Sorry it wasn’t still fresh in your mind – I confess it took me nearly a month from first putting down some reaction to actually posting it; various other things kept intervening and it nearly didn’t get posted at all – but I didn’t want to waste the work…
Let me start with where we agree. As you note at the end, we agree that there is a problem when organisations get too big, and this goes for both companies and governments. It also goes for Labour Unions, which I think are a good thing unless they become too large and powerful (i.e. significantly more powerful than the organisations they are negotiating with). We definitely agree that a government in the pocket of large companies is an extremely bad thing, and that we have moved towards that over the last 50 years.
We also agree that a bargain between individuals is an extremely good way of establishing an equitable result, as long as the parties have a fair level playing field, i.e. neither has any duress applied to it to close the deal, neither is unable to walk away if a deal cannot be struck, and both parties are in full possession of all the facts (there may be more caveats on further reflection).
We also agree, I think, that when purely financial considerations drive an organisation, that organisation becomes toxic. I have had quite a bit of experience of organisations driven by cost accountants and MBA’s of the Harvard school (happily mostly from the outside), and they are every bit as nasty as I’ve described.
However, I don’t see the problems of short-termism and intolerable pressure to keep on producing more for less as flowing purely from the payment of performance bonuses, as you do; I think the root problem lies with a stock market which can respond within milliseconds to any perceived opportunity or risk, and where you have a market which works to a timescale of milliseconds, you are likely to be forced to think short term. Performance-based incentives for CEO’s just makes things that bit worse. The system itself forces the actions of individuals; even if managers wish to be long-sighted, the demands of finance make them short-sighted.
That is, however, just an intensification of a tendency already inherent in the idea of a market in shares in large limited companies. Ambrose Bierce (one of your better American sceptics) said that the limited liability company was the greatest instrument of fraud ever invented by humanity; I would add that it is the second greatest instrument for dissociating an organisation from its ownership (the greatest being a representative democracy with a strong party system).
We also agree that attempts to create pure socialist societies have been, to a large extent, failures; we agree that they come up against the problem that people are not all paragons of civic virtue, and some of them will game the system, some of them will grab and hold power. However, you do not concede that moving closer to the idyllic concept of socialism would produce a society far better than the ones we live in, while you do maintain that moving closer to your idyllic concept of capitalism would do this.
This is where we completely part company. I don’t think that moving too far in either direction would be a good thing, and in particular I am absolutely convinced that removal of all restraints on capitalism would make things far worse.
The thing is, we have seen societies which have been substantially less regulated by government than either of ours now is, and indeed have seen some where there was absolutely minimal regulation. What results is the development of larger and larger organisations, the concentration of wealth (and power) in fewer and fewer hands (both of which Karl Marx observed would occur), the cartels and price-fixing which Adam Smith warned were a feature, as I quoted: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” , and the increase of influence of corporations over government, which both of us have observed and deprecate. It is the system itself which tends to monopoly and cartel, and not any particular failing of individuals beyond normal human nature.
Incidentally, the replacement of small shopkeepers by chains here has nothing to do with government regulation (which is far lighter on small businesses) and everything to do with economies of scale and cartels involving the chains and suppliers, i.e. the negative effects of an imbalance of power.
Yes, such societies can indeed “produce wealth” – indeed, it is the whole objective of their economic systems (and frequently of their governments as well). Without redistributive taxation and strong curbs on the power of corporations, however, in the absence of a labour shortage this wealth largely stays in the hands of a very few people and is of no benefit to the wider population. Both of our societies were far less regulated in the days of our respective industrial revolutions, and both saw the absolute degradation of labour and the rise of super-rich individuals until governments started to limit the power of the industrial concerns and provide for the mass of the population both by providing a safety net, by restricting the ability of the employers to make use of their disproportionate bargaining power and by legislating as to the conditions in which they were asked to work. Both produced appalling living and labour conditions for the workers, frequently worse than those they had had before moving to work in cities. I for one do not want us to go back to the systems of the early 19th century.
