Two Frequent Errors in Capitalism Critique

Actually, there are three major flaws in how many (“Leftists”, “Greens”, “Anti-” or rather “Alterglobalists” and however else they – we – have been pigeon-holed) criticize the current societal and economic system. I am going to discuss two of them here – the assumption that capitalism is in some sense “transcendent” of the society, and that “we are right”. But first I have to avoid making an “overarching error myself and explain what I mean by “capitalism”.

Frequently, in discussions about the downsides of capitalism, people on both sides forget to “make a system boundary judgement” (as it is called in Werner Ulrich’s critical system thinking) – in other words, they don’t define what “capitalism” is to them. Meanwhile, every broad concept can be interpreted in various ways – be it freedom, equality, democracy, communism or capitalism. It is important to make sure that we are discussing the same issue. This may seem to be straightforward – however, too often critics and defenders of capitalism have been talking past each other because they failed to agree on what capitalism actually is (and what it is not).

I am not going to give any historic overview of the development and origins of this term – this is not my purpose and probably is better done in Wikipedia. Instead, I am going to briefly sketch how I understand “capitalism”, before going over to the main subject of this post.

Capitalism is a societal-economic system that is currently dominant in our world. One of its main characteristics is that it heavily relies on free markets – however, one should not set both equal. Capitalism is much more than just free markets (Keynesianism, although relying on State intervention, is genuinely capitalist, too). First of all, capitalism means maximization. Welfare, defined in monetary (or, at best, otherwise quantifiable and deeply materialistic) terms, is the maximand. A central aspect of welfare is materialistic consumption (i.e., consumption in the narrow sense of using material goods and services). Further, capitalism is driven by the strong presumption that individual pursuit of self-interest mostly leads to benefits for all (a rather narrow understanding of Adam Smith’s early theory of capitalist economy). This leads to strongly individualistic attitudes and undermines cooperation, which is mostly viewed as inefficient and hardly feasible. Efficiency is a highly important concept (especially for economists – it appears to have reached the status of an end-goal, instead of remaining a means to increasing well-being) and frequently dominates other objectives, particularly if they are not easily quantifiable. In a capitalist system, it is presumed, factors of production can be more or less easily substituted for each other – including Nature’s services and natural resources (I discussed this issue at length here). All in all, capitalism is a system that catapulted humanity to unprecedented levels of wealth. This is a fact. However, it did this at an increasing cost – socially, ecologically and, in the end, economically. Today, this system fosters senseless consumption, undermines social cohesion and divides the society.

Thus, as you can see, in my opinion there is much reason to criticize this system and to call for a transition to another, more humane and sustainable one. However, many critics of capitalism commit two major errors, one being the assumption or claim that people are “enslaved” by capitalism and must be “freed”, the other being the generally dangerous conviction of being right (“knowing the Truth”), manifested in calls for “freeing” people from capitalism if they want it or not.

Let us begin with the first issue – the “transcendence” of capitalism. It is often suggested by critics of the system that it is in some way imposed upon us. Although most of us don’t benefit from it, we cannot easily get ripped of it. There is a need for some kind of a “minority revolution” or a change from outside.

I believe that this is wrong. Societal structures (such as capitalism) consist of the people living within it, the institutions they have built and the interactions among them. So, people keep them alive, they cannot exist without them. We are those who blindly consume, engage in senseless and futile rat races, free ride on public and collective good provision and so on. If we ourselves don’t change our attitudes and behaviour, the system surrounding us won’t change as well. The change need to come from inside.

On the other hand, at least to some extent capitalism is self-sustaining – every stable societal system is, although to different extents. We are born into structures shaped by our predecessors, don’t know and often cannot even imagine that something different is possible. However, this means that a “revolution” would not necessarily change anything (I abstract here from my general opposition toward revolutions in the more traditional, “violent” sense) – since we are predetermined as to live within capitalist structures, a new, externally imposed outside world would be “incompatible” with us. It would be unable to reach stability and likely break down, sooner or later. The change, again, has to occur within the system – within our heads, most of all. And this cannot be forced from outside, as we should have learned from the failure of Marxism-Leninism.

The second problematic issue is much more widespread, since not only capitalism’s critics are prone to it. It is the deep conviction that one is “right” – a dangerous attitude. It is mostly manifested in a “soft” form – from the refusal to listen to the arguments of the other side to calls for some kind of a “minority revolution” (just in tradition of Marxism-Leninism). It follows the logic that “we” know what is good for humanity, while the majority is blinded – and therefore we have the moral right to impose the “right” solution upon others. What many don’t see is, first, that the logical consequence of this is a dictatorship (the Inquisition is a good example), and, secondly, that “we” are only human-beings – fallible as every other, with imperfect understanding, imperfect knowledge,various cultural and personal biases, imperfect intelligence, short: we are not God. The assumption that we know “the Truth” with certainty (or anything near) is absurd. One should always keep in mind that one may be wrong.

