Unless you happen to be in the middle of a particularly remote vacuum, you would have noticed that today marks the beginning of the G20 summit of world leaders in London.
Looking along Whitehall today, you wouldn’t have noticed a difference apart from a few extra police and some metal barriers. Yet a few miles down the river in the Square Mile, protests are being staged. One branch of RBS has been completely goosed by the protesters (or rioters in this case), and the media report up to 23 arrests have been made, though this figure may change.
What are they protesting about? Although certain groups of protestors have grabbed the headlines, such as the G20 Meltdown group and their demand for the abolishment of capitalism, there are many other groups involved as well, with varying wishes.
There do however seem to be three main desires. The first is the reconstruction of the financial sector, driven by the need of relative equity and not the desire of individual greed. The second is tackling climate change, a phenomenon creeping upon us slowly but surely, which many people believe must be stop before the problem becomes too severe to deal with. For some, like the Stop Climate Chaos Coalition, the creation of ‘green’ jobs will go some way to helping the achievement of both of these targets. The third, as goes with most protests these days, is wanting troops out of Iraq and Afghanistan.
In this post, however, I wish to focus on the first of the targets; the restructing of financial markets, or for some, the destruction of capitalism. Capitalism by definition, has four qualities:
– commodities have ‘market value’ rather than ‘use value’. Hence water is alot cheaper than diamond, despite the former being a lot more useful in keeping us, er, alive.
– productive wealth is predominantly held in private hands
– economic life is organised by demand (what consumers are willing and able to consume) and supply (what producers are willing and able to produce).
– the main motiviation for enterprise and hard work is self interest and profit maximisation.
Although arguments can be made againsts all four of these tenets, I’m going to guess that most people will be in the street protesting in particular against the fourth point. It is, after all, the ‘enterprise’ of risk-taking by banks (and indeed Governments) in the boom years, driven by the desire to maximise profits, which has come to bite them so hard on the arse of late. The risks taken have and are being handsomely rewarded in the private sector, with six-figure salaries backed with similar bonuses an indicator that it is in the interest of the money-driven individual working in the private sector to take such risks. It is this culture which has contributed to the loss of countless numbers of jobs worldwide, not to mention problems with mortgages, currency devaluation and the like. It has also taken away focus from projects to battle poverty, develop renewable energy and stop climate change – the problem is of such magnitude that it comes before everything else.
So, you can see why some people might be angry at both Government and the finance sector, seeing as the proposed solution to this problem seems to be governments throwing capital at the people who misused and abused the capital in the first place. Capitalist society simply cannot survive without the existence of these trading insitutions, which are imperative to a market-orientated system. More pertinently, the bail-out actions of governments suggest they cannot survive without Capitalism.
It would be easy to critique the idealism and anarchism shown by protesters today by saying they facilitate the system themselves by owning a bank account. That would be missing the point however. In the main, people put money in bank accounts to keep it safe. It is the conduct of the speculative banks which is the problem, risking money which essentially is not theirs. This is all well and good when the risk pays off, but when it doesn’t…well, you can see the results for yourself.
The main flaw of Capitalism stems from the application of theory into practice. The free market is the most efficient and productive system of economics, they say, and in theory they would be right. Open any basic textbook and it will tell you as such. Yet is there a genuine ‘free market’? In a word, no. The lack of any regulation leads it open to abuse. As the primary actors in the system are driven by profit maximisation and self interest, they therefore do not take into account the effect of their actions on a wider level. Their actions, leading to the crisis, led to almost 4,607 businesses going into insolvency in the last three months of 2008, a rise of 51.6% on the corresponding period in 2007. Yet as the not-so-big players go, the big players retain their position, albeit a little winded. Yet they now face less competition than before and thus become more monopolistic, able to charge higher than before as they face less competition.
Hypocrisy can also be seen on the blogosphere. Most notably, Guido Fawkes posted his support of Capitalism and the “greed is good” philosophy. I’ve no problem with a man standing up for his views, whether I disagree or not. Yet days earlier he was lambasting the greed of MPs in the expenses scandal. Now before people hit back with “…but MPs are claiming at the expense of the taxpayer!”, it is worth remembering that £37billion of taxpayers money was invested in RBS, Lloyds TSB and HBOS in October alone. By contrast, the amount of taxpayers money spent on Members of Parliament was 159.3million in the year 2007/08. It seems daft to support the greed of a part-nationalised banking sector straight after damning the greed of the public sector.
It is time for a moral compass to enter decision making in the private sector. A sector, the main properties of which profess self-interest and greed, may be good at producing but it is not designed with the consumer in mind. The capitalist doesn’t even have other producers in mind – self interest also means, as the statistics show, other producers who aren’t up to speed are swept away in a flash. Do we live in such an unforgiving society that the interests of the few are catered for, but to the detriment of many?
Regulating the capitalist’s behaviour could be the first small step to changing this.