Why we need plays about Capitalism

It’s no accident that ancient and renaissance playwrights were drawn to write plays about heroes and nobles. Not only were they aspirational figures whose lives would be ripe for curiosity by potential patrons and audience members, heroes and nobles also made decisions that extensively affected the day to day experiences of most people. People had a reasonable interest in exploring the ways in which those decisions might be made.

While the aspirational interest in powerful individuals still applies to 21st century audiences, more of the decisions that affect our day to day experiences are made through huge, largely impersonal processes, especially those associated with the economic model of capitalism. These processes get less artistic attention than individuals for a variety of reasons, but I here argue that as a result there is a theatrical niche available examining these processes and that plays in that niche would serve a useful social purpose. Making it good art I leave as an exercise to the artists.

Let’s start by looking at what capitalism, at its best, does for us as a civilization. It has four main jobs which are linked and interdependent, but still distinct:

1. The price system: by providing open, free, and competitive marketplaces for goods and services, it aggregates the preferences and opinions of hundreds of millions of individuals who, by selling and buying in an environment of supply and demand agree to values of different goods and services. Try to charge too much and people will buy from your competitor instead.
2. Resource allocation: by providing particular marketplaces for labor and investment which are driven by the broader price system, it steers resources towards activities that produce goods and services that are in high demand and away from those that are in low demand.
3. Incentives to work and invest: People who have time, capability, and skill to work and those who have wealth to invest engage with the marketplace to seek returns for exerting their labor and for risking their wealth. Many people are strongly motivated by the opportunity to increase those returns, so they are likely to continue engaging with the economy in a way that keeps it running.
4. A distribution scheme: Responding to these incentives, individuals work and invest, then receive payments that allow them to obtain goods and services they want and to build wealth thereby allowing them to be active participants in the capitalist economy. People need to receive enough in this distribution scheme to survive and enough excess to allow them to participate substantially in marketplaces, otherwise their preferences will not contribute to the accuracy of the price system, and the whole model will fall apart.

For a large complex civilization to function, something has to do these jobs, and while capitalism has plenty of flaws and failures that I’ll be getting to shortly, other economic schemes that have been tried (such as serfdom and slavery) have depended on even higher levels of violence and injustice than capitalism uses. Evangelists for capitalism draw attention to the distributed decision making that it permits contrasting with centralized decision making in other models. In a large society, it’s difficult to get the right information to a central decider and it’s difficult to prevent that central decider from becoming corrupt. In response, fans of capitalism see its emergent order as preferable to an imposed order. In any event, we’re probably stuck with capitalism in some form for quite a while, and so it behooves us to understand it even if only to be in a better position to reform it.

Capitalism falls short of accomplishing its four jobs in many ways. Economists call these shortfalls “Market Failures” and most economists recognize a role for the state to exercise political power to accommodate them. However, once we start regulating markets, we introduce the possibility of unintended consequence – attempting to encourage one thing then actually provoking other behaviors.

For example, there was a widely observed phenomenon that home owners in the US were predominantly more economically successful than renters. A theory emerged to explain this that said property owners had greater investment in the community and therefore participated more and tried harder. This led to a series of tax policies, asset securitization practices, and lending regulations to encourage home ownership. The resulting regulatory framework created a niche for profitable creation and resale of dodgy loans. Welcome to 2008, when we all learned that the cause/effect relationship between home ownership and economic success probably ran the other way – the ability to buy a home was actually a marker of emerging economic success. A population of previously wealthy people got wealthier while the population the regulatory scheme was trying to help got poorer. Almost certainly unintended consequences, although there was some overlap between the designers of the regulatory scheme and its beneficiaries.

So we face an unsatisfying but necessary embrace between market failures that require state intervention to adjust to and the unintended consequences of that intervention that can fail to correct the market failures or even make them worse. Keep that tension in mind as we walk through examples of both.

