My life is my own!

Via Hansard, my unlikely alliance with Labour’s John McDonnell over the need for shareholders to be able to control directors’ remuneration:

Steve Baker (Wycombe) (Con): As I listened to the hon. Member for Hayes and Harlington (John McDonnell) speak to amendment 15, I thought that my ears were deceiving me because I felt so much sympathy for what he was saying. Indeed, he put me in mind of a book by a reformed Trotskyite, James Burnham, who predicted in “The Managerial Revolution” the system of capitalism—the set of structures—that we now recognise in publicly listed companies. My discomfort evaporated, however, when I realised that the hon. Gentleman was defending the interests of the owners of capital.

John McDonnell: Some of us are not completely reformed.

Steve Baker: In that case, I am delighted that we are on opposite sides of the Chamber.

It is strange that capitalism has come to this: that, nowadays, the owners of capital need to be defended by the House from their own directors. If I have understood the amendment correctly, it would mean that the change in the main rate for 2011 would not come into force until legislation had provided arrangements for shareholders to approve their directors’ remuneration. It is almost incredible that such an arrangement does not already exist.

We must reunite ownership control and the risk taken with capital, and I believe that the amendment goes to the heart of one of the problems of our capitalist system. I am not sure that it would achieve the aim that the hon. Gentleman has set out because it might not affect the rate for 2011, and I therefore cannot support it. Nevertheless, I think it is an extremely good idea, and I urge the Government to consider it.

Via The Economic Role of Saving and Capital Goods – Mises Institute (emphasis mine):

What distinguishes contemporary life in the countries of Western civilization from conditions as they prevailed in earlier ages – and still exist for the greater number of those living today – is not the changes in the supply of labor and the skill of the workers and not the familiarity with the exploits of pure science and their utilization by the applied sciences, by technology. It is the amount of capital accumulated. The issue has been intentionally obscured by the verbiage employed by the international and national government agencies dealing with what is called foreign aid for the underdeveloped countries. What these poor countries need in order to adopt the Western methods of mass production for the satisfaction of the wants of the masses is not information about a “know how.” There is no secrecy about technological methods. They are taught at the technological schools and they are accurately described in textbooks, manuals, and periodical magazines. There are many experienced specialists available for the execution of every project that one may find practicable for these backward countries. What prevents a country like India from adopting the American methods of industry is the paucity of its supply of capital goods. As the Indian government’s confiscatory policies are deterring foreign capitalists from investing in India and as its prosocialist bigotry sabotages domestic accumulation of capital, their country depends on the alms that Western nations are giving to it.

The Government does not wish to balance the budget on the backs of the poorest. Fine. But let’s not kid ourselves: sustainable prosperity in the developing world will only come through capital accumulation: that is, through local, pro-capitalist policies.

It’s a notion we might pay attention to ourselves.

If the state taxes away ‘surplus’ cash, those people taxed are no longer free to save and invest that money. Apart from the disincentives to earning created by high taxes, those measures are prejudicial to saving and investing in the very capital goods which would raise real incomes for everyone.

Much the same can be said of inheritance tax. When capital goods are sold to pay taxes, the money which might have been invested in new capital merely changes hands and passes to the state. When that money funds the state’s present consumption or debt interest, new capital goods are not formed.

As for capital gains taxes, it’s becoming obvious that many increases in asset prices are due to currency debasement – inflation – so, far from taxing profits, capital gains taxes may actually erode capital by passing the poisonous benefits of inflation from investors to the state.

That is, inheritance taxes, capital gains taxes and complex “progressive” income taxes make the poor poorer than they would have been by diminishing the formation of new capital goods.

Those who are serious about raising the standard of living of the majority should not advocate higher tax rates for those with something to spare. If we really cared about the poor and those on modest incomes, we would slash taxes and radically simplify the tax code.

A favourite brought forward.

Thinking about the pressures on capitalism — or rather, on the interventionism that passes for capitalism today — and on the alternative which was most comprehensively implemented, I discovered this recipe for chaos and failure from Bukharin:

Under communism people receive a many-sided culture, and find themselves at home in various branches of production: today I work in an administrative capacity, I reckon up how many felt boots or how many French rolls must be produced in the following month; tomorrow I shall be working in a soap factory, next month perhaps in a steam-laundry, and the month after in an electric power station. This will be possible when all the members of society have been suitably educated.

via Nikolai Bukharin and Evgenii Preobrazhensky: The ABC of Communism – Chapter III : Communism and the Dictatorship of the Proletariat.

