Capitalism’s real enemies

7134884983_5301865c77_zMuch of the political commentariat is currently obsessed with the soap opera of the Labour leadership election. The peculiar dynamics of the contest itself are fascinating. It is easy to forget how quickly we’ve moved from the prospect of a continuity Blairite Labour party to a party reshaped in the image of the Corbynistas. The prominence of the language of purge and putsch is remarkable. Commentators seek to frame proceedings in a particularly unfavourable light by seeing unflattering historical resonance with the grisly history of socialism. Beyond the unfolding drama of the process everyone is seeking to grapple with the implications of a Corbyn victory, if such a thing were to occur. Does this signal the rise of unelectable hard-left anticapitalism, as many of the right proclaim – and fervently hope? Or is it a reawakening of a genuinely rejuvenating socialism, as supporters claim?

In this context, Tim Montgomerie’s recent post at the Spectator is intriguing. Montgomerie dismisses much of what is happening as so much sound and fury, signifying nothing. It poses no real threat to the existing social order. The anticapitalist sentiment that has emerged in the wake of the rise of JC emanates from the paper tigers of the hard left.

Montgomerie looks elsewhere for what he sees as the real threat to capitalism.

One of the weaknesses of debates about the broad contours of society is that they are often painted in garish primary colours. There is a limited amount of meaningful comparative institutional analysis. Instead, ideal types are exchanged. The most zealous advocates for a market society see markets as inherently efficient, egalitarian, and benign. Advocates for the state view it as beneficent and focus on its powers of coordination, integration, equalisation and redistribution. On all sides of the debate, advocates contrast their favoured ideal type with a warts-and-all version of the messy, inefficient, iniquitous and dysfunctional reality of their opponents’ preferred option.

It is much rarer for market society or the social democratic state to be advocated while at the same time acknowledging the weaknesses of the preferred option. Much of the argument for reform of the state taking place in the political centre involves focusing on the weaknesses of current state structures and advocating replacing them with a new, uncritically presented, ideal type.

This may well be an inevitable discursive strategy when seeking to sway the political debate. But it militates against genuinely illuminating comparative assessment.

It is equally rare for advocates to recognise that the flaws in their preferred model may represent the seeds of its own destruction.

But this is what Montgomerie effectively does in his Spectator piece. His argument is that the real enemies of capitalism lie not the political left but the political right.

He argues that faith in capitalism is underpinned by two factors. The first is that capitalism benefits everyone. It may not benefit everyone equally, but everyone needs to see it as to their advantage nonetheless. The second is that no one is accorded a “special protected status”.  Montgomerie summarises this as “a belief that the poor can get richer and, often forgotten, that the rich can get poorer”.

These two condition are not currently, Montgomerie argues, being fulfilled adequately. Many people feel that the capitalist system is not to their benefit – they are “moving backwards”. And at the same time many believe that “some super-sized banks, well-connected companies and very rich individuals are insulated from the slings and arrows of outrageous fortune”. He then goes on to note the way in which money can infiltrate and distort the political system so that it appears some sections of society are getting overly favourable treatment. While the alignment of economic power with political power is a greater problem in the US than the UK, Montgomerie is right to observe that the Government’s failure to address the UK economy’s dependence on financial services may not be entirely unconnected with the fact that the Conservative party relies on the City for half its funding.

The underlying philosophy here would appear to be that a healthy liberal democracy needs pluralism. Concentrations of power need to be restrained. If the political system can too easily shaped to the benefit of a particular segment of society – and political elites are comfortable with egregious inequality, misbehaviour by and partiality towards those with economic power – then that erodes the broad-based support for the system overall. As Montgomerie concludes:

If you behave badly enough, not even the inadequacies of the anti-capitalist movement will be enough to save you. Capitalism’s biggest enemies  … are the apologists within capitalism and within capitalism-friendly parties who are complacent and do nothing to combat cronyism, corporate greed and inequality. They, not the revolutionaries, could yet bring the system to breaking point.

Of course, Montgomerie’s enemies on the left and the right are inter-related. The excesses of the right provide fuel for the grievances of the left and gives them momentum. Montgomerie seeks the tempering of the worst instincts on the right as a way of defusing the threat to capitalism from elsewhere: these threats can be neutralised by a bit of self-discipline. He is arguing along similar lines in a post about high pay restraint at CapX today.

Indeed, these posts are trailers for Montgomerie’s broader project on the reform of capitalism. This project is at a fundamental level concerned with sustaining the legitimacy of the system. While capitalism may appear to have ‘won’ against other of forms of social organisation, that victory rests on the consent of the people. If the internal dynamics of unrestrained capitalism generate egregious inequities or abuses then the legitimacy of the capitalist system would be thrown into question. Consent can be withdrawn and the friends of capitalism punished at the ballot box. Better to act now to avoid finding ourselves anywhere close to that situation.

Montgomerie is making an important point here. Credit where it’s due.

But the point could be strengthened by looking down as well as up. In particular, the reforms of the legal system under Chris Grayling are now beginning to have their pernicious effect. The poor are being denied justice. Rights and redress are becoming the preserve of the rich. Those without money are pleading guilty, even though innocent, because they perceive the financial risks of going to court to prove their innocence are too great. The malign intersection of these legal reforms and welfare reform is becoming increasingly apparent. People who have been sanctioned – quite possibly for questionable reasons – and therefore have no money are caught shoplifting in desperation. They are are then hit with substantial court costs, which they can’t pay. Magistrates have had their discretion removed in these cases. The perception that the system is being stacked against the little guy wouldn’t be far from the truth. It’s legitimacy is thrown into question. It is little exaggeration to say that we are not far from the return of the Debtors’ prison. Yet the Ministry of Justice appears entirely complacent about the situation.

These sorts of developments merely reinforce the points that Montgomerie is making. Without restoring an underlying sense that overall the system is broadly perceived as fair and inclusive it will run into trouble.

That is, of course, if you don’t think the phenomena we are witnessing are auguries of a move beyond capitalism entirely. But that is a much bigger debate.

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2 replies »

  1. It will be interesting to see what his report comes up with.

    I think the hard question for Montgomerie is: how many of the flaws he point to are actually logical outcomes of the post-Hayekian belief system centred on individuals and markets? We still talk of the “justice system” etc. but the modern conservative basically doesn’t believe in “systems.” The ruling consensus still holds for now – but it is not clear that it can repair itself.