by Umair Haque
November 22, 2018

from Eudaimonia Website

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Why Capitalism

Fails the More it Succeeds,

and What it Means

Whenever I write about capitalism, a strange and funny thing happens.

"That's not even capitalism, dude! Grow up!!"

It's not...?


Capitalism appears to mean whatever anyone wants it to mean, apparently, and hence, capitalism is whatever anyone wants it to be. Like any god, I suppose, then, capitalism is everything to all people.


But that leaves us even less than unable to really understand much  - it leaves us blind, confused, and going backwards. Dark ages lie at the end of the road which ask truth no questions. Which is more or less where America, maybe the world, is headed today.

So let's discuss a few myths of capitalism, each one based on a different definition of capitalism  - and see if we can understand a little more about what it "really" is.



1 - The myth of "Platonic" capitalism


Anglos  - English speakers  - love to tell me that capitalism is it's "Platonic" ideal:

if only we left capitalists to their own devices, and stopped interfering, competition would ensure that virtue led to prosperity and decency both.

This myth  - which is also the one of laissez-faire capitalism  - is the easiest to disprove.


We've tried it  - time and again.


First, during the Gilded Age, and then again, in the age of austerity, from the 1980s to now. We removed all the obstacles in the way of capitalists that we could.


What resulted wasn't an explosion of competition, but the very opposite  - the emergence of huge monopolies, which turned around and exploited people in five ways:

  1. by underpaying them

  2. by overcharging them

  3. by overworking them

  4. by shifting costs back to them as taxpayers

  5. by corroding their democracy

Whew  - quite a list, no...?


The myth of "Platonic" capitalism is just that  - a myth. Capitalism will not attain some kind of perfect ideal of competition and virtue and prosperity if we unleash it  - the very opposite will result.


What does that tell us about its nature?



2 - The myth of Darwinian capitalism


This myth builds on the first one  - through competition, a kind of Darwinian outcome will magically happen:

the survival of the fittest, which will result in the greatest good for everyone.

But by fittest here, we imagine "products" or "services"  - commodities, in other words. Not people.


But the problem is that capitalism is too Darwinian for a society to really survive it  - because it is not natural, but artificial selection, selecting for its own kind of "fitness" in people.


What kind?


The attributes of,

  • cruelty

  • cunning

  • greed

  • avarice

  • calculation

  • inauthenticity

These are what it takes to rise to the top of capitalist systems, because, unsurprisingly, that is precisely what they reward, cultivate, and value, since their only purpose is blindly maximizing profit, at any cost.


But that also means that people who do not  - or cannot  - cultivate these attributes are regarded as liabilities and burdens in capitalist systems.


What happens to them? They are discarded, abused, and thrown away...

The result is that the worst, not the best, rise to the top, and earn unimaginable fortunes  - often by giving people the worst  - while the best and brightest end up working for them, and wasting their talents, too  - and you don't have to look much further than America to see it.


Capitalism is Darwinian, it's true  - but not in a noble, productive, creative way, if there is such a thing to begin with  - in a self-destructive, calamitous, and ravenous way.


It selects for the worst among us to command the resources of a whole economy  - it's time, effort, creativity, imagination, ideas  - and that is why nations which rely on capitalism, like America, collapse.


Those resources are squandered on foolish and wasteful things :

yachts and McMansions and stock market bubbles, which are earned by giving people subpar drugs and drinking water and educations, instead of invested in healthcare systems and retirement and research ,

...precisely because capitalism selects for the worst, not the best, in both things and people.


If you doubt that, ask yourself why America leads the world in precisely nothing anymore.



3 - The myth of Emersonian capitalism


Ralph Emerson famously wrote about the notion of "self-reliance", and since then, Americans especially, love to think of capitalism as an exercise in strong, rugged, brave self-reliance  - something like surviving the Yukon winter.


But it is nothing of the sort. If you understand that capitalism left to its own devices will wreck a society, then to keep capitalism alive at a healthy level, which is a moderate one, it must be reined in  - which means government.


And that is the point...


American thinking, especially, made a fatal mistake  - in supposing capitalism is "self-reliance", it also assumed that a society needs no social investment, no public goods, no government, no democracy.


That is why all those things appear to be missing in America today  - LOL...

But capitalism is not and has never been self-reliant  - it has always depended first and foremost on socialism. Slavery depended critically on laws and maritime rules and law enforcement. Colonies needed navies and armies.


