Skip to content

Peaked Capitalism? Pt.2 Ism-ism.

13, May 2009

Ism-ism. Capitalism; Socialism; Pedants and Idealists.

There is a purposefully disruptive method that is calculated to stop think-tanks and strategy groups getting anywhere. The method involves use of continual contradiction and the switching of subject (followed by feigned dismay when challenged) – it takes a lot of mental agility, tracking and determination to counter this.

The discussion of, and the subsequent disagreement about, “isms”, are of a similar nature: We dig in our doctrinaire heels, stoutly defend the merits of shifting definitions, or get swamped by miscellaneous obscurities.

To set out the primary positions that people relate to, the focus here is on Capitalism and Socialism on which there is no agreement, but there is an overall picture.

First the words, the main words we use, those that we assume we understand… Capitalism, Socialism, Totalitarianism, Fascism, Communism … To that we could add Corporatism, Fabianism, Feudalism… or start to co-join terms: Industrial Capitalism, Financial Corporatism, Global Socialism. Oh and best not to mention ‘the Free Market’, ‘the Commonwealth’ or ‘Anarchy’.

Some are mentioned, but take a look at what happens if we just look at these four headers:

  • There’s never been a free market!
  • Socialism has never been!
  • Capitalism is running roughshod!
  • Socialism is everywhere!

There’s never been a free market!

There is a genuine opinion that ‘free market capitalism’ or ’market capitalism’ does not exist and may never have existed.

Arguing on the basis of strict definitions – or by citing tariffs, protectionism and state intervention, it’s reasonable to say that real unfettered capitalism has never been.
Even among those with a looser definition of ‘capitalism’ (people who accept it as describing the system we’ve been living under) there are many who consider Capitalism to be shackled by state control. States, or nations, that inevitably regulate the economy, are the problem, they claim.
But don’t states enable Capitalism? How would rules of exchange fare without laws of property, security and enforcement?

“Capitalism requires a powerful centralised state to operate just as much as variants of socialism have. How long [would] the ‘free market’ survive without contract law, the law of patents and a police force to defend property rights?” – ‘HarryTheHorse’, Cif

Concluding then, that a ‘totally free, market capitalism’ cannot, or most certainly will not, ever be, and settling on ‘Capitalism’ as being what we generally call the system we live under, then we near a definition: On the one hand we have restraint through regulations (however loose or ineffective). On the other hand there is the enabling of capitalism via a huge and complex system of national and international law, backed by enforcement to ensure trade and a guarantee of property rights.

Socialism has never been!

“True socialism in the sense of Robert Owen style utopianism has never been tried and probably could not be reduced to a practical system… What has passed for socialism has been the appliance of Fabianism, a doctrine of bureaucratic rationalism.” Claire Allison (aka: Torygirl)

What passes for ‘Socialism’ in the United States of America, is “What the Reds did”. Equating Communism to Socialism is so ingrained in the USA that it is difficult to have a discussion using the word from a European perspective.

The 20th century USSR and China were totalitarian communist states that had little to do with what Europeans mean by socialism. Communism actually shares some characteristics with Capitalism, similarly requiring significant state intervention. The results, and the debate over merits, can be argued indefinitely, what is evident is that these Soviet and Chinese Communism formed in a basic, agricultural economy that required industrialization. Old-style Communism is therefore irrelevant in comparison to any 21st century form of Socialism, which, like modern capitalism, would exist in an age of globalization.

Here’s a definition of contemporary Socialism in the European sense of the word:
“What is Socialism? For some it’s about putting the brakes on the enormous injustices and inequalities that capitalism provokes, it leads to an understanding that globalization is nothing better than the extreme development of capitalism, it is an understanding that the state can and should intervene in markets to ensure that there is less injustice and less inequality. Contemporary socialism is about embracing and extending the principles and precepts of the United Nation’s Universal Declaration of Human Rights, it is about acting within the bounds of the constitutions, by the democratic rules and for the benefit of a civil society, and at the same time of extending and enriching democracy.” Fridah, Cif.

Has that existed? And if it did, would it be any different from very well regulated capitalism?

Capitalism is running roughshod!

Ah yes, back to Capitalism, the top down force that crushed feudalism and eats all before it, but which in order to feed itself needs an ever extending reach of law, state support and worldwide resource exploitation…

People rail against the latest developments of Capitalism, the integration of global finances as a mechanism to ensure continued riches for an ‘elite’ few. When it goes wrong, we hear how capitalist industries are subsidized: Losses are compensated for, or reinstated by, taxes: Banks are bailed out, while vast profits gained dubiously remain unchallenged. This, say many, is ‘Corporate Socialism’: A provocative turn of phrase, but what has this got to do with Socialism? It is, as Martyn Jones points out (, merely another form of state support of capitalism.

Socialism is everywhere!

It’s hard to escape a conclusion, that Socialism, in the European sense of ‘social democracy’ is, in reality, prevalent everywhere; and that any ideological argument over Capitalism ‘verses’ Socialism (as Communism) is futile and irrelevant.

If state intervention is essential to prop up Capitalism in the West, then that damned socialism has to be there… and there’s no question it’s there in the emerging powers like Brazil, India and China, and in the old enemy.
And, of course, we can ignore those irritating Scandinavian countries, with a much more balanced society, calling themselves socialists but fully invested in capitalism…

A Summary.

