Capitalists don't actually like capitalism


Matthew Sinclair makes a political point:

I wrote about one way that the Conservatives might move forward on this issue before the election:  Attack crony capitalism.  Start to aggresively draw the distinction between people doing well by creating value and rent seekers.  With so many bailouts and the recent final report on the MG Rover fiasco there are plenty of opportunities around to elaborate on that theme.  Interventions in the economy from Regional Development Agencies to feed-in tariffs have produced plenty of opportunities for people to make a lot of money out of lobbying for grants and subsidies, instead of catering to consumer demand.

Independently Russ Roberts makes an economic one:

Capitalists tend not to like capitalism. Milton Friedman pointed this out long ago. Too much competition. Too much risk. Much better to have the government keep out competitors and subsidize losses.

And of course Adam Smith made it 235 years ago when he remarked upon businessmen seldom meeting together except to engage in a conspiracy against the public.

For it's true, capitalists don't like capitalism very much, or at least they don't like the free market (or even freeish market) version of it very much. Sure, it's great to play the big lasagne and wax fat off the sweat of the workers' brows. But not when anyone else is allowed to try doing the same. For that means the workers' wages get bid up, prices to consumers go down as competition rears its ugly head. The capitalist would prefer that only this one particular capitalist should be allowed to indulge in the practice: or at worst, a carefully selected and approved list of people who won't rock the boat too much. That crony capitalism, that rent seeking, which can only be done in a stable manner with the collusion and connivance of government.

Which is why we good little liberals need to keep banging on about the market part of the system: capitalism's all very well but it must be regulated and tempered by the fact that everyone's allowed to indulge in it, not just the favoured few.

It's an interesting point, which both Smith and Marx noted, that capitalism only works for both the consumers and the workers when it's red in tooth and claw. So, given that our concerns are and should be for the majority, those consumers and workers. This is why we should be arguing for more toothiness and clawiness in our capitalism: tear down the rent seeking barriers, the regulations and restrictions that keep the incumbent producers safe from competition.

Lots of people with loud voices won't like it but then why should we listen to them rather than the silent majority?