Commentary

The Myth of the Superiority of Capitalist Private Enterprise

The ideologues of capitalism have a mantra that they repeat at every opportunity: "private enterprise is more efficient than public ownership". And, of course, private capitalist ownership is said to be infinitely more efficient than socialist public ownership. But when challenged to produce evidence supporting their dogmatic assertions, these ideologues can only point to the crisis and collapse of the socialist economies, as if that explains everything.

Efficiency is a way of measuring the relative performance of a company or economy. However, to be useful one must be measuring and comparing the same things. In other words, any discussion of efficiency must begin with a definition of what is being measured and what is being excluded from the measurement. Are we talking about efficiency in the use of natural resources? Efficiency in the use of human resources? Efficiency in the distribution of wealth? Or are we merely talking about efficiency in generating profits?

Is private enterprise being efficient when it creates a surplus of airline companies, many of which are now declaring bankruptcy? Is it efficient use of human resources to hire and train human beings to operate the airlines and then to throw hundreds of thousands of them into the streets? Is it efficient use of natural and human resources for Boeing to produce more planes than are required and then to shut down operations all over the world? Is it efficient to allow the "hidden hand of the market" to periodically destroy trillions of dollars of social wealth?

Private enterprise has created the myth of efficiency by hiding a large portion of the costs of production and distribution. For example, almost all of the costs of basic infrastructure without which without which the capitalists could not function - education, health care, the construction of roads and airports, etc. - is simply transferred to the public sector. Other costs, such as the depletion of resources and environmental damage do not even enter into their equations. But all of these costs must be taken into consideration in any serious discussion of efficiency, because they are all being paid out of the common pool of social wealth.

However, let's be generous and look only at the undisputed strength of capitalist private enterprise, it's efficiency in generating profits. Let's ignore for the time being that those profits are possible only because a host of social costs are excluded from the calculation. How well are capitalist private enterprises doing at generating profits for their shareholders? The world capitalist economy has only just entered the initial stages of a global recession, yet already there are long lineups of very large private enterprises seeking handouts from governments to keep them in business. Why aren't the capitalists turning instead to the "invisible hand of the market" to solve their problems, as they have demanded of everyone else during the past two decades?

With a virtual monopoly on the domestic market, a fleet of aircraft provided in part by the Canadian taxpayers and infrastructure provided in whole by Canadian taxpayer, if Air Canada cannot make a profit without massive government handouts, perhaps it is time for the capitalist ideologues to abandon their dogmas about the efficiencies of private enterprise. Capitalist private enterprise is proving that it is neither efficient nor sustainable. Why don't the capitalists and their ideologues simply accept the reality that their grand experiment doesn't work and let society get on with looking for an economic system which does.