Capitalism knows the price of everything and the value of nothing
The global recession has undermined the illusion in unregulated markets, profits and the economics of high finance. Phil Sharpe looks at important ideas in a new book by Raj Patel about how to redefine democracy and the markets.
Markets are unable to comprehend the true value of goods, and instead the price of things is determined by the share price and the aspiration to make profits. The ultimate result is crisis. But politicians have been unwilling to tackle this problem because governments are dominated by the representatives of the financiers, Raj Patel explains.
Politicians do not recognise that the market is part of society, and instead the market is bestowed with autonomous and alienating power to dictate how economic activity is defined, understood and operates.
So, he argues, it is necessary to struggle for a society in which the role of the market can be based on need, and the process of exchange is no longer based on artificial processes that are not controlled by producers and consumers. To realise this end requires the role of mass movements, which are already developing and struggling in this manner.
Patel’s standpoint is that of modification. He wants markets that are accountable, that will realise people’s needs. He does not ask whether this type of market is possible, and his radical critique is still situated within the limitations of the existing system.
But he wants the system to overcome its present defects by a process of self-improvement. He does realise that such change cannot be automatic, and so is in favour of democratic and popular change.
Patel’s starting point, however, is that the system of capitalism is eternal, even if its present form is self-destructive, greedy and immoral. This type of critique of capitalism has become fashionable in an era when the alternative of communism seems to have become discredited.
Patel argues that the standpoint of unfettered markets has been based on the ideological acceptance of the views of the Chicago school of economics, which has promoted the concept that humans are selfish and devoted to narrow economic ends. Humanity has been reduced to the label of homo economicus, a person concerned with profit and indifferent to social concerns.
Economics has come to express this ideological doctrine, and original views of political economy, as outlined by people like J.S. Mill have become distorted, Patel claims. This approach, however, tends to invert the relation between economics and ideology.
Ideology has an important influence on economics, but it is basically the rationalisation of what is already taking place, and the egotistical character of ideology is an expression of the content of economic activity. The character of homo economicus was already present in past political economy because of the profit making character of capitalism. The form of the arguments for a selfish humanity may have changed, but the substance of the arguments has remained the same.
Patel utilises biological arguments to refute the standpoint of the Chicago school: “Unlike economics man, people value mercy, fairness, trust, altruism and reciprocation for their own sakes. While homo economicus has only an instrumental interest in these virtues, recent studies are beginning to show that our ability to appreciate the intrinsic value of generosity, sharing and selflessness is central to maximising our well-being.”
The problem with this argument is that it does not explain why humans have apparently been unable to construct a society that expresses this essential self. If co-operation is integral to what humans are, why has it been so difficult to develop a society that represents corresponding values?
The answer cannot be that the concept of homo economicus has acquired ideological hegemony? However, this seems to be the suggestion of Patel, and he outlines a scenario of an ideological antagonism of selfishness and co-operation, which is translated into social forms.
Yet the development and evolution of capitalism itself indicates that the actual social relations of production are exploitative, and this provides the justification of selfishness. Patel is aware of this but ultimately his view is that the ideology of ethics defines economic activity. The result is that he calls for a capitalism based on co-operation.
Patel describes vividly the activity of global corporations and how their aim to realise maximum profit is ecologically harmful, and is based on a low wage economy that is subsidised by governments. These sections of the book show Patel at his most radical, and he even contradicts his overall view that capitalism can be reformed: “The calls for capitalism to moderate its unethical behaviour resemble the calls for corporate social responsibility of the 1990s, when the heads of several major companies promised not to destroy the environment or, if they had to, to do it as kindly as possible.”
If Patel’s aim is to modify markets, and yet the transnationals effectively control and distort markets in their interests, then how can his aim be realised under the conditions of contemporary capitalism? How is it possible to realise a type of capitalism that can operate without the domination of the corporations?
On the one hand he seems to suggest that reform is a limited answer and would not resolve the problem of the dominance of the corporations, and yet on the other hand his standpoint is about the necessity to reform capitalism. The ambiguity in his perspective creates a strategic impasse that he never entirely resolves.
Patel argues that the role of government could be utilised in order to overcome the limitations of an unregulated market. He contends that corporations are Hobbesian artificial creatures that have appetites that can never be satisfied, and that governments accept this situation. How can this situation be challenged?
Patel’s answer resides in the role of the commons: “A commons is a resource, most often land, and refers both to the territory and to the way that people allocate the goods that come from the land. The commons provides food, fuel and water and medicinal plants for those who use it – it was the poorest peoples life-support system.”
Historically the poor people of the world have used the commons as a public area to provide for their subsistence, but increasingly the commons is being enclosed by private capital, and the poor have become wage labourers in order to survive. The poor had developed many inventive forms of managing and using the commons to meet human need, and this development has been destroyed by the expropriation of the commons by the rich as private property, which is now utilised for the purpose of private profit. The important struggle of the contemporary period is about the poor attempting to reclaim and reinvent the commons.
