Anti-Capitalism: A Beginners Guide (2004)

Chapter One The Hows and Whys of the Thing called ‘Capitalism’ A question of definition As a book about anti-capitalism we are naturally enough going to hear all sorts of reasons why it is that we should be opposed to capitalism. Many of these arguments will differ in sometimes surprising and indeed conflicting ways; but one thing they will all have in common is that they know what they are against: the Thing called ‘Capitalism’ – or, more likely, refinements of the same such as ‘neoliberal capitalism’, ‘transnational capitalism’, ‘economic globalisation’, ‘corporate capitalism’. Whilst anti-capitalist literature is replete with reasons why one should oppose capitalism, they are often less helpful on what ‘capitalism’ is and how it differs from other forms of social organisation. They are often less than forthcoming on why it is that capitalism is ‘hegemonic’, why it appears ‘natural’ or ‘normal’ o so many (as it does). Thus what the ‘beginner’ to the subject might already have asked him or herself is how it is that anyone came to think that capitalism was worth defending in the first place. So in thinking in terms of how to initiate the ‘beginner’ into the nature of anticapitalism it is as good a place as any to start with some brief thoughts on capitalism itself. In particular we need to think about how capitalism established itself as a dominant economic system, and one accepted as ‘rational’ and ‘desirable’ by many across both the developed and developing world. First of all it will be helpful to think about the central term ‘capitalism’ itself. What exactly is capitalism? There are two ways of answering this question. The first is to think of it in abstract terms, that is in terms of what it represents as a relationship between people. The second is to think in more historical terms, i.e. of how it is that capitalism came about, how it developed into the system we see before us today. Why do we need two ways of thinking about the same object? The easy answer is that since the dawn of capitalism in the early modern period (roughly the seventeenth century onwards) capitalism has obviously changed a great deal. Indeed it is has changed so much that it is remarkable to be talking about the same ‘thing’ at all, the world of the twenty-first century being radically different to that of even the nineteenth century let alone the sixteenth. Yet economists and commentators still agree for the most part that there is a fundamental continuity between the Then and the Now. What then is the continuity? Fortunately there is little controversy over the matter. ‘Capitalism’ is not in this sense a particularly contested term in itself. What is contested is whether it is just, rational or otherwise in the best interests of humanity. In abstract terms it is said that we have capitalism where we see the following: • • • private ownership over the means of production: land, factories, businesses. ‘paid employment’ or, to put it another way, ‘wage labour’ creation of goods - or the offering of services - for profit via a system of exchange, i.e. the market. This is a pretty anodyne definition, which is to say in terms that most of those who take some ‘professional’ interest in the matter would regard it with a shrug of the shoulders. This is what is intended. We are looking for a base line here: something that can be agreed on, so that we can understand exactly what it is that pro-capitalists celebrate and anti-capitalists object to. This is not, however, to say that everyone describes capitalism in the same way. We can note that, for example, Karl Marx, unarguably the greatest anti-capitalist thinker, analyses the two antagonistic classes produced under capitalism: the ‘bourgeoisie’ and ‘proletariat’. What defines the bourgeoisie is, nonetheless the fact that they are owners of capital and usually employ others, the working class, to create profit. How Marx analyses the operation of the capitalist system actually accords closely to those of the ‘bourgeois’ economists he otherwise opposed, such as David Ricardo, Adam Smith and Jean Baptiste Say – as he himself was happy to confirm. Looking at the definition other questions will, however, arise. ‘Beginners’ as well as cynics might think that capitalism looks on this view Ch.1 capitalism Page 1 9/2/06 utterly basic to human experience. What other kinds of economic relations might there be? There is some substance to the concern, the chief among these being the relationship between capitalism and the market, or ‘commodity production’. Hasn’t there always been a market, and thus capitalism? The market or commodity production is indeed much older than capitalism, and there are those who would insist that virtually every society known to us embraced some form of market exchange, whether that be the exchange of sharks teeth, beetroot or gold pieces. This is actually a very important point in relation to questions raised in relation to anti-capitalism, and so the need for clarity here is acute. The point is that the market is not an invention of capitalism, nor does the market of it itself lead to capitalism. Markets have existed alongside all manner of different economic regimes and different forms of ownership. The mere exchange of ‘equivalents’ does not in other words necessitate or make inevitable wage labour, which is in turn the key to understanding the distinctiveness of capitalist production. A group of children swapping football stickers might be said to be entering into a market transaction in the sense that there is an exchange of equivalents. Some of the cards may be rarer than others, and so trade for higher ‘value’ than others. Nor is the market in this sense something new or confined to capitalist economies. Markets have existed for longer than human history itself, which is not to say that the market is inevitable or necessary to human life as such, only that markets frequently arise in the course of human interrelationships, and will probably go on doing so as long as people want to swap things like football stickers. But the point is, the market is not capitalism, and capitalism is not the market. So what is? Looking back at the definition what becomes apparent is that one of the distinctive features of capitalism is a particular kind of market, namely that for labour. In pre-capitalist times labour was sometimes bought, but more often than not it was procured by some other means, classically by the institution of slavery, and more recently by bondage, vassalage, or other arrangement that rendered individuals the property of someone else. In other words, through force of arms, conquest, or some other more or less violent process people were made the property of a lord or noble. As a slave or serf a person had little or no control over his or her own life, but rather was a mere adjunct of an ‘estate’ to which he or she was personally tied. As feudalism and slavery were overthrown or displaced, so those who were ‘liberated’ became ‘masterless men (and women)’, freed to try and procure a living for themselves, usually through selling their labour to someone who needed it for the factories, mines and workhouses that accompanied the process of industrialisation. Here, in short, we see a process by which the economic relation of feudalism, namely ownership over the person is transformed into the capitalist economic relation in which some buy other people’s labour power. Whereas in the market place of Ancient Rome or of ante bellum America it was people who were bought and sold; in the capitalist market place it is our labour power that is bought and sold. But what is our labour power bought and sold for? Why do people need to buy and sell labour power? Money, money , money This brings us to the second relatively uncontroversial part of the definition of capitalism, which is that under capitalism the primary purpose of production is profit or making money. This too sounds a banal ‘fact’ about the way we live. What on earth could be the point of setting up companies, working hard, taking risks, indeed getting up in the morning if it was not for making money? We shall hear quite a lot more about what other ends production could serve when we come to discuss anti-capitalist ideas themselves, but for the purpose of a contrast we could at this point think about one possible alternative to production as profit, which is production for what is termed ‘subsistence’. It is probably a truism to note that over the course of human history most economic activity has been for the purpose of maintaining the well-being of the family and the extended groups of which the individual is a part rather than for making a profit as such. Looking closely at precapitalist production what is striking is the degree to which people worked just enough to ensure that they have the things they need to keep them going and to ensure that as and when unexpected crises come along (bad weather, poor crops etc), there was enough surplus to ensure that everyone was looked after. This is what it means to