Climate change, Trump, precarity, the erosion of privacy — all of these problems with life today are often attributed, with cause, to capitalism. And this thought — that capitalism is the source of all our problems — has led, especially among the left, to a search for alternatives. Thus in recent months there has been two books, by central voices of contemporary left media, arguing for socialism, for a vision of a better and radically different future — of labour strong and businesses communally owned, or more fancifully of a world in which technology means we don’t have to work (I reviewed them here and here).
While these visions are useful, and these critiques necessary, there’s a risk that in seeing capitalism as wholly bad, one will overlook good features of it that will be needed, in some form, in any future society. Left thinkers often talk of ‘capitalist realism’, which is the idea that one of the baneful thinks of living in a capitalist society is that it makes one unable to see alternatives to it, leading to a claustrophobic sense of being trapped in something bad with nowhere better to go.
Somewhat tongue in cheek, let’s call socialist unrealism the inability to see, not any alternatives to, but any value whatsoever in, capitalism. For the socialist unrealist, it’s an axiom that capitalism is all and only bad. I suspect a good majority of leftist people today are socialist unrealists. And I think they are wrong to be so.
Thus in reading the books mentioned above, or attending a Bernie Sanders rally, or listening to Chapo Trap House, the message you get is not “capitalism did pretty well but it has some faults we should fix”, or even “capitalism is mostly a disastrous mistake but it at least got this thing right”. Instead, one hears calls for revolution, and, equally importantly, one is told that unless one wants radical change one is a mere progressive or a ‘lib’, a weak and unvirile centrist lacking a backbone (a central part of the worldview of the extremely influential leftist podcast Chapo, whose book I reviewed here).
The problem is that it’s almost certainly false that capitalism is all and only bad. A priori, very few things are all and only bad; that’s just not how the world is. Moreover, empirically, as capitalism has arisen, so has human prosperity as measured along many dimensions, of money, calories, health, freedom, for many parts of the world. It’s blase almost to a point of offensiveness to discard all those advances, and foolhardy to assume that capitalism has nothing to do with them.
Capitalism might have something to teach us, even if it must eventually be transformed into something better. This is especially so because sometimes the near-term goals of the capitalist and the socialist overlap — consider libertarian economic arguments for immigration, for example. Leftists should have those arguments in their repertoire as tools to convince people who might not be convinced by moral arguments for open borders.
For these reasons, we shouldn’t be socialist unrealists (this is entirely consistent with being socialists). The problem is that it’s hard to assess the merits of capitalism with a cool head, for reasons I will discuss in a second. But we should try, and recently, with that in mind, I’ve been reading seminal capitalist/libertarian texts. This week I came across (roughly) libertarian economist Tyler Cowen’s Big Business: A Love Letter To An American Anti-Hero. It provided a useful foil to the socialist books I’ve been reading and reviewing here, and I want to say what I took from the book below. Before doing that, though, I want to say a bit more about socialist unrealism, because I think it is of independent interest from a philosophical point of view.
Why is socialist unrealism hard to avoid?
Until recently, I was firmly in the socialist unrealist camp. I think there are two reasons why it’s a very easy pattern of thinking to fall into: the media, and the defenders of capitalism.
As to the first point: among defenders of the status quo, an argument is sometimes made to the effect that newspapers have a negativity bias that warps how we think (Cowen makes it, as does Steven Pinker). It goes like this: good news, or even just ‘everything is going pretty smoothly’ news, isn’t actually news, in the sense that it doesn’t make the papers to the same extent that quotidian badnesses do. The bulk of any piece of news (paper, show, blog) is about all the bad things that happen. Moreover, we live in society profoundly structured by capitalism in such a way that many of the bad things that happen will often be traceable, in some way, to capitalism. What that means is that opening up the newspaper, or Twitter, and we’ll be faced with a litany of bad news that we can blame on capitalism, but little good news, which can easily lead us to thinking capitalism is all bad.
Personally, when I first encountered this argument and considered its consequences, it kind of blew me away. Philosophers have been interested in skepticism for millennia: in one version, it has it that our way of accessing the world is fundamentally inaccurate, so that everything we think about the world is fundamentally off. Think, as philosophers like to, of the straight stick that appears bent when in water. Or think of the person under the influence of drugs hallucinating. In these cases our perceptual apparatus is wonky, and that makes our representations of the world wonky.
