ONE blogs – JOHN CALDER – Man for Monday: ‘THE MEANING OF CAPITALISM’

Adam smith in The Wealth of Nations described capitalism as a method of creating wealth through the use of innovation and invention, which in practise became mass production replacing handicraft and home industry. It also led to driving whole populations off the land and into factories and led to mass unemployment, which made brutal exploitation easy, so that those who understood what they were doing could become rich at the expense of society as a whole.

This was not always the case. Many businesses and industries were run on socially acceptable lines with the wealth being created shared between those who created it in a reasonable manner. Karl Marx, who understood all aspects of capitalism, described the surplus wealth by labour not going to those who created it as a form of theft, and the purpose of socialism was to return that wealth to be shared, not to end mass production. But primitive capitalism, although it made the clever, the greedy and the unscrupulous rich, could still be controlled by legislation and laws which limited the worst excesses. This, however, is not the case with Global capitalism which, because it is international, can move its activities from one part of the world to another, be above the laws and open to every form of corruption and chicanery.

It is now clear that no regime is able to govern properly or even understand what it is doing or could do. The capitalist world is on the verge of collapse and the bland reassurances we are daily given that prosperity is about to return has no basis of understanding or probability about it. So let us look at reality for once.

First of all, it is time for each nation state to cut its international links. International trade in terms of exchange of goods can continue, but a stop must be made to international ownership. No firm, enterprise, industry or financial institution should by law be allowed to own a company of any size or nature in another country. Also there must be stop to takeovers in the same nation state if the company taken over is still viable. Take-overs should be by the state alone, and I would like to see everything that was once in public ownership re-nationalised. At the same time we must realise that there is a great shortage of competent and honest managers. Margaret Thatcher bears the greatest responsibility for this: she downgraded honesty, encouraged greed and encouraged a way of thinking that made such disasters as Barings Bank, Enron, Madoff and Northern Rock inevitable. Other similar disastersare undoubtedly yet to be discovered.Big companies should be broken up into viable smaller ones, small enough for their workings to be understood by those who manage them. New Labour politicians are also partly to blame for the shortage of competent and honest managers. We have no institutions like the French to pick the brightest from schools and give them specialist training. We are told that would be ‘elitist’. We put no premium on ability, only on cunning.

Smaller enterprises give more employment. At present whenever one enterprise takes over another, the first thing that happens is that as many employees as possible are made redundant to increase profit and to help pay for the purchase. The biggest responsibility of government- and this is realised in socialist regimes of all types- is to create employment for all its citizens. In France, for instance, I can name communities with left-wing local councils that sometimes create many more jobs than are needed in order to clean streets, plant flowers, look after playgrounds etc, in order to ensure that no-one goes hungry or unsheltered and that there is no excuse for crime. Taxes, of course, are higher than elsewhere, but social services, education, health and general amenity are on a level that the British could not imagine. If France shares many of current financial woes of Britain it is because there are too many areas that were deregulated by returning right-wing regimes.

In short, it is only by a reasoned local protectionism that recovery might eventually be achieved and it will not be in the short term. In the meantime we can expect unemployment to rise dramatically, violence and lawlessness to increase, crime to escalate and our standard of living to go back the thirties. We are already engaged in highly dangerous smaller wars which could easily lead to a world one. No party has the ability to govern sensibly and most of them are too frightened to make any decision at all, knowing that strict regulation is necessary, but unable to face unpopular consequences. Democracy is on the way out, largely because the electorate is disgusted with the system and those they have elected and partly because it is too badly informed about what has to be done and about the future in general.

To sum up: laws are needed to reduce the size of companies, stop take-overs, all foreign investment and, above all, to start renationalisation. This mean reforming our educational system to produce a new generation of reasonably paid managers, creating a society of culture and not crime, raising taxation and disallowing tax exile. One to fifteen should be the difference of spendable income. No more global capitalism. We should withdraw all troops from other countries. All this not only can be done, it must be done. The alternative is revolution of the ugliest type, world wars, total anarchy, and possibly the end of the human race.

John Calder 02/03.2010