Is Capitalism Amoral Or Immoral?

It was fashionable (and desirable) until the mid-80s to question how well capitalism worked as a basis for running society. Then the social “greed is good” changes brought about by the Reagan/Thatcher revolution began to take hold of the Western (or at least the Anglo-Saxon) psyche, and it became a form of sacrilege to question the magic power of the free market to fix any problem, anywhere. That superstition gradually became established fact – until, of course, the system began to show its deep flaws in 2008.

Saturday’s Guardian carries a comment article from Tim Montgomerie (editor at the ConservativeHome web site) titled Capitalism is amoral – we’re our own worst enemy. The piece tries to make the case that the ills of recent years have been caused by “extraordinary government activism”, not by out-of-control markets. However, the examples supplied are weak – the author seems to accept, for example, that the main problem with Obama’s $787bn stimulus is that it was too small, given the scale of the crash. Another example given is the Iraq War, seeming to forget the huge profit motive of the oil, arms and reconstruction industries to make that senseless war happen.

But let’s challenge the core assertion, one that is so often repeated without challenge: Montgomerie repeats the popular idea that “Capitalism is not immoral but amoral. It does what its users demand of it”. Is that true? Does the profit motive always work for consumers? Montgomerie gives food and transport as examples, so let’s examine these industries: amoral or immoral?

Food Industry

It’s true that competition has given us more food choices that ever before. That applies to the wealthier parts of society, at least. In young markets, competition creates an explosion of choice, which is certainly a good thing. But once corporations became established in the food industry, strategies changed. Choice is just one way to attract a customer base, but there’s an easier way: make your customer dependent on your product. This is where the needs of the market and the needs of the consumer diverge. Humans are designed to seek out rare ingredients that we need. Meat fat was such a rarity in pre-history (before hunting tools were developed) that we find it highly attractive and addictive. Refined sugar is an addictive drug, only discovered in recent centuries. Salt is a generally rare and necessary substance that, again, we have a natural addiction to. So in the amoral world of the market, it makes sense to add increasing amounts of these ingredients to food, not because users are demanding them, but because profitability naturally rises as a result.

So far, as suggested by Tim Montgomerie, this is amoral behaviour, not immoral. No harm is intended. The next stage is this: scientific researchers (state-funded usually) begin to notice that people are getting fatter; that tooth decay is increasing; that diabetes and other diseases are rocketing. This information starts to spread to the consumer. It’s at this stage that markets lose their claim for amorality. The food industry now has three options:

Moral: listen to researchers and make food healthier, even if that hurts profits.

Amoral: continue to address the evolving desires of the market as consumer demand dictates. Of course, this does happen, but as the history of the food industry suggests, it’s far cheaper (and thus more profitable) to use healthy-sounding language than it is to take addictive substances out of your products.

Immoral: begin propaganda operations to counteract scientific research that might hurt profits. Most markets end up here. Once you have a consumer base hooked on your product, the logic of profit is remorseless: attack anyone or anything that threatens your bottom line.

In a young market, amorality (following consumer needs) is the way to go; but in mature market, the immoral choice is often the most profitable. Rather than simply track consumer demands, it’s more profitable to control them. Many examples can be found of immoral behaviour by the food industry in pursuit of profits: in the US, private corporations have often won contracts to supply schools with food and drink. The result is a fall in the quality of food eaten by children. Now they can get consumers addicted to junk ever younger, and resist the pressure to educate children about food and health, thus crushing future consumer demands for better food. In a perfect example of market immorality, in 1998 Oprah Winfrey ran a show exposing the appalling way the American beef industry was rearing cattle. The amoral response would have been to track any change in consumer attitudes, and change production techniques; but that would be hugely expensive. Far cheaper to shoot the messenger, as Oprah found to her cost. She immediately lost advertising and faced action, both legal and propaganda to discredit her. She backtracked quickly, providing a non-critical “interview” with a beef industry rep. to “set the record straight” (i.e. lie without interference). Examples like this are legion: the food industry will viciously attack anyone that questions the health of its products (remember McLibel?)

Transport Industry

We can apply the same approach to transport. Mass transit (when not starved of investment), offers the fastest, cheapest and most fuel-efficient way to carry large numbers of people and goods. From the 1940s, the car provided an alternative that was more glamorous but slow, expensive and fuel-hungry. Sure, people desired cars, but they wouldn’t trash superior transport systems for an inferior one. Given that cities only had the space for a fraction of their population to use cars, would people destroy their environments just to own cars?

Enter the car mafia, comprising several industries: car manufacturers, tyre manufacturers, road builders, and of course, oil producers. Car transport requires far more resources than rail, trams and buses: huge, multi-lane highways which require vast amounts of space. More space still needed for parking (most private cars spend most of their lives wastefully parked). And most important of all, cars burn far more fuel than mass transit to move the same numbers of people. Would consumers abandon cheap, fast transport for slow, expensive transport? Of course not; but they were never given the choice.

The car mafia set about destroying mass transit, which they could never have competed against in a free market. Across the US, between 1936 and 1950, mass transit systems vanished as the car mafia went into action, destroying electric transport infrastructure. History tells us how happy post-war consumers jumped at the chance to own cars, and that’s undoubtedly true; less is said about the abolition of transport choice. Free market fundamentalists claim markets create choice, but the opposite is often true.

In the UK, the world’s greatest rail system was cut to pieces; between 1950 and 1975, the railways were slashed from 21,000 miles to 12,000. The most significant steps were taken in the 1960s by Dr Richard Beeching, Chairman of British Railways. Beaching was encouraged to cut the railways by Ernest Marples, the Conservative Transport Minister. Marples also happened to be a major shareholder in a construction company that made huge amounts of money from motorway construction. This story is an important part of modern British history, and the name Ernest Marples should be remembered as one of Britain’s best known crooks. But the car mafia, and their tame media, have ensured the British people have forgotten what happened to our transport system

The transport market has failed; we make ever slower journeys for ever higher cost, and most people use the car not by choice, but because choice was taken away to increase profits.

And The Rest

Given the choice of being amoral and following consumer needs, or immoral and crushing competition, the car mafia did what any market does: follow profit at any cost to society. The consumer doesn’t lead; he takes what corporations offer, which is often the most inefficient and expensive (and hence profitable) option. Markets do work, when they’re young and genuinely competitive, but that is a temporary phase. Endless examples can be found of market immorality: the Iraq War was fought so that the US taxpayer could be fleeced of $trillions by US corporations; the millions spent on climate change denial have shored up billions in oil industry profits; the tobacco industry likewise denied the cancer link for decades after the evidence was available.

Markets are good at creating and incubating fresh ideas and new technology. They liberate individuals and societies from bureaucracy and make societies more creative. But this is always a temporary effect. Established markets will support literally anything – murder, slavery, war – to hold on to their privileged positions. So Tim Montgomerie and other “markets are amoral” fundamentalists are disingenuous, only telling half the story. Markets are immoral; only a strong, well-funded democratic state can hope to keep them in check.