July 19, 2012

Ethics and Capitalism: An Interview with James A. Sadowsky, S.J.—Part 4 of 9

Don’t you believe that since capitalism depends on the increase in consumption it promotes consumerist values?
I categorically deny that capitalism depends on increasing consumption.  The market works at any level of consumption, and could even allocate goods in a society of hermits.  If desires change and, instead of refrigerators, people want bibles, the market will be more efficient in producing goods that they then consider more important.  The market does not dictate what people want or need, but satisfies whatever those needs happen to be.  The belief that, absent any stimulation of or increase in consumption, capitalism will collapse, is senseless.  Now, the reduction in the consumption of certain goods, from one day to the next, would leave some producers with large unsold inventories.  But such events are not very probable.  And an economic depression is not due to a sudden desire to lower consumption.
In what respect are monopolies endemic to capitalism, as some claim?
Adam Smith was the great opponent of monopolies.  Now, when we speak of monopolies, we refer to the government’s granting of legal permission to one producer to be the sole producer in a given market, which removes from that market others who can produce more or less.  Such a monopoly is not a product of the market, but rather imposed by law precisely because the market did not permit it.  For a monopoly to emerge on the free market, there would have to be only one producer in whole the world of a certain product.  We cannot say that there is a monopoly in one country if the supposedly monopolized good is produced elsewhere in the world.  The only important thing is legally permitted market entry by anyone.  Curiously, the people who condemn capitalist monopolies are the same ones who defend governmental monopolies in mail service, telephones, etc., which anyone who wants to eradicate monopolies should oppose.
You make a distinction between laissez-faire capitalism and state capitalism.  What would you say about that?
Laissez-faire is simply what obtains when people are free to decide what to produce, how much, and whether to exchange their product and with whom, without governmental interference.  The government acts only to uphold the law against fraud, robbery, to guarantee contracts, etc.  As Friedman would say, the government is an arbiter, not a partisan judge.  The situation closest to this is found in Hong Kong.  But the truth is that it has never existed in any part of the world, because there are always degrees of intervention, from the minimal instances in Hong Kong to the massive ones in the United States.
In one of your talks you said the Soviet Union also has a market.  What did you mean?
You see, a socialist economy cannot exist except under conditions of extreme primitivism. The socialist experiment in Russia ended around 1920.  The gist of Marx is that central planning does not mean “no intervention in the market,” but rather the abolition of the market, the end of commerce, no more production for sale, no more money. If that situation does not obtain, then there is no socialism in the Marxist sense. The Soviet Union has a market economy: there is money, there is the exchange of goods.  Today [1987], it has a highly regulated and inefficient economy, due to a great deal of intervention.
If, as you maintain, the Soviet Union has a market economy, then we have to invent a new word to distinguish it from those Western . . .
Why not call them all “mixed economies”?
But then how would you distinguish the Soviet economy, where the market neither allocates resources nor determines prices, where the central authority plans what to produce, how it is exchanged, etc.?
Look, fortunately the Soviet economy is not all that planned or its people would starve to death.  Planning exists everywhere—in the United States, in Chile, even in the Soviet Union—but it’s limited.  I repeat: no “socialist” country has socialist economics, because, in its strict meaning, it could only exist among primitive tribes who live by hunting and gathering. 
To Be Continued