Aggravating the Disease

It should already be obvious to most observers that tosoc.org's analysis of what is wrong with capitalism is not particularly original. It is time to give some credit to one of the thinkers who have influenced our thinking:  John Maynard Keynes. The following is from his monograph The End of Laissez-Faire, 1926.

"Many of the greatest economic evils of our time are the fruits of risk, uncertainty, and ignorance. It is because particular individuals, fortunate in situation or in abilities, are able to take advantage of uncertainty and ignorance, and also because for the same reason big business is often a lottery, that great inequalities of wealth come about; and these same factors are also the cause of the unemployment of labour, or the disappointment of reasonable business expectations, and of the impairment of efficiency and production. Yet the cure lies outside the operations of individuals; it may even be to the interest of individuals to aggravate the disease."

This is largely what we have been saying in our blog. For whatever reasons, some people become very rich under laissez-faire capitalism. These people are capitalists, but not generally supporters of capitalism at the expense of their own capital. Therefore they generally do not care about free markets or general prosperity. As Keynes said, "these same factors are also the cause of unemployment of labour, the disappointment of reasonable business expectations, and the impairment of efficiency and production."

Since it may be "to the interests of individuals to aggravate the disease," therefore, the individual decision-making which is such a central part of laissez-faire capitalism is not necessarily the socially-benevolent principle that Adam Smith envisioned. In fact, "the cure lies outside the operations of individuals." In other words, the cure lies outside of capitalism.  There we have in a nutshell the reason why capitalism is unstable and why capitalism does not correct itself when it goes wrong.

However, Keyne's solutions were limited by the technology available at the time. We propose solutions that are different mainly because they are heavily dependent on current technologies. Read our other blog posts for more details.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

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