What the world needs, according to Lynn Forester de Rothschild, is “inclusive capitalism” (what Mussolini called corporatism) with the aim of “creating long-term value for all stakeholders — businesses, investors, employees, customers, governments and communities….”1. Standing foursquare behind this one percenter la Pasionaria is her hubby the 90-year-old Sir Evelyn Rothschild, the Don Quixote of the financial world, the same gallant knight that smeared President Trump as “a lunatic”2. And now this pecksniffian pair of self-appointed elitists have the audacity to lecture the rest of us on the so-called benefits of ‘globalism’.
The word for their self-aggrandising nonsense is balderdash. A stakeholder is someone with a direct financial interest in a business. To suggest, for example, that I have a claim on a business of some kind simply because I buy its products or work for it is patently absurd. You can bet your last dollar that when Lady Rothschild, as she likes to be called, speaks of stakeholder capitalism she is not including the House of Rothschild and its innumerable plush offices, banks and opulent mansions.
The striking thing about Lynn Rothschild and her pompous ilk is their total ignorance of economic history as well as their exceedingly shaky grasp of even basic economics. This was made clear when she used neo-Marxist claptrap to fatuously accuse Western capitalism of being “the root of the social and political dysfunction gripping the world.3” Fortunately for us Lady Rothschild and her valiant hubby, along with their billionaire pals, have bravely taken it upon themselves to save us, the little people, from the avaricious claws of capitalism and everything it has to offer, despite the fact that she and her elitist pals have brought misery and economic mayhem to Europe.
Readers should note that what the brilliant Lady Rothschild and her collaborators have failed to do is tell us what capitalism is and why it is supposed to be broken and if it is broken then who did the dirty deed.
A free market is defined by voluntary exchange without which there can be no property rights, the one follows from the other4. However, every market is burdened to a certain degree by taxes and regulations. The lower the regulatory burden the more successful the market will tend to be in satisfying the needs and wants of consumers5. This brings us to the much maligned Industrial Revolution that within a span of 100 years raised the standard of living of the masses to an unprecedented level. Nevertheless, despite this success capitalism still gets a bad rap from rabid socialists whose attacks bear a strong similarity to her Ladyship’s sanctimonious attack6.
To deal effectively with capitalism’s critics it is necessary to begin with a quick overview of nineteenth century capitalism, a subject of which Lady Forester de Rothschild and her galère of champaign socialists (or should I say fascists?) are painfully ignorant.
From 1817 to 1896 there was a considerable productivity-induced fall in prices, “with only one short interruption of some six or seven years”7, which raised real wages. Put another way, increased productivity drove up real wage rates. Accurate estimates of how much incomes in general rose face significant difficulties in the absence of retail price indexes. Nevertheless, Bowley did sterling statistical research in this area. He found that while money incomes remained fairly steady from 1820 to 18518. prices had fallen by 35 per cent thereby raising purchasing power by about 54 percent. What cost £154 in 1820 now cost £100 in 18519, and from 1840 to about 1892 money wages rose by roughly 60 per cent10. Bowley also points out that from 1873 to 1895 prices fell by 45 per cent11. This raised the purchasing power of a pound by 82 per cent. Drawing on statistics from the Board of Trade Blue Books Scottish economist William Smart noted
that 69d [a ‘d’ is a penny] to-day buys as much as 100d did in the average of years about 1873. Or, to use another calculation, 100d to-day buys as much as 140d. did twenty years ago.12
Unfortunately many economic historians managed to somehow overlook the statistical evidence and continued to preach that the Industrial Revolution had impoverished the masses, at least in the first half of the century, and had brought about the moral “degradation of a large body of producers”13. This tale of woe was overturned when in 1926 John Clapham published the first of three volumes of An Economic History of Modern Britain14. His statistical approach refuted the ‘pessimists’14. Nevertheless, the pessimists appeared to hold their own until 1961 when the Australian-born economic historian Ronald Maxwell Hartwell published The Rising Standard of Living in England, 1800-1850,15 an essay that revitalised debate. By the late sixties it was over. The Marxist historian and pessimist E. P. Thompson finally conceded defeat while the Stalinist economic historian Eric Hobsbawm griped, refusing to publicly admit his errors even when in 1983 two American economists thoroughly demolished his Marxist thesis16.
