The capitalism question

Last night, I saw a good example of how the non-Marxist left and the right can both miss something important.

Zoe Williams complains that Richard Branson is trying to monetize the mega-rich's desire for the consumer experience of space travel. Ryan Bourne replies that this is an "age-old critique of capitalism that has been proved wrong" and that capitalism has delivered a massive increase in living standards.

What this misses is that Mr Branson isn't putting anybody into space; Saturday's crash was the latest in a long series of setbacks for Virgin Galactic. The private sector is struggling to do something that a centrally planned economy achieved 53 years ago.

That's a cheap shot. But it's consistent with a wider and more important trend, embodied in talk of secular stagnation and an end (pdf) to growth - that capitalism has lost its dynamism lately. We see this in several ways:

 - Real wage growth has been trending downwards in recent years.

 - Companies in the US and UK have huge cash piles, in part because they don't see opportunities to invest profitably in real assets.

 - Long-term real interest rates in the west are negative. Granted, this might be partly due to a safe asset shortage or global savings glut. But it might also be a sign that investors have no confidence in economies' abilities to grow.

 - The growth of crony and casino capitalism are symptoms of a lack of productive investment. Unable to make money by innovating and expanding, capitalism turns instead to trying to capture the state or to financial speculation.

Perhaps, therefore, that Virgin Galactic's failure is a symptom of a wider and deeper failure of capitalism.

It's for this reason that I say both Zoe and Ryan are missing something.

Zoe is missing the possibility that the problem with capitalism isn't merely one of morality, but of efficiency. Feudalism collapsed not because of its immorality but because of its inefficiency. Why should capitalism be different?

Ryan, on the other hand, is making the same mistake Bertrand Russell's chicken made in expecting the farmer to feed him when in fact he breaks his neck; he's assuming that what's happened in the past must continue. Yes, he's right that capitalism has produced a massive rise in living standards - though we might note that the increase was greater in the post-1945 social democratic period than in the pre-1914 golden age of free markets. But the drop in real wages in recent years in the US and UK calls into question whether this can continue.

Might it instead be that Marx's prediction is coming true?:   

At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production...From forms of development of the productive forces these relations turn into their fetters.

Now, I raise this as a question to which I don't know the answer. But it's a question that both critics and supporters of capitalism overlook - that what is (or should be) at issue isn't merely the morality of capitalism, but its effectiveness in raising living standards.

Comments

[SpinningHugo]

It is unfair to equate a several hundred word column with a 140 letter tweet.

It is also unfair to equate a column which is woefully ignorant of the fact that its central argument has been made for centuries and has (so far) proven wrong, with a tweet pointing that out but which does not carry the qualification that this time (at last) Marx might be right.

Well, maybe. The best predictor of tomorrow's weather is today's, and that isn't great.

[Stuart]

No mention of NASA or the USSR's fatalities then? Odd...

[El]

Perhaps the reason the private sector is still struggling to do something governments achieved decades ago is that the governments in question had the cold war as a motivation for monumental investment and effort, while the private sector is only just coming round to the idea it may be a worthwhile cause.

Once it becomes clear how profitable space travel could be (I'm thinking mining here) I am confident the private sector will make government accomplishments seem primitive in comparison.

Just a theory.

[El]

Correction, I am not confident at all, but it is not out of the realms of possibility

[Stevenclarkesblog.wordpress.com]

It's perfectly reasonable to talk about the many problems of contemporary Capitalism, but isn't this a little tenuous?

If I were to use one of your hobby horses against you, I'd say availability bias is causing you to put to much prominence on a recent dramatic event, and motivated reasoning is leading you to conclusions that don't necessarily follow.

[El]

Another thing, rather than focus on Virgin, SpaceX is a very successful private enterprise. They've been flying NASA's cargo into space for years, them successfully putting humans in space is very much in the pipeline.

[Brett]

Branson and the New Space companies aren't just trying to do the same thing as government space programs were doing 50 years ago. They're trying to do it cheaper, and that potentially benefits any space venture down the line. Even if it's only affordable to the rich at first, it could help drive down costs to make it affordable to more people eventually.

As for Williams, whenever I hear a columnist who would probably complain loudly and unceasingly if they had to give up all or most of their consumer conveniences complaining about the supposed emptiness of consumerism, I reach for the smelling salts.

[Senior Ramboz]

The most disturbing thing in this story aside from the loss of life is that while reading the Zoe Williams article I noticed Russell Brands "Revolution" is top of the Guardian's book shops best seller list.

[Jacques René Giguère]

Eisenhower decide to use only male military test pilpots because "The public is not ready to see women die". Which it was thirty years later.

[Dave Timoney]

The problem with this analysis, and that of Zoe Williams, is that it assumes Branson is representative of capitalism as a whole, rather than being typical of a particular strand.