The crucial struggles about who controls the commons occurred in the period of the development of capitalism, which is why it has a contemporary significance in Africa, Asia and Latin America. But with the maturing of capitalism, the basic antagonism is about the conditions of work, and the question of the reclaiming of the commons becomes secondary.
Control of the commons is replaced by the issue of who controls the process of work, and this means the struggle for workers’ control becomes primary. In this context, the question of who controls the commons becomes integrated and part of this struggle for collective ownership and control.
This is not to argue that the issue of the commons is irrelevant, because the issue of who defines and utilises the land and sea is obviously important. But the possibility to realise democratic control of the commons can only be established when the primary struggle for control in the workplace by the producers and consumers becomes successful.
Unfortunately Patel’s silence on this issue means that his analysis is one-sided, and the actual economic and political conditions for reclaiming the commons are not established. Instead he provides a moral argument as to why the domination of the commons by the rich in the context of private property is ecologically destructive and economically unjust.
But this moral outrage is unable to establish how the commons can become democratically administered. Crucially, he does not establish how the question of control of the commons has been superseded by the importance of other economic forms as the means to consolidate private property. Instead he tries to outline how the question of the commons is connected to the possibilities of democratic control of computer technology.
However, the very role of computers indicates that economic democracy cannot be rigidly connected to tangible assets, such as the location of land in a given space. His argument would be more flexible and less dogmatic if the commons could be considered as merely one form of the struggle for economic democracy and in opposition to the limitations of private property.
Patel’s analysis is at its strongest when he describes the struggles of the poor to claim the right to control over their economic destiny. He outlines the struggle of the peasant organisation La Via Campensina to the right of food sovereignty, or the ability to determine the conditions of food production without being subject to the dictates of the global corporations.
He also describes the struggles of the tomato pickers in Florida for their rights to decent wages, trade union organisation, and for a human value to their work. The struggle to realise rights can only be democratic and is self-emancipatory, and this was shown by the attempt of shack dwellers in the Durban area of South Africa to control their own accommodation. Patel describes the process of participatory budgeting in Porto Alegre in Brazil, which represents the attempt to establish value for goods and services that is opposed to the limitations of the market.
Questions such as how these various local struggles could be connected by common goals, and how they can progress beyond what are mainly local issues, is not answered by him. Instead it seems that the sincerity and enthusiasm of the participants in such struggles will resolve outstanding strategic questions. Patel does not understand how such struggles lapse into crisis if they fail to make advances and go beyond their often localised character.
The implicit assumption is that the struggles have the inherent dynamic to develop because of their sincerity and goodwill. Hence, he seems to ignore the fact that the power of the forces of capital is global, whilst the various struggles remain local. Patel’s approach is to naively assume that the various struggles will inherently develop answers to these types of strategic questions.
Patel argues that tackling the ecological and food problem requires the importance of local knowledge, democracy, autonomy and a change in consumption patterns in the West. He outlines how the Deccan Development Society in India has developed techniques of sustainable farming, which are based on their own democratic activity and is an alternative to the rigid limitations of the imperatives of the market.
Patel utilises Buddhist criteria to define value that is based on need and human flourishing and is not restricted by the arbitrary imperatives of the market. But he is unable to define what could be the alternative form of society that could establish an objective content to value that transcends the limitations of profit making.
Instead he calls for genuine democracy and social control of markets. The profit aims of the present unfettered market would be replaced by a different type of market: “There are many barriers the way of a fairer and more compassionate society. The concentration of resources and power in the hands of a few people and economic entities militates against a successful democracy. What we need is a more plastic idea of property, one in which property and markets are always subordinate to democratic concerns of equity and sustainability.”
Patel argues that this process is happening in terms of the daily struggles of people to control and utilise the commons, but the actual perspective is limited to modifying and not transforming the power basis of the present economy. The main change is to be ideological, the revolutionary transformation is at the level of ideas, the establishment of different conceptions of how we conceive the role of the market and the value of things.
The most important problem for Patel is how to realise his admirable principles of democracy, equality, and a new conception of value for goods and services on the basis of a limited programme of change. His approach is essentially utopian, in that it represents a good idea but there are important practical difficulties that prevent its implementation.
Primarily, the issue of how to tackle the domination of the economy by the global corporations has to be addressed, and this has to be related to overcoming a reluctance about the necessity of a planned, socialised economy. Hence, his book represents the continuation of the illusion that it is possible to realise a different and caring form of capitalism.
Patel is probably correct to argue that the market cannot be quickly eliminated from economic activity because of its role in the process of consumer choice. But his important book would ultimately be more rewarding if it examined the possibilities for a post-capitalist society emerging from the democratic movements of the present.
6 January 2010