At the supermarket buying a loaf of bread and a jar of yoghurt, I saw a German newspaper (Die Zeit) sporting the headline, “What is the alternative to capitalism?” Underneath, dominating the front page, was an appropriate graphic of a big fish eating a smaller fish eating a smaller fish, maybe five fish long. It’s a graphical gesture we all understand. Sadly, the article does not appear to be available online, so, not having bought a copy of the paper, I cannot comment on its content.
A couple of weeks ago, on a mainstream German channel (ARD), Franz Hoermann was allowed his five minutes of fame (his star appears to be rising though, so perhaps more than five minutes are coming his way). In his rapid-fire, academic style, he described the fiat, fractional reserve system. There appeared to be no shock in the audience. The minister for the economy, Philipp Roesler, sat to Hoermann’s left. Next to Roesler sat the finance minister and one of the architects of the Euro, Theo Waigel. Opposite Hoermann sat some markets expert, Dirk Mueller. Of the quartet, only Waigel seemed content to propagate the idea that the money system is fine as it is, is somehow immortal, and needs no substantial adjustments. That a thinker of Hoermann’s oddity should be given any airtime at all on such a mainstream talk show is quite surprising, that the other panelists, and the host too, should (more or less) sympathize with his position (Waigel excepted) more surprising still.
Apparently the BBC (principally Radio 4 and Newsnight) are also broadcasting what I think of as the voice of reason, that is, the type prepared to highlight collapse. Not doom and gloom necessarily, but a deep systemic problem which must be addressed. The Guardian online yesterday morning had a headline in its business section proclaiming the European situation was spiraling out of control, that France and Germany were contemplating a restructuring of the Eurozone. Strange days, as they say, are most certainly afoot. And yet despite this media flurry, a combination of rigged markets, desperate belief, a few heads of state tumbling down the career ladder, some reshuffling, and the situation suddenly seems less desperate. For a while. Nevertheless the taste of profound change in the air can’t be ignored any more. Defenses are crumbling, and I suspect growing numbers of the so-called elite are losing heart. Fewer and fewer of us care about this system as we once did, fewer desire ever growing consumption, ever higher salaries, an ever more frenetic rat race. What’s the point? To be cliched about it, surely there’s more to life than this!
So, is capitalism doomed? Well of course it is, just as is the sun. Only sooner. But it’s the wrong question (sort of).
I’ve covered this topic before, probably too often, so am going to be brief here. What I want to say is that what is being called into question, although labelled “capitalism” by everyone and their aunt, is in fact the price system, and includes the variants of socialism, communism, and fascism humanity has toyed with thus far, though these systems do have important differences.
A price is a piece of information generated by market activity (supply and demand) that tells us—allegedly in an uninfluenced, non-political, ‘value free’ way—what each good and service is worth. Price is therefore Value. Price information as generated by the market is—in ‘free’ market ideology—always true and accurate, as long as the State does not interfere with Price Discovery. Any interference muddies the water, poisons the accuracy of the information, and things no longer work optimally. It’s an elegant and powerful idea. Something organic and ‘natural’ takes place, constantly, no one dominates, and clear, helpful information emerges from the melee, information that guides important matters like how many Ferraris to manufacture, how many potatoes to grow, how many twenty carat diamond rings to produce, and so on. And via the labour market, who gets what amount of purchasing power is similarly discovered, in a ‘value free’ way. If only it were that simple!
As readers of this blog will know, I don’t subscribe to this theory (as it stands), since there can be no such thing as a ‘free’ market. Hence the price system cannot work as advertised. Hence ‘capitalism’ cannot work as advertised. The differences between ‘capitalism’ and ‘communism’ are important, but also somewhat cosmetic. In communism we have the monopoly of State fixing prices. In capitalism we have the monopoly (or oligopoly) or the Corporation fixing prices. Either way we do not have clean and true information contained in prices. Externalities are but one other aspect of this general problem. That we even try to nail value down using a linear scale like Dollar is another.
There are many problems, but perhaps the central one is that the confected dichotomy between Market and State serves no purpose other than to bamboozle and confuse. It is a Punch and Judy show, just as the Left-Right Drama is. One telling sign of this is the infrequency with which lobbying (the modern name for bribery) is discussed as Market interference in State. If Market only works best when ‘free’ from State ‘interference,’ why do we not hear any mainstream discussion of how a ‘free’ State works best when free from Market ‘interference?’
