Capitalism

Full Title or Meme

Ever since Milton Freeman Capitalism has become primarily a government sanctioned Ponzi Scheme.

Context

• Capitalism as been through a wide range of interpretations and manifestations since David Hume and Adam Smith. defined an alternative to the zero sum politics of the Feudal age. They were right and an age of capital growth began that has itself gone through many iterations, but remains the dominant way for humans to organize themselves.
• For most of this new age of capital, the capitalists consider themselves to be an integral part of society that shared in the burden of making the entire society healthy.

Problems

The primary problem with Capitalism is human nature. Some capitalists, including Henry Ford were benign despots that understood that they could not succeed unless society, as a whole, succeeded. Others were less altruistic but were not the dominant breed of capitalists.

• As corporations, and governments, because larger and more unwieldy, bureaucrats were brought into "manage" the enterprise. Starting with Bismarck
• The Journal of Business Ethics published from 1992 to 2018 when no one wanted to write or read about it any longer.
• The major villain in this story is Milton Friedman of the Chicago School of Economics. His manifesto telling business people that they should literally care about nothing other than profits and they had not additional responsibility to society whatever.
• Extreme Capitalism resembles communism as it is practiced in existing examples throughout the world. The allocation of capital is controlled by a professional elite. In capitalism the elite is called Business. In Communism the elite is called Government. The only big difference is that Government has a monopoly on the use of force.

Solutions

• Adam Smith described the "invisible hand" pushing capitalism along.
• Milton Freidman at Chicago was a hard-core capitalist who felt the only function of a corporation was to maximize profits.
• John Maynard Keynes defined the economic boom-bust cycle and suggested that capitalism would no longer have much to offer after 2030 (see below).
• It comes down to time frame. One quarter, One Year, till my next promotion, till I retire, till my grandchildren start a life in the society I leave them.
• While the Business Roundtable was formed by the largest Businesses to push Milton Freidman's ideas. But when their plan was discovered (about 2021) they softened their message to be similar to the one pre-Friedman.

The End

In 1930, the economist John Maynard Keynes published a "letter to our grandchildren"

Technology Review looked at the discrepancy between what Keynes expected and what modern society have delivered.

The following is taken from Pascal Riché of L'obs interviews André Orléan, who has written a preface to this astonishing text. Translated by David Broder.

Les Liens qui libèrent have republished John Maynard Keynes’s odd little essay Economic Possibilities for Our Grandchildren, under the title Lettre à nos petits-enfants [Letter to Our Grandchildren]. Here Keynes journeyed a hundred years forward in order to imagine the society of the future. According to Keynes, by 2030 growth will have put an end to poverty. We will live in a society of abundance, in which we will work very little; an era in which "we prefer to devote our further energies to non-economic purposes." "The love of money … will be recognised for what it is, a somewhat disgusting morbidity." For André Orléan, the interest of this text lies in the break with capitalism that Keynes foresees therein.

Do you think this little text is a visionary one? It really is an astonishing text. Here we discover that even at the end of the 1920s Keynes foresaw that economic activity would be "between four and eight times as high as it is today" a century later. And already today, in constant currency, the Western countries’ GDP is over four times higher than it was in 1930. This prediction is all the more remarkable given that he made it during a very troubled period — the crisis of 1929 — at a time when few statistics were available. To get a measure of the boldness of Keynes’s text, imagine the difficulties an economist today would face if she set out out to predict the level of development in a hundred years’ time.

Conversely, Keynes was mistaken when he imagined a society of abundance. Even if we restrict our sights to the most developed countries, we still cannot see this on the horizon. He did not understand that putting an end to scarcity is not one of capitalism’s goals. But the fact that he was mistaken is in itself interesting.

Nonetheless he did recognise that together with "absolute" needs (food, housing, etc.) there also exist relative needs (the desire to achieve higher status)…

Yes, but he only dwelled on absolute needs, and did not seem to accord much importance to other needs. He clearly under-estimated their power. But this is consistent enough with the analysis that he elaborates: in the society of abundance that he imagines, there will no longer be any basis for these needs, since they are linked to market interactions, which is indeed what he wants to escape from. Once material needs had been fully satisfied, we would be free to be fully human and to develop an authentic art of living.

What is utterly incongruous, here, is that while Keynes was a liberal economist, he conceived capitalism as nothing but a temporary stage in the development of humanity, whereas in general liberals consider it the finished and unsurpassable form of economic order.

The other surprising aspect of the text is the violence of the antagonism that he sets out between true human values and capitalism’s false values, such as the love of money. In his eyes, capitalism constitutes a sort of dark age, a "pre-history" during which human beings are constrained by resource scarcity. The true values can only impose themselves once we have broken out of an economics centred on subsistence and labour.

He considered it necessary to pass not only via capitalism, but also via these malign values…

Absolutely necessary. In his eyes, it was a bad moment to go through, but one indispensable to breaking out of scarcity. We would never read such an argument in Hayek or the greats of liberalism.

