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The Occupy London movement is marking its first month this week. It is routinely described as anti-capitalist, but this label is highly misleading. As I found out when I gave a lecture at its Tent City University last weekend, many of its participants are not against capitalism. They just want it better regulated so that it benefits the greatest possible majority.
But even accepting that the label accurately describes some participants in the movement, what does being anti-capitalist actually mean?
Many Americans, for example, consider countries like France and Sweden to be socialist or anti-capitalist – yet, were their 19th-century ancestors able to time-travel to today, they would almost certainly have called today's US socialist. They would have been shocked to find that their beloved country had decided to punish industry and enterprise with a progressive income tax. To their horror, they would also see that children had been deprived of the freedom to work and adults "the liberty of working as long as [they] wished", as the US supreme court put it in 1905 when ruling unconstitutional a New York state act limiting the working hours of bakers to 10 hours a day. What is capitalist, and thus anti-capitalist, it seems, depends on who you are.
Many institutions that most of us regard as the foundation stones of capitalism were not introduced until the mid-19th century, because they had been seen as undermining capitalism. Adam Smith opposed limited liability companies and Herbert Spencer objected to the central bank, both on the grounds that these institutions dulled market incentives by putting upper limits to investment risk. The same argument was made against the bankruptcy law.
Since the mid-19th century, many measures that were widely regarded as anti-capitalist when first introduced – such as the progressive income tax, the welfare state, child labour regulation and the eight-hour day – have become integral parts of capitalism today.
Capitalism has also evolved in very different ways across countries. They may all be capitalist in that they are predominantly run on the basis of private property and profit motives, but beyond that they are organised very differently.
In Japan interlocking share ownership among friendly enterprises, which once accounted for over 50% of all listed shares and still accounts for around 30%, makes hostile takeover very difficult. This has enabled Japanese companies to invest with a much longer time horizon than their British or American counterparts.
Japanese companies provide lifetime employment for their core workers (accounting for about a third of the workforce), thereby creating strong worker loyalty. They also give the workers a relatively large say in the management of the production process, thus tapping their creative powers. There are heavy regulations in the agricultural and retail sectors against large firms, which complement the weak welfare state by preserving small shops and farms.
German capitalism is as different from the American or British version as Japanese capitalism, but in other ways. Like Japan, Germany gives a relatively big input to workers in the running of a company, but in a collectivist way through the co-determination system, in which worker representation on the supervisory board allows them to have a say in key corporate matters (such as plant closure and takeovers), rather than giving a greater stake in the company to workers as individuals, as in the Japanese system.
Thus, while Japanese companies are protected from hostile takeovers by friendly companies (through interlocking shareholding), German companies are protected by their workers (through co-determination).
Even supposedly similar varieties of capitalism, for example Swedish and German, have important differences. German workers are represented through the co-determination system and through industry-level trade unions, while Swedish workers are represented by a centralised trade union (the Swedish Trade Union Confederation), which engages in centralised wage bargaining with the centralised employers' association (the Confederation of Swedish Enterprise).
Unlike in Germany, where concentrated corporate ownership has been deliberately destroyed, Sweden has arguably the most concentrated corporate ownership in the world. One family – the Wallenbergs – possesses controlling stakes (usually defined as over 20% of voting shares) in most of the key companies in the Swedish economy, including ABB, Ericsson, Electrolux, Saab, SEB and SKF. Some estimate that the Wallenberg companies produce a third of Swedish national output. Despite this, Sweden has built one of the most egalitarian societies in the world because of its large, and largely effective, welfare state.
And then there are hybrids that defy definition: China, with its large socialist legacy, is an obvious case, but Singapore is another, even more interesting, example. Singapore is usually touted as the model student of free-market capitalism, given its free-trade policy and welcoming attitude towards multinational companies. Yet in other ways it is a very socialist country. All land is owned by the government, 85% of housing is supplied by the government-owned housing corporation, and a staggering 22% of national output is produced by state-owned enterprises. (The international average is around 10%.) Would you say that Singapore is capitalist or socialist?
When it is so diverse, criticising capitalism is not very meaningful. What you have to change to improve the Swedish or the Japanese capitalist systems is very different from what you should do for the British one.
In Britain, as already physically identified by the Occupy movement, it is clear the key reforms should be made in the City of London. The fact that the Occupy movement does not have an agreed list of reforms should not be used as an excuse not to engage with it. I'm told there is an economics committee working on it and, more importantly, there are already many financial reform proposals floating around, often supported by very "establishment" figures like Adair Turner, the Financial Services Authority chairman, George Soros, the Open Society Foundations chairman, and Andy Haldane, the Bank of England's executive director for financial stability.
