Scott Remer is an MPhil student in Political Thought & Intellectual History at the University of Cambridge. As an undergrad, he studied Ethics, Politics, & Economics at Yale University. His interests include political theory and contemporary politics, epistemology, metaphysics, psychology, literature, and Chinese philosophy.
Occupy London St Pauls, London Sunday 16th October 2011
Capitalism: A System of Perpetual Crisis
The primary justification for the continued toleration of capitalism, apart from the inequalities in power and force that it relies on to maintain the huge economic inequalities it creates both nationally and internationally, is the theory that the rich are, in Smith’s famous phrase, ‘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.’ But according to a January Oxfam report, the global 1% now have as much as wealth as the other 99% of humanity. The richest sixty-two individuals on the planet enjoy more wealth than the poorest 3.6 billion people, half of the globe’s total population. Within the United States, the twelve to fifteen richest individuals have more wealth than the bottom half of Americans. These stark facts confirm political theorist Hannah Arendt’s argument that ‘superfluous wealth’ is the inevitable result of capitalism. In other words, capitalism has failed, even by its own terms.
If we return to capitalism’s philosophical beginnings, we find deep ambivalence even amongst the thinkers who are commonly painted as capitalism’s most ardent supporters. Adam Smith, the economist whose famous phrase ‘the invisible hand’ is often trotted out to defend capitalism, wasn’t a capitalist cheerleader. In the Wealth of Nations, he argued that huge inequality is unacceptable and dangerous to society, writing:
[W]hat improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labor as to be themselves tolerably well fed, clothed, and lodged.
He also noted disapprovingly that capitalists commonly collude, cooking up ‘a conspiracy against the public’ or ‘some contrivance to raise prices.’ David Hume, a contemporary of Smith’s and another fan of capitalism, thought it was obvious that ‘[a] rich man lies under a moral obligation to communicate to those in necessity a share of his superfluities.’
Let’s think about what happens when you construct a society around market principles. The capitalist ‘law’ of profit maximisation encourages constant expansion. Corporations are incentivised to only care about their bottom line and private profit. They don’t have to think about the public costs (externalities) and benefits of their actions. Because they ignore any costs that they don’t have to bear themselves, it follows that corporations will never make good decisions for society as a whole. Anything that gets in the way of maximising private profit is irrelevant, even if that includes a livable environment, workers’ rights, consumer safety, and public health. Capitalism’s dunderheaded logic trades the long-term viability of our planet, our only home, for short-term gains and private profits built on Excel spreadsheets and castles of air.
Corporations are also deeply hierarchical: they will never make good decisions for the whole of society because they’re run by a small clique of rich and powerful people, not by their workers. The inequality of decision-making power within capitalism means that it produces instant gratification for a select group of capitalists, but their gratification comes at everyone else’s expense. As consumers, we are helpless in the face of enormous monopolies and oligopolies which exploit their market power to gouge us and charge exorbitant prices.
Capitalism’s defenders argue that capitalism inspires technological progress, but what does it matter if we have the world’s tallest skyscrapers and the most expensive gadgetry if most people can’t use the skyscrapers or enjoy the gadgetry, and if the price of building those skyscrapers and creating that gadgetry is unchecked inequality, environmental destruction, global warming, and human unhappiness? What good does it do us if we have an enormous GDP if it’s built on an unstable foundation and a select few gorge themselves whilst billions suffer?
Even the most pro-market conservative would concede that the market is a profoundly destabilising force. The pro-capitalist economist Joseph Schumpeter thought part of capitalism’s genius was the ‘creative destruction’ it involved. Capitalism is a competitive system, and any competition has winners and losers. When capitalism works exactly as it’s intended to, inequality increases, poverty increases, work hours increase (part of strategies capitalists use to squeeze more and more productivity out of each worker), and stress increases across society. Workers without free time can’t socialise with other people. This contributes to the demise of communities and the rise of loneliness and isolation across society. Workers who have to move to seek work, endure zero-hours contracts and irregular work hours, and participate in the gig economy feel uprooted and insecure.
Capitalism destabilises society, makes the middle classes insecure, and pits people of different ethnicities and races against each other in a competition for artificially scarce jobs, thereby encouraging virulent racism and xenophobia. Political attempts to fix the fundamental problems of capitalism by reducing economic elites’ power and ending class domination meet with concerted resistance from millionaires and billionaires. Since financial speculation is an essential part of the capitalist system and banks resist any efforts to regulate or curb their profit-seeking behaviour, major financial crashes are a periodic feature of economic life under capitalism. Financial crashes and economic emergencies intensify the worst aspects of ordinary life under capitalism, exacerbating inequality, poverty, and competition for scarce jobs, and putting people under intense stress and fear. Because of all this, capitalism’s natural tendency is towards fascism, as we saw in the aftermath of the 1929 crash in Germany, Italy, and across Europe, and as we see again today in the United States and around the world in the aftermath of the 2008 crash.
Our ethical aspirations, our hopes for a decent life and economic security, and the natural beauty of our planet have all been sacrificed on the altar of Mammon. We live in a world where rich capitalists enrich themselves further by mercilessly exploiting the labour of the working class. Climate change and economic inequality are plunging the planet into chaos and tearing apart the social fabric of the United States, the UK, and much of Europe. The corporations which are so fundamental to the capitalist economy are rigid, undemocratic dinosaurs, anachronisms whose structure reflects an era when lords ruled over manors filled with serfs. It isn’t a coincidence or an accident that capitalism clashes so deeply with our fundamental moral principles. It is impossible for capitalism to embody our values because capitalist logic is the exact opposite of our ethical ideals.
If we want to defang the fascist threat permanently and achieve the peaceful, socially just world we long for, we must eliminate the mode of economic and political organisation that spawns fascism in the first place. This demands democratic socialism: the renewal of political democracy and the full democratisation of the economy. Economic power must be placed in the hands of ordinary people. Concentrations of political and economic power in the hands of the few must be destroyed or taken into public control and run in the public interest. Anyone who considers herself to be on the Left but doesn’t oppose capitalism is tacitly supporting a system that generates immense suffering and perpetual crisis. Supposedly left-wing political doctrines that have made their made their peace with capitalism – Obama-Clintonite neoliberalism in the US, Blairism in the UK, and all other ‘Third Way’ ideologies hatched during the 1980s and 1990s – are political dead-ends. Fascism is rising around the world, and the best response from the Left must be a forthright programme of anti-capitalism and democratic socialism.
 Adam Smith, The Theory of Moral Sentiments (Washington, DC: Regnery, 1997), p. 249.
 David Cay Johnston, “The Wealthiest Dozen Americans Own More than the Bottom Half,” Al Jazeera America, December 2, 2015, accessible at http://america.aljazeera.com/opinions/2015/12/the-wealthiest-dozen-americans-own-more-than-the-bottom-half.html, accessed January 13, 2016.
 Hannah Arendt, The Origins of Totalitarianism: New Edition with Added Prefaces (San Diego: Harvest/HBJ, 1979), p. 150.
 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. by Edwin Cannan (New York: Modern Library, 1994), p. 90.
 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. by Edwin Cannan (New York: Modern Library, 1994), p. 148.
 David Hume, A Treatise of Human Nature, ed. by L.A. Selby-Biggs (Oxford: Clarendon Press, 1978), p. 482.