The problem of Capitalism

is that it works

Image by Gerd Altmann from Pixabay

As I wrote elsewhere (d’après Max Weber), Capitalism is what happens to Calvinism when it forgets the god it was theoretically about. Everything is kept in place, except the afterlife; material riches substitute for that. Unlike the other main contender in the field of materialist ideology, Communism, Capitalism inherited from its Calvinist direct ancestor a strong individualist basis. While it was between the individual and his god in the previous version, it became about the individual and money when the latter replaced the former.

The main principle of Capitalism is what Adam Smith discerned about markets in general: they work, and by working they generate riches. It’s more than just distributing well what is produced; market incentives lead to wealth creation. If someone finds out there is a repressed demand for a certain product, he will try to produce it. He could, for instance, bake bricks using free mud and free firewood; his labor would create wealth where it did not exist before. What he got for free became, by the work of his hands (and his business acumen, ignored by Marx) something that has a price; something that can be sold. If bricks are scarce, the price goes up; if they are abundant, it goes down. It indeed works.

It is certainly not the case with the Communist alternative — which would be better-called Socialism instead; Communism, in Marxist parlance, would be the final and never-reached Stateless Utopia, that would come after human nature was changed (hah!) by a few generations of State-full Socialist society. The New Man would have been built out of the Old Man, and all problems of mankind would have vanished. The main problem is, of course, the simple fact that human nature cannot be changed. It can only be improved by Divine Grace, on a case-by-case basis, and the next generation will always start from the same lowly point. The improvements of grace cannot be inherited.

Socialism does not work, and cannot work. It is a fantasy in which material goods stand in for the aforementioned divine grace, an immanentized (and eschatological, in the apocalyptic sense) version of the Catholic Communion of the Saints. But we are certainly not saints, and as Orwell wrote, when push comes to shove “[a]ll animals are equal, but some animals are more equal than others”. Powerful people in Capitalism avoid traffic with helicopters; in the theoretically equalitarian Soviet Union, the powerful had traffic lanes for themselves, so that their limousines would not be stuck with the hoi polloi. The most equal among their equals, they were.

Now, Grace is by definition divine, and its Allocator is — also by definition — All-Knowing and All-Powerful. The KGB and the Communist Party could very well be quite efficient, especially when hunting for “traitors”. Nevertheless, they would never be able to keep tabs on each of the tremendously vast military, industrial, social, and personal needs that their material-goods production and distribution scheme would have to fulfill. Hayek crossed his TTs and dotted his IIs when he explained that.

Capitalism (in the sense of an ideology that trusts the market to solve all social problems) does not have this problem. The production and allocation of material goods are regulated by the medium of money: the scarcer a good is, the dearer it is, and the more abundant the cheaper; everything else flows from that. And indeed it does. In a society where State control is weaker (as down here), it would be understandable if a scientist mistook umbrella sellers for a kind of mushroom, as they seem to pop up from nowhere as soon as the first drops of rain fall from the sky.

The problem of Capitalism is of another, completely different, nature. While Socialism intended to change human nature in the somewhat near future, Capitalism started from the premise that it had already been changed. This premise is implicit in the Calvinist religion that guided Adam Smith (who wrote not only The Wealth of Nations but also a Theory of Moral Sentiments; I’ll quote from it as “TMS, part, chapter, section”) and, more importantly, Adam Smith’s society. No man is an island, you know, but 18th-Century Scotland certainly was.

In Calvinism, man is considered “totally depraved”, that is, unable to rise on his own effort, or even to collaborate with Grace. On the other hand, he could be elected by his god, unconditionally (of course; being totally depraved his merits would be worth zero). Whenever it happened he would be regenerated, whether he wanted it or not, and this transformation would be permanent.

In other words, the Chosen® would have had their natures already transformed, no bloody revolution needed. Those predestined to Hell by their god would not, of course, and their nature would always be the same old ugly thing. As they did not stand a chance of improving (total depravity minus unconditional election equals unreformable scum), they could not be considered a real part of society. In the end, it would obviously be perfectly OK to send them to Australia, Rikers Island, a rope hanging from the nearest tree limb, or wherever one would send miscreants away for good.

