The Problem with Unregulated Capitalism Is that It Explicitly Dumps the Moral Premises that Arguably Underlie Just Societal Behavior

15 December 2011

Difficult problems usually do not benefit from simple-minded solutions

Over-simplification draw tumbles us into Reality’s punji-stake holes.

For example, one of the intellectual attractions of pure (unregulated) capitalism is that it accepts the reality of human selfishness and extrapolates that arguably moral shortcoming into an economic and social system that allegedly benefits the social whole.

Competing avarice(s) presumably allow most of us to claw our way to material wealth, with only sluggards eventually inhabiting the poverty gutter.

The problem with the pure capitalism social formulation is that it inevitably does not benefit the bulk of humanity. The fact that it does not has little to do with sloth, brainlessness, or lack of skill on the part of the majority of those who fall by the economic wayside.

Historically, unregulated capitalism merely guarantees that a comparatively small cadre of people are eventually going to hog the planet’s economic and political resources, inevitably vacuuming yet more wealth from other people, who are trapped in a system they do not have the resources to escape. Wealth has demonstrable economic and political momentum.

Denial and/or rationalization in regard to the momentum that wealth accrues prevents pure capitalists (and most of the rest of us) from seeing the moral questionability of the “regulation is bad” formula.

Inherently, we tend not to see what is negatively looming in our face

I wrote about this phenomenon yesterday (here).

Occasionally, framing an issue in a slightly different way lends illumination. Take David Graeber’s essay, “How Debt Has Come to Shape Humanity.”

David Graeber’s jarring juxtaposition of opposed principles

If we accept that “society” should to be based on at least a subset of personally-acceptable moral principles, then David Graeber’s insight about capitalistic lending and creditor-debtor relationships is apt:

The central question then becomes this:

What, precisely, does it mean to say that our sense of morality and of justice is reduced to the language of a business deal? What does it mean when we reduce moral obligations to debts?

The crucial factor is money’s capacity to turn morality into a matter of impersonal arithmetic — and by doing so, to justify things that would otherwise seem outrageous or obscene.

If you end up having to abandon your home and wandering in other provinces, if your daughter ends up in a mining camp working as a prostitute, well, that’s unfortunate, but it's only incidental to the creditor. Is that really the world we want to live in?

The power of self-justifying rationalizations

A pure capitalist’s answer to Graeber would be that he/she/it had worked hard for the money lent, and is therefore entitled to profit from making the loan. A creditor’s work to amass the resources necessary to lend should not be treated differently than a debtor’s required work in paying the loan back.

But this (usually) overly simple rationalization misses the practical point. Everything is not generally equal in the lending context, or in any other aspect of capitalism as it is practiced today.

Most large creditors hypothetically have (i) the financial expertise to have gotten to where they are, (ii) the alleged “smarts” to keep succeeding, (iii) favorable fortune (good luck), and most important today, (iv) the economic power with which to manipulate the political system that actively maintains them atop the socioeconomic heap.

Contrast the lack of expertise, absence of resources, and absolute political powerlessness displayed by the average individual debtor — for example, the defaulting homeowner whom Graeber points to.

Who had the greater moral and social obligation in making and accepting that loan, the expert corporate bank or the comparatively inexperienced and resource-lacking mortgage applicant?

At some moral point, in regard to larger creditors, the concept that “it’s only money” arguably applies.

But it “ain’t only money” to Graeber’s province-wandering bankrupt or his mining camp prostitute daughter.

This contrast is the defining ethical distinction.

The moral? — Social ethics and morality are far more complex than our empty-headed ideas about the virtues of unregulated capitalism are

That’s why I am so tired of the absurdly simplified and deceptively-intended social and economic nonsense that our politicians spout on a daily basis.

To see through their interminable charade, it might be personally helpful to step into the Founders’ shoes and consider how one might set up the institutional and legal parameters that define a just and workable society.

In doing this law school exercise, we quickly see that dumb-downs and mistaken assumptions are obstacles to achieving a fair-minded social order. David Graeber’s juxtaposition of competing social principles is illustrative.

PeteFree.com

The Problem with Unregulated Capitalism Is that It Explicitly Dumps the Moral Premises that Arguably Underlie Just Societal Behavior