By labelling the Occupy movement "anti-capitalist", those who do not want reforms have been able to avoid the real debate. This has to stop. It is time we use the Occupy movement as the catalyst for a serious debate on alternative institutional arrangements that will make British (or for that matter, any other) capitalism better for the majority of people.
Comments
15 November 2011 9:14PM
Agree with all your points. But would agrue that those whose choose to label Occupy as "anti-capitalist" are not simply seeking to avoid the debate but to close it down. This is an important distinction.
15 November 2011 9:15PM
And by refusing (until today...possibly) to have any defined ideas or goals, these protesters have only themselves to blame.
Furthermore, their (again, until practically today) unwillingness to have any objectives has also avoided any real debate.
If they want to have any credibility or any impact, this has to stop (to quote you for a third time).
15 November 2011 9:15PM
Given that the fundamental tenet of capitalism is to maximise profit for the few at the expense of the many there doesnt seem to me any problem with being anti-capitalist!
15 November 2011 9:16PM
Precisely, it is easier to divert attention than it is to contribute to solutions.
15 November 2011 9:17PM
I agree entirely...
15 November 2011 9:19PM
Sorry but your analysis is fundamentally flawed, capitalism is capitalism regardless of where it takes palce.
What you're saying is that the societies in which people practice capitalism is different and the regulatory environment is different.
The problem with the 'occupy movement' is that it isn't serious and isn't therefore capable of being a catalyst for serious debate, in fact while the usual supsects bang on about bankster spiv's and capitalsim being broken then there's no debate at all; just a dialogue with the deaf.
There was more debate around Basel II+ / 3 than there was about the funamental difficulties aound the interface of politics and economics.
15 November 2011 9:20PM
Notwithstanding that you meet as many financial industry people as anyone else at these events ...
"Yawn, a bunch of idiots in tents are no more a revolution than the boy scouts. More idiotic wishfull thinking from the left"
So you're yawning. Congratulations.
Why is your post any more interesting than the above the line article?
If some people in tents are really nothing to worry about, you still made the effort to post that,
So what are you so frightened of?
15 November 2011 9:22PM
Occupy are as anti capitalist as they are of any other system that fails to represent the majority against the minority.
Capitalism has to change or it will go down with the ideology that seems to be representing it in every democratic/dictatorship corner of the world.
15 November 2011 9:22PM
I don't think the Occupy movement really cares about your description of the finer points of Capitalism.
Most are resolutely anti-capitalist in the old fashioned sense that has prevailed since the days of Marx....their arguments are rehashed from the student uprisings of the sixties and countless cycles before that.
The point being, dispite their own inflated opinion of themselves and their rather arrogant claims for speaking for the 99%, they offer nothing new from the usual agit prop student leftish nonsense that most of us have long grown out of.
And it is for that reason, and not the cops, or the corporations, or the rest of whatever boogy-man that might throw at us, that this movement is going nowhere fast.
15 November 2011 9:22PM
Japanese companies provide lifetime employment for their core workers (accounting for about a third of the workforce), thereby creating strong worker loyalty. They also give the workers a relatively large say in the management of the production process, thus tapping their creative powers.
Huh? This is nonsense.
Maybe back in the 1980s - when Japan was booming - Japanese companies offered lifetime employment. Today, when many Japanese companies are struggling they no longer offer this luxury.
I work for a large Japanese company. They lay off a ton of people in the US and they have let go of a ton of people in Japan. As far as giving workers a say in the management process this is also ridiculous. Everything is top down. No Japanese employee would dare offer a suggestion to a higher up. Everybody's creative powers are squashed.
There is no employee loyalty at this company. Everyone hates the company.
15 November 2011 9:22PM
I'd just like to recommend to any readers who found this article interesting a podcast from a lecture Ha-Joon recently gave at LSE here it expands on the issues presented in this article in a better way than i could ever hope to!
15 November 2011 9:25PM
Almost one in ten Americans haven't got a job. Greece is going bankrupt. Britain had to find a trillion pounds for the banks.
Have you been hiding under a rock or what?
15 November 2011 9:26PM
It's very refreshing to have someone spell this out in such clear terms - 'capitalism' has become almost useless as a term of serious analysis for the entire socio-economic system; covering, as it seems to do, anything from 17th century Amsterdam to 21st century Shanghai.
It cuts both ways though. If critics of the occupy movement should refrain from the pointless label 'anti-capitalist' (which I think they should) then so should assorted left-wing commentators and intellectuals from sloppy denunciations of the evil of 'capitalism'.
15 November 2011 9:26PM
"I'm told there is an economics committee working on it"
"What do we want!"
"We are not sure!"
"When do we want it?"
"After the committee reports."
Apart from being for Good Things and against Bad Things, this is so unfocused as to be truly sad.
The Guardian, and writers like Ha-Joon Chang embarrass themselves and the serious left.