Today, capitalism is heavily supported by socialism, in every imaginable way, from laws to codes to courts to roads and bridges and hospitals and schools.


Every great capitalist "innovation", too, has first been a breakthrough in public research, from,

Capitalism is not self-reliant  - it pretends it is, and teaches you it is, so that you end up thinking it is, and that is precisely how it exploits you, because then you don't even know that it is stealing your inheritance, and calling it charity.



4 - The myth of Benthamite capitalism


Now, I do a disservice to Jeremy Bentham by calling it this, so understand that Bentham's insights  - about utility, or "usefulness"  - were crudely caricatured by American thinkers, mostly, centuries later, who came to believe that capitalism, by making us devote ourselves to what is most useful to others, would make everyone better off.


Is that one true? How could it be?


If capitalism selects for the worst as producers  - and we work for them, without having any power over them,

  • how could we ever really end up focused on what's "useful" to others?

  • isn't a public healthcare, retirement, or childcare system more "useful" than a hundred Facebooks or Amazons?

  • so why are Zuck and Jeff unimaginably rich  - while Americans don't have those systems?

The myth says that capitalism will magically conjure up for people the most useful things of all, and we will magically live lives of ease and comfort.


But we only have to look at America to see it isn't true.


Americans are bombarded with the most relatively useless things  - Alexas and Siris and so on. It's true that these things can make your life a little easier and comfortable.


But in the hierarchy of genuinely useful things to human beings, being able to recline like Nero on a chaise longue and have a robot shovel grapes into your mouth, ranks near the bottom if you can't get decent,

  • healthcare

  • income

  • savings

  • education

  • retirement

Human life needs care, nurturance, support, and cultivation  - but capitalism has no incentive or reason whatsoever to provide such things.


Yet they are the most useful of all, because they are the ones we use when we are vulnerable and in greatest need. In this way, capitalism starves a society of what is most genuinely useful.


It is social democracies in which people have the most useful things - the things that benefit people most, when they need them most, available to all like medicine, or retirement, or childcare - and that is because they don't rely on capitalism to provide them.

In fact, if we really think about it, capitalism does precisely the opposite of providing the things people need most, when they need them most, which is what "usefulness" really is.


When people are vulnerable, in great and desperate need  - that is the exact moment capitalism exploits their weakness the most savagely, ruthlessly, without conscience, remorse, absolutely pitilessly.


That is why the very same drugs  - basic ones, like insulin  - cost hundreds of times in America what they do elsewhere. But that is true for everything that people need when they are vulnerable in America  - from money to shelter to food.


Capitalism's rule is to exploit  - to take advantage of people at precisely the moment of their greatest need, not to support them.


Hence, the phenomenon of "medical bankruptcy":

your money or your life...

But such a society is one which will always run short of the most useful things , which is why,

  • healthcare

  • education

  • retirements

  • childcare,

...are all things which are carefully rationed in America:

there simply isn't enough of them to go around.



5 - The myth of good capitalism


This myth says that says that capitalism will make everyone, not just capitalists, a better person, virtuous and noble, by instilling in them the values of moderation, humility, courage, and wisdom, making them "allocentric", or other focused.


Does it seem to have worked out that way to you?


Let's take the example of America.

Americans don't seem especially virtuous, allocentric, "altruistic", to me  - the evidence suggests very much the opposite.


American culture is noted the world over for its extreme selfishness, aggression, dominance, its need to punish and control, its cruelty, hostility, suspicion.


Those are its normal, valued, prized features, which is why it has the rich world's highest rate of violence, abuse, incarceration, homelessness, poverty, the least rights for women and minorities, the lowest rates of social progress, and so on.


I don't say that in a judgmental way  - just an observational one. Far from living lives of noble virtue, Americans seem, if anything, to live in a fractured state.


Either they are badly, severely traumatized by capitalism to the point that depression and suicide are skyrocketing, almost uniquely in the world, or they are busy furiously running a consumerist rat race, whose values are to express superiority in an age-old hierarchy of personhood through more and more acquisition.


Maybe both  - one the result of the other...

So if capitalism made people noble and virtuous, other-focused, allocentric, gentle, kind... then,

  • why don't we see it in America?

  • why is America the only nation which lets its own kids die at school and makes people crowd-fund life-saving healthcare?

  • are Americans really useful to each other  - or do they just use each other?

There is world of difference  - which was Bentham's point.

