Capital Sins: To What End Should Economic Life Be Directed?


Victoria Chick published an interesting paper in the journal Economic Thought on the World Economic Association website entitled Economics and the Good Life: Keynes and Schumacher. In it she explores what both men thought that the end goal of economics should be. As she says in the paper she finds rather a lot of overlap but also some differences in approach. I will here run through both of these here.

Both men share the ideal of bringing economic life closer to how they think that people should live. Broadly speaking both think that people should engage in less stultifying work and spend more time doing things that will provide some sort of inner contentment or enjoyment. The manner in which this might be achieved and the form that, consequently, this should take are thought different by the two thinkers, however.

Keynes is more of an optimist about the capitalist system. He thinks that if we let it run its course and continue to accumulate capital we will eventually reach a point of “capital satiety” where no more capital need be accumulated and resources can be directed to other ends. The economy will then reach a sort of steady-state where accumulation stops, people work less and time is devoted to more satisfying ends. Keynes has what seem to be in retrospect some rather unusual ideas about when this state will be reached, at one point suggesting that it will come about in the mid-1960s!

Schumacher is more pessimistic about the system. He believes that the system itself encourages traits which both Keynes and he find unseemly, immoral even; think here of greed, envy and all those other Evils. In one passage Schumacher is particularly clear about this,

The modern economy is propelled by a frenzy of greed and indulges in an orgy of envy, and these are not accidental features but the very causes of its expansionist success. (p38)

For Schumacher, as for Keynes, it was greed, envy and the desire to ‘get one up’ on others that drove the system. But where Keynes said that we should simply let it run its course, Schumacher said that the whole thing needed to be restructured. He believed that, for example, rather than cutting down on working hours, as Keynes suggested, that we change the nature of work itself; make it less stultifying, smaller-scale and have those who engage in it actually stake some of themselves in it.

These are nice ideas, certainly. They are also, as Chick hints at toward the end of her article, clearly at odds with much marginalist doctrine which tends to consider wants as insatiable, the drive for profits as a de facto social good and work a burden. Here I will take what I think to be a somewhat unpopular stance, however, and say that I think both men envisage something that probably cannot be done; that is: they seek to change human nature.

Today I believe that we in the West largely live in an era of what Keynes would have considered capital satiety. Indeed, overproduction seems to be one of our key problems (together with income inequality, which seems to be overproduction’s not-so-strange bedfellow). Yet we have not reached Keynes’ nirvana and people have not tried to incorporate Schumacher’s conception of the good life into their daily routine on any large-scale. Why is this?

Sure, we can play Marxist and blame Capitalism-in-the-abstract. “Oh, capital is impelling us forward and we cannot stop the train,” we might say in a Marxian mood. But that is not an explanation. Keynes and Schumacher were more incisive than Marx because they were not materialists. They recognised that Capital is not a real agent, rather it is the product of human psychological traits; ones that many find repulsive. Marx’s genius was that he, like many religious prophets before him, externalised Evil — what the theologians called ‘Sin’, Marx called ‘Capital’. (Indeed, his major work could easily have been entitled ‘das Sünde’ rather than ‘das Kapital’ without the work losing much meaning).

Marx’s dictum about the capitalist class, that “they don’t know it, but they are doing it”, is straight from the Bible. (“Father, forgive them, for they do not know what they are doing.” Luke 23:34). This is not a coincidence. Jesus thought that those who had nailed him to the cross were being driven by Sin and required forgiveness; Marx thought that those who accumulated capital on the backs of others were being driven by Capital and required emancipation. The terms ‘Capital’ and ‘Sin’ are here structurally identical; they externalise negative psychological or ontological traits of human beings and give them context in a larger interpretive system (i.e. Marxism and Christianity).

Again, Keynes and Schumacher were more honest; they recognised psychological or ontological traits for what they are. So, again, because with Keynes and Schumacher we can shed our metaphysical baggage and ask the question straight: why do people continue engaging in the capital Sin of sinful Capital accumulation long after it is necessary? Here is a thought: because human beings can be rather unpleasant creatures. They love power, they are inhabited by envy, they have an innate drive to control and their wants are so insatiable that they will create new desires any time the old ones are met.

Some religious and metaphysical systems attempt to control these drives, but they are probably doomed to fail because these are drives proper. They are innate in our species. I am not saying that such drives are ‘biological’ — that word means little to me in this context — rather I am saying that they are ontological truths of our being-human. To try to banish them from our constitution is like trying to banish murder from our population; it cannot be done, regardless of what some social reformers may have thought.

What’s more people, to a far larger extent than I think is generally recognised, often love the things they claim to hate. The person who complains about the ten hours they spent at work before going back to the office for another ten hour shift are no different from the smoker who says that they want to quit as they light up their twelfth cigarette of the day. Such activities are a deep part of their being and the complaints only accentuate the ‘pleasure-in-pain’ dimension of the activity.

Does this mean that everything is hopeless? No, I would not say that. There are good traits in humans also and these should be encouraged. The property developer will destroy the nature reserve to build cheap apartments if he is not stopped, make no doubt about that, and there is every chance that he can be stopped. Income inequality and overproduction are outgrowths of very negative traits in people — namely, envy and insatiability respectively — but they can be curbed; we know how to do this, it is just a matter of being given a chance to do so by having people recognise them for what they are: destructive outcomes of negative ontological traits.

But it seems to me that shooting for the moon and imagining, as Keynes and Schumacher did, that there is some end-point, some nirvana, when all is right with the world and the dark-side of Man subsides is altogether naive. (Don’t even talk to me about Marx and his religious doctrines!). Maybe others will disagree, but I still think that they’re fighting against the unstoppable tide of human nature. Perhaps, even, good things will get done because some seek out Utopia. But I’m still convinced that energy is better focused on particular goals.


About pilkingtonphil

Philip Pilkington is a macroeconomist and investment professional. Writing about all things macro and investment. Views my own.You can follow him on Twitter at @philippilk.
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1 Response to Capital Sins: To What End Should Economic Life Be Directed?

  1. Dantey says:

    Vvverryy though provoking and slightly distressing. I recognise that capitalism, even though, as you say , has come out of human traits that we despise, has been extremely useful for human society as a whole. The sheer productivity that it releases,if used right, is very powerful in lifting human living standards. But I think in the western world, it has come to a point where it is now destructive. Not to say, it cant be changed! As Keynes and Schumacher recognised, its a system based on human psychological traits. If so, then we have the power to change it to a system based on our traits that we dont despise.
    What’s your opinion?

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