Is Capitalism Facing a Philosophical Crisis?

The Rise of Capitalism: Argument for the Common Good

As we know, Locke and Smith were two great philosophers who were considered the founding fathers of capitalist philosophy. Locke gave us the theory of private property, one of the core justifications of capitalism, that made it spontaneously acceptable to people, and Smith’s theory of wealth of nations popularised the idea that the institution of the market was necessary for the creation of collective wealth. Clearly, both philosophers provided a philosophical justification for capitalist institutions, but it was full of ethical concerns. One has to ask whether this justification remains valid when we are reaching the end of time. ² We need to ask that if we are heading towards post-capitalism, a new form of production system can emerge, which cannot even be called advanced capitalism. One can agree that if the philosophy that supports the system is less acceptable to people, then the system itself will become more oppressive. Conversely, if there is increasing dissatisfaction with the system, then we can assume that the philosophy supporting the system is undergoing a deep ‘legitimation crisis’. ³

John Locke’s argument seems to be quite simple but powerful. The first premise is that natural resources belong to human beings in general. He gives two reasons for this, first, a natural reason that, ‘Men, being once, have a right to their preservation, and consequently to eat and drink, and such other things as nature afford for their subsistence’; second, he presents a religious argument or knowledge by revelation, ‘God has given the earth to the children of men’ (Shapiro, 2003, p. 111). The question that movements like Occupy Wall Street is asking is that if God or Nature has, indeed, given resources to humans for the common good, how come they are being cornered by only 1 per cent of people and the remaining 99 per cent are almost without resources. ⁴ Let us see if Locke’s justification of private property can answer this question aptly.

John Locke’s second premise is based on the labour theory of property which suggests that ‘Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his person: this body and the work of his hands, we may say, are properly his (quoted in Shapiro, 2003, p. 112)’. Once it is accepted that our body and its labour is our property, it becomes easy for Locke to make the next move. He further suggests that, ‘Whatsoever then he removes out of the state that nature has provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes his property’ (Shapiro, 2003, p. 112). This argument also seems acceptable, though more so in a less complex society where resources are in abundance. For instance, his example of fishing in an ocean is fine, as anyone who catches fish owns it even though the ocean remains common to humanity.

The third premise of his argument is that since one can own one’s labour as property and whatever is appropriated through this also becomes his property, he has the right to own the labour of any animal he has captured or of any human being who either willingly, in case of family members or friends, or otherwise, in lieu of some parts of the appropriated resources. In other words, man has a right over resources accumulated through his labour or through hired labour. This argument transforms human labour into a commodity as one can promise a part of accumulated resources in lieu of the labour and keeps the surplus with himself. Locke’s idea allows the accumulation of wealth and makes it fully legitimate. In a way, this premise of Locke undermines the first assumption that nature belongs to all of us collectively as he allows its private accumulation. I shall return to this point later in this section.

The fourth premise of Locke is a kind of restriction on the private accumulation of resources. He argues that, ‘He was only to look that he used them before they are spoiled, else he took more than his share, and robbed others. And indeed it was a foolish thing, as well as dishonest, to hoard up more than he could make use of’ (quoted in Shapiro, 2003, p. 120). This clause is interesting, and till now everything seems to be fine as resources are common, and man has mixed his labour or hired labour with nature to privately appropriate it, and he has no right to appropriate more than he needs. Beyond this, Locke starts giving concessions, and the first concession is that if he ‘gave away a part to anybody else, so that it perished not uselessly in his possession, these he also made use of’. Not only giving away but also if he has ‘bartered away plums, that would have rotted in a week, for nuts that would last good for his eating a whole year, he did no injury; he wasted not the common stock; destroyed no part of the portion of the goods that belonged to others, so long as nothing perished uselessly in his hands’ (quoted in Shapiro, 2003, p. 120). Locke’s idea of sharing the product or exchanging it seems to be fine as it should be considered only a minor concession to the spoil clause.

However, Locke does not stop there and goes to the second concession which further undermines the spoil clause almost wholly. He argues that,

…if he would give his nuts for a piece of metal, pleased with its colour; or exchange his sheep for shells, or wool for a sparkling pebble or a diamond, and keep those by him all his life, he invaded not the right of others; he might heap as much of these durable things as he pleased; the exceeding of the bounds of his just property not lying in the largeness of his possession, but the perishing of anything uselessly in it. (quoted in Shapiro, 2003, p. 120).

This concession to the spoil clause makes the trade in commodities possible and also the accumulation of wealth legitimate. Finally, Locke introduces the idea of money, which, in a way, is an extension of gold and silver. The benefit of money is that it is not perishable, and one can accumulate it for as long as one wants. Of course, the importance of gold, silver or diamond lies in the acceptance of them by men as important. In the case of money, its recognition has to be guaranteed by the state. There is less use or value of these items, but society creates an exchange value, and the state guarantees it. Locke argues that the incentive to appropriate fruits of labour would unleash the labour power of human beings, and this would enhance productivity. As a result, the productivity of land would go up, and the total availability of resources would increase. This logic of maximisation has been used repeatedly by economists to introduce reform in capitalism. We shall see how prioritisation of this logic has invariably undermined the other premises of Locke. In short, Locke begins with the premise that either by natural reason or by the dictates of religion, we have to accept that all natural resources are given to human beings as commons.

