CAN CAPITALISM BE MORAL?

There is an alternative both to capitalism and socialism: THE INCLUSIVE MARKET ECONOMY

The Daimler Group’s marketing department recently advertised a current Mercedes model in China – with a wise saying by the Dalai Lama on it:

„Look at situations from all angles, and you will become more open.“ (It was the center photo without the two gentlemen.)

Someone must have switched off his brain temporarily. Everybody knows that the Chinese government will appreciate a Dalai Lama saying as Erdogan will appreciate an Öcalan quote.

The hysterical protests from China were not long in coming – and as quickly as possible the advertising was withdrawn. But what followed was even more blatant, namely the submissive justification of the company:

“As a global company, we respect China like all our other markets with their different value systems.”

Which means no less than: Your brutal oppression system disregards the most elementary human rights, but if your “value system” is like this, then we respect it as a matter of course, look the other way – and continue to cash in.

The peak of this development the next day were the multiple apologies (!) of Daimler CEO Zetsche: In a letter to China’s ambassador in Berlin – Daimler’s China CEO Hubert Troska also signed it – he once again “sincerely” asked China for forgiveness. Daimler had “no intention of in any way questioning or doubting China’s sovereignty and territorial integrity”. Zetsche wrote that his company “does not provide any support or help” to people who “deliberately undermine” or intend to undermine China’s territorial claims. “Daimler deeply regrets the suffering and grief that the negligent and insensitive mistake has brought to the Chinese people.” The Group recognizes “fully and without reservation” the “seriousness of the situation.”

The fact that capitalism does not act morally could hardly be proven more convincingly. And I haven’t mentioned its catastrophic eco-social “side effects” yet, which will kill us all if we do not steer it in a healthy direction.

For a market economy company, the world consists of goods and markets. If it does not act in line with the market laws, it will be driven out by its competitors. Those who act morally will not survive economically for long.

Did Mr Zetsche behave immorally? Within this system, in any case, he is forced to put business above morality. Daimler, like many others, is a stock corporation, and the primary task of a stock corporation CEO is to generate ROI. If he does not, he is exchanged. This is how the system works. Neither Mr. Zetsche nor anyone else would change that by moral behavior towards dictatorships like China.

For the same reason, even Jean Ziegler, one of today’s sharpest critics of capitalism (he pronouncedly describes our capitalist conditions as a “cannibalistic world order”), in an interview defended the then Nestlé CEO Brabeck–Letmathe (whom many consider to be the Darth Vader of capitalism):

“These corporations function according to a single principle: profit maximization, completely without social or political control. Behind this is a system of structural violence. I know Nestlé CEO Peter Brabeck–Letmathe, he is a very decent man. But if he doesn’t chase shareholder value up by 15 or 20 per cent every year, he’ll soon be gone. That goes for all the other top managers too.” (WirtschaftsBlatt, 8/2015)

Moral attacks on leaders therefore don’t make much sense. Managers could theoretically follow their consciousness, provided they have enough of it. But the consequence of this would be that they would soon be replaced by someone who would execute the job of profit maximization without any scruples.

Because they are all evil, profit–seeking bastards? Even if some of them are, it is mainly because the market economy system only works like this. If you want to persevere in this system, you have to play by its rules – just as you have to follow the laws of aerodynamics if you want to fly. (Admittedly, it’s not that black and white, and there are companies that hold to their corporate social responsibility uncompromisingly. But even their future is not determined by ethics, but by sales. And when the going gets tough, you know which of the two is sitting on the longer branch.)

THE SYSTEM IS THE PROBLEM

This makes it clear that the people involved are not the real problem. A top manager doesn’t have much more moral leeway than a worker if he wants to keep his job. No: The system is the problem. It would therefore be pointless to replace the oh so evil managers and to dream of an ethical economy. If we replace people without changing the system in which they (must) function, then we have gained exactly nothing at all. Then their successors must function according to the same rules as their predecessors, whether they like it or not. They are absorbed by the system – or they are eliminated.

The economy is essentially about satisfying needs. The basic principle is: X needs something, Y produces it, X and Y exchange goods for money. Economy = satisfaction of needs.

Let’s look reality in the eye: With regard to his needs, everyone is closest to himself. “As for the body, we are evident slaves,” wrote G.Chr.Lichtenberg, a contemporary of Goethe. Only a saint can be truly moral. The more elementary and urgent the needs are, the less one can be considerate of morality. Only those who have never suffered need can morally condemn people who act unethically out of necessity.

With less existential needs, the situation is less blatant, but still the same. Until we are saints, we will not have overcome selfishness. And until we have not left egoism behind, we are – some more, some less – its slaves. That is why it is unrealistic to dream of an economy based on morality. Economy = satisfaction of needs, and needs = compulsion to egoism. (By the way: one has to be able to afford a completely ethical life!) If some have largely overcome egoism like Gandhi and others: great! They have my greatest admiration. But until the majority of people is not so highly developed, we have to reckon with reality. And the reality is: egoism.

