“Capitalism is essentially a cultural phenomenon for which the property relationship is foundational.” This is the starting point for Dr Rowan Williams - former Archbishop of Canterbury and current Master of Magdalene College, Cambridge - in his thought-provoking response to the question: Can Capitalism be Ethical?
Dr Williams’ lecture launched the 2016/17 programme of the Capitalism on the Edge series of lectures organised by Murray Edwards College.
The problem with property
To answer the question, he says, we must first define capitalism. “In capitalist activity, we own, we exchange, we seek to accumulate, to translate other relationships into property relationships, like labour, and we compete about all these processes.”
In aspiring to generate surplus income, he continues, the resulting web of property relationships leads to the complex phenomenon we call the market, in which, “there is competitive deployment of what we already possess in order to create more possession.”
Dr Williams accepts that his sketch of capitalism is broad brush, but it helps us to understand some of the features historically embedded in the capitalist system: the need for a money economy to back it; the need for interest on money - to cushion against risk, and the need for guaranteed return on investment to justify the risks being taken. Managing risk, he adds, also led to the evolution of a limited liability model for economic activity in the early capitalism of the 16th and 17th centuries.
“On this basis,” says Dr Williams, “We can also understand why capitalism is regularly associated with private rather than social initiatives; why capitalism is resistant to regulation or direction from outside the trading unit.”
Here, he points out that a trading unit can be an enterprise, or even a state - such as today’s China - which is hostile to regulation or direction from outside.
From this perspective, argues Dr Williams, capitalism is not an ethical system. Rather, “it is a cultural practice, based on one particular model. As we will see, one of the risks in the model is that it tends to devour all other available models.”