created 2002-11-27 01:38:39

(Up to: Scribblings Capitalism And Socialism As Cleaning Up )

N.B. Disclaimer 2004-05-06. This is rather old and probably out-of-date with regards my thinking. Or it might not be.

N.B. 2004-05-25. This has probably been superceded by my emerging thinking at "Why IDon TLike Capitalism", and perhaps also "Supply First Demand Later". Rest assured that I haven't left the matter alone. Merely this page.

N.B. This is intended as a retaliatory piece of opinion, as a response to the material published by the BBC. I am fully aware of their ironic (1) copyright notice that reads:

Please note that this is BBC copyright and may not be reproduced or copied for any other purpose.

However, under UK fair use doctrine, I believe the reproduction below to be of due legality:

• This work is not for commercial use, but purely critical analysis
• The entire original work will not be quoted in an attempt to maintain relevancy. Hopefully this won't influence a bias by exclusion
• The original work, being available for free, and being mainly the transcript of opinion rather than creative work, is not threatened commercially
• I intend to offer sufficient further comment as to be relevant to the quoted original
• Credit and reference have been provided to the original work

(1) copyright and its self-protective nature being naturally ironic for this subject...

Introduction

This is a transcript of a program of Analysis put out on BBC Radio 4 on 28th November, 2002. It presented several arguments that promoted a capitalist society. What follows are my counter-arguments to the opinions provided. The original transcript will be in italics, with my own comments in plain text.

*ANALYSIS
THE UNDEADLY SIN
*
TRANSCRIPT OF A RECORDED DOCUMENTARY

Presenter: Diane Coyle
Producer: Zareer Masani
Editor: Nicola Meyrick

Taking part in order of appearance:

Lord Desai - Professor at the London School of Economics
Lord Griffiths - Vice-Chairman, Goldman Sachs
Bronwyn Curtis - Head of European broadcasting, Bloomberg
Bob Monks - Shareholder Activist and Deputy Chairman, Hermes Investment Management
Eamonn Duffy - Professor of the History of Christianity and President of Magdalene College, Cambridge
Martin Taylor - Chairman of WH Smith
John Caudwell - Chairman, Caudwell Group

COYLE When once-respected companies are sinking in a swamp of fraud and mismanagement, it's hard to remember why we ever valued self-interest above public service. What could there possibly be to admire in greed?

DESAI Societies based on greed are in one sense immensely liberating which societies based on virtue are not. Adam Smith was the first person to see that paradox deeply. He understood how, when people are motivated by greed, you think that they're being selfish and isolated from everybody else but underneath our transactions there is a network which binds us together, and because we are motivated by greed we end up doing things for each other without necessarily intending to.

Opening comment. Here, Lord Desai lays out the idea that a form of altruism is an incidental side-effect of helping ourselves, that society improves itself as a result of people being motivated through self-interest. This, I have no particular problem with in itself, continue.

GRIFFITHS I think that greed is something which is very corrosive, because what greed does is to give an individual an enormous sense of independence. Somebody who is remarkably successful can easily become very arrogant and, as a result, very indifferent to society. And I think there's something about wealth which makes people indifferent to others.

Again, another fair point, if somewhat redundant. Self-interest promotes self-indulgence and further self-interest. Red is red. But possibly the most true words uttered throughout the entire programme.

COYLE So the left-wing economist finds virtue in avarice and the right-wing banker only vice. These are unexpected reactions to the dramatic developments in the world of business, from the stock market bubble to the collapse of companies like Enron. There's no doubt that the desire to make a lot of money is one of the motors of economic growth.

Again, more redundancy. Financial growth is dependent, fueled-by, an attraction to financial growth. Well of course it is. The two are interdependent, if not simply the same thing. One certainly couldn't say the same thing about, say, trees, which thrived long before people became interested in them. However, within a man-made system such as an economy, the factors that define the success of that economy being also man-made, the two are symbiotic.

But if ever we truly did believe that greed is good, in that famous phrase from the last boom, have these latest scandals proved otherwise?

CURTIS Nothing wrong with greed - it does motivate people. You see, you know, often big changes because people really are driven by this.

Ah, now we can truly start to get philosophical. Curtis' argument is that self-interest motivates progress, change, development. However, looking back through history, it's clear that the majority of major changes have been nothing to do with self-promotion. Did Einstein (classified as a Marxist by the US) do it for the money? Freud (scorned by his fellows at first)? Galileo (persecuted by the Church)? Hitler (strived for one change, achieved something else)? The list goes on, and has a far greater influence, be it for "good" or "bad", than any change influenced purely by a desire for the welfare of oneself, which after all, is in the end just that - self-congratulatory.

CURTIS What you don't want is another Enron but, you know, that should never have happened in the first place if all the players had been doing their job.

This in itself is true. How does one regulate self-interest when the rules have been defined to reward those that manipulate the system best?

COYLE And you've been observing the reaction to the corporate scandals - do you think the pendulum is going to swing too far the other way?

CURTIS I think it's inevitable that the pendulum will swing too far the other way. There will be a mass of regulation which will come in and which will try to dampen it down so that they can't make decisions - and I think that is a problem. I really think you have to be careful not to do that.

Thus deriving the "free" market of the ideas that were originally intended to promote its success, i.e. that those who innovate are rewarded most. New laws and regulations, however much I am against them (especially when introduced hastily), are only brought in once something has gone wrong, in this case. The chances that they would impinge upon the fundamentals of capitalism are very low indeed. We already have anti-monopolistic laws in place globally which are designed to restrict and control a supposedly-free system. The fact that these are in place, well before Enron "happened", means that the ideals subscribed to originally by capitalism are soon surpassed in the name of self-interest. A "free" market that needs to be controlled. I smell a rat...

