By Umair Haque
How Predatory Capitalism Breaks Societies, Economies, and Minds
Here’s a tiny fact. Burberry recently had $35 million of unsold clothes — and so it burned them. Just set them alight. If you think there’s something weird, infuriating, and perverse in that, you’re not wrong. It contains in it the whole story of how predatory capitalism operates — and why it’s failed a system to organize and shape human life.
Why did Burberry burn the very goods that people had worked so hard to imagine, create, fabricate, and try to sell? The cotton and silk and wool in them? It’s a way to create artificial scarcity. Burberry needs to keep its prices high — or at least it thinks it does — because people are playing a game of status competition by buying its stuff. “Oh, that dirty poor person is wearing my Burberry scarf!! Now it’s worthless to me!” The only way in which that can be true is if what you’re really buying isn’t the scarf, but exclusion, social status, primacy, and dominance.
Predatory capitalism operates, now, by enforcing this gruesome and weird idea of artificial scarcity. It’s a way of manipulating markets, which are only tools so that supply can freely meet demand, at some price in which everyone’s outcomes are maximized. But artificial scarcity rules that efficient functioning of markets out altogether — it’s a way to restrict supply, and therefore raise the price. Burberry burns coats, so it can go on charging some people $1k to buy the status, the enviability, that the hole in their soul needs to be filled up with. But that’s the tip of the iceberg.
Artificial scarcity is now the rule by which predatory capitalism — “late capitalism”, if you like — now operates nearly everywhere. When hedge funds buy up life-savings medicines, and then skyrocket the price by 5000%, that’s artificial scarcity too. When student debt costs more than a mortgage, that’s artificial scarcity too, only by another means. And when 75% of a “healthcare system” is a system to limit who gets treatment to the “insured,” the rich, or the otherwise profitable, that’s artificial scarcity too.
The hidden cost of artificial scarcity is this: societies governed by it never invest, instead, in making precisely those very things abundant. You can’t do both, after all —you can make medicines artificially scarce, or you can build factories to make more of it, doctors to prescribe more of it, and clinics to dispense more of it. And yet America’s problem is that it keeps choosing the first option, which is a ruinous one — and that means it can’t do the second. What happens to a society like that — and to people inside that society?
The effect of an economic system premised on artificial scarcity is that capital income skyrockets, and labour income stagnates and implodes. That’s exactly what’s happened in America — average incomes have stagnated for decades, but people now pay absurd prices for the basics of life, $5000 for ambulance rides, $30k for childbirth, which means even those stagnant incomes are really shrinking ones, in real terms. Life has become a desperate act of living every day right at the razor’s edge of ruin.
That’s because what’s scarce in the economy isn’t just luxury goods, in order to fuel status competition — but the basics of life, in order to keep people pinned down. Healthcare, education, finance, incomes, savings, opportunity, security, a sense that life can be lived in tranquility and stability. All these are in chronic, consistent, and omnipresent shortage under capitalism. A society like America simply doesn’t have enough of them to go around — precisely because it wastes much of what it has, and doesn’t invest in more. Why? Precisely because capitalism cannot and will not provide enough of them — at high enough quality, and low enough cost. It will always try to restrict the amount available, and cut corners even on that, so that it can charge people as much as possible and maximize profits. Why else does insulin cost hundreds in America — but pennies even in poor countries?
What is capitalism’s ultimate tool for making these basics of a decent life artificially scarce? It’s tying all of them to “jobs.” So in America, you only get healthcare, a pension, a safety net, an income, and so on, if you have a “job.” But the problem is that “jobs” were an institution built for an industrial economy — you go to the factory, you spend eight, maybe twelve hours, doing the same thing, every day, forever, because you are making just the same thing. A modern economy is not an industrial, churning out mass-produced consumer goods. It’s one doing more creative, intellectually demanding, humane, and sophisticated things — and quite naturally, for that reason, it doesn’t have “jobs” so much as it has projects, endeavours, programs, efforts, movements. To attach the basics of life to a job is to make a decent life itself artificially scarce in a modern economy.
