The defence of capitalism as a system of economic organization often takes the form of strangely pious declarations about how we have strayed from the path. This could involve over taxation, limiting incentives, government takeovers of industry. Crises, it is claimed, emerge from our failure to allow the market to work its miraculous power divorced from the interfering hand of government and social sentiment which produces inefficient and unjust distributions of wealth, followed by gluts which result in inflation, crises and depression.
Oddly, it was the great libertarian economist, Hayek himself, who formulated the most concise internal rejoinder to such idealizations. As a Darwinian epistemologically, he understood better than most that the market system that now dominates our world had emerged as a result of contingent and circumstantial accidents around the Atlantic. While he felt that it was the most rational system to allocate goods, he had no doubt that the proclivity towards over consumption and poor investment would lead to crises which government interference could only make worse. He was far more clear minded than the later monetarists, such as Friedman and Sowell, who always envision a utopia yet to be divorced from history and contingency, in which the rationalizing power of the invisible hand will distribute wealth in a manner both efficient and in line with the principles of classical liberal justice. They do not recognize that their utopias are just that; fantasies with little grounding in either history or economic reality. The failings of capitalism, like its successes, do not result from some bizarre unwillingness to let the market work its distributive magic. They are precisely what they appear in material fact; the failings and successes of capitalism within the world of actual human beings who are forced to live within time rather than divorced from it. This complex relationship with time is among the defining features of capitalism and help us account for its benefits and limitations in a less abstract way than is typically found in micro-economic modelling. One of its most tense limitations are the ways through which capitalism produces a culture centered around individuals who must lack individuality.
Capitalism tries to evade individuality through the production and expansion of difference along the lines directed and limited by capital. Saying that, I do not wish to deny its accomplishments for improving the lot of many; but merely to point out that its limitations are modes through which we think and act and not conditions in which we are bound to exist. Our responsibility is to always overcome limitations; as such, capitalism should one day be replaced by a more egalitarian system of distribution that I will sketch out later in this piece. Saying that, my normative critique is fused with an institutional analysis. For it is in no small part through the constraints it places upon human expression that capitalism finds itself in spiralling cycles of overconsumption, gluts, inflation, depression, and recovery. This, or so I argue, will remain unchanged so long as we remain human beings with the capacity to achieve more.
Capitalism as an economic system is a chimera; continually choking on its own accomplishments as it seeks to satisfy a never ending hunger for producing new values. Along this line, its three greatest analysts were Marx, Keynes and Schumpeter. Each understood that the inherent tensions produced by capital expansion were directly responsible for its crises and redemption, each following smoothly in succession within a strictly delineated time.
I characterize time as delineated for capitalism not to raise a new theoretical problem about temporality but to point out the inherent manner in which the ecstatic experience of human life within time needs to be evaded and reduced down to moments of desire and consumption which allow the system to function on a day to day basis leading to aggregate gains for competitive firms. This leads to the crises of capitalism, as the futural projections of individual firms come into conflict with their immediate needs as retailers in the present. This Keynes understood better than anyone else. His General Theory of Employment, Interest and Money is a terribly written book, but one that truly understood and articulated the nature of time in capitalist society. Its break with the classical paradigm lay not in its proposition that the government could play a role in improving the economy. This was an incidental contribution. It is the founding text of macroeconomics because it recognized that the expectations of firms and their inability to accommodate the future were what was responsible for the cyclical woes of the system.
But this puts firms in a difficult situation, since they must always produce the values of tomorrow to compete with those of today. But capitalism demands that both firms and consumers not think of tomorrow as an actual historical event but rather as merely another moment in the clockwork process of labour and consumption. Despite all the emphasis placed on saving, there is no sense in which this is seen as a good in and of itself but only as a prerequisite for greater returns and consumption at a later date. The propensity for underconsumption promoted by mercantilism has been decisively destroyed. When significant funds of money are hoarded it is only during crisis periods which further exacerbates the problems of decreasing liquidity, minimal investment and inflation.
Capitalism must always demand that consumers subordinate the future to the interests of the present, even when the products being marketed are to be consumed in the future. These problems with time lead to overconsumption which cannot be supported by consumers of the present, who are always milked beyond their capacity to give, necessitating temporary credit solutions that postpone the day of reckoning to a point where crisis becomes catastrophe. When this happens we see the collapse of old values and the creation of new ones; the process of creative destruction upon which capital relies for its dynamism while simultaneously dreading its consequences at the level of individual firms and their employees who are condemned to fall and rise as the system re-establishes the status quo and the whole process begins again. Throughout all this, difference is produced via the production of new values which exist in conflict with one another in the market which simultaneously validates and alienates them by not allowing them free reign beyond the boundaries established by capital. In this sense, Marx was entirely right to claim that the limits of capital are capital itself.
Marx did not commence Capital with an account of the commodity by coincidence. The commodity simultaneously expresses the allure and ultimate failure of capitalism as a stable and empowered form of economic organization. Beyond their use value, commodities are associated with the expression of individuality that codes the subject according to their commercial preferences. In modern societies, this takes the form of consumption for the purposes of manifesting a present divorced from the impact of real history. When I consume a product, it is intended not just to gratify a desire, but to sublimate it as a part of my identity; that part which can be given expression in the public world with dignity because it is undertaken along the lines commended and authorized by capital. Cars, homes, plants, diets, gym memberships, and social media are all part of this same process of making present what seems absent; an identity that is always to come. But the needs of capital require that this promise of a present identity given social expression never arrives, since this would cease the process of fetishization and consumption. It is always what leads so many of its theoretical proponents by necessity to embrace the defence of capitalism that requires the desires which produce demand be stripped of a rich temporal dimension and reduced to a bizarre idealism which takes the cognitive aspect of desire as it is in order to draw the positivists’ conclusion that it must be organized in a rational system which enables the maximization of wealth so that consumers can make a broader range of individual choices about which commodities they wish to acquire. These choices, in a fully capitalist society stripped of historical diversity, are not to be questioned except to the degree that they might interfere with the operations of capital itself. By presenting desire as something not to be questioned but exclusively fulfilled, capitalism reduces history down to a present where the primary drive is a superficially objective association with the commodity.
In such a system, identity can never become authentic, but needs to develop ahistorically since the different identifiers associated with objects cannot become fixed and united or the consumption process itself would cease. Capitalism is tied to the production of new values which are mutually constitutive of the desires they seek to meet. Because of this, old commodities begin to lose marginal utility and are usually re-assimilated by competitive firms or else fade from the market. This is the process Schumpeter characterized as creative destruction; the process through which capitalism destroys old values to repackage or create new ones.
The sorry rise and fall of commodities, from the beaver pelt top hat to the music industry, could be perpetuated indefinitely and history put on hold if it weren’t for the consequences of capital accumulation which gradually (though with accelerating pace in a neo-liberal political system) pushes wealth into the hands of monopolizing firms. They could potentially invest this profit as new capital, but it is instead funnelled into the financial market decreasing the overall liquidity of actual money while increasing the need for credit. As Weber claimed, this is the tension that emerges in all large scale firms; officials with significant control are not always best served by re-investment and so instead appropriate funds for their private needs. This, of course, is an entirely “rational” gesture for private actors who after all need fear no reprisals since they are protected by the sanctity of private property.
Matthew McManus is a PhD Candidate in Socio-Legal Studies at York University