Vaccinating against anti-capitalism

Soros, Stiglitz and associates provide a penetrating critique of the Washington consensus that is driving globalisation. They show how some of the axioms of conventional market economics are flawed, arguing that such concepts, consciously or otherwise, are used to legitimate increasing wealth and power for a corporate elite. Soros summarises stating, ‘the system is deeply flawed. As long as capitalism remains triumphant, the pursuit of money overrides all other social considerations’ (1998: 102).
Characteristically, looking at the shock therapy that has wrecked Russian attempts to build a stable society, they praise the more cautious and successful Chinese road to capitalism. While Soros has predicted that globalisation may depose the Chinese Communist Party he suggests that capital controls allowed them to escape the 1997 Asian crisis that wrecked the economies of their neighbours. Yet such praise suggests the limitations of their approach. Soros and Stiglitz make little comment on the Tiananmen Square massacre, the occupation of Tibet or the Three Gorges dam project which will flood large areas driving millions of peasants from their land without compensation. Ecological issues are pretty much secondary to them. While advocating transparency they still believe in a world dominated by a wealthy minority who make key decisions, indeed Soros is very keen to use his wealth to increase his own personal political influence. They have no notion that economic growth is unsustainable.
Soros and Stiglitz recognise that market failure is a problem and suggest practical ways of dealing with it. Their vision of an economic alternative to neo-liberalism is neo-liberalism managed a little to make it fairer and more stable; their utopia is Clinton’s America, or a less muscular version of Karl Popper’s free market, or a more stylish and intelligent version of Blairism. Such visions are likely to look more attractive as US hyper-capitalism erodes its own base.
Given their Keynesian roots this approach is hardly surprising. Keynes has been seen as an economic radical because he strenuously criticised many of the assumptions of market based economics. He also showed an awareness of the subjective human costs of a capitalist economic system. There have been suggestions that it is possible to create a ‘green keynesianism’ (Elliott and Atkinson 1998). Indeed Keynes noted:
The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard. (Keynes 1972: 329)
He also stated:
For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight. (Keynes 1972: 331)
The Economist noted cynically: ‘So prolix was Keynes […] that he is thought to have said everything at least once’ (9 October 2003). Keynes was indeed quite happy to promote luxury and waste as ways of sustaining economic growth. He believed that thrift was dysfunctional but greed was good if it boosted demand and prevented recession:
Keynes celebrated booms in a manner that would do a Texas populist proud. Shakespeare, said Keynes, died rich, and his days were ‘the plamy days of profit – one of the greatest ‘bull’ movements ever known until modern days in the United States…the greater proportion of the world’s greatest writers and artists have flourished in the atmosphere of buouyance […] The Shakespeares of the era of junk finance have yet to be discovered, unless Bret Easton Ellis qualifies. (Henwood 1998: 195)
Keynesianism is an ideology that sanctifies shopping and sees reduced consumption as a sin. The pioneering green economist E.F. Schumacher, author of Small is Beautiful, bitterly complained:
Maybe we do not even have to wait for another sixty years until universal plenty will be attained. In any case, the Keynesian message is clear enough: Beware! Ethical considerations are not merely irrelevant, they are an actual hinderance, ‘for foul is useful and fair is not’. The time for fairness is not yet. The road to heaven is paved with bad intentions. (Schumacher 1978: 22)
Keynes was well aware of Marx’s critique of capitalism, perhaps more surprisingly he was sympathetic to the monetary reformers like Major Douglas and Gesell discussed in chapter five. Yet Keynes sought not to destroy capitalism or to move beyond it but to sustain it. Indeed he explicitly argued that in the class war he was on the side of the bourgeois. He developed, using his insights into macro economic market failure, a theoretical understanding of how capitalism, that appeared so weak in the 1930s, could be strengthened by selective government intervention. Stiglitz and Soros are in this sense neo-Keynesians, while their criticisms of neo-liberal globalisation are telling, like Keynes it is inaccurate to describe them as anti-capitalists.
Stiglitz is a neo-Keynesian, trying in his academic work to shore up Keynesian macroeconomic analysis, which looks at national economies, with firm microeconomic principles that deal with the basic building blocks of an economy such as the behaviour of firms and consumers. Stiglitz is equally Keynesian in his project to create a more stable and faster growing capitalism. Like many other centre ground critics the point is not to halt globalisation but to heal it so it can be sustained and grow. The solutions of such mainstream critics of globalisation such as transparency and the Tobin Tax appear to be modest, realistic and just. These capitalist critics of globalisation fear that if the market is extended too quickly or too completely it will collapse. They do not, despite their lip service to Polanyi and talk of asymmetry and reflexivity, follow their doubts and challenge the market in essence. More radical opponents of neo-liberalism, by contrast, suggest that markets are innately undemocratic, that indefinite economic growth is ecologically unsustainable and that the market-based system is tyrannical because it reduces human life to a narrow pursuit of quantitative advantage. As Bob Dylan observed, money doesn’t talk, it swears.
By attacking the most obviously repellent features of neo-liberal globalisation, Soros, Stiglitz and friends seek to show how capitalism can be maintained and to channel more radical sentiments into support for a supposedly ‘nicer’ form of globalisation. They act as a vaccine against the virus of anti-capitalist protest.