Newspapers, one might think, are something like the apparatuses by which we access the social and political world. Then if newspapers are inaccurate becuase they systematically filter out the good news that happens, they cause us to have fundamentally inaccurate thoughts about the world, and so we should be sceptical that we know much about the social and political world.
The upshot of this is that even if we seem to get our anti-capitalist beliefs confirmed multiple times a day by the news, we should be wary, because the news is not a reliable conduit of truth. At the very least, it calls us to carry out much more due diligence to find out how things actually stand — merely going to the Guardian or scrolling Twitter some isn’t enough. Reading Cowen’s book impressed upon me the extent to which I had failed this — I often came across empirical points that spoke against views I hold, but didn’t have, in my brain, refutations in the form of other data that spoke against it.
Consider now the second aspect: that many of the most popular defenders of capitalism are right-wing dumbasses. If you think someone lacks a moral compass, then it’s all too easy to discount what they have to say, even if it has argumentative merits. We might think the friend of my enemy is my enemy, and leave it at that. So, for example, if Ben Shapiro presents an argument against the minimum wage — a topic on which I know little — I am more likely to assume that the argument is bad because it comes from him than that it’s good despite coming from him.
And this is dangerous. Not only will I tend to write the argument off, but if I encounter anti-minimum-wage people in the future, I’ll tend to judge their character as I do Shapiro’s, thence to conclude that their arguments are bad because their characters are bad, even prior to giving the argument solid consideration.
Combined, it might be that we don’t hear good news about capitalism from sources we trust, and, just as badly, do hear good news from sources we distrust. All together, we don’t hear anything good about capitalism, and this leads us to the almost certainly false view that is socialist unrealism.
In Defense of Capitalism
Big Business was, for me, a welcome antidote to socialist unrealism. While it didn’t cause a revolution in my beliefs or anything, it certainly shifted my probabilities on a number of issues and — importantly — convinced me that there are things to learn from the capitalist that any socialist will probably have to learn if their society is to get broad appeal. I will consider, somewhat selectively, some of the parts of the book that I found most instructive, but first, let’s rehearse some of the — I repeat, good and very worth our attention — concerns people have with capitalism.
Asking the average Twitter commentator or pundit why they dislike capitalism, and they might give a list like this:
- Income Inequality.
- Climate Change.
- The dominance of politics by businesses
- The digital monopolies of Google, Facebook, etc.
A lot of the book is rearguard action, showing, often somewhat convincingly, that these concerns have responses. But an important and valuable part of it is the positive case it makes for capitalism as a positive force in our lives. First I want to consider it.
The Central Argument (As I Understand It)
The case is made succinctly, if weirdly, on the first pages:
All of the criticisms one might mount against the corporate form [I think we can take this as synedochic for capitalism in general] — some of which are valid — pale in contrast to two straightforward and indeed essential virtues. First, business makes most of the stuff we enjoy and consume. Second, business is what gives most of us jobs …
Without business, we would not have:
Ships, trains, and cars
Electricity, lighting, and heating equipment
Most of our food supply
Most of our lifesaving pharmaceuticals
Clothes for our children
Our telephone and smartphones
The books we love to read
The ability to access, more or less immediately, so much of the world’s online information
There’s a sense in which this seems obviously false: communist Russia had medicine, clothes, books, food, at least to some extent, and more generally it’s not obvious that there’s a tight connection between capitalism and these goods. It could be he’s making the rather tepid point that, in fact, capitalism has led to those things, for us, but that shouldn’t bother the socialist who would want to say yeah but there are other and better ways to make them.
It’s also dialectically weird. If you want to convince people that capitalism is good, ‘without it we wouldn’t have gadgets’ isn’t the best argument. It’s a very common rhetorical move in popular culture, from Bill Hicks to American Psycho to The Simpsons to Fight Club (I can’t actually think of very clear examples post-90s, oddly), to say that modern life is made worse by the commodities in which we drown, that they cause our lives to be superficial.
