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From the ’Neoliberal myths and misconception’ dept.

Capitalism and Innovation (or the lack thereof).

Sunday 14 April 2013, by mond

While some proponents of capitalism acknowledge that it has some shortcomings one thing that they often cite is that after all it helps people. Today, so the popular argument, even poor people have higher living standards then kind or queens a few hundred years ago. What is really annoying here is that this myth is often not rebutted by the left.

So where is the flaw in the above argument? The higher standard of living that some of us can enjoy today is mostly caused by the scientific and technological progress. The development of “productive forces” as we marxist say.

While it can be said that capitalism somehow promotes that development it is not a fact that that development was caused by capitalism. Capitalists are forced to employ the latest technology in order to be competitive in the marketplace. So while capitalism did not directly invent new technology it at least forced the industry to make use of it. This is what marx calls the “great civilizing influence of capital

After the soviets had launched the sputnik program the US joined the space-race was finally able to land a man on the moon. But this was done with heavy public investment into NASA [1] So it can be argued that “landing a man on the moon” was only possible to socialist-style state sponsored research.

Today we find that private industry also finances some applied research but the majority of all basic research is funded by the state. Even with all the patent-laws that are heavily in favor of private interests the capitalist market system is not able to create the scientific progress. Take e.g. the pharma-industry: They spend twice as much on advertising then on the applied research. And for the research they do most go into research for the production of cosmetics. Only a tiny fraction of their budget is used for actually useful research.

So the basic research does not work at all in the capitalist system. The applied research seems to work but only if we do not look to closely: The system of patents and other, so called “intellectual property” rights is a complete mess. Not only does it often direct the research into the wrong direction (see above), where it “works” it creates huge extra profits for corporations where they did not invent much at all. One good example is the debate over software patents. The most important effect of those is that they help the established monopolies to kill off possible competition. So it does not really help innovation that much.

So it can be argued that the capitalist mode of production, while being favorable to getting new technology applied to products quickly does not do a good job in providing for the technological progress at all. Thus the formula:

Capitalism == development of productive forces == well-being for all

does not hold at all.

As for the second part of the above equation it is important to notice that technological progress is not “neutral”: The capitalist progress is, as much as it is done by some applied research is always directed towards maximizing profits and thus is not always in correlation with “well-being for all”. Just think of military technology, Monsanto-style genetic engineering, etc, etc..

We life in a world where each year 10 million are starving even thought there would be enough food for all. And the whole “progress” is driving our world to a climate collapse.... It is just insanity.

Franz Schäfer (mond), April 2013

Footnotes

[1] In 1996 the US spent 4.4% of its federal budget for NASA, Also see Sputnik Crises.

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