subsist: a farmer works hard enough and long enough to make sure that all basic needs are met. Beyond that however, life is for living, singing songs, lazing in the sun, swimming, painting or whatever. Under such conditions ‘profit’ as such has little rationale. To the subsistence farmer, profit requires extra work, and extra work means less time to do the other Ch.1 capitalism Page 2 9/2/06 things she or he wants to do as well. This is one of the ironies of capitalist production spotted by the very earliest critics of capitalism. We often work harder and longer hours to be able to do the things that if we worked less and for fewer hours we would be able to do anyway, like lazing in the sun. So inevitably the question arises of why capitalism is characterised by production for profit as opposed to something else, like subsistence? To answer this question we need to make a link between wage labour and profit creation, for what has yet to be clarified is why anyone would want to work for someone else rather than work for themselves as, say, a subsistence farmer. Why do most of us work for someone else, and not for ourselves, or for our families, or relatives or friends and neighbours, with whom we choose? Historically, the reason why most of us work for others is that we have very little choice but to do so. It is again a truism to note that in most parts of the world, the most important resource allowing a degree of independence to individuals, namely land, was conquered, invaded or otherwise taken from indigenous groups to serve the needs of royal families, conquistadores, colonial barons, imperial elites or states. In the UK the story of the creation of ‘masterless men’ - or future ‘employees’ - is one that concerns conquest of a particularly crude and at times bloody kind over the course of the previous three centuries, and this is to say nothing of ‘1066’ and the Norman conquest of Britain. It was crude in the case of the ‘enclosures’ of the late eighteenth and early nineteenth centuries. This ensured that large chunks of the English countryside were hived off to the ‘great families’ in the name of ‘improving’ the land, that is making it available for agro-industrial development or building plots. It was bloody in the case of the ‘Highland clearances’ of the same period that ensured royal and noble control over the magnificent wilderness regions of Scotland. The effect was the same. Formerly independent ‘subsistence’ farmers were thrown off the land, in turn forcing them into the towns and cities to search for work. We can note that some of the very first ‘anti-capitalist’ protests and demonstrations were sparked off by such processes, and account in part for the sporadic resistances, sometimes violent, that punctuate modern British history, notwithstanding the insistence in ‘official’ history of the idea of Britain’s ‘peaceful’ historical development. This is part of the story of the industrial revolution in Britain, and it is in turn part of the story of virtually every country the world over. It is part of the story too of anti-capitalism in those countries that have experienced the failures of ‘land reform’ in recent times. We could mention here the case of Mexico where the Zapatista rebellion of 1994 was initiated by those seeking a return of control over scarce arable land in the mountainous Chiapas region. We could also mention the Sem Terra or landless of Brazil striving for the means of getting land for those who have been deprived of it, or the Via Campesina network that attempts to help various groups restore their rights to land and agricultural produce. But the story of the conquest of ‘subsistence’ is not the whole story, as those who defend capitalism will, with varying degrees of skill and urgency, insist. Finally, we should also note that the private ownership of the means of production is hardly intrinsic to human experience. For much of history, hunter-gathering was the norm and where this was displaced it was often by various forms of collective ownership, whether by families or kinship groups, or by larger units such as villages, towns and city-states. We can also note that even under advanced industrial conditions private ownership of production existed side-by-side with public ownership, as for example in the welfare or social democratic states of the early to mid- twentieth century. Indeed as recently as the mid-1980s over 50% of French GDP was accounted for by publicly owned enterprises. Even this ratio is dwarfed by the situation that obtained in communist states such as the former-Soviet Union where the vast bulk of the productive capacity of the country rested in ‘collective’ hands, admittedly a euphemism for the party-state apparatus that ruled the country until its collapse in 1991. The private ownership of the means of production has thus historically supplanted a variety of other kinds of ownership, collective, communal and feudal. It also supplanted varieties of ‘non-ownership’, as in hunter-gathering and nomadic forms of life that subsisted without resort to ownership over the land and natural resources. It has also co-existed alongside rival forms of ownership, particularly the large-scale state ownership seen in the former communist bloc. Many if not all of these alternatives have some supporters amongst anti-capitalist groups, and so we will be returning to the issue of which if any of them could provide a realistic and/or desirable alternative to the forms of ownership so many anti-capitalists object to. So to summarise this brief discussion, we can talk about capitalism in abstraction from the Ch.1 capitalism Page 3 9/2/06 historical conditions that brought it into being, but only just. Without some element of that history, we get the how, but we don’t get the why, which is equally part of the case before us. We can see in particular that capitalism is not the same as the market. Capitalism is of course a market society, but market societies may take forms other than those found under capitalist conditions. Even feudal and slave-owning societies were ‘market societies’. We can also see that capitalism requires a certain kind of social relation namely that between ‘formally free’ individuals. This means that wage labour is only possible where people are free to the extent of being able to sell their own labour power to someone else. People whose labour is forcefully taken from them are formally unfree like slaves or serfs. We can also see that capitalism is about the creation of profit. Profit is needed not least to give owners the money they need to keep themselves alive. It is also needed to reinvest in their businesses, in particular in the new technology and equipment that will enable them to compete successfully with others and thereby maintain those profits without which any capitalist enterprise will fail. Capitalism as a system of competition Though we have not mentioned it so far, this final point illustrates an important aspect of capitalism, which is that it is normally, though not necessarily, characterised by intense competition. Capitalism is as we know defined by the existence of a market; without a market there is no capitalism. A market is a physical or nominal ‘space’ in which those with something to sell or exchange- like their own labour or football stickers – can seek buyers. Much of the time there are others who will be wanting to sell something similar, and so there is a competition for buyers. What determines who wins the competition is, when all other things are equal, price. I need some tomatoes, so I go to the market and see someone selling them for 2 cents a kilo and someone else selling them for 3. They look pretty similar in size and price, and so being the ‘rational’ person I am, I buy my tomatoes from the former. Now the question is what determines price? This is actually a fairly vexatious question in the specialist literature. Nevertheless it seems reasonable enough to say that whilst demand is important – the greater the demand, the higher the price that can be charged – the cost of production operates as at the very least a ‘bottom line’ beneath which the producer cannot go. Ultimately it always costs something to produce tomatoes and get them to the market. People have to be employed to plant the seeds, or, more’s the same, a family has to keep itself in food and clothing in order to sow the crop; transport must be paid for, packaging, boxes, sometimes the stall itself has to be rented or bought. All of these are basic costs which have to be ‘passed on’ in the price of tomatoes. Let’s say these basic costs amount to 20 cents per kilo. If the price of tomatoes goes below that level and stays there for very long our tomato growers are in trouble. Unless they have some reserves stashed away, or have access to some other product they will go bust. Now what is obvious is that the lower these basic costs, the lower, potentially, one can set the price of the tomatoes. As is also obvious, tomato sellers working in a commercial context want to obtain as high a price as they can for