But I think we can extract an argument, implicit here and maybe more explicit elsewhere, that sounds more convincing. Some of these goods depend on the competitive nature of capitalism, which forces companies to invent new things and give us new ways of living, and that does so in a way that it’s not obvious other forms of organization could manage.
Thus consider pharmaceuticals. It’s at least arguable that progress in pharmaceutical research, in the search of long-shot cures for diseases, is something that requires people to riskily stake a lot of capital in essence in a bet. You might think — again, arguably — that the sort of innovation and risk required is not something that the public sector will excel at.
Let me consider another example and perhaps less controversial example: dating sites. These, surely and uncontroversially, are products of the private sector (albeit, of course, developed on publicly funded technology, using the brains of people who probably received publicly subsidised education and health care — all these rhetorical moves that leftists like to make to suggest that private innovation depends on public services are, I think to the book’s detriment, not considered). But they, arguably, and unlike gadgets, are for many truly life-enhancing things. Dating sites mean we don’t have to be limited by our social circles in finding partners, widening our range of choice about one of the most important parts of life, a fact, unlike the fact that the capitalist lets us watch movies in ever higher resolution, of existential significance.
(Anecdotally, the development of dating sites more or less transformed my life: as someone shy and not particularly social, meeting people when I was younger was very difficult, and suddenly became very easy. I think I owe this transformation to the private enterprises that made the sites for profit.)
So now here is a claim that I think is covertly to be found in the above passage:
- Without the competitive profit-driven structure of capitalism, innovations that improve the way we live would not be possible, because innovation involves risk that, for example, centralized government planners can’t bear.
Once you see this, you can see how it would apply to the rest of his list. It’s not that only under capitalism can clothing exist; it’s that only under capitalism can affordable stylish clothing exist for every body type, that can be shipped to one’s house in days in time for a date or a meeting. This, I think, is a solid argument for capitalism. It is not the case, as satirists might want to have it, that all capitalist innovation is stupid products; some of it genuinely improves our life. And if that’s so, then if we make a transition to a socialist society, we have either to forgo those improvements, or find a way to replicate them. In either case, the socialist unrealist will be in for a shock.
Of course, maybe we should forego these improvements. If the cost of my having a better dating life were life on this planet, then I should, I don’t know, learn better social skills. In general, capitalist life seems to entail many costs, and it’s Cowen’s aim to show that these costs are less severe than they seem. I will now, sometimes quickly, go through his response to the laundry list of complaints given above.
Income inequality is one of the most talked about and angry-making features of our society. It seems unfair that ordinary workers should languish in a system while their bosses do well, as has notably been the case for decades. After all, either the company is doing well, in which case everyone receive wage increases; or it isn’t, in which case the boss shouldn’t. Either way, it seems, something has to give.
Some of Cowen’s responses struck me as good, some as bad. On the good side: he tells us that much income inequality is the result of inter-firm inequality rather than intra-firm inequality: ‘income inequality is mostly about the differences between the superstar companies and the others’. Some firms have pulled out ahead, skewing the numbers. Moreover, he claims that what seems like excessive compensation of CEOs can be traced to the fact that they receive a lot of stock options, and so a hot stock market will lead to high income but in a way that doesn’t seem so unfair. These seem like arguments worth considering. On the bad: he cites studies showing that if a CEO dies, the value of the company in the short term falls (surely the crucial question is whether we frequently see companies go from doing well under one CEO to doing badly under another).
It’s a venerable feature of Marxist theory, and an intuitive part of many of our working lives, that work involves exploitation. Whether you understand that in turns of theoretical notions like surplus value or the stories we read about digital piecework or the service industry, it is certainly a widely held view. Cowen pushes back. He points, convincingly, to studies that show forced unemployment is psychologically and physically deleterious, and notes how Trump’s successful 2016 campaign involved a lot of talk about jobs. He also notes that while work is stressful, so is home, and that work conduces to a pleasant flow state. Less convincingly, citing a study, he suggests that because the average number of hours worked has actually increased, that’s a sign that people don’t dislike work so much (the counterresponse would be that that’s just another example of exploitation: if people are working longer, but aren’t receiving adequate wages, they must be being forced to do so).
