Why the left needs to reclaim capitalism

This article has been submitted as a paper to ‘Radical Labour,’ the website run by Labour MP John McDonnell, as part of a discussion about the future of the Labour left.

There is a tendency on the modern left (the tumblr-twitter axis) to criticise and attack the current state of capitalism without recognising that it is far from the only workable form of money-based economic organisation, and without providing any sensible alternative. These people often casually self-describe as Marxists or anti-capitalists without understanding the ramifications of that standpoint. A more sensible aim for the left, in the best tradition, ironically, of Labour leaders such as Attlee, is to reinvigorate the positive case for capitalism as a practical way of organising our society when properly constrained, channelled and held to account by the people.

The first thing to understand is what is meant by capitalism. Capitalism is an umbrella term encompassing many widely varying ideologies, including, to name a few: Laissez-faire, corporatism and third-way economics – all of which we ardently oppose. The most basic aspects of capitalism are the existence of some medium of exchange (i.e. money), the ownership of some industry, at least, by private individuals and organisations, competitive markets and opposition to the idea of equality of outcome – and we aim here to make the case for all four as invaluable tenets of a free and fair society in the globalised world.

The function of money as a medium of exchange is not only the most workable solution to the difference between the demand for and the production of goods by the worker but also a vital mechanism for ensuring that the consumer is able to choose. Lazy ‘Marxists’ entirely miss the fact that a society without a medium of exchange in the modern world would simply not function – the cost in resources and time of the state redistributing every product according to need immediately after production would be simply too great. Having money in a society is not an ideological stance – it is simply a practical necessity.

Speaking of consumer choice, we move on to more contentious ground for the left – the need for private ownership as part of a mixed economy and the related need for regulated competition in markets. This not only opens up the freedom to start one’s own business – the best vehicle for both fulfilling labour for an individual and social mobility for a society – but also allows, when the profit motive is properly constrained, for rising quality of products and lowering prices. Of course, there are markets that should never be exposed to the profit motive: namely – health, education, energy and transport. These are products and services where choice is trumped by the fact that we consider these necessities, and where we believe public ownership would provide a cheaper, fairer service.

Another attack that some socialists often invite upon themselves is of supporting ‘equality of outcome’ – as a separate idea to ‘equality of opportunity’. It is naïve utopianism in the worst sense to believe that a society where all are equal in the absolute is either deliverable or desirable. Far more useful would be a society where everyone has the same chance in life, and this is very much possible within a capitalist framework – to a certain extent. If we worked to eliminate inborn privilege via truly comprehensive education, high inheritance tax, and a more representative political class, the possibility to innovate through business ownership would become a true social leveller.

The future for the left therefore lies not in reactionary anti-capitalism but social democracy – as opposed to third-way centrism (more on that later), and as pioneered in government by the great Clement Attlee. This means a policy programme involving higher rates of tax, both on income and wealth, a larger public sector including rail and energy – but also efforts to stimulate and aid the formation of socially beneficial small private enterprise. Specific policies would include an eventual abolition of value-added tax (which negatively affects the worker, the business owner and the growth of the economy as a whole); land value, assets and financial transaction taxes; and fully democratised and accountable public services and government. The importance of unionized labour within this system also cannot be overemphasised – the union is the primary mechanism for workers to combat bad capitalism at source, taking their bosses to task when they overexploit in the name of profit.

But, you may be thinking, this program is not the logical extension of our above defence of the capitalist system – instead, we appeared to be supporting a more laissez-faire style of economic governance. We shall now, therefore, set out why this article is an appeal to the left and not the right – why we believe Thatcher-brand neoliberal capitalism is fundamentally wrong. It is not just morally insupportable, but also a poor mode of capitalism. What capitalism identifies in human nature is that we are fundamentally competitive – and what neoliberalism tries to do is raise this to the status of a moral imperative. Instead of channelling this competitive instinct towards bettering society, laissez-faire economics simply says that we should abandon ourselves completely to the whim of the markets. Margaret Thatcher subscribed wholeheartedly to this doctrine and succeeded in hollowing out the British economy, replacing a steady stream of industrial exports with a virtual, financial-based system where, as the market requires, growth is disproportionately concentrated within the Square Mile. Thatcher also privatised rail, giving commuters the worst effects of private control of a market without any of the benefits, as also happened with energy – we now have a ‘crony capitalist’ approach in these markets, where providers collude to keep prices artificially high, negating the main benefits of private ownership – consumer choice and competitive prices. The current Thatcherite government continues this ‘bad capitalism’ – with their austerity harming the average citizen in terms of wellbeing, as well as the strength of the national economy.

But make no mistake, ours is no centrist programme. An attempt to synthesise a ‘social liberal’ approach with a centre right economic policy, as advocated latterly by Blair and Clinton and currently by many on the right of the Labour Party (Kendall, Umunna et al.), will always fail. Though obviously a step up from Thatcher’s politics, knee-jerk public spending whilst also allowing free rein in the private sector is no long-term solution to the plight of the worker. Blair had many great achievements in the vein of moving towards better, fairer capitalism – the minimum wage being the most obvious – but the backdoor privatisation of the profit and not the risk of the NHS through PFI exemplifies the limits of the third-way approach. Whatever arguments can be made for the strategic benefits of returning to centrism, it will never provide a coherent and workable government policy.

The modern state of capitalism is a lamentable affair, yet the solution lies not in idle rejection of the only system possible in a globalised economy but in an attempt to make capitalism work better for the many. Our argument is not that, as Marx would have argued, better capitalism is a poor yet tolerable stepping-stone to full public ownership of the means of production, but that it offers a fair balance between the freedom to choose and to innovate, and the possibility for all people to have access to the same basic necessities and the same opportunities for a better life. This programme, of moderate nationalisation paid for through higher and fairer taxation is eminently achievable – unlike the Marxist utopia that is unfortunately popular with some reactionaries on the modern left – and totally fair, unlike the flaccid centrism that is even more popular.

– Seb and Vint

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2 thoughts on “Why the left needs to reclaim capitalism

  1. This was a brilliant article regarding capitalism and the left; I really enjoyed it. I especially loved the concise way in which you conveyed all the information that was needed. Allow me a brief introduction: I’m a 15 year old with an interest in finance and economics, who shares his views at shreysfinanceblog.com If you could read and reblog one of my articles, it would be very much appreciated! Thanks again for this lovely article.

    Like

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