Is there such a thing as ethical capitalism?

Kerry-anne Mendoza 3 February 2012

In response to a growing realisation that neo-liberal capitalism is morally and literally bankrupt,
Britain’s political leadership have provided three visions of ethical capitalism for us to aspire
to. So, is there such a thing as ethical capitalism? And why is this question being asked now?

In response to a growing realisation that neo-liberal capitalism is morally and literally bankrupt,
Britain’s political leadership have provided three visions of ethical capitalism for us to aspire
to. So, is there such a thing as ethical capitalism? And why is this question being asked now?

What is Ethical?

First, we must decide how we approach this question: from a binary or a spectrum view of
ethics. In binary views of ethics, to use a metaphor, you are either pregnant or not. You can’t
be half pregnant. Therefore, the question has a yes or no answer. However, using a spectrum
view, there is a sliding scale ranging from the most heinous unethical extreme at one end, to the
apex of moral good standing at the other. In short, binary ethics asks ‘if’ something is ethical,
spectrum ethics ‘how’ ethical it is.

It is interesting that this question – 'is there such a thing as ethical capitalism?' – is asked in
binary terms, yet often answered in spectrum. Notice the question is not ‘what is the most
ethical economic system?’ or ‘which economic model promotes the most ethical economy?’

Furthermore, the very question itself acts as a ring fence around the resulting debate,
concentrating the imagination within the boundaries of just this one system – capitalism. The
reason it is answered in spectrum might well be that the unethical behaviour associated with
capitalism is so overwhelming and unignorable, that even the most ardent defence relies on
relativity arguments – ‘given human nature’, ‘compared with communism’, ‘would you rather
live here or North Korea?’.

Therefore I consider the question itself to be unethical. It is either insincere or ignorant.

Insincere, in that it has been posed in response to plans for ‘ethical’ capitalism by Nick Clegg,
David Cameron and Ed Miliband, with knotted brows and solemn voices, as if it were consistent
with the conversation happening outside of the rarefied air of Whitehall. It is not. The
conversation outside is around what an ethical society would look like, and what structures,
economic included, would need to exist to support that.
If, however, the question is not insincere then it must be asked in ignorance of the myriad
alternative economic models available and the broader social, economic, ecological and
political questions being asked by individuals and movements, such as Occupy, UK Uncut and
Climate Camp.

However, if people have themselves in knots over ethics, this is small beer compared to the
state of our understanding of capitalism.

What is Capitalism?

Our understanding of capitalism is incredibly limited. Despite this being the prevailing world
economic system, it is not taught until University in the United Kingdom. This means the vast
majority of the population have never even had a structured, informed conversation around the
mechanics and iterations of capitalism, let alone whether it is ethical or not. People, on the
whole, don’t know what it is, what it does, what it means, where it came from or what it
replaced.

As a snapshot, capitalism is a socio-economic ideology, a theory and the current global

economic paradigm. It originated in the West, gained a foothold in the 1700s and 1800s and
ultimately replaced feudalism. It has gone through various incarnations, or developments, from
Mercantilism, Industrialism, Keynesianism, and the latest, Neo-Liberalism. It exists in
established democracies and totalitarian dictatorships.

Yet I have had conversations on the topic of a world without capitalism with intelligent people
who, without irony, have stated that capitalism has always existed and will always exist because
people will always want to exchange things with each other. To be clear, you can have an
economy without it being capitalist. You can have trade of ideas, labour, skills and products
without capitalism. Capitalism is not synonymous with any of these things.

I mention this not to belittle, but to demonstrate how successfully and misleadingly capitalism
has been branded as natural, inevitable, permanent and, arguably the most intriguing, ‘post-
ideological’. It is none of these things. But consider for a moment: if most people believe it is,
then does it matter whether it is ethical at all? If something is natural, inevitable, permanent
and not based in ideology, isn’t even entering a conversation about the ethics of it somewhat
irrelevant outside of the curiosities of academia?
This is precisely how this conversation becomes pointless, for most, fast. This is where the
conversation slides into a rational black hole, we hang our heads and bemoan the cursed world
and go back to watching the telly. This is how quickly and easily a question seemingly
challenging of capitalism, leads inexorably to a conclusion in favour of the defence of the status
quo. The question itself acts as a kind of cerebral sat-nav guiding anyone who answers it
without first analysing it, straight to the pre-set destination: turn right at the false dilemma, left
at the pop psychology and come to a stop at the dead end.

