Trahison Des Clercs

Clinker? I’m not trying to fling fine-tuned forge fetishism. I’m doing something much more disagreeable: applying that beast known as American slang. It’s not as inane as taking an episode of Friends and assuming it is a good representation of comedy. No, it serves the purpose of characterising capitalism as “an error, a failure and a dud”. I’m going to do this by avoiding the traditional snotty-nosed snivelling favoured by the net nerd neo-socialist. There is no reason to blubber about execrable evils or bawl about monstrous morality. Such scrawny socialists, treading water until their souls launch towards lillylivered liberalism, are so darn easily discounted and give an unnecessarily easy ride for the cretinous conservative. The battle should be confined to efficiency expostulation. The churlish conservative must be educated about economic efficiency and the failures inherent in capitalism.

To demonstrate capitalism’s calamity, one only has to think about the characteristics required for capitalist’s to thrive and gorge on the gravy train. For your informaton, here are some of these little ditties:


(1) Unemployment/underemployment
The employer’s objective is simply the maximisation of their profit. Unfortunately for the free marketeers this can have some rather unfortunate implications. The dastard microeconomic foundations of macroeconomics leads us to the effulgent efficiency wage theory. For example, we can appreciate that work effort is not guaranteed by the labour contract (i.e. employers have to find methods to transform labour power/capacity to work into labour/activity of work). Worker resistance dominates if the cost of losing one’s job is too low. We get an unacceptable level of effort, referred to as “whistle while you work” level of work intensity. Unemployment is necessary to deliver acceptable levels of productivity. There’s applause from the orthodox and the radical economist with this stuff. For example, the Shapiro & Stiglitz’s (1984) shirking model is strikingly similar to Bowles & Gintis (1990) radical economics model. We therefore have to consider the caustic consequences for our understanding of efficiency: With unemployment (or hidden unemployment via underemployment) used to discipline the workforce, profit maximisation is reliant on unemployment. Given involuntary unemployment is a wasted resource, competition will ensure inefficient labour markets.

(2) Discrimination
The Economics 101 student is misled to think that supply and demand conditions determine an individual's wage and employment outcome. Hogwash and balderdash to all that bunkum! We only have to consider the existence of discrimination to kick that in the knackers. The orthodox position is based on Becker’s “taste for discrimination”. The bigoted big bad boss, given his distaste for the lady/black/handicapped/homosexual, is prepared to accept lower profits to maximise their utility. It’s a poor theory precisely because discrimination exists in the long run and is not driven out by market forces. We would have to assume the existence of market power, where firms with monopoly profit can maintain abnormal profit indefinitely and therefore can afford to be bigots. However, we do have an alternative explanation. We can again refer to the profit motive and how it encourages inefficient practices. The employer is motivated by gaining greater control over workers via divide-and-conquer strategies. (see Roemer [1979, Divide and conquer: Microfoundations of a Marxian theory of wage discrimination, Bell Journal of Economics, Vol. 10, pp 695-705] for a good introduction to the theory). Wage discrimination can be used to increase profit by dividing workers and increasing overall exploitation. Within that there will be an understanding of an ‘optimal mix’ of ‘worker types’. Moreover, there will be gains from reinforcing racist opinion. For example, occupation crowding of ethnic minorities into jobs deemed menial can be used to strengthen the opinion of ethnic minority inferiority. Profit maximisation requires discrimination in order to minimise labour solidarity, reinforcing further capitalism’s need to adopt an inefficient use of factors of production.

(3) Education
Britain offers a great natural experiment into the repercussions of growth in the tertiary education sector. It has seen a reduction in social mobility. It has also seen an increase in the proportion of unemployed graduates. This should communicate to you that ‘supply side economics’ is a load of guff. Instead, we have to focus on the role of education. More specifically, its human capital role is corrupted by the nature of capitalism. It becomes increasingly sidelined to simple certification and used primarily to justify artificial generated wage distributions. The consequences are again inefficiency generating. Education increases the likelihood of worker mismatch and reduces the productivity gains from education. “Higher quality” workers from poorer income households are denied the same opportunities, as “lower quality” kids from higher income households can more easily acquire the certificates necessary to gain access to the primary labour market characterised by “good jobs”.


I’ve chosen just a few diddy examples to demonstrate the failings of capitalism. Hopefully it will encourage my chummy comrades to avoid the morality spew that they’re prone to. The efficiency argument favours the left wing and can easily be used to beat any wretched right winger in a pub debate.