ANTICIPATE THE WORST CASE

I have explained above that it is not immoral people who are the problem of capitalism, but the system. The motor of this system is egoism. If we want to change our economic system in such a way that it no longer poses a threat to the future of earth and mankind, then we have to reckon with egoism in all its power. Nothing at all will improve if we start from utopias, from conditions that can only work with better people than the present ones. We must anticipate the worst case, the most unpleasant manifestations of selfishness – and steer egoism in a good direction.

Why can egoism be so destructive at the moment? Because it has no opposite balance. There is nothing that could slow it down. Because some of the stakeholders have no say, never had a say. In other words, they could never assert their needs – if you like: their egoism – vs. the needs of others, vs. the MoneyPower. I am talking about the people at the end of the capitalist food chain, here and especially in those countries where labour law is a slap in the face of human rights. The same applies to nature. It does not have a billion-dollar army of lobbyists, just a few NGOs struggling to keep up with the corporations somehow. That is why nature is being ruthlessly exploited to an extent that will make life impossible for future generations.

AN INCLUSIVE MARKET ECONOMY

The solution is obvious. It is far less complicated than all the above considerations. With regard to their own interests, everyone is more or less egoistic; only a part of the market participants can assert their own interests (at the expense of others); the conclusion is that until we have overcome egoism, all must be involved so that the egoism of one person is neutralized by the egoism of the other. Humanity and nature need an inclusive market economy.

You only have to look at a bazaar: Producers, traders and consumers are haggling over a price that everyone can live with. A price that A can afford and from which B can make a living. In order to extend this principle to the big picture, you only have to keep one thing in mind: A market can only function properly, i.e. for the good of all, if all are involved in price formation. The markets need not be controlled from outside (politically) if they control themselves through the participation of all (!) affected parties.

The central task of the state vis–à–vis economic life is to ensure that all market participants have equal rights to participate in price formation. No more, but also no less. Then no one will be cheated any more, no one will be exploited any more, no one ruined any more. Not because people have miraculously become saints, not because they have left their egoism behind, but because everyone can assert their egoism in the price formation processes. So everyone can defend himself against the egoism of others and oppose them with his own interests. (“All” is not meant literally; only representatives of interest groups are practicable.)

An agreement in these negotiations can only be reached via a fair price that everyone can live with. All participants have an existential interest in an agreement. But this is only possible through a fair price. Consequently, a consensus is only a question of time (and patience). And here another factor comes into play again:

Imagine such a lively price discussion, in which all those concerned (representatives of all stakeholder groups) sit around a table and haggle over a price that is okay for everyone. It is not enough simply to demand the max for yourself; there is a need for justification! “Why do you demand such a high price?” “Why do you offer so little for my goods?” All this needs to be justified.

SOLIDARITY EMERGING

And what results from this in the end, systemically? Social understanding! An understanding of the whole economic context, of all the consequences of decisions – consequences for consumers, for producers, for traders, for animals, for ecosystems… All these consequences are now on the table. And I underline it again: not because the participants have been transformed into saints, not because they have suddenly overcome their egoism, but quite on the contrary because they can for the first time assert all their interests on inclusive markets.

So in these negotiations solidarity emerges. A consensus is easier to reach if one does not stubbornly insist on one’s point of view, but if one includes the interests of others in his considerations. Solidarity is just more useful.

But as if led by an invisible hand, a genuine mutual understanding, global awareness and sense of responsibility emerge: solidarity. In a circular process the negotiating structures and processes nudge people towards social understanding and solidarity. People conduct negotiations more and more in the interest of all. To put it bluntly: cooperation improves people, and better people cooperate better. It is a systemic momentum that continuously makes our world a better place.

AN INCLUSIVE MARKET ECONOMY CREATES FRATERNITY

The capitalist market liberals talk of exclusive markets. I am talking about inclusive markets. As soon as all interest groups (including representatives of future generations, the biosphere and the entire planet) are included in price formation, no one will get run over any more. As a side effect, social understanding, social feelings and solidarity will grow. If one wanted to cover all this with a single word, it would be the old term: fraternity.

The initial question was: Can capitalism be moral? The answer is now clear: No, it cannot. This is because capitalism is based on the law of the strongest. The stronger exclude the weaker from price formation processes. They have created exclusive markets for themselves – hence social injustice, exploitation, need, misery, destruction of resources… Not because they are bad people, but because the laws of supply and demand leave them no choice. Supply and demand are important factors for price formation, but what is crucial is that we have sufficient prices – prices on which everyone can live. That then has nothing to do with capitalism. And if it has anything to do with morality, then morality is one of the positive results.

The vicious circle of MoneyPower and exploitation arises from exclusive markets: The more money power, the more exploitation, and growing exploitation leads to even more MoneyPower.

In an inclusive market economy, all interest groups can equally shape market processes. An inclusive market economy regulates itself through the stakeholders themselves without intervention from outside (state…). Market participants only achieve negotiation results if they are prepared to compromise on prices that everyone can live with. These compromises bring about the greatest possible benefit for the greatest possible number. This well-being in turn legitimizes the participants in these negotiations, so that another self-reinforcing cycle emerges: the more social understanding and empathy, the more well.being for all participants; the better it is for all participants, the more fraternity is enforced.


Originally published in German (2/2018)

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