Is Money Too Successful For The West?

Although the race for superiority between communism and capitalism ended already in 1990, the repercussions of the Cold War can still be felt at times. Political science students learn about the 40-year period of ideological warfare, but the more we move forward in time, the more difficult it seems to envision a viable competitive political paradigm next to the capitalist idea – especially for those who never experienced the Cold War. Capitalism has claimed superiority to the communist idea, and by establishing itself over this political system, it was able to unfold its full potential. Since the world has moved to a unipolar political order under the United States of America, the economic systems of the past 30 years, too, have turned to only one side, namely capitalism. Technological progress, vastly expanding financial markets, lower poverty rates and higher earning opportunities evolved and consolidated the idea that capitalism constitutes the pinnacle of economic systems. In this article, this argument is challenged. Due to the very limited scope of our contemporary political thinking, one might intuitively expect a defence of the failed communist idea. Solely because an argument is dismantled, it does not follow that the exact opposite stance is adopted. Instead, this essay aims to point out the challenges capitalism faces and why its success could potentially harm its further development.

The way these questions can best be tackled is to put the relevant concept into its life cycle context in order to understand at which point of development the concept, idea or process currently is. For example, a nation has life cycles according to which it develops and also experiences hardships. Usually, the founding era is quite difficult and tied to great struggles. After that, a period of growth and development sets in, given that the nation can survive the dangers of its founding days. To illustrate this idea in even simpler terms, we can think about our own life cycles, too. The birth of a human being and its first years are the most dangerous. Later, our childhood and youth will always be remembered as the most beautiful time of our lives. Afterwards, the struggles that set the natural rhythm of our life begin to set in more frequently and dependent on our life management, our life cycle curve slopes up or down. In the case of capitalism, we can identify the industrial revolution as the initiator of this economic school. Informed by technical capabilities and a heightened awareness of the importance of economic power in the international political struggle for power, money was then viewed as an end in itself for the first time, though not as explicitly as we might perceive it now. Communism emerged as a response to this fresh economic thinking, and the 20^th century was characterised by both ideas competing for survival in the early stages of their respective life cycles. With the collapse of the Soviet Union in 1990, capitalism fully entered into its second stage, though its consolidation as a viable economic system dates back to the 1960s. This second phase of its life cycle was characterised by great success, lasting until today.

Technological Progress

Especially, the invention of the internet accelerated the growth of capital markets through the expansion of investing opportunities, both spatially and temporally. And in the history of innovation, this marks a quite crucial point because the extent of new profiting possibilities structurally moved the importance of money further to the foreground. It could be seen as a break from previous innovative conduct. Whereas the scientific endeavour was, though to varying degrees, driven by normative considerations, such as improving quality of life or furthering our understanding just for the sake of understanding a certain phenomenon, the financial innovations of the late 1990s constituted the biggest trend of non-normative innovation in human history. With this wave of profit-oriented innovations, the idea of consumption also became more prominent. Credit cards, digital exchanges, globalised transaction networks and transnational trade operations did increase the volume and movement of money to such an extent that many people benefitted from this development. Surely, some might have used the additional funds to pursue normative goals, but the inventions themselves did not aim at improving things normatively. Accordingly, funds were allocated in the direction of more profit-promising projects, leaving scientifically valuable projects in the shadow. Today, we have reached a state of real slowdown in the development of normatively valuable innovations. Not only are the investment rates in producing assets lower, but the incentives for scientific progress are also not in place to fund scientific progress at high rates just for the sake of advancing in specific fields. This is not to say that capitalism purposely denies valuable projects access to funding, but the dynamics of money movement in such systems simply lead to such a situation. And where valuable developments are slowing down because the volume and dynamic of money are structurally more inclined to lead it to move elsewhere, we can make an argument for money being too successful to sustainably evolve within the capitalist system.

Political Systems

Equally prominent is the changing dynamic of power relations in the world. While money under capitalism did not necessarily trigger or fully carry the changes described below, we can attribute a certain weight to it in bringing about this change. What is meant by this is that we currently experience a significant shift in wealth on the global scale. Whereas Arab, Latin American and Asian nations were half a century ago far behind the European economies in terms of output and wealth generation, we today have sharply rising gross domestic products, less income inequality in those states and higher purchasing power compared to Europe. Also, production and innovation have shifted to those regions, too. Although those nations are not at the same industrial level as European nations or nations with European origin, the stark contrast in economic power decreases. As such, the political power constellations are affected, too. China is reinvesting much of its wealth in bolstering its international infrastructure operations to solidify its political power. Bazil and Saudi Arabia seek new alliances and diversify their income sources away from the United States of America.

When capitalism established itself as the superior idea to communism, this also had a strongly ideological note. It was not only the economic system that won but also the liberal idea that not only governs the market but interpersonal relations, too. By promoting this liberal idea that many nations under the umbrella of the so-called Washington Consensus freely adopted (many were also pushed to adopt such policies by the International Monetary Fund), even ideologically distant nations learnt about the European logic of economic policy. This gave competing nations significant advantages as they could adapt to the major markets of the world, Europe and North America. They, in turn, had a solidified position already, not needing to adapt to the markets elsewhere. But with that economic development, the centres of capitalism are now under pressure from newly rising centres that were once far more inferior. If we return to the idea that capitalism is treated in the White world as something more than just a way of structuring economic conduct, then we will easily identify that the underlying purpose of the capitalist idea was not to generate general prosperity but secluded wealth. The Marxist critique is just that: the market dynamics are oriented towards the goal of privileging an elite group and upholding a social class system. In the global political order and in the context of the Cold War, this aim translates into the aspiration to create a superior position towards non-capitalist and essentially non-white nations. But when those nations, that were formerly labelled as underdeveloped and merely exploited for the own economic success, suddenly started to reduce the distance, the calls for protectionist economic measures from the United States of America and European nations became louder by the day. The white nations today try to push for more regulation, marking a drastic turnaround from the deregulation policies between the 1980s and 1990s.

It appears that capitalism was never the objectively admired system but rather a vehicle to uphold societal distance towards all non-white nations that were exploited for centuries to create this societal and economic hierarchy in the first place. The leftist social and economic policies come in the wake of increasing capitalist and non-interventionist trends elsewhere in the world. It appears like the West will do anything to not be similar to Asians, Latinos and Arabs. If we have to answer the question of whether money was too successful, then: yes, for the West, money and the capitalist idea have become too successful. They enriched other parts of the world and, thus, reduced the hierarchical distance towards the white world. Maybe capitalism is not as unfair as proponents of the communist idea often portray.

Devletism as the solution

However, capitalism in itself remains weak. It can flatten out inequalities, as well as amplify them depending on its utilisation, but the quality of economic output will always tend to reduce normative elements by moving gradually towards pure profit-maximisation. Innovation and progress are either side-effects of economic considerations or merely opportunistic steps towards higher earnings. While it does perform better than communist systems in generating progress, it is an equally vulnerable system in terms of potential decadency. Under Devletism, the free market economy will have more normative boundaries and stricter standards in terms of product use and quality. Mainly utilising the price dynamic of money, devletist economies incentivise progressive behaviour. Also, earnings limits will force companies to channel capital into productive activities, pushing for growth and development. Further, the capital market will then also regain its role as a facilitator of financing new growth and not as a venue for engaging in solely profit-oriented activities. In short, Devletism uses the potential and success of capitalist infrastructures to channel it into sustainable societal progress.