As one who has not long studied Marxism, it is frankly amazing that Bukharin was hailed by Lenin as “a most valuable and major theorist of the Party” when he wrote such impractical nonsense. Here’s another taste of his particular madness, expounding on what we know as “from each according to his ability to each according to his work” and “from each according to his ability to each according to his needs”:

The communist method of production presupposes in addition that production is not for the market, but for use. Under communism, it is no longer the individual manufacturer or the individual peasant who produces; the work of production is effected by the gigantic cooperative as a whole. In consequence of this change, we no longer have commodities, but only products. These products are not exchanged one for another; they are neither bought nor sold. They are simply stored in the communal warehouses, and are subsequently delivered to those who need them. In such conditions, money will no longer be required. ‘How can that be?’ some of you will ask. ‘In that case one person will get too much and another too little. What sense is there in such a method of distribution?’ The answer is as follows. At first, doubtless, and perhaps for twenty or thirty years, it will be necessary to have various regulations. Maybe certain products will only be supplied to those persons who have a special entry in their work-book or on their work-card. Subsequently, when communist society has been consolidated and fully developed, no such regulations will be needed. There will be an ample quantity of all products, our present wounds will long since have been healed, and everyone will be able to get just as much as he needs. ‘But will not people find it to their interest to take more than they need?’ Certainly not. Today, for example, no one thinks it worth while when he wants one seat in a tram, to take three tickets and keep two places empty. It will be just the same in the case of all products. A person will take from the communal storehouse precisely as much as he needs, no more. No one will have any interest in taking more than he wants in order to sell the surplus to others, since all these others can satisfy their needs whenever they please. Money will then have no value. Our meaning is that at the outset, in the first days of communist society, products will probably be distributed in accordance with the amount of work done by the applicant; at a later stage, however, they will simply be supplied according to the needs of the comrades.

Where to begin a critique? “The applicant” for products? I think perhaps we should bear in mind the madness of this system when we lament our present circumstances.  We should remember that even in Bukharin’s peculiar dreams, repression was essential:

For a long time yet, the working class will have to fight against, all its enemies, and in especial against the relics of the past, such as sloth, slackness, criminality, pride. All these will have to be stamped out. Two or three generations of persons will have to grow up under the new conditions before the need will pass for laws and punishments and for the use of repressive measures by the workers’ State.

I have written for ConservativeHome today on the problem with capitalism:

I listened to Comrade Milliband’s tedious historical revisionism with interest: apparently New Old Labour are to become the party of enterprise and small business in order that wealth can be created and redistributed. With Comrade Milliband’s remarks following so closely after Comrade Cable’s denunciation of capitalism, I am reminded of Churchill:

“Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon.”

Comrades seem to understand that there is something wrong with capitalism, but they seem unable to say what it is.  Grotesque, long-since discredited Keynesianism, innuendo and ad hominem attacks fall somewhat short, in my view.

Read more here.

In preparation for an article to be published in the Autumn, I just reread The Open Society and Its Enemies – Volume 1: The Spell of Plato. The book traces mankind’s opposition to change and the consequent rise of the myth of destiny, technically, historicism: the belief that history unfolds according to laws which can be discovered.

Popper argues that the strain of civilisation causes us to seek to return to a supposed harmonious state of nature, a heroic age of tribalism, rather than face the burden of personal responsibility. This is, he argues, what gives rise to totalitarianism.

In chapter 6, Totalitarian Justice, Popper presents an argument about the use of the words individualism and collectivism in combination with egoism (selfishness) and altruism. He explains that “individualism” is used in two senses: in opposition to collectivism and as a synonym for selfishness. But Popper explains that collectivism is not opposed to egoism: class egoism is a common thing. However, someone who is anti-collectivist — an individualist — can also be an altruist, one ready to make sacrifices for another individual.

Plato makes the mistake of thinking society faces a choice between collectivism or selfishness. In fact, altruistic individualism is possible, without individuals living constantly in a state of subjection and sacrifice for some group. In our time, as in Plato’s, this error provides a defence of collectivism which is unjustified.

Society is the cooperation of individuals. In my view, one great advantage of a society based on equality before the law, freedom, peace and property is that it can bear selfish individuals without harming the whole of society. More than that, perhaps such an order is the only one which exploits the selfish individual to the benefit of other people.

These are ideas to be developed another time. Meanwhile, I am struck that many contemporary complaints against individualism fall into Plato’s trap and that some of the deeper green ideologues seek a return to a long-lost harmonious state of nature. I wonder if they realise where their ideas may lead?