Home > Uncategorized > Let’s all blame capitalism

Let’s all blame capitalism

from Peter Radford

Well, actually let’s not.

Just as much as I decry single minded adherence to what I have called the binary vision of our world, as in markets are great, the state is bad, I also object to laying all the blame for our multitude of ills at the feet of capitalism. Simple answers to complicated questions always raise my suspicions. I suspect that the truth is somewhat more nuanced.

Take poverty for example. Is it really true that capitalism is the root cause of poverty? No. It is not.

What do we mean by poverty anyway? Relative poverty, as in some distribution of incomes and wealth? Or absolute poverty, as in an inability to provide sufficient sustenance to support life?

Theses are quite different things.

The libertarians are naturally inclined to look at what we can call the long view of poverty. Many more people live above the basic support level than ever before. To argue the contrary is to delve into special pleading and to redefine the issue in a prejudicial way. There is no doubt that we, in our part of the world, live a far more prosperous life than any of our ancestors. The great surge of invention unleashed after the Enlightenment and then applied after the Industrial Revolution has driven the average person’s lifestyle to gaudy levels undreamed about even a mere two hundred or so years ago. That is an extraordinary achievement.

And achievement of whom?

The people who benefitted most from driving the change. Most of whom qualify to be called capitalists.

Left wingers who deny this are always left stumbling about and creating oddball utopian visions in order to debunk the progress that basic free market economies have produced. They introduce things like our alienation from our previous self sufficiency. As if that was a nirvana from which our ancestors would not have wanted to escape. Endless hours tilling land with primitive technology. A constant threat of starvation because of dependence on weather. Awful living conditions and disease prone lives that were more squalor than haven.

Sign me up for alienation.

I doubt my ancestors – the servant class in an aristocratic backwater in England – would mind the oppression of modernity at all. In fact I know my grandmother embraced it. So do I. Cleaning stables so some aristocrat can go play polo is not my cup of tea. But that’s what her husband did. She looked after the fireplaces so the duke could keep warm.

No. My family was liberated by the Industrial Revolution. Capitalism, if that’s what we describe the basic economic  model of the past two hundred years of so, has done me proud.


The leftists are right if they change the subject to today and quit the old nonsense. We have a problem with the distribution of the modern cornucopia.

Another but …

This modern problem is not a failure of capitalism. It is a failure of democracy.

I can hear you groaning.

The problem with the binary worldview held by both libertarians and leftists [Marxists in particular] is that it ignores the emergence in the past hundred years of something called democracy. Allow me to introduce you to it!

The political domain becomes a lot more complicated when we introduce the notion of self-governance. Even if the system is not ideal – as I am no doubt many of you are dying to tell me – it is far more progressive than one party, autocratic, military, or any other type of rule.

Why is it more complicated?

Because the people now have a foot in two camps. They work and trade in the economic camp. They vote and self-govern in the political camp. So even if economists don’t like the notion of political economy the real world now does.

So the distribution of income is as much political as it is an economic problem. People can vote to get a bigger share of the national pie. Which is what happened with social programs the world over. And which is also why libertarians with their binary view dislike those programs.

I have been flippant. The deeper issue is this:

At the onset of the great leap forward back in the 1700’s the concepts and ideas that support both the modern right and the modern left were conflated. They were very fuzzy. The great thinkers of that era were still struggling to sort them all out. Balibar calls it “equaliberty” for exactly this reason.

So the founding fathers of the US could prattle on about how egalitarian their new nation was even while ignoring slavery, the plight of women, and the lack of voting rights for the majority. Liberty, to them, was a very sparsely defined idea. It extended to  very few. In fact, apart from their lack of hereditary status, the founding fathers were to a whole lot different from the more enlightened [a relative term if ever there is one] European aristocrats they so despised.

During the 1800’s, as industrialization disrupted traditional lifestyles, late thinkers started to rise those muddled ideas apart. They saw liberty as something different from equality. Indeed they created a great divide that we still struggle with.

