Capitalism isn’t nice; just necessary
If you happened to be watching any of the BBC’s “city season” programming over the last few days, you may – like me – be coming out of the weekend feeling pretty depressed.
Whether it was BBC2’s excellent Saturday night documentary 1929: The Great Crash drawing chilling comparisons between then and now, or Peter Day’s Radio 4 In Business which looked forward at what will hapen post-recession, it was all sobering stuff.
The former really did show how we seemed doomed to repeat history and never learn: in the 1920s they believed boom and bust was a thing of the past because technology and the dawn of world trade had changed the rule book, just as many people in the 2000s felt about the internet and globalisation. The programme also explained how the lack of regulation resulted in disaster; and in recent years, many of the key post-Depession government oversight regulations put in place by FDR have been torn up by Reagan, Bush x2 and even Clinton administrations. It also described how the 1920s boom worked because so much of what was going on wasn’t understood or even known about by many investors or officials, and how this resulted in an iceberg waiting to hole the entire endeavour; exactly the same as today’s complete lack of knowledge of investors about sub-prime mortgages, credit markets, derivative markets and the market in loans repackaged into bonds has wrecked the 21st century economy. BBC Radio 4’s More or Less did a good programme on this aspect, too. (All BBC programmes are available on the BBC iPlayer for the next few days, in the UK.)
The only slight fly in the ointment of all this coverage is the slightly annoying BBC tone of admonishment, Auntie can’t help being Auntie sometimes, and the City season seems designed to tell us all off for our ignorance, hubris and most of all for our greed, which the BBC coverage never fails to put the blame on of all this economic downfall. And of course they’re right – it was the banks’ greed to make money (to sate their shareholders’ greed), and the greed of many traders like Bernard Madoff committing outright fraud, that has caused much of the maelstrom we see around us.
But to say “it would all have been okay if we hadn’t got greedy” rather misses the point. Because at its heart, capitalism is greed. It’s greed adapted into a workable system for running a civilisation. Take away greed and you take away the desire to buy things, acquire more, and to beat the neighbours. The greed that drives people to find the best deals, and traders to make the most profit for their investors, is at the heart of the engine that drives capitalism. Without greed, capitalism itself doesn’t work. But that’s okay, because greed is an intrinsic part of the human animal, almost as basic to us as our urge to procreate, and it will take many centuries for us to evolve out of that basic fact.
This is why communism has failed. Communism (and Marxism, and socialism) all rely on the basic optimistic view that people just want to work together to make the world a better place. But it forgets that people at heart are not like that: we try and be altruistic, but that urge isn’t as powerful as that of the selfishness and greed, and so communist systems become hopelessly corrupt almost from the start, and also underperform and stagnate. Any system that assumes that people en masse aren’t greedy and prone to corruption is bound to fail; only by accepting the reality and either playing to its strengths or rigorously compensating for its deficiencies will a system work.
I’d love to live in a world where greed wasn’t the most important, most dynamic driver of business. But as a realist, I have to accept that I do live in such a world: and that capitalism is the best way so far we have come across to harness those traits for the greater good. But we have to also accept that within the centre of our civilisation is this very dark heart, and it’s going to keep on exploding out of hiding every now and then to show its teeth. This latest recession is just the most recent demonstration of its malign but inescapable influence: boom and bust will be with us for many, many years to come. It only becomes truly dangerous and deadly – as in 1929, and possible in 2009 – when we blithely forget that its there and about to pounce and we let down our guard, take away the oversight, remove the regulations. That’s when ‘bust’ becomes ‘depression’ rather than merely ‘recession’.
And we just sleepwalked into it all over again, because we forgot our history and our basic human nature.