their tomatoes, but also remember that there are other tomato sellers out there competing for custom. So the tendency in market-based societies is competition on costs, all of the costs not just that of the labour power without which ultimately there can be no tomato farming. The seller who can reduce her costs, can reduce her prices further than the seller who has higher costs. This in turn means that in a period or environment of intense competition and relatively open markets such as that found under capitalist conditions that seller will be at an advantage: she will ‘win’ the competition, driving her competitors out of business, into retirement or another sector of the market. That is until another tomato grower comes along who thinks she can reduce her costs even further (and so on). There is, however, another way to ‘win’, and that is for one tomato seller to buy out or otherwise eliminate her rivals, leaving just herself in the market place. This is the monopoly scenario dreaded by both pro and anti-market theorists since the dawn of economics. If I buy out the other tomato sellers and establish myself as the only seller of tomatoes, then assuming a constant demand for tomatoes we can anticipate that the costs of tomatoes will rise enormously, making those big profits tomato growers apparently yearn for. Monopolies are bad. They eliminate competition and inflate prices to exorbitant levels. Monopolies represent the death of the market and thus ultimately the death of capitalism. It is thus for this reason that virtually every defender of capitalism has argued Ch.1 capitalism Page 4 9/2/06 for the necessity to ensure that monopolies are prevented from emerging. Even such stalwart defenders of the ‘minimal’ or laissez faire state such as Adam Smith and Friedrich von Hayek were agreed on the necessity for state intervention on these grounds. What still needs clarification, however, is the difference between capitalist and non-capitalist forms of market competition. The tomato seller example used above illustrates some of what happens in markets as such, not just capitalist markets. Isn’t there a difference? Indeed there is. As we have had occasion to note, a key to understanding capitalism is wage labour, and thus the competition for labour between capitalists. They need us, and in the absence of other means of keeping ourselves alive like having our own land, we need them. So the cost issue that we were discussing above refers very particularly to the costs of labour power, of keeping us working. This is much less the case in pre-capitalist societies where a great deal of production is based either on enforced labour of the feudal kind or on subsistence farming and manufacture which is characterised by family or small group production, rather than on wage labour. We have also noted that production in the capitalist market is for profit, with at least some of that profit being used for increasing the level of productivity through investing in machinery, new technologies, plant and equipment. So capitalism is a particularly energetic, or perhaps a frenetic form of market society. Whereas the pre-capitalist market mainly concerns the reproduction of the basic necessities of life (give or take luxury goods for the few) the capitalist market concerns the accumulation of capital though the exploitation of all available means for the increasing of production whilst at the same time diminishing costs. Under the capitalist market there is no resting place for producer or seller. Capitalism is in its own self-image a Darwinian struggle, a struggle with many winners and many losers. It is for this reason that even Marx paused part in admiration, part in incredulity at the sheer brutal relentlessness of the system, even whilst exclaiming how much he detested it. Capitalism today So far we have been describing capitalism in fairly abstract terms. That is we have been trying to extract what it is that unites the very earlier forms of capitalist society with what we see around us today, but what we see around us Now is very different in many ways to what existed Then. It is time to think about what these differences are so we get a better sense of the Thing that contemporary anticapitalism seeks to oppose. This means thinking further about: • • • Interdependence and the transnationalisation of capitalism Corporate consolidation The legal and political framework of economic globalisation Towards a global (economic) village: Interdependence and the transnationalisation of capitalism It is no doubt true to say that capitalism has since its beginnings always been a world or ‘global’ system in the sense that the rise of capitalism coincides with and feeds upon the rise of colonialism and inter-continental conquest. The markets of Europe in the sixteenth and seventeenth centuries were never in this sense merely markets for local produce, with local buyers and local sellers, but were supplemented with produce from colonies and overseas ‘possessions’ such as tobacco, wood and precious metals. But what is equally obvious is the degree to which over the course of the development of the modern world we see an ever-increasing interdependence between markets, producers and sellers. The ‘shopper’ in sixteenth century Nottingham (where the author finds himself …) would have been choosing goods that mostly came from the surrounding area, the odd pouch of tobacco notwithstanding. Today Nottingham’s shoppers are confronted by a vast array of goods from all over the world. Indeed the part of the world least represented on the shelves of the local shops would be Nottingham itself, which like so many other areas of post-industrial England produces very little compared with even thirty years ago when it was known for the production of bicycles, lace, and cigarettes. The hero of Alan Sillitoe’s famous novel (and film) Saturday Night, Sunday Morning, set in the Nottingham of the 1950s was an industrial factory worker living amongst other factory workers. Now he would be more likely to be a security guard or telesales operative. But what does this interdependence actually mean? What is it to be increasingly interdependent apart from the fact that Ch.1 capitalism Page 5 9/2/06 there is more stuff to buy in the shops? Thinking in terms of capital itself what is obvious is that over the course of the twentieth century owners have removed capital, that is money, assets and resources from local, regional and national contexts in the pursuit of greater profit. Capitalists were once local people investing in local businesses, using local employment. This no longer the case. Since the Second World War capital has become increasingly mobile, increasingly ‘liquid’, meaning that capitalists have been able to invest wherever they see the greatest possible return on their investment. They have been able to take advantage of ever-diminishing costs in terms of air freight, communications infrastructure and IT capabilities to ‘outsource’ production to hitherto far-flung parts of the world. Such changes are often referred to in the specialist literature in terms of the transition from ‘national capitalism’, to ‘multinational capitalism’ and finally to ‘transnational’ or ‘global’ capitalism proper. These labels give some idea of what is said to have occurred. The term ‘globalisation’ is more commonly used than any of these more specialist terms, but globalisation or, better, economic globalisation is just another term for the same phenomenon, i.e. the growing interdependence of the world economy. Again, there is nothing new about interdependence or the ‘world economy’, as a glance at, say, Marx’s The Communist Manifesto or Smith’s The Wealth of Nations reveals. It is the degree to which we are interdependent that is striking and particularly so over the course of the last thirty years. But what does it all amount to? To go back to example above, we noted that what determines the success or failure of the producer is her capacity to drive costs down to survive the intense competition that characterises the capitalist market place. Capitalists must do whatever they can to stay ‘ahead of the game’ which means being able to compete with others in the market place on price and in turn cost. As we know costs vary from place to place and from country to country. In the global North the cost of living is pretty high. Housing costs are expensive. We need a lot of heating because of our miserable winters. Thus the basic costs involved in producing anything are themselves relatively high, not least because of the high cost of keeping a worker working. By contrast, when I visited Indonesia recently I was told that the cost of living had, since the 1997 Asian economic crisis, gone back in some areas to the price of a bowl of rice per day per person. No need for housing or heat: people could ‘sleep out’ in that lovely climate of theirs. Certainly the costs are low compared with the cost of living in the UK or US. Back in 1945 Indonesia was a far off country that not many people knew much about, but by 1980 plenty