So, just what is wrong with Umair Haque’s article If the Point of Capitalism is to Escape Capitalism, Then What’s the Point of Capitalism?
Well there is a lot wrong with it from start to finish.
In Haque’s description of the capitalist world, people’s objectives are couched purely in materialist terms – “the worker is trying to become a manager. The manager is trying to become a capitalist.” Haque seems oblivious to the notion that capitalist societies already allow people to live on hippy communes if they wish whereas socialist societies do not allow people to opt out of the commune.
His description of capitalism as being “like a pyramid, which we’re all climbing” is mistaken. So is his example of capitalism in its purist form, in which he labels the slave owner as the purest capitalist of all. But what he is describing is actually a form of feudal society. There is little notion of property rights, markets and voluntary exchange enabling the use of capital to produce things that people want[i]. From a classical liberal perspective self-ownership does not allow for slavery.
But even if we grant him this point, he still doesn’t offer any evidence about the motivations of different classes of people. Nor does he allow for individuals pursuing their own very different objectives. The result is that his article is a misguided reading of the motives of Bezos, Musk and Gates, just as it is for the desires of unnamed individual plumbers, bakers and hairdressers. Haque’s dismissal of these people smacks of condescension.
How does Haque know that many people right here, right now don’t have lives “seared with meaning”? He doesn’t. He just asserts that they don’t, based on a misguided socialist framework that sees the modern market economy as being rife with exploitation, control, and the inability of people to find, realize, and develop themselves.
But this argument is devoid of facts and can be easily dismissed. The World Happiness Index, indicates that subjective well-being is positively correlated with both income by country and also with indexes of economic freedom. As people in market economies get richer, their reported happiness tends to rise[ii].
Worst of all, Haque just wills production into existence under his model of “technology, public goods and public investment”. There are two main difficulties with such a notion: prices and innovation.
On the price system, Haque commits two blunders. Firstly, he just throws away relative prices by stating that we are at “the first juncture in human history where we are really capable of giving these things to one another”. Without prices, how are producers and consumers to set priorities?
He provides no argument about whether social planners are capable of doing the job other than providing a paean to the UK’s National Health System as an example of good measurement. He’s obviously never heard of “hitting the target and missing the point”, where the UK Commission for Health Improvement found that patients often had to wait in lines of ambulances outside emergency departments until the hospital was confident that patients could be seen within a four-hour waiting target[iii]. It’s not clear but Haque seems to assume that new technology and public goods providers will just sort this out. This isn’t so much the “socialist calculation problem” as the “no calculation problem”.
Haque then proceeds to subvert the monetary system by saying that the central bank can just print money – “Today, everyone can open an account online at the central bank, and poof — money.” Perhaps we can take some comfort in the fact that Haque’s idealized post-capitalist economy would very quickly turn into a version of Venezuela on steroids and that such a nightmare would soon be over.
Never mind the destruction of the price system and hyperinflation, Haque’s world would be one of stasis rather than dynamism and innovation. Under his system why would anyone want to innovate and what signals would they have to respond to in the absence of a price system?
But he doesn’t seem to worry about that – and relatedly – he appears to have an incoherent view about public goods. He just lumps together things that he appears to like, such as ”healthcare, transportation, retirement elderly care, childcare” with no consideration as to whether or how these goods and services fail to be provided in the market place and what, if any, remedies are the most appropriate.[iv]
In the absence of drivers to spur innovation, Haque’s future would be a world that locked people into their current places in society. They would be just as stuck as workers and tradesmen in Diocletian’s Rome, as serfs in feudal Europe, as apprentices in the age of the Guilds, and most of all as almost anyone in a socialist states of the 20th Century where one’s education and employment were state directed, with the best positions allocated more on the basis of party connection than on merit.
Fortunately, we will have market capitalism to help avoid such a fate.
[i]See for example, Eamonn Butler 2018, “An Introduction to Capitalism”, Institute of Economic Affairs, London, page 14. https://iea.org.uk/wp-content/uploads/2018/07/Butler-Capitalism-Interactive.pdf. See also Jason Brennan, 2014 “Why Not Capitalism?”, Routledge, New York.
[ii] See for example, Angus Deaton, 2013 “The Great Escape: Health, Wealth and the Origins of Inequality”, Princeton University Press, page 21 Figure 2: Life evaluation and GDP per capita on a log scale; and Steven Pinker, 2018 “Enlightenment Now: The Case for Reason, Science, Humanism and Progress”, Viking, New York, page 269, Figure 18.1: Life Satisfaction and Income, 2006.
[iii] Cited in Christopher Hood 2006, “Gaming in Targetworld: The Targets Approach to Managing British Public Services”, Public Administration Review, Volume 66, Issue 4 July/August 2006, Pages 515-521 https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6210.2006.00612.x.. See also
[iv] So enamoured with his world of post-capitalist abundance, Haque appears to find little time for considering whether any good or service is a public good in the economist’s sense of being non-excludable and non-rivalrous. Perhaps Haque thinks everything will be magicked up out of new technology and just given away.