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IS CAPITALISM CORRUPT?

Published online by Cambridge University Press:  09 May 2019

Richard W. Miller
Richard W. Miller*
Affiliation:
Philosophy, Cornell University
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Abstract:

In one broad construal, corruption consists of deriving benefit from power over others in morally objectionable ways. The charge that capitalism is corrupt is usefully understood as a claim that modern capitalist economies inevitably and pervasively generate corrupt gains, in this sense, through conduct that does not transgress capitalist norms for individuals’ economic conduct. Modern capitalism has two features that would figure prominently in such an indictment: gains from the inferior bargaining power of most workers and gains from the superior political influence of those in the best economic situations. The taint of corruption should be reduced by political measures that move capitalist commerce toward Adam Smith’s commercial ideal of gains from exchanging help for help and that show appreciation of the equal importance of everyone’s presumed desire to have a life shaped by directives that he or she willingly accepts. Through such measures, capitalism could, in principle, become non-corrupt. In practice, unequal political influence will prevent this. Ending the corruptness of capitalism is an unattainable yet productive goal of reform.

Keywords

Adam Smithbargaining powercapitalismcorruptionexploitationpolitical equalitypolitical influence
Type
Research Article
Information
Social Philosophy and Policy , Volume 35 , Issue 2 , Winter 2018 , pp. 31 - 53
Copyright
Copyright © Social Philosophy and Policy Foundation 2019 

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References

1 See Brennan, Jason, Why Not Capitalism? (New York: Routledge, 2014), 23–25.CrossRefGoogle ScholarPubMed

2 Smith, Adam, The Wealth of Nations (New York: Modern Library, 2000 [1776]), book I, chapter II, 14–15.Google Scholar

3 Ibid., book I, chapter VIII, 77.

4 Ibid., book I, chapter IX, 287–88.

5 Arrow and Debreu describe further features of such a market that guarantee an equilibrium price, in powerful demonstrations prefigured by Jevons and Walras. But all that is important here is these theorists’ means of ensuring that price would solely depend on holdings, preferences, and access to exchange.

6 In the Arrow-Debreu model, the contrast with actual conditions of uncertainty is not perfect foresight, but it is another utterly unrealistic resource: the availability, without transaction costs, of infallibly enforced contingent contracts covering all eventualities, extending infinitely far into the future.

7 Smith, The Wealth of Nations, book V, chapter II, part II, 939. Smith emphasizes the danger of contempt based on an assumption that one has sunk low from bad conduct. But the author of The Theory of Moral Sentiments was well aware that pity can be deeply corrosive, as well.

8 See Stiglitz, Joseph, Whither Socialism? (Cambridge, MA: MIT Press, 1994), 35–36.Google Scholar

9 While these disadvantages are not in the foreground of modern economics, they are an enduring presence. For example, in the dominant textbook at the start of modern economics, Alfred Marshall acknowledged the force of these factors. See Marshall, Principles of Economics (London: MacMillan, 1920), 566–73. Alan Manning explores their implications for current microeconomics in Monopsony in Motion (Princeton, NJ: Princeton University Press, 2003). Janos Kornai, perhaps the most incisive economic critic of central planning, describes how the competition that creates the distinctive virtues of capitalism generates burdensome bargaining disadvantages among workers in Dynamism, Rivalry and the Surplus Economy (Oxford: Oxford University Press, 2014); see especially 88–105.

10 In the United States, the ratio of those actively seeking work to job openings averaged about 3 to 1 from January 2002 to January 2017, and was at least 2 to 1 nearly two-thirds of that time. The inclusion of people working part-time who wanted full-time work, plus discouraged job seekers who wanted a job, had actively sought one within the previous year, and had currently given up, routinely doubled these ratios. From the last quarter of 2009 to the last quarter of 2015, the unemployment rate declined from 10 percent to 5 percent. Median real weekly wages did not change. (See U.S. Department of Labor, Bureau of Labor Statistics, https://data.bls.gov, “Number of unemployed persons per job opening,” “Alternative measures of labor underutilization,” “Unemployment rate,” “Weekly and hourly earnings,” “CPI Inflation Calculator” (accessed March 30, 2017.)) Manning documents the normal ease of filling relatively unskilled positions in the United Kingdom in Monopsony in Motion, 280–81.

11 See Piketty, Thomas, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), 330–35, for a more detailed account, with further references.CrossRefGoogle ScholarPubMed

12 The classic general account of this source of higher compensation is Shapiro, Carl and Stiglitz, Joseph, “Equilibrium Unemployment as a Worker Discipline Device,” American Economic Review 74, no. 3 (1984): 433–44.Google Scholar

13 “A Fair Rate of Wages [1887],” Memorials of Alfred Marshall (London: MacMillan, 1925), 214.

14 For reasons of space, I have confined discussion to the central case of political choice responding to the situations of fellow-citizens. The argument can be extended to established residents of one’s country who are not fellow-citizens and, with significant modifications, to the transnational inflow of benefits from foreigners’ inferior bargaining power. I sketch some elements of the latter argument in Globalizing Justice (Oxford: Oxford University Press, 2010), chap. 3.

15 See Bartels, Larry, Unequal Democracy (Princeton, NJ: Princeton University Press, 2008), 257–60.Google Scholar

16 See Gilens, Martin, Affluence and Influence (Princeton, NJ: Princeton University Press, 2012), 78–83.CrossRefGoogle Scholar

17 See John Stuart Mill, Considerations on Representative Government [1861], Collected Works, vol. 19 (Toronto: University of Toronto Press, 1977), especially chap. 4, 473–77.

18 See Dworkin, Ronald, Sovereign Virtue (Cambridge, MA: Harvard University Press, 2000), chap. 4, “Political Equality.”Google Scholar

19 Dworkin claims that insistence on universal equal suffrage could be justified as avoiding an adverse "symbolic" consequence: an assignment of votes must not "be capable of interpretation as reflecting . . . any lower standing of, or lesser concern for, one citizen as against others” (ibid., 200). But such interpretations can be misguided, and partisans of unequal suffrage typically insist that the lower assignment expresses equal concern and ascribes appropriate status to all. What matters is whether the denial of universal equal adult suffrage actually entails a disrespectful judgment. Dworkin does not provide a basis for this claim that does not appeal to the intrinsic importance of equal political influence.

20 See Whitman, Walt, Poetry and Prose (New York: Library of America, 1996), Preface to Leaves of Grass (1855), 6.Google Scholar

21 See Carnes, Nicholas, White-Collar Government (Chicago: University of Chicago Press, 2013), 20.CrossRefGoogle Scholar