knew all about it, and those neighbouring countries which shared its ‘low cost’ attributes. Now from the point of view of intense competition it is simply ‘irrational’ for capitalists not to take advantage of (‘exploit’) those conditions which aid the reduction of their costs. Why? Because if I can lower costs then not to do so will be to leave oneself open to the possibility that someone else will, in turn putting me out of business. Being the ‘rational’ people they are, what we see over the course of the latter third of the twentieth century is capitalists engaging in a wholesale transfer of production from relatively expensive economies in the global North to relatively cheap economies in the global South. Where did all those industries in Nottingham go? One barely needs to ask the question. I once owned a Raleigh bike which would have been manufactured here in the city. Raleigh bikes now boast that they are ‘made in Vietnam’, hardly a fact a company would want to boast about twenty years ago. This, in microcosm, is the story of the last thirty years, in turn the story of the ‘transnationalisation of capitalism’. The British owners of Raleigh bikes looked around to see where the cheapest places where to install themselves, and off they went. As Allan Spencer, operations director for Raleigh put it in an interview with the BBC, ‘The decision to close the factory doesn't reflect on the workers - it is a question of global economics and economy of scale and other factors’ (as reported: www.news.bbc.co.uk/1/hi/england/2519053.stm). So farewell Nottingham. Nice to have known you for 120 years. It (almost) goes without saying that what goes for Raleigh, goes for virtually every major company involved in manufacturing in the advanced industrial world. So over the latter decades of the twentieth century capitalism became progressively internationalised meaning that more and more production circled around the globe looking for the cheapest places to set up. Volkswagen went to Czechoslovakia, Spain, Poland; Ralph Lauren to Indonesia (nice climate); Raleigh bikes to Thailand and Vietnam, and the really big corporations like Coca-Cola, Nike, Ford, Shell, McDonalds and Citibank just went everywhere and anywhere they could. This is what ‘transnational’ as opposed to ‘multi-national’ means. Multi-national corporations Ch.1 capitalism Page 6 9/2/06 can be found in a number of countries; transnational corporations are by contrast ubiquitous. The concept of bounded locale as in ‘national’ is simply meaningless for them. They are all over the place. Thus the constraint of operating under local, regional, or national contexts in order to drive down costs has given way dramatically under the need to compete more effectively, which in turn means for greater profit, and in turn greater investment. All this is because it is (remember) in capital’s own interest to seek the cheapest possible cost base, the cheapest resources and labour that it can find to produce the goods it wishes to produce. Thus such developments conform to what we might term the ‘logic of capitalist accumulation’. This is to say that to keep her business going the capitalist entrepreneur has to compete effectively, and this in turn means finding the most productive, most competitive, most commodious environment in which to operate. Not to do so is, as the history of contemporary capitalism painfully illustrates, to consign one’s business to the dustbin of history. It was for this reason that even Marx argued there is little point in blaming individual capitalists for the character of capitalism. They are busy ‘outsourcing’, ‘streamlining’, down-shifting’, ‘flexibilising’ because under a competitive market order they need to do whatever it is permitted to do to compete effectively. It is march or die. Corporate consolidation: the big just got bigger We noted earlier, however, that in order to succeed in the market place you can either reduce your costs further than your competitors or you reduce the number of competitors through merger, incorporation or ‘take overs’. As we further noted such developments send shudders down the spines of both pro and anti-capitalists for fear of the creation of monopolies. Nonetheless corporate consolidation is a key part of the story of contemporary capitalism and helps explain why it has the character it has, and indeed why it is that the energies of so many anti-capitalists have been directed at ‘corporate power’. The degree of consolidations is indeed striking, particularly as regards older, capital intensive industries such as car manufacturing, shipbuilding or steel making. To take cars as an example, in the immediate post-war period there were literally hundreds of manufacturers in Europe. Now one can count them on the fingers of two hands – one if we count the indigenous major players like Fiat and Volkswagen. On my embarking on the writing of this chapter, it was reported that Matra, the last of the small French manufacturers has been collapsed into Renault. The Matra ‘brand’ may be preserved if Renault can find a use for it. If it cannot, then it is farewell Matra too. But it is not just these traditional industries that have experienced accelerating consolidation. Look around the world of the media, luxury goods, software, drinks companies, banking. Everywhere one looks the story is the same: merger, acquisition, strip down, ‘streamlining’. The survival of a multitude of brands in our shops does not, confusingly, obviate the point. Between them Unilever and Proctor and Gamble dispose over hundreds of brands of soap powder, detergents, dishwasher tablets and so forth. The fact that the shelves of our supermarkets groan under the weight of an astonishing range of products should not be taken as a sign that there is an astonishing array of competitors out there in the market place for household products such as these. There was an astonishing range of competitors, but they became gobbled up by the ‘big two’ as part of their efforts to shape the market place in accordance with their own interests. Again, it seems we will be wasting valuable energy blaming individual companies for looking after their own interests in ways which are legal and part of ‘the game’. If there is a fault to be found in this scenario then it lies with the rules of the game, or rather with those who invent and maintain ‘the rules of the game’. Here, however, matters get more complicated because the gap between the ‘players’ and the ‘makers of the rules’ has narrowed markedly to the point where we begin to see that often the ‘players’ and the ‘makers’ are the same people, albeit with different ‘hats’ on. In the case of large corporations such as Unilever, they not only make soap powders, they also ‘help’ make the rules by which international commerce is regulated (or not). As Michael Moore, George Monbiot and Gregory Palast (amongst the many) have documented, large corporations ‘help’ by buying the favour of the political elites. They fund election campaigns, commercials for local politicians, holidays for politicians, school fees, medical fees, and lots of other ‘useful’ services besides. They like things as they are, and they are prepared to do a lot and spend a lot to make sure that they remain so. This too is part of the ‘game’ of contemporary capitalism. Ch.1 capitalism Page 7 9/2/06 The legal and political framework Reflecting this latter point, one of the characteristics of contemporary capitalism is that it takes place within a legal and political framework that is now, reflecting the internationalisation of trade itself, ‘global’ in scope. Here we need to mention those various agencies and institutions set up by the most powerful states after the War to oversee the development of international trade. Their aim was to prevent the kind of economic instability seen in the inter-war period, one that fatally undermined democracy in Germany and led to a severe crisis of confidence in the capitalist world more generally. The names will be familiar to most people reading this book, as their various meetings tend to provide the pretext for anti-capitalist carnivals and protests, as for example at Seattle, Prague, Quebec City and Genoa. These institutions include the International Monetary Fund (IMF), The G8, the World Bank, and the Organisation of Economic Cooperation and Development (OECD). We need to mention too the various agencies of the United Nations involved in economic or socio-economic regulation particularly the United Nations Conference on Trade and Development (UNCTAD). The World Trade Organisation (WTO) was set up much later in 1995 to provide a permanent institutional focus for the General Agreement on Trade and Tariff discussions (GATT) which attempt to make the ‘free’ market even ‘freer’, that is free from the barriers that prevent businesses circling around in ‘perfect’ liberty. What should be made clear is that it was the major capitalist states that set up the institutions, and they did so quite self-consciously to further their own particular interests (normally