Faced by the above facts our Marxist historians quickly took another tack: They shifted their focus to the quality of life, arguing that an increase in the material standard of living did not necessarily mean the quality of life improved17. They could point to horrible living conditions in parts of London and Manchester18 as evidence of a severe deterioration in living conditions. In doing so they were forced to ignore the fact that living conditions for masses were far worse in eighteenth and century and sixteenth century London, with rural conditions being no better19. Never let it be said that leftists cared about facts. Thus Frederick Engels made the absurd claim that before the advent of the dreadful machine called capitalism
the workers vegetated throughout a passably comfortable existence, leading a righteous and peaceful life in all piety and probity; and their material position was far better than that of their successors.20
But as Clapham rightly pointed out21:
George IV’s London was amazingly insanitary, but not so insanitary as Charles X’s Paris. The French death-rate in the ‘twenties was nearly 50 per cent higher than the English.
In the insanitary and crowded towns — which, it is not to be forgotten, were less crowded than the great towns of other countries …
If horrible conditions were created by capitalism then what caused them in previous centuries or in contemporary Europe or Asia? Moreover, why did these historians ignore the fact that conditions were still improving in general? It is true that capitalism isn’t perfect but it is also true that it did not make things worse. Without capitalism no continuing improvement in the standard of living of the masses was possible.
This apparent digression into nineteenth century capitalism was necessary in order to defend capitalism today. The ghastly distortion of capitalism that vicious intellectual malcontents like Marx and Engels concocted is what underlies the current leftist assault on our society, an assault which, knowingly or not, is being led by a destructive self-appointed elite of which the fatuous Lady de Rothschild is a prominent member.
4Once property rights disappear so do markets. It is the absence of market determined factor prices that makes central planning impossible.. Mises. Davidson’s myth.
5If you want more of a product then lower the cost of producing it. If you want less of it then raise its costs of production. Ricardo taxes
6 Her attack on capitalism makes me think that she must have read Karl Polanyi’s The Great Transformation. This is the worst book on economic history I have ever read. His treatment of markets is absolutely terrible, particularly chapters 14 and 15. The Great Transformation, Beacon Press Boston, 1957. Trygve Hoff was far too charitable to Polanyi’s treatment of central planning. Hoff, Economic Calculation in a Socialist Society, Liberty Press, 1981, pp. 242-43.
7 David S. Landes, The Unbound Prometheus, Cambridge University Press, 1969, p. 233.
8Arthur L. Bowley, England’s Foreign Trade in the Nineteenth Century, Its Economic and Social Results, Swan Sonnenschein & Co., 1905, p.106.
9Ibid. p. 106.
10Arthur L. Bowley, Wages in the United Kingdom in the Nineteenth Century, Cambridge: At the University Press, 1900, p. 133.
11Arthur L. Bowley, England’s Foreign Trade in the Nineteenth Century, Its Economic and Social Results, Swan Sonnenschein & Co., 1905, p.106.
12William Smart, Return to Protection, Macmillan and Co., 1904, pp171-172, 191-92.
13Arnold Toynbee, The Industrial Revolution, Longmans, Green & Company, 1923, p. 64
14Sir John Clapham, An Economic History of Modern Britain 4th edition, Cambridge at the University Press. The first two volumes were published in 1967 and the third volume in 1968.
15Ronald Maxwell Hartwell, The Rising Standard of Living in England, 1800-1850, The Economic History Review, Issue 3, 1961
16Peter Lindert and Jeffrey Williamson, The Economic History Review, February 1983.
17Hartwell wrote two books on this subject: The Industrial Revolution, Basil Blackwell Oxford, 1970 and The Industrial Revolution and Economic Growth, Methuen & Co., LTD.
18Dorothy George, England in Transition, Pelican Books, 1962. This book is required reading for those interested in this subject. Page 71 is particularly apt with respect to health and towns.
19According to Karl Marx capitalism will create such an “accumulation of misery” that the proletariat will finally revolt until “the expropriators are expropriated” Capital, Vol, I, Penguin Books, 1982, pp.799 and 929.
20Friedrich Engels, The Condition of the Working Class in England, (Translated by W. O. Henderson and W. H. Chaloner), Stanford University Press, 1958, p. 12.
21Sir John Clapham, An Economic History of Modern Britain. Vol. I, Cambridge at the University Press, 1967, pp. 316-17, 548.