HISTORY OF IDEAS - Capitalism

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Today,

pretty much every economy in the world is organized along capitalist lines

but at the same time, capitalism is almost everywhere regarded

with disappointment, frustration and suspicion.

Interestingly, none of the criticisms are new. They've been dogging capitalism

since its inception. So let's look back in time

to figure out how capitalism got its bad name and what might be done

to improve it. Padua, Italy, 1304.

0n the wall of a church in Padua near Venice, the painter Giotto makes a

fresco:

Jesus and the Money Lenders. It restates for his own times

an idea that had by then already been well established for centuries in the West:

the notion that a good spiritual life and the pursuit of business

and money are sworn enemies. Jesus goes to the temple in Jerusalem,

sees merchants and small-time bankers crowding the forecourt and gets furious.

This sacred place is not a fitting arena for the polluting activities

of buying and selling. The Christian attack on the immorality of money

is deeply influential and severely holds back the development of capitalism

for centuries. Venice, 1450.

A Franciscan friar, Luca Pacioli, publishes the first ever book on

accounting:

Summa de arithmetica. It's the single most important capitalist invention

until the birth of the joint stock company and the modern factory.

In the book Pacioli introduces the principle of double-entry bookkeeping

which gradually become standard practice in all companies.

Pacioli's textbook proposes that dealing well with money

doesn't depend on faith anymore. Money isn't a divine punishment or reward;

it's a kind of science that can be learnt through patience,

reason and hard work.

Geneva, 1555. In powerful sermons to his congregations in Geneva,

the Protestant theologian John Calvin emphasizes to his Swiss

audiences the importance of what have become known as the Protestant

virtues: hard work, self-denial, patience,

honesty and duty. These will turn out to be extremely useful qualities

for capitalism. Calvin along with many other preachers who share his

outlook explains that you must never indulge yourself not spend money having

a lavish life.

You must simply put any surplus income back into your business

as an investment. Calvin adds that being good at business

is far more pleasing in the sight of God than being an aristocratic

warrior or even a monk. Perhaps more than technology,

it's this new mindset that will accelerate the progress

of capitalism. 1670,

Delft, Dutch Republic. The newly independent Dutch Republic is the world's

first explicitly capitalist nation where lazy aristocrats

are looked down upon and hard-working merchants revered.

In the churches, Protestant sermons about thrift and hard work are heard.

In the arts outgo glorifications of kings and queens.

Johannes Vermeer finishes painting The Lacemaker,

a depiction of the intricate careful and homely tasks

of manufacturing lace. In his painting The Little Street,

the suggestion is that living peacefully and quietly in your own home

running a business is far more glamorous and noble

than fighting in a war or going to a monastery.

1776. 141, the Strand, London.

These are the offices and shops of Strain & Cable, publishers

who have a big success with a new book: an inquiry into the nature and causes of

The Wealth of Nations

written by a Scottish philosopher called Adam Smith.

Smith demystifies wealth creation by explaining how capitalist economies grow.

He reaches several important conclusions. Slavery

is remarkably inefficient. Violence is less of an incentive than money

for a worker and the cost of buying and maintaining slaves

far exceeds the cost of wages. Capitalists will make far more money

by treating their workers legally and humanely.

It's by specializing that economies grow, says Smith.

Smith focuses on the pin making industry and concludes that while

one worker could make up to 20 pins a day, a team of

10 workers well arranged could make not 200 but 48,000 pins,

thanks to what Smith terms the Division of Labour.

Smith also tells us that capitalism is guided by an invisible hand.

By maximizing one's own profit, individuals

inadvertently benefit society providing goods that people want and need.

As Smith puts it: "It is not from the benevolence of the butcher, the brewer,

or the baker that we expect our dinner, but from their regard

to their own self-interest." These ideas further remove the moral suspicion

that once surrounds capitalism. But not all will be won over.

1854, London. The British economy

is now the largest in the world thanks to its enormous industries of cotton,

shipbuilding, steel and coal. Vast cities have chewed up the countryside of

the Midlands and northern England. Merchants and the newly rich capitalist

class

have triumphed. But many are furious. Charles Dickens,

one of Victoria England's most passionate critics of unrestrained capitalism

publishes a novel: Hard Times. Set in the fictional town of Coketown,

a version of Manchester, it takes aim at heartless capitalists

like Mr. Gradgrind who abuse their workers, exploit young children in mines

and chimneys

and use their relentless capitalist logic to blind them to their desecration

of nature and human life.

Here is Dickens' writing on Coketown: "It was a town of red brick, or a brick that

would have been red

if the smoke and ashes had allowed it; but as matters stood

it was a town of unnatural red and black like the painted face of a savage."

