The failure of capitalism

As a communist I believe that capitalism is inherently immoral, in several different ways. But that's not the point today.

The point today is that:

1. We know both theoretically and empirically that there is a relative optimum for how a capitalist economic system operates
2. We know that the entire Western capitalist system is operating nowhere near its theoretical and empirical optimum
3. We know why it's nowhere near its optimum; indeed we've known for many years how to keep it near its optimum
4. We know how to return the capitalist system as it is right now to its optimum in less than a year

There's a lot of interesting and informative debate about how to fine-tune this knowledge, but there's no actual scientific, rational debate among relatively honest economists that we have the basic fundamental knowledge about how to both prevent catastrophic financial collapse and recover once the financial system has actually collapsed. The "debate" about fundamentals essentially mirrors the evolution/creationism debate: one side with all the facts and all the science; the other side with nothing but lies and bullshit.

One does not need Marx at all to come to this conclusion; all that's required (other than intellectual honesty) is a basic understanding of capitalist economics and recent (19th and 20th century) history. One does not even need to read Keynes (although it doesn't hurt): his conclusions are plain to see. (Keynes was a true genius, making the subtle obvious.)

I want to emphasize this point: We know exactly what it means to have a well-functioning capitalist system, we know how to make a capitalist system function well, and we know how to fix a broken capitalist system. And yet 20 months after the beginning of the collapse of the entire Western financial system — a collapse that was foreseeable and preventable — the capitalist system is not just a little sub-optimal, it is two or three orders of magnitude away from practical optimality; the collapse is still getting worse, not better.

In much the same sense, I think there are good arguments that the Microsoft Windows operating system can never be a fundamentally "good" operating system. Regardless of this conclusion, we know how to build a computer that will run Windows relatively well. We are presently in the absurd position of having a Windows computer that takes 10 minutes to bring up Notepad, we know that the reason it's running unacceptably slowly is that most of the memory is corrupt, and we have a faction of economists arguing that while Windows is the best and only operating system, it is somehow irrelevant, impractical, or actually immoral to replace the memory... because the system is running so slowly.

The only honest way to philosophically justify the "obstructionist" faction is to argue that whatever the capitalist ruling class does is good by definition, that there is no coherent independent measure whatsoever of how well the capitalist system is actually functioning. (In much the same sense, there is no independent measure of what the laws of physics "ought" to be, they just are what they are.) The obstructionist faction dares not make this argument, hence their reliance on lies and bullshit.

The progressive capitalist economists (especially Krugman and DeLong) have an honest and reasonably accurate understanding of capitalist economics, and know what we have to do economically to fix the capitalist system. Their failure, such as it is, is to implicitly attribute the failure to the outbreak of actual schizophrenia in half the population. Brad DeLong in particular is fond of asking why we can't have a better press corps, and why the Republican party is allowed to survive. He loves to ask the questions, and provides tons of evidence why the questions are perspicacious and relevant, but he never answers the questions.

No good scientist should ever blithely accept the hypothesis of mass insanity (nor should she blithely accept massive conspiracy).

The 20,000 foot answer to both the questions is: We have the press corps we have and the Republican party we have — as well as the incompetent, ineffectual and spineless Democratic party as well as the systemic financial collapse — because the alternatives have been selected against by the social selection pressures inherent in and essential to the capitalist system, i.e. the selection pressures created by the private ownership of the means of production.

First, we need complicated and expensive physical and technological means of production to maintain a standard of living above bare survival. Second, these means of production must be physically concentrated to some degree* to be maximally efficient at generating use-value. Once we had discovered the ideas (originally efficient steam power and cheap energy) that allowed us to accumulate surplus labor into efficient means of production, it was inevitable that any social system that did not accumulate and physically concentrate the means of production would be selected against**. There are theoretically many different systems that could have survived this selection pressure; for a lot of reasons, many historical and purely accidental, capitalism — which does in fact create and physically concentrate the physical and technological means of production — is the one that survived.

*Which is not to say that concentration is good in and of itself, or that more concentration is always better than less. There are diminishing returns to both excess concentration and excess distribution.

**Technically, the concrete selection pressures were more basic; the selection pressure against failure to accumulate capital is relatively abstract. Going deeper would be interesting scientifically, but we know empirically that these more fundamental physical selection pressures must result in the abstract selection pressure favoring the development and concentration of the means of production. Since it's an abstract selection pressure, it's relatively benign to discuss it as selection for, rather than strictly as selection against.

We have to ask these questions: What were the essential features of capitalism that allowed it to survive the early economic environment with selection pressure favoring development and concentration of capital? Between the origins of capitalism and today, how has the environment changed? How do the essential features of capitalism relate to the modern environment?