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資本主義的省思-英文版 Re Look at Capitalism 發文時間: 2014/1/18   文 / 張安平台北 瀏覽數 / 18,050+

In the early 20th century many intellectuals thought that the Soviet centralized planned communist economy would be the solution for the world. However, by the end on 20th century, we witnessed the clear triumph of capitalism over communism and democracy over authoritarianism. We saw all liberal democratic countries adopted capitalist economies based on private ownership of capital. Most of the western European societies became capitalist before they became a democracy such as Germany. The rise of living standards made possible by economic growth is conducive to democracy. However, not all capitalist economies are or have been liberal and democratic.

This paper will re-examine some of the histories of how the modern world transformed into capitalism and some fundamental thinking behind capitalism as well as some of its pros and cons from some renowned thinkers and philosophers. Of course there are huge varieties of capitalism. In this paper, if capitalism is used alone, it means entrepreneurial capitalism. This paper will discuss the possible causes of some of the tensions between capitalism and democracy in the modern world. In conclusion, this paper will also attempt to make some suggestions for resolve the tensions existed in the world today.

In the wake of 21st century we are also seeing many problems emerging from the various forms of capitalism practiced around the world, such as the “Subprime Crisis” which turned into worldwide financial crisis in 08, “the European sovereign debt crisis” starting in 2010, as well as the recent political crisis in both Turkey and Brazil. The first two were economic issues but the later two are political problems arising in countries where their respective economies are in relatively good condition. If fact we are seeing tensions across the democratic and capitalist countries all over the world, even in the US with event such as Occupy Wall Street.

Early Intellectual Discourse on Capitalism

In the early phase of world capitalism development after Adam Smith’s famous book “The Wealth of Nations”, capitalism actually helped to bridge cultures, religions as well as national boundaries. Capitalism did not just provide the old wants in a new way, but also created and provided for the new wants of a society. Professor Amar Bhide in his book, The Venturesome Economy, said capitalism is a good phenomenon of nondestructive creation. Nobel Laureate economist Friedrich Hayek also said in defense of Classical Liberalism that the capitalist market produces things that we as individuals use to develop our potentialities and market produces things people want. This is exactly what Greek philosopher Aristotle believed a good society should do, helping individuals to achieve their full potential. However, there are also many scholars and economists who see tensions between capitalism and community, and tensions between capitalism and democracy. In the late 18th century German jurist, Justus Moser predicated in the long run market competition would destroy the existing communities, social structures and local cultures. This concept was adopted by Karl Marx and used in his book “Das Kapital”. Joseph Schumpeter later crowned the phrase “Creative destruction” which is in total opposition of Bhide’s conclusion. Schumpeter in his book “Capitalism, Socialism, Democracy” is sympathetic to Marx's theory that capitalism will collapse and will be replaced by socialism. Schumpeter’s second famous thesis was “Eroding foundations thesis” which basically says the success of capitalism set in the process that will destroy the social and cultural system on which it rests and give rise to socialism. In order to survive this inherent problem in capitalism, knowingly or unknowingly political entities around the world in the 20th century created many variations of capitalism, such as state guided capitalism (Singapore), welfare-state capitalism (Nordic Countries), authoritarian capitalism (China), Big firm capitalism (Korea), and Entrepreneurial capitalism (USA) and there are also nationalist method to classify the capitalist systems also such as Rhineland capitalism, Nordic capitalism, Mediterranean capitalism and Anglo-American capitalism, just to name a few.

Looking back to the 18th century, the development of capitalism interestingly enough led to the development of two opposite trends in the modern world, the development of nationalism and the beginning of globalization, which created another tension that ultimately resulted in imperialism. The treaty of Westphalia in 1648 was the beginning of the concept of “nation state” vs. “empire and principality”. The history of Europe at the time was about ethnic and religious separation rather than pluralistic society. The emotional vacuum caused by secularization and materialism resulting from of capitalism was filled by “ultra” nationalism, a trend that is still widely present today in one form or another.

