“Redistribution of wealth”. That’s a phrase that gets people aerated, both those who see it as a positive, a valuable tool to a moral end, and then those who see it as being the root of all evil. It is presented by some as the great socialist sin: the taking of money from people who have it, to give to those who don’t.
Capitalism as a locus of taboo
It is a truth universally acknowledged that anyone starting a paragraph with those six words really isn’t as clever as they’d like you to believe. Ahem.
But then, not everyone appreciates the serious point Jane Austen is wryly making about something that has always been true of our society, and I suspect may have always been true of all human societies. It is related to notions of taboo, of matters untouchable, of matters that, if examined, might force a society to confront things it would rather never acknowledge, let alone address (although the current letting of Netherfield is presented as one of these things only as matter of absurdity, of course).
Unchallengeable truths
Just exactly what these matters are changes over time and place, but there are always matters regarded as axiomatic and ubiquitous, unchallengeable truths. Note: not “unchallenged”, but “unchallengeable”. It’s not that these matters possess a status of fact that makes them unassailable, but rather their authority is so woven into the very fabric of society that they effectively disappear because they are, in effect, what the fabric of that society IS, and how do you challenge the very ground upon which you stand?
As the fish has no concept of dryness, so the people in the society will, for the most part, have no concept of there being a society without that “truth”.So, what is this untouchable “truth” for us? There will be a few such truths, but I’d like to address just the one. It is the claim that ours is a capitalist economy.
Capitalism as religion
Wealth redistribution is often portrayed as an ideological imposition, an artifice, as contrary to the natural order, and, however well intentioned, it must be expected to be replete with unintended consequences that all concerned will come to regret.
This is because it is believed – as an article of faith rather than as an understanding of the process – that the market can be expected to self-regulate and make the proper and just distribution of resources. “The Market” is thereby granted the status almost of a disembodied intelligence, a judicious mediator. You know – like a god.
A capitalist
Now, I’m a capitalist. Not in the sense that many people appear to consider themselves to be capitalists, that is, the acolytes of a revealed truth that divests them of all responsibility for their actions and choices (since they seem to believe, quite sincerely, that capitalism deploys the innate mathematics of all creation; evidence, almost, of the workings of a god). No. Because that is silly.
No, I’m a capitalist in this sense – within the context of a set of laws that prevent vested interest from exempting themselves from the rigors of the market by establishing such circumventions as cartels and monopolies, there is a self-regulation to the capitalist system, which is a system of human agency, and which depends upon a genuinely competitive framework that must be deliberately maintained by law, which will serve as a counter to the interest of the individuals engaged in commerce.
It isn’t no juju of revealed truth, it’s just about failure, bad practice, criminality, and inefficiency being expelled, thereby keeping the system lean and healthy, and to do that it must be operating under laws that identify failure, bad practice, criminality, and inefficacy. In short, regulation.
Regulation
Regulation is seen by some as an assault upon capitalism, but it is in reality the extrusion of the very bedrock of capitalism, which is not money, it is law. They had money in the Middle Ages, money is nothing special. Banking and insurance, the harnessing of time (investment, mortgages, etc.) and being able to spread risk through the wider commercial practice rather than all upon one individual’s shoulders, depends upon law. Obligations are assumed, and advantages that limit commercial risk are thereby won. However, all this relies upon law to enforce both obligations and advantages.
In Shakespeare’s The Merchant of Venice, the merchant, Antonio, waits upon the return of a trading enterprise. If his ship comes in, he’s rich. If it is lost at sea (and at one point they fear it is) he’s ruined. That was a common reality of the pre-capitalist age. To risk all could win your fortune, but it could ruin you, and ruination could be fatal. And so, some clever cove invented insurance. You cough up a bit, it cuts into the profits somewhat, but, if the whole project does all go belly up, well, you’ll recover enough to try again. The days of all or nothing were, for the wise in business at least, over.
The harnessing of time to invest while mitigating risk through law is what capitalism actually is.
Which tells you exactly what a lie it is that regulation – which just means law – is the enemy of capitalism. That’s like saying water is the enemy of fish.
There are rules to capitalism. It isn’t magic or revealed truth. It’s a set of rules which, if followed, reap rewards.
So, what tells us that this isn’t a capitalist society?
If we were a capitalist society, no one in work would need to receive what are euphemistically referred to as “in work benefits”, but which are, in fact, state subsidy of what are supposed to be commercial ventures. Such subsidy is a nonsense. Work is being done, it is being paid for, and, in a self-regulatory system, that pay will suffice for the worker’s needs.
That is what a self-regulation of capitalism looks like. Valid commercial enterprise does not require subsidy. If a job needs doing, if the society requires a product or service, providing it will command a wage that can sustain a worker. If the job can’t command a wage that will sustain a person, then the society doesn’t need that job enough to pay for it and will do without it. That is an aspect of the self-regulation of the market.
(I’ll mention in passing that not every aspect of society is a commercial enterprise, and there are things we can choose to support through subsidy perfectly validly. However, Tesco’s shareholder profits are not one of them).
