You’re going to miss me when I am gone
You’re going to miss me when I am gone
No, I am not talking about myself. I am just quoting a line from the cup song made famous in the movie Pitch Perfect. Instead, I am talking about capitalism. It may be unsurprising coming from a banker but in my view, capitalism is one of the best inventions humans have ever made.
Capitalism is responsible for creating more wealth and progress than any other economic system ever invented. It has lifted more people out of poverty than all charitable efforts and aid organisations put together. It has taken us out of the Malthusian trap and increased agricultural productivity to a level where we can feed more than 8 billion people on the planet, most of whom would have died of starvation or never been born without the financial means to develop modern agriculture. And it has provided the foundations on which health standards have increased so much that global life expectancy has more than doubled in the last 100 years.
Yes, scientists invented artificial fertilisers, antibiotics, and other wonders of modern life, but without capital and capitalists these innovations would never have spread globally but instead would have remained accessible only to the select few (like most things in the thousands of years until the start of the Industrial Revolution).
Yet, it is open season on capitalism. Admittedly, I have lots of criticisms about capitalism and its failings, but I am fully conscious that this is complaining about the details of an otherwise marvellous system. But it seems in my enthusiasm for capitalism, I am in the minority, at least if a survey in 34 countries by Rainer Zitelmann is to be believed.
The survey asked a total of 34,550 people on all continents about their attitudes toward capitalism and their perception of its benefits and drawbacks. And the headline numbers look awful. The chart below uses normalised scores for the aggregate answers across three major blocks of questions. All answers are normalised in such a way that a score of 1.0 shows an equal share of the population agreeing with pro-capitalist and anti-capitalist statements. Higher scores indicate a relatively higher share of pro-capitalist responses than anti-capitalist responses. Zitelmann considers an average score between 0.9 and 1.1 as value-neutral about capitalism, while scores above 1.1 indicate a society that is largely in favour of capitalism and free economy. Conversely, a score below 0.9 indicates a society that is largely critical of capitalism and free economy.
Attitudes toward economic freedom in 34 countries
Source: Zitelmann (2023).
But let us dig deeper and look at the associations people have with capitalism. The chart below shows in how many countries a specific statement ends up in the top 5 most agreed with statements about capitalism among a pool of 18 statements. As you can see the idea that capitalism is dominated by the rich is in the top 5 answers in 33 out of 34 countries. Fair enough, if you have a lot of capital, you dominate a system like capitalism. I can live with that.
Number of countries in which the listed statements rank in the top 5 of 18 statements
Source: Zitelmann (2023).
But look at the other end of the list and you will find the notion that capitalism is an efficient economic system in the top 5 statements of only one country. And the statement that capitalism has improved conditions for ordinary people only in the top 5 of 2 countries (read the second paragraph of this post again to know what I think about that). I could go on, but it is fair to say that capitalism needs to hire a good PR agency.
And as you may have guessed, criticism of capitalism is more prevalent among people leaning left on the political spectrum. But among conservative people, things are not always the same in every country. Zitelmann identified a set of ten countries (among them the US, Sweden, and Switzerland) where people are more pro-capitalist the more to the right they are on the political spectrum.
Countries where the far right is most capitalist
Source: Zitelmann (2023)
Yet in more countries than that (16, to be precise), being on the far right of the political spectrum is associated with being more critical of capitalism than being on the moderate right. In these countries (among them the UK, Germany, and France) the moderately conservative people tend to be most in favour of capitalism.
In my view this matches well with the populist right parties in these countries which have quintessentially anti-capitalist views and goals. Whether it is the Brexit Party in the UK (now Reform UK) which is against free trade and a more isolationist country, or the Alternative für Deutschland and Rassemblement National in France both of which are mostly defined by anti-immigration and pro-socialist government redistribution policies.
Countries where the moderate right is most capitalist
Source: Zitelmann (2023)
In the end, then, capitalism seems to be under threat. It is being attacked from both the left and the populist right and it desperately needs some defenders because as I stated above, much of what we take for granted today would have been impossible without capitalism and is indeed a product of capitalism, directly or indirectly. And if we abolish free markets, free trade, and capitalism in general, we are pretty quickly going to miss it.