He doesn’t say anything about climate change. I imagine his story would be that we’ll need the private sector to innovate in order to make solar panels and other technology, and — again, I’m putting words into his mouth — that any tepid response on the part of business is a response to tepidness of the part of their customers. One the claims he makes in the book is that businesses try to win customers over by supporting their ethical concerns, and so he’d probably predict that the recent upspike in public concern about climate change will be reflected in an explicit reorientation of businesses towards being more environmentally friendly.
The 2008 crisis is never far away from discussions about how to understand today’s political and economic situation. Cowen’s response to this, and the broader issue of the reliance of the US on fictionalization (startling statistic: in 2007 the top five hedge fund managers earned more than all five hundred CEO’s from the S&P 500 put together) is mixed. He doesn’t talk much about the crisis, suggesting that the greed that underlay it is not some special greed unique to capitalism, but the greed of human beings. It was some bad actors, not a systemic feature. That, I think, might not convince many. Better is the role of private VC-funding, and the banking infrastructure it depends on, in permitting innovation. He also claims that decreased barriers to access mean that more Americans are enjoying the benefits of the high-performing stock market, although I’m not sure what data bears that out (just earlier I read that the wealthiest 10% of households own 84% of stocks).
Another worry is that business affects politics too much. You might think of the depressing prevalence of senators having financial interests in areas they have power to pass legislation about, or the revolving door between the world of politics and business, or again Chomsky’s famous claim that elections are bought, in the sense that you can read the winner off the receipts.
He presents some interesting data worth heeding: corporations spend $3 billion a year lobbying vs $200 billion advertising, and cites a study purporting to show that lobbying doesn’t seem to increase the chance of legislation favourable to the business being passed (let me just note that I haven’t checked any of these claims; I’m assuming honesty in Cowen, because I have no reason not to.) He doesn’t think all business is innocent, but the culprits — heavily-subsidized agriculture — are not what one would first expect. And he points out the results of an academic spat the outcome of which, he thinks, is that there is no clear correlation between what laws the elites want passed and what actually gets passed.
What about Amazon shutting down independent bookstores, what about Uber hemorrhaging money with an inscrutable business model that surely is going somewhere, what about the fact that we get so many things free but there’s no such thing as a free lunch?
Cowen is surprisingly sanguine about most of this. He’s worried about privacy, but he does seem to think that we get all the labour-saving and life-enhancing products of the digital age for free and not, as I think most people might think, that we’re paying for it with our data whose value Google et al realize even if we struggle to see it. I was expecting more cynicism here, and was left still wondering what to make of digital capitalism. I still don’t know why we get all this seemingly free stuff.
There’s more to the book. There are interesting reflections about things like — to use a term he doesn’t — woke brands as furtherers of socially liberal aims.. There is pretty convincing evidence to suggest that CEO’s aren’t unduly concerned with short term reports as opposed to long term sustainable growth. The final chapter has interesting thoughts about the way we tend to anthropomorphize businesses, which yields philosophically interesting about what the basic concepts in terms of which we should understand contemporary life are. Back in the day, you might have thought, we maybe had people, the environment, and groups of people (families, tribes, states). Now we have this new factor, big businesses, as impersonal forces that provide us, often seamlessly, many of the things we want and need. Our world is a strange one, and perhaps the categories we divide the world up into don’t adequately reflect this fact yet. And that maybe explains the wildly bizarre spectacle of fast-food chains pretending to have mental illnesses on Twitter.
In sum, there’s much for the non-capitalist to learn and think about. While it almost certainly won’t eventually convince them (a big ask), it should, I think, convince them that socialist unrealism is false, and that we’re going to need to learn from capitalism and business if we want to overcome it.
Added 23 June 2020: From summer 2020 I’m going to move my occasional writing from medium to tinyletter. If you want to read more from me in your inbox, please consider signing up: https://tinyletter.com/mittmattmutt. I’ll post relatively infrequently, and hopefully interestingly, on the same sort of themes as the blog, so: popular philosophy/explainers, culture, literature, politics/economics, etc. I might also do things like brief reviews of books I read and so on.