"The cancer stage of capitalism, according to philosopher John McMurtry, is that stage in which the system’s social immune system comes under attack and is systematically weakened by the newly dominant financial sector of the economy. The social immune system (Medicare, labour legislation, public education, environmental protection, etc.) protects citizens from the pathologies inherent in the competitive and unequal system of capital accumulation. As they erode, more and more of a nation’s capital is diverted to the financial industry,which makes money from money rather than from productive activity.
McMurtry writes: “Indicative of the classic pattern of cancer mutation is… systemic intolerance of bearing the costs of maintaining social and environmental carrying and defense capacities, and its rapidly escalating, autonomous self-multiplication that is no longer subordinated to any requirement of life-organization.”
What McMurtry implies is that the players in the global capitalist order, transnational corporations and the global financial institutions, have managed to separate themselves from the rest of society, radically decreasing their responsibilities. The ideology supporting this de-coupling from society was developed in parallel and effectively places the abstract “economy” on a pedestal above any other social institution — whether government, community, family or individual."
I may not agree with everything Dobbin says, but fundamentally, what he says makes a lot of sense to me. The rest of the essay is here Murray Dobbin.
Dobbin states “more and more of a nation’s capital is diverted to the financial industry, which makes money from money rather than from productive activity.” There is an element of truth here, but what financial institutions do is allocate capital to what they see as the most productive use. However, the government also does nothing “productive”, and instead confiscates capital (vs financial institutions obtain theirs voluntarily) and deploys it inefficiently (encouraging apathy amongst its citizens). This is clearly a key difference between the left and the right, as the left believes the government does a pretty good job allocating capital while corporations (at least transnational corporations) do a terrible job. He states that “transnational corporations and the global financial institutions, have managed to separate themselves from the rest of society..” The right, which includes me in this case, recognize that corporations by definition provide goods and services that society desires and additionally, employee people and thereby through taxes fund the government that he so loves.
ReplyDeleteI find it a tad ironic, that those that desire smaller government have for decades said that these social costs (Medicare, public education, etc..) are on unsustainable fiscal paths, and the government needs to do less. Looking at the fiscal situation of governments worldwide (particularly those with generous social programs) that is clearly the case, and it is that fiscal problem that is undermining the fabric of society. Most notably in Europe, there is recognition that the social programs are unsustainable at current rates, and the impact that is having on the economy is causing business confidence to tumble. This lack of confidence is preventing business from hiring. Yet somehow that obvious fact eludes Murray Dobbin, somehow the problem with capitalism is again the fault of the evil business man.
I, probably like you, have a romantic view of business the way it used to be 50 years ago. Whereby local small-businesses dominate the landscape, and we go to a local shop to buy cloths and groceries, instead of the giant corporation. However, that is sadly inefficient, and if we encourage that through legislation, we will merely be hurting the lower income classes in particular. Companies like Wal-Mart are successful because they are vastly more efficient than a small business and can therefore offer much lower prices to consumers. If we make it hard for these corporations to succeed, we will simply raise the prices of goods, as there is no way a small firm can compete on price.
I completely agree with you that the function of the financial industry is to allocate capital, and that this function is necessary and important. That is to say, it should, in a dispassionate way reflect the wishes of the people as they seriously weigh the various risks involved with various investments, and the projected returns on those investments. By so doing the financial market serves the needs of all the people. However, to suggest that the financial market is actually doing what good people want it to do, is tantamount to saying that communism is all about “from each according to his ability to each according to his need”. Lenin and Stalin lost there way a long time ago. The global financial institutions lost there way more recently.
ReplyDeleteSo you remain of the opinion that what is good for the "economy" is good for the "people".
Let me use a specific example I know something about. When I was growing up, a farmer with a tractor could comfortably look after 300 acres. Today, a farmer in the same category would be looking after 3000 acres, and most likely he is getting about 3 times the yield. So by one measurement of efficiency – the capitalist one – today's farmer is 30 times as efficient as the farmer 60 years ago. Who's not impressed?
Well, I'm not. For one thing, the farmer 60 years ago was probably using about 2 units of fossil energy to produce one unit of grain energy. If you go back a little further to when he was using horses, he would be using no fossil energy, and if you were to measure the energy put into the production of one unit of grain energy, it would be about 0.5. Much of that grain energy was consumed again on the farm, so that's the end of the chain. Today's farmer is using minimally 3 units of fossil energy to produce a unit of grain energy, and if you add the energy expended in getting the food to the table, it usually takes upwards of 10 units of energy to get one unit of energy into my tummy. This scenario exists because of the way the free market prices oil – cost of extraction with no thought about replacement (rape of the commons).
Secondly, since we now have less than 10% the number of farmers we had 60 years ago, what are the 90% doing. Some of course, are building the tractors and manufacturing the fertilizer the remaining farmers are using, and I see efficiency in that. But I contend that too many of them are producing widgets having no useful function, but are needed to keep the economy going. Bottled water, energy consuming holidays, houses unnecessarily big, throwaway toys, throwaway clothing, throwaway autos and the list goes on. What's efficient about that? Were the efficiency of the farmer translated into more and better schools or more and better hospitals, there would be merit in the greater efficiency of the farmer. But if it is merely translated into diminished non-renewable resources and larger landfills, what merit is there in such efficiency? So while I agree with you that Walmart has brought us lower prices, I do not equate those lower prices with a higher quality of life. There are social costs to the Walmart route that are not factored into their prices.
We agree that there are those who have tried to run an economy through planning. It has not worked. Not only has it resulted in an oppressive loss of freedom by the people, it has also resulted in totally unacceptable pollution.
So if the choice is between a centrally planned economy and a (more or less) wide open free market, capitalist economy, I would go for the capitalist economy. But are these really the only two options?