A Capitalist Condemns Capitalism

Boston-based investment firm GMO LLC manages $97 billion about half the market value of Berkshire Hathaway. Its co-founder Jeremy Grantham recently suggested in a quarterly letter to investors that Karl Marx and Friedrich Engels were right regarding the development of capitalism.

Grantham writes

"...Karl Marx went on and on about the tendency of capitalism to so fixate on growth that in time it would forget the need to put on a friendly face for society and would drive home too clearly and brutally its advantage over labor. Ironically, in some way he and Engels looked forward to globalization and the supranational company because they argued it would make capitalism even more powerful, over reaching, and eventually reckless. It would, they claimed, offer the capitalists more rope to hang themselves with or, rather, to be hung with, in the workers’ revolution. The rope for the job, they suggested with black humor, would be bought from briskly competing capitalists, eager till the end for a good deal. ... However, Marx and Engels certainly got the part right about globalization and the supranational company increasing the power of capital at the expense of labor..."

It’s about profit, not people, writes Gratham "...Capitalism in general has no sense of ethics or conscience. Whatever the Supreme Court may think, it is not a person" and how "economic theory ignores natural laws" in that "...capitalism wants to eat into ... limited resources at an accelerating rate with the subtext that everyone on the planet has the right to live like the wasteful polluting developed countries do today. Ethical humans can also impose their will on corporations singly or en masse by withholding purchases or bestowing them, and companies can anticipate this and even influence it through clever brand advertising, “clean coal” being my favorite. But that is quite different from corporate altruism. Thus, we can roast our planet and firms may offer marvelous and profitable energy-saving equipment, but it will be for profit today, not planet saving tomorrow..."

"...If scientific evidence suggests costs and limits be imposed on industry to protect the long-term environment, then science will be opposed by clever disinformation. It’s now getting to be an old and obvious story, but because their propaganda is good and despite the solidness of the data, half of the people believe the problem is a government run wild, mad to control everything. So the “industrial complex” (or parts of it) fights to increase the inherent weaknesses of capitalism. They deliberately make it ever harder to reach the very long-term decisions that will serve us all. The influence of the Tobacco companies in deliberately obscuring the science to protect profits at a huge cost to society in health costs and lives is a perfect analogy to the energy industries that work hard to confuse the public on scientific measures of damage to health and the environment. Yet it is one that is surprisingly forgotten..."

"... Capitalism, by ignoring the finite nature of resources and by neglecting the long-term well-being of the planet and its potentially crucial biodiversity, threatens our existence..."

Grantham writes about the exploitation and depletion of soil (something Marx also referred to) He explains we are losing of our collective ability to feed ourselves, through erosion and fertilizer depletion which has received little or no attention. " ...A few painstaking readers might remember my “Farmer and The Devil” story of last July. In it I showed how a good capitalist farmer had to sign a contract in which the Devil guaranteed a quadrupling of the farmer’s income through very aggressive farming practices at the hidden cost of 1% a year of his soil. The farmer would enormously profit and eagerly re-up through the first several 20-year contracts only to end up with no soil, no food, and no people at about 100 years out. Yet each time the farmer re-upped, he did the sensible capitalist thing. In this case, Adam Smith’s “invisible hand” failed, and fatally so. Damage to the “commons,” known as “externalities” has been discussed for decades, although the most threatening one – loss of our collective ability to feed ourselves, through erosion and fertilizer depletion – has received little or no attention. There have been no useful tricks proposed, however, for how we will collectively impose sensible, survivable, long-term policies over problems of the “commons.” To leave it to capitalism to get us out of this fix by maximizing its short-term profits is dangerously naïve and misses the point: capitalism and corporations have absolutely no mechanism for dealing with these problems, and seen through a corporate discount rate lens, our grandchildren really do have no value. "

Grantham concludes that "Where Marx and Engels got it wrong was in thinking workers would unite...It’s going to be hard to have a workers’ revolution with no workers. Organizing robotic machine tools will not be easy.” But this to overlook Marx's idea of the proletarian, who is not necessarily employed, and the "reserve army of labor" whereby "surplus population" helps to keep wages in check to the benefit of capitalists. Just because robots exist does not mean that a "revolution" of workers has become obsolete.