One of the ways one could try to assert belonging to the collective of the saved was, then, by one’s adherence to Bourgeois mores and “virtues”. Therein lies one of the greatest problems of Calvinism, by the way: is that guy truly Saved®, or is he just a fake? That is why the followers of Calvinist preachers often end up sorrily disappointed when their idol forgets to superglue his pants shut and ends up being exposed as an adulterer: if he were a true Chosen® his nature would have been transformed already, and he wouldn’t have fallen into temptation; if he were not, his followers would have been giving their time and money to a fake, an impostor.

In Adam Smith’s 18th-Century-Scotland society Calvinism was not one of several competing religions; it was the very basis of the social order. There was no alternative worldview. In this context, no sane person would be able to avoid the fear of being a fake Elect, as nobody is in fact free from all temptations. This fear, together with the supreme importance of adhering to that society’s universal moral codes, led Smith to write that:

«Our uncertainty concerning our own merit, and our anxiety to think
favourably of it, should together naturally enough make us desirous
to know the opinion of other people concerning it; to be more than
ordinarily elevated when that opinion is favourable, and to be more
than ordinarily mortified when it is otherwise»

(TMS 3,3,24)

In that Calvinist pre-social-media bubble, what would make people’s opinion favorable? Essentially, the full and visible adherence to the same sad bourgeois virtues.

(Curiously, the deeper the Calvinist influence in a society, the lesser privacy people expect to have. While people in Catholic countries make their homes look like Medieval castles, with high walls all around, home windows in Calvinist societies tend to resemble shop windows: passers-by must always be allowed to check on the bourgeois virtues of the dweller.)

Among these is stinginess. We are talking about the sour-faced people who invented the black business suit (basically a colorless and lace-less version of the nobility’s riding wear, as laces were forbidden to commoners and colors were just too beautiful for the totally-depraved bourgeois), the people who forbade public music and dancing, those who used to lock away children’s toys on Sundays so that the poor little things would not offend their god with their mirth. It was a strange society where he could write, with a straight face, that:

«The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.»

(TMS, 3,2,10)

He evidently could not even conceive Donald Trump’s bathroom, or diamond-embedded iPhones, when he wrote it. He was being honest, but his vision was marked by its insularity. Moreover, he could not conceive of a society that did not have the same universal adherence (or at least willingness to fake adherence) to the provincial “virtues” he took for granted.

And that is why it is such a bad idea to establish an ideology on his works: he was right about economics, but he could not have known how much more right he was about economics than about sociology and “moral sentiments”.

Capitalism works, and that is its greatest problem. When there is a demand, however much hidden it is, someone will come up with an offer. And human nature, pace Calvin, is certainly not changed instantly and permanently by divine fiat. A few consequences of Capitalism working too well are:

1. As the great G.K. Chesterton deliciously wrote:

   “Too much Capitalism does not mean too many capitalists, but too few capitalists.”

   He meant that Capitalism leads to the concentration of wealth in too few hands. And it surely does; after all, our lousy nature makes one want power, and money is only a means to that end. Money is neutral but the human being is not, and few are those whose upbringing and morality will always keep them trying to “consume [only a] little more than the poor” if they have the means to consume much more. Any society that is larger than Adam Smith’s tiny Scottish island of hardcore Calvinism will produce a critical mass of people who could not care less for Bourgeois virtues, at least big enough of a mass to form a demand the market will attend to.

   In other words, there is a demand for power, and where there is a demand the market will find a way for an offer to appear. This is how crony Capitalism is born, by the way. It does not start with Eisenhower’s military-industrial complex, but with — for instance — the Western frontier Sheriff who picked old Miss Lockheed over old Miss Martin to provide meals for his jailed outlaws. The currency she paid him with could perfectly be only her prayers or her politeness towards the lonely lawman, but she was in fact buying the favor of power in order to acquire a business advantage. This is crony Capitalism; old Miss Lockheed differed in scale only from the multi-trillion-dollar deals of the same phenomenon when it occurs on a much larger scale.