Let us now take up another great philosopher of capitalism and the founder of the philosophy of the free market. Smith’s comprehensive worldview is expressed in two of his books: The Wealth of Nations and The Theory of Moral Sentiments. However, over the centuries, the first one got an exceptionally enormous acknowledgement, whereas the second one has almost passed into oblivion. In the first book, Smith proposes a system, if followed, was supposed to transform private property in to the wealth of the nation. On the grounds prepared by Locke, Smith sowed the seeds of a system that is universally acknowledged, even by his opponents, as being the most productive one in the entire history of human civilisation. His underlying assumption is that humans are self-seeking beings, and like Locke, he thought that any theory has to take this as a given condition of human existence. He conceives that the economy as a system, in which these individuals pursue their self-interest and consequently produce a pattern of relationship, is based on the maximisation of their interest. This pattern of relationship produces the market system which follows a certain logic, and it needs minimum intervention from the state in maintaining an equilibrium. He explains this in these words:

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his advantage, indeed, and not that of society which he has in view. However, the study of his advantage naturally, or rather necessarily, leads him to perfect that employment which is most advantageous to the society. (Smith, 1776, pp. 569–570)

This was a kind of revolutionary idea at the time Smith proposed it as it released accumulated wealth by transforming it into capital and unleashed human creativity in the form of productive labour. The pursuit of self-interest, Smith suggests, produces the needed market equilibrium as the resources seek their most profitable uses, and the market maintains it because, in the equilibrium state, the rates of return to a resource in various applications will be equal. Smith demonstrates that by following self-interest, people promote the common interest as the logic of the market would always link the self-interest of an individual with the self-interest of capital and the self-interest of capital to productivity and profitability. Smith argues that man by ‘pursuing his interest, frequently promotes that of society more effectually than when he intends to support it’ (Smith, 1776, p. 572), and this becomes possible due to the invisible hand of the market. This unintended support to the system by intentionally pursuing the self-interest is the greatest strength of capitalism.

We need to remember that Smith’s ideas of self-interest, market and the common good are accompanied with certain ethical issues particularly reflected in his other text, that is, Theory of Moral Sentiments. Some scholars have suggested that Smith’s arguments regarding the interest and market have been interpreted with a particular motive by a generation of apologists of capitalism. They have argued that Smith has given sufficient emphasis on ethical issues, even in his Wealth of Nations, but this has generally been ignored. For instance, Emma Rothschild has challenged the centrality of the invisible hand argument in Smith’s writings. Her main contention is that Smith is an advocate of freedom, and he believes that the market would enhance these possibilities. However, his argument has been blown out of his immediate context of the eighteenth century and has been projected as if the invisible hand is ruthless, and it has no ethical limits. According to Rothschild, Smith’s main fear was that the contemporary state might work in favour of the powerful. As far as the state’s intervention for the poor and marginalised is concerned, Smith would not mind positive action in their favour. He is conscious of the fact that whenever the ‘legislature attempts to regulate the differences between masters and their workmen, the councillors are always the masters’, and there is a possibility of anti-labour policies, which he would like to oppose (Smith, 1776, p. 195). He can therefore be considered as one of the founder-philosophers of the idea of feeling, the project which was abandoned by the next generations of Smith readers. He argues that it is natural to the human being to try to feel others pain, even though it is difficult to match the feeling of the other as experiences are entirely personal. However, he argues that the importance of perception is that human beings try to adjust to others’ feelings which produces some virtue in them. A theorist of feeling and the consequent idea of mutual emotional adjustment probably cannot argue for a ruthless invisible hand of the market.

There is no doubt that both Locke and Smith provided a philosophical justification to capitalism through their theories of private property and market, respectively. However, we should not ignore that both also suggested the ethical limits of these institutions. They were fully aware that without these limits, defined in terms of the ‘common good’, there would have been no legitimacy of the system. Let me take my argument to the next step now. I want to explore what happened to the ideas of these founding fathers in the process of evolution of capitalism and, particularly, during the crisis it faced in different phases.

First Crisis of Capitalism: Birth of the ‘Civilisational Mission’

Let me begin with the first crisis of capitalism that emerged in Europe after the first phase of a massive boom in the economy during 1848 and 1873. This was boom time as British cotton goods export in one decade were almost equal to that of the past three decades. ⁵ Eric Hobsbawm rightly termed this as an ‘Age of Capital’ (Hobsbawm, 1975). However, by 1873, the economy started crumbling as, one by one, several banks plummeted into crisis. ⁶ There is a debate about whether we should consider this as crisis or merely a phase in the growth process. The economists from the Austrian school deny this was a depression. Instead, they argue that it was the time of a relatively large expansion of industry, railroads, physical output, net national product and real per capita income (Roberts, 2016). Contrary to this thought, the Marxist school treated this as a major depression as the gross domestic product (GDP) continued to rise in this period as did per capita income in real terms, but it was also true that most countries experienced lower growth rates relative to the earlier and later nineteenth century(Roberts, 2016). There is no doubt that this crisis was happening at the growing stage of capitalism. As a result, conditions were not so harsh for workers. During this crisis, many firms prospered, wages did not fall as new industries were coming up and, of course, workers though displaced were not thrown out.

