Barron’s, that bastion of capitalism, calls for a kinder, gentler capitalism. Or at least a return to what it was meant to be.
[Prime Minister Wen Jiabao Wen] is no paragon of economic and political freedom. Wen does, however, grasp a basic truth that many in the West fail to see. The core principle of capitalism isn’t the greedy pursuit of self-interest, as The Wealth of Nations implies, but the opposite. As Smith describes in The Theory of Moral Sentiments, the single-minded effort to create value for others is at the center of capitalism.
The current global crisis, which is an episode of what John Kenneth Galbraith described as capitalism’s “recurrent descent into insanity,” doesn’t signal that capitalism has failed. It means instead that genuine capitalism was abandoned, or never really tried, by its modern adherents.
Barron’s goes on to say that only by creating real long-term value for people can capitalism genuinely sustain itself. The robber barons may have played rough, but they built things of value to others, unlike our current times when trillions of dollars of what Marx called fictitious capital (money based on money rather than on tangibles) simply disappeared, leaving ruin in its aftermath.
Look at Commodore Vanderbilt, he built steamship lines and railroads, paid his employees fairly and treated them well. When he finally got a monopoly on the railroads he lowered the prices so more people and businesses would use them. When he died, he was a hero to the common man.
We need more of that and less fictitious capital. Capitalism sure hasn’t lived up to its words, and neither, for that matter, has socialism.
Socialism, too, was never tried, or so its adherents say. When the Berlin Wall fell nearly 20 years ago, socialism was declared a failure. But was it really socialism when the murderous dictator Josef Stalin hijacked Russia and killed at least 18 million people in the Gulag prison camps? Was it socialism to designate street maps and the price of tomatoes as state secrets? Or to make starting a business a criminal offense? When Mao Zedong exiled scientists and scholars to the countryside to do hard labor, and drove China deeper into poverty, was that socialism?
When all power lies in the state, and just a few control the state, then their power becomes absolute. The worker’s councils, the soviets, were supposed to be the real power. But it didn’t quite turn out that way, did it?
Mao’s Little Red Book says “a communist must be selfless, with the interest of the masses at heart.” Mao and his system flunked that test badly. It remains to be seen if some new socialists can live up to those empty words.
What better time than now to find out? The old system has been discredited, what comes next is up to us.