The reality is that capitalism does not make people noble and virtuous  - but exactly the opposite, because it first makes them poor. Because people live at the edge of perpetual ruin in capitalist systems  - no matter how nominally "rich" they get, just like the people formerly known as the American middle class  - virtue becomes a luxury.


When you are struggling to put food on the table for your kids, then noble and great virtues are so much idle theorizing.


Capitalism cheats people of chances at more, greater virtue, as it has Americans, by trapping them in rat races, in the pursuit of status, in endless competitions for superiority, in the superficial and trivial and meaningless, turning lives into glittering game-shows and desperate lotteries.


The result is that people stay poor, which is right where capitalism wants them  - then they will do anything to survive. Then you might even buy into the next myth:

that you are overworked and underpaid in the hope that one day, you too will be capitalist.

But will you...?



6 - The myth of neoclassical capitalism


Now, all the above goes against the greatest capitalist myth of all, which is the one that you probably still believe  - even if you don't think you do.


This myth says that capitalism will shower prosperity down from above. That is, one day, everyone will be a capitalist  - and live a life of untold riches, comfort, and ease, without having to work.


Maybe you will too. Or at the very least  - you're better off with more capitalism, not less.


Right? Wrong...

How many Americans are really capitalists? Less than 10%. That is the number of Americans who own most of the stocks, bonds, and businesses.


Let me put that in perspective:

that's 10%  - after centuries of capitalism.

Are you beginning to see the problem? Why hasn't that number grown?


Wait  - let's ask a different question:

is it growing? Nope...

It's shrinking:

the latest trend, which is "share buybacks", means that the number of capitalists is in fact shrinking, not growing.


But the amount of capitalism in society has grown massively  - how much of society's resources are controlled privately, not publicly.

Do you see the problem here? A smaller number of people control a larger fraction of a whole society.


But that has never not been true under capitalism. There has never been a time when capitalism has trickled anywhere but up  - the fact that by this point, after centuries of more and more extreme capitalism, just 10% of Americans are capitalists, and that number is shrinking, is damning, tragic, bizarre, and funny proof.

(And no, "owning your home", as in owing the bank a giant mortgage, doesn't make you a capitalist. If you earn a comfortable living by renting a few out, then maybe you're one. Using an asset you're in debt for, makes you the opposite of a capitalist  - just another prole.)





Now, the reason I say that you probably believe this myth is that even while I criticize capitalism, part of you probably rebels, and is a little angry at me.


I am challenging a fundamental belief of yours, in other words. But why is it one?


Have you ever thought about it? It must be because one day you believe it will happen for you, too. Why else would you place faith in an abstraction, a system? You must either one day believe that your moral circle will benefit from it  - even if it is in the sense that you are quite happy to be a martyr for the good of the whole world.


That is the weird and strange place that many Americans are  - capitalism is quite literally killing them, and yet they will defend it tooth and nail.

The problem is that capitalism has not trickled down, either to you, or to anyone else, really. It has never grown to encompass a society whole, and benefit it all. It is still the same as it ever was  - capitalists are a tiny fraction of the population, and the ones that count are a tinier fraction still.


The capitalist class is shrinking in America today because capitalists have no incentive to share their riches with anyone whatsoever. Nor can a society ever be made of capitalists because capitalism relies on exploitation, on me profiting from your time, labour, effort, creativity, instead of my own, and therefore, not all of us can ever be capitalists to begin with.


In this sense, the idea that capitalism could ever trickle down to all is the most foolish and strange one.

The myth of trickle down capitalism is the most dangerous one of all because most people believe it  - even when they don't think they do, and the greatest giveaway is when people who don't like capitalism still get angry when capitalism is criticized.


Somewhere, deep down, even if they don't often admit it to themselves they've placed their faith in a system their mind tells them isn't working.

We must never have blind faith in human systems as if they were gods. Then we end up their prisoners  - not their masters. We must examine what is before our eyes  - and make doing so a habit.


Glittering fairy tales of promised lands, no matter how tempting and seductive they are, are no substitute for a thinking mind and seeing eyes.


That is a hard job, though  - and that is the problem. It's eminently self-evident to see capitalism's striking failure, downfall, and collapse  - that is what this age is about, really.


The question, then, I suppose is why so many of us keep our eyes and minds wide shut, instead of opening them.


The answer might just be:

it's more comfortable that way, especially when the world is burning...