My purpose is not to go into the debate about the crisis as I am more interested in finding out what happened to the ideas of the two founders of capitalism during and after whatever happened to capitalism in this period. As we know, three measures were taken to solve this problem: protectionism, colonialism and growth in the arms market. The expansion of the arms industry and military power aimed at controlling the natural resources of other nations and protecting their resources. So, colonial expansion was another strategy for capital during this period. It provided cheap labour and raw materials, a captive market and opportunities for new investments. ⁷

The first phase of the crisis of capitalism and its resolution shows that not only the idea of free trade was compromised but also human beings of other geographical regions were brutally enslaved through colonialism. Natural resources were drained, and they were reduced almost to inhuman life. Colonial regimes compromised with the basic idea that natural resources belong to all human beings living in these areas and any attempt to acquire resources should ultimately be aimed at an increase in production so that more resources should be available. Of course, colonialism increased the production of resources but at the cost of forced labour and without giving an appropriate share to the natives. Similarly, it also compromised with the idea of Smith’s moral sentiments. The regimes were so oppressive that they hardy treated natives as human beings.

Moreover, protectionism compromised with the idea of free trade, which was supposed to guide the economy for equilibrium, and ultimately to give some solace to the working masses and small producers. It required militarisation of the state, and gradually capital moved from producing resources useful for human survival to the instruments of mass destruction. All this happened in the name of ‘civilising the world’ by freeing it from oppressive feudal relations through introducing new modes of production and distribution. However, colonial capitalism was recognisably different from the capitalism of colonising countries as resources were drained and not distributed in the country of its origin.

Second Crisis of Capitalism: Innovating Welfarism

Now, let us see what happened to the idea of the common good in the second phase of the crisis of capitalism. The measures taken for solving the crisis of the first phase reached its limits by the early twentieth century. Intense competition for colonies and accumulation of arms led the world to a world war between capitalist countries. This time, war was not fought by swords but by firearms,and the loss of life was unprecedented. Only a couple of decades after World War I, capitalism started facing another unprecedented crisis; known as the Great Depression, it began in 1929 and it lasted for almost a decade. The concentration and centralisation of capital that happened while solving the first crisis transformed the nature of capitalism, and it moved to its monopoly phase. The crisis originated in the USA with a fall in stock prices that began around 4 September 1929, and then spread to the rest of the world with the stock market crash of 29 October 1929 known as Black Tuesday. It had a devastating effect on some countries resulting in a decline in personal income, tax revenue, trade and employment (Tumin, 1991).

Once again, without going into the reasons for the Great Depression and the debate on this issue, I would like to see how this crisis was solved and what were its political consequences. One solution to the crisis was increased arms production, giving rise to the notorious military–industrial complex as a dominant player in both the economy and polity. The American economy got converted into a war economy with the state making huge investments. Many industries involved in the production of consumer items transferred their capital to the arms sector. The power of this new player was recognised by President Dwight D. Eisenhower in his farewell speech of 17 January 1961 in which he used this concept for the first time. He warned, ‘In the council of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist’ (Eisenhower, 2006). The military–industrial complex plays a significant role not only in the policymaking process but also in the social life of an ordinary individual. For instance, it has started using cinema less as an art form or as commercial entertainment, but more as a tool to forward particular social, economic and political objectives. ⁸ Eisenhower rightly predicted the growing role of the military–industrial complex. Even today, the American economy is controlled by this phenomenon, further compromising capitalism’s ethical aspect and distancing it from the dream of its founding fathers.

The other measure to overcome the crisis of capitalism was based on the ideas of economist John Keynes who analysed the crisis in terms of a demand–supply equilibrium. He argued that during the crisis, instead of wage reduction, there should be a wage increase. He thought this would increase productivity and purchasing power thus regulating the market. This cycle of production and consumption, he thought would revive the economy, by emphasising its demand side. This policy became widely accepted and dominated the world for a few decades after World War II. In the USA, it took shape as the New Deal policy of President Roosevelt. One main reason why capitalists had no option but to accept the theory of Keynesian economy was the presence of a strong labour movement. This was the phase of capitalism when industrial production was labour intensive, and there was a possibility of negotiations on wages.

