THE DILEMMA OF CAPITALISM

The most innovative and creative economic system in humanity’s history is also the most destructive

By Walter Grode

[This essay published in 2005 is translated from the German on the World Wide Web, www.grin.com/de/fulltext/bwq/26485.html. Walter Grode is a professor in Hanover, Germany.]

Without economic development, we cannot live. However the normal deregulated economy threatens to destroy our ecological, ethical, social and democratic foundations. Capitalism’s very normal nature is the problem, not the scandalous excesses of capitalism that are now denounced.

Karl Marx had the vital insight in the 1840s. He saw capitalism as the most innovative and creative economic system in humanity’s history and also the most destructive. Marx recognized that capitalism on one hand leads to undreamt-of economic output but on the other hand tends inexorably to undermine and dissolve every society where it develops (cf. Grode 1998).

Marx should have left it at this insight (Taylor 2005). Instead he succumbed to the great recurring temptation of a civilization arising in the Christian western world. He fell to the utopian hope that a single harmonious social order is possible.

As everybody knows, this utopia consisted in the abolition of capitalism whose dynamic Marx wanted to retain in a creative and productive communist system. Today, however, the same illusions appear at the other end of the political spectrum, namely among our triumphing neoliberals. They defend the freedom of the market and believe this is the only and perfect solution to all problems.

Marx’ original insight intended something different. Perhaps the picture of a hopelessly torn marriage could be helpful. Without capitalism, we could not live (because market-oriented relations pervade society on many planes) but we can hardly survive with it. Successfully shifting social costs is the real core of capitalism. Its side effects are passed off as “external effects” or as someone else’s problem.

SHIFTING COSTS INCREASES PROFITS

Environmental pollution and the decay of social bonds result from uncertain employment conditions or low wages. Politics is powerless toward the economy. This endangers German democracy (Grass 2005). “This process is inevitable for capitalism as long as there is no effective deterrence” (Taylor 2005).

In a word, capitalist societies are scenes of a persistent dilemma. How can corporations be controlled to prevent the worst social and ecological consequences without provoking their migration or weakening growth? Governments are constantly forced to weigh the necessary control of capital against the dangers of positional deterioration. No harmonic solutions wait, only unstable compromises limiting damages (Grode 2004).

Compromises depend on global competition. The best solutions for this dilemma are international solutions where problems are magnified many fold.

This is especially dire where ecological questions are touched. Capitalism does not only endanger the health and well-being of persons excluded in the course of globalization which may form the breeding ground of terrorist violence for the multitude of the marginalized (Grode 1999).

Capitalism can also lead to irreversible environmental disasters. Everyone knows that the only hope in relation to greenhouse gases for example lies in the global cooperation of the nations. In short, the dilemma of capitalism could kill us.

One of the greatest obstacles on our way, the Canadian philosopher Charles Taylor says, is the utopian illusion. Capitalism itself can never be the basis of an ethics (Grode 1997), let alone a religion. However capitalism interprets itself as a concretization of a value like “freedom” or “electoral freedom” (Grode 2004). But with this interpretation, we lose sight of its dilemma nature. Suddenly capitalism appears as a knight in shining armor in distress, even as a redeemer freeing us from all cares. This illusion presently captivates the ruling circle in the US.

At the other end of the world, China’s ruling clique, a sclerotic ex-communist elite, is able to master the dilemma pressures of a capitalist revolution getting out of control. Some globalization critics within this clique, Taylor says, succumb to the Marxist temptation and believe the cause of the dilemma can be simply removed.

Consumer capitalism creates many of its illusions. The competition to sell goods and services has long changed (perhaps irreversibly) into a competition where attractive outlooks on life are sold – in pictures of bliss, freedom and beauty urging people to buy style when shopping for shampoo, tennis shoes or an SUV (Grode 2000, 2003). Brand names are connected with certain attitudes and ways of life, with a sense of power and invulnerability or freedom and creativity.

Finally, all this produces a new cultural power that is not a simple antagonist of ethics and religion but breaks from both of them in a very novel way, as Charles Taylor says. This power results from life taking place in an increasingly irrational space of mutual parading. This cultural power erodes local and national communities and prompts young persons to adapt differently to ethics and religion than happened in the past.

The development of consumer society is increasingly promoted with an ethic of authenticity that spreads more and more in the West. Consumer society has an unmistakable tendency to trivialize authenticity and personal existence. Media styles are imitated while the discovery of substantial life goals recedes and fades.

Thus the ethic of “freedom” and “individualism” that once justified capitalism changes furtively into a celebration of more “electoral freedom” as a good in itself. Capitalism pretends to fulfill the life of individuals and make them happy because their elective possibilities are more numerous – even though the differences between the alternatives are banal.

Decades ago some feared that capitalism would make us hopelessly foolish long before we drowned in the higher sea level through global warming (cf. Huxley in “Brave New World”). However Charles Taylor still believes – and I hope he is right – that people are wiser and more resistant and have not completely lost contact to the deeper meanings of life.