Tuesday 28 January 2014

No Speeches On The State Of The Capitalist System

State of the System: What is it about Capitalism that allows so much to be denied to so many by so few? None of our political leaders "State of the Nation" speeches had anything to say about an economic system which is steadily reducing the opportunities for human participation in the processes of wealth creation.
ALL THREE LEADERS of the leading political parties have now delivered their “State of the Nation” addresses. To what degree the voters have been surprised, moved or inspired by their efforts will be registered in forthcoming opinion polls. If I had only one word to describe my own reaction to these political speeches it would be – underwhelmed.
None of our political leaders has yet delivered an adequate response to the extraordinary statistic released by Oxfam on the eve of the World Economic Forum at Davos in Switzerland. According to the UK based aid organisation, the world’s 85 richest individuals control a sum of wealth equal to that of the poorest half of the world’s human population – 3.5 billion people.
Now, I do not propose to argue the rights and wrongs of this extraordinary disparity. The gulf between the world’s wealthiest and poorest has always been vast, and who is to say that it is greater today than in 1914, 1814, or 1514 for that matter? A more useful question is what is it about our current economic system that makes it possible for so much to have been amassed from so many by so few?
To answer: ‘because that’s just the way the system works’ is clearly inadequate. Economic systems do not simply descend from the sky like rain or sunshine; they are human creations constructed for human purposes.
The economy of ancient Sparta, for example, was designed to sustain an army of proud and indomitable fighting men. Aware that money bred indolence and indulgence, Sparta’s rulers went out of their way to make getting rich more of a curse than a blessing.
According to the classical historians, Sparta’s official currency consisted of unwieldy iron bars several feet long. The gold, silver and bronze coins circulating among the other Greek city states were forbidden. In their place Spartans operated a form of voucher system – using leather tokens to acquire the basic necessities of life.
Not surprisingly, Sparta’s cumbersome currency isolated it from the thriving economies of its neighbours. Sparta’s rulers didn’t care: facilitating personal wealth was not their primary concern. Economically, Sparta relied upon the surpluses it extracted firstly from the Helots (farmers and herdsmen descended from the subject peoples of Sparta’s conquests) and secondly from the Periokoi – a slightly more privileged caste of merchants tasked with obtaining the commodities Sparta lacked.
Sparta was not a just, equitable or even a particularly comfortable society, but it was extraordinarily successful at what it set itself to do – which was to fight and win against all comers. Its peculiar economic arrangements were the product of its national objectives. Successes won with gold came a poor second to victories won by iron.
If the mind-boggling amount of wealth accumulated by Oxfam’s “85 individuals” is any guide, then contemporary capitalism is also extraordinarily successful at what it has set itself to do: make more and more money for fewer and fewer people.
According to a 1983 study undertaken by the German economist, F. Vester, the investment of a billion Deutschemarks in the years 1955-60 produced 1 million jobs. The same amount invested between 1960-65 generated only 400,000 jobs. Between 1965-70, far from generating employment, a billion Deutschemark investment would have eliminated 100,000 jobs. Half-a-million jobs would have been lost if the capital sum was invested between 1970 and 1975.
In other words, the ineluctable trend in modern capitalism is towards job-free growth. Or, as the American economist, Allen Sinai, told the New York Times in 2010: “American business is about maximizing shareholder value. You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”
The American socialist, G.S. Evans, calls this “Living Dead Capitalism” – a capitalism no longer capable of addressing contemporary human obligations but which, by super-efficiently funnelling the fruits of its own automatising ingenuity upwards to the dwindling number of real persons directing investment flows, continuously concentrates the “surplus value” of its non-human workforce in fewer and fewer human hands.
For a while the dire implications of this trend were masked by the explosion of service-sector employment. While the number of steel and auto-workers shrank, the number of data manipulators and patty-flippers sky-rocketed. But the same inhuman capitalist logic which prompted capitalists to invest in robotic car assemblers is now computerising millions of mid-level service industry jobs.
How long can it be before 42 individuals are worth as much as the poorest three-quarters of humanity? Or, just one person controls the wealth of the entire planet?
Spartan political-economy may have been brutally inefficient, but at least it delivered its citizens what they prized most – military victory.
What will Evans’ “living dead capitalism” deliver?
It’s an issue our vote-seeking political leaders unanimously declined to address. State of the Nation speeches are for encouraging voters – not questions.
This essay was originally published in The Press of Tuesday, 28 January 2014.


Tiger Mountain said...

A a school kid of the 50s/60s ‘we’ were meant to be living a “Jetsons” life by now with technology assisted creativity and personal development for the benefit of all and major personal leisure time.

This projected Life magazine scenario (United Nations, Esperanto, Brasilia) has moved on to resemble something more the movies “Bladerunner”, “District 9” and “Elysium” for many of the worlds citizens. The ‘Matrix’ we are plugged into basis and superstructure is indeed private ownership capitalism and it will be required to be extinguished. The major complication is will the planet last long enough for peoples thinking and organisation to catch up with the 85 supreme bludgers.

Davo Stevens said...