In economics, the 18th century there was a time of financial revolution and the beginning of the commercialization of society. The financial industry as we know it today was also born. In the 19th century was also the start of the industrial revolution. This industrialization/specialization began the process of economic globalization, as well as the secularization of society. Thomas Hobbes’ writing probably did more than any other to bring about the secularization of political thought and Adam Smith’s book brought forth the concept of modern commercial society. Toward the end of 18th century, people came to buy most of the things they need and to sell most of what they produced. Before then each household only produced what it needed to survive. It was the beginning of market-oriented households. Cottage industries produced goods for sale. Wage laborers worked for others for money. As Adam Smith once put it, everyone was a merchant to some degree or another. It was to some extent the first consumer revolution.

However, the Dutch were the first to interweave between political power and economic policy. The increase of material wealth led to be seen as part of state power. For the first time, commerce was linked to national power. In 1602, the Dutch East India Company was formed. It was the first multinational corporation as well as the first company to issue stocks, which pooled capital and risks for large single undertaking. In the 17th century, the Dutch East India Company was the richest private company in the world. However, it was actually a form of imperialism, setting up a privately owned capitalist enterprise as a state within a state.

The bank of Amsterdam was formed in 1609 and the first stock exchange was also formed in Amsterdam in 1611. Amsterdam had become the center of international finance as well as the center of religious tolerance with a large influx of Calvinist refugees from Antwerp and Marranos Jews from the Iberian Peninsula. Capitalism allowed for the bridging and the diminution of culture and religious differences. Holland was perhaps the first society in which a majority of households made the switch in allocation of time toward production for the market rather than only for its own needs.

After the Glorious Revolution of 1688, the English learned from William of Orange, an English King who was Dutch by birth, the importance of commerce and finance. It was the beginning of “mercantilism” which believed international wealth was fixed and trading was a zero sum game. World trade at the time was dominated by protectionism and trade wars as well as real wars between nations. This neo-Hamiltonian strategy of world trade was based on tariff protection and subsidies was believed and practiced by most nations at the time. We can see this type of zero sum thinking even till today. This was totally different from what Smith had envisioned. He wanted a competitive free market of international free trade. His book, “Wealth of Nation” was an argument for expanding the freedom of international trade, which would result in diminishing conflicts between nations through mutually beneficial trade. However, during the same time, the rise of “Social Darwinism” caused an age of imperialism. Because people believed in the Darwinian concept of “survival of the fittest”, even in terms of societies or nations, winning is up most important, regardless of methods and morality.

Material Luxury was viewed as the basis of civilization. For a time, material prosperity was the first prerequisite for the development of higher civilization. Society sought to fill its imagination and aspirations through secular art, literature and the wonders of science. For Voltaire and Hume, civilization was a world of art and science, of technological improvement and a greater well being of society. However, for Rousseau, material progress had increased inequality as well as undermined virtue. Rousseau argued capitalism brought the individual desires for the unnecessary wants and comforts that distract people from their moral purpose. Science was unequally distributed among people, which led to more inequality in a society. Prosperity came at the expense of the self-esteem of the poor. A state of war ensued between the haves and have-nots.

Adam Smith believed in channeling self-interest toward socially desirable outcomes. It became a link between personal vice and public welfare. Self-interest was an important motivation in the market activity. Voltaire believed that commerce provided a means through which people of different ultimate orientation/religion can cooperate. He argued that in the quest for economic gain made people more willing to tolerate those with different views of ultimate salvation. He also thought benevolence was a limited phenomenon. Both Voltaire and Smith legitimized self-interest and popularized the pursuit of wealth through markets.

Smith also believed that producers would want to circumvent the competitive market whenever they could. If individuals or groups could promote their own interests at the expense of the public by bypassing the free market, they would. So well functioning government was and is a necessary condition for an effective commercial society. Government’s function is to provide justice and security under the law as well as national defense and infrastructure. Thomas Hobbes’ famous book “Leviathan” clearly pointed out that the government is a necessary “evil”. He also pointed out that without effective government, there is no effective ownership of private property, which means no commercial society.

Capitalism and Social Structure

In industrial society, division of labor increases human productivity. However, this also has a negative effect, especially on manual laborers. Division of labor has a narrowing effect on human psyche as well as the possibility of stunted intellectual abilities of the workers therefore further narrowing their future job horizons. For this reason a free and mandatory public education system for the working public in England was first set up in the 19th century. The 19th century British poet and school inspector Matthew Arnold believed education and culture would counteract the potential harmful effect of “the market” and division of labor.

