You can spend forever debating what capitalism is but most definitions would come down to something like "an economic system or model that emphasises the private ownership of the means of production motivated by the aim of making profit for the owners of that capital".
I was knocking this about yesterday afternoon with a few enlightened people and we all had to laugh: if that's the definition then let's be candid about the fact that capitalism has already failed. As bankers and the top management of the world's major corporations and the fund managers of the world's major pension funds have already proved, the idea that making money for owners now has any significant link with the prevailing business model that we observe on a daily basis and which is reported in our media is a myth: the aim of management is to enrich management, not shareholders. And the role of pension funds is now very clearly to enrich fund managers or the returns they pay would not be as bad as they are.
The implicit split in the ownership of control of capital, with directors and others acting in a stewardship role as if they are trustees on behalf of those who entrusted their assets to their care is dead: it's been killed by greed.
In that case the debate is about what comes next, and about how stewardship models can now be created in the interests of wider interest groups. This is the debate that we need to have. It's just that the right wing like keeping up the pretence that all is well with capitalism as it was for, and the power of that myth is what is presenting progress.
So I wonder, how long can a myth last in the face of the overwhelming evidence that it is just that? Or, how long is it before the cries that the emperor is naked are heard?
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You pose your closing questions on a day when we hear that the Borders Agency is seriously considering adopting a policy that would allow rich people to enter the UK without the bother of queuing to demonstrate that Britain is ‘open for business’ to ‘high value’ people. The fact that such a policy is discriminatory to the many thousands of us who also use airports, and who collectively contribute many times more to the UK economy (and society more generally), and is thus deeply devisive, and that this is simply ignored, illustrates the extent to which politics and state in the 21st century are now controlled by an elite (and their agents) who have little or no interest in equity, fairness, compassion, the common good or society as many of us would understand it. In short, the emergence of a neo-feudal society.
This project is, I think, well advanced, such that in the UK and US at least, even though a sizeable proportion of the population knows the emperor is naked there’s very little we can actually do about it. Of course, as you’ve noted elsewhere, if we had a decent number of courageous politicians we might still stand a chance of halting, and maybe even reversing this project. But let’s be frank, that’ll never happen in a political system like we have in the UK, US and increasingly elsewhere, where money trumps the democratic wishes of citizens at every step of the democratic and political process. The icing on the cake for our new feudal lords and ladies is then to produce politicians of the ilk of Cameron, Osborne, Johnson, and co. Charlatans schooled from an early age in the art of lying while sounding – and looking – concerned and sincere at the worries and woes of the little people. Or, by definition in the age of a UK ‘open for business’ – low value people. Robin Hood and his merry men would feel totally at home!
Be careful what you wish for. Castro’s Cuba was a genuine attempt at socialism, with public ownership of all the means of production. In many ways it worked – high standards of education, free medical treatment (of a high standard) for all, etc etc. But it led to economic stagnation and restriction on dissent and free speech. In a way we need the greed of the market/capitalist system to motivate people, but at the same need to curb its excesses.
Oh get real: I’m not asking for state socialism
I’m working for a mixed economy that works
Socialism is not state ownership of the means of production, it’s the common ownership of the means of production. This can encompass workers’ co-operatives within a market system – the best of both worlds. Capitalism is the ownership of the means of production (land and capital) by a separate class who do not apply their own labour to them.
The purpose of modern-day investment funds (corporations, business and other financial vehicles) is to entice the innocent public (nascent shareholders) to provide sufficient liquidity to enrich the “administrators”. These parasites have no altruistic values, or indeed any conscience – they are simply in the business of defrauding people by duplicitously manipulating assets that don’t belong to them.
By succeeding in corrupting the ethics of capitalism beyond recognition these greed crazed charlatans have forfeited the right to live in a free society … ironically many of them don’t live in a free society as they have sold themselves to obscene “tax dodgers havens” masquerading as “financial centres” where they skulk shielded by totalitarian “governments” with less business acumen than the local district council, but the audacity of the great train robbery.
All is NOT well with capitalism, largely because of these and those who protected them.
Getting rid of both will begin to expunge the myth.
“…..the aim of management is to enrich management, not shareholders”
And what are politicians if not “management”?
And what are voters if not “shareholders”?
You recognise and decry the principal-agent problem in the private sector (indeed appear to be claiming it renders the entire system of capitalism a failure), but are seemingly oblivious to the fact that the same problem exists in the public sector.
Indeed as lawmakers the politicians have the monopoly on violence – I can be imprisoned for not paying my taxes, but I cannot be imprisoned for not investing in a hedge fund.
Surely the principal-agent problem is more significant in the public sector?
If not, please explain why.
To confuse a property right with the universal franchise is so absurd that further debate would be utterly meaningless
Ivor.
Your post appears to suggest that management in the private sector exists for the enrichment of management.
All plc.’s are owned by the shareholders only who hold capital assets in the company. Banks invariably provide more working capital but have no share in the company.
The directors of the company are employed (indirectly) by the shareholders to properly and legally administer the company for the maximum benefit of the shareholders; this without prejudicing the assets and future welfare of the company – or placing shareholder’s capital at undue risk.
Although the mechanism inherent in the AGM allows the shareholders to remove the directors, the shareholders have little say in the day-to-day running of the company. For example some of the shareholders may believe that the auditors and lawyers appointed by the directors are a bunch of sharks, but would have difficulty in removing them.
In other words the directors can wreak havoc in a company — sometimes indefinitely.