Vince Cable on capitalism – old wine in new bottles

by Alexander Baron

There was much controversy last week over comments at the Liberal Democrat Conference in Liverpool by UK Business Secretary Vince Cable.  They included an attack on City spivs and gamblers, on the wealthy, and on capitalism and its strangling of competition:

In uncompromising mood, he told the delegates:

“Capitalism takes no prisoners and kills competition when it can.

The right-wing press reacted predictably. But, as is often the case in politics, the controversy is unwarranted. Cable earned a PhD in Economics, so it is to be hoped he is not entirely ignorant of his subject matter, but reading a little (unorthodox) history might help to shed light on what he really means.

In his magnum opus “Tragedy And Hope”, which was first published in 1968, Professor Carroll Quigley makes essentially the same observations; page 452:

Business hates competition. Such competition might appear in various forms ... [making] planning difficult, and [jeopardising] profits. Businessmen prefer to get together with competitors so that they can cooperate to exploit consumers to the benefit of profits instead of competing with each other to the injury of profits.

But it is not only business that hates competition, earlier, on pages 380-1, the good Professor points out that:

... the picture which Marx had drawn of more and more numerous workers reduced to lower and lower standards of living by fewer and fewer exploitative capitalists proved to be completely erroneous in the more advanced industrial countries in the twentieth century. Instead, what occurred could be pictured as a cooperative effort by unionized workers and monopolized industry to exploit unorganized consumers by raising prices higher and higher to provide both higher wages and higher profits

This is, in fact, well-recognised in Libertarian circles, as are the real reasons for tariffs, local taxes, and subsidies. Tariffs are themselves a form of subsidy, although they are sold to the public as a means of protecting (inefficient) local industries from rapacious Japanese businessmen who will sell you a better quality product for half the price. In his 1975 book “Ninety-Five Per Cent Is Crap…” Terry Arthur observed cynically that the topography of the Common Market consisted largely of butter mountains, beef mountains and wine lakes. What he meant was that like tariffs, subsidies distort markets. As far as government has any business poking its nose into business proper, it should be to ensure that competition is free and fair. In practice this means less legislation rather than more, because it is only by coercion, ie, state intervention, that big business can retain its hegemony.

It remains to be seen though if in spite of his fiery rhetoric, Cable will do anything, or if he will be permitted to do anything in the way of meaningful reform. The hottest issue of the day is, of course, banking and those enormous bonuses. Vince Cable has been in the forefront of the banker-bashers, but one is entitled to ask how sincere this “bashing” is if the deeds do not match the fine words. It is one thing to rail against bankers’ bonuses; it is another entirely to grasp the bull by the horns and tackle the monopoly of credit head on.

Again, Professor Quigley tells us, at page 53:

bankers sought to control the money supply “To do this it was necessary to conceal, or even to mislead, both governments and people about the nature of money and its methods of operation.

And at page 62:

In addition to their power over government based on government financing and personal influence, bankers could steer governments in ways they wished them to go by other pressures. Since most government officials felt ignorant of finance, they sought advice from bankers whom they considered to be experts in the field. The history of the last century shows, as we shall see later, that the advice given to governments by bankers, like the advice they gave to industrialists, was consistently good for bankers, but was often disastrous for governments, businessmen, and the people generally.

Although these words were written over forty years ago, their relevance today can be summed up in one word: cuts.

Okay Vince, the genie is well and truly out of the bottle now. Everybody knows that banks create credit. The question is, what are you going to do about it?

And a word of advice to everyone else: don’t hold your breath for any kind of real solution. It would mean leaving the EU, since Article 104(1) of the Maastricht Treaty makes real solutions illegal:

Overdraft facilities or any other type of credit facility with the ECB or with the central banks of the Member States (hereinafter referred to as ‘national central banks’)in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments.

As for Cable, he might be the consumer’s friend when it comes to big business. But all the signs are that he is just another internationalist who would rather pull out his eye teeth than forego the Europhilia.

Posted by Guest Blogger on Tuesday, September 28, 2010 at 03:36 PM in British Politics
Comments (3) | Tell a friend

Comments:

Next entry: The Trade-In

Previous entry: Heidegger: The West Texas Translation