Has capitalism failed?
Those who think so come out of the woodwork in every crisis. They’re wrong
You can tell when we are in an economic crisis: the influencers start to tell us how “capitalism” has failed, that “the system” that made us so wealthy has now reached the end of the line, that there is no more juice in that lemon.
“The latest release of US whole economy profits data delivered another shock to my weakening confidence that the capitalist system is working as it should,” says Albert Edwards, a strategist at Société Générale. Everything is getting more expensive, while wage fail to keep up with the cost of living. This “greedflation” is a result of company profiteering, says Edwards, first during the pandemic, and now to exploit the war in Ukraine.
No! Unbelievable! Those greedy SOBs; they raise prices, when they can get away with it! Well, thank God other segments of the population are more public spirited, more self-sacrificing and more civic minded. You don’t see them trying to take advantage of a bad situation. Take the long-suffering consumer, for example. He realises that producers are always trapped between resource costs, labour, taxes and interest rates. So they always want to pay full price so that producers’ profit margins can be maintained, right? No discount shopping for them.
And what about employees? You don’t see them asking for wage rises when there’s a shortage of skilled labour. Oh no. They happily stick with their low salaries so employers can keep prices as low as possible.
But if you’re looking for true civic virtue, you can’t ignore the public servants, who never ask for anything. Would they consider increases to their wages or pensions, knowing that governments are already a little short of cash? Of course not. Greed is uniquely concentrated in the corporate sector. And if businesses weren’t so greedy, prices would be much lower, right?
We have that on the authority of at least two of the American peoples’ most selfless representatives: Bernie Sanders (net worth $3m) and Elizabeth Warren ($67m). Also, TV host and political commentator Jon Stewart ($120m) deserves a mention for his performance grilling former treasury secretary Larry Summers. All of them believe their own salaries and profits are merely reflections of their worth – they deserve the money. Amounts earned by corporate management and stockholders, on the other hand, are just evidence of “obscene greed”.
What troubles us is this: Stewart, Sanders, and Warren are paid to act like fools. Albert Edwards is not. He’s a serious financial analyst. What’s gone wrong with him? He must know that “capitalism” is no “system”. It’s merely what happens when greedy people – consumers, workers and owners – work out whatever arrangements they can. It is infinitely adaptable.
Capitalism doesn’t care how much things cost. It doesn’t care who works for whom, what they do, how they do it, or how they share the profits and losses. It only cares that, whatever they do, they do so voluntarily. That is really the only difference. Capitalism is based on win-win trades. Other “systems” are win-lose, where one group uses its police power or robbery or treachery to get what it wants.
“Capitalism” is just a word used to describe what happens when people – with all their faults and foibles – are left alone to get the job done. The alternatives – statism, central planning, various forms of state-sponsored collectivism
– all require the use of force. And they give the “experts” more power and money. “The People”, meanwhile, get poorer.
“Capitalism is what happens when you leave people alone”