The strongest opponent of capitalism was Karl Marx and Friedrich Engels. They concluded that industrial capitalism profits only the wealthy/capitalist, while leading to moral and material degradation of the rest of the population. Marx depicted capitalism as alienation. He thought both market competition and individual self-interest were morally intolerable and economic forces will lead to class conflict because he viewed capitalism as “exploitation”. By his definition, profit is exploitation and capital is the result of past exploitation. His theory was that capitalism was intrinsically a process of exploitation. He also argued that under capitalism freedom and legal equality between capitalist and worker is illusory.

Marx’s contemporary, French political thinker Alexis de Tocqueville after studying America also feared that this could lead to a new sort of aristocracy and a new form of social polarization. Later German socialist Ferdinand Tonnies also argued that under capitalism, community (solidarity by shared culture and ancestry) would be eroded and replaced by a more individualistic “society” (pursuit of self-interest in a market). In a community, shared understanding motivates actions and moral life is governed by religion. In a society, actions are based on rational calculation and life is governed by public opinions.

An even later German sociologist Max Weber also wrote that under capitalism life will become cool and calculated, less impulsive and emotional. It will lead to ever-greater distance between means and ends as well as will lead to standardization of cultural life. Capitalism tend to confuse people that material gain/mean is the ultimate goal of life. The constant gain of capital will be become an end to itself with no other higher purpose. It will become what Werner Sombart called “massification” of society. This will mean a loss in the quality of life, as well as inner peace and their relationship with nature and their ancestry. Worst of all, capitalism without governing rules can capture the political process and in the long run may even dictate national policies in favor of the capitalists which eventually may erode the foundation of a society’s social justice. This will result in social discontent as well as polarization away from pluralistic nourishing society.

Capitalism in the Twentieth Century

With all these drawbacks why has capitalism become the main economic force in the 20th century? There are three reasons: First, the awesome power of profit driven by capitalism to improve the standards of living was visible to everyone. Capitalism is intrinsically dynamic actively transforming both supply and demand. It often helps to create the demand for new goods and services that it then works to meet. The modern IT and electronic industry are great examples of this concept. In its never ending quest to reduce production cost, modern capitalism also introduces economic innovation by constantly revolutionizing means of production. The source of creativity lay in the spirit of its entrepreneurship.

Second, western Calvinist and Puritan theology unintentionally promoted capitalism through the psychological effects of religious doctrines. Calvinists’ believe in predestination, almost made for the capitalists, as it almost sanctifies their endeavors. The idea of rational and religious conduct expressed in one’s hard working vocations is as important in religion as in capitalism.

Third, and most importantly in the mid-20th century-especially the post WWII era--saw the development of welfare-state capitalism. This was what post WWII Germans called the Soziale Marktwirtschaft (the Social Market Economy). The root of this social market economy can be arguably traced to the end of 19th century’s German Chancellor Otto von Bismarck, who started the statutory social insurance model for the German working class. However, the term welfare state was borrowed from Britain during their Labor government period 1945-1950 under the vision and leadership of Health Minister Anthony Bevan. In a capitalist social market economy, individuals are shielded from risk through public safety net. The approach relies on Keynesian fiscal policy to help government to manage the demand side of the economy and uses monetary and tax policy to influence the supply side. An important part of capitalist social market economy is the promotion of equal opportunity in law as well as in human capital formation (education) and economic redistribution to assure “social justice”.

By the end of the 20th century, some of these remedies used by various governments to resolve some of the shortcomings seem not to be enough. Conflicts started to rise between government and society, as well as different sectors of society. The less welcome features of capitalism started to surface. There are several reasons that caused this to happen. First, most people have forgotten the basic premises of Capitalism which according to Max Weber in the early part of 20th century are: 1) Rational, industrial organization attuned to the market not to politics. 2) Rational organization of free labor. 3) Systematic calculation of profit and loss. 4) Ownership of private property protected by the law. (The 4th premise was not mentioned by Weber but can be assumed.)