The man is a chancer who has built a career launching shonky products with a smear of branding. Suggesting he embodies the state of capitalist dynamism is akin to imagining that Alan Sugar is an expert in organisational development. Branson is a morbid symptom, but more of the media and politics than capitalism per se.

When Branson took over Northern Rock, I'm sure I wasn't the only person who thought "I wouldn't trust that muppet with my money", so why on Earth (or off it) would any sane person want to put their life in his hands?

As Stuart's comment implies, bleeding edge engineering in space guarantees fatalities. The squalid truth is that Branson never expected to fully deliver on his promise of regular spaceflight as he, and the slebs who signed up, have always seen the project as a PR exercise.

If it ever happens, there will be a handful of flights to save face (during one of which old beardy will advance his mile-high membership once more), after which the whole thing will be written off ... like Virgin Cola, Virgin Brides etc etc.

[Zoe]

I really object to being critiqued on the basis that a) my objections to Branson represented my entire understanding of capitalism and b) by a load of people who don't even seem to have read the column anyway. Really object!

[Matt Moore]

Chris - are you open to bets? You seem moderately confident that we are stagnating

Say - on the level of world GDP 10 years from now?

Matt

[Hidari]

Another point that Chris could have made, but didn't, is that there are (possibly) absolute limits to growth set by the environment, which we may well be crashing up against very soon now. Even if there continues to be a dead cat bounce (as Matt implies) and GDP continues to stagger on upwards, a bit, will it continue upwards for the next thirty or forty years, if AGW really starts to bite?

[Brett]

@Hidari

Absolute limits to growth are only a problem if you've got a growing population and no ability to gradually access offworld resources over the next couple hundred years. Even if you "only" have a stable population, then you can more or less keep the number of new resource inputs (aside from energy, but energy is cheap when it's solar) to a minimum.

[Keith]

You forgot to mention that people going into space is a silly idea. As a way to square up to the commies it was effective but still a doubtful use of scarce economic goods. Just like the construction of thousands of nuclear war heads. Both were juvenile activities.

The unhealthy nature of space from zero gravity to interstellar radiation means that exploiting resources off planet will require robots. First small robots sent from earth then larger ones built in space by the robots sent from earth. Sending a tiny number of rich people into low earth orbit is certainly a example of one of the moral failings of capitalism; the tendency of inequality to lead to the production of useless toys for the wealthy. Like building massive yachts. I see little gain for the majority of human kind from such activities. It merely makes me feel that the rich are shallow people.

[marvin]

If in 20 years it costs £2000 to get into near-earth orbit, building on the earlier efforts of the likes of virgin, would that still be a moral failing of capitalism? Are you sure a few guardian reading marx enthusiasts couldn't even be tempted at that price?

Read 'The case for mars'. Colonising another placet is feasible and sending humans to space cheaply is a step towards that goal.

[Hidari]

"Absolute limits to growth are only a problem if you've got a growing population and no ability to gradually access offworld resources over the next couple hundred years".

That is of course absolutely true, but at least according to the latest IPCC report, a 'couple of hundred years' is precisely what we do not have. Thirty, forty years, tops.

Incidentally, Keith is right. For biological reasons, (genetically unaltered) human beings will never colonise space, let alone 'conquer' it. Robots might, but we are currently so far away from that kind of technology it's not even funny.

[marvin]

Are all lefties this miserable?

[marvin]

My god this is depressing. If I could go back in time and tell you that in a few decades you would have a pocket sized device which would allow you stream live football matches and video conference your mates in realtime all wirelessly you lot would not doubt have had a depressive episode dispairing the excesses of the rich.

Hang on mate, cheer up. Such a device will be available to you from your friendly neighbourhood evil corporation starting for £10 a month, and will be in common usage even amongst working class school kids.

No? How about some Prozac then?

At least I can take comfort in the fact that with that kind of defeatest attitude you lot could not organise a piss up in a brewery, let alone a revolution.

[Hidari]

"If I could go back in time and tell you that in a few decades you would have a pocket sized device which would allow you stream live football matches and video conference your mates in realtime all wirelessly..."

Of course, a few decades ago we were all expecting to have working, usable, reliable space travel, 'space hotels', colonies on the moon (and possibly on Mars), working artificial intelligence, cheap affordable flying cars, and many others things by now.

I am old enough to be amazed by how slowly technology has progressed (especially in the last few decades), and, as Chris has tirelessly pointed out, this is likely to be a long term structural problem with technology under capitalism, rather than just a 'temporary glitch' (it's interesting that this is happening just as the rate of pure theoretical scientific discovery is also slowing down: cf John Horgan's The End of Science).

