Capitalism's Blind Spots

Ronald Reagan said famously and often, “Government isn’t the solution, it’s the problem.” Simply get out of the way of free markets, and it would be morning in America ad infinitum. Raj Patel, activist, scholar, and author of "The Value of Nothing," is not high on either governments or 21st-century capitalism. He makes a compelling case that matters have gotten so out of whack that, rather than staying the economic course that landed us on the rocks, we need to closely reevaluate doing business as usual.

One problem the author has with government and capitalists is that he sees them in cahoots, feathering each other’s nest at the expense of the masses. He points to the White House, “hijacked” by Wall Streeters like Tim Geithner and Larry Summers, and to the emergence of the modern market economy, which he traces back to medieval England and the enclosure of common lands for the enrichment of the upper classes. Dispossessed peasants were forced to work in virtual servitude for large landlords or to migrate to the city, swelling the ranks of the incipient working class.

Patel draws parallels to practices today, where corporations pad their profits by exploiting natural resources such as fisheries, rain forests, and wildlife habitats – which he argues are not theirs to despoil and for which they are not paying anywhere near the fair market value. He estimates the true cost of a $4 Big Mac to be closer to $200 when its carbon footprint and government subsidies are factored in. Talk about an unhappy meal. Though he does concede after several pages of calculations that it is all “an approximation,” it’s small wonder that people (Patel included) refer to economics as “the dismal science.”

A better example he cites is the dramatic depletion of fish stocks off the Pakistani coast after the government, strapped for cash, allowed international trawlers to operate closer to shore. The small indigenous fishing operations along the nation’s 600-mile coastline report their catches dropping by more than 50 percent as a result.

Patel, an Oxford grad with a Ph.D. from the London School of Economics, presents the problems of modern capitalism in the first half of the book, enlisting to his cause the likes of John Stuart Mill, Adam Smith, John Maynard Keynes, and even a band of chimpanzees. Unlike “Homo economicus,” who is out for No. 1 in the dog-eat-dog marketplace, chimps exhibit endearing communal empathy toward one another. Exhibit A, however, is Alan Greenspan and his public mea culpa on his misplaced faith in the self-regulating power of the markets.

Patel is at his best when he is writing like the professor he is, rather than like an activist. He can explain the practice of “shorting” a stock in a brief paragraph as well as it can be done. He cites the exquisite example of how a perfect storm of circumstances totally unrelated to its intrinsic value sent Volkswagen stock soaring by an order of five while Wall Street wunderkinds were betting for it to drop like a stone, like every other automotive company was.

It is hard to argue with much of Patel’s indictment at a time when many bankers have received taxpayer bailouts for bringing the economy to its knees, followed closely by obscene bonuses. Anyone who has bought a $10 toaster knows at some level that something has to be amiss somewhere. How much could they have paid the people who made it, and how many other corners were cut to attain that paltry price? When cold cash is always the bottom line, a lot of very valuable things undoubtedly are getting sold short. Government leaders from around the world met recently to try to figure out how to mitigate the damage that our modern economic practices are doing to the planet.

The problem with the book comes in the second half when Patel tries to articulate solutions. He cites numerous examples of groups and movements that are challenging injustices and the machinations of governments and big business, like the Zapatistas in Mexico and the international peasant movement La Via Campesina. But he can’t pull them all together in any coherent or convincing way to explain how such approaches might play out on a grand scale.

At times, advocacy gets the better of the author and his prose: “In the relentless enclosure of the natural world, we have destroyed our planet, and if the quiet whispers among many climate scientists are to be believed, it may be too late to do anything about it.” If our planet was destroyed, no one would be whispering, quietly or otherwise. Often it is not clear why Patel is citing a particular anecdote, such as the cause for the rising crime rate in Bhutan, “once the world’s happiest nation.” The introduction of television is the culprit.

Toward the end of the book, the best he can do is vague bromides: “In other cases, it means developing new ways of sharing, and of stinting.” Or this: “In order to reclaim politics, we too will need more imagination, creativity and courage.” Amen.