Because Capitalism

By Dmitry Orlov and cross-posted from Club Orlov

When Barack Obama was elected President of the United States in 2008 this was treated as a landmark event. He presented himself as the underdog, an outsider from a minority background, who spoke eloquently about a fairer society, an end to war in the Middle East, transparency in government and a green future. His speeches promised “change” and “hope,” and voters were infused with optimism. Eight years later a fair assessment of his efforts is that they were hardly any better than George W. Bush’s.

In the current election cycle there are two new candidates pledging hope and change: Bernie Sanders and Donald Trump. Occupying opposite corners, they have painted pictures of two very different futures for the United States: democratic socialist and cult-of-personality capitalist.

Their campaign speeches are interesting to observe. In trying to make sense of their success, particularly in the case of Trump, it is apparent that the idea of a savior is infectious and appealing.

Trump presents himself as a man who gets things done. The appeal to his supporters is that feeling good about the future is easier when you’ve got a strong man to tackle your problems – someone who will fence off the hostile outside world, bomb the terrorists who threaten to infiltrate our ranks, and bring back the jobs from whoever it was that stole them. Never mind that much of what he proposes to do is in fact illegal under both domestic and international law, and far too simplistic in its conception.

In the case of Bernie Sanders, he has pledged a “future to believe in” and that a “political revolution is coming”. His appeal seems to operate on two levels. On the first he articulates a vision of an America more like Scandinavia, with free education, healthcare and welfare for those in need. He speaks from the heart about inequality, and wants his campaign to “end a rigged economy where the rich get richer and everybody else gets poorer, and create an economy that works for all of us, not just the 1%.” This is a common enough narrative and one to which he has been faithful for a long time.

But beyond such specifics, there is a more general dynamic operating. A swing to the extremities in the tastes of voters signals that faith in the mainstream narrative is breaking down. Things are not working and people are starting to notice.

Huge numbers of the American population are impoverished, two million of them are incarcerated, and tens of millions live under the influence of tranquilizers and sedatives. We’ve heard all of these statistics before. College graduates who expected a middle class family life are working as waiters and bar-tenders while living with their parents. Going to the doctor or a hospital is a thing to be feared because it may lead to bankruptcy. The police have become as violent as the criminals they seek to protect us against. Climate change carries on relentlessly, blithely ignoring treaties and accords. Politicians tell lies, lies and more lies, and much of the television news is little more than a reflection of the dark hearts of Rupert Murdoch and his billionaire cronies who own the majority of media channels.
Sander’s humanity and fighting talk are a tonic for those who want something better to believe in. But even he has fears about whether he can really deliver on what people are expecting of him. In an interview at the end of last year, he confided that “people are asking a lot of me” and that for himself he had posed the question: “Can you deliver what people need and what they want?”

These thoughts are perfectly understandable, and Sanders is no doubt aware that there is a very powerful force working in opposition to his good intentions. This is the prevailing incentive system, and it is deeply entrenched and subversive.

The following extract from 150 Strong: A Pathway to a Different Future describes how the primary incentive system currently operating acts to thwart even the most noble political efforts. This is what is at the heart of the current predicament. Nothing changes until the prevailing incentive system is changed.

* * *

The dominant reconciling force in all of our worldly affairs at present is the profit motive, and the effects of that cannot be overstated. It is the organizing principle that we operate by above all others.

For while there are many other values that may be considered important in our society – social justice, environmental protection, community engagement – no enterprise can survive without surplus assets generated by profit. And without profitable businesses a country or a region will not have the tax revenues to fund its activities, and it too will fail. Profit is therefore imperative, and in the administration of the affairs of state and business all other aims are secondary.

Translated into everyday life, there is a simple creed from David Copperfield by Charles Dickens: “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” It expresses the relationship that is fundamental to the capitalist system and goes some way to explaining how the reconciling force of the profit motive shapes much of the world as we know it. It is a precondition of success in our modern society that we must remain financially solvent, and in order to do this profit is paramount.

Before we can further explain the technical details of how the profit motive manifests itself as a reconciling force, we first need to identify two other forces: the creative force of entrepreneurship and the constraining force of limited resources. Not all entrepreneurs can succeed in their ventures, because only the most profitable can survive

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