This is why I have taken the time to set the question in some context before even attempting to
address the material content of it.

A Matter of Context and Perspective

These matters of context and perspective are sadly missed in the current and painstakingly
narrow debate conducted at sound bite level across the rolling news channels today. A large
part of the thinking taking place at venues such as The Bank of Ideas, a building repossessed
by Occupy London for the purpose of a Free University Campaign, is around placing questions
of ethical economics in context and shifting perspectives from ‘western’ based to a more holistic
view.

Be it economic stability, education, health, famine, poverty, security, the global commons,
climate change, civil liberties, human rights, technological and scientific progress – any mode
of economy needs to be consistent with social goals related to these elements. Why? Because
if it is inconsistent, then you place individuals and organisations in a position of conflicting
social and economic priorities. Either they honour the social goals, the economic goals, or they
search for some compromise – and there is often not a compromise to be found as the goals are
diametrically opposed.

For example, technological and scientific progress rely on the broadest population of educated,
innovative, critical thinkers with access to means of contributing ideas, skills and capabilities
to achieve breakthrough results. Yet in order to safeguard the profit from any venture, it makes
economic sense to have the smallest group of people involved as possible, operate secretively,
and use patents and licenses to prevent others from ‘stealing your idea’ and making the profit
from it that you yourself seek. In order to progress more quickly, one would need to over-ride
or compromise this economic imperative. There has been fascinating work recently covered in
TED talks on this matter and I’ll use one example: cancer research.
Jay Bradner, a researcher at Harvard University, and his lab discovered a molecule JQ1 which
they thought might explain how cancer cells know they are cancer cells – and wanted to explore
if this finding could be used to outfox cancer. He expounds on the success of the decision of
his microbiology lab to refuse to patent JQ1, and instead to publish their findings, post them
out to 40 other labs, and open source the development of their work. Please watch the short
video below.

The work is truly inspiring. This case demonstrates two things. Firstly, that scientific progress
does not rely on competition, but collaboration. Secondly, people are driven as much by purpose
and passion, as they are by financial gain, or put another way – actual success and economic
success not synonymous.

Even in this case, participation is still limited by the need to make money from it at all, and no
doubt Jay Bradner and his team made less money than they ultimately could have if they had
chosen to stay in the secretive, closed, patent model. This is important as it is exactly what has
the majority of people remain in the model which Bradner and his team have demonstrated is a
de facto slow lane for research and development.

Supporters of capitalism might ask ‘why should people not benefit financially from their skills
and capabilities?’, yet it could equally be asked of capitalism, ‘why would you penalise people
for collaboration?’, or ‘why would you incentivise behaviour which holds us back?’

Do we want, as a society, to make people choose between personal wealth and making the best
decisions on critical matters like curing cancer?

Far from progress being caused by capitalism, in many areas progress has been made in spite
of capitalism. Considering the incredible pace of scientific and technological advancements
with these limits in place, the mind boggles at what would happen to human progress if the
collective mental and physical power of the three billion people currently starving in the world,
were available.

This is why context is so important when addressing the matter of ethical economy, and one
way in which capitalism places ethical dilemmas into just one area of our lives.

Moving on to perspective, this is vital in addressing questions of ethics, particularly in the case
of capitalism. One of the hardest argued cases for capitalism is the aforementioned progress.
Capitalism, it is said, propels people to work hard, in order to succeed financially, and therefore
wider society benefits from the increased productivity of the population. It is also leads
inexorably to individual liberty, freedom and democracy.

Now, superficially, taking a ‘Western’ view of this, the post industrial revolution period of
history has seen extraordinary leaps of progress in science, technology, human rights and
democratic participation. So for many people, compared to feudalism, capitalism is an
improvement. People cite democracy, universal healthcare, education and the welfare state as
representative of this progress. Let us assume for the moment that they are.