meaning nationally based economic interests) and also the interests of capital generally, which is to say the interests of transnational companies like Unilever and Coca-Cola – no surprise there. Indeed it is hardly controversial to note that the rationale of these institutions is make the life of capitalists as easy and uncomplicated as possible through facilitating the ability of capital to move freely, to compete on a ‘level playing field’, through currency reform, through ‘opening up’ markets to ‘free’ competition and ensuring the necessary ‘flexibility’ of the labour market. This is all in the name of enhancing, promoting and facilitating the ability of capitalists to make profits, which is after all why they are in business. Now, however, capitalists have to make their profits ‘legally’, that is by abiding by the strictures of institutions they helped set up. This is by contrast with earlier centuries when elites just did whatever they wanted by force, making people slaves, conquering ‘undiscovered’ lands, utilising ‘unclaimed resources’. So it sounds like an easy ride for business. They after all designed and operate the institutions, but is it? We’ll learn more about this later, but just for the moment we need to return to what was just mentioned, namely the distinction to be drawn between the particular interests of capitalist states and the interests of capital generally. One of the fascinating aspects of the politics of international trade is that since the creation of these institutions what has been evident is that the gap between the particular and the general interests of capital has never been eliminated. This is to say that since the dawn of international trade there has always been a degree of friction between the demand for ‘free trade’ and the desire of particular states to protect their own producers from free trade usually through protectionist measures or ‘tariffs’. To be clear on this key point, a tariff is a tax that one country places on imports from another, usually in order to protect ‘home’ producers from cheaper goods arriving from abroad. The example of tomato growing is actually instructive here, for one of the sources of greatest friction has been between those with relatively small-scale agricultural production such as France, and those with either large scale agricultural production (such as the US) or with very cheap labour costs by comparison with the French agriculteur (such as the developing world). In practice this means that French representatives lobby hard and long for protective tariffs protecting their agriculture, whilst at the same time bemoaning the fact that other people’s markets are closed for the kind of goods that they produce at low cost relative to others. Similarly expensively subsidised cotton farmers in the US lobby hard to be allowed access to the markets of the developing world, whilst the US sets limits on the inflow of steel, which it produces at high cost relative to countries such as South Korea. This leads to the practice of what is known as ‘dumping’ where producers who have received a government subsidy for manufacturing a commodity (such as cotton) gain access to markets where cotton is produced at ‘real’ cost, i. e. without subsidy. The result is, for example, that cotton produced in the US trades for less in many of the markets of the developing world than the latter’s ‘home’ cotton, in turn driving many producers in the developing world out of business notwithstanding the fact that in terms of real Ch.1 capitalism Page 8 9/2/06 costs they produce cotton much cheaper than US farmers. Such tragic outcomes are a direct correlate of the developing world’s lack of bargaining ‘muscle’ at the WTO where the detail of who can ‘dump’ what on whom gets decided. The position of the US is unsurprisingly crucial in the context of the development of international trade, yet it is a position that arouses controversy amongst ‘globalisation’ watchers. The question specialists in the field squabble over is this: when the US administration defends the interests of transnational corporations does it do so from the position of wanting to defend its own particular interests, or from the point of view of the interests of transnational capitalist corporations most of which would call themselves ‘American’? To put the same question differently, is the US the prime mover in the development of economic globalisation generally, or is it merely upholding its own local interest? Depending on one’s answer to the question globalisation will either appear like an imperial project for the benefit of the USA (and other states sharing its ‘values’ and ‘ideals’), or it will appear to be a process in which a genuinely global class (sometimes called the ‘transnational capitalist class’ or ‘global economic elite’) is in the process of detaching itself and its interests from national control, including the control of the US. As ever, the situation is more complex than many would have us believe. Fortune magazine’s 1999 survey reported that of the world’s 500 largest companies, 179 of them are based in the US with 148 based in the EU, leaving a handful outside these two zones (quoted in Held and McGrew). Nevertheless to contemplate the issue of global economic power in the ‘abstract’ is like looking at one of those ‘duck-rabbit’ pictures where depending on one’s ‘hardwiring’ one will see either a duck or a rabbit, or both interchangeably. On the other hand, what one ‘sees’ does have important implications for thinking about who or what the ‘agent’ of global capitalism or economic globalisation is – if there is an agent. It is thus a key matter for anti-capitalists to resolve, as we shall see in later chapters. Squabbling between these various interests and dimensions of capital has been the pattern for better or worse since international trade became institutionalised. Where once protectionist measures were met with bombardments or a ‘shot across the bows’, now they are met with the huffing and puffing of expensively kept officials meeting in luxury conference centres. Nonetheless this notion of the legal and political context within which capitalism operates is and will be an important one for our discussion, for what it implies is that, with changes to the rules and regulations of international trade capitalism can be shaped according to different needs and interests. This is a source of hope for quite a number of anti-capitalists (particularly of the ‘reform’ variety), as it implies that the rules and regulations of international trade can be made ‘fairer’, and thus aid those who find their own interests or way of life at odds with those of big business. This is particularly so in the case of the very poor countries, which historically have done worst out of this post-War trade regime, as many who have served on such bodies freely admit. Joseph Stiglitz, former Chief Economist at the World Bank, presents an alarming picture of just this kind of infra-warfare between representatives of global capitalism in his Globalization and its Discontents, mostly (as he notes) at the cost of the development of the ‘developing’ world. At this point we can review what we think the main differences are between contemporary capitalism and older variants, i.e. those that existed before the war. Contemporary capitalism is marked by an ever-increasing interdependence, that is by economic globalisation. Capital is much more fluid, it ‘flows’ much more readily looking for the optimum conditions with which to reproduce itself and in turn accumulate greater capital. Businesses looks around the world not just around the locale, the region, the nation for greater profit. Contemporary capitalism is marked by the rise to preeminence of transnational corporations which in terms of their size and power are able to take advantage of whatever opportunities exist to lower the costs of production, typically by shifting production from wealthier to relatively poorer countries or through consolidation, merger or ‘takeovers’. Finally, contemporary capitalism takes place within a regime of global governance that seeks to accommodate both the particular interests of nation-states (rich and poor) and the needs of transnational capital, which seeks access to open markets and cheaper resources. What still needs to be asked is how any of this came to be regarded as rational or worth defending. Is capitalism just for capitalists? Learning to love capitalism Ch.1 capitalism Page 9 9/2/06 On the face of it capitalism looks a bad deal for many. After all, all this talk about ‘outsourcing, ‘flexibility’, the collapse of Raleigh, Matra etc. means that real people in real places have lost jobs, and had to move away to find new ones. It means that villages, towns and cities that once had jobs no longer have them. It means that those sometimes intricate networks of friends, relations and associates break up and disappear. It can mean the difference, quite literally, between life and death. Economic competition is tough. So much is too obvious to bear repeating. How