A Response to Umair Haque’s “Six Myths About Capitalism Everyone Should Know”
By: Hirak Mukhopadhyay
Tags: Economics, Politics, Environment, Climate Change, Philosophy

A Response to Umair Haque’s “Six Myths About Capitalism Everyone Should Know”

Umair should be praised for coming forward with his beliefs on capitalism and the economy; Medium readers should also hear the other side of the debate.

Umair Haque, someone who I assume comes from a business background, has amassed quite an impressive bit of popularity on the Medium platform, writing about economics and the evils of capitalism. When I first joined Medium back in March, I must admit that at first I was a fan. As time progressed however, I began to notice oversimplifications and ultimately incomplete analysis of what capitalism is all about. I wanted to respond to one of his recent posts, “Six Myths About Capitalism Everyone Should Know” and much of what I think about capitalism can be a rebuttal to that plus almost everything else Mr. Haque has also written about capitalism. I want to give a response here, before providing some links of my other work on Medium that articulate the point far better, essentially coincidental counterarguments courtesy of my own views.

In his “Six myths” piece, Umair dismantles a wide range of different capitalist systems, systems that have all in his opinion produced some good, but have mostly failed to produce economic progress, leaving so many people behind. Part of that is certainly true. I also agree that people spend things on unnecessary things like McMansions (more than one) and yachts and other things. That however, is not a guaranteed component to capitalism- capitalism can still exist successfully without excessive spending. I, as a pro-capitalism person, still wish that people with that much money in a capitalist system would tell their politicians they can pay more in taxes or give a significant amount of money away to charity and philanthropy. As expected, Umair makes a broad generalization about the wealthy and what capitalism has produced. What Umair is against, as am I, is personal greed, one that leads to stashing money in the Caymans, complaining about paying more taxes, and hating unions and public sector agencies. Although capitalism can produce that, capitalism is not its creator. Capitalism can exist, in harmony with far less greed in our mindsets throughout the world, and greed and selfishness could also exist in socialist or communist countries throughout the world. I believe greed comes from within, and is very common in human behavior, regardless of their surrounding economy.

In fact I advocate for a left-leaning type of capitalism that truly tries to eradicate poverty through the power of Keynesian, neo-Keynesian, a little neo-classical and even democratic socialist thought. Much of that has already been labelled by Umair as a farce, but I tend to disagree.

Umair goes on to state that:

“Human life needs care, nurturance, support, and cultivation — but capitalism has no incentive or reason whatsoever to provide such things. Yet they are the most useful of all, because they are the ones we use when we are vulnerable and in greatest need. In this way, capitalism starves a society of what is most genuinely useful. It is social democracies in which people have the most useful things — the things that benefit people most, when they need them most, available to all like medicine, or retirement, or childcare — and that is because they don’t rely on capitalism to provide them.”

So much to unpack here! Umair’s thoughts about what human life needs are correct, but he thinks capitalism does not provide these things, seemingly, for almost anyone. That is far from the truth. He then claims social democracies do have these things, but they are not relying on capitalism. Actually, they are, because social democracies, like what we see in the U.S. and the E.U., believe in capitalism, believe in free markets, and it is the free market itself that makes social democracies thrive and creates opportunity to offer medicine, retirement, childcare, and other social needs. The market system cannot cater to all of society’s problems, which is why we need government, sometimes perhaps big government (I go as far as certain qualities of democratic socialism) and other regulatory schemes. As much as Umair confuses me, I am also confused by George Stigler and his theories. Maybe I am crazy, but I see no conflict in being somewhere between Haque and Stigler.

(CNN-Money)

Indeed, for all of capitalism’s flaws, there are stopgaps seen in the U.S. to do something about them. In the late 90’s, the Justice Department shut down Microsoft’s antitrust violations. After an unprecedented recession, Dodd-Frank was passed into law (I still believe we could regulate a little more). To fight climate change, the Obama Administration made large scale reforms at the EPA. Still could have done a little more. All of this, even an improved version of them in the future, can still happen under a capitalist system. In fact, I would go as far as saying capitalism, with proper limitations imposed, make social change easier.

