Age of Awareness
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Age of Awareness

What is Wrong with Capitalism Exactly, Problem #1

In this article, the first problem of why no one should even expect capitalism to work in the first place, is developed.

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Introduction to the series

The usual approach on the left to understanding our society, economic and political system is empirical. And, why wouldn’t it be?

This usually contrasts with delusional ideology that’s completely disconnected from reality on the right.

For, in the world of sane good faith intellectuals, if you make a claim of how the world works — such as unregulated markets distribute resources efficiently, lowering taxes on the rich will increase everyone’s wealth, private enterprise can do this thing better than government that currently does it, trade relations with poorer countries benefit them and are not exploitative, the economic system is sustainable and there’s no big environmental problems etc. — and it’s simply proven false by an investigation of reality, well … honest intellectuals abandon those beliefs about reality if they don’t line up with said reality.

This (people accepting overwhelming evidence), of course, we rarely see happening … but that’s only because who we see are generally right wing propagandists who are paid to parrot a certain line: they know it, we know it, their backers know it. Sometimes the “talking points” can change within a few hours; this happened multiple times of the right wing media making a plausible deniability defense of Trump, inventing some 5-D chess moves… and then Trump would just get in front of the camera and simply admit to whatever the right wing media had been vehemently denying the past few hours, a script they would simply immediately flip to get with the new program, makeup some even more fanciful gymnastics of reasoning.

However, there are plenty of people we don’t see, who are curious, trying to figure things out.

This article is to help you engage with them, or even them directly.

For, empirical evidence is messy. It’s of course critical, the most critical, but you need a lot of evidence before coming to any strong conclusions.

Evidence is also simply not enough. We also need values of what to do about that evidence.

Say there was overwhelming evidence climate change will make life miserable, maybe even impossible, for future generations, or even the younger generation alive right now, or even lot’s people in the current moment. Well, one would have to care about that. If the propagandists denying the reality of climate change are only saying they care, but don’t actually care, then presenting evidence simply doesn’t matter. The situation is in conflict. Which is a different scenario than someone who does really care but lacks or is confused about the evidence.

Engagement with bad faith actors is not the same as honest intellectual mistake. It’s not a search for a the best understanding of reality and plan to implement shared values, it’s a battle with someone with totally different values who will destroy what you value. In the latter context, “discussion” is not really discussion, it’s tactical maneuvering to decrease their political influence while increasing your own; a move justified, we hope, because the position one is increasing happens to be both just and true.

The propaganda defense of capitalism never gets fully into the evidence, rather: evidence is denied until it can no longer be denied, and then it is simply claimed that the negative outcome, that was previously denied, is in fact a moral necessity. It is a confused hodgepodge or moralizing … while also sometimes denying it’s moralzing by claiming it’s evolutionary psychology and has all the prestige and merit of science, even if it’s a speculative narrative about the lives of tribal people thousands of years ago based on absolutely nothing (while simultaneously casually denying the legitimacy of scientific theory with overwhelmingly more evidence) … all while blaming others for whatever bad outcome that we’re still somewhat denying, but is morally necessary consequence of the hard “justice as harsh teacher” of capitalism … but definitely it’s the fault of those other people, that goes without saying.

I will be untangling that mess of subterfuge and deflection in another series of articles, that I’ll need to muster up the courage to do, as it’s the time to clean up a mess is proportional how messy things are.

However, in the latter case of a good faith actors who are questioning and curious and do actually feel something for poor people, exploited people, future generations, or just the young generation right now, and life in general on the planet, and would want a better life for all these people and creatures, but they simply don’t see what’s “wrong” with capitalism, this article is about that.

For, capitalism is such a bad political system, it’s extremely easy to explain why it shouldn’t be expected to work, and when one doesn’t expect something to work, it’s much easier to interpret empirical information that it doesn’t work, than going into things convinced it does work and then finding out there’s a “problem with reality”, in the famous words of Alan Greenspan.

Even if capitalism is “working” and we simply ignore issues of corruption, there remains 3 fundamental problems and 3 core contradictions.

This has all be said before, but I hope to provide a clear summary for reference.

Problem number 1: ‘Good’ and ‘marketable’ aren’t the same thing

Markets mediate transactable interactions. A transactable interaction is an action in which free agents exchange a good or service. You want some shells, I want some bananas, you have bananas, I have shells, so we trade them.

However, not all “good” actions (regardless of our definition of goodness) can be the object of a financial transaction.

