The economic illiteracy of anti-capitalists

29 June 2021

10:05 PM

29 June 2021

10:05 PM

Back in October, World Bank chief economist Carmen Reinhart recommended that countries borrow heavily during the pandemic. ‘First, you worry about fighting the war,’ she said, ‘then you figure out how to pay for it’. As thousands of mask-free demonstrators took to the streets of London this weekend to campaign on issues ranging from Palestine to climate change, you have to wonder: are we still at war? And does anyone care about the economy anymore?

It has been apparent for some time — though it may continue to confound psephologists — that issues such as identity, patriotism and culture are more important to the electorate than economic concerns. That the tensions between globalism and cosmopolitanism on the one hand, and nationalism and cultural particularism on the other, are key. Such is the result of the ongoing political realignment — after all, the best predictor of whether someone voted for Donald Trump in 2016 was whether they are fans of World Wrestling Entertainment.

The downgrading of economics to a second-order concern has seemingly been entrenched by the pandemic. We are weeks away from our national debt surpassing 100 per cent of total national income. According to the latest data, 3.4 million people are still on furlough — many of whom won’t have jobs to go back to. The hospitality and aviation sectors have been decimated by lockdowns. Yet identity issues are still drowning out economic ones; we’re too distracted by statues, plaques and cancelling heretics like J.K. Rowling to worry ourselves with trivial matters like government borrowing and unemployment statistics.

But while many may view these battles as occurring outside of economic debates, they nevertheless have a strong economic underpinning. It’s not obvious that spray painting the statue of Winston Churchill with the words ‘was a racist’ is part of a wider economic argument, but if you listen to culture warriors in the media they have a very particular understanding not just of how the economy works but why our current system must be overthrown.

Black Lives Matter claims in its mission statement that ‘we are guided by a commitment to dismantle… capitalism’. While critics may accuse BLM of fixating on the distant past, campaigners believe that the abhorrent atrocities committed two centuries ago still shape the world today. Though it isn’t always clearly articulated, supporters subscribe to the ‘stolen-wealth theory’, the idea that colonialism explains why some nations are richer than others and why, within countries, some groups are poorer than others. By toppling memorials, renaming streets and attacking symbols of the colonial past, they seek to focus on the inherent injustices of global capitalism — making the case for a radical redistribution of wealth between races and nations.

In a similar vein, in the eyes of Extinction Rebellion activists, capitalism is necessarily at odds with the environment. The only way for people to earn a profit, the logic goes, is to exploit the environment and in the process cause irreparable harm.

The trouble is, they’re wrong. Atrocities committed by Europe’s colonial powers should never be downplayed nor dismissed but they also aren’t the reason why the western world is rich today. There are nations who had empires for a brief spell — such as Germany and Denmark — and whose greatest eras of development came before and after those colonial episodes. Switzerland, Finland and Austria never had colonies. Britain prospered because it eventually rejected these atrocities and installed instead the fundamental institutions of a free society and pursued good economic policies.

Similarly, there is no logical connection between climate change and a ‘crisis of capitalism’. The carbon footprint of a company or industry doesn’t depend on whether it is privately or state-owned. Where we have direct comparisons, capitalist economies are superior to socialist economies in terms of their environmental record. Surely, at the very least, environmentalists should be neutral in terms of the optimal economic system?

Political coalitions may no longer be built around the question of how active the state should be in economics, but culture warriors still care about our economic system – they just address it in a latent way. So the next time XR pours manure outside the offices of a national newspaper, even if it’s in the midst of a sclerotic bumper weekend of schizophrenic protests, bear in mind that it’s still the economy, stupid.<//>

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