Other than the profit and loss calculation premise, most people have lost the understanding of the rest. In the world today, monopolies, oligopolies as well as highly competitive markets all under the same label of “market economy”. Markets based on perfect competition under the condition of complete information are a lot rarer than we thought. We know clearly that competition is not always fair and information is never complete. Governments’ trade agreements between trading blocs, world oligopolies such as OPEC as well as some new IT dominating technology platforms such as Google, Facebook, and Apple have severely limited “fairness” of the international competition.

Capitalism in the 21st Century

In the 18th and 19th century the rise of “imperialism” was a response to the maladjustment within capitalism, the lack of effective demand as well as strong desires to look for new investment opportunities. Western capitalist countries solved these problems and tensions through raw imperialism backed up by military force and occupation. The aim was to create new demands for manufactured products, procure cheap raw materials and in process create new investment opportunities.

The 21st century’s imbalances created by capitalism, especially chronic excess supply, cannot be solved the same way. The system is producing more than market demands. Today almost every country is following a neo-mercantilism export oriented economic policies in order to solve the problem of excess supply. There is over capacity in almost every industry as well as high unemployment across the globe. Lenin believed that capitalism was incapable of evolving toward a stable international balance of power because of the inherent characteristic of uneven development. World markets are no longer governed by “invisible hands” but by government controls and big MNCs. No government truly understands the implications of its controls no matter it is in goods traded or capital flow. The fact is that the big corporations never wanted fair competition. The playgrounds have never been leveled and competition has never been fair. The problem is its getting worse, because all governments only care about maintaining its political power (votes) under the current democratic political system.

On the labor front, with such high unemployment worldwide, workers have much less bargaining strength. Fast development in technology has made job transition very difficult if not impossible. The effect of technological modernization and globalization has dramatically reduced the value of unskilled as well as low-skilled work forces. There are new jobs being created but they require different sets of talents and skills. Less educated unskilled laborers have created a new “lower” class of society that to some extent they are locked into a lower income group not easily changeable. During the last ten years, the income gap is unprecedented getting wider. Almost all the economic growth went to the top tier of society. The lowest income group’s income actually dropped both in real or absolute terms. Alexander Hamilton, main architect of the American Constitution, wrote in his Federalist Paper that classic republics are responsible for the unending class warfare between the rich and the poor. 20th century German professor of law and philosopher, Carl Schmitt argued that the political pursuit of class interest in a liberal democracy would lead to political stalemate that may leave the government incapable of function. Popular rule and participatory self-government often lead to fratricidal strife rather than community. A combination of capitalism and democracy may result to a paralysis of a state. To some extent this is what happened in many nations today.

With regards to the most fundamental part of capitalism, “legal protection of ownerships of private property”, governments have started to discount it. This year, Cyprus had a bank defaulting issue, which could have lead to Cyprus government going into default. Some EU financial ministers suggested to charge a large “depositor tax” on all deposit over certain amount because most of the large depositors are Russians. It was called tax, but in effect it was a form of expropriation by the government. Tax on income is tax. Tax on a percentage of the deposit is expropriation regardless who are the depositors. If a bank fails and depositors’ lose deposits as part of debt restructuring, that is part of “normal” business risk. It’s within the existing legal frameworks of doing business. However, if depositors’ money in a bank is no longer considered sacred and part of the money can be taken by the government to solve its own debt issues, not only will the existing worldwide financial/monetary system fail but eventually the current economic system will be no longer be operational or even viable.

No government is “benevolent”. Each has its own self-interest and its own elected Politian’s personality. Very few ever think of the traditional “Civic Republican Virtues”. James Madison, one of the founding fathers of United States, worried about human nature of self-love which creates “violence of faction” within a political system and threatens the good of the whole. The notion of government, which he believed should guide people to a shared purpose and higher ideal, no longer exist. Worldly happiness is neither the goal of each national government nor the most important aspect of International organizations such as United Nation or World Bank. Rousseau sought to reinvigorate civic republicanism in the 18th century without much success. The most of the governments are now driven by “self-love” and dominated by political factions. Because of these reasons, James M. Buchanan believes that contemporary politics has a built-in tendency to run large deficits. This is exactly what has happened to the majority of the debt laden governments today.