Speaking of Microsoft and antitrust, Umair claims that “platonic capitalism” can result in huge monopolies (probably likely to some extent). However, socialist or socialist-laden countries (like China’s state capitalism and state-owned corporations) also render monopolies, sometimes of an entire industry, because the market is non-existent or very narrow. If one wants to abolish monopolies, they should build broad markets for commerce, and install several competing private-sector corporations into that market, as we see in the quickly-growing ASEAN bloc in Southeast Asia.

Umair then states:

“the reality is that capitalism does not make people noble and virtuous — but exactly the opposite, because it first makes them poor. Because people live at the edge of perpetual ruin in capitalist systems — no matter how nominally ‘rich’ they get, just like the people formerly known as the American middle class — virtue becomes a luxury.”

Oh? Has that happened every single time? Because in my experience, capitalism has made people noble, more educated, in a higher income group, and did the complete opposite of making them poor or remain on the perpetual brink of poverty. Capitalism has helped my parents, two Indian immigrants, who arrived during the first Bush Presidency, despite a weak command of english or grasp of American norms and traditions, to start out with completely nothing and in cultural isolation from western life (my parents grew up in the 80’s but never knew of Queen, Kareem Abdul-Jabbar, and the Iranian Revolution while living in India), the opportunity to arrive in America in the first place. Plenty others like them settled in places like Canada, Britain, Singapore, France, and South Africa.

But after a long time, my parents know American music, sports, movies, food, culture, TV, and style. I would say this does not just apply to my parents, but plenty of other immigrants as well, all of whom have succeeded in America because of capitalism. My parents, recently, for the first time, switched to the Democratic Party. For the first time, they made a large donation (large for us) to a political candidate and have given me money to donate to candidates who I like. It is not always a size-able amount, but I donate to candidates who stand up for the American worker, Obamacare, civil rights, climate change, and other important matters. Outside of immigrants, there are a lot of Americans, such as academics and captains of industry and science, who started off in poverty in a capitalist society, but still made it. Have they all made it? Are there still pervasive roadblocks to eliminate poverty in America? Certainly. However, this is a long and difficult fight, but one that has had major victories, all in the presence of- you guessed it, capitalism. Capitalism can make someone in America, immigrant or not, noble and virtuous.

I also want to focus a little bit on the country my parents left behind, which is India. Umair, I am assuming, is also originally from South Asia. Umair should go back and look at how socialism in India (the same socialism that indirectly convinced my parents to leave West Bengal, as well as India altogether) had performed from 1970–1990. What are the numbers? What are the gains? What did poverty look like? Did the Communists and the Leninists succeed? How did socialism do in Bangladesh, Pakistan, Sri Lanka, and Nepal? Now of course, all of those countries are doing significantly better and have improved their quality of life. My parents’ counterparts in the modern era can now live a far more comfortable and productive life in India, at least in Bombay, Delhi, Poona, and Bangalore, more so than what those places were like in 1985. There is still a lot of poverty and income-inequality. Social innovations do need to be done. Nevertheless, what led to this economic turnaround? What could it possibly be? It amazes me that someone like Umair, or any “desi” on Medium, can rail and slam capitalism for engraining poverty into society, when it is capitalism, trade, and financial liberalization that eliminated poverty in their homelands.

Wonder how Bangladesh got all these nice buildings (Click Ittefaq).

Outside of South Asia, it has also been well-established that market economies, almost always tied to capitalism, have performed better than socialist economies of the past or the ones around them. In fact, when recession does hit, market economies have been shown to bounce back more efficiently, from Argentina to Thailand and everywhere else.

I will concede, that capitalism is harder to adjust to what one sees fit in this lens in the United States and in Europe. However, Europe and the United States are also very complicated places, with forces of capitalism that are distorted, warped, corrupt, and immoral. There is no disputing that immoral capitalism exists, and the centre-left has a lot of work to do (as it always has). As we learned from Spiderman (RIP Stan Lee), “Great power comes with great responsibility” and the U.S. and the E.U.’s top economic dogs, far more powerful than India’s and still slightly more so than China’s, have not always been responsible.

Robert Solow (Nobel Prize)

Then there is the economic science part of the equation. Although the great Robert Solow told us that growth should be continuous (I still believe that), there is still evidence nonetheless that after decades of growth, it becomes much harder to produce that growth over and over. There are a lot of problems, which is why Umair thinks America is failing so badly all the time, occasionally questioning the intelligence of Americans and America itself (rather offensively).

