A Capitalism versus Socialism debate from the December 1991 issue of the Socialist Standard
Serious consideration of alternatives to capitalism needs to address: the nature of capitalism; its validity as an instrument of progress; the threat from existing alternatives; and the plausibility and cost/benefit ratio of socialist alternatives.
The nature of capitalism
The real nature of capitalism is widely misunderstood, especially by intellectuals. Over and above ignorance, there is widespread prejudice.This serves to confuse description with evaluation, and fosters naive wish-fulfillment.
Capitalism is not inherently or by definition exploitative, cruel and arbitrary, or unjust. These are empirical issues, to be judged as part of the objective evaluation of capitalism in terms of relevant evidence and reasoned argument.
Capitalism is a specific mode of organising society, and in particular the economy. It is a recent and rare phenomenon in human social development. It should not be confused with other completely distinct forms of social organisation.
Capitalism is characterised by: cultural individualism; private property; private ownership and control of capital; effective laws of contract; competitive markets shaped by the pursuit of profit; the key role of entrepreneurs; real prices; free labour; liberal political democracy; and limited government.
The benefits of capitalism
By comparison with other systems, capitalism has one major built-in advantage. The freedom which it structurally requires, permits it to learn from its mistakes, and to adapt flexibly and rapidly. In addition, analysis of the historical record demonstrates, quite contrary to socialist allegations, that capitalism has powerfully beneficial effects.
It creates massive wealth, dissipates it widely, and destroys poverty. The "poverty" celebrated so noisily by the Poverty Lobby is "relative poverty" for the most part. This is inequality rather than genuine poverty.
Capitalism requires some—modest and changing—economic inequalities, to provide incentive and aspiration. But capitalism eliminates destructive social in¬equalities. It keeps even economic in¬equalities modest by comparison with all save primitive societies.
Socialists' moral castigation of capitalism is as unjustified as their economic critique. Empirical research reveals — despite recessions and the risk of unemployment — extraordinarily high levels of work and life satisfaction, widespread positive commitment to opportunity and social mobility, and remarkable achievements in self-expression and spiritual development. Moral denunciations of capitalism, such as Erich Fromm's The Sane Society, are invariably emotional, hysterical, and contradicted by the evidence.
Immigrants flood out of all sorts of evil systems into capitalist societies. They are pursuing, first, an escape from poverty, secondly freedom, and third, the dream — which is no mere fantasy — of a good life for themselves and their families in the truest sense of the concept of good so far available. Ironically, it is the supposedly destructive features of capitalism — property, profit, competition, and the market — which are the sources and causes of its economic and moral success and its magnetic attraction for outsiders.
There are existing alternatives to capitalism which challenge its pre-eminence. They do this either as rivals' for control of humanity's destiny — for example Islamic theocracy, and the decaying remains of "actually existing socialism"; or as exemplars of the conditions into which we might fall if we lose faith in capitalism — for example the barbarous despotisms of much of the third world.
It is much more likely that we may decay into one or other of these regressive models, than that any of the apparently more positive alternatives on offer will be established. Should that happen, as it easily might if we fail to treasure freedom, democracy, and capitalism, and to protect them from their critics, the future is bleak indeed. It was ill-founded socialist criticism of capitalist democracy in pre-war Germany which sowed the seeds of Fascism.
The major alternative to capitalism proffered throughout this century by self-styled socialists has now been exposed once and for all as a moral and economic disaster, and as infinitely worse in every respect than capitalism. "Actually existing socialism" is and always was objectively regressive.
Anti-Stalinist socialists who nonetheless acclaim 1917 remain influential. But the mistakes were as much Lenin's as Stalin's. There is no real threat to capitalism from this quarter.
This leaves the minority of Marxist socialists who have always condemned Lenin and dictatorship, and the idealistic, allegedly non-Marxist, socialists whose anti-capitalist utopianism permeates intellectual life in the free world. Socialism in this sense is a permanently retreating mirage of empirical analysis and defensively resistant to rational critique:
• Its postulate of an infinitely elastic human nature is wholly implausible.
• Its concept of democratic planning as a replacement for the market would impoverish us all.
• Its objections to property, wage labour, competition, economic inequalities, and in the last resort money are grounded in a gross misreading of history and the human psyche.
• Its dream of a "peaceful socialist world" is a major threat to the natural and gradual evolution of a community of co-operatively competing nations, each and all of them prosperous, capitalist, and democratic.
In short, to quote a respected authority, "there is no alternative".
Professor David Marsland, West London Institute.
P. Berger, The Capitalist Revolution (Gower, 1987). F. Hayek, The Fatal Conceit (Routledge, 1988). D. Marsland, Seeds of Bankruptcy (Claridge Press, 1988). A. Seldon, Capitalism (Blackwell, 1990).
Marsland's magical capitalism repudiated
Those who seek to defend the capitalist system and prove the case against the socialist alternative are usually disappointing, often pitifully so. Too often they exhibit little understanding of what the system of capitalism is and no serious awareness of what the socialist alternative is. Added to this are archaic notions about "human nature" and "the human psyche" which are the last resorts of the confused thinker. Scratch a pro-capitalist sociologist and you will find a priest, his mind packed full of ridiculous ideas about the immutability of existing human behaviour and social organisation.