We read it in Marx, who was in his own way a classical economist.

In Marx, yes… Keynes considered him a "very poor thinker."

Keynes did not follow through his reasoning to its full conclusion: for example, he did not imagine a universal income unbound from labour. He focused on a drastic reduction in working hours…

That is true, in his judgment "the Old Adam" would still feel the need to work three hours a day. But what makes his work very "current" is that it challenges the classic justification for capitalism, which is constantly to produce more goods and services. For Keynes, capitalism can only be conceived as something we ultimately break out of, in order to build a society based on restraint. Today, we know that this productivist model is driving us toward a fall, given the limited amount of resources and the question of the environmental balance. Of course, he does not mention this problem — it was not a matter of debate back then — but the change in modes of life that he imagines does have points of contact with thinking today.

Would Keynes be in favour of "de-growth" if he were around today?

Keynes was so unpredictable — he even defined himself as a heretic — that it is impossible to say. The idea of growth is so important to his thinking that it is hard to imagine that would be the case. Unless, that is, we think of de-growth as the exit from capitalism that he imagines in this text. According to another hypothesis — one upheld by numerous contemporary economists — future innovation will regulate the problems that our economic system brings up. Between the two, I think that he would opt for the former hypothesis, though ventriloquising the dead is always rather hazardous.

In this text he counterposes the "good" (pleasure in the moment, "delightful people"…) to the "useful." The useful comes by way of injustice and greed. Humanity must, in time, be led out into "daylight." But once it is outside "the tunnel of economic necessity," it would prefer the good. This is a captivating passage…

It summaries his radical opposition to what he called "the Benthamian tradition," according to which the good is equated with the useful. In Keynes’s view, this tradition inspired both Marxism and laissez-faire, leading to moral decadence. For his part, he upheld an utterly different conception of the good, identified with the pleasures of human relations and the enjoyment of fine objects, love, creation and aesthetic enjoyment, the search for knowledge. He partly owed this to [Cambridge philosophy professor] George Edward Moore and his Principia Ethica. Measured by this yardstick, he considered economics a very much secondary activity.

In the perspective he sets out for our grandchildren, he openly disdains economics. He predicts that economists will ultimately become like dentists, repairing a few cavities from time to time, but nothing more.

For Keynes, economics is a form of stewardship. It must not become too powerful. He takes a very different stance to the neoliberals who think that innovation and the entrepreneur are central. They think the spirit of enterprise is made of the same stuff as humanity itself. That is not at all his conception: he places the aesthetic values of the Bloomsbury Set way above everything else. His own development took place within that group, which brought together British artists and intellectuals [including Virginia Woolf]. He identified capitalism not with the enterprise, but with chrematistics, the desire for money. He rejected what he called "intentionality" — setting distant goals — in favor of privileging the present moment. He repudiated the desire for money in uncharacteristically virulent terms, speaking of a "somewhat disgusting morbidity of semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease." This itself brings us back to his General Theory, in which consumption is central, and saving only accessory.

This rejection of accumulating money is at the heart of his overall vision of economics. His was not a financial capitalism, and Keynes had no qualms about imagining "the euthanasia of the rentier" after the necessary fall in interest rates. After all, for Keynes the two noteworthy vices of the economic world are unemployment and inequality of wealth and incomes.

The historian Jean-Marc Daniel has spoken of his amazement that Keynes inspired 1) social democracy, an expression of the popular and middle classes, and something that he openly disdained, 2) economists, whom he made fun of, and 3) the advocates of dirigisme, even though his whole life he defined himself as a liberal…

That is an amusing way of presenting things. But his liberalism was a very particular one. He associated himself with the "new liberalism," a movement born in England at the end of the nineteenth century. The new liberalism did not provice individual freedom, as had the old laissez-faire liberalism, but rather social justice. He was a fellow-traveller of the Liberal Party but he was also close to Labourites. This "new liberalism" was opposite to contemporary neoliberalism.

The Original post that this was developed from by André Orléan, research director at the École des Hautes Études en Sciences Sociales and a member of the Économistes atterrés, has written the preface for Les Liens qui libèrent’s edition of Keynes’s Economic Possibilities for Our Grandchildren. He is author of La Monnaie entre violence et confiance (together with Michel Aglietta – Paris: Odile Jacob, 2002), De l’euphorie à la panique. Penser la crise financière (Paris: Éditions rue d’Ulm, 2009) and L’Empire de la valeur (Paris: Seuil, 2011, winner of the prix Paul-Ricoeur).

Commentary

Just searching on Google for "Forbes the end of capitalism" gives a very interesting view that this capitalist of all magazines worries endlessly if each "new thing" in the world will be the end of capitalism. If the capitalists themselves are worried, that is significant in-and-of-itself.