15 November 2011 9:28PM
actually things are not nearly as bad as they have been.
Unemployment in the UK was worse in the early nineties recession...and much much worse in
both the USA and UK in the eighties.
Inflation, at 5%, is nowhere near 1970s levels...
and nothing compares to the thirties!
where you born yesterday??
15 November 2011 9:29PM
Not half as embarrassed as you having read your post.
15 November 2011 9:29PM
Good article.
15 November 2011 9:31PM
You clearly seem to think that the occupy movement isn't worth bothering about.
So why did you bother reading the article and responding to it then?
15 November 2011 9:32PM
True.
Do we even need the City of London to survive? Cut off the blood supply at the neck and the head dies eventually. Just get local communities to bypass it altogether. Can't we regionalise our cash into community trusts? Force large conglomerates, retail giants and corporations to pay tax towards Community Banks. Turn their cash into Town Pounds, a bit like the Totnes experimant, and use the cash for community growth, jobs and investment.
15 November 2011 9:34PM
Just to assist the weak of thinking.
Capitalism is the movement of a 'product' from a lower value state to a higher value state where the distance of movement is greater than the cost of the movement.
A simple example would be growing wheat, grinding wheat into flour, making bread, selling sandwiches.
15 November 2011 9:34PM
"and nothing compares to the thirties!"
Really?
Does that make it alright then?
15 November 2011 9:35PM
Ha ha ha , Spinning Hugo is scared because we have some excellent ideas.
(Oh dear, bang goes the corporate berth for the yacht at the Abu Dabi Grand Prix. Nevermind Hugo, the plebs are friendly, really, we are.)
15 November 2011 9:36PM
teandc
No.
15 November 2011 9:38PM
Can't beat Cayman Islands or BVI capitalism.
15 November 2011 9:38PM
Small businesses. The Occupy movement needs to listen to small businesses and think of some solutions to help them raise cash and to pay rents. They are the life-blood of our country and our communities, and no one is helping them.
15 November 2011 9:38PM
Excellent article!
Capitalism mainfests itself in many different forms. Capitalism, has to be equitable and fair...but its proven itself not to be...
The problems that many have with it are the ways in which certain ideas are used to shape policy and practice. There is room for shaping what happens so that it beneift sboth buiness and society; however, business and pofits come first, leaving society - indeed, whole societies - to struggle as the majority are squeezed as they have been over the last few years. The sense of injustice is palpable...
There is a tipping point - we are approaching it. With so many people finding life harder than ever - their voices will join the that of the Occupy Movement's. The majority do not need to join the protestors - they just need to agree with the sentiment and the need for change, and it can grown from there...
Real change takes time...
15 November 2011 9:39PM
@Spinninghugo.
I don't agree with the points you've made today, but I must admit, that's a neat one word answer.
15 November 2011 9:39PM
teandc
Perhaps you could help me out with these "excellent ideas". Let me see, abolish the City of London is one yes?
Now try and think really really hard.
Why do you think that that is not seriously suggested by any party of the left? Is it because, say, the Greens have not had the brilliant thought you just had?
or is it because it is a seriously stupid suggestion?
Have a guess.
15 November 2011 9:41PM
Capitalism works fine for the favored few capitalists, but it leaves 20% unemployed right now.
The purpose of taxation is to redistribute the wealth. The rich are not paying their fair share of taxes. Alternatively, you might come to the conclusion that the US government is wasting its tax income on unnecessary military spending and wars.
15 November 2011 9:42PM
So capitalism exhibits different behaviour in different societies - maybe that's because capitalism is as much an expression of beliefs and behaviour as it is a determinant.
Today on CiF has been instructive; nothing has been said by the rather confused protesters that could not have been said any time since WW2. The same choice remains, capitalism or socialism, and 99% of the population made their choice a long time ago. The Occupy movement has as much substance as a Glastonbury field of well meaning idiots high on an imagined sense of community, though hopefully they will at least take home their tents and their rubbish ideas when they go.
15 November 2011 9:42PM
Gosh, you really are scared.
Whoops. Have you tried herbal tea? It's very calming.
15 November 2011 9:45PM
Another excellent article from Ha-Joon Chang. I really cant get enough of this guy. Some of the criticisms here are just plain ignorant.
I also get really frustrated when people try and over simplify things into 'capitalist/anti-capitalist' or 'capitalist/socialist'. We all live in mixed economies and will continue to do so for a long time.
The key now is to get the right mix in terms of what role the government should play in society and in the economy in particular.
15 November 2011 9:45PM
One way would've been to use the services or goods of these small businesses - but where's the money...
Small buinesses are suffering because their is no money in the economy - particularly in the pockets of the people...and that's born from the fact of the last few years...
