• What's a "Capitalism" Anyway?

last modified August 17, 2012 by strypey

Danyl Strype responds to a blog post by John Veitch, entitled 'Capitalism Out of Control', in which he suggests that the problems caused by state-corporate systems can be fixed by greater state regulation of "capitalism".

These days I tend to seem steer clear of debates about "isms". I find it more useful to talk about facts that can't be disputed purely by theory. For example, point out to any cheerleader of the existing system that half the food grown in the USA never ends up in anyone's mouth.

I've been reading Charles Eisenstein's book 'Sacred Economics' (released under CreativeCommons and freely available online). Rather than waxing esoteric about economic 'isms', and evalutating "capitalism" on a shallow moral basis, or a dogmatic ideological basis, as so many anti-capitalists *and* pro-capitalists do, he applies a systems understanding to our economic systems, explaining what they actually do, and why they produces the results they do.

He talks about the systemic problems with things like issuing money-as-debt, and charging interest, while debunking a number of bits of economic folklore (eg the myth of the gold standard, or the myth that fractional reserve banking is still in use). He shows how the set of incentives embedded in a debt/ interest money system forces us to pursue economic growth by converting ever more of the commons into money. He shows how this money system rewards businesses which externalise as many costs as possible onto people, other animals, and the rest of the environment, and punish those which don't.

The problem with "isms" is that they are notoriously hard to define, and one "ism" can mean precisely the opposite things to two different people. Capitalism is classic example. What does it acutally mean? John's post presents a typical liberal-socialist definition - one shared by most parliamentary parties - where capitalism is an economic engine that exists within a framework defined by the state, and needs state regulation to work properly. Marxists share part of this analysis, differing mainly in their proposed solution. Where liberals tend to believe in stronger economic regulation by the state, marxists believe in using the state to abolish capitalism and replace it with central planning.

Anarchists have a different view where the state is seen as an inseparable part of capitalism, particularly because of its role in enforcing property (see Proudhon, perhaps the earliest anarchist writer). For them, the marxists only go half way. They want to abolish both capitalism *and* the state.

On the other side of the coin you have objectivist libertarians, like the Libertarianz Party, who claim that *real* capitalism, free from the drag of government regulation, has never yet existed. They blame all the problems of the corporation on the states which allow them to be created and subsidize them through taxation in all sorts of direct and indirect ways (although an objectivist will always rhetorically claim to oppose state regulation, in truth they simply prefer different styles of state regulation, particularly defence of property).

From the reading I've done, there is some truth in all of these perspectives. It's pretty clear that capitalism as we know it could not exist without a state to enforce the social conventions that make money and property work. You can see that on the internet, as the absence of a central authority makes it impossible for digital robber barons to fully enclose "intellectual property" in a global anarchy, forcing them to recruit state governments to regulate on their behalf. I think, socialists (liberal, marxists, or anarcho-leftists), and libertarians (objectivist or anarcho-mutualist) can all agree on that.

The differences come in when we start talking about whether that means we should have more state regulation, less state regulation, or no state at all. I think the confusion here derives from a false separation of politics (decision-making) and economics (resource-allocation), of state and capitalism. The global system as I see it is an ongoing war between a range of corporate entities -centralised, hierarchical, and monopolistic entities which claim territory in either a geography (eg super-cities, states, free trade areas like APEC and FTAA, UN), a field of business (eg corporations and philanthropic NGOs), or an area of regulation (eg WTO, IMF,  G8 etc). The people running all these entities agree on state-corporate social conventions surrounding money, debt, interest, and property, as well as in other areas like charity/ aid, education and various other areas.

These corporate entities are happy for us to waste our energy squabbling with each other about the relative powers each of them have over each other. What they don't want us to do is question the validity of the social conventions that give them that power in the first place. What they don't want us to do is propose new social conventions like Eisenstein's sacred money, Michael Albert's Participatory Economics, or direct democracy using systems like demarchy, or LiquidFeedback:

However, I believe that is precisely the sort of deep questioning the 99% movement needs to be doing in Occupy Together, and exactly the sort of radical solutions we needs to be exploring, and enacting.


Originally published on Aotearoa.Indymedia.org (March, 2012)


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