   Furthermore, Miss Lockheed would jump at the opportunity of buying Miss Martin’s business, if it granted her a greater market share or even a monopoly. And thus would be born Lockheed-Martin.

   The same goes, of course, with plenty of other aspects of economy and society. If Pfizer wishes to literally “buy the market”, the market will make it so it is for sale. Demands generate offers, and things that are very scarce (say, the mainstream medication market) are the dearest. Only a few, too few, can buy them, but buy they will. And thus Capitalism will always have fewer and fewer capitalists.

   It is a feature, not a bug.

   The market works so well, that it will provide a way to destroy the very same market that provided it. The freer the market is, the widest the opportunities for gaming it; and game it people will. The only thing that could prevent it would be either the miracle Calvinists pretend to happen with all those chosen by their god (that is, god-assured moral impeccability for all true members of society) or a society so closed into itself as Adam Smith’s Scotland, wherein overt manifestations of Trumpian extravaganzas would be seen as, say, people would see overt manifestations of pedophilia in 2022. And it leads us to the next problematic consequence of the success of Capitalism:

2. Next to power in the list of bad stuff our nature leads us to desire, misuse, and desire in order to misuse is sex. It should be as easy as with the birds and the bees (well, perhaps not the bees. It’s quite complicated among them. But the birds are still OK.) It is not. In fact, it can quickly become a slippery slope, and in our decadent society, it got so complicated I cannot make heads or tails of it. My late aunt Marina used to say that the human mind is like a bunch of entangled vines: impossible to disentangle. As usual, she was right.

   I was lucky enough to be born in a time and place where the hardest pornography one could find was sedate enough pictures not to deserve the name “soft porn” nowadays. Perhaps “light erotica”, I don’t know. What I do know is that the poor kids nowadays have all kinds of kinky stuff presented to them on a platter by their cell phones.

   To make it worse, the algorithms’ bias makes it probable that the next video will be kinkier than the last, and so on, slippery-sloping down all the way to requiring gel-coated dwarves, goats, and wheelbarrows to find it mildly interesting.

   And if someone’s sexual perversions demand something, the market will provide. Hardcore gel-coated dwarf porn will certainly be a niche market (until, of course, the algorithms lead a lot of people down that precise rabbit hole), but if there is a demand there will be an offer — at least while it is a material demand (in opposition to, say, wisdom, or talent).

   The very fact that the market will provide for however weird a demand, added to the darkest recesses of our fallen nature and our tendency to need and want more and more of whatever pleases us, means that the freer the market (and Capitalism proposes to keep it completely free) the deeper the moral abyss the market will provide and lead people into. Paraphrasing Lenin, the market provides the means to destroy the very society that created it.

3. An older term for “destruction”, or “dissipation”, is “consumption”. That’s the root of “consumerism”. The literal meaning of consumerism is destroyer-ism. In a way, it’s the other side of the same coin we have just seen: the offer is also able to create a demand. That demand, in turn, will make it worthwhile to diversify the offers. Up to a certain point it is wonderful, but as soon as the offers go above the lowest layers of Maslow’s hierarchy of needs things start to go awry, as the market will also offer cheap and damaging substitutes for real human needs.

   One of the most egregiously obvious is addictive drugs. I agree wholeheartedly with Dalrymple when he says opioid addiction is all in one’s mind — as opposed to the theory of “physical addiction” that is still popular in certain circles.

   (As a personal aside, I was first acquainted with morphine while lying by the roadside after colliding head-on with a pick-up truck while riding a bike. Both bike and truck were destroyed; I spent almost four years on a bed, first at the hospital and later at home. While in the hospital I was kept on morphine for six or seven months, but when I left I started using it only when really needed. Nowadays months pass between uses. I do suffer from constant pain, but hey, life is pain.)

