Capitalism and Human Nature

What is Capitalism?

Wikipedia, the encyclopaedia everyone loves to hate but still uses, defines capitalism as

...An economic system based on the private ownership of the means of production and their operation for profit…

This definition, and their list of central characteristics of capitalism, does not explain today’s toxic capitalism, disasters like Bhopal, sweatshop labour, The Peterloo massacre and the viciousness with which then Prime Minister Margaret Thatcher eradicated opposition to her policies, especially in the mining industry and the day to day agonies faced by the low paid in the UK and the USA.

Capitalism is now an ideology, indeed a religion. The current neoliberal version originated in the 19th century UK as Manchesterism and fell out of favour as other nations outperformed England in trade. It was preceded by Mercantile capitalism (The South Sea Bubble), Industrial Capitalism (The 19th Century Robber Barons, the Peterloo Massacre and the scrip system) and Corporate Capitalism (IBM’s Assistance with the Holocaust and Industry's obscene profits from selling weapons to all sides involved in a war). Alongside all these is Financial Capitalism (numerous recessions).

A capitalist system which avoids the evils we see today could arise and prosper but human nature works against this and such a system would need strong cultural norms and government to keep it human rather and not return to the anti human religion we see today.

The Role of Human Nature

Humans and chimpanzees share a common ancestor. Chimpanzees behaviour shows us aspects of our own behaviour. Troops of chimpanzees have a dominance hierarchy led by a male. Chimps tend to treat their equals, inferiors and superiors differently and conflicts are often resolved with violence.

As well as the urge to dominance humans behave differently to members of their tribe and members of other tribes. Clans seen as out-groups inside a tribe tend to experience less favourable treatment.

Love of power, greed and fear contribute to the toxic capitalism we see today. Those with power exploit greed and fear to keep themselves in power and feed their greed.

How did we get here?

Capitalism has never been benevolent but seems to have stater to turn toxic after the publication of Adam Smith’s book Wealth of Nations in 1776 at the start of the industrial revolution.

Smith believed in free trade but his cooption by free market economists seems mendacious, since at various points in his work, Smith criticises the business community of his time and the way Big Business (Gross Entrepreneurs) influenced government policy. He also approved of trade unions, which he calls combines, and said that whenever two or more professionals gather the conversation turns to a conspiracy to cheat the public.

Smith, who seems to have been autistic, probably intended Wealth of Nations to be read alongside his other major work, The Theory of Moral Sentiments. Factory owners of the day, however, simply used his ideas to justify replacing the older moral wage, a wage that let workers live with dignity, with a market wage: whatever the employer was willing to pay. The authorities naturally sided with the employers, who had developer the necessary political connections.

Conflicts between workers and employers marked the 19th and 20th centuries with workers gradually winning back some dignity and leisure time. The revival of Neoliberalism with Margaret Thatcher in the UK and Nixon in the USA signalled a slow turn round for employers.

Human Resource Theory: A Keystone of Toxic capitalism

In the 19th century employers realised there was a benefit from looking after their workers. This resulted in the birth of Personnel Management. In 1919 the Treaty of Versailles explicitly stated that humans were not to be regarded as resources. In the 1980s personnel departments began changing their name to Human Resources after management theory had adopted principles that implicitly regarded humans as resources:

1. A corporation comprises an inner core and a periphery of flexible workers

2. It is the individual’s responsibility to look after their own development, not that of the employer (or government)

3. Management’s right to manage cannot be questioned

The first principle reflects the way primitive tribes treat members of other tribes. Throughout history elites have regarded themselves as distinct from the rest of society and the first axiom justifies maltreating the workers in the periphery.

The second principle is both a statement of individual responsibility and abandonment of corporate responsibility. At the same time employers tended to regard workers who left to join another company as disloyal. Loyalty became a one way street. In essence it says the workers are an out-group and managers have no responsibility for them.

The third axiom is a hang over from slave plantations and cements the idea that the flexible non-management core are inferior to the managers (wage labour was initially branded wage slavery and wage slavery remains a recognised category of modern day slavery). It also panders to the desire many humans have, like chimpanzees, for power over others.

Devotion to these principles has increased unemployment, inequality and social division.

The Wrap

Capitalism is morally neutral. Today’s toxic capitalism is driven by human nature. Creating and maintaining a more human centred capitalism will need strong cultural norms and government enforcement. Changes in this direction will be strongly resisted by those who profited in terms of power and/or money from the current form of capitalism. The same aspects of human nature that drive toxic capitalism will also pervert any efforts at creating socialism or communism.