Some of the demonstrators in the G20 protest jamboree are demanding the “overthrow” of capitalism. Well, there are lots of things than can be done to “capitalism” – it can be undermined, suppressed, sabotaged, even outlawed – but it cannot be “overthrown” because in itself, it has no power.
It is the very opposite, in fact, of a tyranny. It is simply the conglomeration of all the transactions made between individual and corporate players in an open market. Some people may gain power through those transactions but that power is transient and contingent on their own financial in immutable positions from which they can be forcibly removed in a coup d##etat.
The question we are wrestling with now is how much the bodies which actually do have power should undermine, suppress, sabotage or even outlaw the practice of capitalist exchange.
Those who talk of “overthrowing” capitalism are determined to depict it as a system of government in a precise parallel with socialism, when in reality, capitalism is not a system in the ideological sense.
It is, if anything, an anti-system: the aggregation of human behaviour as it goes about fulfilling particular wants and needs. It can be described in anthropomorphic terms, such as “ruthless” or “benign” but of itself has no motives and no objectives. (Gordon Brown is more than usually fatuous when he insists that markets need to have “values”: only people have values, methods of exchange do not.)
It is in the interests of the Left to talk as if capitalism and socialism were precisely analogous because then they can be seen as competitors and in bad times, the command economy as opposed to the market-based one can win the popularity contest. But this fallacious argument into which, I am sorry to say, a great many well-intentioned people are allowing themselves to be drawn is very dangerous: capitalism isn##t really an “ism” which is why the term “free market economics” is so much more apt.
When we make the case for capitalism, we are defending the political principle of freedom, not arguing for one kind of rigid economic organisation over another. The debate is being hopelessly muddied by those late converts to free enterprise – politicians like Mr Brown who believe that markets should only survive if they can be made to serve Left-wing purposes.
So the idea that the arguments which will dominate the summit are purely economic is quite wrong: this is about politics. The fundamental disagreement between the United States and Europe amounts to nothing less than the question of whether the great 200 year old experiment in national democracy – government of the people, by the people, and for the people – will survive.
The major dispute over the American preference for fiscal stimulus as opposed to the European priority of global regulation is at the heart of this. Europe may as well get this straight now: Barack Obama will not subject the United States to policing by an international regulatory authority, not just because he puts the economic recovery of his own nation above all other concerns (and from the point of view of the rest of the world, this is no bad thing since American recovery is essential to the future of the global economy) but because to do so would be to sign away the democratic accountability of his and all future US governments to a body in which American voters had no say.
Unlike in Europe – where the historical commitment to democracy has been patchy – America has little difficulty with the question, “who needs to be in charge of our future?” The answer is always, “we the people”. Democratic self-governance, and the concept of personal freedom that underpins it, comes first and last.
Which is why the anger in America about bankers (and the recent furore about AIG bonuses) was more personal than political: the rage was against individuals who had abused the freedom of the market and who needed to be punished as individuals.
When the crisis first hit, the overwhelming majority of Americans were vehemently opposed to any bank bail-out. That was why Hank Paulsen##s first rescue package was thrown out by Congress: the bankers had screwed up and they were not (hell, no) going to be pulled out of the tank by taxpayer dollars.
The US population had to be painstakingly persuaded that if Wall Street went down, Main Street would go with it before they agreed to stump up: they were much more inclined to believe that the banks should be allowed to go under than that the hard-earned money of ordinary people should be given to support them. You take the consequences of your own stupidity: that##s the price of freedom. Faced with the damage that such bank failures would have done to the mass of the population, Americans relented, but I suspect that many still believe they could have rebuilt their lives and economy again from scratch through their own industry and resilience.
The good news is that even in Britain, for all our overheated arguments about the future of capitalism, there seems little appetite for a command economy to replace it. Because people are as disgusted by politicians who have spent their money unwisely as by bankers who have lent it unwisely, they distrust the state as much as they dislike the banks. But they are not at all sure how this notion of international regulation will affect them.
Everybody is telling them that global cooperation (which sounds so nice) is necessary for survival, but nobody is saying what that will actually mean in terms of sacrificing the power they have over their own government – even in the attenuated form in which it still exists in the EU. When people are worried about their survival, it is quite easy to persuade them to suspend what seems like the abstract concept of democracy. But once you have given up, as citizens, that power of restraint over your elected government, you can say goodbye to it forever.
By all means, we must continue to make the moral case for capitalism, but it seems that we have to make the case for democracy, too. People must not be bullied into believing that economic security must be bought at the price of their political birthright. The operative word in the phrase “free market economics” is “free”.
The Daily Telegraph