Capitalism would be a “good system” that we’d expect to work, if we could draw a circle around good actions and a circle around transactable actions, and we’d see the same circle.

Already, we can hear the roaring defense of the libertarians, that we can’t define “good” and so we need the market to discover that: if you’re willing to pay for something, who’s to say it isn’t “good”. So, who’s to say “good” and “transactable” don’t overlap?

Unfortunately for libertarians, this just doesn’t work, as there’s plenty of non-transactable actions that are prerequisites for the capitalist system to work in the first place. Namely, property rights and enforcing those rights, the basis of market interactions, is not a transactable interaction. A judge does not “possess justice” and we transact with the judge to get some of that justice. The justice system is simply not a market place where justice is traded. It is something else, which we’ll get to. But for now, it suffices as a counter-example of which we’re sure the circle of “good actions” and the circle of “transactable interactions” do not overlap entirely.

If they don’t overlap entirely, since equating goodness with markets doesn’t work as markets depend on none-transactable actions to exist, if they aren’t the same thing: There can be “good” actions needed for society to function in a good way that simply cannot be the result of a market transaction, there’s simply no a priori reason to believe they are even close.

If we draw a circle of all the good actions needed for a good society to function — of which you don’t need to imagine a utopia just just a society you’d be more-or-less pleased to live in, even the current one you’re in — the circle of actions resolved by market transactions could be minuscule part of it for all we can deduce from first principles.

Now, if all these other good actions — which, once we start to think about it, are easy to make examples of such as parents taking care of their child without the child paying for each meal and every encouragement and language and life lesson — aren’t all spontaneous, but require institutionalization to ensure these actions happen, then a priori capitalism, insofar as we understand it as the primary reliance on markets to organize society as an article of faith, has a big problem. For, it would be convenient for the proponents of capitalism if whatever is outside the circle of the market, no matter how big that space is, could be said to be all spontaneous good acts that don’t require social organization (institutions) to function; if that were the case, maybe all these other non-market actions, like teaching a child a new word, are more numerous and more important for the functioning of society, but they could be imagined to happen within the context of markets as the primary institution.

However, we already know this not to be the case as the justice system upon which the market rests is by definition agreed upon rules and collectively paid for and organized, not based on spontaneous actions of police and judges happening to encounter people who happen to need justice and lending them a hand to provide “judiciation and law enforcement” — indeed, police and judges simply are impossible to define outside the context of institutions to organize society.

Of course, if “bad things” can happen, which even the most minimalist government freedom loving libertarian believes does exist, as the whole capitalist system rests on the notion that property rights (as currently defined, or then would be further defined by the already wealthy) being infringed is a super, duper bad thing.

So, even in an attempt to make no moral judgments in leaving good actions up to the market to decide, there’s no way to actually get rid of value judgments, only obfuscate them by taking granted thousands of years of criminal and civil law built up by non-market institutions upon which the institution of the market rests and not realizing the massive amounts of moral premises adopted in so doing.

And, not only do we not know how much of the “good actions” circle does market interactions occupy, but there’s no a priori reason to even assume the circle of the “market” lives inside the circle of good actions. The market circle could stretch out beyond good actions occupy space in bad actions as well.

And indeed it must, for, if we are building things from first principles, we cannot simply assume people won’t be willing to pay for assassinating the competition and bribing judges, so we would expect anyone willing to provide that service may encounter someone willing to buy that service, thus forming a market of assassinating and bribing. Clearly, we want to suppress and constrain that sort of market interaction.

How many more bad things might happen in the market that we will need to try to stop from happening? There’s no a priori reason that bad things people maybe willing to do for money is a small amount. Significant intrusions into the market maybe required for the market to even function in the first place.

There maybe required extensive laws, regulations, and political effort to even understand what’s going on, to ensure bad transactable actions happen less rather than more.

We will get more into what this all means, especially what the “good” non-transactable space represents, in subsequent articles, after the other critical problems.

For now, keep in mind the above reasoning is simply to establish there’s no first-principle reason for capitalism to work. We know good actions are required for a good society to “happen”, but there is simply no principle argument to assume market relations deliver those good actions; worse, no reason to assume market transactable interaction don’t deliver lot’s of bad actions!

In the next part, I hope to publish in the morning, we’ll get into the next problem with capitalism: the poverty trap.

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Eerik Wissenz

Eerik Wissenz

Founder of solarfire.io and co-founer of abalance.ch

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