Silly Saturday Stories About Adam Smith no 21

Amazing how opinionated opinion formers launch attacks on ‘capitalists’ without proportionate words about government ministers, by far a greater parcel of rogues than the corporate bosses of those parts – by no means the whole – of the economy. It’s probably safer to do so in Africa (glance at the headlines not attacking Mbeki with half-as-much gusto; even less so about Mugabe).

Anonymous ‘capitalists’ are made out to be in hidden conspiracy against whoever form the ‘us’ in the columnist’s litany of the downtrodden masses.

Sentletse Diakanyo writes a column in Thought Leader (Mail and Guardian Online HERE:

His headline leads with the unpromising title: ‘We are continuously being screwed by bloody capitalists!’

[Comments: words in square brackets are mine]

“Our society is tied as a whole by an invisible umbilical cord: capitalism. It continuously promises the masses the vastness of a seemingly infinite horizon of affluence, yet the poor are still subjected to vile and ignoble existence, to an undignified and humiliating squalor of poverty [not shared by prosperous and healthy-looking newspaper columnists].

The level of depravity entailed in the accumulation of wealth under capitalism is unacceptable [it’s also unacceptable – Zimbabwe anyone? – to be without the real ‘depravity’ of no capital accumulation]. Capitalism breeds greed, corruption and all other industrialist iniquities. [There are fewer living below the poverty line in capitalist market economies than in economies without capitalist markets – and, er, capitalists.] Unjustified escalation of global food prices is attributable [by who?] to remorseless profiteering by capitalists at all cost. This acceleration of prices has been augmented by a marked rise in profit margins, and bears testimony to the suspicion that there is no correlated increase in the production costs. [Data please!]

Under normal circumstances this surge in prices would be countered by an increased entry of new competitors willing to undercut prices and by increased labour costs as more companies try to exploit the opportunity for exorbitant profits by expanding employment and output. That increase in competitive pressure would generally return profit margins to more acceptable levels. Unfortunately, none of this fantasy is soon to become reality. [Hang on – fuel price inflation is about to bankrupt 50 world airlines – that’s no ‘fantasy’]

What consumers have to contend with is rising inflation, now at a staggering 11,6% and continuing to press against historical limits. Inflation in all probability will continue to escalate considerably beyond the [politicians'] inflation target of between 3% and 6%. As this monster continues to erode the disposable income of households, month after month, consumers are left with nothing to neutralise the harmful effects of a tighter monetary policy. [Wait a minute – relax monetary policy to cover the ‘harmful effects’ of inflation and you increase the rate of increase in prices; a daft suggestio, what? – become a billionaire in Zimbabwe and cannot afford bread!]

We need to overcome the prevailing economic orthodoxy in respect of capitalism and institute progressive reforms to promote moral and ethical consciousness in those in business [in Communist China they used to call this ‘re-education’, killing millions before they learned anything.]. Adam Smith’s views of laissez-faire and economic individualism, deeply entrenched under capitalism, are dangerous to the well-being and prosperity of society in general. [Sorry, but Adam Smith did not mention ‘laissez-faire’ ever – that was a French idea; Smith spoke of ‘Natural Liberty’, a wholly honourable notion. Sentletse Diakanyo apparently knows little about Adam Smith, which if his ideas are ‘deeply entrenched’ they haven’t yet penetrated into the columnist’s consciousness]

Society as a collective of individuals requires, for its own prosperity, self-sacrifice and the subordination of one’s interests to those of others [the alibi of every dictator in the modern era – who monitors the ‘subordination’?]; it insists on the recognition that when society prospers, individuals prosper [wrong way round: when individuals prosper, society prospers!]. None of what I propagate dictates that individuals be chained to collective action and collective thought for the sake of “the common good”, if such collective action is fruitless. [So if its ‘fruitful’ they can be ‘chained to collective action and collective thought? Who decides if dictatorship is ‘fruitful’ – name one dictator where all individuals were made ‘better off’, or does he mean the entourage of Robert Mugabe being ‘better off’?] The challenge is finding equilibrium between the needs of the collective and individuals. [Yes: it’s called liberty; the separation of powers – legislature, executive, and justice; regular, free and open elections; the rule of law, not of the ruling party; open economies; markets and entrenched human rights; none of which is found in state-managed ‘equilibrium’ economies].

We should be vigilant of the threat of capitalism [‘threat’? – you need the entrench markets under the rule of law] and ensure that we employ requisite measures [here we go! A recipe for disaster] to prevent the continuous entrenchment of inequalities in society. [Poverty is the absence of wealth creation] We live in a world that is deeply and antagonistically divided into groupings of nations very dissimilar in economic, social, religious and political positions. Such differences ferment conflict and impede any progress of material kind for the downtrodden.

None of us can contest the assertion that capitalism has throughout recorded time proved itself to be an inhumane system that subjects a large number of ordinary men and women to abject and dehumanising poverty, while a handful few reap its limited fruits. [Have you any idea at all of the 'abject and dehumanising poverty’ of ALL pre-market economies before capitalism?] We cannot change the system, but we can certainly put certain safeguards in place, for example regulation. [You cannot ‘regulate’ an economy to wealth; nobody has done it ever but you can de-regulate an economy to greater wealth creation and the spread of affluence - see the modest but real results of doing so in over-regulated India and even in Communist-planned China (but not in North Korea or Cuba)].

If we do not do anything now, in the long run we are all dead. [er, surely in the ‘long run we are all dead’; nothing the columnist proposes will postpone that event… it will just make worse the journey to that end]