Are capitalism’s biggest critics making the case for crypto?
BELIEVE it or believe it not, Karl Marx – the scourge of capitalists, but forever relying on Engels’ capital – had great admiration for capitalism. What he admired was its modernism, its disruptive nature, and its insatiable hunger for productivity gains. He firmly believed that this would lift the majority out of poverty, and it was only the usurping of those gains by the capitalist money men that prevented it from happening.
Of course, as he went on, Marx became more and more disenchanted with the sources of capitalism and eventually espoused revolution. It’s easy to see why Soviet Russia – or rather the Bolsheviks, the Reds, and all the other hues – adopted his doctrine. It was a perfect and appealing excuse to expropriate capital and bring its control into the hands of a few, supposedly for the benefit of the many. The only problem is that this is what capitalism does as well. But, of course, if you are the commissar you don’t really care what ideology it is do you?
What, then, are we to make of today’s situation, where no matter how hard you work and save, there is essentially no chance of you becoming rich? I suppose we should define rich, whilst remembering that £1 million isn’t what it used to be.
When I started work, earning £100,000 a year was regarded as millionaire status and very definitely rich. Such a sum nowadays for the mass of the middle classes doesn’t even touch the sides, as the saying goes. A survey last year of people earning £100,000 and over found more than one-quarter were ‘living pay cheque to pay cheque’ in part because of the cost-of-living crisis.
Of course, as we know, expenditure usually rises to meet income at all levels. And for a person living in a council house, sending their children to the local comprehensive, and not spending on designer clothes and holidays, £100,000 per annum is a very nice whack. But to a commuter outside London struggling with their mortgage and energy bills, the holidays have had to be scrapped and the weekly manicure too.
In his book Capital in the 21st Century, Thomas Piketty described this situation quite clearly. ‘Hard work’ and ‘enterprise’ in today’s economy simply isn’t rewarded – or at least not sufficiently. What we have now are ‘universal owners’, such as BlackRock. We hand over our meagre savings in order to give these entities overwhelming financial power. Perhaps we think we are a part of it, but, in reality, they always take their cut first.
Our society is governed wholly in the interests of asset owners. Productivity gains are increasingly miniscule, so much so that maybe we are no longer in a capitalist society and, instead, have reverted to a state where the controllers of money are in the position enjoyed by the barons and warlords of feudal times.
Piketty also accurately states that past accumulations of wealth massively overshadow our present efforts. I don’t know anyone who became a millionaire by actually working or by creating some kind of value.
Yes, if you are lucky enough to end up as CEO of a FTSE 100 company, you will definitely be in the millions. But almost inevitably, that status is acquired through property appreciation. Relatively speaking, the rent payers and wage earners who do the useful work get poorer every year. As Piketty says: “It’s the house prices, driven by the gatekeeper premium that prevents supply, that drives house prices, and that drives inequality.”
If any political party had the will, it could scrap planning restrictions, economics would do its stuff and, in a very short space of time, supply would be fixed. That, in turn, would fix house prices, and by extension inequality too. It will also fix the terms of trade as well, by the way.
An erstwhile government’s mantra of ‘borrowing for investment’ was, of course, no such thing. Taxing to spend is not investing by any definition.
The real disconnect came with New Labour’s most destructive economic act. This was to exclude housing costs from the yardsticks for calculating inflation. As a result, it became quite unnecessary for any government to consider them at all.
Marx believed that wealth increases by saving and accumulation – and so does Piketty. But I have news for you. Wealth also comes from innovation and surprise. The inventor of the steam engine created a situation whereby poor people could afford to travel across continents and oceans, opening up lots of new opportunities and empowering people to go where they could make their fortunes.
And – just to take a couple of examples – what of Amazon and Apple? Both started in a garage, and don’t we wish we had bought the shares when they first went public, never mind when they opened their first garage door. The wealth created thereby has nothing to do with accumulation. It is entirely to do with the forces of innovation, demand, and disruptive thought creating unique situations.
In fact, doesn’t that sound very much like blockchain and crypto?
Temple Melville is CEO of The Scotcoin Project Community Interest Company (CIC)