This does not mean that we shouldn’t struggle for what we think is right. But the recognition of our fallibility and the possibility that we are wrong precludes certain means of struggle – especially violence, including “benevolent coercion”.

I believe that capitalism is harming us more than it benefits us. And I hope that we all are going to recognize this and change our society from the ground up. However, I also believe that as long as we are not able to act toward this change, nothing can be done – the “redemption” cannot be imposed upon us. Finally, I know that what I have written here may be wrong.

7 thoughts on “Two Frequent Errors in Capitalism Critique

  1. I have read with interest what you have written. Yes, there is a lot of unhappiness with what commonly we call ” capitalism”. Personally, I suspect it is less about the system as the fact people are becoming a small gear in the bigger workings of an “ideological” structure. In my view there is a growing disconnect between a democratic stated and the citizens. This takes many forms but the bottom line is , the system is not for the people but people are for the sake and well being of the system ( at least this is the perception). As it happens democratic countries are also capitalist ones (in reality the former does not imply the latter ) and it is easy to direct anger at what you can “see or feel”. Superficial as it is, “capitalism” takes the blame. While the problem is rather complex , in my view it is the democratic state, which should shoulder a lot of blame for the dissatisfaction.


  2. In general, I agree with you (I recently wrote about the problems of modern democracy and one possible improvement – here). Democracy, in its current form, is far from perfect (although famous Churchill’s comment on democracy is still right, I think – we have nothing better). However, here as well, I would argue that we are shaping democracy, not (only) the other way around – it is exactly the same problem as with capitalism. Furthermore, I wouldn’t play down the problem of the economic system surrounding us – rather, both democracy and capitalism appear to me to be an important challenge for humanity.

  3. “I would argue that we are shaping democracy, not (only) the other way around ”

    There are multiple reasons for a popular discontent currently present but one of them is the reversal of what you have stated above. In the eyes of the wider public, the citizens are no longer shaping democracy and its institutions, it is no longer ” by the people and for the people”. I would not say democracy is failing but there is a need to ask a question: what comes first, democracy or capitalism? How for example society’s longing for long term stability and security fits into a concept of “free market” ,
    ” increased mobility” , “no job security” etc?


  4. I guess, there is some difference between the subjective feeling of people (whether they have influence on politics or not) and the objective fact. But your are perfectly right in pointing to the conflict between democracy/human rights and unrestrained capitalism.

  5. “and the objective fact.”

    This is correct if certain parameters can be technically measured. In other cases one develops a set of evaluation parameters which are influenced by a personal value system. Just think about capitalism and democracy. Is American democracy/capitalism better or worse than European? There is no single answer to this question. Whatever we take as a guide, either technical measurement or a subjective feeling none of the concepts/systems will survive without people. They are the core and essence. Unhappy and/or unwilling people will make any system fail. In principle I am not against capitalism or socialism as a theoretical concept. I do believe that the principles of democracy ( and a rule of law for that matter) are beyond reproach. However, the devil sits in the details.


  6. Talking about capitalism and democracy, something on a lighter note. This fragment hs been copied fronm “The Independent”.

    “We mustn’t panic, but according to a front page headline in the Daily Mail we’re being “HELD TO RANSOM BY 1,000 TANKER DRIVERS”. What bad luck, that 1,000 tanker drivers have become Somali pirates. I suppose they had to re-train because of redundancies in the piracy trade due to new technology, such as email ransom notes and digital planks. But they’ve perfected a new method of ransom, which is holding a strike ballot and counting the votes.

    A spokesman for Hoyer, one of the haulage firms affected, said, “This action is driven by a small number of disaffected drivers.” And I suppose 1,000 is a smallish number, compared with the size of the universe, but the problem is that it’s a bigger number than the number who voted against the strike.

    So maybe the rules of voting should be changed. Instead of using outdated methods such as majorities, we should let haulage firm managers decide whether the number who voted is small or not. Perhaps strike votes should be disallowed if the number in favour is a prime number, or can be divided by seven. At least the law should be changed to disqualify votes of the disaffected, who aren’t in a stable frame of mind for important decisions.

    The Daily Mail itself complained that “the union only achieved its majority because 12 per cent of members failed to vote”. In other words, the strike vote was only won because not enough people voted against it. So the union has found yet another way to fiddle the result.

    To emphasise how serious this strike would be, the Minister for Energy said yesterday, “This dispute threatens our economic recovery.” So the economists have all been wrong. They go on and on about debt and trade and all that, but what determines economic recovery is whether there’s an oil tanker drivers’ strike ballot. That must be what caused the world recession in the first place. And to think we’ve been blaming those poor bankers all along….”


  7. Unhappy and/or unwilling people will make any system fail.

    I fully agree with that. Maybe it is indeed so that people’s bad feelings about democracy are more decisive than their objective possibilities to get involved in the shaping of policies.


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