Dickens argues that capitalism is evil because it encourages appalling

conditions for the producers.

Under the sway of capitalist logic otherwise quite nice people

will keep coming up with reasons why it's okay to employ

a child in a factory or to let poor people starve once they've reached the end of

their working lives.

1860, London. The English reformer John Ruskin

publishes Unto This Last, a furious track against capitalism

that takes aim not so much at the production side of capitalism

as the area of consumption. Like Dickens

Ruskin is incensed that people are being exploited

and the environment ruined. But he asks a further question:

In the name of what? Ruskin notes that large capitalist fortunes

are built up on selling people absurd things: knick-knacks, fancy plates,

embroidered napkins,

bonnets carved sideboards. The whole of the suffering of the cotton factories of

Manchester

are being fed by our appetite for very cheap shirts with delicate collards.

We are ruining our lives for trinkets, whereas for Ruskin

money shouldn't only be made morally, it should be spent morally

on the truly noble and beautiful things that humans need.

He contrast the beauty of Venice with the ugliness of modern Britain

to make his point. Berlin, 1963.

The leader of communist East Germany, Walter Ulbricht

launches an ambitious new scheme: the Neues Ökonomische System

or NÖS. It aimes to solve for East Germans

the two major failings of capitalism in his eyes.

One: It will guarantee workers good conditions with a huge expansion in the

number of

state schools, housing blocks and holiday camps. And secondly:

It will focus not on the fripperies of capitalist production

like blue jeans and pop music; it will give people the works of Plato and Marx

and uplifting television programs about track to production.

1976, Dresden, East Germany.

The fatal flaws of communism come to a head in January

with a massive riot

about the unavailability of coffee. East Germans love drinking coffee

but a huge rise in global prices means that the German Democratic Republic

can no longer afford to import it in the necessary quantities.

The Politburo decides to remove all coffee from shops

and replaces it with "mich Kaffee", mix coffee

which is 51 percent coffee and 49 percent a range of fillers including

chicory, rye and sugar beet. Dissatisfaction with this

eventually has to be quelled with the use the Stasi or secret police.

It's an inadvertent tribute to capitalism which is especially good

at providing us with life's little luxuries. Edeka hypermarket near Hamburg,

November, 1989. East Germans who have recently breached the wall

head straight for West German supermarkets like Edeka near Hamburg.

They marvel at the productive capacities of capitalism

and the ability that it has to provide such modest but very important things as

olive oil, party hats, ice spuns and coffee. The old East German elite

who had believed that the people could be satisfied with philosophy,

athletics, sauerkraut and TV programs about farming

are hounded out of office.

1999, Seattle, USA. The World Trade Organization,

a capitalist body dedicated to removing protection from industry

and liberalizing markets gets together for its next round of talks,

10 years since the fall of communism and after a decade

of unprecedented economic growth. But though the mood of politicians is

upbeat, out in the streets hundreds of thousands of anti-capitalist protesters

have gathered to call an end to the iniquities of global capitalism.

The complaints are strikingly similar to those made

by Jesus Christ. Capitalism doesn't look after the producers

and capitalism downgrades the important spiritual

ends of life for the sake hamburgers, unsustainably cheap clothes

and garish distracting mass media. With their beards and guard figures

many of the protesters look a little like Renaissance's renditions of Jesus.

The police take a very heavy hand, fired tear gas into the crowds,

arrest 2000 and call in the National Guard. The protest remind the world

that besides the winners of capitalism there is an enormous

army of the disenfranchised and the angry who see more sense in Jesus, Dickens and

Ruskin

than in Adam Smith and Bill Clinton.

2015, Cupertino, California. Apple Computers

officially becomes the largest corporation in the world. It's a giant

success story.

But the very same challenges remain. It turns out that Apple are

indirectly responsible for the suffering and abusive of workers in the supply chain

in China

by the Foxconn corporation and with the launch of the Apple watch,

a gadget that seems to have no particularly urgent purpose,

questions are once again raised about why we are exhausting ourselves and the

planet

for ends that are so out of proportion with the costs they impose on

all of us. To generalize: Capitalism is amazingly productive

but it has two big flaws. Firstly, it systematically inclines to ignore the

sufferings of workers

unless regularly prodded not to. And the wealth of companies is often built up on

satisfying

what are not the essential needs of human beings. Fortunes are made

on making unhealthy food or bad television programs.

The challenge for the future is how we might be able to make money humanely

by treating people and the earth well and also

make money through activities which address the more noble

end of human needs. Till then, the rage of Jesus in the temple

will periodically always go on.

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