Capitalism and Smithian Markets

Adam Smith had a concept of markets, not of ‘capitalism’, a wholly new phenomenon of the 19th century and not one that Smith, nor any of his contemporaries, with the possible, loose, exception of Turgot, who used the word (in French), ‘capitaliste’, in 1766, though not the word ‘capitalism’, first used in a novel by Thackeray in 1854, and later, of course by Marx.

This might explain the programmatic problem raised by Mehreen Shakoor, who writes a ‘Call to Youth’ in “Pakistan Times” (18 August):

“Adam Smith’s concept of capitalism and Karl Marx’s concept of communism should now be discarded as no longer relevant to our present problems. Communism fails to provide diversity of choice and encouragement to individual enterprise; it is too demanding in its elimination of basic human rights.Likewise, if capitalism has a contribution to make it will have to be in a changed form. Capitalism must develop still further, and with greater rapidity, a rational solution to the employer / employee partnership. It must direct its productivity and energy to eliminate — and not ignore — poverty; to add to the quality of life rather than to eliminate life itself. It must use technology so that future generations are not destined to devote a greater part of their waking hours within office walls doing work of little mental or spiritual satisfaction.”

Comment
19th century ‘capitalism’ changed several times and took various forms by the 21st century. No doubt it will continue to do so. ‘Capitalism’ is different in Germany, France than its Anglo-American forms, by, among other aspects in the degree of state intervention (’state capitalism’?) in these variants.

It is a long time since workers were rioting violently in the streets of Britain and the USA, though the do quite regularly in France, a capitalism noted for its ‘pro’ labour regulations compared to the USA and Britain and its provisions for job security if they get a job (counter-balanced, of course, by the higher unlikelihood of unemployed workers finding jobs ‘with greater rapidity’ than in the USA and Britain, where markets are relatively freer than in France, Germany, Spain, Italy, Belgium and The Netherlands).

Poverty is eliminated by the creation of wealth and markets are better at achieving this outcome than state capitalism. It is the lack of markets, under all forms of government, that creates poverty and it is in the continuance of state rather than markets solutions that allows poverty to continue.

Mehreen Shakoor’s desire for ‘capitalism’ “to add to the quality of life rather than to eliminate life itself” is absolutely strange when set in the context that life expectancy is highest in capitalist countries (of all variants) than in non-capitalist countries, and partly developed countries like Pakistan.

Child mortality is higher in non-capitalist countries and partly developed countries. Hence, I do not understand what the charge of eliminating ‘life itself’ as a failure of capitalism and markets means.

As for capitalism using “technology so that future generations are not destined to devote a greater part of their waking hours within office walls doing work of little mental or spiritual satisfaction”, this too is a strange ambition given that capitalist countries provide more work opportunities, better education for work and leisure, and more challenging work, than socialist, undeveloped and state managed countries compared to capitalism.

If an agenda contains misdirected ambitions it will not be satisfied.