Professor Marsland's attempt at defining capitalism is inadequate. He correctly states that "competitive markets shaped by the pursuit of profit" characterise capitalism, but also speaks of "free labour". In fact, the pursuit of profit is only achievable on the basis of exploited labour.
Unless labour power is legally exploited, unless, that is, wealth producers are paid wages and salaries which are less than the value of what they produce, not a penny, cent, rouble or yen of profit could even be produced. But for Marsland it is simple enough to state that "capitalism is not inherently or by definition exploitative". Without the exploitation of wage labour, how on earth does he think capital could ever be accumulated?
Socialists are urged by the professor to evaluate capitalism empirically and objectively. This is good scientific advice and we take it seriously. Alas, the educator needs to be educated, for, as well as his failure to explain how profits can arise other than through exploitation of wage labour, our opponent makes several wildly unjustifiable observations about capitalism which are empirically false. We shall deal with just three of them.
Wealth, waste and want
Firstly, we are told that capitalism "creates massive wealth, disseminates it widely, and destroys poverty". Capitalism creates massive wealth — and is faced with periodic crises of overproduction, which means that too much wealth has been produced for the market. So, food is dumped or locked in warehouses and farm owners are paid subsidies to take land out of cultivation while in other parts of the capitalist world (capitalism dominates the whole planet) every single year 15 million children under five die of starvation and malnutrition-caused diseases. Society is capable of producing the "massive wealth" of which Marsland boasts, but the profit priority dictates that such potential abundance be constrained or destroyed.
The claim that capitalism disseminates wealth widely is absurd. In fact, in Britain the richest 10 percent own half of all marketable wealth and the poorest 75 percent of the British population, i. e., the vast majority, own less accumulated wealth than the richest 5 percent (Economic Trends, October 1990). This extreme wealth concentration in the hands of the privileged few is the basis of capitalism.
More crazy still is the claim that capitalism "destroys poverty". Poverty is defined by socialists as the gap between wealth (goods and services) which is produced and what workers have access to. But even on the Conservative government's own empirical data, "official poverty" (the number of people forced to live on less than half the average income) has increased from just under 5 million in 1979 to just under 12 million in 1988 (Daily Telegraph, 23 October 1991). So, according to sociologists working on data supplied by the government which Marsland has faith in, poverty has increased, not been destroyed. Professor Marsland should go and tell the homeless beggars on the streets of London, whose numbers grow by the week, or the starving millions in the world whose kids scream with hunger pains, that capitalism "destroys poverty".
Secondly, we are informed that capitalism "learns from its mistakes" and adapts "flexibly and rapidly". This is a justification for the futile policy of reformism, of patching up capitalism. We challenge Professor Marsland to tell us of one basic problem of capitalism, from homelessness to unemployment to racism to pollution, which any government running capitalism has ever remedied. All of these problems have been presented as "mistakes" to be rectified by government reform. In fact, these problems are endemic to the system of production for profit.
Thirdly, capitalism is said to offer "extraordinary levels of work and life satisfaction" and critiques of capitalism by writers such as Fromm are dismissed as being "invariably emotional" and "hysterical". Such abuse is easy, but it is less easy for pro-capitalist sociologists to explain away the escalation of a massive, escapist drug culture, the rise of frustrated urban violence, the existence of mass tranquiliser addiction caused by anxieties generated by ruthless competition and dull frustration, or the fact that millions of workers fear the indignities of old age or the living hell which characterises numerous boring jobs. It is not "hysterical" to recognise the widespread sense that the quality of life is worsening under the strain of the profit system, but to ignore the increase of working class misery is to display an insensitive unwillingness to face the facts.
Professor Marsland misunderstands capitalism, but is totally in the dark about the meaning of socialism. He seems to think that it exists somewhere, but does not tell us where. He rightly observes that Leninism-Stalinism offered "no real threat to capitalism", but then repeats the foolish remarks of those who refer to Leninist state capitalism as "actually existing socialism". With confused definitions of this kind, what hope is there for our opponent to have anything sensible to say about socialism? He opposes "democratic planning as a replacement for the market", but this is probably an attack on centralised, state planning which is a left-wing capitalist policy for regulating the market. We doubt whether Professor Marsland has ever seriously thought about the possibility of real democracy where all resources belong to everyone, production is for use and there is free access for all. If he had, he would not conclude that this would "impoverish us all".
Human nature again
The bottom line of Marsland's attack upon what he dismisses as "anti-capitalist utopianism" is that socialists' idea of "an infinitely elastic human nature" is unrealistic because "property, wage labour, competition, economic inequalities and . . . money" are grounded in "the human psyche". This is unhistorical. All of the above are part of social relationships which did not once exist and need not exist in the future. Money is no more a function of the natural human thought process than were witch burning or slavery. Our opponent is a poor sociologist, but no historian at all. The lesson of history is that society changes. Alas, Professor Marsland does not comprehend the structure of the capitalist present (which he thinks will last forever) nor the nature of the materially-based socialist alternative (which he thinks is not for humans) and therefore, like priests of old, he falls back upon unscientific, morally dubious, metaphysical nonsense about the evil nature of human beings. We pity the wage slaves who are convinced by such pessimistic lack of social vision.