   While one is in an opioid haze, thought, life is not painful. At all. It’s not only about physical pain; opioids also blur out psychological pain. Life becomes, if not rosy, at least much easier. And there will always be a demand for that, therefore a market-provided offer.

   Consumerism is just another form of that. Fake choices (between dozens of different-but-similar brands of breakfast cereal, for instance) replace the real ones (such as whether it makes any sense to start the day by eating stuff that is little more than sugar and paint applied to zero-nutritional-value white flour), just as bad money drives out good money.

   Even in the first layers of Maslow’s hierarchy, there will be a large offer of fakes — of “bad money” — driving out the fulfillment of one’s real needs. For instance:

   Body-building drives out health;

   Drug-induced stupor drives out sound sleep;

   Overprocessed junk “food” drives out nutritious and tasty real food;

   Drug-based bliss drives out real safety;

   Fashion drives out sensible clothing;

   Individual pod-like living spaces drive out real homes, with several generations of one’s family in them.

   And so on.

   By this point, it becomes almost impossible to go much further up Maslow’s hierarchy. The sense of belonging becomes more a matter of frantically trying to “fit in”, as a teenager with low self-esteem, and it doesn’t matter much whether one tries to fit in the larger society or in a small group of supposedly “independent” people. As long as one denies one’s own identity and feelings and adopts the group’s answers to whatever questions arise, it is no longer a real need-fulfillment, but a fake, an ersatz solution, driving the real thing out.

   Reaching the apex of Maslow’s pyramid — becoming who we really can be, that is, self-actualization (making true and actual the potential one has) — is prevented by the myriad of fake solutions, of bad money driving out the good one, that the market will offer as long as there is a demand. And there will be a demand as long as we are dealing with human nature, because attaining the real thing demands our blood, sweat, and tears, while getting the fake for cheap doesn’t.

   To make what was already bad much worse, not only does one consume (that is, destroy, dissipate) tons of stuff in order to feel alive, but our society as a whole has been for a long time already spending what should rightfully belong to the next generations. Digging rare-earth minerals, and polluting a whole region in the process, only to have them so thoroughly mixed with other rare stuff, in so tiny amounts so that it is essentially impossible to pull them apart or recycle them, just makes no sense. But the electronic junk made this way is purposefully made in such a way it will not last more than a couple of years.

   Thus, a fortune that rightfully belongs to the next generations is squandered to produce stuff one holds for a little while before sending it to a landfill, where it will spend the next millennia poisoning the soil. And don’t get me started with making stuff that will be lethally radioactive for tens of thousands of years just so we can watch idiotic stuff on huge TV sets.

   Again, it’s a feature, not a bug. Human nature demands quick-and-dirty pseudo-solutions when real ones would be much better from a rational standpoint. It’s like when one knows that walking that mile to buy a loaf of bread would be much better for one’s health than driving it, but one drives nevertheless. That’s how we are; complaints shall be addressed to Adam and Eve, on counter #1.

   While there is a demand, the market will provide. Adam Smith’s invisible hand could only be trusted if it were the results of the sum total of individual choices made by angels. As our nature is, it feeds us while slapping us on the face; liberates us while enslaving us further.

So, what could the solution possibly be?

The only obvious answer is that the solution is certainly not Socialism. Socialism, in fact, shares the same basic error as Capitalism, inasmuch as it shoves aside anything that is not material as a merely private and subjective concern. The only saving grace of Socialism, if I may say so, is that it is so ineffective it ends up doing the opposite of what it tries to do. Socialism could produce a Solzhenitsyn while the greater part of his compatriots starved to death, but only Capitalism can produce epidemics of diabetes and obesity while keeping the greater part of the population drooling in front of a TV set (or social media; same difference).

Perhaps the hard times that are a-coming may wake people up to the fact that there is much more than empty consumerism in life. This realization may lead some out of the abyss of the lowest urges of our nature, possibly even allowing them to remember our Creator. Maybe the break-up of the Modern State may damage enough cronyism to make it possible to start again in some fields.

Who knows?

The fact is that Capitalism is a problem, but only because it works so well. Too well for the people we are.