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Ethics, Money & Corporate Power. Can they co-exist?

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12:32 / 26.03.08

"Wealth is certainly the neccesary starting point (by definition), but to get to the solution we need to alter the structure of the wealth as well."

Yes, definitely.

I think it generally works well in all Western countries at the moment. Private companies build wealth, employ people, taxes are paid, benefits are paid to those unable to work, tax fraud is a crime, poor working families recieve tax credit, students recieve cheap loans and so on.

Obviously, as in all complex systems, various things aren't perfect, some are terrible, but generally it works well.

ONLY NICE THINGS

12:40 / 26.03.08

The capitalist nations are rich.

Well, Chad isn't. Burkina Faso isn't. In fact, most of the countries at the bottom end of the HDI participate in free markets in some sense, have a currency that trades in currency exchanges and so on, but are not wealthy, and arguably have not become significantly wealthier as a result of their participation in the free market - partly, arguably, because those free markets are not in fact as free as they should be.

12:44 / 26.03.08

I have to say that I find this:

Many theorists have noted that this increase in global GDP over time coincides with the emergence of the modern world capitalist system.

A bit, well, rubbish. The best evidence that anyone can come up with is, "Well, we're basically capitalist now and we're richer than we used to be, so it must be because capitalism creates wealth".

"The capitalist nations" aren't rich. Western countries are, in general, and Western countries are generally more capitalist than the rest of the world on average (although plenty of others have adopted capitalist models), but then Western countries were also much more powerful at the time that capitalism was emerging. What we have at the moment is a handful of rich countries which are effectively parasitic on much of the rest of the world, which is pretty similar to what we had a few hundred years ago, but achieved through different mechanisms.

One more time, though: there *is* no empirical evidence that capitalism --> wealth. It's entirely based on assumptions such as those made by Adam Smith which just happen to benefit those who make them. No-one has ever demonstrated that these assumptions have any basis in reality. Growth over the past however-many-years has not at all correlated with who has the most capitalist system; however, what has been shown time and time again to correlate is the emergence of large-scale inequality leading to misery and death for huge amounts of people.

ONLY NICE THINGS

12:49 / 26.03.08

I think there's another problem, which is the difficulty in sorting a control group. I mean, countries that have essentially not interacted with the open market, and where trade is entirely state-controlled? There's Cuba, but Cuba is not a great comparison, in part because it has a kick-ass healthcare system - lower infant mortality than the US, actually. Also, because its most economically powerful neighbour has been seeking to destroy it, economically and politically, for the last forty years, which is going to mess up the stats.

So, how are we defining a capitalist nation, and a non-capitalist nation?

13:18 / 26.03.08

"Well, Chad isn't. Burkina Faso isn't."

Hmmm, yeah. I suppose when I said capitalist nations I kind of blithely meant the West.

I agree that countries like Chad and Burkina Faso are poor because they haven't been able to implement free trade. Not that I know too much about those countries but I am guessing they have problems with corruption and so on which inhibit trade.

13:26 / 26.03.08

To be fair, what Buk seems to be in favour of is an idealised, but still reasonably attainable, version of the current system. Business is allowed to prosper, but is brought to heel for the greater good. I don't know if there's anything wrong with that.

The alternatives do seem a bit horrific; all right, socialist/anarchist ideas have never really been tested properly as a long-term project - this sort of stuff has usually faltered. But on the other hand, that's perhaps something to do with the way uptopian ideals are prone to corruption.

It's a boring thing to say, maybe, but as much as I'm annoyed by the UK government, I can't even begin to imagine what sort of nightmare I'd be dealing with now, had I been born in Cuba, or China, or Russia. Given a straight choice (and this isn't to say that Western democracy is perfect, by any stretch of the imagination) who, honestly, would pick the alternative?

(I ... I still like 'The Invisibles' though)

13:55 / 26.03.08

Buk, you seem to be attributing anything good in various nations (like the fact that many Western countries are, if you pick certain standards, fantastically rich) to capitalism, while stating that any instances of capitalism failing to bring about fabulous wealth is because, well, they're just not capitalist enough. It's a very convenient model, but I'm not sure exactly what you're basing your assertions on. It seems to me a teensy bit more likely that the UK is rich because it has been for a very long time and has maintained that position, and that Chad and Burkina Faso are poor because they have been for a very long time and that countries like the UK are doing pretty much anything they can to ensure that this state of affairs is perpetuated, as our current wealth is predicated upon the exploitation of much or the rest of the world.

And AG, I'm not sure how much you're being facetious, but I'd suspect that your choice of where to live has much more to do with the richness of the UK rather than its capitalism. Would you be so much more happy to live in, to keep the same examples going, Chad or Burkina Faso than Cuba or China? At least in the latter you'd have a pretty decent life expectancy by global standards.

14:11 / 26.03.08

Sorry, that should be "failing to bring about fantastic wealth in other countries which have adopted capitalist systems".

ONLY NICE THINGS

14:38 / 26.03.08

Not that I know too much about those countries but I am guessing they have problems with corruption and so on which inhibit trade.

