Charles Moore’s article in the Telegraph yesterday caused something of a stir. Equality, he said, was not really a good thing at all. What’s that you say? He must be an elitist! How uncool is that! Well, essentially he was arguing that in the context of women in the army, and in particular on the front line of the army, that it was one step too far. Women just are not as strong as men, and therefore shouldn’t be there. His argument weakened when he extended it into civil partnership, defining marriage in terms of the legal structures for its dissolution, which appears to me to be something of a non sequitur. In essence, Moore misses the point that ‘unconventional’ couples are not seeking access to the institution, but rather to its attendant rights; indeed, they are seeking to fundamentally alter the institution, and make it more inclusive, rather than simply more equal.

He further insisted that equality generally was compromising freedom itself, because it “attacks ways of living which people have developed for themselves” (he doesn’t explain this), it undermines institutions and civil society structures who should represent minority interests, This is a veiled attack on minorities, it is conventional Tory support for the ascendant elites, and of course the old bugbear of the Conservatives, political correctness itself. For all of my disdain for the argument, and indeed for the insular and comfortable consensus Mr Moore represents, he may be on to something.

Two quotes come to mind. First, to quote Zizek on Marx, “…the legal-ideological matrix of freedom-equality is not a mere ‘mask’ concealing exploitation / domination, but the very form in which the latter is exercised.” Second, Monty Python: “Suppose you agree that he can’t actually have babies, not having a womb, which is nobody’s fault, not even the Romans’, but that he can have the right to have babies.” The difficulty with Marx is that there really isn’t much of a plausible alternate choice, though there are several dystopian theories (such as Negri & Hardt) that may play out. The farce of Python is played out in every political chamber in the world, as we haggle over whether or not to call a woman a chairman, or whether Hollywood movies should reflect life as it is, or a Randian version of life as it should be.

Equality, for all of its socialist attractiveness, is at the heart of Marxist criticism of capitalism. Marx’ analysis of capitalism in The Communist Manifesto was not that it was unproductive – it was – nor that it was unrepresentative, which it has largely become, notwithstanding egregious inequity in many examples. Marx’ criticism was essentially that it was fundamentally flawed, and doomed to failure. It was flawed because the incentives at its heart – Smith’s invisible hand – would ultimately bankrupt the system. The bosses would drive towards greater and greater profits, and given their control of the means of production, would squeeze the workers to a subsistence level. This in turn would reduce their ability to buy and consume the goods produced by the bosses, ultimately undermining the system itself, and its addiction to the growth-drug.

The bosses continue to drive growth, and to invest in growth-producing innovations, constantly leveraging future business (and an expectation of growth) in order to invest to increase the rate of growth. A consistent question is asked “what is the minimum income threshold for the workers that will allow me to maintain and grow production?” This constantly pressurized minimum income threshold compresses disposable income, and reduces the workers to a relative subsistence. But with compressed disposable income, discretionary spend is squeezed, and the products that the bosses make suddenly find that their market is shrinking. As growth in revenue slows, and even contracts, profitability is sustained, and even grown, as further pressure is placed on the workers. Ultimately, once the thresholds of worker tolerance are breached, the market collapses in a maelstrom of corporate defaults.

There are either two or three great collapses that we can think of since the Industrial Revolution began, depending on whether you choose to merge the last two or not. These represented the ends of great Capitalist Periods. The first period was up to the end of World War II. Its long crescendo began in 1929 with the stock market crash, which sustained itself through the Great Depression, and culminated in war, and – specifically – the Breton Woods agreement of 1948, which established worldwide standards for Capitalism, and an existential, ideological battle between Communism and Capitalism. Immediately before the crash there was a period of great frivolity, the roaring 1920s, as fictionalised in the often uplifting work of Somerset Maugham, F Scott Fitzgerald, P G Wodehouse, Evelyn Waugh and the Bright Young Things. These were heady times, of great innovation (the car, the telephone) and a realisation amongst many that this was, essentially, the apotheosis of humanity. There remained great poverty, and great hardship all over the world, but there persisted an elite, the second and third generation of great industrialists merged with the dregs of aristocracy and nobility in Europe. There was a significant gap between rich and poor.

The crash destroyed an enormous amount of wealth. The odious position of the less well off was worsened, but not so much in relative terms as that of the wealthy, and in particular the nouveau riche of the 1920s. Many of them saw their wealth destroyed by the crash. In Marxist terms, the bosses themselves got squeezed, after squeezing the workers too much. The resources of the proletariat became exhausted, they could buy no more, and markets evaporated. Substantially of course this was a Western phenomenon, an experience of the developed world. It did not apply in Africa, Asia or Latin America, as formal capitalist structures were only beginning to take hold there.