Perhaps it’s power, and the concentration of that power, that needs redress? Whether it’s in the hands of financiers (The World Bank, IMF etc.), nation states, central banks or global cartels – one correspondent blamed the current economic crisis solely on such monopolies, not the capitalist principle as such – A capitalist society seems to boil down to rules of exchange based on supply and demand.

Democratic socialist principles adds to rules of security and property further rights: – human rights; employment, education & healthcare; potable water & clean air; freedom of expression and movement and so on.

In this global economy the old ideologies of Socialism & Capitalism seem to loop back and merge into one another. The hybrid system has failed, and can be put back together in better shape no doubt. But the bigger question is, is that enough? How long can it sustain itself given a probable crisis in the natural resources that fueled the expansion of modern society in the first place?

….. In Part 3 of ‘Peaked Capitalism?’: What to do Next?

Peaked Capitalism? Pt. 1

22, April 2009

1.  The ‘Free Market’ crashed, right?

Before spring ’08, Northern Rock a UK bank, experienced a ‘bank run’. People queued (physically and electronically) to reclaim their deposits, the bank crashed, the British government intervened, eventually nationalising the bank. The writing was on the wall then, and years earlier on a less noticed wall,  now,  it wasn’t just all over town, it was all  over the TV.

Stock market plunges, collapsing housing values, failing businesses; unemployment… all that followed should make it incontestable to say that the ‘free market’ crashed. Yet most business continues, a small minority of people are still able live in luxury, even excess… sport and entertainment are unabated…  Our contrasting perspectives affect our views of economic and political systems: As we attempt to understand what is going on even the words we use get in the way.

The argument over words is illustrated by the term ‘free market’ – some say that the economic system is out of control, and that lack of regulation has caused the current crisis. Others say that there has never been ‘free market’ capitalism. ‘Socialism’ gets the same rap – ‘never been tried – is not communism, etc” The 2nd part of this blog will address that subset, for those who are interested.

So what happened? What caused this economic ‘crash’?

Central Banks, State Intervention and ‘Fiat’ Money Systems

Some people do not link the cause of the crisis to any events such as the housing ‘bubble’. Instead they question the sustainability of the very monetary system under which most of the world operates: The ‘Fiat’ Monetary system. This system decouples money from any actual ‘store of value’, (such as a rare commodity, like gold). That, together with the creation of central banks, they argue, allows governments to print money, create deficits, and devalue national currencies.

Worse still, they maintain, the system can only sustain itself by ever more reckless behaviour, ‘inventing’ more money and derivative values which are backed by very little.

Richard J. Greene, a huge critic of The ‘Fiat’ Monetary system, predicted the current situation back in 2004. According to Aida Edemariam the percentage of the UK’s money backed by something real verses ‘unbacked’ money in bank deposits is approximately one, yes – just 1%.

Does money actually have to be backed by something real? Intuition would tell us so, but if so what? Labour? Mineral or material wealth? And how, given that most money doesn’t change hands at all, would the system change in a digital age? The 4th part of this blog takes that subject up. First, there are other viewpoints to note…

Too much government.

Some people think that there is too much intervention by government and that as a consequence ‘Free Market Capitalism’ has not been allowed to flourish as it would in an unregulated market.

They see central banks as being under state control, tacitly or otherwise (even though the Federal Reserve, for example, is independent of the US Government and owned internationally by other banks). They also say that taxation allied to the provision of social ‘safety-nets’, distorts the economy.

It’s a little difficult to understand why many of those who hold this opinion are not averse to the government using taxes, bonds and increased money supply to ‘save’ the system.

Elite Excess

People who think it’s a super-rich scam are furious over what they see as “the government – acting on behalf of the capitalist system – effectively seizing the money of the ordinary workers to prop the failing banking system up.”

I’d attribute these quotes but if these people are correct we’re headed to a ‘police state’ and they wouldn’t want their names used; here’s another: “It doesn’t matter how you dress it up, tyranny is always tyranny…. What we need is to stop turning on people because of their colour or religion, and turn against our common enemy, the ruling elite.”

Greed… A Weakening of Constraint… or Not a Problem!

Martyn Jones, a independent commentator, put it succinctly: “there is no mystery as to why a combination of the overabundant supply of cheap and easy money, decades of economic bubbles and market manipulation (military-industrial, dot com, real estate, energy, basic foodstuffs, etc.), together with a somewhat decadent laissez faire attitude towards the shenanigans of some financial capitalists, has resulted in a financial and economic crisis of major proportions.”

People who normally have faith that the market ‘will generate wealth and ensure its equitable distribution’ blame, in particular, the removal, weakening, or absence of regulation tied to an ever-decreasing bank reserve requirement.

But others of different persuasion do not think Capitalism has failed at all; believing it will right itself and be fine again for a decade or so, then repeat in a ‘normal economic cycle’.

What’s different this time? They ask.

Resource depletion, that’s what. Oil and gas supplies, vital to energy and industrial agriculture (and just about everything else), as well as water and hence food. The rules of global economics seem to have been stretched so far from reality that some enforced restraint would seem necessary even if there were not a looming crisis over supply of energy.

If life really is all about supply and demand, then how long before the demands of billions of humans outstrips the supply. Surely the economic recovery has to be built in a way that’s sustainable, in every sense.