Brief criticism of capitalism from a structural angle

I will skip over the question of what capitalism is, because it is a tedious word game in which various traditions talk using the same word, but using vastly differing and poorly defined interpretations of the word. For the sake of this brief essay I will merely consider it as unconstrained economic activity separate from the state, which most would probably be happy with.

Taking this definition, I want to offer a simple criticism of capitalism based on engineering principles highlighted by the De Jouvenelian model. This criticism is the following : Allowing individuals to acquire great wealth constitutes the creation of power centers which then act outside of formal structures as informal arms of governance. They don’t go rouge.

Putting aside the ethical and moral arguments that envelope this discussion, such as the morality of wealth inequality, and the ethical nature of private property, as well as the fever dreams of Randian adherents that seem to have a complete inability to observe reality, we can just concentrate on this structural issue.

To give a couple of striking examples, we first have the case of Ford and the Ford foundation, then Carnegie and the Carnegie Foundation, then…all of the foundations. And in more modern examples we have Gates and the Gates Foundation, and now Zuckerberg and the Chan Zuckerberg LLC, and of course the Open Society of Soros.

Once these great fortunes were created, what happened with them? They were engaged by the founders of the companies to engage in societal “good.” What did this good consist of? Haphazard and uncoordinated philanthropy based on the opinions of the founders at first, then subsequently the psychotic ideas of the “elite” within society once they died.

This is best summarized by the actions of Ford’s grandson Henry Ford II who decided to conduct a report in 1947 to decide on the priorities of the Ford Foundation funding. This report was led by Rowan Gaither, and following massive consultation with experts across the Ivy League concluded that the funding priorities should be:

  • Peace
  • Democracy
  • Economy
  • Education in democratic society
  • Individual behavior and human relations (A.K.A behavioralism et al)

Note that at the time, the Ford Foundation funding outstripped the UNs (by 1960 it was 3 billion in 1960’s dollars – an obscene amount.)

I don’t see any elite rebelling against society as per Rand. In fact, I see society being shaped and mutated by these elites. Just look at Zuckerberg and his new venture:

“”We live in a world where talent is evenly distributed, but opportunity is not,” Zuckerberg said. “Andela’s mission is to close that gap.”

Pretty damning isn’t it?

When you think about it, this all begins to make sense. The elite will do what they wish to do, and being the elite they will succeed. It is irrational to assume the opposite will be the case. Now if you have a liberal democratic structure with blocks and power balances, then the simple thing to do to route around this is to engage “civil society” in the form of wealthy individuals and pools of wealth which are obviously going to be held by the elite. This makes a mockery of the official state / society split doesn’t it? Especially when you consider the key way to enshrine policy is to bring it into the legal arena, which is where the Foundations were decisive. The entire civil society/ state split becomes a joke that blocks clear analysis of what is going on.

From an engineering angle, how do you solve this issue? Because these foundations are used to proactively govern in the ways the passive liberal democratic model does not recognise, because of course, state and civil society are two different things (sure…). The simple answer is nationalisation of these fortunes. It also means a refusal to consider corporations and economic activity as somehow neutral and not a concern of the state. This strikes at the heart of “modern” economic thinking.

So the criticism is this – capitalism (aka state separate economic activity) appears to be a fraudulent concept that is only maintained as a concept by the delusion of the state/ civil society model of the Liberal state. In reality, once this blinker is removed, it is clear that all economic activity is co-opted by the elite and always will be.

The real tools of the state, and the official picture do not match at all.

added: From the president of the Ford Foundation: “TALENT is equally distributed, but opportunity is not.”