It's not capitalism but markets that must be argued for


Around here we're rather fond of Allister Heath. But we do think we need to gently correct him here. It's not capitalism that needs to be argued for, to be fought for, but markets. And we think it an error to try to fight for both at the same time:

Capitalism creates wealth and opportunity for the many, not just the few. Lower taxes are the best way to forge a stronger and more generous society. Social problems can often be traced to misguided government intervention. These are some of the sentiments that underpin modern small-c conservative thinking across the English-speaking world. Such ideas are relentlessly expounded by centre-Right politicians in the US, Australia, Canada and New Zealand. But when was the last time you heard such striking, unapologetic language from the Conservative Party? There has been the occasional speech over the years, of course, and the odd newspaper article, but they all quickly vanished without trace.

Well, sorta, but not quite:

There is only one possible way forward for the Tories, and that is to re-engage in the battle of ideas. They must start campaigning explicitly and methodically for capitalism, for markets and against the pernicious view that Whitehall always knows best. The aim over the next five years must be to reframe the narrative around capitalism by depicting it as a tool of social progress, a means to tackle poverty and a mechanism to help families enjoy a better life.

Again, nice, but not quite grasping the very beating heart of the matter. Which is that capitalism and socialism are descriptions of who owns the productive assets of a society. And this is one of the less important factors in determining how good that society is for the consumer (and as both Smith and Bastiat pointed out, we really must be looking at the society and economy from that aspect of consumption). Yes, the profit motive is also important and so on: but what is vastly more important is the market. For it is that market that tempers the profit motive extant under either capitalism or voluntary socialism to the benefit of those consumers.

To take a direct example, the British supermarket industry. One player, Asda, is owned by Walmart, a rather good example of entreprenurial capitalism turned patriarchal. Some 50% of the company is owned by the children of the founder. Sainsbury's is rather further down the road to extended outside shareholder ownership, Tesco and Morrison's all the way. These are definitely capitalist organisations. But we've also got, in this same space, the Co Op which is a mutual owned by the customers, and Waitrose which, as part of the John Lewis group, is mutually owned by the workers. These various methods of ownership are interesting, but they're not in any manner what makes food and booze cheap , plentiful and always available to the consumer. That's that there's these organisations, and others, fighting in a horrendously competitive market for each pound, penny and groat that the consumers desire to spend.

In this sense we're entirely indifferent to either capitalism or voluntary socialism. Of course, we're still vehemently opposed to imposed socialism: but then so are we to imposed capitalism, or as that's normally called, crony capitalism.

Sure, we think capitalism is pretty good. It works which is always nice for a socio-economic system. But we really do not think it's the important and defining thing that needs to be argued or fought for. That it is possible is enough: as that people can organise themselves into whatever version of mutual or socialist cooperative they desire is also enough. Neither needs to be promoted.

But we must absolutely make sure that whoever does own those productive assets is made to compete, to sweat it out, in those markets. So if as and when the Tories, or anyone in fact, goes out on the road to argue for capitalism we'll be the ones right behind them shouting "Markets!" at all times. Just as if people want to go out and argue for mutuals and co ops we'll be the ones shouting that "Markets!" at all pauses in the conversation.

Because the truth is that whoever does own those assets their behaviour, their chase for profit and advantage, is only tempered by the existence of others doing the same. Those markets that we shout about.