Why does so much work today feel so meaningless? So pointless? Because it is. If you understand all the above, then you will also understand that much of the work done in the predatory capitalist economy is basically maximizing artificial scarcity to a precise and exact breaking point. Keeping what should be abundant for all limited to just the most profitable few. That’s what hedge funds do. That’s what those billing managers at hospitals do. That’s what insurance agents at HMOs do. I don’t say that to condemn them, but in fact to empathize with them. When you’re devoting your life to the cause of maximizing artificial scarcity, it can only mean something like: “I impoverish people.” Such a life will lack meaning, happiness, and purpose won’t it? Those are things we gain when we genuinely improve the lives that we touch, because human beings are governed by empathic resonances in the heart, as much as we don’t like to admit it.
But what if that’s all there is? What happens when all of human life is organized, at a social scale, according to predatory capitalism’s law of artificial scarcity? On multiple levels? First, the idea of a “job” creates artificial scarcity for the most fundamental goods — income, savings, healthcare, and so on. Then, basic goods like medicine and education and books are allocated according to artificial scarcity as well. And finally, artificial scarcity rules in the arena of luxury goods, producing intense status competition. What does it feel like to live in such a society? Well, life feels like one endless, constant, relentless battle. A kind of war for existence itself. Economic existence, social existence, financial existence, institutional existence. The human mind begins to be consumed with feelings of dread, fear, rage, greed, and envy. But all these are the opposites of meaning, happiness, and purpose.
I think it’s no overstatement to say that people’s minds begin to shatter and fracture with trauma, depression, loneliness, and a kind of deep-seated grief, for which we don’t have a name yet. The inner logic goes like this: “If only I’d had that medicine, that education, those emergency savings, that safety net — I could have lived a better life. And there was no good reason for me not to have it. Didn’t I deserve it? Am I worthless?” Crack. A mind fractures, because to face such things every day is to also feel one’s most primal fears, of abandonment, annihilation, and isolation, come true. Don’t we see that in America today?
So such a society suffers terrible and destructive outcomes. It’s quality of life craters, in hard terms — people die young and get sicker. Artificial scarcity for social signifiers is what people are chasing furiously all their days long — and so they look down their noses at everyone else, but never gain a sense of humility, of equality, of dignity. A society governed by artificial scarcity, in other words, will be one in which people live nasty, brutish, mean, unhappy, and short lives.
But of all these negative effects, I think the most ruinous one is to the mind. People don’t only grow unhappy, desperate, afraid of each other, suspicious, cold, mistrusting — they begin to really, desperately break inside, with the shattering trauma, the guilt and shame, of being abandoned and neglected. “Am I worthless? I must be.” But what happens when people internalize the lesson that people only deserve artificial scarcity — or that worthless people don’t deserve anything at all, which is exactly the same thing? Then we end up with something like a Stockholm Syndrome of capitalism. Such people will deny their neighbors, peers, and collegaues everything, won’t they? Healthcare, education, finance, transport, media, safety nets, and so on. “Worthless people don’t deserve anything!” Such a person has become an agent of the law of artificial scarcity — but the law of artificial scarcity is what made them one. Do you see the perversity? Let me make it clearer.
If the logic of predatory capitalism’s grief says: “If only I’d had those things! I could have lived a better life! Didn’t I deserve them? Wasn’t I a human being, too?”, then the defense against it something like: “Nobody deserves such things. If I can’t have them, no one else will, either.” A kind of vengeance proceeds from the grief, whose purpose is to restore equality and justice to world again. Only now people are equal in having nothing, and justice is the act of stripping people of dignity. So people who spend too long in systems of artificial scarcity, I think, end up being so profoundly traumatized by them, that like abuse victims, they become abusers themselves, in order to restore harmony and fairness, and give themselves a kind of perverse power. Isn’t that just what we see in America today?
Here’s what I think. Artificial scarcity is the law at the end of predatory capitalism, the principle by which it operates. But the price is that it also drives people out of their adult minds — or at least out of their better selves, if you like. When people themselves begin to become the enforcers of artificial scarcity, as a way to reduce the grief they feel for the loss of human potential that it has produced, then they break apart. So no matter how nominally “rich” such a society gets, such people are going to find it difficult to stay a democracy, a republic, or even free in minimal ways — they’ll go on enforcing the rule of artificial scarcity.
What the law of artificial scarcity operating at the end predatory capitalism is really saying is: “you can only have what you need if you can pay the impossible price we demand, or else we burn it all down.” It’s exactly the logic of an abuser, if you think about it. And when people, enough of them anyways, begin to believe that is the only way to run a society, what is the result? Precisely the authoritarian meltdown America is now facing — because the logic of the abuser and the authoritarian is one and the same.