flying fish and the inefficiency of Capitalism

Worth his weight in paper clips
Worth his weight in paper clips

I have started to speculate about the efficiency of Capitalism.

While having sympathy for Socialistic ideals I can see that Socialism is more prone to bureaucracy and autocracy than Capitalism. The reason I say this is that Socialism has no in built mechanism to correct activities that are wasteful, inefficient or detrimental. This is somewhat broad and debatable so an example may help understand my meaning.

In the Soviet Union irrigation of land meant that less and less water flowed into the inland Aral Sea which started to dry up. Leave aside whether this itself was good or bad for the moment and consider the factories on the edge of the Aral Sea which canned the fish for delivery to customers. Of course these factories had less and less work to do. The solution fond by the bureaucrats was to fly in fish from Vladivostok. This was, of course, tremendously wasteful but it didn’t matter in the Soviet Union. Waste was not an issue. Nobody was watching the bottom line.

In a capitalist economy flying in the fish would have been so expensive that the company would have gone bust and that would have been the end to the madness.

This “evolutionary” tendency seems to me to be built into capitalism. It works to eradicate inefficiency and, when working at its best, it works to provide the best goods and services to the consumer. Admittedly there can be detrimental effects to this tendency within capitalism but for the moment let’s leave them aside. I think it is generally accepted that Socialism is less efficient and less adept at modifying its processes to suit the general public.

I had seen this as a feature of Capitalism which made it simpler and more efficient than Socialism but recently I have been wondering about this.

Let us suppose that we tried to create a mechanism within Socialism to provide this feedback. A mechanism which forced factories to adapt to produce what the consumer wanted and to close down wasteful industry. How might it work?

One way it could work would be to employ an army of bureaucrats working for a separate government department to monitor activity. It would be the responsibility of this department to review the workings of industry and to assess whether the desires of the general public were being met.

At a practical level this would mean industries being forced to record information on their work which would be raked over by officials who would then direct them to stop flying in fish and close down the canning factory.

It would also mean thousands of bureaucrats visiting a representative sample of households and interviewing them on their satisfaction with their products. It would mean more officials analysing the statistics.

On the doorstep:

“Are you happy with your television set?”
“When you last purchased a car what colour did you choose?”
“Was your first colour preference available”

In the office:

OK people we have work to do. In brighton the people have started to listen to their radio in the bath so we need to make radios with suckers to attach to the tiles and we need water proof front panels. We also need to produce more red cars.

OK, OK, This is, of course, absurd.

It is the sort of plan that might be dreamt up by silly bureaucratic state officials in the old Soviet Union but in a modern, democratic capitalist country nobody in their right might would try to implement such a scheme.

But hold on.

That is exactly what has happened.

Consider all the activities which we take for granted in a Capitalist economy which provide no basic function but merely exist to enable the workings of the system.

Consider insurance, audit and finance. Consider that Financial Services was the second biggest contributor to the British exchequer in 2008 after oil and gas. Consider the Financial area of London. The City and Docklands. Consider the thousands, if not millions, of people who commute into London every day from the home counties. Consider the advertising industry and the marketing departments. Consider the customer relations people, the complaints departments and the public opinion survey organisation such as Gallup.

And consider that in capitalist economies the people who work for banks and finance institutions are not low skilled bureaucrats but extremely well paid professionals.

Of course I don’t know the figures and I doubt that anyone does but one has to wonder.
With all that activity, with all that money spent on secondary tasks one has to consider whether it might have been more efficient to simply modify socialism a little bit.

I work with a guy from Pakistan. He observes the way we in England spend enormous amounts of time weighing up the pros and cons of every purchase. (Should I buy the Prius because it’s green or the Avensis because it’s got a big boot?) He is amused at this for, as he says, these things are not important. And of course he’s right. A car is a car. Despite what the guy from the finance company says and despite what the advertising industry would have us believe differing models of cars will really not make a difference to our lives.

Efficiency in motion
Efficiency in motion


  1. Do I want to engage with the many tentacles that touch me…no, do I have to …yes !
    I don’t care about the colour of my car but I do need to know if my house is insured etc.
    Sustainability, if you need to bring in the fish why can’t we adapt, in the interim,for the love of cake does it have to be this complicated.
    Afterall we are coping with a downturn in economy in the interim
    Are you happy with your bank?
    When did you last get a decent loan rate ?
    Do you trust politicians ?
    “Yes” to more accountability and governance but in a more localised and transparent way to inform wider issues.
    Sorry did I miss the point ?

  2. Dunno. I’m just interested in the fact that our supposedly simple system seems to require armies of bureaucrats to keep it ticking over.

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