However, it is a debatable issue if the crisis was solved by adopting the Keynesian policy or by orienting the economy towards arms production. One thing was clear that in the post-war scenario, American hegemony in the capitalist world was fully established, and advanced capitalist countries emerged as significant arms suppliers to the rest of the world. This situation produced a great paradox as the system became internally supportive but externally exploitative. Welfare measures undertaken by the state provided a human face to capitalism as the system invested in welfare projects. Still, increasing dependence on the arms industry forced it to create war zones outside Europe and North America artificially. For a few decades, the Cold War helped advanced capitalist countries in sustaining their economy as it expanded the arms market. There was a revival of the capitalist economy, which had nothing to do with the ‘common good’ of humanity. Sustaining itself, capitalism started destroying humankind.

Third Crisis of Capitalism: The Idea of Freedom

The third phase of the crisis of capitalism was entirely different from the earlier two forms, and its resolution, in a way, transformed capitalism more fundamentally. The 1970s crisis was unique in a way as wages did not fall during this time, but there was stagnation and inflation together known as stagflation. Due to high taxation, increased trade union activities and workplace resistance reduced profits for capital. Moreover, the state needed more resources for maintaining welfare schemes introduced during the Keynesian regime. This crisis was explained in terms of an overburden on the state caused by its involvement in welfare policies. One solution suggested was to reject the Keynesian welfare economics as a guiding principle for states and its replacement by neoclassical economics. The central idea of this new philosophy was the withdrawal of the state from all welfare activities and to subject all such things to market forces.

International financial organisations like the International Monetary Fund (IMF) and the World Bank, which came into being after the two world wars, were working on behalf of multinational corporations. They started a process of replacing Keynesianism as state policy throughout the world. Gradually, most countries have accepted this new paradigm and began replicating similar policies. Ronald Regan and Margret Thatcher got their second terms as heads of governments and promoted neoclassical liberalism aggressively. The world economy recovered in a few years, but the nature of capitalism transformed fundamentally.

The term neoclassical gives an impression that it is a version of the classical economics as articulated by Smith in which the market was imagined as a mechanism to unleash the creative potential of labour and necessary to support the idea of freedom. However, the two great exponents of this idea, Frederic Hayek and Milton Friedman, economic advisors of Margret Thatcher and Ronald Regan, respectively, transformed the logic for the legitimacy of capitalism from the ‘common good’ to the ‘freedom discourse’. Friedman introduced his book with his thesis in clear terms that freedom is the main goal of capitalism—consider the following paragraph:

First, the scope of government must be limited. Its primary function must be to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive markets. Beyond this primary function, the government may enable us at times to accomplish jointly, what we would find it more difficult or expensive to accomplish severally. However, any such use of government is fraught with danger. We should not and cannot avoid using the government in this way. However, there should be a clear and large balance of advantages before we do. By relying primarily on voluntary co-operation and private enterprise, in both economic and other activities, we can ensure that the private sector is a check on the powers of the governmental sector and an effective protection of freedom of speech, of religion, and thought. (Friedman, 1962 p. 3)

So, for Friedman, the role that the state adopted during the Keynesian phase was an aberration and against the essential liberal idea of freedom. He emphasised that the importance of the state was limited to regulation and monitoring of the market, but beyond this, he argued, it is fraught with danger. He advocated reform in terms of withdrawal of the state from all other activities and the introduction of the free market, voluntary cooperation and free enterprises. He thought this would once again unleash human creativity and protect individual freedom.

Similarly, Hayek argued that socialism or collectivism reflected in the idea of centralised planning was a ‘road to serfdom’. In a way, there was common ground between the idea of socialism and classical economics, both are based on the assumption of a ‘common good’. The central critique of classical economics by the advocates of socialism was that it could not deliver the common good as promised. To recall, both Locke and Smith argued that private property and the free market would enhance the total resource available for humanity, which was considered as serving the common good. However, Hayek, in this book, shifted this ground to freedom and argued that the main advantage of private property and the free market was the freedom that human beings enjoyed. So, he considered capitalism as a necessary condition for freedom and, in contrast, socialism as a necessary condition for serfdom. He concluded his famous book, Road to Serfdom, by suggesting that, ‘The guiding principle, that a policy of freedom for the individual is the only truly progressive policy, remains as true today as it was in the nineteenth century’ (Hayek, 1944, p. 245).

So, by the time capitalism could overcome its third major crisis, the classical concern of Locke and Smith was almost reinterpreted, and instead of the common good, freedom discourse was privileged. For the classical thinkers, freedom was a means to contribute to the common good as it was necessary for creativity, whereas, for neoclassical thinkers, freedom became an absolute value. This obsession with individual freedom constituted the core legitimisation principle for contemporary capitalism. I want to suggest that this should be considered as a philosophical mutation of capitalism as it has a substantial social and political impact. After 1970, Keynesian policies nearly vanished from the economic policy discourse in major economies. Keynesian economics is now hardly part of any standard macroeconomic text in any major Ivy League universities.

