I’m pretty sure I’m not alone (among people who get up in the middle of the night thinking of such things) in being uncomfortable with how political philosophers position “capitalism” against other forms of societal organisation. There’s something that doesn’t make sense; democracy isn’t capitalism, and in history, democracy has existed comfortably with other economic forms. Similarly, capitalism exists comfortably with authoritarianism (to a point); indeed, the Comintern realisation in the Soviet Union recognised the value of the market – the fundamental transformation process of capitalism – in setting objectives for the state.
The confusion, I think, comes from thinking of capitalism as a mechanism for control, instead of seeing it for what it is: a mechanism for establishing relative value. The confusion is understandable, and may stand at the root of much of the debate we are currently engaged in about the future of capitalism and of western liberal democracy. But they are incorrectly confused, which is the point of this scribbling – if nothing else, an exercise in establishing in my own mind the purpose of various activities which seem fundamental to capitalism.
I’ll start with some first principles and definitions. Capitalism is the system by which values are established by human societies through a market discourse: that is, instead of values being defined by either an external source (a religious expression of fundamental principles, for example), or the imposition of relative values by the state, values are established by a constant set of exchanges, which we collectively define as “the market”. The marketplace is where we compare what we have – our accumulated stuff which is available for exchange; our time and labour; the potential expansion of that labour through time; and most importantly, our own preferences for different combinations of things and labour and existential states of being – with what other people have. Capitalism simply expresses the idea that the marketplace is the most effective and most efficient way of determining relative value among people.
Capitalism is posited against other potential ways of determining relative value, most notably mechanisms which define absolute notions of value and require integration of those absolutes into the determination of relative values among people. Historically, the primary source of absolute values were religious, in all of religions various forms; these map today to other sources, both human – progressive notions of absolute human equality, for example, or ecological notions of “environmental value” which supposedly supersede any human expression of relative value, or quasi-scientific notions of absolute scarcity which in theory supply a set of baselines which must be observed by any dynamic system anywhere, including those of human beings establishing their own relative values.
Note that, while none of this requires a specific organisation of human systems of control, there are some obvious affinities. Systems which define an absolute source of basic values align well with control-oriented human systems, whether they be tribal or proto-statist or royalist or full-on authoritarian systems. On the other hand, capitalism – relying on dynamic and constant exchange – aligns far better with non-control oriented human systems, systems like diffuse democracies which fluidly establish rules which can be overruled in the future by common consent. But capitalism itself merely requires some consistency on the margin: the marketplace can adapt to changing rules, and indeed, can live within externally imposed rules – it’s just that externally imposed rules will tend to make a given marketplace susceptible to arbitrage and eventually to a reduction to the absolute principles which govern it, whereas dynamic rule processes will adapt with the marketplace to evolve new expressions of value.
Again, the point is that a system of organising human society – a control orientation – is not the same as a system of deriving human relative valuations of goods and services and future outcomes. Governance and valuation are two distinct – if intersectional – processes.
By observation, if we accept the idea that humanity consists of billions of individuals – and not that it is a differentiable mass of races or tribes or what have you – I find it hard to believe that capitalism is anything other than an almost base definition of the species. We exchange: it’s what we do. We do not survive solely on our own merits; we rely upon systems (parents, villages, families, etc) to grow into beings which then exchange on a full and equal basis with others. We raise new beings to do the same; if we don’t do that, the system does indeed collapse and the world beyond our species will grow to forget us. We exchange at every point of our lives, in various states of equality and superiority and inferiority, but the exchange exists nevertheless. Capitalism simply abstracts a space – the market – in which these exchanges exist. And importantly, it presupposes that there is a further abstraction – money – which enables a fluid exchange of value through space and time. In other words, capitalism is nothing more than the human condition of exchange enabled through a human, intermediary fluid.
We fear this fluid – and we fear the exchange – because at every stage, we unconsciously recognise that we have no direct control over it. But in so doing, we fail to recognise that that fluid mechanism only derives its marginal and total value in our expression of preferences and needs. In other words – if we stopped exchanging, money would be meaningless. Money needs us – but we can’t exist without a fluid mechanism for comparing and exchanging preferences and needs. That is to say, capitalism is merely an attenuated abstraction of what we as human being need to do to exist as individuals. As long as we have individual preferences, and individual needs and desires, we will have to form exchange relationships – and capitalism is simply the academic expression of that process in the form of the market with a fluid means-of-exchange to enable the further extension of that exchange through both time and space.
