Although, as we argued previously, banks are not to blame for the financial meltdown and subsequent recession, it has become popular practice in both media and government to ascribe all of today’s economic trouble to the supposed greed and irrationality of Wall Street. Chairman of the American Federal Reserve Ben Bernanke was only the latest in a series of officials to call for greater supervision and regulation of the banking sector. Indeed, it has become one of the outspoken goals of the Obama Administration and recent G20 summits.
As rumors persist that the White House is to propose legislation that will impose a fee on international transactions, echoing a suggestion offered by the European Union past December, banks worry.
Goldman Sachs recently came under fire as it turned out bonuses to its employeed once again. How dared they, journalists and politicians cried alike, even though the company had repaid the US Treasury’s $10 billion TARP investment in June of last year already—with 23% interest.
Nevertheless, Goldman Sachs is now considering to force its executives and top managers to give up part of their earnings each year—to charity. As The New York Times reports, the details of the charity initiative are still under discussion while the firm is “trying to understand whether such gestures would damp public anger over pay.”
Whatever one may think of demanding that employees donate part of their income possibly against their choice, the mere fact that Goldman Sachs is contemplating such a policy is telling of the economic climate in which we live.
Things may be even worse across the Atlantic. In the United Kingdom, the Labour Government is bashing the rich with an extra tax on bankers’ bonuses while in France, President Nicolas Sarkozy explicitly distanced himself from what he called the “excesses of financial capitalism.” Although his government can’t seem to solve a 8.5% deficit on its budget, Sarkozy relishes in “the victory of the European model.”
Ever more so in the press and in the words of policy makers is not quite capitalism itself condemned. Rather its “excesses” take the blame for the supposed wrongs which plague our time. Although capitalism brought immense prosperity to the Western world, it is “too much” of it that is stopping the rest from catching up. Although capitalism is the only socio-economic system that guarantees individual rights to life and liberty (because it cannot properly exist without them), it is for the sake of “society” that it must be tempered. Capitalism is justified as a necessary evil. It is justified on altruistic and utilitarian grounds—because, it is grudgingly admitted, capitalism satisfies “the common good.”
Capitalism is a practical system. It does bring the greatest good to the greatest number of people. But that is of secondary concern. Primarily, capitalism is a moral system because it is only under capitalism that man can reap the rewards of his own labor. It is only under capitalism that man is free to choose his line of work, free to specialize in it, free to trade his products and services for those of others on a free market. It is only capitalism that ensures man’s unalienable rights to life, liberty and property and its ruling principle is: justice.
Twenty years after the Cold War ended, capitalism is in recession, to be compromised on at the first sign of trouble. Moreover, its greatest practitioners, the traders, the bankers, the industrialists, the businessmen have become a persecuted minority, carrying a burden of blame for a crisis that was beyond their control, subject to public scrutiny and special laws and penalized, not for their failures, but for their virtues; not for their incompetence, but for their ability; not for their errors, but for their accomplishments.
Businessmen have in part themselves to blame. Amid accusations of greed and selfishness, they appease, apologize and they compromise. They attempt to appease the loudest of their opponents who will never relinquish the struggle. They apologize for their very existence, denouncing “inhuman capitalism” as much as the most collectivist of commentators. And they compromise on capitalism, relying on lobbying, on private manipulation and on pull in order to extract momentary favors from government.
Businessmen have allowed themselves to be persecuted because they never stood up to defend capitalism. Rather they chose to undermine the system and let it take the fall for faults that were not its own. There are few capitalists today who ever bother to defend the philosophy they live by, if even they do so consciously. In their absence, capitalism can be vilified and destroyed almost soundlessly, at least until some remember the source of progress and prosperity again.
“Primarily, capitalism is a moral system because it is only under capitalism that man can reap the rewards of his own labor. It is only under capitalism that man is free to choose his line of work, free to specialize in it, free to trade his products and services for those of others on a free market.”
I think you’re confusing capitalism (which is an economic system) with classic liberalism. Capitalism has no morals as such, the morals (whatever does may be) lies in the political ideology which has evolved parallel with capitalism (however you may define it).
Potato, potato.
Capitalism has morals: free market enterprise, private property, property rights, individual rights, individualism, the separation of State and Economics, limited government in general.
Classical liberalism is quite similar, I agree, and it takes a lot from capitalism but usually stresses freedoms more than markets.
I agree. Not only is capitalism the unknown ideal in Western society in general, but even amoung its supporter, the actual way it works and is messed up is often not known. (I wrote something about that.)
Capitalism is the only practical system because it is the only moral system. It is the only system that allows men to deal with reality without hinderence.
“while the firm is “trying to understand whether such gestures would damp public anger over pay”
It doesn’t take much knowledge of human pyschology to realize in this case these gestures would actually increase the anger”
“Classical liberalism is quite similar, I agree, and it takes a lot from capitalism but usually stresses freedoms more than markets.”
The idea of capitalism as morality generally seem to originate with Ayn Rabnd, who lived over a century after the classic liberlists. The problem is that we have two systems, one econmic and one moraly ideological based on the conomical one, which confusingly happens to have the same name. But hey, call it what you want to call it.
Perhaps. I’d counter that the economic system can’t properly exist without a capitalist morality, but I understand where you’re coming from. Most people understand capitalism purely as an economic order.
Found a typo:
“… impose a free on international transactions…” should be “… impose a fee…”
Quite true. Thank you!
“Businessmen have in part themselves to blame. Amid accusations of greed and selfishness, they appease, apologize and they compromise. They attempt to appease the loudest of their opponents who will never relinquish the struggle. They apologize for their very existence, denouncing “inhuman capitalism” as much as the most collectivist of commentators. And they compromise on capitalism, relying on lobbying, on private manipulation and on pull in order to extract momentary favors from government. Businessmen have allowed themselves to be persecuted because they never stood up to defend capitalism. Rather they chose to undermine the system and let it take the fall for faults that were not its own. As it is, defenders of capitalism have become scarce and capitalism itself, a forgotten ideal.”
It is a corruption of the ideal too, perhaps they fear not having these various forms of insurance, even if they are actually hurting the ideal and their business overall.
They have used capitalism to achieve their status, but now abandon it thinking doing so will increase their chances of maintaining their position. If you climb a ladder to get to the top of a building and then destroy the ladder entirely so no one else can use it, you may think yourself clever for securing your position, but what happens when someone sets the building on fire? Even if you can escape in tact, you won’t have a ladder to get back up again. You will have to rebuild the ladder entirely, assuming you have enough resources to do so.
Yes, it’s absolutely short-sighted. If you start giving in, as a businessman or a defender of capitalism, and admit that the system has “excesses” or “dark sides” that need to be “corrected”, that’s the beginning of the end. From the moment you accept the premise that capitalism is inherently, morally flawed, you’re working toward its destruction.