Thursday, December 19, 2013

Simon, Capitalism and Money

David Simon, the creator of The Wire, presented a criticism on capitalism at the Festival of Dangerous Ideas at Sydney. In it he argues that America has become accidentally split in two, the part that is connected to America's economic life and economy and one part that is not, a part that benefits from economic growth and one that does not, a part that will participate in the future and one that will only exist in it. "That may be the ultimate tragedy of capitalism in our time, that it has achieved its dominance without regard to a social compact, without being connected to any other metric for human progress," he says. "And that notion that capital is the metric, that profit is the metric by which we're going to measure the health of our society is one of the fundamental mistakes of the last 30 years."

It is an interesting, if common, observation and much of the problem is contained within his very premise that "profit is the metric by which we're going to measure the health of our society." Virtually no one believes that--other than politicians running for reelection, wild-eyed revolutionaries and the occasional tenured economist. History is littered with the belief that material success equated to social harmony. But money can't buy you love. Nor can it buy a "social compact." Certainly more is at work in the human mind and heart. And soul.

Adam Smith's "Wealth of Nations" was and is a revolution in economic thinking that promised the improvement of general social and economic life through the unfettered individual pursuit of personal fulfillment and economic reward. And, regardless of the inequities in the West, it has been true. He did not think, however, that it was his best or most important work. That work was The Theory of Moral Sentiments, a book on his reflections on ethics and a social compact. Nothing worked for Adam Smith without ethics.

That is not the case in the modern world. Marx thought ethics charming but totally subservient to the forces of history. History was, itself, truth. And the postmodern world is worse; postmodernism allows for no standards. The Americans have put freer markets in the hands of nihilists; the Russians have put less controlled markets in the hands of autocratic nationalists. Smith would not recognize either system as anything other than nihilism and autocracy..

Simon believes that nothing creates wealth like capitalism. (Perhaps "free markets" would be better because he seems to merge free markets, wealth and capital.) His main concern is how to expand the success of an economy to its fringes, its outliers. No one will forget the pictures of those people sitting on rooftops during Katrina in New Orleans, people simply unable to take care of themselves. Simon writes, "Capitalism stomped the hell out of Marxism by the end of the 20th century and was predominant in all respects, but the great irony of it is that the only thing that actually works is not ideological, it is impure, has elements of both arguments and never actually achieves any kind of partisan or philosophical perfection." But Capitalism is not a philosophy, it is a technique. "All men are created equal" is a philosophy," the dictatorship of the proletariat is a philosophy, albeit a homicidal one. But where do these ideas merge, become an "impure" amalgam? It seems that Simon wants to share the successes of "capitalism" with those marginalized. How is that "social compact" articulated? And he thinks that "capitalism" has moved into politics: "the last journey for capital in my country has been to buy the electoral process, the one venue for reform that remained to Americans."

There are a lot of ideas milling around here and some are kind and heartfelt. But this thinking always bypasses the basic and obvious problems. Capital, in itself, is nothing more than money. Unrestrained capital is money that might be used in any way, charity, bribery, construction, destruction, savings. Capital is present under any, any system. Aristocracies, kings, guerrilla bands, democracies, theocracies--all have capital. The point is always the underpinning of the culture. What motivates the culture? How is the "social compact" mediated? Acting as if capital and its behavior is "capitalistic" is like using a pirate community as an example of democracy. And trusting someone or some thing to reorder the successes of free markets is staggeringly naive. We are seeing that now in the U.S. and in Russia. Capitalism has created astonishing wealth in the West but that is all it can do.

In essence Simon is correct. There is a growing disparity in the nation, and in the world. Some are indeed becoming "unnecessary." This despite the poorest in America would likely be the envy of most men in history. But this separation points to many things, and capital is only one--probably minor--part. He writes, "Mistaking capitalism for a blueprint as to how to build a society strikes me as a really dangerous idea in a bad way." That is the basic problem: No one thinks capitalism is a blueprint--or should. Individual worth, freedom, the value of the unfettered human spirit, the interconnectedness of all men---those are blueprints for society. The problem is not that we have a capitalistic blueprint, it is that we have no blueprint. Reading about the vultures feeding on the wounded during the sub-prime mortgage crisis will show you that some people, regardless of the economic system, will be grasping and ruthless.  And without pity; the astonishing thing was how they worked with such self-absorbed, wolfish isolation. They were no more or less capitalistic than Bonny and Clyde.

Spreading money around might make some averages look better but will only paper over fatal problems. The foundations of the culture are the essence here. And no extrinsic economic system, no isolated political philosophy asynchronous with the human mind and heart will work.
Nor will they order disordered thinking.

Simon's article:

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