Capitalism’s Contemporary Crisis: ‘Ontological Mutation’

Let me now talk of the contemporary crisis of capitalism, its nature and consequences, as this marks the ontology of the contemporary time. This is the phase of crisis that is most important for us, yet, I took a detour and decided to discuss the earlier stages as I want to demonstrate the gradual depletion of concern for the ‘common good’, which used to be integral to the philosophy of early capitalism. By the time capitalism reached the twenty-first century, it was almost emptied out of any sense of the people’s well-being. It is now a self-propelling profit-oriented system which has the philosophical backing of the idea of absolute individual freedom. One has to examine the thesis of the new philosophers of capitalism, the neoclassical economists, that ‘the market is a necessary condition for individual freedom’ and contrast it with an alternative thesis that ‘individual freedom is a necessary condition for the market to survive’. One has to ask whether capitalism decided to rely more upon the market than on the democratic state as it did not see it as a reliable ally essentially because the political class draws its legitimacy from popular sovereignty which goes against the notion of capitalism.

This time the crisis of capitalism, which is yet to be entirely over, started in 2007 with a collapse of a series of banks, first in the USA and then in different parts of the world. The financial institutions which had survived for centuries and managed to overcome the earlier crisis crumbled almost like a house of cards. An interesting part of this story is that so-called great minds and ruthless managers of these firms known as ‘corporate wolves’ could not even predict this crisis which was almost like a tsunami in the economy. The Guardian, a prominent British newspaper said that this was not a natural phenomenon but a human-made disaster and published a list of 25 people responsible for this unprecedented crisis (Finch, 2009). This list contained the names of prominent bankers such as Alan Greenspan (chairperson of the US Federal Reserve) Mervyn King (Governor of the Bank of England), Abby Cohen (Goldman Sachs, chief US strategist) and Dick Fuld (Lehman Brothers, chief executive). They were heroes of that time with a tremendous capacity to make profits out of speculation, drawing huge salaries, even during the crisis, from the bailout packages given by the government out of taxpayers’ money.

This was speculative capitalism as money was invested mainly in finance, real estate and insurance. The investment in production went down as speculation in financial assets and real estate gave higher returns. It was a credit fuel boom in the economy as the interest rate was brought to almost zero, and credit was given without much consideration on the payback capacity of the borrower. The moment there was a downtrend in the share market, and the real estate sector, this artificially created boom collapsed completely (Roberts, 2016). It is interesting to note that not only corporate geniuses failed to predict this crisis coming but economists were also unable to envisage the crisis. ⁹

As I intend to show the problem with the philosophy of the neoclassical phase of capitalism, I would like to draw attention towards the language experts are using to explain what went wrong with the system. Consider the language of the report produced by the Financial Crisis Inquiry Commission, constituted of members of the Congress for both the parties, set by the government of the USA, under the Fraud Enforcement and Recovery Act:

Unfortunately—as has been the case in past speculative booms and busts—we witnessed an erosion of standards of responsibility and ethics that exacerbated the financial crisis. This was not universal, but these branches stretched from the ground to the corporate suits. They resulted not only in significant financial consequences but also in damage to the trust of investors, business, and the public in the economic, system. (Angelides, 2011, p. xxii)

This report gives several reasons for the crisis. However, I am interested in one of the reasons quoted above in which it mentions categories like ‘standards of responsibility and ethics’ and ‘trust’. One can easily guess that this is not the language of neoclassical economists as they never emphasised on humans as moral and ethical beings. Does this mean that the model of the economy, based on the assumption that humans are self-seeking beings and if they pursue their self-interest without any compromise they will create a free society, has failed?

The report suggests that whatever reasons are given for the crisis, we must see them in the context of ‘human nature and individual and societal responsibility’. It says that it would be simplistic to ‘pin this crisis on moral flaws like greed and hubris’. However, one has to accept that it was ‘the failure to account for human weakness that is relevant to this crisis’. The report accepts the crisis was a result of ‘human mistakes, misjudgements and misdeeds’ that resulted in systemic failures for which our nation has paid dearly. These are the words used in the concluding paragraph of the report (Angelides, 2011). Does this mean that neoclassical economists should rethink their concept of human nature as, on the one hand, they theorise human beings as self-seeking individuals, and, on the other they wished all human beings would work as socially responsible persons? One can consider ‘human mistakes’ and ‘misjudgement’ as natural even for self-seeking individuals, but how can one account for ‘misdeed’? If ruthless persuasion of self-interest was considered to be a ‘misdeed’ of self-seeking individuals, it should be considered as a contradiction in the philosophical system.

Before drawing a general conclusion from this apparent contradiction in the language of the report, let me examine the report of the Commission on the Measurement of Economic Performance and Social Progress (CMEPSP)—produced by a committee of prominent scholars, chaired by Joseph E. Stiglitz, Amartya Sen and Jean-Paul Fitoussi. The commission was constituted in February 2008 by the President of France, Nicholas Sarkozy to identify the limits of the GDP as an indicator of economic performance and social progress. It was asked to develop alternative measurement tools to help in conceptualising social progress, which could include concerns for the wellbeing of people. The assumption behind the formation of the commission was that GDP is an inadequate metric to gauge wellbeing over time, particularly in its economic, environmental, and social dimensions, some aspects of which are often referred to as sustainability (Stiglitz, Sen & Fitoussi, 2018).

