Reviewed: The Locust and the Bee by Geoff Mulgan

Hive mentality.

Capitalist concepts are now being applied in every sphere of human activity
Capitalist concepts are now being applied in every sphere of human activity. Photograph: Tim Davis/Retail

The Locust and the Bee: Predators and Creators in Capitalism’s Future
Geoff Mulgan
Princeton University Press, 344pp, £19.95

“Capitalism,” writes Geoff Mulgan, “is not so much an aberration as a step on an evolutionary path, and one that contains within it some of the answers to its own contradictions.” In thinking of capitalism in this way, Mulgan voices a contemporary consensus. As advances in biology and genetics have promoted the belief that economic and political development can be understood in evolutionary terms, hundreds if not thousands of books have appeared in recent years claiming to explain the rise and development of capitalism as part of an ongoing process of social evolution.

This is not the first time that the idea of evolution has been invoked in this way. Owing more to Engels than Marx, who knew too much about history to imagine that it could be understood in Darwinian terms, there has long been a Marxian tradition that sees capitalism as a stage in social evolution. The current fashion for evolutionary theories of society has much in common with this view and quite a few of those who promote these ideas – including Mulgan – were influenced by Marxian thinking at an earlier stage in their careers.

Yet there is an important difference between the Marxian view and the prevailing consensus. Whereas Marx and Engels understood capitalism as being only one in a succession of economic systems and certainly not the last, today capitalism is seen as the end-point of social evolution.

The Locust and the Bee illustrates this shift. Mulgan is aware of the contingencies of history, pointing to a range of realistically possible futures, “from a future ‘pax Sinica’ overseen by a hegemonic China, to a more fractured global apartheid, or a world where the older powers of Europe and North America revive like phoenixes”. He recognises that capitalism is continuously mutating: “All real capitalisms are impure hybrids, mongrels mixed with other strains.” The book’s first chapter is entitled “After Capitalism” and there are many suggestions that capitalist economies might evolve into something different. However, will what evolves be something other than capitalism or simply another version of it?

The assumption underlying Mulgan’s ana - lysis is that, for practical and political purposes, capitalism is the only game in town. At a global level, this may be right. Despite the financial crisis, there are no signs of any serious rival to capitalism emerging in the foreseeable future. Plainly Mulgan agrees but he seems reluctant to admit this. For him, capitalism is protean to the point of being indefinable in material terms: “It is at root an idea, an imaginary, a way of seeing the world. This idea is the single-minded pursuit of growth in value, or more specifically of growth in representations of value that can be exchanged with others.”

I’m not altogether sure what that means but it’s clear that capitalism is being detached from any particular mode of production. Using Mulgan’s definition –which says nothing about property ownership or market forces – pretty well every economic system since the Renaissance has been capitalist. If the conquistadores aimed to increase value within the Spanish empire, Stalin’s Soviet Union and Nazi Germany were equally committed to adding value in their respective systems. True, they had divergent conceptions of value and limited the scope of exchange in different ways but all three fit Mulgan’s idea of capitalism as “the relentless pursuit of exchangeable value”.

You might think the fact that virtually any modern economy would count as capitalist would limit the usefulness of such a definition. In the small world of British politics, however, the opposite is the case. As with Tony Blair’s “third way” and David Cameron’s “big society”, an elastic understanding of capitalism allows governments to condemn the market’s excesses while continuing to entrench market forces in every corner of society. In narrowly political terms, the advantages of such elasticity are obvious. Yet there are corresponding costs – particularly if you think what is needed at the present time is some clarity about which areas of society should be ruled by the market and which should not.

Mulgan can’t offer much help in this respect, since it is a feature of his analysis that every aspect of human activity is described using categories that derive from the market. “The idea of entrepreneurship,” he tells us, “applies as much in politics, religion, society and the arts as it does in business.” From this point of view, John Keats was someone who invented a new brand in negative capability and the Buddha was a pioneer in the mindfulness market. Describing poetry and religion as branches of business enterprise is absurd but it is also increasingly common and is worth asking why.

All human action may be entrepreneurial in some (not particularly illuminating) sense; but the reason there is so much talk of “social entrepreneurship” and the like is not that any profound truth of the human condition has suddenly been grasped. Rather, the political triumph of market liberalism has delegitimated any other way of thinking. Not much more than 30 years ago, it was taken for granted that social institutions could and should be animated by a diversity of values. Old-fashioned conservatives and social democrats both accepted the central role of markets in the economy, while believing that the NHS, universities, the arts and public broadcasting should operate outside the market. Today, with market concepts being applied in every sphere of human activity, such a stance is almost literally unthinkable. As the late Tony Judt noted in Ill Fares the Land (2010), the language of ethics has been usurped by that of economics.

