Jan 03, 1997
How nice to be thought of as "almost correct". It gives me the fibre to maintain my views, nay, even to admit that I am a collectivist, a socialist, or god help me, a liberal. But lables are no substitute for reasoned debate.
In my previous post I stated - and most people agreed - that capital is not moral. I also stated - and most people disagreed - that capitalism is not moral. By that I don't mean immoral. What I mean is that capitalism is not a standard for defining "right" or "good" actions.
Now why would I say that? For clearly a person can use capitalist principles in order to guide his or her actions. True. But being a guide to actions does not in itself make a system a guide to morality. A roadmap will tell me how to get to New York, and a system of using roadmaps (roadmapism?) will in general ensure that I get where I'm going. But both roadmaps and roadmapism are silent on the question of whether getting to New York is a good thing. The same with capital and capitalism.
For example: capitalism will tell us how to maximize our GNP, or how to extract the lowest price for a toothbrush. But it is silent on the question of whether it is good to maximize GNP or lower toothbrush costs. Arguments from outside the domain of capitalism (and of economics generally) may say, in essence, sure, you could do this, but there will be a social or environmental cost which makes it bad.
This is the role of government, or as I styled in in my previous post, rule of law. Government is required to regulate corporate actvities because corporations, insofar as they follow capitalist principles, are blind to the moral consequences of their actions.
People are very fond of saying governments make bad corporations. On a strictly capitalist analysis, this may be true. Perhaps a corporation could clearcut a mountain more efficiently than a government. But governments are made less efficient (if they are less efficient at all - I haven't granted that point) by the fact that they must weight moral consequences along with economic consequences.
(A cynic may say they have to weigh political consequences. Too true. But the cynic implies that this is a bad thing, presumably because it interrupts the unfettered flow of capital. But look at it the other way around. If a government is hesitant to act because there is a political cost, there may be a good argument for saying that such an act is bad, that the people will see it as bad, economics be dammed.)
But even if governments make bad corporations, it must be said, corporations make terrible governments. Left unfettered by government regulations, corporations answer to nobody but their customers and their shareholders. This leaves corporations a wide latitude, one which should not be underestimated.
It's easy to say that corporations could be regulated by such actions as consumer boycotts. These tactics, if they work at all, work only against highly visible corporations such as McDonalds. But how could a consumer boycott be successful against 107254 Ontario Limited? Or even against a name brand such as Bristol Aerospace?
In any case, customer boycotts are useless when the corporation provides an essential service. For my own part, I would love to boycott banks. Like members of the Islamic faith, I believe usury is morally wrong. But I am unable to boycott banks; it is not possible to live in an industrialized society without using their services.
The best I can do is to gang up with a bunch of friends and attempt to regulate the activities of banks, aerospace companies, and mysterious numbered companies. This is called politics. It is the art of mitigating the bad caused by corporations who are blind to the concept of good and bad. That is why we need government. If a corporation is not going to care when it hurts me, then by golly I will use government to make it care. Economics be damned.
While capitalism is perhaps best served in a free market environment, politics by contrast is best served by cooperative - dare I say socialist? - action. Politics is indeed the art of mass action, of a large number of people moving and acting as one. Perhaps such an unwieldy mass makes for a bad corporation. But it makes a strikingly effective moral agent.
The desires of a community often make no economic sense. The park which I can see from my window generates no tax revenue and costs money to operate. But I like the park. And I think it is good that kids can play on the swings for free. Perhaps a corporation, if it ran the park, could make more money than the City. This fact is irrelevant to me. If the City tried to sell the park, or even make a profit doing it, I and everyone else in the neighbourhood would take to the streets to stop them.
Corporations may be able to run hospitals more efficiently than government. They can certainly make money doing it. But is this a good thing? In Canada, hospitals are essentially run by the government. Even if they were less efficient that the American corporate system (in fact they are not) or provided a lower standard of care (again, they do not), I would still support government run hospitals.
Why? Because when I am gravely ill, I am not in a position to negotiate. I cannot shop around for the best deal. If I am charged a fee, I am faced with the choice of either paying the fee or meeting my maker. When I am in such a situation, I want those people who care for me to be governed by something other than the bottom line. For me, there is a moral element attached to care-giving, one which is not captured by market forces or Adam Smith's invisible hand.
It's easy at this point to start with the rhetoric about "command" economies and to harp on the failure of the communist bloc, and to tout the triumph of free market economics. Easy, but misleading. The soviet economy failed not because it was governed by a central authority (Mircosoft is governed by a central authority, but doesn't appear to be failing), but because it failed completely to exercise the moral will of the people, and often, acted against that will.
People often talk as though the soviets were not capitalist systems. Nothing is further from the truth. The western nations practised market capitalism. The soviets practised state capitalism. The primary purpose of soviet leadership was to increase industrial output and economic gain. The western nations succeeded where the soviets failed not because they were capitalist, but because they were democratic. A moral force in western nations opposed the excesses of capitalism, a force which did not exist in soviet nations.
Which brings us to the Sudan. No moral force protects the little girl. Her country is wracked by civil war - easy to blame government for this one, except that the governments in question are in no way democratic. Leaders on both sides are trying to maximize profits by eliminating the competition by any means possible, and the consequence, especially in the south, is strife and starvation.
The little girl in the Sudan can be exploited because there is no agency which stipulates to the employer in question the need to pay staff a living wage. Without allies - without a politically empowered community - the only forces operating in her environs are purely market forces, and these dictate that she works for fifty cents a day. She is powerless to resist; it's either that or starve.
It would be nice if her society had better, more enlightened, leaders, or that she and her friends were better organized, but she is not in a position to change this. Asking her to stand up for herself and throw off her oppressors, like the Americans did in 1776, is to ask her to commit suicide.
What would be better for her? Here we reach the point of this discussion of morlaity. It would be better were she in school instead of work, better is she were in jeans instead of rags, better if she were in a house instead of a hut. And the point of my argument is: even if it makes no economic sense to house, feed, clothe and educate her, it is still good. The role of government is to see to it that this good is enforced.
Economics is a wonderfully abstract discipline. The various discussions of trade deficits, of GNP, of models and systems, all abstract to elimination the pain of this little girl. Economics is, like capitalism, indifferent to the fact that pain is bad.
I wish I could share the economists unbridled enthusiasm for the global economy. Even as the average wage increases, the gap between rich and poor widens. Even as GNPs increase, relative purchasing power decreases as that newfound wealth finds intself more and more in the hands of a privileged few. Even while the stock market climbs, the Sahara expands, the rain forest shrinks, the hole in the ozone grows.
It's easy to point to numbers and say, "See? It's getting better!" But in fact we have entered into an era of unparalleled human suffering, and against the tears of the little girl in the Sudan the economists' apologies sound like hollow rationalizations.
Again - and why does it seem so absurd? - if we are to enter into a global capitalist economy, we must restrain its excesses with rule of law. Couldn't anything be more obvious?