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The Death of Capitalism? (Part One)

I have a friend who is a Marxist. For as long as I can remember he has been predicting the death of capitalism, seeing socialism as the way forward. Being involved at an akward corner of the coal face of capitalism myself I would scoff at his synopsis. However events of recent times and particularly yesterday when the fourth biggest bank in the USA, Lehmans filed for bankruptcy would certainly lead one to suspect that my friend might have the last laugh. Let me say at this juncture that I don’t think he will.

Why? well for one capitalism, unlike socialism, is not an ideology it is simply a system. The reason that capitalism has survived opposition from kings and popes and latterly socialism and communism is that it directly appeals to the hunter gatherer instinct in man. Capitalism is simply a progression of the cavemen who is the best hunter having the biggest cave and the most comfortable animal skins. In today’s world it is once again regarded by the majority as the natural order of things. There can hardly be a more basic human trait than the desire to make an income or profit (or a fast buck). Socialism on the other hand is a man made ideology which appeals to peoples’ sense of fairness but it is really only a different way of running capital(ism) whilst seeking with varying degrees of success to distribute reward in a more equitable manner.

In the twentieth century to take a retrospective view of the relative success of the two systems, one need only look at the car industry. In the west, certainly in Europe and the USA, car ownership became almost universal with a wide and varied choice of model, price and innovation on offer. Although union leaders in the car industry here would complain at what their members were earning and their conditions, one wonders what they would thinkhad they been on the Lada assembly line, making sub standard cars (which they could barely afford) on old discarded equipment from Fiat in the USSR and being paid a fraction of what their members were. It reminds me of the story of a UK Ford car worker and union official visiting the Lada factory and declaring that his members wouldn’t accept the conditions because they were all communists!

Capitalism’s biggest enemy however is no longer socialism or communism and really one wonders if it ever was. No capitalisms enemy is also its greatest opportunity and it is a four letter word, risk.

William Sanjour wrote: Making money and avoiding risk in doing so is what capitalism is all about.  But it is precisely in the risk taking that society draws its benefits from capitalism.  That is the dilemma.  Risk promotes wise investment resulting in efficiency, innovation and the creation of wealth, not just for the capitalist but for society as a whole. But a lot of capitalists fall by the wayside in the process.  It is in the capitalist’s interest to eliminate risk and society’s interest to prevent them from doing so.  The way to avoid risk is to control the market and to do that they must also control the government. This struggle has been going on for hundreds of years: capitalists forming monopolies, oligarchies and trusts and society breaking them up.

Coming next: How the banks who have resisted government interference and regulation now want those same governments to bail them out.