My final point, which few people have pointed out, is that capitalism is about growth (in the same sense that zombie plague is about growth). Not just internal but growth into external markets, where it can access new people to sell to, and cheap labour.

And that has continued, unabated, since the first cases of capitalism were spotted in various Italian city states in the 12th/13th century. Since then it has spread, by, when faced with a new crisis, finding new markets to sell to and new sources of cheap labour (as noted).

I wonder: is it any coincidence that the crisis of capitalism which began in the 1990s (still ongoing) started at precisely the same time that capitalism could no longer do this? After all, with the (possible) exceptions of North Korea and Cuba, for the first time in world history, all the world is capitalist. There are no new markets to be penetrated, no new untouched wildernesses in which armies of people who will work for essentially nothing can be found. Certainly, there are 'mop up' operations in parts of Africa and South America, but, essentially, my point holds.

Is it a coincidence that it is at this point that capitalism seems to be finding fundamental problems in growing further?

[marvin]

Speculative, to say the least.

Don't be so negative, there are going to be huge technological breakthroughs in the next few decades. Democratisation of manufacturing is on the horizon. Maybe you will consider that socialism, which is fine with me, but in my mind its the natural next phase of capitalism.

That's it for me, going off at a tangent as usual.

[marvin]

Except to say I work in tech and am constantly surprised by innovation. If there's a revolution it will be driven by entrepenuers, not miserable old intellectuals

[Luis Enrique]

Even if capitalism is experiencing a secular slow down, which strikes me as a rather premature judgement, you still have to give us some reason to believe other forms of economic organization would be faring better. Otherwise capitalism may still be the most efficient of all, making claims about its inefficiency nonsense

[Vincentj]

What makes science as well as capitalism progress is the dynamic of trial and errors. And sometimes the cost of errors is measured in human lives. True, Richard Branson faces issues with his project of space travel but how many pilots died flying in the first airplanes?
I also agree that the macroeconomic indicators do not let foresee growth in the short term but success usually starts with failure.

[reason]

Hidari,
I think you could argue that the Roman empire was at least partly "capitalist".

[reason]

Marvin
"If I could go back in time and tell you that in a few decades you would have a pocket sized device which would allow you stream live football matches and video conference your mates in realtime all wirelessly you lot would "
No this was widely predicted. But moving heavy things against gravity is another matter entirely.

[Dave Timoney]

The internal logic of capitalism requires that it exploits resources at a marginal rate - i.e. it looks to the next least expensive. Asteroid mining and colonies on Mars are at the back of a very long queue.

We are still exploiting resources on land, which are the cheapest to access, and only began to exploit subsea resources just over a century ago (coastal coal mines). Though we assume the oil industry is doomed, deepwater drilling and seabed mineral extraction are in their technological infancy. At a global level, we have have barely (ahem) scratched the surface. Anthropogenic climate change is the result not of resource depletion but of abundance and accelerated use.

As Keith notes, capitalist logic means that when we eventually come to exploiting extra-terrestrial resources, we will employ self-replicating robots (known in the trade as von Neumann machines). Chucking meat into space is pointless vainglory.

The slowing of technological progress, per Robert Gordon et al, is a moral and aesthetic critique - i.e. we wanted New Frontier jet-packs and we ended up with the triviality of iPods. In fact, technological progress (measured by the lag from primary research breakthrough to commercial application) is speeding-up. The decline in productive capital investments is not due to weak technology growth but to the opposite, i.e. technology has become so productive it requires less and less capital - e.g. the capital requirement of software is much less than hardware.

Capitalism as a mechanism is not in crisis, in the sense that it will happily chug along oblivious to the problems it gives rise to (falling demand, inequality etc). Rather the crisis is of the capitalist state, i.e. the social contract by which we divide up the fruits of technological growth, which has hitherto depended on the transmission mechanism of jobs.

In that light Richard Branson is emblematic not of fading capitalist dynamism, or even of growing inequality (he isn't as rich as you think), but of capitalist ideology, i.e. the valorisation of just desserts, narcissistic philanthropy and Ozymandias-style hubris.

[rijkswaanvijand]

"Read 'The case for mars'. Colonising another placet is feasible and sending humans to space cheaply is a step towards that goal."

That's obviously dangerous ideology even more than it is idiot fantasy, which -to me- seems designed to justify exploitationist destruction of the planet we inhabit.

"If I could go back in time and tell you that in a few decades you would have a pocket sized device which would allow you stream live football matches and video conference your mates"

I'd probably tell you to shove your device, shove your football matches, and most of all to shove your mates, you whining little social conformist.

[Min]

Since capitalism does not have the goal of raising living standards, why measure its effectiveness or efficiency in doing so? Today capitalism is effectively meeting the goal of enriching capitalists by comparison with the rest of us.