Liberty and equality are in conflict. And their modern manifestations are thus the source of argument. Liberty, and its economic version engine that libertarians interpret as the ‘free marketplace’, undergirds such things as private property and ultimately capitalism. It is built around incentive and wealth. It is divisive simply because different people have different abilities to respond to those incentives. And if rewards flow freely – as they do in a society based on liberty – then the distribution of incomes and wealth will inevitably be unequal.

The negative social consequences of capitalism – what the leftists identify as its oppressive and distorting effects – stirred up a reaction. But that reaction did not replace capitalism, it merely constrained it, by elevating people into the governance of the societies being distorted. The Marxist road to nirvana was blocked by an alternative logic of history. People wanted to be part of the great leap forward, but not stop it. Mitigation rather than elimination and replacement became the driver of modern politics. Hence the emergence of democracy as we know it subsequent to industrialization.

So as the original and muddled ideas were crystalized they separated into two conflicting streams that need to be balanced if we are to benefit from them both.

And, unfortunately, we cannot achieve that balance as long as the two sides, our libertarian and Marxist friends, insist on re-hashing arguments from the old days.

For instance is we all blame capitalism for the ills of poverty we miss its role in getting us to where we are. And if we simply laud its ability to generate wealth and prosperity, we miss our need to mitigate its downsides.

I realize its fun to be ideologically committed, and that a binary worldview make life simpler, but we need to get beyond that divide. The problem with modern democracy is that it isn’t a pure system. It isn’t socialist and it isn’t libertarian. It’s the ugly middle way no one wants to defend. But defend it we must if we want to preserve the prosperity capitalism has bestowed upon us, and yet enforce restraints on liberty to ensure a more equal distribution of that prosperity – and to prevent further degradation of our environment.

So is capitalism to blame for all our ills?

Yes. And. No.


  1. anmayhew
    September 15, 2015 at 12:50 am

    Peter: I absolutely agree that the common binary view is inadequate and agree as well that industrialization has made the lives of most humans much, much better. Where I do not agree is with your apparent acceptance of the view that “capitalists” drove the process. “Capital,” meaning money was a consequence not a cause of industrialization. Our textbook stories of the way in which saving leads to use of accumulated riches for building of factories is wrong as any serious reading of economic history reveals. Factories, built with credit (often short-term) led to the ability to repay that credit and the ability to access to more credit and eventually to the production by “financial capitalists” of paper that constituted claims to future flows of income. By the end of the 19th century in the North Atlantic community the buying and selling of these claims became an alternative to building or expanding factories for those clever and lucky enough to seek and gain riches. This buying and selling of claims–equity shares, bonds, and all of the financial offspring of those original claims–have now come to dominate western economies even as the industrial output of the world economy continues to free us from the horrors of cleaning out stables or, as my not-so-long-ago ancestors did, plowing fields with mules and living primarily off of what you could grow.

    Our stories about capital and capitalists do not distinguish between those who organized the building of factories, railroads, and etc. and those who manipulate paper claims to income flows. And, that is on top of a creation myth that attributes the success of industrialization to capital-as-money rather than to the many, many rude mechanics and inventors who figured out how to harness steam power, how to mass produce steel, and etc.

    I agree that there is little point in blaming capitalists and would only add that there is little point in praising them too much unless we are very careful to distinguish between those who actually figured out how to organize the tools and make them work in complicated organizations.

    I also agree that our problems stem from a failure of “democracy” or, as I would prefer to say, a failure of political processes to manage for human welfare a very, very complicated series of interrelated economic systems which bear slight resemblance to the capitalism imagined by the laissez-faire utopians of the 19th century and still imagined by some today.

  2. Larry Motuz
    September 15, 2015 at 1:16 am

    Not being a libertarian, I find it odd that anyone would be arguing today that bare subsidence needs are a proper benchmark for measuring poverty, since what we basically need to survive has vastly changed when ‘poverty’ was the misery of being unable to properly feed, clothe, or shelter oneself. Today, to not have also the means to afford electricity, water, or means of transport/transit, or basic communication services is also to be suffering grinding poverty.

    In short, the means of ‘subsidence’ have altered with the technological and cultural landscape.

  3. Geoff Davies
    September 15, 2015 at 3:43 am

    The binary division into “capitalism” and “socialism” is equally unprofitable. I don’t even know what “capitalism’ is supposed to refer to, it is used in such a vague way to refer to many kinds of market system.