then can all of this be considered ‘just’ or ‘fair’ – as of course it is not just by capitalists themselves, but by many ordinary men and women? Looking back over the history of economic and political thought and the work of those who have sought to defend capitalism two forms of argument are clearly pertinent: the argument from liberty (or freedom) and the argument from utility (or economic growth). Most liberal theorists, who in turn did the most to establish a moral or ethical basis for capitalism considered both kinds of argument to be important, though they did so in different measure and to different degree. But in order to rehearse the basis of the ‘neoliberal’ retrenchment of the 1970s it will be useful to keep them apart. The argument from liberty To the early liberals the rise of capitalism or ‘mercantilism’ represented a great advance on hitherto existing society for reasons that have already been touched upon. Pre-capitalist society meant for them, feudal and pre-feudal forms in which most of the population was held in some form of subjugation. Kings and nobles were free, priests were too, but as for the rest of the population, it was mostly the powerlessness and poverty that comes from being born serfs or slaves. The emergence of capitalism meant the emergence of the individual from the black night of a world in which your ‘opportunities’ were limited by the fact of birth. Under feudal condition to be born a serf meant to die as a serf, irrespective of one’s talents, capacities or worth. Under capitalist conditions, however, more of us find ourselves in a situation where our destinies are to varying degrees contingent, and open to choices we make or don’t make. We lack a master, for one thing. Being thrust into the world without a master was the very quality celebrated by early liberal theorists and enshrined in the idea of the ‘rights of man’. And what are these rights? To the seventeenth century philosopher John Locke, they were the right to ‘life, liberty and property’. We are free: free to work for whomever we pleased, or not. Free to take our own chances, to set ourselves up, try something novel or profitable. It was also a freedom to fail, a ‘freedom’ to find oneself homeless and unemployed. Capitalism celebrates such freedom as the essence of its own creation. Without freedom those essential constituents of the capitalist ‘space’ are lost: wage labour, new ideas, innovation. Much later the philosopher Isaiah Berlin was to call such a conception the idea of ‘negative liberty’. Negative liberty expresses the thought above. ‘Freedom’ is ‘freedom from’: freedom from arbitrary interference; from other people’s plans; from government meddling; from clerics and priests; from people one has not chosen to be with. What is thus implicit in such an understanding is that the state is fine as long as it is protecting my freedom defined in these terms, but bad when it goes beyond the protection of each person’s rights, particularly my right to my ‘justly’ acquired property. As a system built on the right of private property, capitalism conforms to and indeed fully embraces this notion of freedom, as the following example will help demonstrate. Take the issue of salaries, who should get what? On this conception what the government or the state or public opinion thinks is irrelevant. I have a right to my property and you have a right to yours. I own a tomato business and you need a job. I offer you 10 cents a day, which you are free to accept or decline. The next year, I judge that economic conditions have worsened and thus that I should cut wages, so I offer you 5 cents a day. Meanwhile Jordan Beckham, a famous tennis player, is to be paid a million cents a day. How could this be considered unjust? According to this conception of freedom individuals, are free to earn whatever they can. If you turn down my 5 cents a day, then you have exercised your rights not to be ‘exploited’ on my tomato farm, but this still leaves you looking for money. Similarly, someone is prepared to pay Jordan Beckham a lot of money to play a sport, because they think he is worth that. Sport is big business and successful sportsmen and women can command huge fees because a lot of people want to watch them, buy shirts with their name on, buy their posters to put on their wall. Given these huge sums, perhaps the appropriate question to ask would be: who Ch.1 capitalism Page 10 9/2/06 else do we think should get the money from the shirts, the posters, the entrance tickets? Would we be happier if more money went to the ‘fat cats’ who own the clubs or businesses concerned? For many liberals this is what freedom is like: some will win, and some will lose, but whether one wins or loses is not arbitrary. It is not based that is on the whim of a tyrant, a king or a priest, as it was in the past It is based on what you are worth to others or what others will willingly give you. So the argument from liberty insists that being free is about having rights and being able to exercise those rights with the least possible interference from others. We should be allowed to get on with our own lives. If this means the world is incredibly unequal (as it is), then this is the price of freedom. There are only so many Jordan Beckhams out there. Such individuals may be ‘lucky’; they may owe their success to being incredibly athletic, or being seven foot tall, or handsome, or blessed with a good voice or huge feet (like Ian Thorpe, the Australian swimmer). An important point in this context is that what goes for individuals, goes for countries too. There is for libertarians of this hue a direct analogy between the relative position of individuals and the relative position of states. The US and Britain are ‘lucky’ countries blessed with hard-working entrepreneurial individuals, important natural resources like petrol, good trading links, and a long history of settled institutional development. But they have earned their relative wealth through global trade. Other countries are not so lucky, or are in some other way hampered from doing as well as the US or Britain. It is for this reason that they are much poorer. They are not poor because the latter two are rich. Economics is not on this view a zero-sum game. If everyone plays by the rules of ‘just acquisition’ everyone can get what they want, what they need. They might not get it today, or tomorrow; but if they strive hard, get lucky, then perhaps one day they too will strike gold. The argument from utility Consideration of capitalism from the point of view of utility gives a quite different slant on the matter, one that is probably more recognisable as the basis most defenders of contemporary capitalism use to justify their position. The argument is again classical, being associated principally with the work of Smith and J. S. Mill and, more recently, with economists such as Hayek and Milton Friedman. What these thinkers argued is that a (capitalist) market society is not only a free society (see above), it is also a productive society. It works, and in working it provides employment, dynamism, opportunity. What after all is competition doing? At the consumer end of the scale, it is bringing down prices and enlarging choices for us, for shoppers. If you have found yourself wondering why it is that goods are getting cheaper – DVDs, digital cameras, cars, holidays, indeed bicycles and linen (for readers in Nottingham), then the answer is because of all those things we have just been discussing: competition, lowering costs, opening markets, increasing productivity due to enhanced use of technology. All that outsourcing, downsizing, flexibilising is at one level for ‘us’, or for us as shopper. The capitalist is doing us a personal service: she wants to make a profit, and in doing so she is benefiting us, making our lives easier, cheaper, more fun, more mobile, more creative, whatever. If she wasn’t she would, as we know, go out of business. Nor is the ‘happiness’ confined simply to the consumer end of the scale, for what a competitive market system encourages at the producer end is risk-taking and entrepreneurship which in turn leads to job creation, employment opportunities, and thus to personal and collective wealth. As Smith famously noted, all this happens by operation of the ‘invisible hand’, which is to say that it is not even an intended outcome of the acts of individual capitalists (though it may be). We are not in other words talking about virtuous activity, but activity which necessarily has virtuous outcomes. My desire for money, wealth, glory, self-satisfaction leads me to set up a business which in turn requires the labour of others. From such desires come opportunities and employment for others. Self-interest is the motor that drives economic progress and which leads to highly dynamic societies. Where selfinterest is curbed by state intervention, then economic stagnation follows. Whilst East Germans puttputted around in their loveable but ugly Trabants, their West German neighbours were zooming up and down the autobahns in BMWs and