Yet we see millions receiving subsidy (benefits) whilst in full time work, rather than their employers paying them properly for their labor, and then requiring the customer to pay the price necessary to support the enterprise.
Ergo, ours it not a capitalist economy, and this is largely because those aforementioned laws intended to prevent vested interest circumventing competition have been largely stripped away and, even when they survive, are so diluted as to be useless.
Regulation keeps you alive whilst removing charlatans
The stripping out of regulation must be expected to give you such travesties and disasters as families that die screaming in tower blocks watching each other burn, or water companies hawked to investors who mortgage them, take that money themselves but without investing in the actual company, and then selling on the company as its material assets crumble, laden with debt, so that the tax payer has to intervene to prevent people dying of being poisoned by pollution.
It also contributes to rocketing rental prices driving people to be homeless or live in near poverty whilst filling their landlord’s bank account, landlords who are unencumbered by any obligation to ensure that their tenants don’t die screaming, watching their family burn, in poorly regulated tower blocks. Indeed, some of those landlords will be sure to enter the legislature and determinedly resist regulation of rent and property because they like to receive rent, lots of it, quite absurdly inflated gobbets of it, and who, therefore, pretend that the market has dictated the absurdly hiked rents they receive, and that’s unfortunate but absolutely nuffink to do wiv ‘em, guv, nah, honest, we wasn’t even there!
“There” being the Houses of Parliament where they themselves voted down rental controls and building regulations.
The market
Regulation is the context that allows the market to find the natural value of things. The people telling you it is a break upon capitalism are lying. They just want the cost of making sure people don’t die is not paid by them. People are expendable, you can always find another tenant, but cladding costs. Our law still pays lip service to the idea that the cost of the safety of a product, or a property, is the responsibility of the manufacturer or landlord. It’s part of what they’re paid for, part of why we pay rent.
That’s the idea, anyway, but they want to take the money that might be factored into those costs and spend it on cars and skiing holidays.
Money
Capitalism is the system that sees money – the “capital” – invested to improve goods or services in a competitive market. The venture capitalists who make these investments must do so wisely for they “venture” their “capital”, which implies the possibility of losing it if they invest foolishly. But, if they invest wisely, some product or service that is needed by society will be invented or improved, and the clever investor will make a profit, which they, as the people who risked their capital, are entitled to take.
The investors who do that well are rewarded with the profits that a high demand for their goods or services may be expected to command. It also means the investors who do not do their job properly go to the wall, as is right and proper. That’s capitalism – talented and capable investors make money, useless clowns and charlatans are ruined. That is the essential mechanism of the self-regulation: the produce and infrastructure of a society will improve, and the quality of investor is driven up too. The crap goes to the wall.
If, however, the regulatory context in not in place, charlatans and pirates will skimp on safety, and so skimping will undercut the responsible manufacturer or landlord, which will force the responsible to become irresponsible, or, if they insist on honoring their obligations, possibly drive them out of business, and so will charlatans and pirates proliferate.
A society with people dying all over the place whilst goods fall apart and services fail is unstable, and instability is untenable to investment over time, because a return on investment is not really reasonably predictable in the midst of such chaos, so even the responsible investor is reluctant, so capital is not ventured, investments are not made, products and services do not develop, society stagnates, wealth is not generated, there is no growth.
Anyone reminded of anything yet?
The Public Purse as idiot subsidy
It’s supposed to be the case that employees are paid whatever their work is worth, and if their work is necessary, if society requires what they do or make will be enough to live on. If it doesn’t warrant the wage, if the market can’t support their wage, it isn’t a real job addressing a real demand, and it should fail.
Thus is the economy kept lean and mean and properly distributes resource.
Whereas what we have now is investors merrily taking profits, often having underinvested, but then the public sector bails them out when they suffer losses because at least some of what they were doing had to be done and must happen. The bail out therefore serves as subsidy after the fact, effectively extorted from the public purse with a gun to its head. Which isn’t capitalism.
The actual redistribution of wealth practiced in our society.
So, there is a redistribution of wealth in our society, indeed, there is what you might call a “class war”, but it isn’t a leftist conspiracy, and the masses aren’t all driving Porsches. The actual redistribution of wealth that has been operating for some decades now has been stripping the economy of its wealth and siphoning it off into the coffers of a privileged predator class who have been perfectly content to watch people die because of their manipulation of the economy.
Obviously, it isn’t, as it is usually posited, a leftist, socialist attempt to deprive the rich of their money. Rather, it has been a subjugation of the poorer in society, and a stripping of their wealth, such as it is, by the class that pretends they are investors, but who actually don’t invest in any meaningful sense in anything. Rather, they have perverted the law to allow them to farm the population of their wealth whilst contributing nothing.
Had they been investing, our water system wouldn’t be releasing oceans of excrement into our waters, and villages in Suffolk would not be being poisoned. And there would be adequate fire safety in our tower blocks. And investors or landlords that failed to perform their role would either be ruined or arrested, and preferably both.
Because that’s capitalism under law. Or, as I like to phrase it, capitalism.
