ETHICS, VALUES AND CAPITALISM

Ethics and Values in Reforming Capitalism



Ethics and Values in Reforming Capitalism

Introduction

The distinction between genus and species is central to what follows. Since the collapse of state socialist alternatives to capitalism, the very idea of a post-capitalist civilization has been banished to the realms of speculation and theory. For practical purposes, people now take it for granted that the only issue worth discussing is what form of capitalism is best or will prevail. Indeed prior to the financial crash of 2007-8, it was widely believed that even this question was on the way to being settled as the Anglo-American, neo-liberal model of capitalism appeared to outperform its rivals. After 1990, Japan sank into protracted stagnation and although the EU escaped from the doldrums of the 1980s and embarked on three major projects completing the “single market”, building monetary union and absorbing the former Soviet bloc states of Eastern Europe. It signally failed to resolve its internal crisis of popular legitimacy and governance, and far from stemming the neo-liberal tide, got caught up in it.

In the immediate aftermath of the crash, from the autumn of 2008 to the summer of 2009, there was a brief window of opportunity for radical economic reform. The opportunity was lost and temporarily thrown off balance. The political and business elite were hardly going to embrace the state-capitalist models of development favored by the world's rising powers such as China, India, Russia, and Brazil and in Europe. Though not in the US, they quickly rallied behind the banner of fiscal conservatism, spreading alarm about the state of the public finances and setting out to restore “business as usual” by dint of fiscal retrenchment. This is a high-risk strategy at a time when recovery from recession is far from assured and little has been done either to reform global finance or to tackle imbalances in international trade, and, capital flows, but in the absence of a systemic alternative to the neo-liberal model that combines abstract cogency with administrative appeal, our rulers apparently judge the risk worth taking. In that sense, what has transpired over the past three years is a crisis in neo-liberal capitalism, not a crisis of neo-liberal capitalism.

Elements of Capitalism

Three clusters of institutions are fundamental to capitalism, concerned respectively with markets, production and money. Economic activity is coordinated by impersonal market forces, a mechanism that Adam Smith famously likened to an “invisible hand”. There are markets for money and money capital (that is, money employed to make more money, through lending at interest, speculative trading or productive investment); for labor power; for produced commodities, whether to serve as means of production or for use in final consumption; and for physical and financial assets of various kinds, from land and buildings to stocks and shares. These markets form an interrelated system. However, the views differ about how well it works (Dobb, 1949).

Production is organized by privately owned, profit-seeking enterprises, which employs wage labor to produce marketable commodities and are separate from households, ...