In the last 30yrs we have gone from the divinity of the Prophet to the divinity of the Profit.

In the US today, some people are setting up their own electricity suppliers as co-ops instead of private companies. There are many other supply companies there that are being taken over by worker co-ops too.

In our case the decimation of the Unions was the demise of wage increases and a better life for all. We need to change our attitude to profit. A business exists for one purpose: to make money for its owners. It has no other reason to be.

I recall clearly Little Roger stating when he fired 20,000 workers from the Railway, that private enterprise would snap them up immediately. That didn't happen as we all know. Business is a lean, mean profit-making machine.

I am waiting to see just what Cunliffe is going to do, but I'm not holding my breath that he will make any serious changes. We are stuck with two branches of the one company.

David said...

I think discussing this would have gone over the heads of most voters.

I remember thinking about the implications of technology reducing jobs when writing for Salient at Victoria University back in the mid-1980s. In a functioning private enterprise society the money has to pass through everyone's hands so every takes a cut. The only option in the future is for people to be paid without working but everything thinks that is lazy people sitting on their bums.

Guerilla Surgeon said...

Yes, whatever happened to the 4 hour working week, and by the way where is my flying car :-)? As that awful Michelle Boag says loudly and often on afternoon radio – that's the "real world". The main question arising from it would be can the rich afford to hire enough private armies to stop the rest of us from committing something akin to the Holocaust – (according to some rich clown) in the "real world" you can't keep this sort of shit secret. Eventually there will be consequences. I'm looking towards America, where more and more people are becoming aware of the fact that their nice well paying jobs are gone, and they're going to be flipping burgers for the rest of their lives with bugger all medical cover :-). Either the rich give in gracefully, or we'll be using the lamp posts to recreate the French Revolution.

Unknown said...

Hi, Chris,
May I draw your attention to 'The Trouble with Billionaires' by Linda Mcquaig & Neil Brooks, among other books addressing this topic...
It is clear that capitalism is overdue for a redical reformation...but we're still awaiting a modern Martin Luther to emerge.

Anonymous said...

Chris -- Do you have a source reference for Vester's 1983 work? My internet searching isn't producing much and I would like to follow it up for unrelated (to your writing) purposes.

Many thanks,


Chris Trotter said...

To: Greg.

I'm afraid Vester's work is only available in the original German. I was relying upon an English summary of his research contained in the writings of the Austrian/French sociologist, Andre Gorz.

The best I can do is this:

Ballungsgebiete in der Krise

Vester, F

Published by DTV, 1983

ISBN 10: 342310080X / ISBN 13: 9783423100809

Len Richards said...

The Capitalist System is, unfortunately, incapable of being "designed" by anyone. It runs amok under its own ineluctable logic.
The best that the left can do at the moment is to put up a strong resistance to the "amokness" of the system while undermining its inner logic (that word used advisedly here) at every available turn.
But you are right to point out that human beings can design a system of economic and political reason that is democratically based and able to deliver to everyone the wealth and leisure-time that abounds in this modern world. That might take a revolution ....

Anonymous said...

Chris, you are a frequent critic of capitalism (to understate the obvious). I am curious, what sort of a system would you like to see replace it, here in NZ?

I hope you are not going to propose some form of Marxist system. No attempt at that has succeeded in doing anything other that reduce political (and every other kind) of freedom, coupled with economic stagnation.

Of course there are other possible systems than 'neoliberal' capitalism and Marxism.

What is your choice?

Chris Trotter said...

The logic of capitalist development suggests either an epochal breakthrough to an automated libertarian utopia or a descent into neo-feudal corporate barbarism.

Before the Bolsheviks got hold of socialism, most socialists anticipated a future society closely resembling the former.

Bellamy's "Looking Backward 2000-1887" a science fiction novel published in 1888 predicted that humanity would be liberated by technology - it was enormously popular in New Zealand.

More recently there's the work of Andre Gorz - whose most famous book was called "Farewell to the Working Class".

Well worth a read.

Anonymous said...

Questioning "the system", being the "CAPITALIST" one, hey, that would be an unforgivable sin these days.

It would be like blasphemy, and deserving immediate annihilation, shooting, burning on the stake, that is how it is seen by the powers in control, who have the populations in virtually every country on this planet firmly under control.

Watch and listen to the "news", when it is not about crime, a serious accident or extreme disaster, mostly about some economic indicators, various employment or business growth data, about prospects, surveys, "sentiment" of consumers, about the currency exchange rates, the price of gold, and what the interest rates are.

People are growing up with it, like all this is staple diet for the mind now.

So being someone human, "independent" and able to think and "freely" choose an alternative society, a different life, that is near impossible in today's modern capitalist, consumerist, over commercialised, work and business focused society. We are all some form of slave, production unit and consumer unit, nothing more.

Those that disagree, wake up, bang your head against a wall or rock, maybe it will rattle something and shake brain cells into place.

Only a tiny minority are still capable of seeing things differently and to have some autonomy about their lives, their thoughts and decision.

It is a very sad, shocking reality, and it will get worse, nearer to an Orwellian society.