One big vulnerability of the price system is that it tends to be present-focused rather than future-focused and can therefore fail to price a good or service high enough to account for its real long term cost. A familiar, if controversial, example of this would be that gasoline or petrol tends to be priced based on a combination of the cost of extracting, transporting, and refining petroleum and the ability of petroleum producers to ration supply. An infinitely wise version of capitalism would also add to that price a hefty fee to build a fund to deal with the pollution and climate change impacts of burning that fuel. By buying inexpensive fuel today, we defer environmental costs to future generations or in the most pessimistic estimates our own old age. Even the most radical fans of free market capitalism admit that these kinds of factors (which they call “externalities” because they are seen as outside the basic economics of the individual transactions) often justify political intervention into marketplaces, but they can argue for a long time about the size and nature of that intervention. In most places today, there is a government tax added to fuel costs that makes it more expensive and therefore discourages consumption, although in many cases that revenue is used for road building rather than any kind of contingency fund to address environmental issues. Government intervention specific to environment and vehicles has mostly been about setting regulations for fuel mileage and emissions, which represents a different way, besides manipulating prices, that a state can try to correct market failures.

Another category of failures in the price system starts as soon as government begins regulating either the production or trading of goods and services. Because economic power can be exerted to acquire political power, wealthy established firms in a particular industry often use that political power to further secure their economic power. Sometimes that takes the form of reducing government regulation of their industries as is almost certain to happen to the US banking industry during the Trump administration, which is just starting as this article is written. Surprisingly, sometimes industries actually use their power to increase the scope or complexity of government regulation of their own industry to increase the costs of potential competitors entering the marketplace. Established hotel and taxi operators are currently maneuvering in that way to limit sharing-economy entries into the marketplace. Once in place, these kinds of business coddling regulatory schemes can be very difficult to unwind. Search the web for “US Sugar Subsidies,” and you will find opinion pieces from all over the US political spectrum calling for an end to this particular form of “Corporate Welfare;” articles going back more than 10 years and still those subsidies persist. In either case, whether trying to relax or tighten regulation, wealthy firms influencing government regulation prevent markets from operating freely and fairly to establish sensible prices.

Resource Allocation is distorted by many of the same factors that distort the Price System. The relatively slow implementation of renewable energy solutions in the US has partly been achieved by manipulating regulatory schemes to make current fossil fuel generation appear to be much more cost effective. Arguably, ineffective regulation of the banking and investment management sector has led to overinvestment in that sector at the cost of more directly productive industries. If banking had been regulated to stay closer to its classical role of loaning money for interest and providing safe storage for uninvested funds, it might not have been able to offer the huge salaries that made banking and investment management an obvious career choice for mathematically savvy individuals. More of them may have chosen engineering careers instead and delivered broader benefits to society. That’s a little further out on the limb than the other observations in this article, but it isn’t completely unreasonable and shows how the Resource Allocation function can go awry.

Incentives get perverted in other ways beyond Resource Allocation overvaluing less productive endeavors.

Probably the most significant failure of incentives might be thought of as working too well. This is one category of human failing within capitalism that does get a fair amount of theatrical attention. The character who has lost touch with all sources of motivation except for financial gain has been looked at in theatre at least since Comedia del Arte, and continues to show up today. Perhaps Dickens’ A Christmas Carol is the most popular piece of literature often adapted to the stage that highlights the miser and asserts that he would be happier with a more balanced set of motivations. The success of works of art exposing this pitfall of capitalism serves as evidence that art exploring other pitfalls might also succeed.

Growing income inequality represents a different kind of incentive failure. Free market faithful try to argue that inequality doesn’t matter as long as people at the bottom of the distribution are still receiving enough to make a living. However, research in the emerging field of behavioral economics is providing evidence of something you probably already know from common sense – feelings of well-being in humans are driven almost as much by a sense of relative standard of living as by absolute factors like available calories per day or available square feet of living space. Just knowing that there are others working in the economy who are compensated much better than oneself can be de-motivating, even when on a world wide scale, one has a good standard of living.

The Distribution Scheme gets distorted by all the earlier market failures described above, but in our age of rapid technological innovation, it has one special problem all its own. I am indebted to economists Francis Fukuyama and Thomas Piketty for this insight. Running any productive enterprise requires both labor (effort) and capital (stuff). At low power levels of technology (and in industries where technology contributes little), most of the productivity comes from the labor. In those circumstances, a relatively large proportion of the earnings of the enterprise are returned to labor, especially skilled and organized labor, because labor is the dominant input producing the earnings. At higher power levels of technology, capital, in the form of complex, capable machines, contributes a lot of the productivity. A bus driver without a bus can’t transport many people. As a result, the distribution of earnings tends to shift away from labor and towards the providers of capital. This shift even makes a certain amount of sense on a transaction by transaction basis, but in aggregate across the economy it has led to a concentration of wealth and income unprecedented in the electrical age. Nobody knows what effect that is going to have going forward, but it certainly distorts the price system since the wealthy few exercise greater influence on the system as they have the income to participate in more and larger transactions. As a result, the preferences of the poor will be less reflected in the economy, which will likely bend it even further away from meeting their needs.

