Everything Must Go

One of the enduring habits of the news media is giving staff time off at Christmas. This is achieved mainly by padding out space with seasonal filler. Some of this is prepared weeks in advance, such as end-of-year lists and guff about new year resolutions. Some of it is artificial news, such as the honours list, which also produces more guff in turn (Q: what does Sir Wiggo say about us as a nation? A: bugger all). The shift of the start of the sales from January the 1st to Boxing Day has been a godsend in this regard, allowing the dead days of Winterval to be bloated with photos of naked greed at Harrods against a background of retail jeopardy: will shops sell enough reduced-priced goods to drag the economy over the finishing line?

In today's Guardian, Deborah Orr has got into the seasonal spirit by suggesting that capitalism make a new year's resolution to be better at providing jobs, security and fairness. Though generally an astute observer, this reveals her weakness for the sort of liberal sentimentality that lets capitalism off the hook. She claims: "After decades during which we have all been told that we must allow the market to decide, the market is making a pro-social and humane decision. It is choosing to sacrifice profits in order to save itself. This is what the sales are all about – companies slashing their profits in order to keep ticking over, providing jobs, maintaining a presence".

This sort of analysis credits capitalism, the "market", with moral agency: the making of a humane decision. Of course, no such thing is happening, nor could it ever happen. The market does not have a mind, not even in the pop-bollocks sense of a hive-mind. To believe it does is to accept the ideological premise of a supernatural force that we must accommodate: the "invisible hand" of Adam Smith's metaphor which has subsequently been apotheosised into the Old Testament deity of free enterprise. There is no reasoning with capitalism. Both worship and propitiation (the sacrifices of the "strivers") fall on deaf ears. Actually, there aren't any ears - that's just me lapsing into anthropomorphism. Some businesses will take a hit to profits if they think it will grow or maintain market share, and thereby deliver fatter profits later, but others will quite happily asset-strip or lay-off staff now if they think that will be in their best interests. The free-market ideologue may deify the profit motive, but at least he doesn't claim that businesses are primarily driven by ethical considerations. What need of the CSR fig-leaf if every decision you make is ethically-based?

Orr continues: "You could even argue that the recession is teaching businesses that people really are more important than profit (or at least that if people don't have jobs then they don't have customers). The rich are realising that they can't keep getting richer if the poor keep getting poorer". At this time of year we oscillate between extreme perspectives. Thus the Queen will habitually bore on about Christmas being a time for family but also a time for remembering those less fortunate than ourselves (that's everybody, in her case). Orr's focus on the decimation of the high street, and in particular the mismanagement of pubs by the big chains, is a paean to the "local" in all the senses of that word, but this makes her temporarily blind to a fundamental truth of capitalism: there are always more customers, always new markets, elsewhere. Starbucks have not yet exhausted the UK market but are already opening up in India. The growing global middle-class will ensure steadily increasing demand for coffee-as-lifestyle for years to come. The rich know they can keep on getting richer, even as the poor of developed nations get poorer, so long as there are populations in developing countries whose new spending power can grow the overall market.

Orr's optimism, the belief that growing poverty is ultimately bad for the rich, is based on the zero-sum fallacy. While it is true that eventually every population, from Aberdeen to Amazonia, will be incorporated into the market, thus precluding further customer growth (i.e. opening up new territories), this simply shifts the balance of activity towards technological growth. The poor of the world can see absolute growth in terms of material advancement, while experiencing relative decline in terms of the share of wealth. It's all about how the pie is shared out. As it grows, the rich are positioned to appropriate a disproportionate share of that growth, just as they have done over the last 30 years.

New year resolutions are rarely effective as they tend to focus on the aspirational rather than the achievable: losing weight or quitting smoking rather than painting the bedroom or visiting relatives. Asking for a capitalism that "promotes fairness" is just delusional. Unfairness is its very essence and there is no natural limit to its appetite.