Capitalism is indefensible (except if you are a capitalist). But that doesn’t stop people trying. One recent example is Lucy Turnbull, member of the Australian Liberal Party and former Lord Mayor of Sydney. “Capitalism is still the only system that works,” she asserted in the Sydney Morning Herald (9 August).
According to her, “price signals, fair markets and free trade are the cornerstones of the capitalist system for creating goods and services”. Prices, markets and trade certainly are features of capitalism but she manages to omit two other, key features: the class ownership of the places where goods and services are produced and production for profit. Without these capitalism wouldn’t be capitalism.
Prices may signal to people and firms what to buy, but it is profits that signal to capitalist firms what to produce. Unless prices are high enough to allow capitalist firms to realise a profit they can signal as much as they like but no production will be forthcoming. In addition, some needs don’t register at all if the person hasn’t got the money to pay to satisfy them. In which case they go unmet.
“Fair markets” and “free trade” are not essential features of capitalism but policy objectives that sections of the owning class sometimes want the government to pursue. At other times subsidies and tariffs have been preferred. Turnbull has made the mistake here of identifying capitalism with a particular policy.
She makes some extravagant claims for her conception of capitalism:
“It alone harnesses the reality of human nature – our continual striving for progress and our competitive instincts to do our best.”No doubt people do want to do their best, but what has this got to do with competition? If it is part of “the reality of human nature”, then this would continue if the capitalist rat-race to avoid falling into poverty is replaced by cooperation to ensure that nobody‘s needs are neglected.
Competition in fact prevents many people from doing their best. Capitalist firms compete to make profits by trying to keep their costs below the average for their sector; the lower their costs compared with their rivals the more sales – and profits – they can expect to make. It’s a race to the bottom with speed-up and pressures to get a job done quickly taking precedence over taking the time to do it properly.
Turnbull also claims of capitalism: “It alone is compatible with political and democratic freedoms.” Capitalism may well be compatible with political democracy but it’s also compatible with a restricted franchise (as in the 19th century) and political dictatorship (as in many countries now and in the past). Capitalism impedes the carrying out of democratically-expressed wishes to improve housing, health care, education, transport and the like as the workings of its economic laws force governments to give priority to profit-making over these. When it comes to production capitalism is undemocratic. The moment a worker enters the factory gates or the office doors they stop being a “free citizen” and become subject to the authority of the employer.
Socialism alone is capable of ensuring a genuine democracy as, with the means of production the common heritage of all, everyone will be able participate on an equal basis as nobody would have a privileged say in how the means of production are used and nobody would have a privileged share of what is produced. Under democratic control the means of production can be used to satisfy people’s needs not to make a profit for the few.