Capitalism has also driven some assumptions deeply into culture that impair it working properly for the majority while protecting the interests of elites. The least discussed of these (and this is insidious) is the way in which most people have been convinced that talking or even thinking about money is distasteful. Discussion of both income and wealth is broadly thought to be unseemly. In most non-unionized private sector companies, the earnings of individual employees are deep secrets. This cultural phenomenon makes fact based exploration of pay equity extremely difficult. Similarly, people are made to feel embarrassed by discussions of wealth which makes it hard to honestly explore wealth distribution. In a strange way, Parade Magazine, an advertising supplement in many weekend newspapers, commits a subversive act each year by running a cover story that identifies the annual earnings of a few dozen US residents. This field of awkwardness surrounding any detailed discussion of money serves to keep most of the population from paying much attention to the real functioning of the economy, leaving elites a wide scope for unexamined action. (This paragraph owes a debt to Mike Daisey whose Last Cargo Cult sniffs around the edges of this topic as part of a broad inquiry into the phenomenon of money.)

A related cultural belief that probably helps to repel playmakers and other artists from looking too closely at capitalism is the broad conviction that everything to do with commerce is dirty, repulsive, and anti-intellectual. I’m speculating wildly here, but this complex of beliefs is so widely held and reinforced in so many ways that it often feels to me like there may have been an active conspiracy at some time to keep life-of-the-mind types from paying much attention to business which continues to echo through the culture and do its work centuries later.

So hopefully that little tour of what good capitalism can do and a scattering of ways in which it goes wrong have convinced you that it might be a worthy topic for the stage, but is there really a shortage of plays engaging the topic? I needed to convince myself of that as well. My first hint was that I see or read about 100 new US plays each year routinely, and I’ve seen very few plays that take on economic issues at the root. Concerned that I had just been unlucky, I logged in to the National New Play Network’s New Play Exchange and searched for keywords Capitalism and Economics, filtering for plays that were available to download. That gave me 41 plays, all of which I skimmed and some of which I read completely. Here’s what I found.

Plays with the Economics or Capitalism tag are mostly about:
1. People suffering in a climate of reduced employment opportunity.
2. The broad impact specifically of unscrupulous and unconstrained capitalism on the less wealthy.
3. The villainy of specific bad economic actors and its consequences.
4. Classism and isolation between the wealthy and the poor in general.
5. Send ups of the absurdity of profit seeking as a primary motivation.

All of these are important topics, and I was favorably impressed with the vast majority of the scripts. However, only category number 5 really spoke to any of my example capitalism failures, and almost none of the plays revealed a sophisticated model of capitalism as part of their structure.

There were two plays that specifically spoke to economic theory, in the same way that Copenhagen speaks to physics or The Hard Problem speaks to brain science. (I’ve seen productions of both of those plays recently, so may be a little over-prepared to see more work with a hefty academic basis.) Clearing Bombs by Eric Samuelson imagines a conversation between two major 20th century economists stuck on a rooftop during WWII and passing the time with a deep but lively economic debate. Jan Kultura, Substitute Teacher, Meets the Crowd by Ian Thal is a short play that essentially presents a case study of crowd sourced creativity as a vehicle to steal ideas from people without having to pay them – well larded with good economic thinking. These stood out to me as good examples of scripts we could stand to have more of.

Those two aside, most contemporary plays I encounter that engage the issue of capitalism can be accurately if uncharitably reduced to “Our economic system is unfair and it causes suffering.” This is true and significant, but most of the audience knew it before we walked in. I contend that by digging deeper into the workings and failings of capitalism and the institutional artifacts it has driven into our culture playmakers could produce works that would better prepare their audiences to both understand and respond constructively to economic and political realities around them. Further, by creating plays in which characters pay attention to the economy and invite the audience to do so as well, playwrights can be as transgressive and path breaking as previous generations of playwrights were exposing issues of race and sexuality.

So, capitalism is a big important thing in our civilization that hasn’t received much theatrical attention. There are powerful elites who don’t want you to pay attention to it. That should be catnip to playwrights and other playmakers. I look forward to seeing what you come up with.