It’s clear that Mulgan thinks he has avoided this trap. “The market turns out to be just one special case of collective decision-making. It uses binary decisions (whether or not to buy) and a single currency, money. But richer communities transcend binary messaging and can cope with multiple currencies – from money to friendship or love.” Yet the notion of love as a currency is telling and it is significant that he goes on to define a perfect community as one that achieves a “Nash equilibrium” – a theoretical construction devised by the mathematician and game theorist John Nash in order to express what human interdependency might mean in a world of rational strategists.

With all the talk of richness and diversity, the idea is still that human relationships can be understood as a succession of exchanges. But it is this idea that has brought us to our present pass. Think of the scandal surrounding Stafford and other hospitals in which ill and frail human beings have been treated with indifference and contempt and thousands appear to have died needlessly. Might not the culture of callousness that exists in some parts of the NHS be somehow connected with the destruction of ethos in the service by incessant market reforms?

One of the ruling ideas of The Locust and the Bee is “social innovation” – a notion that derives, like much else in the book, from management consultancy. If only we could cast off the stubborn resistance to change, Mulgan believes, we could be much smarter in solving our problems. The trouble is that his quasi-economic account of human interaction makes it difficult to distinguish between good and bad changes in any fundamental way. After all, when it results in destructive and uncivilised forms of “lived value” (Mulgan’s curiously abstract way of describing everyday experience), social innovation can be regressive. The injection of market mechanisms throughout public services is a case in point. Ethics and politics are made up of conflicts rather than soluble problems and no increase in smartness will deliver us from difficult choices. In order to make these choices, we need ideas about the good life that go beyond anything that can be expressed in the language of economics.

It may be that the distinction between predators and creators, which Mulgan deploys in an attempt to capture what has gone wrong with capitalism, is meant to fill this gap. “Creators, makers and providers,” he writes, “create valuable things for others” while “takers and predators” are those who “extract value from others without contributing much in return”. He tells us that he takes the distinction from “one of the great founding works of modern capitalism”, Bernard Mandeville’s Fable of the Bees (which first appeared as a poem in 1705). In Mulgan’s version, the bee “is quietly productive, providing benefits to many. It is also intensely co-operative.” The implication is that capitalism will improve to the extent that it encourages bee-like virtues but that is far from what Mandeville had in mind.

Quite to the contrary: the message of Mandeville’s fable is that capitalism’s dynamism and productivity come from harnessing private vices – rivalry and predation, envy and ostentatious luxury – to public benefit. Without the energy it derives from such vices, the market will not deliver the goods that are demanded from it. There may be a sense in which a beehive is a perfect community but beehive capitalism is a non-starter.

Mandeville’s motives in producing the fable have been the subject of controversy and it remains unclear whether he meant it as satire or a serious contribution to economic theory. Either way, it is a powerfully subversive piece of work, for what it implies is that capitalism not only comes with moral hazards but depends on them for much of its success: the market is as productive as it is because it makes use of the most powerful human motives, not those that may be most morally admirable.

If this is right – and I think it is – the prospect of a kinder, gentler, more co-operative capitalism that Mulgan holds out is just a mirage. Instead, there is a clear need to decide where markets should operate and to build countervailing institutions where they should not. Recent governments have done the opposite, dismantling non-market institutions while babbling on about society and community.

There is much in Mulgan’s analysis that will repay careful scrutiny. He has some usefully demystifying things to say about intellectual property rights, noting: “Intellectual property is neither very intellectual (it’s hard to think of any serious intellectual advance that was protected in law); nor is it exactly property.” Again, he makes a powerful criticism of mainstream economic theory when he notes that conventional explanations of economic growth that stress the vital role of the rule of law and well-functioning markets can hardly account for China, which lacks both. The Locust and the Bee abounds with arresting observations of this kind and no one will finish the book without having learned something new and important.

Where Mulgan’s argument is problematic is in accepting that all human relations can be understood as forms of exchange and suggesting that we can enjoy the market’s benefits without any of its hazards. Rather than leading us out of the current impasse, ideas of this kind are symptoms of what has gone wrong. Capitalism needs to be complemented by strong institutions with a different ethos. This will not come about in some benign process of social evolution but only when governments have shaken off the idea that every institution has to be turned into a business. Capitalism may be the only game in town but it doesn’t have to be the whole of life.

John Gray is the New Statesman’s lead book reviewer. His latest book is “The Silence of Animals: on Progress and Other Modern Myths” (Allen Lane, £18.99)