Hard-line socialist journalist Paul Foot Paul Foot waxes indignant in the Guardian newspaper on Wednesday about what he sees as the systemic sickness of capitalism, as demonstrated in his view by the demise of such U.S. corporate behemoths as Enron Corp and conglomerate Tyco. Foot quotes the Goldman Sachs chief executive Hank Paulson, who warned last week that “Business has never been under so much scrutiny. To be blunt, much of it is deserved.”
These words, which will hardly strike readers of this blog as controversial, come in for the following Foot broadside. Let’s quote the man in full: “The problem with this argument is that it overlooks the central feature of capitalism: the division of the human race into those who profit from human endeavour and those who don’t. This division demands freedom for employers, and discipline for workers; high pay and perks for bosses, low pay for the masses; riches for the few, poverty for the many.”
In other words, life is a zero-sum game. If I profit from selling you a pair of shoes, a newspaper or a motor car, then you have “lost”. If you are poor, your poverty must be caused by my wealth, and vice versa. No-where in Foot’s mental universe is the idea entertained that both sides in a trade gain, since why else would they trade in the first place? In his world, no wealth is really ever created, just redistributed or grabbed by one group from another. His world is essentially closed. It is not surprising that a world fashioned according to such beliefs will be marked by stasis and decline. If we were to accept Foot’s take on capitalism, the history of mankind and its staggering increase in wealth at all levels would be incomprehensible.
I have no quarrel with the many commentators who have blasted the U.S. financial system for the bad lapses in recent months. The demise of Enron, the faltering faith in the quality of corporate accounting and the shenanigans of analysts secretly trashing stocks while plugging them in public have damaged the U.S. economy. But surely what these sagas show is that capitalism, often with brutal power, punishes malefactors and ultimately puts a premium on honesty and fair dealing, and at the same time educates the masses into investing carefully. In short, capitalism works because it embraces a form of feedback, as mis-judgements and crooked behaviour get punished. This is something one won’t readily find in the socialist world of which Paul Foot dreams.