Oddly, I think as human beings, we struggle with the temporal, and that lies at the core of the confusion of capitalism-as-market and control-system-as-state. We can kind of deal with extensions of space: I get the idea that Joe in the valley over there might value a pig or a bushel of wheat or a strand of pearls differently than I do, because it’s a different space with different ecological potentials. But I don’t as easily grasp the idea that Joe in the future in this valley will value those objects differently, that the passage of time will create different valuations. And thus I look to an absolute to establish value here in this valley, and establish governance and control processes to make sure Joe-in-the-future sees the value of the pig the same as I see it today. It takes a massive mental exercise in seeing difference in place as being exactly the same as difference in time, to allow for the notion that there should be a single fluid to enable comparative value between both differences, and we’re not good at the one (time) even though we’re perfectly comfortable with the other (space). But it’s there.
Capitalism is the social expression of exchanging value across both space and time. Because of our terror at the strangeness of time, we establish regimes which mitigate or attempt to halt it: the state, governing processes, absolutes. But we then reflect back on capitalism and see it as a separate process beyond our control – and see it as a control mechanism itself. But it’s not: we control the market, always. We always set the values, both today and in terms of future value.
It’s our reluctance to admit that our own preferences are at the heart of the future of value – and a parallel desire to control the future the way we seemingly can control space in the instant – that lie at the heart of how we organise the state, organise the mechanisms of control. Western liberal democracies, in their best forms, flexibly establish norms to govern what we do today, while acknowledging the need to adapt in the future (although some of that adaptive requirement seems to have faded in recent times). Most other forms of governance establish a rigid absolute, and without the ability to evolve, eventually fall into some sort of decay or collapse – even if, in our limited four score lifespans, we fail to see the inevitable (and there’s no mystery in the fact that authoritarian regimes such as China or North Korea hate with a passion history as a profession, inasmuch as it reveals the inevitability of authoritarian failure at every step).
But any conversation of value and valuation starts from a single differentiation. Either we are a species of individuals, with individual preferences, or we are subject to an absolute. If we are individuals – and history would tend to support that notion – then we will inevitably tend towards the market as a place to exchange those preferences, and capitalism is merely the expression of that exchange in such a form to allow exchange across time and space. The means – money – is just a convenience, and its form is largely irrelevant as long as it is reasonably fluid: gold and bitcoin are poor examples, but fiat money is the ideal. If, however, we’ve gotten it wrong – evolution isn’t real, human beings are subject to absolutes – then maybe there is an alternative.
But all of this is to observe that the market is not a means of control. The state is: the state exists to assert control of some kind, even if – in its lightest, western liberal form – the control is to assert individual rights to not be controlled by a majoritarian mob. Capitalism feels like a force beyond our ability to control, and thus feels like a mechanism of control: but that ignores the fact that the market only exists by us supplying our idiosyncratic – which is to say off-market, which is to say solely in our personal control – pricing preferences constantly. The market depends on individuals being different, by individuals choosing to transact at a level higher or lower than the last market clearing price – it depends on personal control. That individual choice is what then sets the new relative value process: that individual price, even if seemingly invisible at the margin, is what gives life to the market itself.
The state can’t control your preferences, even if in places like North Korea, or medieval Europe, or within rigid tribal systems, it does everything it can to do so. You’ll still prefer that colour to this one; or you’ll prefer a bigger house tomorrow than a marginally larger flat today; or you’ll prefer to lie with a man in intimacy instead of a woman. Those preferences will always be there, and to the extent they inform what price you’ll pay for anything – a haircut, your rent, your marginal purchases for weddings – they enter into the grand constant integration process of valuation which is the market. No matter what state form exists, you’ll still be communicating your preferences in value.
We are subject to absolutes, of course: we all die. And we all were born of parents who were also human. But that just means time is the absolute, and any process which fails to acknowledge that is prima facie false. The marketplace, however, is the human invention which more than anything accepts difference in time as an explicit part of its construction, where time and space are traded alongside our preferences for stuff. It’s only our own confusion of the market-as-control – which is false – with the market-as-collective-process – not collective control mechanism, but process in which we all are just marginal, but without all of our marginal contributions, would be meaningless – that makes us think today that somehow capitalism is flawed. Drop that notion. We are not at late-stage capitalism: the market will always exist unless we’re at a stage of evolution where we decide to stop being individuals. Thankfully, evidence supports the opposite, that we’re more willing to be ourselves than ever before – and thus, we need the market more than ever.
With that – hopefully you all have completed your holiday shopping, or if not, good luck with the Boxing Day sales… A very merry Christmas to everyone, and as always, thanks for reading.