What My Students Taught Me About Capitalism

Teaching is a peculiar business, because (I think) people are generally getting smarter. My students are, on the whole, cleverer than I was at their age or at their stage of education. I’m teaching them because I currently know more than they do about certain subjects. To this extent it makes perfect sense. Nevertheless some awkwardness remains in the arrangement of having the more intelligent educated by the less so.

I’ve been teaching Locke’s Two Treatises. I pointed out, in the lecture, that the famous notion of ‘tacit consent’, by which Locke aims to justify political obligation, first arises in the context of an attempt to justify the concentration of wealth.

Every philosophy or politics student knows the famous theory of property, according to which one acquires property by mixing one’s labour with it. In the case of land, for all Locke says, ‘mixing one’s labour’ with it can be a simple matter of enclosing it. The obvious objection is that this would permit one person to become extravagantly wealthy by enclosing all the remaining land and renting it out to everybody else.

My paraphrase of Locke’s reply is that in the natural order of things there is no reason to suppose that anyone would do this. Nobody could possibly need so much land to feed her own household. Others could be forced to turn over some of their produce as rent, but, again, what would one household want with an inedible mountain of produce?

And yet Locke knew full well that in his day this was very close to the real arrangement. A handful of privileged landholders collected rent from everyone else. How had this occured? And was it justified? The answer to both questions resides, for Locke, in the fact that we don’t follow the natural order of things. Nature has been distorted by money. It’s pointless to pile up produce, and impossible also, since it decays. But it’s easy to sell the surplus produce for money and then pile up that. The only reason for anyone to claim more land than is necessary to feed his household comfortably is to pile up money.

If it weren’t for money, accumulation wouldn’t occur. The easiest way to stop it would be not to have money. But we all (imagining ourselves as Locke’s contemporaries) tacitly consent to there being money. If all of us stopped believing that little pieces of gold have a value beyond their (very limited) industrial and decorative uses, they would stop having it. We may not like the arrangement in which wealth has accumulated in very few hands. But we have tacitly consented to what made it come about. And it is irrational to simultaneously object and consent to the same thing.

I’ve posted before about where I think this argument goes wrong. It adopts the wrong theory of money. But some of my students pointed out, quite rightly, that the argument is fallacious even granting that theory. On the theory, money would stop having value if we all stopped believing that it did, but this is not to say that it would stop having value if any individual or even any sizeable group of individuals stopped believing. Locke gives no evidence that we have the capacity to coordinate with each other in order to act with one mind in modifying our collective belief. So there is no reason to suppose that we have any choice in the matter of money having value. And where there is no choice there is little sense in speaking of consent, tacit or otherwise.

More than this, however, my students seemed preternaturally able to understand something that I completely failed to understand as an undergraduate, as did my colleagues. This was the notion of accumulation itself. Locke finds it ridiculous to suppose that anyone should want to pile up produce. But this is mostly because the exercise would be self-defeating: most of the produce would rot. He finds it perfectly plausible to suppose that people would want to pile up money. But why? You can, of course, spend money buying nice things for yourself – there is nothing unusual in that. But spending money is the opposite of accumulating it. Why would anyone want to accumulate it? To hand it on to one’s heirs, of course, but if, as often, they just go on accumulating then the problem simply repeats itself.

(Machiavelli once said that misleriness is what gives a prince his power to rule. But this hardly helps to make rational sense out of the acquisitive instinct; what rationality is there in the desire to rule over others? As A.J.P. Taylor pointed out: ‘All men are mad who pursue power when they could be fishing, or painting pictures, or just sitting in the sun’.)

Locke, again, may have found much to puzzle about in the acquisitive instinct, but he accepted it for what it was. His followers – the early Classical economists – refused to do so. They sought to explain away accumulation as a mere deferral of consumption. To them, as to my undergraduate self, this was the only way to make rational sense out of behaviour that would otherwise appear utterly irrational.

Locke was wiser, and so are my students. They know how to take things as they are. If people accumulate wealth, and if doing so is irrational, then the right conclusion to draw is that people are irrational, at least in that particular way. We must judge the question of human rationality on the evidence; we cannot judge the evidence on the basis of an assumption of rationality. When I attempted to present the paradox to them – that accumulation for its own sake is intuitively pointless – they didn’t fail to see it. They just saw it as a platitude rather than a paradox. They were right, and I was wrong.

My students probably have a historical advantage over me – possibly the same advantage Locke had over the Classical economists. I came of age in a world where business was booming and markets appeared to be showing the inner logic promised by the economics textbooks. They have come of age in the wasteland of a global financial crash – a great compressed pageant of human folly – in a world where it is much plainer to see that one primary outcome of economic activity is the concentration of wealth in the hands of those too rich to be able to do anything with it. When they read Marx – ‘Accumulate, accumulate! That is Moses and the Prophets!’ – they will take this for what it is: a plain statement of fact, not a puzzle to be resolved by clever tricks with time-preferences and fallacies about savings being necessary for investment (see my last post).

They reason rightly that if there is capitalism then there must be capitalists, and a capitalist is somebody who accumulates capital. It is what it is; whether or not we can say why is nothing to the point.

Locke tried, very unsuccessfully, to justify what he saw. But he was too wise to make his acceptance of the fact wait upon his capacity to make rational sense of it. So are my students. I had believed, with the Classical economists, that what people do must make sense; all this led us to was a failure to acknowledge what actually happens.

Rationalising things also got us off the hook from having to decide whether we really wanted them to be this way. My students seem to have recovered from this illness. They seem to see the world for what it is. This places in their hands the power to change it. In teaching them I am helping to make me and my kind obsolete. We of the past will see our vision of the world fade into history, replaced by a truer vision. If the object of the vision is unsatisfying, we’ll see our world replaced also. That really is the natural order of things. And a good thing too. It’s what makes it all seem worthwhile.


One thought on “What My Students Taught Me About Capitalism

  1. Pingback: Marx, Andrew Kliman, and Accounting | Origin of Specious

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