    More useful would be to discuss which kind of market system might serve us well, and which things are not well served by markets.

    A managed market system could serve us much better than either old capitalism or old socialism: https://rwer.wordpress.com/2014/04/19/more-effective-remedies-for-inequality-than-pikettys/

  4. Mike Hall
    September 15, 2015 at 9:43 am

    I think that we do need to identify key opposing financial interests between citizens, and these are surely (obviously?) owners of Capital vs the Labour class, in any kind of Capitalist society.

    There’s always a few wannabes among the Labour class, but by its nature the idea that we can all become Capitalists, or share an interest in each camp is false. The Thatcher/Reagan politics promoted this along with ‘trickle down’ economics.

    But of course this was another fallacy of composition. Some individuals could cross sides, but, by definition, not many. Labour are always the vast majority in any Capitalist system. Yet again tho’, both the economics and education profession, together with a more than willing journalism profession, and Capital owning media owners/financers, conscientiously removed the very concept of ‘macro’ from public discourse, and allowed, or encouraged, everything to be defined by the single household model.

    I sometimes wonder why even progressive economists make so little effort to educate a 99% ignorant public on at least basic micro/macro distinctions? Do you not realise that without such knowledge widely understood by citizens, the very notion of a (participatory) real ‘democracy’ is an absurdity? Until citizens know why ‘macro’ is different, often opposite, from micro, there is no informed condsent of anything.

    Which brings me to what I think is the most useful (and true) binary distinction in society. Capitalism vs Democracy. Interestingly, this is what Paul McCulley, PIMCO uber capitalist (self described) also believes, nicely explained by him in his youtubed 30min lecture at the Kilkenomics 2012 festival. It’s also what Warren Buffet has alluded to when saying “… it is a class war, and my class has won… “.

    Buffet there stating the obvious that Capitalists now have full ownership of the political process. In fact, taking visiblly progressive periods as a metric, when have they not had such ownership during the century or so of universal suffrage? FDR perhaps in US, Attlee/Bevan in UK, but not much else? If we strip away Capitalists’ need for an increasingly educated workforce, sufficiently healthy and longlived to repay that investment, I’d contend that virtually nothing has changed from 19th C and earlier periods of very narrow (or nil) suffrage.

    So, yes, Capitalism vs Democracy. By which we really mean Capitalist vs Labour, whereby the latter must always be in the vast majority, and thus by definition the political system must always see Labour class interests as primary. That is, politics should always prioritise the working class interests, or it isn’t functioning democracy. Simple as that. Sure, there are other nuances one can argue, but they are all distant 2nd order, or lesser, issues. Occam’s razor applies.

    Every citizen should understand these basic forces in society, yet virtually none do. Until the internet, Capitalists owned the entire information space – the Fourth Estate.

    Yet whilst this massive hithertoo defficiency in meaningful, informed, democracy, is to me as obvious as the nose on my face, has been for decades, I continue to be shocked at just how few supposed progressive academics and professionals (economics, journalism) appear to notice how power in society operates.

    So what’s the answer? Well, as a first step, why not try to implement actual democracy, as described but never delivered? Get the interests of, and Capitalists out of the political system. Cap money and asset ownership of politicians and all public servants to an insignificant level as regards ability to live off the returns from it. Exclude all corporate, business, political party or trade union etc. interests from any formal (beholden) relationship with public officials. And when they leave office too – no Blair style JPM pay offs. Use public finance to create a counter balancing media space not beholden to Capitalist interests thru’ ownership or big corporate advertising revenue. (The latter far easier than you would think, but does require ‘macro’ concepts to understand..) Enshrine in Constitutions a right of binding referenda, called by citizens at any time, to decide anything they want, as a backstop and unequivocal expression of the primacy of The People.

    That is, try and reach a working balance between Democracy and Capitalist forces. Why not? Why, for a change, can’t all the esoteric theorising and squabbling so called progressives not just agree on a few simple steps forward?

    Nothing complicated or difficult in what I’ve outlined is there?

    Choose a simple plan – in fact one that common political rhetoric already suggests should exist. Then get to work educating and informing citizens. Really how hard is it?

