In Prospect’s September cover story Adair Turner worried that the City engages in “socially useless activity.” He is by no means the first. In 1845 Friedrich Engels asked the workers of Elberfeld in Germany to consider “how many speculating, swindling superfluous middlemen have now forced themselves in between the producer and the consumer.” Discussing a bale of cotton travelling from America to Germany, he attacked the “exporters, commission agents, forwarding agents, wholesalers and retailers who actually contribute nothing to the commodity itself.”

Yet Engels’s same swindling middlemen are heroes to Milton Friedman and Friedrich Hayek. They find price disparities in different local markets, and move goods to where demand is highest or (to put it another way) where they can be most usefully used. Think also of the idea of paying people to dig holes, and then fill them in. A more socially pointless activity would be hard to find. But it is a Keynesian solution to some forms of economic crisis.

In short, economic activity does not wear its uselessness on its face. How, then, to distinguish philosophically between the socially useful and useless? At first sight it seems one could judge on human wellbeing: real economic activity produces outputs that make us better off. But not so fast: research into happiness shows that decades of growth haven’t made people in the rich world more content.

The paradox that wealth makes us less happy has been known since 1750, when the Academy of Dijon held a competition on the question: “Has the restoration of the sciences and arts contributed to refining moral practices?” The winner, Jean-Jacques Rousseau, said “no”: invention, learning and achievement had only damaged morality. The luxuries we seek give us only short-term pleasure. Yet if we lose them, or they break, we are devastated; far worse off than if we had never had them. But should we conclude that all such economic production has been useless? This can hardly be what Turner had in mind.

Not everything is a luxury, of course, and there is a level of basic needs that each of us requires. Capitalism contributes food, clothing and, for most people, housing. Other needs, such as healthcare, are partially provided by the state. Still others, such as friendship and creative activity, we sort out ourselves. It is here that most of us find real value, and it may be here, too, that aspects of modern capitalism—from long working hours, to anxiety about job security—intrude. This is one way at least in which capitalism can go beyond the useless, to the harmful. It is just as easy to add other ways in which perfectlyAd productive capitalist markets lead to human misery, or environmental degradation.

In summary, some economic activity that looks socially useless is pretty useful. Some economic activity that Turner would call useful may well be pretty useless. And some of the things that are most socially useful of all have nothing to do with economics, except that economic activity can ruin them. The moral of the story? Sorting capitalism into the provision of socially useful and socially useless activities is a mug’s game. Best avoided.

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