What this givernment has failed to realise is that it will take more than banks lending to businesses to revive that entire sector; it requires money circulating in the economy - money in the pockets of people. And that requires jobs and disposable income...
This is my most leanest year yet...been very, very difficult to support any local businesses with my custom, though I have tried...
15 November 2011 9:48PM
In certain places, that figure rises to 40% unemployment amongst the young [ up to 25 yrs ]...
Exactly...
15 November 2011 9:49PM
Friedmanite free market fundamentalists are quite happy to label any protest against injustice as anti-capitalist, because it suits their manichean narrative.
There's either capitalism lifting millions out of poverty, or top-down state-imposed 'socialism' along the lines of the ex-USSR, with its history of brutal totalitarian repression and economic failure.
This ridiculous Punch and Judy style ideological warfare gets us absolutely nowhere, which of course is exactly what it is intended to do.
Good, intelligent article.
15 November 2011 9:51PM
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15 November 2011 9:52PM
Ironic this article! Ha-Joon poses the question 'what does being anti-capitalist actually mean?' and then conceals and obfuscates what capitalism really is by instead describing different institutional and regulatory forms of capitalist society across history or time.
As I assume that all Cambridge economists have been properly educated (well it's supposed to be one the best universities in the world) I can only assume his use of non-theoretical popular beliefs is deliberate and designed to muddy the waters and support and fit with his conclusion: "It is time we use the Occupy movement as the catalyst for a serious debate on alternative institutional arrangements that will make ... capitalism better for the majority of people."
Please let's have an honest debate here and not try mislead people.
15 November 2011 9:52PM
Yep. That's the trick they use.
The wing-nuts will be piling, trying to frame the movement in the context of the atrocities of Stalin and Paul Pot.
See for them, the endpoint has to be 1970s Cambodia, and not present day Sweden.
Be gone fiends. Your war is over. The bums lost. The bums will always lose.
15 November 2011 9:55PM
Ummmmmm..
Not sure but I think you are making that up.
Most people - me included - would have difficulty uniquely defining either, as do most economists.
Without full information people make bad choices.
Which is why we are where we are now.
15 November 2011 9:57PM
There's plenty of money! They high street retailers are chugging it in. Bankers' bonuses beggar belief. The local councils should be able to create their own tax revenue locally.
Local people should invest their money, after outgoings, into a community bank. The councils should force tescos, and the other big corporates to pay a tax into the community purse.
If they don't want to pay they can f-off, and local people can reclaim their high street and decide who gets what, instead of the corporate weasel debters.
15 November 2011 10:01PM
That should be the
, like M&S, Boots etc.
15 November 2011 10:01PM
A strong, intelligent and well-informed article as always. I always appreciate your extremely strong grasp of history, so many myths can be debunked by a corrent historical understanding eg monolithic definitions of capitalism rather than historically specific ones. It makes people realise that the left vs right debate is a red herring here, a massively oversimplified caricature of what most people are really concerned with.
My one misgiving is that the Occupy movement, to me at least (and this might be because of the media filters i'm viewing it through) does seem quite anti-capitalist. This is a bit worrying as it will lose support from people like me who, as you yourself said "are not against capitalism. They just want it better regulated so that it benefits the greatest possible majority."
15 November 2011 10:01PM
That was happening millenia before the idea of capitalism came about.
The term is too confused and ambiguous to be usable as a tool for analysis and debate.
15 November 2011 10:03PM
I usually agree with a huge amount of what you say. And I will agree that there is plenty of money - but it doesn't lie with Joe Bloggs...
...until that wealth redistributed in the first place, we have no money to spend...
This is what I mean I say that present political establishment have pulled up the drawbridge...they've made everything so much harder...
15 November 2011 10:04PM
- Dwayne Andreas CEO of Archer Daniels Midland one of the world's largest agricultural processors.
15 November 2011 10:05PM
An excellent article.
15 November 2011 10:06PM
Sorry - meant to say 'across history and space'.
15 November 2011 10:06PM
- and consequently depend on exploiting the labour power of the dispossessed, and are the terrain for competitive accumulation which (even in "egalitarian" Sweden with its nepotistic Wallenberg family) concentrates obscene amounts of wealth and, consequently, power in the hands of a minority class.
15 November 2011 10:06PM
teaandchocolate
they can start by getting the f%^k out of St Pauls and stop strangling many of the local businesses there who have seen their revenues plunge in the last several weeks.
...but then I don't think many of these protestors would know what a small business actually is, let alone how to run one
15 November 2011 10:14PM
It takes a powerful atomic clock to measure the miniscule time lag between people saying this sort of thing, and the fraction of a femtosecond ago when they were all pleased with themselves for stating that all protestors in the area have been shopping in giant retail multinationals, of which there isn't really anything else around St Pauls.
Do please make your mind up.