To a degree, but many of the obstacles to trade are tariffs from the West or downward pressure from corporations on their exports - that is, the practice of capitalism. That is, inhibitions to trade caused by what currently passes for capitalism.

I ask again, though - and anyone, feel free to jump in - what's our control group?

14:59 / 26.03.08

Would you be so much more happy to live in, to keep the same examples going, Chad or Burkina Faso than Cuba or China?

The situation in Cuba is complicated, certainly; what would it be as a country if it was further away from the States? Quite different.

Still, this seems like a flawed analogy; Cuba and, especially, China, seem to be the best examples going, these days, of communist societies in action. In that respect, it seems only fair to compare life in that sort of joint to the best Western capitalism has to offer, and ... all right, there are holes in this argument you could drive a tank through.

On the other hand, I'm not sure if anyone would hold up Chad as an ideal example of the benefits of capitalism. They'd be looking more towards Western Europe, where the beast of business is at least notionally tethered.

15:08 / 26.03.08

Holes you could drive a tank through, yes. All I was saying was that saying this country is nominally capitalist, and this one is nominally Communist, and this one seems better to live in, therefore capitalism is a better system falls slightly short of constituting a logical argument.

Haus: control groups? Well, clearly, there aren't any, really. There are, though, countries with more or less trade liberalisation, and countries which have moved from less to more capitalist systems (as well as occasional instances of moving in the opposite direction), and I think that's about as good as you're going to get without having the powers of an Almighty Creator.

15:23 / 26.03.08

"what's our control group?"

You could compare the post-war Western capitalist world to the communist one. Countries like Germany were split in two the East becoming impoverished the West rich.

15:44 / 26.03.08

That's a great idea! Except that I don't think the figures support what you think they support:

The truth of the matter is, however, that the countries of Eastern Europe had historically always been economically backward relative to the rest of the world even before communism.

... Once communism had been established in Eastern Europe, GNP per capita grew significantly faster than the GNP per capita of capitalist countries. For instance, GNP per capita of the Soviet Union grew from one-twelfth that of the United States in 1917 to one-third that of the United States by 1991 [United Nations 1994].

16:03 / 26.03.08

Oh, and from the same regarding the example of East Germany:

The only exception here was East Germany, which was first impoverished relative to its peers in the West shortly after World War II, when it was forced to make reparation payments to the Soviet Union that exceeded several times its national income, while Western Europe was receiving substantial Marshall Plan aid [Apel 1966].

So, yeah, it doesn't really work as a great example of the wonders wrought by capitalism.

All Acting Regiment

16:08 / 26.03.08

When you say 'countries like Germany were split in two, the East becoming impoverished the West rich', which other countries are you talking about? In the context of post-1945, Germany would seem to present something of a special case.

16:12 / 26.03.08

What alternative to capitalism do you propose Moomin? How do you see a better world being built?

16:14 / 26.03.08

"which other countries are you talking about? In the context of post-1945, Germany would seem to present something of a special case."

Yeah, true it is a special case. I was also thinking of North and South Korea.

16:18 / 26.03.08

Through socialism, basically, with enterprises of all kinds publicly owned rather than run for private gain. I'm not really here to go through a thorough argument about how a vast Trotskyist system would work, though; my main intention in entering the thread was to point out that capitalism has no basis whatsoever to claim to be the driver of economic growth, but does have plenty of horrendously awful stuff which can be traced directly to it.

16:23 / 26.03.08

But didn't socialism fail? They tried it in the Soviet Union, in China and a bit in India and it just didn't really work out?

Whereas when China and India introduced capitalist reforms then lots of people escaped poverty and the economy grew massively.

ONLY NICE THINGS

16:41 / 26.03.08

Having said which, capitalism was introduced to Albania, and promptly destroyed its economy. See also Chile. Might be worth thinking about Vietnam, as well, where the South didn't exactly lead its people to prosperity before the South Vietnames capitalist experiment failed. And, for that matter, the recent wave of leftward governments democratically elected in South America in resistance to the aggressive promotion of free market economics pushed by their northern neighbours - most dramatically shown up in the collapse of the Argentinian economy...

I'm still not sure what we actually mean by "capitalist" and "socialist" here, mind - by Libertarian standards, the US is a socialist state, although these guys are, of course, coo-coo. Also, is the only ethical good the generation of wealth? I'd question that on a number of levels...

16:48 / 26.03.08

Yeah, I think I have my own definition of capitalism in my head which isn't necessarily dictionary. I just mean roughly the economic system we have in the UK and the EU.

I think prosperity is built on that economic system and it would be great if everyone could share in that prosperity.

All Acting Regiment

17:03 / 26.03.08

Yes, but as various people have been showing, that economic system also prevents people from getting at the wealth which is produced.

