Socialism, Capitalism, Risk, and Innovation

One of the themes that comes up often in debates between socialists and capitalists is the idea of ‘punishing success’.

‘When someone, a genius, a person of distinctive intelligence, comes up with a brilliant idea that makes huge savings and improves people’s lives, and in consequence becomes very rich, why do socialists want to punish them, by depriving them of their rewards? Such people are doing great services for humanity – why does socialism hate them?’

To this the simple response is that there are two personalities here: the big capitalist, who has skillfully accumulated a lot of capital, or otherwise come by it, and the innovator, someone who performs or has performed a particular productive sort of intellectual labour. Sometimes the two overlap – often they don’t. Socialists are hostile to the former, but not the latter.

Indeed, the argument is perhaps analogous to something like following, from a defender of an Classical (i.e. not racialised) form of slavery:

‘When a slave of distinctive intelligence, a genius, comes up with a brilliant idea that makes huge savings and improves people’s lives, and in consequence gains their freedom and enough money to buy themselves many slaves, why do anti-slavery advocates want to punish them, by depriving them of their rewards? Such people are doing great services for humanity – why does anti-slavery hate them?’

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Capitalism and the Industrial Revolution

I’ve recently been reading some of the work of Eric Hobsbawm, focusing on the Industrial Revolution in Britain and its causes.

Now, there’s an idea which is widespread both among ardent defenders of capitalism and among many of its Marxist and Marxist-inspired critics, that the industrial revolution, and the worldwide technological transformation which it initiated, is intimately involved with capitalism – we have capitalism ‘to thank’ for it. Mostly this is presented as a good thing, and I would overall concur with that analysis, although the environmental consequences have not been brilliant.

What Hobsbawm argues, though, is that while the industrial revolution emerged along with the growth and strengthening of British capitalism, and while the two were certainly connected, capitalism was not actually a very ‘fertile’ ground for industrial revolution, because profit-oriented production tends to be actually quite conservative. He writes:

“It is often assumed that an economy of private enterprise has an automatic bias towards innovation, but this is not so. It has a bias only towards profit. It will revolutionise manufactures only if greater profits are to be made in this way than otherwise. But in pre-industrial societies this is hardly ever the case.

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