We definitely agree that monopolies are in principle a bad thing; where we disagree is that I see the likelihood of monopolies growing as regulation decreases, and you see competition as being a sufficient mechanism to stop that happening and even think that deregulation assists competition. While we agree that government-sponsored and protected private monopolies are a bad thing, we are not agreed, I suspect, that there are no areas in which a government monopoly is beneficial.
I have in mind there that there are going to be natural monopolies in some areas – it is, for instance, inconceivable that it would be sensible for me to have two entirely different sets of wires connecting my house to two different electricity producers – and in those cases, if private companies are supplying my electricity, they need to be extremely strongly regulated. In fact, we now have here a rather artificial “market” in which a number of middlemen companies contract with individuals on the one hand and with electricity generators on the other, and “compete” with each other (which would never have happened without government intervention – without that, there would have been local monopolies and possibly a national one). I am unconvinced that this system actually delivers any benefits over and above the previous government-owned and run electricity monopoly. Rail transport is another area in which I am not convinced the current privatised system works as well as the former British Rail, which had to be formed when the previous private railway companies became insolvent and incapable of providing a reasonable service. The theory behind both these moves was hugely convincing, but the outcome has been fairly bad.
And, of course, I have not come across any advocates of privatising the defence of the country – though it could be argued that the USA has experimented with this with several private military contractors. I do not envy you that piece of privatisation!
This is a position I could well have reached (and in fact did) without years of reading the scriptures, and in particular the synoptic gospels, and within them the injunctions of Jesus to his followers. It is not too dissimilar from your own – that market forces are the basic way in which human commerce is best organised, and government should intervene primarily to ensure that competition is fair, though I think far more needs to be done by government than you do to ensure that fairness.
However, I see a different set of injunctions from Jesus. In particular I see a clear identification of the pursuit of wealth as evil; “you cannot serve God and money” (Matt. 6:24), which is underlined by Paul “the love of money is the root of all evil” (1 Tim. 6:10). Jesus enjoins those who would follow him to sell all they have and give it to the poor (Matt. 19:21) or at least half of it (Luke 19:8-9) and asks followers to abandon their small businesses in order to follow him (Matt. 4:18-22).
Now you think that socialism taken to its extreme doesn’t work, I think that capitalism taken to its extreme doesn’t work (and largely agree with you as to socialism); I think both of us would have substantial problems thinking that following Jesus’ economic injunctions would work. If we did follow them, we would probably end up as itinerant beggars – but that is, I am wholly clear, what following Jesus demands when taken to its extreme. I can’t do it myself, and setting aside all arguments that it isn’t practical, that I have responsibilities I’d be abandoning and the like as self-serving excuses, at the root I am too scared to do it and lack the faith to trust that God would see that I was all right if I did.
So Jesus is suggesting that money is an alternative to God, i.e. a demon, and Paul is reinforcing that; Jesus then suggests that we renounce Satan in renouncing wealth and its pursuit (to paraphrase him).
Pope Francis put it this way in a recent address:- “Friends: the devil is a con artist. He makes promises after promise, but he never delivers. He’ll never really do anything he says. He doesn’t make good on his promises. He makes you want things which he can’t give, whether you get them or not. He makes you put your hopes in things which will never make you happy. … He is a con artist because he tells us that we have to abandon our friends, and never to stand by anyone. Everything is based on appearances. He makes you think that your worth depends on how much you possess.”
This all leads me to the position that free market capitalism, at least in the form it’s developed to, is an inherently satanic system. However, it’s the one we’re stuck with; the alternatives are perhaps theoretically attractive but can actually be worse in practice – it’s much like the Churchilian comment about democracy, which he said was a bad system, but better than all the others which had been tried.
I could, however, also point to a set of injunctions of Jesus which militate against putting faith in governments (or nation states); these too are at least potentially satanic. What I advocate is not to let either have free rein, but to balance the one with the other and in the process always have in mind that both are flawed, both are man-made, both are fallen.