Back to Umair’s commentary. He goes on to preposterously state that only 10% of Americans are capitalists, the ones who own stocks, bonds, and businesses. Do you really have to have those things to be a capitalist? Regardless of profession, one can support capitalism and have capitalism benefit them in at least a small way at work, and an inevitably large way overall. More preposterously, he claims owning a home does not make you a capitalist, even though you could pay it off, eventually sell it, have a higher return than what you originally paid, and use that money to buy another home or what have you. To me, that still sounds like a serious investment-turned-profit, assuming the real estate system is fair and the economy is performing well (thank you Federal Reserve for existing, take that Milton Friedman!). Haque thinks it is terrible that you owe so much to a bank, just another “prole” in the cog, but mortgage payments are ultimately putting money in the pockets of others. How is that bad? That is precisely the benefit of capitalism, where money will change hands in a cycle where, if done properly, will lead to everyone having enough money to survive. Maybe I am incredibly naïve, but I do not the understand the general problem here.

The Federal Reserve aka The Fed (WSJ).

In his closing, Umair proceeds with two remarkably-questionable statements. One is that “capitalism is quite literally killing” people, and yet they will “defend it tooth and nail.” Perhaps this is because they know that the alternative, socialism, has actually killed people, through inefficiencies, famine, starvation, and a lack of medical supplies. It is possible and proven that capitalism can lead to those unfortunate predicaments, but socialism most certainly always has. Socialism has not exactly worked throughout modern history; it has led to what I stated above, as well as poverty, mass corruption, political instability, and a barrage of other unfortunate conflicts. If Umair can point out one purely socialist country that has succeeded economically again and again, and places in the top 10 in GDP and HDI in 2018, I would be glad to re-consider not just this paragraph but everything else I have written here. Meanwhile, the United States, the capitalist, nightmare, failure Umair laments about often, still ranks number one in every single nominal-GDP index. On HDI, it is right outside the top 10, currently 13th.

As of right now, my political and economic philosophy is grounded in centre-left social democracy, built on the foundation of moral capitalism and politics, but not left enough to be socialism and nowhere near as right as the capitalism that Umair writes about so often. Markets and the private sector must run the day, alongside an effective and well-formed government. In other words, something very similar to the New Deal from FDR. I am not alone here: Thomas Piketty, Elizabeth Warren, and Joe Kennedy III have all said similar things in the past.

Finally, Umair says that “the world is burning”. Is it? There is pressing economic inequality, but America and the world have rebounded from a devastating recession. Despite terrible conflicts, the world is in a relatively-peaceful state in terms of war, after looking at the past few decades and last century. There are no World Wars, no Cold War, no frightening nuclear arms race and proliferation going on. Extreme poverty is significantly down, although the future of eradication will be enigmatic and difficult. Climate change looms large, and yes, that is the most serious problem of our lifetimes. All things considered, the world is not “burning” overall. Trump and many right-wing figures are in power, which is troubling, but they constantly get rebuffed by their own opposition, by world leaders, and the intellectual class and media everywhere. I do not think the world is burning. Not yet anyway.

If I had to put a nice bow on top, the fact that Umair thinks the world is burning is all you need to know about how he thinks. He always thinks about the worst of the worst scenarios, never the good or the positive. The critiques he makes of capitalism are of extreme, unfettered capitalism, something I too am not a fan of at all. However, he believes all of capitalism is extreme capitalism when it can vary. Thinking this way is like seeing your parents divorce and believing all marriage is doomed to fail and be devastating. His sample size is of the most grotesque, but sets the entire standard in his mind. Umair does offer some good commentary on occasion, but it is so overly reactionary, unjustifiably outraged, and trying to streamline negative returns of capitalism as ALL RETURNS OF CAPITALISM, that it not only loses value, but shows readers a distorted view of capitalism as whole, as distorted as the immoral capitalism he and I both abhor. America and plenty of other countries do need a new social contract- I wonder if they need the one Umair is suggesting.

With all due respect,

Hirak

November 2018

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Some other writings of mine on this topic and related topics: