The gimme-gimme protests

Protest the cronyism in capitalism not vice versa 

If the Occupy Wall Street protesters want to move us towards the socialist side of our mixed economy, they should be careful what they wish for. If the capitalists want to move us towards the free enterprise side of the mix, they should be careful what they agree with. 

The anti-capitalist protests are confused to put it mildly, but the pro-capitalist responses are not without their confusions either. In The Australian on 18 October, under the header “Business must engage in battle for hearts and minds”, Professor Peter Shergold argued that the "licence to operate" a business must be “rearticulated” to make “corporate social responsibility” a “core business activity” rather than a peripheral “bolt-on” activity, in order to regain “business legitimacy”; because: “giving back is no longer sufficient. Charity will not save capitalism”.  

Licence to operate? Social responsibility? Business legitimacy? Giving back?  

When capitalists give to charity, they should be careful what they call it. If they call it “giving back” to society, they shouldn’t be surprised when self-proclaimed representatives of society protest that capitalists should give the rest of their wealth back to the society from which it was taken. And when businessmen have to apply for a “license to operate” they should do so under protest. Just because they may need a license to operate so much as a lemonade stand these days, that doesn’t mean they should accept the premise that their legitimacy depends on a license granted by society. Once they do that they have surrendered their right to be left free to produce and trade and make a profit. They have “rearticulated” themselves into public servants responsible for duties assigned by society in exchange for whatever largesse society deems appropriate. If that is their status Professor Shergold is right, they must convince society (or its proclaimed representatives) that they will be useful and generous, in the hope that their license to operate will be extended a while longer. But if that is their status, what is left of our economic freedom? 

The mixtures of freedoms and controls that make up our economy throw up clouds of complications to muddy the waters, but the fundamental question is: do we engage in economic activity by right, or only by permission of the government. If by right, then laissez-faire capitalism is the proper system, if only by permission, then some form of socialism is the result. Crony capitalism is a mixture of the two. When Tea Party protesters target government interventions they are protesting against the cronyism in crony capitalism. When the OWS protesters target “corporate greed” and demand higher taxes, more handouts, more interventions and more regulations, they are protesting against the capitalism in crony capitalism. When Professor Shergold recommends an appeasing response to the OWS protesters he plays into their hands – or, since they wouldn’t know how to wield crony power, into the hands of politicians who do know how.

Capitalists don’t take their wealth from society – they make it. Consequently they have no “corporate social responsibility” to give their wealth back to society. The billions Steve Jobs left in Apple’s coffers were not taken from anyone. Not from Intel who supplied him silicon chips – that company made more money by supplying him than it could have without him. Not from his employees – they made more wages than they could have without him. Not from his customers – they got more bangs for their buck than they could have without him. Not from Apple shareholders – they made more from their investment than they could have without him. And certainly not from the protesters who wile away their occupation of Wall Street and our CBDs listening to their iPods and chatting on their iPhones. The way capitalists make their money is not always as apparent as Jobs’ way, but they don’t survive in a free market for long unless they add value, most of which is passed on to those they deal with, some of which is kept as profits.  

The theory that capitalists “take” their wealth from workers or customers or society and so must “give back” their ill-gotten gains didn’t add up when Marx proselytized it, and it made even less sense when his theories were put into practice, but to listen to the same anti-capitalist prejudice being rolled out after a century of devastating refutations is like being trapped like Phil Connors in Punxsutawney on Groundhog Day, except that this screenplay was written by academics. I am not accusing anyone of being an explicit Marxist, certainly not Professor Shergold, but Marx’s theories were plastered all over the hallowed walls for a long time, and they are sticky. Anything emanating from a university, from Harvard on down, should be dusted for prints. If anti-capitalist protesters are not university graduates they are their intellectual children or delinquent grandchildren, who, incapable of conceiving how money is made, can only contrive how to redistribute it. Which is why, as each new Groundhog Day dawns, they look more aggrieved and sound more confused. 

Corporations do, of course, have responsibilities, but they’re not primarily to “society”, they are to: suppliers, employees, customers, shareholders, and anyone else who chooses to deal with the corporation. Their primary responsibility is to trade value for value according to the voluntary arrangement struck with whomever they decide to deal with. No party to any such agreement need supply, work for, buy from, or invest in a corporation for any less return than that party could get elsewhere. Since no one in a free economy engages in a transaction unless he thinks he will be better off by doing so, no one ends up with any unearned wealth that he is obligated to “give back”.  

When a corporation decides to give away part of its profits it should call it charity or public relations or corporate policy; not “corporate social responsibility”. Its responsibility is to the people it deals with and to those who invest in it; and its right to operate derives from their inalienable right to liberty.



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