[snip....]

COYLE Don't you think that if there is that sort of backlash or revulsion there's a danger of going too far and people become rather moralistic and actually you could squeeze out some of the dynamism and energy in the system?

Uh, so morals and motivation have suddenly become mutually exclusive? Hmm.

MONKS Yes I do. We don't really have a form of clutch to put in to regulate the way in which we swing from one thing to the other. And in the United States we're prone to swing very far very rapidly. You're quite right - I think there's a very serious risk of swinging too far.

COYLE He too accepts that a bit of greed is a necessary evil. But if that's the practical reality of business, or even of human nature, does it leave any place for the moral view?

Here again we have a closed argument. Accepting that greed is evil, but then assuming that it is necessary, any argument against that greed, that doesn't subscribe to the self-propagation of the existing system, can instantly be shot down as it no longer promotes the success of capitalism. From there on, all morality is easily usurped, as has happened.

[snip...]

DUFFY It's not the material wealth that matters it's what you do with it and it's what your attitude to it.

Aha, now here's a different approach. I think Duffy's the first person here to realise, however faintly, that financial resources can exist, and can be used, without the necessity of personal gain, or at least to an extreme, or that it is something that everything should be measured by.

[snip...]

COYLE Some of today's philanthropic billionaires like Bill Gates, George Soros and Ted Turner,

Yes, you do have to wonder about how philanthropic someone is when they're living in a house the size of small country making more money each day than a third-world country does. Donating small pocket change for media image is dubious philanthropy, to say the least.

do indeed acknowledge the social responsibility their wealth brings them.
The thing that many of us find most distasteful about greed is its sheer selfishness. So philanthropy can perhaps bridge the gap between the moral ideal and imperfect human nature.

[snip...]

DESAI If I'm motivated by greed, I would not look at your colour, your gender, your race if you want to sell me something or if I want to sell you something. In old-style communities, before capitalism came around, you had to be a member of the community to be able to enjoy its privileges - and these were very small communities, narrow and narrow-minded communities. So if you're, for example, a Jew in Europe or an untouchable in India you had problems. It's only when you have established society on greed then greed doesn't actually discriminate on any of those narrow grounds. You say, have you got money to buy my goods? I'll sell it to you. Money has no colour, money has no smell, money has no caste, money has no race.

WHAT? What fucking planet is this guy on? IvoryTowerPlanet[tm]? Nice theory, but to bring pre-capitalist racism into it and pretending that capitalism eradicates all prejudice? Suck my toes and toss me off to the tunes of Neil Sedaka. Racism, conservatism, right-wingedness, et al. The counter-argument is just as true, that a society based upon self-interest and self-interests actually makes prejudice easier, by providing a universal common denominator with which one can quickly and easily preclude certain sectors of society. You're black? Oh, I don't think I'll buy/sell of you then.

However (contradictory, but only in a theory vs practicality way), his argument holds merit in that capitalists aren't necessarily just race/crede/etc independent, but also ethically independent, which brings us full circle back to the morals discourse.

[snip...]

TAYLOR Capitalism needs the rule of law. If you want to see things going really badly, you look at what happens in some emerging capitalist countries like Russia and China, where, because the law of contract or the law of property is not as well developed, you get all sorts of rogues - it really is the Wild West.

Yikes, a society independent of regulation that thrives purely on self-interest, you mean?

TAYLOR Many of the things that went on in building the great American fortunes in the second half of the 19th Century probably wouldn't stand the scrutiny of the moral philosopher. Take the gold rush of the 19th Century, I mean, that really waspure unadulterated greed. As a result of what happened huge amounts of country were opened up. There was considerable wealth generated. Now, you know and I know that at the gold diggings there were all sorts of appalling things going on. People were murdered, claims were stolen - that was the unacceptable side of the gold rush, and I think that in periods of extraordinarily rapid development when there are great temptations, people are going to behave more badly than they would otherwise.

Yes, thank god that kind of thing doesn't happen any more. Than god people aren't forced to work 20 hour days (in developing countries), or even 70 hour weeks (in developed countries). Thank god people aren't taken advantage of through shit pay and arse working conditions, just so that someone else can benefit. Thank god people don't die penniless from being screwed over simultaneously by the industry they work for and the independent government, both of which are designed to support people. Phew.

[snip...]

TAYLOR Peoples' desire for riches among those who feel it have two parts of them - the absolute part and the relative part. The absolute part is have I got as much money as I need? Can I look after my family? Call that greed if you like - it's very natural human instinct. The other is the desire to be better off than other people and when you have an extraordinary burst of apparent wealth creation as we had in the last few years of the last century, people start wanting money because it boosts their ego and they want to have as much money, more money than anybody else. Why are otherwise do billionaires keep trying to become multi-billionaires? I mean, there's nothing rational in it - it's some strange psychological flaw - there's a lot of that going on.

Surely this is exactly the problem with capitalism? Firstly, in a culture designed to promote the survivial of the fittest, the only surefire way to stay above water is to have more resources than anybody else. Secondly, how can you separate success through both innovation and (primarily) growth, from a desire to become larger and larger?

Yes, I think a compromise is possible, but such a situation is (at least currently) inherently unstable, thanks to the values placed upon such a society by its very nature.

To be continued... See also this retort from Counterpunch