Don’t cry for capitalism. The populist right may froth but no one has come up with a system that produces jobs and prosperity so successfully.
- Can Capitalism Be Saved From Itself?
- Trump's Appointments: Filthy Rich, Arch-reactionary and uber-Islamophobic
What with Brexit and Trump and the rise of the far right in Europe, we all have good reason to worry that the liberal democratic order of democracy, rule of law and civil rights is under assault. But what about capitalism, an equally critical component of the system?
In a piece published this week, the anonymous writer of The Economist’s Schumpeter column on business and economics is concerned. Government has gotten bigger over the decades, taxing and regulating on a scale unimaginable decades ago. Business is getting flabbier, more reliant on lobbying than on efficiency, and the heroic capitalist has been replaced by anonymous managers and institutional investors. And the rise of the populist right is emerging as another threat.
Confused on capitalism
That last item might come as a surprise. After all, Donald Trump is an arch-capitalist. Nor is anyone on the European right calling for nationalizing industry.
But the populist right is shaking up the old order, including the traditional left-right divide. Trump promises to cut taxes for the rich and tear up regulations on banking, employment and energy. Capitalists will like that,
But capitalism also likes free trade and immigration, and Trump and the populist right don’t. The capitalist class likes the European Union and doesn’t like getting phone calls from the president telling it to lower prices or hire workers.
The populist right’s hostility to many of capitalism’s favorite causes may be hard to discern because most people’s perception of capitalism itself is faulty. The stock capitalist from central casting is Scrooge McDuck or Gordon Gekko, men (let’s face it, they’re almost never women) obsessed with money and profit and ready to mow down anything in their way to get it.
Profit is certainly the raison d’etre of capitalism, but what is more important is how it gets there. Gaming the system and exploiting labor and consumers is one way (which is why we need government).
But the true capitalist working in a competitive economy succeeds by relentless pursuit of new, better, cheaper and more efficient ways to deliver products and services.
Experiments gone horribly wrong
If you are now reading this column online just a couple of hours after it was written, delivered halfway around the world at virtually no cost, you can thank two decades of capitalist competition for bringing what had been a network developed by the U.S. Army, so its computers could communicate with each other, to the entire world.
That’s the creative part of capitalism that the economist Joseph Schumpeter (for whom the anonymous columnist is named) cheered in his book “Capitalism, Socialism and Democracy,” but it also involves a lot of destruction.
Like automobiles displacing horses a century ago – another capitalist triumph – the internet disrupts: People like journalists lose their jobs, old ways of doing things are upended, businesses disappear, the pace of life quickens and technology replaces ordinary human contact.
It’s no surprise, then, that capitalism’s relentlessness has earned it a lot of enemies who envision an alternative that can somehow deliver the goods of a prosperous economy without the alienation and inequality of the capitalism system. Utopian socialists, anarchists, fascists and communists all tried.
The last of them even had an opportunity to experiment in a big way after the Russian Revolution, but it led to a travesty of mass murder and political repression unprecedented in the history of humankind. Capitalism steamrolled it into oblivion within a few decades.
The new pretender to the capitalist throne is the populist right. Like other populist movements, it is more about inchoate feelings than ideas. But broadly speaking it envisions a patriotic system where the private sector works hand in hand with the government to ensure employment and prosperity for all. Social solidarity comes in the form of looking after a country’s own by shunning international trade and the free movement of labor across borders. A strong, beneficent leader will make sure it happens.
Of course, it won’t all happen. Modern economies, with their markets numbering in the tens and hundreds of millions of people, their reliance on mass production and a breakneck pace of change and innovation, can’t and won’t work on a principle of mutual benefit. The big experiment of communism produced economies that exploited their workers as badly as the worst 19th-century robber barons – in the name of the people.
What you are more likely to get than jobs and prosperity is crony capitalism that can’t deliver the goods. It’s another reason why the populist right’s infatuation with Putin’s Russia is such a mystery. When people eventually wake up from this latest dream, it will be to capitalism’s latest, new-fangled alarm clock.