The majority of the world political systems are democratic. Simon Johnson, a former chief economist for IMF, has argued in an article in the Atlantic Monthly (May, 2009) that some democracies are dangerous slouching toward a form of oligarchy. Under the most of the existing political systems, each voter has equal vote. As Prof. James M. Buchanan has put it “Democratic system radically over estimated the rationality of individuals as voters.”  Nobel Laureate Daniel Kahneman in his recent book “Thinking Fast and Slow”, also clearly pointed out that men are not rational. But German “ Idealism” philosopher Georg Wilhelm Friedrich Hegel believed freedom should be the action a rational being. Wax Weber also believed that capitalism should be characterized by high level of rationality. However, current world political elites and policy makers are following shortsighted irrational public sentiments, while capitalistic economy requires rational decision-making. Its important to know that individual liberty only can exist under a rational front without harming the society.

In a secular world and virtues are no longer taught in schools. Egocentricity and selfishness will almost always win out over public good. Long-term goals easily trade off for short-term benefits. The most misunderstood word in the world today is “Equality”. Tocqueville in his book “Democracy in America” wrote that equality means not in the sense of equality of wealth but rather in the sense of equality of “legal conditions. Equality means equal treatment under the law not equal “results”. This misunderstood equality also acquired a new name, “social justice”. This highly rated concept cannot be used to stifle competition, which is the most important part of capitalist system. Government has the responsibility to provide basic needs and health care to its citizens but not to equalize all income. Incentives and individual growth are still man’s basic driving force.

The Conflicts between Capitalism and Democracy

Last but not least, there are clear conflicts between capitalism and democracy. Capitalism favors the minority, “the capitalist” and democracy needs the support of the majority, “the voters”. Economic and political policies need to be balanced. This is the most important job of the government and political leaders. The issue today is that almost all political leaders only follow constantly changing popular sentiments without really considering the balance of the two.

The vague concepts of capitalism and half understood practices of democracy are the real cause of our current problems. It is true that the contemporary capitalism is based on advertising, consumption and expanding credits. It is increasingly promoting hedonism, a culture of excitement and fun, and irresponsibility to long term good of a society. The Work Ethics, frugality and deferred gratification, the important bases for capitalism, have been all but forgotten....  Matthew Arnold worried about the hazard of “philistinism” (the spiritual and culture narrowing in a capitalist society) in the 19th century, which, to some extent also exist in the 21st century. But liberal capitalist society is also characterized by a greater variety of ways of life. It is constantly leads to the creation of new communities--many of them are now virtual communities in cyberspace-- and new common shared goals. Effective capitalism helps an effective civil service, capable of administering law and justice. Effective government and capitalism results in long-term economic growth and improved welfare of the society as a whole. The flexibility of capitalism also gives its tensile strength. Ability to associate and to change is the mother of all knowledge. This ability to change is the integral part of both capitalism and democracy. All society has flaws but all are capable of improvement and self repair, either through revolution or more rationally, through the influence of its own people and the intellectual elites of the society. This can only happen peacefully if fully understand and keep to the basic premises of both capitalism and democracy.

Conclusion

In conclusion, private business capitalism deeply rooted in human history and has thrived side by side with state-ownership or guided capitalism. Successful capitalism will find the right mix of the two. Government should act as a capitalist only when private capitalism has demonstrably failed and government needs to define and enforce the rules under which fair competition can take place. Last but not least, in a true laissez- faire mode, private capitalism can produce enormous wealth, but also can cause a series of social and political problems. It has a tendency to concentrate wealth in the hands of few. This together with fast advancing technology can split a society into a new type of aristocracy and a class of economically difficult plebeians. This development may fan social unrest if not open class warfare, which will hinder economic development and waste human potentials. Visionary political leaders are needed who can strike a balance between fair competition and a system of governance to pursue social justice, a balance between entrepreneurial capitalism and democracy.

*本篇「資本主義的省思」(Re Look at Capitalism)中文版可至下列連結閱讀:

資本主義的省思(一)

資本主義的省思(二)

資本主義的省思(三)

 

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