A Thought for Halloween

Writing this week in City AM, Diego Zuluaga, Head of Financial Services and Tech Policy at the Institute of Economic Affairs, seeks to defend capitalism. His article on 24 October Big Businesses Denigrating Capitalism Don’t Understand It is interesting not for its call on big business leaders not to rock the boat, nor for its arguments in defence of capitalism – even the author must surely recognise, deep down, they are disingenuous – but because it was felt necessary to publish such a defence at all.

For Marxists, a study of history and an analysis of capitalism and its instabilities leads us to conclude that capitalism is merely the penultimate stage in our evolving, class-based society, not the final equilibrium or ‘end of history’ envisaged by Francis Fukuyama. Marxists are sometimes accused of irrational belief, but belief has nothing to do with it. Our approach is a rational and scientific one. It is the defenders of capitalism who exhibit irrational belief. Their confidence that de-regulating markets will lead to the welfare of all is, at best, based on an elegant model built on unrealistic assumptions[1]. In practice, it is based neither on economic theory nor on Zuluaga’s flimsy arguments but on the self-interest of the ruling class and those in their pay. Our theories, on the other hand, have concrete evidence to support them: the 2007 financial crash; historic levels of inequality; Grenfel Tower; global warming; the housing crisis; growing hospital waiting times; bloated expenditure on ‘defence’; and …. Readers of this blog are invited to complete the list.

It may be too soon to claim again, as did Marx and Engels in the Communist Manifesto, that ‘a spectre is haunting Europe, the spectre of communism’, but we can take comfort from the thought that something is spooking our ruling class.

[1] The Arrow-Debreu Model, a mathematical expression of Adam Smith’s ‘hidden hand’. Amongst its many unrealistic assumptions is perfect and complete markets.

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