One can read the fear of losing the legitimacy of capitalism which is coming out of the danger of the erosion of the validity of self-interest-based argument for capitalism. As I have argued earlier, the current crisis has thrown a philosophical challenge to capitalism because the case that the free market would ensure individual freedom has lost its validity. Capitalism to survive has to look for a new philosophical foundation. I do not think any of the reports acknowledge this need explicitly; however, reading between the lines, they give a clear impression that a philosophical crisis is looming large in the background.

It is this philosophical crisis that has forced economists to raise moral questions which has been generally out of their paradigm of thinking. The report takes help from the behavioural economists like Daniel Kahneman, Ed Diener & Norbert Schwartz (Kahneman, 2011; Kahneman, Diener & Schwarz, 1999), who consider wellbeing closely related to personal happiness. The report borrows the idea of subjective wellbeing from Diener in the following terms:

Life satisfaction, i.e. a person’s overall judgment about their life at a particular point of time; the presence of positive feelings or affects, that is, the flow of positive emotions (such as feeling happiness and joy, or sense of vitality and energy) from moment to moment; and the absence of negative feelings or effect, i.e. the flow of negative emotions (such as feeling angry, sad or depressed) from moment to moment. (Stiglitz, 2009, p. 146)

This is a clear departure from the language of neoclassical philosophy. Does the return of the economist to the moral philosophy indicate a search for a new paradigm? I think so.

One would agree with Michel Sandal that the diagnosis of the current crisis in terms of human greed is not fair as there cannot be such a change in human nature in the past few decades (Sandal, 2012, p. 10). Sandal suggests that in the previous three decades, the market has penetrated in the domains of human beings’ personal and social life to the extent that the market economy has transformed into a market society. According to Sandal, under market triumphalism we are not allowed to even debate about the desirability of a market society. We do not have a chance to question the growing influence of market relations in one’s public and personal life; it was challenging to stop the penetration of the market even in areas which otherwise we should have kept away from. I think Sandal is right that human greed is a specific state of behaviour, which is produced under the excessive penetration of the market. The market follows the logic of profit,and in combination with the unrestricted pursuit of self-interest, in terms of an excessive dose of consumerism, has produced a market society without any respect for human value.

We see in the earlier analysis that the philosophical basis of legitimation of capitalism has first shifted from the idea of the common good to the freedom of self-seeking individuals, and then during the contemporary crisis even the latter is under serious challenge. Many scholars have started raising doubts about the survival of capitalism itself. Scholars have already started talking of ‘post-capitalism’. However, it is too early to say what will happen next as trends are not clear as yet. One possibility is the return of Keynesian policies, as state intervention is required to discipline the market for a reduction of inequality and improvement in the employment situation (Krugman, 2012; Stiglitz, 2010). It is argued that this will revive the demand in the market and set the economy right. Is there any possibility of the return of Keynesianism? I think that such a possibility hardly exists as factors forcing the state to take such measures are missing now. Neither a strong trade union movement nor any viable political movement against capitalism is visible at the moment.

Moreover, the capitalist state has developed enough techniques to manufacture consensus, and its coercive capacity also has massive technological support. In such a situation, it is difficult to accept that the capitalists state will give up easily. On the contrary, one can imagine the emergence of a more powerful coercive state with a stronger set of ideological apparatuses. This is a time when there is no parity, not even a national one, between two contradictory forces of the system, as the capitalist class has tremendous control on financial resources and almost complete control on the political power, whereas workers have an unprecedented lack of bargaining capacity. There is a fragmentation of oppositional politics at a time when the ruling class is most organised politically, institutionally and discursively, which does not give much hope for the return of welfare economy (Venn, 2018).

There is a strong appeal of the ideology of the ruling classes as people believe that there is hardly any option available. The other possibility, which seems to be more real, is a new science and technology intervention to reduce the dependence of capital on labour to increase profitability. No one can deny the chances of emerging technological solutions to the contemporary crisis of capitalism from within the fields of robotics, genetics, and Artificial Intelligence, which would change the nature of work. As a consequence, there will be a massive increase in unemployment.  No doubt there is a possibility of the emergence of new marketable skills. However, one cannot deny that some people with old skills will be pushed towards the margins of the labour market. The nature of the labour market is also going to change drastically as the market will be globally spread, and technology might make it possible to work without spatial migration. Probably there will be more jobs with more insecurity as the number of tenure employment might almost disappear. A good number of people might remain underemployed if not unemployed. This trend is already emerging in many sectors in advanced capitalism and the developing world. A new policy option of basic minimum income is being discussed widely. The idea is to develop a safety net for the vulnerable population.

