This article was first published on CapX.
The knee-jerk reaction of the dinosaur Left to any large-scale upset in the markets is to proclaim ‘The Crisis of Capitalism’ – yet again. That tired old canard had its last major outing in 2008, but the Corbynistas and allied Marxist doom-mongers across the developed world may hesitate to pronounce the same verdict on the latest panic in the markets, since its architect is China, the world’s last communist superpower.
On the analogy of the term “Bastard Feudalism” – used by historians to characterise the increasingly diluted version of the feudal system that presaged its collapse – the present hybrid economic system in China might be described as Bastard Capitalism. But is what is happening in the West so very different from the situation in China? The micromanagement of business by the regulatory systems of the European Union, where new VAT rules have just forced thousands of small businesses to close, is one obvious parallel, but there are issues far beyond excessive regulation that are subverting capitalism in the West.
If we throw off the blinkers of corporate groupthink and reject the consensual attitudes that are atrophying the latent energies of capitalism, an objective assessment shows that there is indeed a Crisis of Capitalism, though not of the kind the Marxists proclaim: it is a crisis of identity.
Capitalism no longer understands what it is, or what is its purpose, or – most corrosively – what is its natural and proper relationship with society. It has lost the plot. Increasingly, its interpreters are re-imagining capitalism as an ideology. Perhaps that delusion was inevitable as a consequence of the Cold War, when Western ideologues posited an antithesis between Communism and Capitalism, as if contrasting like with like. But Communism is an ideology, whereas capitalism is not.
Capitalism is an evolved and evolving system of wealth creation, no more, no less. That role is of major importance to human well-being: to attempt to inflate it into a universal philosophy and Utopian system of global social engineering can only subvert its real function and diminish it. But lately capitalism has made a Faustian bargain with governments and, like all such pacts, it can only lead to the destruction of the party that has sold its soul.
Enterprise, anxious to court the powerful state, has allowed itself to be made an instrument of so-called social liberalism, lending its cooperation to state-promoted social-engineering schemes that have nothing to do with capitalism’s sole remit, wealth creation, and in many instances actively undermine it. To observe this damaging trend in its most pronounced manifestation, one need only look to the annual assembly of the World Economic Forum at Davos.
Of course, many valuable insights are exchanged there by CEOs and influential politicians; it is probably the premier networking opportunity on the planet; and it is necessary for business to make its concerns known to policymakers. But how far is the tail now wagging the dog? The 2015 Davos programme contained many discussions on matters of obvious relevance to entrepreneurs; but it also embraced such topics as Gender, Human Rights and Equality, more usually the preoccupations of local authority ideologues, with these components of the WEF deliberations largely driven by NGOs whose legitimacy should itself be a matter for debate.
The mask of benevolence and concern worn by self-styled “progressive” forces on such occasions, exploiting capitalism’s crisis of ethical confidence and desire to reinvent itself morally in the wake of the banking scandals, conceals a malign development: cultural Marxism is colonising Western boardrooms. Directors whose sole concern should be to deliver good results – achieved legally and ethically – to shareholders are being distracted by a host of “equality and diversity” objectives that have nothing to do with their proper remit.
Recently almost one-third of FTSE 350 companies apologised because they did not believe they could achieve Lord Davies’ target of 25 per cent female directors by the end of 2015. Why should they be under any such pressure? The sole criterion for selection of directors should be suitability; if that results in 100 per cent male boards – or 100 per cent female – so be it. If there is one thing incompatible with competitive capitalism it is a quota system. If corporate boards are run like local authorities their institutions will end up in a similar state.
The state must be kept out of boardrooms. It is notorious that in the one area where its presence was legitimate – enforcing lawful trading practices – government was culpably absent pre-2008. But the intruder state is increasingly insinuating its presence into the engine rooms of capitalism and that is a destructive development. Beyond that, the contagion has been caught by many commentators who are appointing themselves evangelists of a new brand of “progressive” capitalism, misrepresenting a wealth-creating mechanism as an all-encompassing ideology.
Like all ideologues, they are fiercely intolerant and seek to demonise everything they see as an obstacle to the hegemony of progressive capitalism. In the recent writings of such commentators the targets have included Christians, retired people and the elderly in general, anyone opposed to unlimited immigration, those who favour a reduction in the size and role of the state, women who want to rear children rather than join the workforce, supporters of the traditional family and even opponents of same-sex marriage. That list of anathemas expresses the prejudices previously associated with capitalism’s most inveterate enemies on the left.
The “good” things in the new pantheon are youth, cosmopolitanism, university graduates, urban dwellers and, above all, “individualism”. The most striking feature of this list of endorsements is its intrinsic naivety. While the rights of the individual were necessarily reasserted during the Cold War, to counteract communist collectivism, today it is equally necessary to acknowledge the contribution made to social cohesion by organic communal institutions, pre-eminently the family. The fact that many women in Britain are compelled by fiscal constraints to entrust their children to strangers and enter the workforce is a more serious social reproach than any shortage of women in boardrooms.
But the worst feature of the blinkered agenda of the ideologues of Bastard Capitalism is its indifference to culture. The notion that, to supply cheap labour for current requirements and inflate immediate profits, the individual cultures of every European country should be liquidated and the continent flooded with incomers ad infinitum is a caricature manifestation of the Philistine greed and anti-social mentality which its enemies have always attributed to capitalism. As recently as a generation ago one could glance out of a train window and know one was in China, or Japan, or Africa by glimpsing the architecture. No longer: cosmopolitan steel and glass structures have eradicated cultural expression in the built heritage.
Sometimes cultural concerns – the future of civilisation – must take precedence even over economic growth. The ideologues may have a vision of the New Man – multicultural (which eventually means monocultural), divorced from family ties, technologically sophisticated, a consumer rather than a person – in a word, inhuman. They should heed Thomas Molnar’s warning that man cannot step outside his human nature. As for marginalizing religion, that is a declaration of war on 80 per cent of the world’s population. The extravagant ambition to abolish the metaphysical from human experience is far above the pay grade of commercial traders, which is what every successful practitioner of capitalism identifies himself as being.
Why should capitalism pick a fight with so many people? If it proclaims itself incompatible with so many ingrained human characteristics – faith, family, patriotism – those who are indissolubly attached to such values may conclude it is capitalism that needs to be marginalized. But there is no need for such conflict if capitalism will embrace its true identity and restrict itself to the crucial activity of wealth creation. The ideologues of Bastard Capitalism like to dress up their arrogant prescriptions as “Enlightenment values”. In that case, it is a pity they have chosen to discard the brilliantly insightful Adam Smith and embrace the charlatan Jean-Jacques Rousseau. All utopian ambitions produce dystopian outcomes.