Richard D. Wolff: Capitalism a ‘Fantasy’

[I]t is the duty of any serious critic of our economic and social environment to examine very carefully what defects and imperfections are to be imputed to the economic system as such, rather than to other historically more or less incidental circumstances.

The decisive point in judging capitalism, finally, is that precisely in our days, when the system is being attacked so sharply, it is disfigured and distorted almost beyond recognition by alien elements. The direct manipulation of prices by the government, price ceilings such as still exist for dwellings, minimum prices for coffee, rubber, wheat or rye, an increasingly more complicated system of protection for domestic producers against foreign competition, regulations on the compulsory utilization of materials, regulations on consumption, “political” wage formation, the growing infiltration of public intervention in the field of production and trade, an endless string of premiums and subventions, the steadily increasing expansion of public expenditure—in short, intervention, collectivism, and economic “planning” all along the line. Can this still be called capitalism? Had we not better give it a new name, such as subventionism, interventionism, or pseudo-capitalism? What is so grotesque in this situation is that all these interventions and manipulations have lowered the efficiency of capitalism in a way of which we are only too painfully aware now, in the crisis, but that, on the other hand, they fit perfectly into precisely that pattern of economic policy that is advocated by the most vociferous critics of capitalism. And in order to refloat the economy whose functioning has been so largely impaired by past interventions, those same critics of capitalism clamor for more interventions, more planning, and hence a further emasculation of our economy. It is as though one poured sand into an engine and then hoped to start it up again by pouring in more sand. This is the admirable logic that bedevils us today.

— Wilhelm Röpke, Against the Tide

I thought of this quote above when reading a recent Richard D. Wolff article, “‘Pure’ Capitalism Is Pure Fantasy.” By “capitalism,” I take Wolff to mean a market economy. He says that capitalism (read: a market economy) cannot reach its ideal, unhampered state because a market is necessarily accompanied by government, monopolies, unemployment, and inequality. But this conclusion seems like a non-sequitar.

The existence of a government doesn’t necessarily interfere with the operations of a market economy. It depends on the laws and regulations enforced, including how they’re enforced. A market economy is a system of profit and loss, but not if the government enforces laws designed to subsidize or punish peaceful people’s behavior.

If greater government intervention brought fewer big businesses, economic stability and a more equal share of prosperity, shouldn’t we be experiencing that by now? Yet what we have is governments widening their already expansive powers and taking more of our liberties. Think if the case were reversed. If the number of interventionist regulations on the federal registry were slashed, not just politician’s offering platitudes, and the economy continued to stagnate, wouldn’t that be news?

The separation of economy and state can have the same fate as the separation as church and state. It’s a question of what people believe, and what kind of society they hold as the ideal.