The System and Greed

Jun 26, 2011 Features / Columnists, Ravi Dev

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The great US ex-slave Frederick Douglass once observed pithily that crops can never be produced without first breaking apart the earth nor can the life-giving rains come without thunder and lightning.
He was reminding us that very few, if any; improvements in the collective human condition are achieved without upheavals and struggle.
A few centuries ago the west stumbled on a new way of organising production – dubbed “Capitalism” – that delivered undreamed of wealth and improvements in living conditions for some.
But unfortunately, at the same time, debilitating by-products such as the exploitation of others and the ravaging of both the social and physical environments were unleashed.
Its early grand chronicler Adam Smith described capitalism’s central feature, the profit motive that fuels the supposedly impersonal “market”, in 1776 as follows: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
Over the years, however, deliberate confusion over Smith’s usage of the term “self-interest” as the “invisible hand” that would guide the market to deliver the “goods” that society needs, has contributed greatly to the debilitating by-products of capitalism.
Twenty-seven years before he wrote his magnum opus, Smith had produced “The Theory of Moral Sentiments” in which he clearly defined self-interest not as selfishness or greed, as some would have it, but as an innate psychological need to win favour with other members of our society.
Self-interest is in inextricably intertwined with the societal interest. When he revised the latter book after the Wealth of Nations had been published, it is important to note that he did not alter his original formulation of what he thought was “self-interest”: self interest and moral sentiments are coterminous.
It is a subtle point that bears development at this time when the excesses of capitalism is roiling the EU, the world’s trading bloc, three years after the US was brought to its knees.
All of us are innately pushed to “better” ourselves but this is ambition not greed. Greed is the uncontrolled, unmediated primeval id; to be human means to control its untrammelled self-centred demands by the ego and super ego – developed and nurtured by and within society. Untempered greed will bring down the whole edifice, destroying those that believe they can “game” the system. Greed must be sublimated into “self-interest” of the Adam Smith formulation: being socially directed.
But we cannot ignore the reality that somehow our methods of socialisation keep on throwing up individuals who are only driven by their id and greed. In addition to the demons of the id, (what Lord Keynes called “animal spirits”) we recognise also that none of the institutions that we design around our values will ever work perfectly – hence imperfect socialisations to begin with.
Macro-institutions were therefore created over the years to deal with these exigencies. And so in matters economic markets became increasingly regulated (especially after the great depression of the 1930’s) so as to mitigate the inevitable excesses precipitated by greed and “imperfect markets”.
The neo-liberals that became ascendant globally in the 1980s however, insisted that Adam Smith’s “invisible hand” meant “no hand” in the workings of that much-abused term, “free markets”. And the regulations were thrown out of the windows. But they spoke from both sides of their mouths.
Take, for instance, the creation and issuance of money which is regarded as the sine qua non for the creation of markets in the modern sense of the term.
These have been regulated, by definition, from the earliest days, by the institutions that issued them in the first place and later by governments.
One can’t very well have everyone creating money and expect markets to function. The problem is that those who ritually invoke the ethereal “free market” do so only when the regulation in question hinders their efforts to make excess profits over what other regulations allow them to make in the first place.
Karl Marx’s early critique of capitalism (“Das Kapital” 1867) was remarkable for its prescience in highlighting several of its inherent contradictions but the attempts to institutionalise his insights failed miserably in our own lifetime.
It would appear that, ironically, Marx was too idealistic about human nature and man’s greed. To paraphrase Churchill’s aphorism about democracy, capitalism is evidently the worst type of economic system – excepting for all others that have been tried and failed.
While we must work on inculcating more cooperative values at the individual level through our socialisation mechanisms, we have to get back to vigorously regulating the markets of capitalism that remain subverted in Guyana.
We wonder, once again, why those that rail about corruption do not question the premises of the system that make uncontrolled corruption inevitable.

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