17:07 / 26.03.08

I was going to do a proper, long post about how "socialism has failed" is wrong in so many ways, but a) I don't, as I've said, want to turn this into an argument about my own preferred system, which is what I assumed you'd intended by asking me what it was, and b) it's much easier to just point you to what Haus has said, which is much more concise. Quite simply, though, if "didn't socialism fail?" is a reasonable question, I think it's equally reasonable - more so, in fact - to state that capitalism has failed, quite spectacularly. Compared to the more capitalist Western countries, and in spite of the nutcase that is Stalin and the humongous policy disasters of Mao, countries adhering to a more socialist model saw greater economic growth, and performed substantially better in terms of metrics such as public health.

17:08 / 26.03.08

Yes, but as various people have been showing, that economic system also prevents people from getting at the wealth which is produced.

And has a remarkably poor record, in spite of its acceptance as orthodoxy within many Western nations, at actually creating wealth.

ONLY NICE THINGS

17:12 / 26.03.08

I just mean roughly the economic system we have in the UK and the EU.

OK - but to start from there, the EU was composed of a number of countries with considerable wealth, in many cases highly-developed economies and protected industries. Further, the EU consistently imposes limits on free trade - through trade tariffs, for example, and supports uncompetitive practices - say, by the Common Agricultural Policy. Ironically, the destruction of our food surplus, through climate change brought about so far primarily by the industrialised nations (and India and China moving to a 1960s-level-US industrial base, say, is lest we forget pretty much the death knell for human life on Earth) and through the increased desire for grain-intensive foodstuffs like meat through the world (especially as people move out of poverty, alas), is raising the cost of food to the point where the CAP payments could be lowered.

I'm not sure it is sensible to look at, say, the UK, which at one point owned and ran for profit a fair chunk of the entire world and say that the only reason that it has a higher standard of living than Angola is that it has had the benefits of capitalism for longer.

17:40 / 26.03.08

Surely it is undeniable that socialism has failed in so much it has lost any meaningful presence in the current world and has been massively rejected in favour of capitalism?

I don't know if socialism is really better at creating wealth but if that is true it suprises me because, in my experience and understanding, state owned enterprises are generally inefficient whereas private enterprises are generally efficient (while being greedy and not necessarily ethical).

17:50 / 26.03.08

Well, depends what you mean by "meaningful presence". I think if you told people in current socialist-run countries that they're meaningless they might be a bit irked.

But yes, as I've kept saying: empirically, capitalism generally fails, relative to more socialist systems, at creating wealth, regardless of the endless unfounded assertions from the ruling classes about efficiency and other such nonsense.

18:13 / 26.03.08

By "meaningful presence" a large percentage of the world used to be under socialist rule. Now it clearly isn't. That is clear failure of socialism.

"But yes, as I've kept saying: empirically, capitalism generally fails, relative to more socialist systems, at creating wealth, regardless of the endless unfounded assertions from the ruling classes about efficiency and other such nonsense."

So how does that work then?

ONLY NICE THINGS

18:19 / 26.03.08

By "meaningful presence" a large percentage of the world used to be under socialist rule. Now it clearly isn't. That is clear failure of socialism.

I dunno ... by that logic we can say that Zoroastrianism has clearly failed, or spats. Especially bearing in mind that the EU, for example, has a fair amount of socialism - controlled markets, state ownership - baked into it. I think you're taking too simplistic a view there. Having said which, I'd be eager to see if there are genuinely comparable stats on the impact on quality of life (not quite the same as wealth, or even GDP) of socialist and capitalist systems. Do you have data, Pingles?

18:32 / 26.03.08

I can take a look. I know there's data out there showing that private ownership of things like health and education systems mess them up, which isn't surprising. I'm not sure how one judges quality of life precisely, but I think such things are reasonably decent metrics to start off with. I'll see what I can find.

ONLY NICE THINGS

20:02 / 26.03.08

How about Malawi? Where free trade policies encouraged regular famine conditions, and state intervention averted it - NYT story here.

20:34 / 26.03.08

Well, if you're looking for particular examples, there's the few I've outlined earlier - Bolivia, Dominican Republic, Tanzania. But I know there are figures out there with a much broader view which indicate that privatising things - particularly things which are key to living like healthcare, education, water etc. - just invariably causes pretty awful results. I've been doing other things and haven't had much chance to look, but there's this:

The labor movements and the social democratic parties that have governed as a majority for long periods since World War II have generally been the most committed to redistributive policies, contributing to better health indicators such as lower infant mortality rates... Conversely, countries with weaker labor movements and social democratic parties and stronger capitalist classes, such as the liberal Anglo-Saxon countries, have had a weaker commitment to redistributive policies and worse health indicators.

I know there's more conclusive stuff out there, I'm just not sure where to look to find it quickly.

23:19 / 26.03.08

I ask again, though - and anyone, feel free to jump in - what's our control group?

They had a shot with this one, but didn't get Lord of the Rings enough.

But seriously, you don't really expect a control, right?

ONLY NICE THINGS

01:11 / 27.03.08

I think you mean Lord of the Flies.

01:55 / 27.03.08

That's what I get for not paying attention in church.

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