To solve this problem of unemployment several models are being suggested. The most widely discussed model is that of a universal basic income being provided by the state. This is a replacement of the guaranteed-minimum-income scheme such as the Mahatma Gandhi National Rural Employment Guarantee (MNREGA). The basic minimum income scheme proposes an income which is sufficient for meeting basic needs for survival, and it is supposed to be covering every individual (not household) irrespective of their income. It is argued that this will guarantee ‘real freedom for all and not just for the rich’ and it is considered to be an ‘instrument of freedom’ (Van Parijs & Vandesbrought, 2017, p. 4). Several international organisations have been formed to carry on the advocacy for this policy like the Basic Income Earth Network and United States Basic Income Guarantee. There are strong advocates of this policy in the Third World countries too, like India and Brazil (see Devala, Jhabwala, Mehta & Sanding, 2015; Murray & Pateman, 2012). Several issues related to its feasibility and desirability are being debated. Probably in advanced capitalist countries, this might be a feasible policy but not in Third World countries. There is a possibility that in the former, capital would move further towards military–industrial complexes, and given growing tensions in the international politics, it would make a profit by selling arms to Third World countries as the indications are already there of a fresh arms race in countries like India and Pakistan. In the advanced capitalist countries this military–industrial capital might make enough profit to feed the unemployed population. This will be necessary for keeping any future popular unrest away.

However in developing countries, not only is the basic minimum income is not a feasible idea, but also it might lead it to a further decline in the state’s welfare schemes. For instance, the Indian state has already started popularising the security discourse and increasing its budget for arms purchase. Also one can link the fast withdrawal of the Indian state from the health and education sector as a symptom to this new model of the emerging global economic scenario. One can imagine that such changes in policies will get an adverse response from the common people, which will push the Indian state towards further authoritarianism.

The ‘ontological mutation’ of contemporary capitalism due to technological innovations and contraction and centralisation of capital is throwing a serious philosophical challenge as the fundamental principles of human beings’ relation with nature, the role of state and government, labour and productivity, almost everything is being freshly discussed. The fact that the universal basic income model is widely discussed in a world which is witnessing a deep economic crisis suggests that a huge churning is going on, and it should be considered both as a symptom and as a consequence of this ontic mutation. One can imagine these symptoms and outcomes in the form of growing alienation in society, populism in politics and dystopian tendencies in literature worldwide.

Emerging Trends: Alienation, Populism and Dystopia

There are at least three indications that support the idea that the crisis of capitalism has induced fundamental changes in domains other than the economy. These are simultaneously symptoms and consequences. The first among them is a series of interconnected phenomena linked to the rise of unemployment—growing alienation, an increasing rate of suicide, the resurgence of religion and the politics of identity. As we have discussed earlier, there is a significant rise in the figures related to unemployment globally, and this has serious implications for social relations. A hyper-consumerist culture, unleashed by neoclassical economics and its overemphasis on the expansion of market relations in every realm of society, profoundly impacts human relations. It not only challenges the institution of the family but also negatively influences other aspects of humans as relational beings. Changing social relationships under capitalism’s market morality regime has been a subject of analysis for a long time (see, for instance, Ollman, 1976). The level of alienation has risen to such an extent that the British government has had to appoint a ‘Minister for Loneliness’. One of the differences between the earlier crisis of capitalism and the present crisis is that the level of loneliness has increased substantially. The rise in unemployment during an economic crisis is not new. But earlier, there was a better social support system to take care of this crisis. This time, with the rise in loneliness, there is hardly any such support.

Three separate phenomena can be linked with this growing alienation and its declining social support. First, the rise in suicide rates almost globally. The link between increasing suicide rates and an economic crisis is not new, and studies suggest that an increasing number of suicides in Europe, America and other countries is linked to high levels of job loss. ¹⁰ This point is further supported by the fact that there is a rise of suicide among the economically active population and women. The lack of social support for people suffering distress and several kinds of medical problems associated with it and finally having suicidal tendencies has been noted by the modern state. There are efforts by the state to break the stigma attached to accepting the problem of mental health and visiting an appropriate consultant. ¹¹ Mostly, the question of suicide is treated as a psychological issue, and the causal relationship between economic crisis and suicide remains under-researched.

Second, there is a rise in religiosity among people. Studies on new religious movements suggest that people tend to visit New Age gurus to de-stress themselves. The discourses delivered by these gurus are mostly about the value of life and futility of the material world. However, they also expect people to pay money for such highly spiritual discourses. In a way, spirituality is transformed into a commodity in this process, and even during the deep economic crisis, this is a flourishing business.

Third, there is a rise in the tendency to search for community. Consequently, several associations based on primordial identities are created to rediscover the relational self. It is in this process that religious communities become one of the important destinations even for those who are losing their affinity to their community under the influence of modernity. In many cases, the ruling classes also conveniently use this newly found affinity towards the community for transforming into communal politics. I think all three processes are simultaneously autonomous and interlinked in the sense that they do not logically follow each other. Still, they do have some kind of causal connection with each other.

