But we've already got something that scares capitalism - markets

Aditya Chakrabortty is once again showing the perils of getting your economics reporting from a modern history graduate. The contention is that the existence of communism - OK, socialism attempting to build communism - led to capitalism being ameliorated. Given the absence of a socialism that works we need something else to scare capitalism.

The task of politics today is to scare the capitalists as much as communism did

In more detail:

The very presence of a powerful rival ideology frightened capitalists into sharing their returns with workers and the rest of the society, in higher wages, more welfare spending and greater public investment. By sending tanks into Prague in 1968, Leonid Brezhnev may have crushed the dream of “socialism with a human face”; but he and other Soviet general secretaries forced capitalism to become less inhumane. Conversely, the collapse of communism between 1989 and 1991 has left capitalism unchallenged and untempered – and increasingly unviable. The challenge of our time, whether in the UK’s general election or next year’s US presidential contest, is to build a political movement that can restrain a system spinning madly out of control.

What’s missing here is that we’ve already got the very thing to scare the bejabbers out of the capitalists - markets and their competition.

As William Nordhaus noted (here) it is competition which leads to 97% or so of the value created by entrepreneurs going to consumers, not entrepreneurs. As Karl Marx noted it is competition among capitalists for the profits to be made by employing labour which raises wages.

We’re perfectly willing to agree with the first contention, that we desire something to ameliorate capitalism. We do insist though that people have a little look around the world so they can understand that we’ve already got it. Markets.