Mercedes. Why? Because the West Germans had a free market economy that encouraged entrepreneurial activity, whilst the East Germans laboured under a suffocatingly paternalistic planning state that all but outlawed similar behaviour. The result was almost complete stagnation in the East and astonishing economic dynamism over a forty year period in the West. West Germany was not a more equal society than the East. Deviation from the mean wage Ch.1 capitalism Page 11 9/2/06 was much higher (on official figures) in the West than in the East; but since the overall standard of living was much higher in the West, even the poor were better off there with access to better public services than the ‘universal’ services provided in the East. Wealth is on this view a correlate of inequality in capitalist economies: we (paradoxically) need inequality to make us all wealthier. So working back from the premise we can see that a society that was concerned about the well-being of its inhabitants would do all it could to provide the most welcoming environment possible in which those individuals could be encouraged to take risks, to set up new businesses try out new ideas and be able to rebound quickly from failure. This would be an entrepreneurial society, rather than a society based on dependence – on the state, on the tax payer, on charity, on kind people. So on this view, the justification for capitalism is that it promotes economic growth and dynamism and in turn the economic well-being of individuals, of society, and by extension the world. And to do this we need a free market, a market that is, with the fewest possible encumbrances, tariffs, taxes, obstacles to overcome, hurdles to clear, bars to jump over. We should be free to get on with it, because ‘getting in with it’ will in and of itself lead to greater benefits for others. Transferring to the global debate, what we are describing is what is known by pro and antiglobalisers as the ‘trickle down’ theory of development. Capitalists are going to get rich in a free market, but in enriching themselves they will provide opportunities, employment, goods for the rest of us. Thus some of that overall wealth created finds its way down the pyramid. But how? Remember the point made above about costs. Down there at the bottom of the pyramid people will sometimes work for a bowl of rice per day. Companies come along set up, more employment is created, other companies arrive. Labour shortages begin to kick in, so companies need either to pay a little bit more to keep their workers or move somewhere else. Now as the ‘somewhere elses’ come themselves to be developed, the effect of capitalist competition is to create a virtuous circle of mutual interdependence. Countries that are poor today will be better off tomorrow through free trade and capital mobility. This is such a key point in the overall case for global trade that we need to look more closely at the issue. Let’s imagine a capitalist planet (Planet Milton) with ten communities (C1-10). C1 is very rich, C10 is very poor (they live on the dark side of the planet). Because C1 is so rich, companies find they have to pay a lot to get anyone to work for them, so two apple growers head off to C2. They find they are able to grow apples very well there, labour is cheap and thus they make big profits. Other apple growers come along as well, as do cucumber growers, grass planters, and dust miners. They all find the same. It’s cheap, people work hard. But as more time passes and more companies arrive from C1 the people of C2 find they have plenty of choices of where to take their labour, and the companies are thus having to pay more in order to keep them. After a while the people of C2 find they have the savings to start up their own businesses, so there is even greater pressure on wages as the companies from C1 compete with the companies from C2 for available labour which is now pretty expensive. So some of the companies from C1 and even some from C2 head off to C3 where labour is cheaper. After a while the pattern is repeated. C3 begins to look expensive, so they move off to C4, then C5. Eventually they make it to C10. For C1 read the US, Britain, France; for C2 read Japan, for C10 read Burundi, Eritrea and Nepal. One day their turn will come. It’s evidently not quite their turn yet, but those clever folks at the World Bank understand the tendency of ‘trickle down’, so they are confident that even the C10s of the world will have ‘their day in the sun’, not just literally, but metaphorically. They know that what we need is not less free trade, but more free trade; not less freedom, but more freedom. More is good. Neoliberalism and the end of the political So what of neoliberalism? How do these arguments link to the current phase of development, termed by anti-capitalists, neoliberal globalisation? As the name implies, neoliberalism is essentially a restatement of the classical strands of liberalism we have just been discussing. There is nothing very novel about neoliberal ideas as such. What is novel is the sense in which they have gained a purchase on the minds of political and economic elites across the world. Thinking back over the previous century, what is apparent is the degree to which these classical statements of liberty had declined into virtual unimportance. A cursory survey of political discourse over the period from 1929 (the period of Ch.1 capitalism Page 12 9/2/06 the Wall Street Crash) to late 1960 and early 1970s reveals the degree to which it was social democratic, Keynesian and welfarist arguments that held sway in the advanced industrial countries, even in the US. Elites had accepted - or, more realistically, been made to accept - that part of the task of government was to provide for citizens from ‘cradle to grave’. People needed to be housed, educated, cared for when they were sick, given pensions, and social facilities. This is what ‘progress’ meant, even more so ‘progressive politics’. It was for this reason that the tone of a work like Hayek’s The Road to Serfdom published in 1944 which argued against the vogue for planning and welfare provision is so shrill. Indeed almost all of Hayek’s work is infused with a sense of defeat, the defeat of liberal ‘orthodoxies,’ of ‘individualism’ of freedom. Libertarian liberals like himself had, he thought, lost the key arguments. They had failed to stem the tide of ‘collectivism’ that threatened civilisation itself, Bolshevism and Nazism being on his view mere exaggerations of the collectivist tendencies he attacked in the nascent welfare states of Europe and America. All this changed with the Oil Crisis of 1973. Reacting to the US’s support for Israel in the Yom Kippur War, the major oil producing countries of the Middle East embargoed the West, quadrupling oil prices and sending elites into a frenzy of recrimination concerning the costs of economic growth, the ever mounting burdens on business, and the suffocating cost of social democratic measures. From here on we hear talk of the ‘crisis of the welfare state’, the ‘overloaded state’, ‘dependency culture’ which were to become all too familiar as the 1970s gave way to the 1980s. It was around this point that the ideas we have been discussing came back with a vengeance, and re-established as the dominant paradigm not only at national level as the conservative tide swept over the world’s most ‘advanced’ nations, but also at global level, in the World Bank and the IMF. There is nothing like a crisis to provoke a serious rethink, and the serious rethinking was already underway. In the US Robert Nozick’s Anarchy, State and Utopia, published in 1974 brilliantly restated the case for an ultra-minimal, ultra-libertarian politics, the rhetoric of which made its way via the think tanks and graduate schools into what became ‘Reaganomics’. In the UK Hayek became court philosopher to Keith Joseph, in turn the principal architect of ‘Thatcherism’. Reaganism and Thatcherism are quite different phenomena. Whilst the former deployed the libertarian rhetoric of ‘freedom’ associated with Locke, the latter leaned more towards the classic liberal notions of utility associated with Mill and Smith. But the conclusions were the same: the state should do less, a lot less. If it did less, we would be freer and we would also benefit from the entrepreneurial forces unleashed in the wake of the ‘rolling back of government’. Sounds familiar. So what did neoliberalism imply in terms of policies? There are a number of key themes here to be itemised: • • • Reassertion of the centrality of the market as resource allocator substitution of supply-side for demand-side economic management submission of public life and the ‘commons’ to commodification Firstly, neoliberalism is most obviously a restatement of the belief in the centrality of the market. Sometimes this is justified by reference to liberty (people should be free to do what they want with the property), and sometimes by reference to utility (it is better in the long run if we allow people to keep more of their money as this provides an