Shazza said...

I have more ambivalent views towards "capitalism" - I see it as a reflection of societies value of hard won freedom. The problem is not the system, but the players.

I am interested in possibilities surrounding solutions such as ethics training, corporate value calculations incorporting negative externalites, white collar crime sentencing reform. Things that aren't reformist, rather honing the present system.

Victor said...

Whilst I agree that we're well into a "descent into neo-feudal corporate barbarism", I don't think we have job-free growth.

Jobs are being constantly created by the million in China, India, Vietnam, Indonesia, Philippines etc.

The upside is that millions have been lifted out of absolute and abject poverty.

The downsides are that these millions still remain poor by our standards, that their societies lack adequate safety nets, that there are still many more whose poverty is abject and that their environments are in a state of perpetual degradation with serious downstream consequences for the planet as a whole.

So how do we end global capitalism's "race to the bottom" without condemning those in poorer nations to lives without hope of material betterment?

One way NOT to do it is to focus solely on the 'First World' and its problems to the exclusion of all other considerations.

Fats said...

Davo Stevens

"I recall clearly Little Roger stating when he fired 20,000 workers from the Railway, that private enterprise would snap them up immediately. That didn't happen as we all know. Business is a lean, mean profit-making machine."

If you cast your mind back to the railways, they were a mire of corruption protected by the union. A worker being disciplined for theft would spark a full-scale strike. One reason for the shift to road transport was that shipments were less likely to be looted, and workers actually worked. That's why I laughed when I saw your comment.

What employer in his or her right mind would want a former 'railways worker'? By the way, 'railways worker' is a contradiction in terms.

Anonymous said...

Certainly the general view at the time I was at school in the 1960's an 1970's was that we would be working less and living a life of leisure. A decade late, in the early 1980's their was a general assumption was that their would be huge unemployment, and a lot of people were keen to take advantage of it with the leading international tourist guides offering guidance on how to get on the dole in Aus and the UK, aquire a squat and live on the beach for free exploiting every opportunity. This was just a step up from such guides, as the whole earth catelogue of the early 1980's and as Keith Richards and virtually every other rock star of the time, the whole aim was not to work and do anything to avoid it. A philosophy I partly embraced. Being a bank clerk seemed a very unattractive job with lots of fiddly bookeeping, and a strong temptation to corruption-2/4 schoolmates who joined banks ended up in jail, one rose high in SC finance and the other one became a 80's era star market trader in the 80's but was fired from his media employment , as soon as Maggie Barry assessed his testostorene levels as too high. The offer of what was called the idea job of joining the traffic branch of NZR, seemed to me the ultimate downward mobility and had me running straight for the dole office and the attraction of 6 month PEP jobs every now and again at graduate rates- for minimal effort.
In terms of NZR, the rail was a mix of highly skilled engineers, signalling operators and professional managers and a mixture of sub crimimal who operated the local freight debts as a mix of gang, fence and mafia and the general alcholic rif raf that got temperoray relief jobs on the rail and were completly unemployable and destroyed the railways image.

Davo Stevens said...

A Capitalist System has to be rigidly regulated. Anything that can be sold or traded becomes a part of it. That is what we have Govts. for. Their job is to regulate the economics within a country.

Those who say we need less Govt. forget that important fact. If we didn't have such Govts. things like drugs and Child Pornography would be traded, the Gubbies decide what should be traded and what should not.

I believe that the comment regarding a "Jobless Recovery", oft times stated by pollies Victor, is referring to the jobs in their own countries not on the other side of the world. Yes, it has lifted many people out of poverty but at the expense of our own workers. Somehow we need to work out a real balance.

Davo Stevens said...

@Fats: So what you're saying is that some 20,000 workers in the Railways were all crooks? I find that hard to believe! Perhaps the few of the Rail Stores people were so but they only made up a small part of the Rail workforce. And, futhermore, that was not the point I was making!

Un-employment is acceptable when it happens to some-one else but not so acceptable when it happens to you. Many of those Rail workers were in their fifties and never got another decent job again. Why should they be sacrificial lambs?

I had to make a delivery to the Welfare office in Manchester St., one day (1988) and when I went through the waiting room I saw the shattered looks on the faces of the people waiting there. Those looks will haunt me for the rest of my life. It was the time I hated that smug little prick Douglas and turned me against him and what he stood for.

Guerilla Surgeon said...

The employed pay taxes, which the right seem to forget. They also buy stuff, which capitalists sell.

Anonymous said...

Don't forget the Ministry of Works, and Post Office, where thousands were paid to do very little. It was in fact the unemployment benefit disguised as WORK. Thus no incentive to retrain, and prices were distorted upwards to compensate.
Signed: Hagar

Guerilla Surgeon said...

You're not wrong Davo, economists seem to think in terms of stock units rather than people. I remember my economics textbooks going on about how workers would be 'redistributed' when a firm closed. Nothing about those who couldn't get a similar job and had to settle for flipping burgers, nothing about those who are too old to get another job at all, nothing about the social effects of forcing people into poverty.