Cooking the Books 2 – What would ‘good’ capitalism be?
‘Pet care rip-off is a case of bad capitalism’ ran the headline of Emma Duncan’s column in the Times (15 March), subtitled ‘Profiteering by vet chains and children’s homes will only bolster appeal of socialism to the young’. Let’s hope so.
Earlier that week the Competition and Markets Authority (CMA) had announced that it had identified ‘multiple concerns’ about what it called ‘the vets market’, including that pet owners were being overcharged and that the concentration of the firms operating in the sector put them in a position to do this.
‘In 2013, around 10% of vet practices belonged to large groups, but that share is now almost 60%, and many of the large groups have expressed an intention to continue expanding their business through acquisition of independently owned practices. To illustrate this another way, since 2013 1,500 of the 5,000 vet practices in the UK have been acquired by the 6 large corporate groups (CVS, IVC, Linnaeus, Medivet, Pets at Home and VetPartners)’ (tinyurl.com/5y4x2xf4 ).
This is a manifestation of the trend that Marx identified under capitalism towards the ‘centralisation of capitals’ — the ‘concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals’ (Capital Vol 1, Ch 25, section 3). In the particular case of the market for pet care this has been facilitated not only by the greater amount of capital needed to invest in advanced equipment but also because of the prospect, as noted by Duncan, of making a bigger profit.
‘The rise in insurance has made pet owners largely indifferent to the prices that vets charge. Private equity firms — companies that buy up businesses they reckon could be more profitable — spotted this, and poured money into buying up individual practices.’
The same sort of situation, she notes, has arisen in the children’s home sector where ‘the CMA has calculated the average profit margin in the sector to be 19.4 per cent — “materially higher than we would expect”.’
Echoing Tory Prime Minister Ted Heath in 1973 who described some shady business practice as ‘the unacceptable face of capitalism’, Duncan sees this as ‘bad capitalism’. But is it? Is it not rather capitalism functioning as it is supposed to, with money-capital, such as that gathered by private equity firms, seeking out the most profitable investment outlet and then going for it?
It is all very well for a supporter of capitalism like Duncan to argue that the market ‘works properly only if toughly regulated’, but this is saying that it doesn’t work, in fact can’t work, properly. William Morris once pointed out that laws against adulteration wouldn’t be necessary if there wasn’t an economic incentive for firms to adulterate. Similarly, there wouldn’t need to be regulations to prevent rip-offs by capitalist firms if there wasn’t the incentive to do this.
If she wishes to win over the ‘53 per cent of 18 to 34-year old Britons’ who she cites as regarding ‘socialism as the ideal economic system’ (alright, most won’t know what socialism is but they will know that it’s not capitalism) she will have to come up with a better argument than she advances here.
‘Good capitalism’, apparently, is an economic system that requires (tough) government intervention to try to mitigate the effect of its basic economic imperative to seek and make profits. The ‘acceptable face’ of capitalism would be profit-seeking in accordance with Marquess of Queensberry type rules, rules that wouldn’t be necessary unless there was a tendency not to respect them. Socialists have a better solution. Produce directly to meet people’s needs, not for the market or profit, and there wouldn’t be any need for such rules.