The Fabian Socialists famously thought that the science of socialism was so sound that there would be no need for people to take up arms to overthrow capitalism – people would just naturally turn to it as they saw the truth. In no small bit of irony, the London School of Economics was founded by the Webb’s, leading socialists of their time in England. They had no problem hiring liberty-oriented scholars to come work there (Lionel Robbins and F.A. Hayek are two of the earliest) because they believed deeply in the truth of their work.
We know how that turned out.
I’m not sure it would be correct to call Marx a Fabian, but there was another large group of people in the mid-19th to mid-20th centuries who believed that the collapse of capitalism was inevitable. For Marx was a methodologist of the historical school – he famously argued that the class system he lived under/in was “natural” for the particular stage of production and development of England at that time. He argued then that a dictatorship of the proletariat would emerge as a way-station on the way to the elimination of all classes. In short, capitalism would sow the seeds of its own destruction. It is a popular mindset even today.
Remember that one old criticism of capitalism was that it could not possibly deliver the goods has now been turned on its head to be quite the opposite. Indeed, Joseph Schumpeter, in his classic work Capitalism, Socialism and Democracy managed to both refute Marx but condemn capitalism to its death at the same time. For Schumpeter the “perennial gale of creative destruction” was a destructive force in the long run, largely because of his (erroneous) belief that innovation had to come from monopoly-like firms. These monstrous firms, paradoxically would be anathema to innovation by virtue of their bigness and bureaucratic sway – and it is the corporations themselves that would kill capitalism. Now, Schumpeter probably never imagined the crony-ism that we live in today, so his view of the end of capitalism is, in my view, closer than any others, but still out there.
Let’s take Marx and the Fabians and Schumpeter at face value. Capitalism will inevitably fail. Fine. But how does that prospect, even as an idea, imply anything at all policy today or about any other institutional arrangement? After all, can we not construct equally plausible hypotheses about the inevitability of the destruction and instability of ANY social system? While capitalism has yet to become unglued, the evidence on Communism is quite clear — that beastly ideology and political regime is, and deserves to be, 6 feet under.
And what of the inevitability of the end of other arrangements? Have the soft-socialisms of modern Europe proven their mettle? They are bankrupt, fraying at the cultural edges and no closer to achieving heaven on earth than when they began their programs in earnest last century. What about the other authoritarian regimes out there? Are they stable? Will they last the test of time?
I don’t see any system as being “stable” but I don’t see the stability of a system as being all that important. My only point today is that claiming that capitalism is unstable or doomed doesn’t imply that your preferred alternative is any better. That’s a pure logical fallacy. And it’s one I see very often. Think of a harmless analogy. It may be inevitable that in your preferred sport that the officials will blow a call – and that perhaps the game you love could be improved upon (theoretically). It does not follow, without proof, that an official-less alternative would be preferable. But that’s the fight that capitalism faces these days.
I urge thoughtful defenders of capitalism to recognize that capitalism is not perfect – it is not supposed to be. It emerges from humans’ desire to improve their lot in life. But under capitalism, some values are elevated at the expense of others. This is, to me, a good thing – because the values that happen to be elevated are determined by “us” and we are free to ignore them if we wish. But inevitably some folks will not flourish under capitalism, even as they get to enjoy the bounties that it delivers. By making the case that capitalism is perfect, or is awesome for everybody, I put forth that you seriously undermining the case for it, and leaving it open to the kind of arguments that won the day 100 years ago. Let capitalism run the horse race, but please do not feel like you have to lighten the saddle before you begin. She’s a strong pony.
Echoing others, let’s not call it capitalism, a term coined by its detractors, let’s call it the “free market”.
Aside from that, Joseph Tainter’s 1988 book, The Collapse of Complex Societies points out that it’s not necessarily the version of economics that a society practices but the decreasing marginal utility of the societal solutions that spells disaster. http://nailheadtom.blogspot.com/2012/07/investment-in-sociopolitical-complexity.html
Indeed I don’t think there are many people making the argument that capitalism is a “perfect” system. Rather, it seems those on the “other side” often like to bring it up as a stawman argument and then proceed to “demolish” the argument of the perfection of capitalism through some nonsensical example of 10 year old girls making coffee, or some such thing. In fact, a couple of weeks ago we had a PhD seminar from one such professor, who thankfully is alone in the school as far as his thinking on capitalism goes, where he proceeded to have a 3 hour monologue of why Milton Friedman thought that capitalism was perfect and why this was rubbish, and why the fact that there are poor people and 10 year old girls growing coffee in Africa is evidence that capitalism fails (and therefore, we need to focus on the sort of “ethics and CSR” stuff he specializes in! What a surprising conclusion!)
But these are not serious arguments by serious people. The problem may be that there aren’t many serious arguments by serious people on this issue, but rather you are forced to discuss at an emotional and “moral” level, because that’s usually where the arguments against capitalism come from.
The idea was “dialectical materialism,” coming from Hegel, a doctrine that assumed history would proceed inevitably toward a better world, the end point, for Marx, being the dictatorship of the proletariat. Thus, progress would proceed from feudalism to monarchy to bourgeois capitalism to socialism.
I know my summary of Marxism may leave out a few details, but Marx’s ideas were taught to me first in my Medieval History class in high school by a Hungarian refugee who was taught the subject the same way as Rexford G. Tugwell and Harold Ickes, Sr., were taught it at Ivy League colleges, and my teacher strongly defended the inevitable march of history. We argued in class, me a fifteen-year- old know-it-all. One of the best things that ever happened to me.
So we have always had the argument about “capitalism”, a loaded Marxist term that implies the sweat shops of industrial revolution England, the implied exploitation of labor, and the avaricious sins of aristocracy in league with the government.
A hundred fifty years and more later, perfessers in the academy are spinning the same yarn, in spite of massive failure of these ideas to bear any fruit except for hunger wherever the ideas have been applied. One Perfesser just a week or so ago said his solution is to print more money, and he took a shot at the reactionaries who might disagree with him.
We and other countries have seen this movie before — Weimar Germany and Jimmy Carter come to mind, but North Korea, Cuba (which has universal health care!), Burma, Albania, and the former and Putin Soviet Union come to mind as well. Try to talk about this at a dinner party politely.