The philosophical crisis of capitalism is also reflected in the growing influence of populism in politics, mostly in the form of the right-wing variety. In this phase, capitalism is ready to abandon the substantive democracy, and use formal democracy to facilitate its interest. This process has fastened in the post-2008 economic crisis. This has been reflected in the Brexit vote, victory of Trump and the return of the right wing in power in many countries including India (Fitzi, Marckert, & Turner, 2019). The politics based on populism generally appeals to the ‘disillusioned’, ‘left behind’, or ‘just managing’ kinds of people as they are more vulnerable due to their anxiety of being so. Populism’s appeal should be understood as a response to the fundamental reshaping of our political, economic and social spheres (Fieschi, 2019). One has to ask if it should be seen as the consequence or symptoms of the ontic mutation due to the deep philosophical crisis that capitalism is facing today. This crisis has thrown a fresh challenge to the legitimacy of the liberal state, which promised to consider individuals, not as members of communities but its own citizens, protected fully by rights offered through the Constitution.

This distrust towards the state has turned individuals towards their communities as they find them useful for their security. This affinity towards the community is used as a tool for different forms of the populist politics at the time of deepening economic crisis. Populism uses the anxiety of both majority and minority communities for political mobilisation. The community identity is consolidated by harping on the otherness of the rival community, and it blurs the contradictions based on inequality and exploitation. It fundamentally transforms the nature of modern politics as the primordial loyalties start playing an important role. Populism is the most dangerous to democracy, but it suits the interest of the capitalist class as the attention of the masses is diverted from the primitive accumulation it is involved in during the economic crisis. Though people fall in the populist trap, they remain fully aware of their financial needs and the impossibility of managing it in the present situation. This produces a sense of dystopia in them which is reflected in the popularity of the genre of literature and serials produced in recent times.

The growing popularity of dystopian literature can be understood by the fact that a novel of this genre, The Camp of the Saints written in the 1970s by Jean Raspall, a French author, was critiqued by a number of reviewers as racist and another version of Mein Kampf. It has now been mentioned in the L’Express now as a bestseller. Jill Lepore, a Harvard historian, rightly calls our time as a golden age of dystopian fiction. He suggests that the new trend of dystopian literature is quite different compared to the earlier ones. Earlier, dystopia used to be a fiction of resistance; now, it has become ‘fiction of submission, fiction of an untrusting, lonely and sullen twenty-first century, the fiction of fake news and info-wars, the fiction of helplessness and hopelessness’ (Lepore, 2017). Houellebecq, mentioned earlier, is one of the prominent dystopian writers in France who has attracted attention worldwide. But it is a trend not merely in France. Basma Abdel Aziz is an Egyptian and, as a psychiatrist, finds dystopian writing providing her space to express discontent about totalitarian absurdity (Abdel Aziz, 2016). Her novel, The Queue is about regime’s attempt to rewrite reality and its efforts to propagandise, shift blame, keep repeating lies and surveillance. Purushottam Agrawal, an Indian novelist, expresses similar concerns in his novel, NACOHUS, an acronym for National Commission for Hurt Sentiments (Agrawal, 2016). He imagines that the Government of India has formed a committee to resolve the conflict among different groups based on caste, community, language, gender, and so on. The diagnosis of the conflict suggests that their sentiments are hurt and the commission is supposed to pre-empt conflicts and resolve them. However, the real intention of the state is to hide its authoritarian intentions. Agrawal further imagines that this commission has decided to resolve such conflicts in the university and in the name of that dissenting intellectuals are picked up by the police. One can go on discussing a number of such novels published in the past few decades and hitting the list of bestsellers. My aim here is to ask the question if this change in the literary scenario suggests that there is something changing in our society at the fundamental level.

Conclusion

In this article, I have discussed that the contemporary crisis of capitalism is much deeper compared to earlier ones. It is a product of a situation in which rich elites have confiscated what remains of the commonwealth (Klein, 2014). I think we need to ask if what we are witnessing today is only a crisis in one or the other aspect of capitalism or it is a fundamental philosophical crisis as it has lost its ground for justification. For decades, it could manage other forms of crisis as its philosophy was still mostly acceptable. I would agree with the idea that it is an ‘ontological break’ in the history of human civilisation (Feldner & Vighi, 2015; Zizek, 2010). It is pertinent to ask if capitalism will remain as an organising principle in the emerging future of humanity keeping in mind that the two major justifications of such an organising principle—the theory of common good and individual freedom—have failed.

In other words, the current economic crisis has proved the point that two components of the organising principles of capitalism, private property and market, have failed to produce either common good or individual freedom. No doubt, capitalism is facing a ‘new anxiety’, and it is ‘morally bankrupt on track for tragedy’ (Collier, 2018). If we agree with Jonathan Tepper that it is a ‘deformed version of capitalism’ (Tepper, 2018), and ‘a steady undermining of the trust’ (Reich, 2016) that exists today, capitalism will be digging its grave soon. One can say the reflection of Houellebecq, discussed earlier, is not without any ontological basis. If this point is accepted, the next big question will be to explore theoretical tools to understand this ontological mutation as the available resources might not be adequate.