Category: economics

Capitalism in Fundamentally Unethical

There have been a couple telling examples of the inherent unethical nature of capitalism that it seemed valuable to make not of here. The first is Canada’s participation in the renegotiation of NAFTA. Under globalized capitalism the maintenance of such trade agreements is of crucial import and the fact that you are dealing with a country currently carrying out genocide against migrants from the global south is less relevant than the need to maintain trade or the consequences of that trade to either the people living in the country in question or to the environment (as NAFTA serves as a serious barrier to Canada’s ability to produce effective climate legislation, even if the government was inclined to actually do anything about climate change, which it obviously is not).

The second example is from the recent revelation that the Canada pension fund has invested in US immigration detention firms in addition to other anti-social corporations such as ExxonMobil, Philip Morris, and the defense contractors General Dynamics and Raytheon. The defense provided by the Canada Pension Plan Investment Board is extremely telling and sums up quite effectively why there cannot be a moral society under capitalism: “CPPIB’s objective is to seek a maximum rate of return without undue risk of loss. This singular goal means CPPIB does not screen out individual investments based on social, religious, economic or political criteria.”

The crucial dichotomy between capitalism and socialism is the difference between how they conceive economic relationships. For capitalism, economic relationships are essentially asocial. That is, they occur under the auspices of the market and can be studied and modeled independent of any consideration of morals or ethics. The effort to keep economics separate from the study of ethics has been an effective tool in enabling the growth of the extractive capitalism of globalized financialization under neoliberalism. The only imperative of governments in this view is to make sure that capital growth continues unabated. Though in in principle few deny the need for some financial and economic regulation, in practice there are little consequences to financial malfeasance as long as the perpetrator is wealthy enough and the victims not. Hence, the banks that caused the 2008 financial collapse were bailed out to the tune of trillions of dollars and are now positioned to do it all over again (a courtesy not extended to their victims) or the Nazi profiteer IG Farben (which knowingly used concentration camp slave labour, participated in experiments on concentration camp victims, and produced Zyklon B, among other crimes. Though a number of IG Farben’s executives were convicted after the war, their sentences were comparatively light in consideration of the magnitude of their company’s crimes. For instance, Fritz ter Meer, who was involved in the planning of the Auschwitz satellite camp Monowitz – which was built specifically to provide IG Farben with slave labour – was sentenced to only seven years and after his release served as the supervisory board chairman of Bayer AG). While broken up after the Second World War, it is now larger than ever in the form of Bayer (which recently purchased Monsanto for $63 billion).

Socialism, on the other hand, is fundamentally the study of economics from an ethical point of view. That is, what Karl Marx was trying to understand was how capitalism affected workers. He wished to develop a theory that explained the exploitation of workers by employers and to make clear that this exploitation is a fundamental feature of capitalism. Thus, under the capitalist mode of production the worker will always be exploited and this exploitation increases over time. While history has demonstrated that the exploitation can be temporally tempered by labour organization, such attempts to limit the worst abuses of capitalism while keeping capitalism itself in place are doomed to fail in the long run, which we can clearly see with the ongoing collapse of postwar social democracy.

That Marx’s position was foremost a social and ethical one can be seen in his definition of value as “socially necessary labour time.” By defining value in this way he explicitly ties his theory to social relationships rather than to abstract mathematical concepts. Thus, commodity exchanges on the market cannot be understood without recognizing their human consequences. We cannot make any meaningful progress toward a just society unless we recognize, as Marx did, the need to begin our understanding of economics from the point of view of ethics. Thus, we continue to live in a world where people profit off of imprisoning children and refugees, genocide and warmongering, and the ongoing destruction of the environment. That the response to efforts to stop such egregious crimes are claims that meaningful action will negatively affect the economy is a perfect summation of the moral poverty and catastrophic limitations of capitalism.

Joseph Stalin pinpoints the failure inherent in social democracy

The aim which the Americans are pursuing, arose out of the economic troubles, out of the economic crisis. The Americans want to rid themselves of the crisis on the basis of private capitalist activity, without changing the economic basis. They are trying to reduce to a minimum the ruin, the losses caused by the existing economic system. Here, however, as you know, in place of the old, destroyed economic basis, an entirely different, a new economic basis has been created. Even if the Americans you mention partly achieve their aim, i.e., reduce these losses to a minimum, they will not destroy the roots of the anarchy which is inherent in the existing capitalist system. They are preserving the economic system which must inevitably lead, and cannot but lead, to anarchy in production. Thus, at best, it will be a matter, not of the reorganisation of society, not of abolishing the old social system which gives rise to anarchy and crises, but of restricting certain of its excesses. Subjectively, perhaps, these Americans think they are reorganising society; objectively, however, they are preserving the present basis of society.

That is why, objectively, there will be no reorganisation of society.

Nor will there be planned economy. What is planned economy? What are some of its attributes? Planned economy tries to abolish unemployment. Let us suppose it is possible, while preserving the capitalist system, to reduce unemployment to a certain minimum.

But surely, no capitalist would ever agree to the complete abolition of unemployment, to the abolition of the reserve army of unemployed, the purpose of which is to bring pressure on the labour market, to ensure a supply of cheap labour. Here you have one of the rents in the “planned economy” of bourgeois society. Furthermore, planned economy presupposes increased output in those branches of industry which produce goods that the masses of the people need particularly. But you know that the expansion of production under capitalism takes place for entirely different motives, that capital flows into those branches of economy in which the rate of profit is highest. You will never compel a capitalist to incur loss to himself and agree to a lower rate of profit for the sake of satisfying the needs of the people. Without getting rid of the capitalists, without abolishing the principle of private property in the means of production, it is impossible to create planned economy.

From this interview between H.G. Wells and Stalin, which is also entertaining for Stalin’s disdain for Wells.

What Stalin recognized was that social democracy cannot succeed over the long-term because it does not reorganize the capitalist structures of power. While social democracy does a good job of providing moderate improvements to the material conditions of the working classes, it exist within capitalism and is therefore deeply limited in terms of what it can accomplish. Such material improvement does offer an empowerment of the marginalized groups that benefit most strongly from social democracy, but eventually the capitalist classes are able to re-assert their power, as seen by the abandonment of social democracy beginning in the 1970s in favour of neoliberalism. Another clear example can be seen in the collapse of chavismo upon the death of Hugo Chavez and the decline in the price of oil that Chavez had largely depended upon to fund his social programs. Chavismo failed not because it was socialist, but because it was not socialist enough. Though Chavez improved the conditions of the working class in Venezuela, he did not attempt to break the political power of the bourgeoisie.

Social democracy is but a temporary check on the destructive force of capitalism.