If you were born into another family, country or region of the world – you would have seen
quite the opposite. From Foreign Direct Investment, to The Debt Trap, to coups of democratic
leaders in order to install dictators who would ultimately generate a profit for western
corporations, to Structural Adjustment Programmes used by the IMF on African and Latin
American countries shifting production to foreign trade rather than domestic need, to the
morally defunct trade in weapons, to a toothless UN general assembly and a pointless US
dominated UN Security council. All of these policies, decisions and institutions, created in
order to perpetuate and stimulate ‘progress’ on one side of the world, at the direct and indirect
expense of survival, let alone progress, on the other. This argument is not refuted by realists of
politics, economics or international relations – it is defended and justified. It is only neo-liberals
and neo-liberalist ‘idealism’, that seeks to wash its hands of any responsibility for generating
this mass dispossession, suffering and death – whilst claiming to be the only show in town in
terms of dealing with it. It could be argued that rather than replacing feudalism, capitalism
merely globalised it.

It is unconscionable, to the Citizens of the World perspective exemplified by the global Occupy
movement, that this progress continue to be made at the cost of, and with little or no benefit to,
the majority of people on the planet. On the whole, set in context, they find it difficult to see
how on earth, given the competitive nature of it, a capitalist economic model is the choice model
for the globalised civil society emerging in the 21st Century.

The Least Unethical Thing?

For those people who see the ethos of capitalism itself as unethical, when people ask ‘is there
an ethical or more ethical form of capitalism’ the initial response is a palm to the forehead.

Nick Clegg, Deputy Prime Minister of the UK government and leader of the Liberal Democrat
party, is currently trumpeting the idea of what he calls a John Lewis economy. It is not clear
that it means anything at all. John Lewis is a department store; it operates within a capitalist
economy. Aspiring to a John Lewis economy is like aspiring to Scout Club Christianity, or Air
Cadets Security. John Lewis is a company, the world isn’t. A wistful, ‘oh wouldn’t it be nice
if all our companies acted like John Lewis?’ does not translate into a just and ethical economic
model – what of currency control, trade agreements, migration – what would John Lewis do?

Furthermore, even if we take the statement at face value, assuming it to mean a more equitable,
responsible, fair capitalism, the concept is still problematic if capitalism itself is considered
unethical. In this light, talking about John Lewis Capitalism, is comparable to talking about
Theresienstadt Nazism or expounding the virtues of ‘separate but equal’ over slavery. They
may well be moving in the direction of ethical on a spectrum scale, but what is the point of
making such an unethical thing, slightly less unethical? Surely, one could conclude, our
collective time and energy would be far better spent in the act of creating an ethical scenario,
than seeking – cynically or otherwise – to dampen the worst impacts of an unethical one.

For Whom the Bell Tolls

As before, in the dying days of feudalism, human society is once more at the point where its
economic model no longer fits the ethical or social ambitions of the majority of its constituents.
There is friction, fracture and frustration. Discontent hangs in the air, as does the unspoken
terror that is (in stage whisper) ‘change’.

So, is there such a thing as ethical capitalism? I believe not. More importantly, despite the
failure of political and other institutions to do so, broader social movements are resetting the
horse before the cart by asking first – what kind of society do we want? We can then move into
‘what kind of economy will best deliver on those ambitions?’, ‘what economic model serves
that society best?’

The people today refusing to entertain even the conversation, or imagining of a post-capitalist
economy, are no different to the feudal barons and peasants who could not foresee or were
hostile to the dynamic newcomer capitalism in centuries past. For them, humanity has reached
the apex of its ability to generate economic and political ideas.

To hold a view of humankind as static, or finite in our ability to innovate and create is, in my
opinion, to fundamentally close one’s mind to the facts, as demonstrated by human history. It
has been said before, that the economy is a great servant but a terrible master. This is
demonstrated perfectly by a glance at the current state of our world. It seems we have forgotten
that we, human beings, invented this economy. If it has ceased to serve us then our best efforts
should - and in the tent cities, repossessed public buildings and occupied homes across the
world are -being made to design another.

A day will come when whatever new model replaces capitalism also ages, withers and no longer
fits our future society’s ambitions, and the process of socio-economic evolution will continue.
This is the reality of human existence, and in my view, the wonder of it. Let us take this
opportunity to be not the desperate hangers-on to a dying, unjust regime, but the instigators of
evolution and the architects of our social and economic destiny.

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