Second part of the comment, part one below (i think): Having citizens deal with abstractions can produce 'rich' outcomes:
Just last week more hand wringing for the Dutch when dealing with an abstraction. A survey showed that those who 'care' the most for our beleaguered Planet - median to high earners, who produce the most CO2 - did the least to change their ways (apart from accusing others i guess). While those who worried least - low to median earners - through their modest lifestyles, were the least harmful.
At the same time it's those median to high earners who, through their media and 'specialized' climate-psychologists (no really) who've teamed up with just-as-concerned marketers, are having desperate public discussions on how to reach the (literally a bit poor) brains of the low to median earners, to have them BELIEVE. Like with any religion apparently believing in the abstraction is enough, at least that much we can deduce from the example set by median to high earners.
To run a test in the UK just ask your friends and colleagues and perhaps even yourself 'what will it be? Blackpool? Bournemouth? Or Bali? Obviously alliteration is never a coincidence when the UK is involved and i see rich language-based opportunities for UK climate-psychologists to reach the brains of the Planet-Saviors-in-name-only-as-for-now to have them, pardon, help them live up to their worries (and moral standards - hello FT) and cycle to Bournemouth this summer. Now that the UK Met Office since 2021 calls any +20C day a 'Heat day' surely Bournemouth won't disappoint the swimmers.
Back to the study, 2 x abstraction:
Example 1:
'The fact that people in Nigeria take such a positive view of capitalism may come as a surprise, especially as they also view the market economy negatively. But in Nigeria, capitalism may be a word of hope: People in this poor country may associate it with the kind of prosperity they see in Western countries.'
Example 2:
'For the sets of questions where the word ‘capitalism’ was used, the Vietnamese were clearly pro-capitalist (with a coefficient of 1.31). In contrast, where the word ‘capitalism’ was not used, Vietnamese responses were moderately anti-market (0.78).'
- Thank God Foucault and Derrida aren't around anymore to have a go at the language...
The study's conspiracy thinking segment's 'revelations' https://tinyurl.com/2wdrv9sn are a bit rich. It's not surprising that even pro capitalist Americans agreed with the sentence below, designed to 'reveal' conspiracy thinkers:
‘In reality, politicians don't decide anything. They are puppets controlled by powerful forces in the background.’ Would you agree with that or would you disagree?'
- Which American (and foreigner) isn't accutely aware of the massive involvement of (extremely) wealthy individuals and corporations in US politics? And, apart from their backers, almost all members of Congress are wealthy BEFORE they are elected. The few that are not most likely will be when they leave - H Clinton is now worth hundreds of millions.
(On a funny note '...Albania...did we find that pro-capitalists are more likely to be conspiracy theorists than anti-capitalists.)
The Substack post: 'In the end, then, capitalism seems to be under threat' (from populists and lefties).
- Fossil energy + supply security = energy security = capitalism. Hence capitalism is under threat from lefties, middle classes and the wealthy. Much less so from populists who merely want more capitalism for themselves.
In the end, as Schumpeter (sort of) said, capitalism is coming for capitalism. And America leads the way, the study:
'The most significant exception is the United States, where respondents under the age of 30 have a neutral to slightly negative attitude towards capitalism and respondents over the age of 60 are distinctly pro-capitalism'.
But before the great Schumpeterian finale, after we've had financialized capitalism and now (after capitalism 'derisked' post the GFC at the expense of low to median income climate denying populist scum) we (re)enter gov guided capitalism - for the west, while the IMF, WB and WTO keep promoting free markets & trade for EM.
And EM love us for it. Just like they love us for increasing burning coal instead of decreasing prosperity after feb 2022. While previously (COP Glasgow) the west urged EM to transition to renewables faster. Now the free global LNG market has Pakistanis transport gas in plastic bags. While western tankers transport Indianized Russian oil.
And while they're at it Europeans experiment (not the US, that's where our industry is going) as major energy importing nations with sanctioning the world's no 2 energy exporter and at the same time having a sort of / sort of not, energy transition. Without the corresponding steady supply, grid and storage.
As long as they stay abstract abstractions work like a charm. But these days Ts are lost, sorry, put in them. If we have to believe Sunak he's going to lay an electricity cable from the UK not only to Morocco but also to the US (10 x sic).
Is Sunak saving (UK) capitalism or is he a threat?
The Chinese say 'may you live in interesting times'. And that's not a conversational pleasantry.
