Monday, 7 November 2011

I Disagree with #OccupyLSX

Last week, I blogged on how I agreed with the #OccupyLSX crowd on one particular point - their arguments for the democratic reform of the City of London Corporation. I stand by that. They are good ideas - the City does have too many vested interests in the political system, and that should be addressed. Not because it's the City that has them, but because they're vested interests in the first place.

That said, I find myself in increasing disagreement with what else they have to say, and what others have to say about them.

Ed Miliband, for example, has said that the protesters outside St. Paul's Cathedral are 'danger signals' symptomatic of wider public sentiment aligned against capitalism. In the same article, the BBC describe the protesters as protesting against 'corporate greed'.


I was down in London a few days ago, and had a brief stop outside St. Paul's Cathedral. What struck me the most was two big banners outside the encampment, one reading: 'INSISTENCE ON SOCIALISM' and the other reading: 'CAPITALISM IS CRISIS'. No mention of corporate greed.

I didn't get a chance to talk to any of the protesters - it was raining and fairly late in the evening, and it appeared that most of them had gone home. Or perhaps they were in Starbucks. They'd left their tents, mind you. Empty. But I digress. I didn't get a chance to talk to them, but some excellent folk from the Commentator did.

Let's get this straight. They are not protesting against corporate greed. They are protesting against capitalism - the most successful economic system in human history, which has lifted millions of people out of poverty throughout the world.

I've spoken to a fair few people about the protests, from various positions along the political spectrum. The general consensus appears to be, far from the protesters' assertions, that they are not representative of them. Nobody I've spoken seriously wants to abandon capitalism, on account of it actually being quite good at alleviating poverty. Perhaps the #OccupyLSX crowd should think about the benefits it has brought them:
  • The phones they text on;
  • The web servers they host their website on;
  • The coffee they drink;
  • The tents they don't sleep in;
  • The clothes they wear;
  • The tobacco they smoke;
  • The e-mail & messaging services they use.
All arising as a result of capitalism.

I'll be the first to admit, capitalism is not a perfect system. It encourages the pursuit of wealth for it's own sake. The acquisition of wealth is not inherently a virtue, but neither is it inherently a sin. Being rich does not automatically make you a bad person. Yet the #OccupyLSX protesters try to frame it as such. Indeed, as Ken Costa remarked in the Telegraph, there is a moral imperative to create wealth via the capitalist system, for the precise reason that doing so alleviates poverty.

Yet the behaviour of banks in particular over the last few years can be described as anything but moral. And why is this? Simple. Morality requires both incentive and hazard. The system we currently have provides incentive: bankers are easily able to become very rich. What they lack is hazard. Hazard manages risk. It prevents them from being stupid risk-takers. It forces them to deal with the consequences of their actions.

When you implicitly guarantee to nationalise a company if they get into trouble, you take away the hazard.

When you allow the market to be dominated by a cartel of massive organisations, you take away the hazard.

When you inhibit new entrants and therefore new competition through burdonsome regulation, you take away the hazard.

These are all symptoms of socialism. The #OccupyLSX crowd have correctly identified the symptoms, but ascribed them to the precise opposite condition which we are suffering. They have recognised that the building is on fire, but they propose to put it out with petrol. We don't need less capitalism to counter the ills of our society - we need more.