Capitalism by a Better Name: Sweeter Still

Karl Marx is usually credited with coining the term “capitalism” to describe the economic system of our age.  The prior system, feudalism, accorded power and wealth to those that controlled the land.  Marx observed that power and wealth had shifted to those that controlled capital.  The irony of describing today’s economy as capitalistic is that for Marx capitalism, as he thought of it, was only a small portion of the overarching system that really set him off.

The plain fact is that prosperity and productivity had nothing to do with Marx’s ire.  The Communist Manifesto contains arguably the greatest paean to the productivity of the new system ever penned to paper:

Marx3“The bourgeoisie, in its reign of barely a hundred years, has created more massive and more colossal productive power than have all previous generations put together.  Subjection of nature’s forces to man, machinery, application of chemistry to agriculture and industry, steam navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization of rivers, whole populations conjured out of the ground – what earlier century had even an intimation that such productive power slept in the womb of social labor?”

Wow!  After that you would think Marx would be wild about the bourgeoisie reign.  Note that Marx did not refer to a capitalist system, but to actions and accomplishments of a class of people.  Indeed they were an entirely new class of people eschewing the status of birth for the status of wealth, relentlessly pursuing profit.

This all suggests something deeper and broader for Marx’s negative sentiments found in his manifesto.  In what I believe is the greatest paragraph in all of English nonfiction prose, the Communist Manifesto contains the answer.  Having read both Capital by Marx and Conditions Of The Working Class In 1844 by Engels, I believe the following ideas are from Marx, but the words were Engels’:

“Constant revolutionizing of production, uninterrupted disturbance of all social relations, everlasting uncertainty and agitation, distinguish the bourgeois epoch from all earlier times.  All fixed, fast-frozen relationships, with their train of venerable ideas and opinions, are swept away, all new-formed ones become obsolete before they can ossify.  All that is solid melts into air, all that is holy is profaned, and men at last are forced to face with sober senses the real conditions of their lives and their relations with their fellow men.”

This is powerful stuff.  The context of this text embedded in the Communist Manifesto is clearly negative in its thrust.  Yet, a free market objectivist like me can only be moved by its eloquence, perception and accuracy.  Unlike Marx, I revel in this new state of affairs.  Unfortunately most are not unlike Marx.

In the narrowest sense, Marx preferred the old status based system because it favored lazy intellectuals like him.  Later in the Communist Manifesto he notes that professionals, intellectuals, artists etc. merge into the working class and:

“[L]ive only so long as they find work, and … find work only so long as their labor increases capital.  These workers, who must sell themselves piecemeal, are a commodity like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market.”

Heaven forbid!  Intellectuals, professionals and artists have to actually work for a living providing something people actually want and for which they will pay.  Dare I say it, they must be commercial!!!

More broadly and fundamentally, Marx strikes a deeply harmonious cord with the evolutionary base of the human psyche.  The new system, which the word “capitalism” does not fully encompass, is as much about actions and change as it is about a market economy, laissez faire and globalization.  Marx was the first to fully understand this.  He was the canary in the coalmine of the industrial revolution noting that the new system brought constant, even accelerating change.

Humans are wired to detest change.  For all of the history of life on earth change was always bad.  Organisms strive to be in a place where they met their needs, and once there any new development was surely negative.  This is why, despite the colossal productive prosperity all around us we are far from content, let alone happy.

Slow motion legs of business people walkingWe live in The Age Of Angst!  Ours is the only truly unique age in all of history – future as well as past.  Until yesterday, from a historical perspective, a person would be born, live and die in a world essentially unchanged.  That is why ancient structures were built to last forever (and more than a few succeeding in that aim).

Therefore the correct word to describe the past’s prevailing world view was not cyclical, but circular.  Details differed here and there, but everything eventually returned to its original position.  Pestilence and war commonly caused havoc.  Technology caused minor lifestyle differences.  The world remained the same.

That world view has been obliterated.  In my lifetime the world has been turned upside down and inside out not once, but going on twice.  Historical processes that changed fundamental cultural traits like manners, dress, attitudes toward sex and women, marriage, family and religion used to take centuries and now take decades or less.

It is more than ideas and opinions that are swept away.  We are in the only age where there is no cultural consensus about anything.  People are making it up as they go along because there is no cultural point of reference.  Until our age the notion of a fulfilling marital relationship or being a good parent had no meaning.  You rose at dawn, worked like hell all day, hopefully ate afterword and dropped of exhaustion at dusk.  There was not time or energy for anything else.

In a few hundred years or so humanity will probably sort this all out bringing a close to this only real age of change.  We need a new word or phrase to denote this system impelling accelerating change referred to by Marx as the reign of the bourgeoise.  The concept of the free market is incomplete.  Liberty and law may be better.  Any suggestions?

Karl Marx Photo Credit: http://www.PhillWeb.net

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ISE Proposal for Financial Market Reform

The International Securities Exchange (ISE) has issued a proposal for reform to the the U.S. securities markets. The proposal is based on the premise that there are currently significant overlapping areas and regulatory gaps between the Securities Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC).

They are proposing a new risk-based framework that includes 3 components:

  • Financial Systemic Risk: financial and capital matters involving commercial and investment banks, as well as futures commission merchants, investment companies and hedge funds.
  • Disclosure: disclosure/risk analysis for investors, which would cover corporate issuers, investment companies, and product-specific risk.
  • Financial Industry Operations: operation of financial markets, trading platforms and financial service providers, including but not limited to the services traditionally provided by brokerdealers, investment advisors, hedge funds and futures commission merchants.

To execute this framework, there would be a new U.S. Financial Markets Commission (FMC) that oversees all activities. A transitional authority would be set up for 18 months to facilitate the merger.

See the full proposal at: http://ise.com/regulatoryreform/

Ethnocentricity and Free Trade

Der Speigel recently printed a poll of former East Germans. In it 49% say: “The GDR had more good sides than bad sides. There were some problems but life was good there.” Another 8% say “Life there was happier and better than in reunified Germany today.” A full 57% defend a totalitarian, police state!

Typical of those polled is Thorsten Schon a 51 year old master craftsman who lives in Strasland on The Baltic Sea. Since reunification he has purchased a Porsche, traveled to Africa and by all measures has benefited from the fall of communism. “I’m better off today than I was before, but I’m not more satisfied” he says. He misses “that feeling of companionship and solidarity” and laments the rise in crime. “People lie and cheat everywhere today” and “today’s injustices are simply perpetrated in a more cunning way than in the GDR.”

Are these opinions merely looking back thru rose colored glasses? Or do they represent real questions we need to consider when assessing capitalism’s benefits and weakness’s.

InPen

Living in the southwest I’m often in contact with native American cultures. I once asked a Navajo gentleman what his definition of success was. A new car? A big house? “No” he said. His definition of success was to be “a good member of my clan.” Material things meant little to him. Family, friends and community were far more important.

He also felt that democracy was a mistake in native cultures. The corruption of so many tribal officials was a result of it. He felt native peoples would be better off if they returned to the old system of chieftains. His answers are remarkably similar to those of the former citizens of the GDR.

The poll reminds us not to be so judgmental when assessing a trading partners economic and political system. While human rights need to be adhered to, values may be very different. Modern capitalism has many benefits, but they come with a high price, a price that others with different value systems may not be willing to pay.