Of course the answer is that the price system is corruptible, corrupted, and benefits approximately 10% of the population at the cost of the remaining 90%. It is an elitist system by design. And that applies to both Market and State. Elitism, entrenched class divisions, wealth, health and education gaps, are systemic properties of the price system while the money system is set up as we have it.
Underneath all of this writhe, like uroboric world serpents, the core assumptions of Competition, Selfishness and Greed, as projected onto nature via misunderstandings of Darwinian theory (Spencer’s “red in tooth and claw”). Of course a millennia old dynamic of elitist control of an exploited non-elite, as established by the state long ago (a HUGE topic), predominantly engenders the kind of competition, selfishness and greed history has delivered thus far. We cooked ourselves in that soup and now see its flavours everywhere we look, even in our imagination. That there is far more to nature than this simplistic Triumvirate of Evil is becoming plainer and plainer, but changing the system forged in those elitist fires, the system which found form and life in historical processes set in motion by farming and ‘taming’ fire, and as these accomplishments gave birth to scarcity and property (twinned phenomena in my humble opinion) which in turn shape our view of All That is; changing a system that old, that much a part of what we all are, is no easy task.
Back to the price system. As we can see, its roots go deep indeed. We ‘need’ it, because we have ‘discovered’ scarcity via farming and property. Because there is not enough to go around, what better way to ‘decide’ who gets what, while keeping the constant threat of a Hobbesian Warre of Each Against All at bay, what better than some ‘anonymous,’ impartial, and incorruptible system? Capitalism. Free Market. The Price System. A force of nature for harnessing our brutish forces of nature.
Cool, only atop the foundational assumption of scarcity no market can stay free. Big fish eat little fish (competition, greed, selfishness), in the twinned realms of Market and State alike, and before you know it, the biggest are writing the rules to suit themselves and their own. ‘Twas ever thus, and ever thus shall be. Until we update the Triumvirate of Evil and embrace abundance, cooperation and faith.
Back to the money system. It is the motor of state apparatus, is its core dynamic embodied in financial infrastructure. Forged in those Competition, Selfishness and Greed fires, the money system stimulates and assumes these three forces equally resolutely. It also requires, by design, perpetual economic growth. Ever-growing economic activity. An ever-expanding money realm into the non-economic realm. An ever-accelerating rat race. What was once done for free, what is ‘idly’ doing nothing—like forests and schools of fish—must be converted into either goods or services. If it’s not working, if it’s not earning money and delivering price information, what possible value can it have? How can we measure a thing, assess it, extract it, profit from it, unless it is sucked into economic life? Look at air, that useless, ubiquitous stuff. It has a price of zero! Let’s earn money from it, put it to work somehow, make it earn its right to exist! But what happens when there’s no nature left to convert into goods and services ??? Let’s not contemplate that.
Except, the mainstream has begun to contemplate just that. We are the mainstream, even we Fringe Nutjobs. The more eloquent we become at presenting our case, the quicker and more effectively the message can spread to others. Then our imaginations can begin the work of envisioning a new system, and put ideas into practice.
Fellow travelers, through this period of upheaval, crisis and opportunity, the time of the Fringe Nutjob has come. People will be asking, in growing numbers, what the alternatives are. Sadly, the “no one knows” answer can be annoying. I suggest pointing out that the system we have is based on profound misunderstandings of the workings of reality, and, as a consequence, has become addicted to perpetual growth. We have designed a system which, were it a car, could only accelerate. Forever. Pressing on the breaks causes it to crash. Designing things differently requires, urgently, a new money system, which will further and necessarily require a redesign of pretty much everything else. All of it can only begin when we are ready to initiate the task. When we badly want something new. Right now recognition of the urgency is paramount. The ideas are there. We need safe-as-possible mechanisms and methodologies for testing them.
It has begun in earnest. Now we have to kick our imaginations into gear, have a lot of faith, and believe in ourselves.
(After reading this please check out this talk, given towards the end of October at Occupy Wall Street, on money, value and information flow. Fascinating stuff. Thanks, Karl, for the link.)
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