Europeans answer 'thank you very much (and thank you for the solar panels but not so much for the EV's) but we're a proactive lot. We don't wait for interesting times to arrive, we make them happen'.
To which the Chinese would probably answer 'yes, and we make the rest'.
(Substack had me split my comment in two, apparently it's long)...Part 1: From the study: 'For instance, approval of capitalism in the United States increases by 51 per cent when the word ‘capitalism’ is omitted from the survey item (see Figure 3)...'
- Omit 'at midnight at the cemetery' from a question like 'would you like to go for a walk' and...
You know...
'In addition, the items were designed to allow us to determine to what extent negative perceptions of capitalism stem from the negative connotation of the word itself and how much is really related to people's rejection of or support for the basic principles of the capitalist economic system'.
Aren't those basic principles not completely politicized and aren't we therefore looking at a psychology and language survey? And weren't the participants implicitly but effectively asked throughout the study about (their) politics? About the distribution of the benefits and costs of capitalism? (While i'd say the study (any study?) sheds a ton of light on how capitalism and economics is discussed in the media in countries).
Sweden hardcore capitalist? Then with a large gov share of the economy. Argentina and Brazil neutral? Milei? Lula? The Swiss anti-capitalist? The Dutch as well? A very collectivist nation yes, but if anti capitalism were a thing we'd try to sell it (and first buy it cheap somewhere else of course).
Plus (traditional) cultural traits clearly show up, example:
'In most of the surveyed countries, unsurprisingly, the respondents who describe themselves as being on left of the political spectrum are most opposed to capitalism or least pro-capitalist. One exception was Poland, where people who classify themselves as moderate leftists are even more positive about capitalism than those on the right of the political spectrum.'
Who doesn't recognize the significant number of conservative to reactionary Poles who view capitalism as a threat to traditional society? (I'd say this is one of the main differences between European and American conservatives). And don't many conservatives (and progressives) equate capitalism with liberalism (correctly in my view) and thus see (too much of) it as suspect? Look at this study-paragraph https://tinyurl.com/3674aj8d for more on (very) right wing and the pov on capitalism.
From the above Substack post:
'In my view this matches well with the populist right parties in these countries which have quintessentially anti-capitalist views and goals. Whether it is the Brexit Party in the UK (now Reform UK) which is against free trade and a more isolationist country, or the Alternative für Deutschland and Rassemblement National in France both of which are mostly defined by anti-immigration and pro-socialist government redistribution policies.'
Is being anti free trade populist and anti-capitalist?
- Pre the rise of Jean-Marie Le Pen c.s. France had significant trade barriers and vigorously protected industries and agri. Thereafter while the FN and its successors grew, France liberalized economically. And thus French blue collar workers were competing with immigrants - instead of being granted higher wages in a scenario where immigration does not occur or occurs less.
For some being anti free trade is looking out for themselves while for others being pro free trade is looking out for themselves...
- The previous US populist high watermark were the 1920s/30s, post the free trade bonanza which ended with WW1. (And boy were those populists murdered (some literally) by republicans, democrats and media teaming up - Thomas Frank).
Anti immigration = anti capitalist?
- First, again, if there is an economic motive here it's wage competition. Second, isn't white collar immigration throughout the west not (much) more restricted i.e. less laissez faire than blue collar immigration? And doesn't anti immigration not also express 'where the hell did my neighborhood go?' Something which isn't particularly on the radar of white collar workers simply because they don't live there - Sic:, and these days we have academics rambling about 'lived experiences'...
The study apparently shows, though a 1000 p country is not much for a survey, that a lot of people live in a nation that doesn't provide them with the economics they say they prefer - though economic and financial illiteracy is rife, including in the west. Just read any newspaper - minus probably the wsj - or watch tv (if you dare). For many, writing/reading on economic / capitalist affairs is an opportunity to show off 'good taste'. With the FT (a Guardian + articles on the bond market) as a prime example.
The study:
'...the indisputable statement "Capitalism has improved the situation of ordinary people in many countries” made it into the Top Five in just two out of 34 countries...(VT, NG)...In Germany, it elicited agreement from fewer respondents than any other statement on capitalism, while the statement “Capitalism is responsible for hunger and poverty” received three times more support'.
- Them righteous guilt-ridden-as-a-lifestyle German experts in exports. Then again, they save The Planet by shutting down nuclear and up burning lignite.
Boing.