  5. September 15, 2015 at 9:59 am

    I’m an historian. Most historians take a very different view of this sort of debate. I’ve used a quote from Williams James for years to introduce such comments as these.

    The doctrine on which the absolutists lay most stress is the absolute’s ‘timeless’ character. For pluralists, on the other hand, time remains as real as anything, and nothing in the universe is great or static or eternal enough not to have some history. But the world that each of us feels most intimately at home with is that of beings with histories that play into our history, whom we can help in their vicissitudes even as they help us in ours. This satisfaction the absolute denies us; we can neither help nor hinder it, for it stands outside of history. It surely is a merit in a philosophy to make the very life we lead seem real and earnest. Pluralism, in exorcising the absolute, exorcises the great de-realizer of the only life we are at home in, and thus redeems the nature of reality from essential foreignness. Every end, reason, motive, object of desire or aversion, ground of sorrow or joy that we feel is in the world of finite multifariousness, for only in that world does anything really happen, only there do events come to pass.
    James, William (2012-05-16). A Pluralistic Universe Hibbert Lectures at Manchester College on the Present Situation in Philosophy (Kindle Locations 375-382). . Kindle Edition.

    Most social scientists and economists (whatever they are) are so attached to their theories and models they forget these have histories. Focusing only on economics, we see discussions on markets, governments, marginal pricing, capitalism, socialism, etc. These are not, despite what economists seem to believe “basic facts of life.” In other words each is created by a lot of actors over some period of time, and each is changed, again and again by actors over time. They have only the “nature,” the meanings given them in this process. So the basic questions I ask are how are these created, by which actors, over what periods of time, with what expectations (if any)? This helps put in perspective the debates about so called fixed and absolute divisions between capitalism/socialism, markets/governments, economics/technology, etc. The world is as James notes one. The seams in in are constructed, and thus neither fixed nor preordained.

  6. September 15, 2015 at 4:16 pm

    How to minimize political confusion
    Comment on Peter Radford on ‘Let’s all blame capitalism’

    “I realize it’s fun to be ideologically committed, and that a binary worldview make life simpler, but we need to get beyond that divide.”

    Economics started as Political Economy and has never recovered from getting off at the wrong foot. Your fundamental error consists in depicting economics as a world view. On the surface it is and exactly this has always been its fundamental defect.

    The binary code of world views is good/bad. Accordingly, the discussion since 200 years has been whether capitalism as a specific form of organizing the national/world economy is good/bad. This discussion has been complicated — to say the least — by mixing it up with the political issue of democracy/autocracy.

    Your personal criterion reduces to good old individualistic utilitarianism: “My family was liberated by the Industrial Revolution. Capitalism, if that’s what we describe the basic economic model of the past two hundred years or so, has done me proud.” That is fine for the Radford family but begs the question.

    The binary code of science is true/false. And the task of economics is not to produce a world view but to explain how the actual economy works. What we have at the moment is, broadly speaking, Walrasianism, Keynesianism, and a conglomerate of political/sociological/historical/individual storytelling.

    According to well-defined scientific criteria all these approaches are false. Because economists do not know how the monetary economy works the question whether capitalism is good/bad lacks any foundation whatsoever.

    Until now economics consisted essentially in praising/blaming capitalism. This is a post-Enlightenment sequel to praising/blaming Catholicism/Protestantism/Islamism/Hinduism etc.

    Going beyond this unsatisfactory state of affairs means in specific and concrete terms to advance from the proto-scientific state to the scientific state, in other words, to stop producing worthless opinions and to start producing valuable knowledge.

    The pivotal question for Heterodoxy is not whether English capitalism has been good/bad for the Radford family but whether economics is true/false. As Schumpeter summed up the situation: “We are not yet out of the wood; in fact, we are not yet in it.”

    The alternative between left/right has always been a political distraction, the real choice for every student of economics since Adam Smith has been between political junk and science. The sad state of economics proves that the representative economist has consistently preferred the former.

    What is required most urgently in order to minimize political confusion among the general public and to secure a fresh start is an explicit dishonorable discharge of economics from the sciences.

    Egmont Kakarot-Handtke

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