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.