incentive to work harder). Sometime we hear both together, as for example in the alarm in the UK and US over the salaries of corporate ‘fat cats’, or directors. With regard to the latter, some days we hear that it is bad for government to intervene in such matters because it is none of our business how much companies choose to pay their directors,, just as it is none of our business how much a sportsman gets paid (liberty); on others, we hear that to interfere would be to risk ‘de-incentivising’ directors or making British and American companies ‘uncompetitive’ in the global market place for ‘top’ people (utility). The main thrust of the return of the market has been in terms of privatisation of economic activity, particularly as regards state-run or state-owned industries. This is less a factor in the US where the state had little to privatise in the first place; but in Europe and Latin America privatisation has significantly altered the balance between the private and the public sectors, ‘rolling back’ the decades long process of nationalisation that was a key feature of the welfarist settlement of the middle decades of the twentieth century. Nationalised industries are ‘inefficient’, ‘unwieldy’; they inhibit Ch.1 capitalism Page 13 9/2/06 ‘risk-taking’ and ‘entrepreneurial activity’. They had to go. But neoliberalism demands much more than competition between businesses; it also demands competition within businesses. Thus one of the novelties of neoliberalism is the penetration of the market into every aspect of the functioning of the enterprise which is now itself reconstructed as a series of sub-markets. Units within the same firm compete against each other for the same work. Workers within the same firm are expected to see each other as ‘resources’ or competitors, encouraging the individualisation of work and in turn of rewards. Contrary to expectation the extension of the market has itself led to massive bureaucratisation, with every ‘transaction’ requiring a contract and every contract requiring a tendering process, in turn necessitating an army of lawyers, accountants and consultants to pore over their ever more complex contents. Yet ‘UK PLC’, ‘USA Inc’ and ‘France SA’ all find themselves in thrall to the logic of ‘efficiency’ that the return of the market is supposed to represent. Secondly, the neoliberal revolution implies a shift from supply-side economic management, as opposed to the demand-side economics that typified the Keynsian approaches of the ‘post-war consensus’. Governments could no longer create demand by embarking on large scale public works which would in turn soak up unemployment, but instead had adopt ‘fiscally prudent’ measures for money supply, public borrowing and the control of inflation. A low inflation economy with high unemployment is according to neoliberal orthodoxy better than the ‘high inflation, low unemployment’ economy with which it was invariably contrasted. The task of government was to create an environment in which capital could prosper; it was not to displace, moderate or ‘interfere’ with capital. Here the regime of global governance was also key, making governments comply with the ‘austerity measures’, ‘structural adjustment’ policies and drastic cuts to public expenditure that global elites increasingly argued were the basis for the ‘stability’ without which entrepreneurial activity could not take place. Finally, we can note that the submission of public life to the logic of the market is intrinsic to the neoliberal argument. This is to say that for those services that remain in state hands profit and loss accounting, the importation of managerial techniques from the private sector, and ‘public-private’ initiatives await. Services that remain in the public sector have to be compelled to run themselves as if they are private enterprises, even if they aren’t. The more they act like businesses, the less they will succumb to the ‘inefficiencies’ and ‘red tape’ that dogged nationalised industries. Thus schools should be made compete for pupils. hospitals to compete for patients, public and ‘leisure’ services to compete for ‘customers’. The ‘exceptional’ character of ‘public’ life as opposed to the world of industry and commerce was thus seen as an old-fashioned nostrum that merely excused ‘wastefulness’ and ‘incompetence’. Neoliberals insisted that there is no separate ‘public life’ outside the market, or rather there was, but there shouldn’t be. There is just life; and, as we know, life is competition. Nor does neoliberalism accept the singularity or exceptional quality of the ‘commons’, the idea that there are certain areas of life that should not and cannot be bought and sold as commodities. One of the more disturbing facets of neoliberalism has been the encouragement to regard the whole of life as a resource for corporate profit. In recent years, genetic patenting has illustrated the inexorable nature of the logic as companies vie to patent the very genetic building blocks of life. Some of the most vociferous demonstrations and protests of recent years have focused on the efforts of corporations such as RiceTec to patent different varieties of rice so that peasants in the developing world are forced to buy their stocks from the company. All this is not merely acceptable on a neoliberal view, it is intrinsic to it. On a neoliberal understanding there is no ‘commons’; there is no outside of the ‘commodity’ and thus no reason why the genetic code for rice, wheat or bananas could not be bought and sold. That this is the road to the further impoverishment of the developing world whose citizens cannot afford to insulate themselves from monopolistic practices is perhaps a matter for regret, but not for intervention. Adam Smith would be rolling in his grave. Whilst neoliberalism is an intellectually complex phenomena involving diverse strands of argument, its ‘beauty’ (everything is relative) is that it emitted of a pristinely simple politics. Indeed it offers a simplification of the political to the extent that ‘politics’ ceases to have any meaning beyond terms prescribed by the market. There is little violence to the memory of the authors of the project to assert that neoliberalism represents the end of the political, and that moreover this is regarded as its chief virtue as a doctrine. There is no ‘politics’ as such in Nozick’s conception of utopia, and very little in Ch.1 capitalism Page 14 9/2/06 Hayek’s stripped down vision of a Singaporean ‘post-democratic’ state. Friedman thought politics was just a form of ‘protectionism’ for over-bloated and self-serving officialdom looking for a reason why they should be paid. ‘Politics’ on this view is a complicating encumbrance requiring ‘judgements’ of a value-laden nature and thus of an arbitrary nature. To neoliberals, there is only one rational way of measuring value, and that is in the market-place. Any answer that departs from the formula ‘whatever he/she/it is worth in the market’ has to be arbitrary, that is, based on a bureaucrat’s notion of what something is worth. Politics is the Thing that capitalism could supplant if only the market - not kings, priests or bureaucrats - was allowed to hold sway. But even under the onslaught of the neoliberal revolution that swept the world in the 1980s and 1990s, politics did not go away or ‘end’. It went underground. Resources Read on: Noam Isaiah Berlin, Four Essays on Liberty (Oxford: Oxford Paperbacks, 1969) Chomsky, Profit over People: Neoliberalism and Global Order (New York: Seven Stories Press, 1998) Wayne Ellwood, The No Nonsense Guide to Globalization (London: Verso, 2001) Milton Friedman, Capitalism and Freedom (Chicago: UCP, 2002 [1962]) Thomas Friedman, The Lexus and the Olive Tree (New York, Anchor, 2000) Friedrich von Hayek, The Road to Serfdom (London and New York: Routledge, 2001 [1944]) David Held and Anthony McGrew, Globalization/Anti-Globalization (Oxford and Malden MA: Polity, 2002) Eric Hobsbawn, Age of Extremes: The Short Twentieth Century (London: Abacus, 1994) John Locke, Two Treatises of Liberty, various editions [1689]. Full text available online at: www.history.hanover.edu/early/locke/j-l2-001.htm Karl Marx and Friedrich Engels, The Communist Manifesto [1848], various editions Full text available online at: www.marxists.org/archive/marx/works/1848/communist-manifesto/ Robert Nozick, Anarchy, State and Utopia (London and New York: Blackwells, 1978) Ayn Rand, Capitalism: The Unknown Ideal (New York: Signet, 1986 [1966]) Judith Sklair, Globalization: Capitalism and its Alternatives (Oxford and New York: OUP, 2002) Adam Smith, The Wealth of Nations, 2 vols [1776], various editions. Full text available online at: www.econlib.org/library/Smith/smWN.html Joseph Stiglitz, Globalization and its Discontents (London: Penguin, 2002) Paul Treanor, ‘Neoliberalism: Origins, Theory, Definition’, www.inter.nl.net/users/Paul.Treanor/neoliberalism.html Link to: www.capitalism.org www.zmag.org www.wto.org www.worldbank.org www.oecd.org www.unctad.org Ch.1 capitalism Page 15 9/2/06 Ch.1 capitalism Page 16 9/2/06