Does it make sense to question the morality of capitalism?

Keynes warned that ‘practical men’ were often in thrall to some dead economist. In fact many leading economists have agreed on the idea of guaranteed work.

The global pandemic is bringing all the issues that torment the modern world to boiling-point: job scarcity, ecological transformation, mass migration, biotechnologies, artificial intelligence and the uncontrolled development of science, education, public goods and culture. The World Economic Forum, which as early as last year at Davos announced ‘an end to profits without ethics’, now proclaims ‘better economies and societies’. The need to bring the legitimacy of capitalism into discussion, even under a strict moral purview, is being recognised on a variety of fronts.

Some scholars linger in celebration of the essay in which Milton Friedman claimed, 50 years ago, that capitalism had no social responsibility except to increase profits (‘the business of business is business’). But questions are beginning to emerge—ranging from Paul Collier’s concern about the ‘mutilated ethical foundation’ of capitalism to Joseph Stiglitz’s desire to free ‘progressivist capitalism’ from ‘market fundamentalism’. The  philosophers Nancy Fraser and Rahel Jaeggi seek to rebuild the ‘regulatory bases’ of capitalism, holding that no economic practice is neutral and therefore detached from normative evaluation and that capitalism must be seen as not simply an economic system but an ‘institutionalised social order’.

So does it make sense to question the morality of capitalism? Yes—indeed without it, there can no supersession of the paradigm in the direction of a much-needed new model of development.

Necessary immorality?

Branko Milanovic, a distinguished scholar of inequality—itself a question with strong moral connotations, though it is seen above all as a problem of redistribution—does not however agree. He considers the immorality of capitalism and the ‘externalisation’ of morality—by which the mechanisms of an individual’s internal self-control, thought to be by now dead or displaced, are transferred to the external coercion of rules and laws—to be inevitable. His conviction is that ‘immoral behaviour is necessary for survival in a world in which everybody is trying to obtain as much money is possible’.

It is no accident that Milanovic shares the 18th-century opinion of Bernard Mandeville, contested by Adam Smith, that success depends on individuals behaving as greedily and egotistically as possible. Nor is it an accident that he accepts that preferences are, essentially, non-contestable matters of taste—he goes so far as to apply degustibus non est disputandum even to the economy—or that he condemns Karl Polanyi’s critique of extended and indiscriminate commercialisation, because it is desired and freely chosen by individuals rather than ‘an unnatural development that presages the crisis of capitalism’. In this way, however, Milanovic fully accepts the postulates of the old paradigm, pushed to their extreme by neoliberalism, as well as its pretence toward neutrality and the division between ethics and economy.

The neutrality of this paradigm has been contested, though, by the Nobel prizewinner Amartya Sen. From his debut as a scholar, Sen has criticised the hypostatisation of the economic agent as an isolated individual, exclusively self-interested, obsessively seeking the greatest possible gains and perfectly rational on the practical plane. Already in the 1970s Sen branded such an agent a ‘rational fool’ and a ‘social idiot’—his single problem consisting in putting together given means and given ends, without reflecting on the one or the other, in total ignorance of his own intrinsic sociability and interdependence.

Deep structures

Perhaps, then, something very profound makes the difference here: if the emphatically ethico-political character of the present upheaval calls the dimension of value into question, this gives the denunciation of social and political problems a strong moral meaning while providing morality with a higher critical content. We cannot remain on the surface of the current turmoil, considering justice and equality mere questions of compensation and redistribution. Rather, we must recover the deep structures that articulate our systems of production and our productive roles—our duties, our powers and our social prestige.

The goal of full and high-quality employment then comes to the fore—a goal which today eludes even centre-left governments. It is extremely significant that during the electoral campaign which led to Joe Biden securing the presidency of the United States many Democratic Party advocates were committed to the elaboration of programmes for ‘guaranteed jobs’.

Guaranteed-job initiatives are based on a noble theoretical tradition, from John Maynard Keynes to James Meade, from Hyman Minsky to Anthony Atkinson. The last developed the conviction that in circumstances, such as those of today, of dramatic under-utilisation of the fundamental factors of production—labour and capital—and therefore of the creeping ‘secular stagnation’ of low investments, the state should no longer concentrate on indiscriminate monetary transfers. Rather, it could and should directly create jobs, through grand projects in the style of Franklin D Roosevelt’s New Deal. It would thereby become an ‘employer of last resort’—an image which in turn connotes the ‘innovator state’ and the ‘strategic state’.

Shift of power

The questions which arise here can no longer be avoided. What are truly adequate policies for the revival of global and national economies? What are today’s equivalents of the New Deal, the 1944 Bretton Woods agreements, the postwar welfare state—able to provoke a shift of power from finance to production, to transfer the focus from stock indices to the expansion of the real economy and increased social wellbeing? Can the objective of full and high-quality employment any longer be sidelined? How can jobs be created which are of such scope and quality that they increase the rate of participation of the young, women and people living in depressed areas?

If we believe that a rehabilitation of the moral dimension is fundamental, even including a critique of capitalism, this induces us to raise the stakes. We need to focus on a large-scale ‘reform’ of capitalism, a deep reform such as that outlined by Keynes. Then an unusually radical theoretical plan and ethico-political critique combined innovative Keynesian thought with Roosevelt’s revolutionary initiatives and radical European reformism—from the English labour movement inspired by William Beveridge to Scandinavian social democracy—all meanwhile standing opposed, even on the level of ideals, to every form of totalitarianism.