The second great collapse was in 1989-1992. The fall of the Berlin Wall, and the collapse of Communism brought to an end a period of great prosperity fuelled by personal credit, and the manipulation of the international financial system. Francis Fukuyama’s 1989 book The End of History and The Last Man proclaimed that mankind had finally found its ultimate form of government, that Liberal Democracy was the true Global political system that could bring Kant’s Cosmopolitan ideal to life, notwithstanding its dangerous penchant for equality and homogenisation. It’s publication immediately before the fall of the Berlin Wall was prophetic, and all the more successful as a result. Mankind had found the infrastructure within which true freedom could be achieved, where ambition could be met with opportunity, in a kind of globalised version of the fictional American Dream.

This time, rather than the industrialists, it was the bankers who bore the brunt of the crash. The 1980s were a time of great excess, characterised in the movie Wall Street, and the books American Psycho and Liar’s Poker. There were two significant elements of this crash. The first was the extent to which personal credit had fuelled the boom; the Savings and Loan scandal in the US, and the 1992 devaluation of Sterling were direct results of this. The second was the extent to which derivatives and other complex financial instruments were used to game the market. The computerisation of financial systems had happened in the run up to this period, and this allowed the bankers to go beyond the limits of the first Capitalist period. While the first period only allowed the bosses to squeeze the workers for their available resources, the financial instruments developed in the 1980s allowed bankers to squeeze the workers for their potential resources, via credit. This was a massive shift.

1989 directly led to the reunification of Germany, and the economic union of the Eurozone, which took place over the following twenty years through the next great crash of 2008. In return for allowing Germany to unify and co-opt the former East Germany and all its weaknesses into the European Economic Community, and the European Union as it became, Germany agreed to the Euro project.

There was a different experience on either side of the iron curtain. As Communism collapsed, industrialists capitalised very quickly. In post-communist societies, the lunge towards private ownership by a relatively small number of what became known as oligarchs secured control of former state assets, while those former custodians of each communist state extracted their coupon from the exchange.

The third great crash ended the third great period of Capitalism, that between 1989 and 2008. While the first period had seen the bosses squeeze the resources of workers , and the second period had seen the bosses squeeze the potential resources of the workers (though personal credit), this period saw the workers squeeze the resources of peoples through sovereign debt. From an original position of simple supply and demand economics, the global capitalist economy had moved to a position of state level derivatives – squeezing the potential of states to create value. This was accompanied by a mortgage crisis, exacerbated by mortgage level credit derivatives, and accompanied by lax regulation and weak government. A sovereign debt crisis, within a fledgling economic union in Europe, undermined the Euro, which was just beginning to challenge the dollar as a reserve currency. There are some similarities here to the system of alliances in 1914 that contributed to the outbreak of World War I, at an intellectual level: our interdependence became a weakness. The mortgage debt crisis in America, coupled with its exposure to the European sovereign debt issues, led to bank collapses in Iceland, Ireland, and other places.

It is possible to consider the two latter periods as one – and that the result of the 1989 shift was played out over twenty years (and is still not resolved) just as the 1929 crash never truly resolved itself until 1948.

There is some evidence to suggest that we appear to be entering a fourth period of capitalist expansion, notwithstanding the lack of a clear conclusion to the last. The great characteristic of this period seems to be globalisation, facilitated by the Internet and pervasive air travel. In essence, sensing an end to the Western capitalist expansion, while regulators, politicians and policy makers are seeking some mechanism to staunch the bleeding in American and European economies, capitalism has moved on to begin anew.  The industrialists of the West are joining with the new industrialists of the emerging markets of the world to harvest those new markets. If we are to see history repeating itself, the workers of the new markets will first have their resources developed – through education, infrastructure and Development (with a big ‘D’, as in the UNDP); then squeezed through the process of industrialisation; then, as credit systems establish themselves, squeezed of their potential resources, and ultimately the states of the emerging markets will be squeezed of their sovereign credit (though emerging states were quick to understand the benefits of sovereign debt markets, in particular the African kleptocracies).

There’s a danger of a blowback factor. A fourth wave of capitalism is leaving in its wake a desolate economy and an angry people in the West. In America and in Europe, wages will remain low, and inflation will continue to make them worth less; governments will get smaller; jobs will remain scarce; and social discontent will grow. The core infrastructure of the global economy remains a western construct, yet it is the west that will reap a bitter harvest. Whether the global economic system can sustain a migration of its core to the east is not clear. It is also unclear how long the process will take – the first phase of Capitalism played out over almost one hundred and fifty years, while the Industrial Revolution took hold. It has to be said, however, that it had pretty much no reference point, which is not the case with emerging markets today.

A final point – the demise of the western capitalist market is happening at a much faster rate than the growth of emerging markets. That will require management and regulation, and tax policy will increasingly dictate the relationship between western liberal democracies and capitalist multi-national corporations. As a race, we have a lot of thinking – and work – to do.