then those businesses will succeed and others will change their practices to compete. If the people want services at low prices, they will empower economical providers. And if people can find a business that provides all three of these qualities then that company will clean up.

In this way capitalism brings power to the people in ways democracy has only ever flirted with; the complete freedom of choice where every dollar spent shapes the world they live in, making it more like they want it to be. Not only this, but the power of individuals increases directly proportionate to how well they cater to the wants and needs of those people – the powerful are literally representative of the people rather than the party puppets we currently have to put up with.

A utopia (an utopia?), I’m sure you’ll agree. Who could ever disagree with such a system? Most people as it turns out.

The problem with this vision is that it’s based on two massive assumptions; that people are always completely informed and that people are always rational in the decisions they make. The entire Neo-lib theory is based on rational consumers, that is that every person involved in the market knows what the hell they’re doing, which broadly comes down to whether they know what they’re supporting with their money, and whether they can be relied upon to make a sound, rational decision based on that information.

To put it bluntly, neither of these things happens. Ever.

Rational decision making is the more likely of the two – it is after all pretty insulting to say people can’t make sound decisions based on the evidence they have before them, especially when you realise I’m talking about you and me. Of course we can make rational decisions! Hell this entire website is founded on my ability to be rational, so how cynical would I need to be to say people are nearly always irrational and can’t be trusted with their own decisions? It’s a fair point, to which I have only one response: Miley friggin Cyrus. I am yet to meet a single person who thinks this person is worthy of a second of anyone’s attention, let alone any of their money, but that didn’t stop virtually all of us reading everything there was to read about her, was it? The entire thriving professions of advertising, marketing and public relations are based on the fact that your ability make rational decisions can be subverted by having an airbrushed model pretend they use a particular brand of cosmetic.

The necessity of consumers being fully informed on the other hand, is just flat out impossible. Consider this diagram of brand ownership; which of you could honestly tell me without seeing this that the Ralph Lauren clothing company is owned by the Nestle corporation? Or that over 80% of all eyewear sales are controlled by one company? And given we don’t have the first clue of who ultimately owns the products and service we’re buying, how the hell are we meant to keep track of their business practices, especially after the regulations requiring they disclose that information are rolled back? It’s not exactly in a company’s best interests to less you know they’re using slave labour to produce your chocolate after all.

To be a fully informed consumer would require complete encyclopaedic, constantly updated knowledge of the business practices of the parent company for every single product or service you buy, every single hour, every single day, for the rest of your life. Given most of you didn’t know that buying Ralph Lauren clothes directly funds a company that actively defended its right to source chocolate ingredients from slave labour camps, good fucking luck with that.

Knocking down these two assumptions brings the entire Neo-liberal utopia crashing down on itself. If consumers can’t be relied upon to be rational and literally cannot be fully informed then their spending decisions have no relationship with reason whatsoever. Instead of the market slowly changing to reflect what the people want and need, it shifts to what they’re told they want and what they think they need, all the time smothering what they don’t want you to know. Power in the form of money centralises not into the hands of those that represent the people, but in the hands of those that are best able to con or exploit the people, while those who stand up for unpopular truths face the choice of going bankrupt for their cause or shutting up to survive, assuming of course they’re not just squelched by their more powerful opponents.

At the end of the day, this vision of ideal capitalism suffers from the same flaws as democracy; unless the people participating in the system are actively engaged in it to keep it accountable to the facts, then it will produce dodgy results – power will tend to centralize into the hands of a few, whether they be business leaders, government of some other group, and the danger of corruption will rise accordingly.

What is needed is a system that invests power not in public popularity, or wealth, or party loyalty, or any other arbitrary measure that we hope corresponds with an honest and informed concern for the public interest, but in what can be proven to be in the public interest itself. But that’s the subject for another post.

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3 thoughts on “The Ethics Of… Capitalism

  1. You might really enjoy a book by economist Richard Thaler called, “Misbehaving: The Making of Behavioral Economics.” His central thesis sounds a lot like yours.

  2. Pingback: The Ethics Of… Class War | The Ethics Of

  3. Pingback: The Ethics Of… Taxes and other forms of Theft | The Ethics Of

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