An excellent recent article (Capitalism is the wrong target – but we can refine it, 11th January 2012) by the economist and academic John Kay posits that in all the discourse about capitalism and its fallacies that has emerged in recent years, most critics and commentators may be missing one absolutely crucial point: the system they are describing is not technically a capitalist one.
The main thrust of this piece – part of the Financial Times Capitalism in Crisis series – is that capitalism only really existed in a pure form for ‘a brief interlude in economic history’: the nineteenth century universe of top-down industrialism where the ownership of capital, such as factories and mills, really did define the system. By contrast, in much of the contemporary Western world, ownership of capital is something of a side issue: often, one’s boss is not one’s boss because of their ownership of the means of production, but rather because of ‘their position in a hierarchy’. In other words, it is prowess within an organisational context that is the key variable in what we are left with: a market economy as opposed to a capitalist one.
And it is this kind of dry fact which probably leads many to note the ‘post-idea’ world that the second decade of the twenty-first century has become. While there are clearly huge problems with some facets of the market economy, almost no one – not even in the various ‘Occupy‘ movements that have mushroomed around the world in the last few months – is proposing to supplant the current system with a ‘hard’ socialism or anarchism. The idea that parliaments and governments could be replaced with something else entirely is a huge conceptual leap.
The issue is with the quality of the system rather than the precise form, and this is where it gets difficult: what mechanism exists for ensuring quality in governance and economic administration? For sure, there is much to be learned from the constitutional orders of Germany and Scandinavia, two parts of the world which seem to be as well-placed as any to weather any future storms: decentralisation, the entrenchment of basic human rights and heterarchical forms of organisation are all admirable and, to some extent, replicable.
But all the technical safeguards in the world may not be enough to combat the cultures of corruption, huge power distances and profound personal character flaws which appear to be disillusioning so many citizens of countries as diverse as the United States and Spain. Addressing the question of how to inculcate values into those delegated with economic and political governance is the real challenge, regardless of the precise shade of market economy that we happen to inhabit.
Mediolana 