Saving Capitalism From Its Greatest Danger -- The One Percent

07/06/2012 03:44 pm ET | Updated Sep 05, 2012
  • Allan Brawley Professor Emeritus of Social Work, Arizona State University

When are the billionaires, multimillionaires, corporate tycoons, and their political enablers going to learn? How long is their unlimited greed going to blind them to the fact that milking the unregulated free market system for all it's worth, without regard for the wellbeing of the country as a whole, while hugely gratifying to them in the short term, is unsustainable and inevitably catastrophic in the longer term, not just for the rest of us but also for them?

How many more billions do the Kochs, Waltons and others need before they cease to work the system so blatantly and shamefully for their own benefit? They already own a huge portion of the country's wealth, with the Walton family's $90 billion alone equaling that of the bottom 30 percent of the population, according to Joseph L. Stiglitz, the Nobel Prize-winning economist, in his article "The 1 Percent's Problem" in the May 31, 2012, issue of Vanity Fair. This is just the most egregious example of the gross inequality that has developed over the last couple of decades. Add to this the fact that they and other members of the top one percent rake in 25 percent of annual income generated by the American economy while making a disproportionately small contribution to our collective needs for defense, police, fire protection, education, roads, bridges, and other essential services. As a consequence, we have reached the point where the wellbeing of the whole country is being jeopardized.

The much-vaunted American way of life that was the envy of the rest of the world for 30 years after World War II is in peril. Among comparable developed countries, our health statistics are terrible and our children's academic achievement is shameful. Our national infrastructure has suffered from thirty years of neglect. Most scandalous of all, we have the highest rate of poverty since the sixties and millions of children are going to school hungry while billionaires bid on $50,000 bottles of wine and shop for bigger and better private jets and yachts.

There is nothing inherently wrong with making lots of money but the present abuses of the capitalist system need to be fixed. Among other things, the wealth that is being accumulated needs to be earned honestly, not by financial sleight-of-hand and legalized corruption. It also needs to be shared more fairly with those whose daily toil generates it. And, all wealthy individuals must contribute fully to the country that made it possible for them to make their millions -- or billions -- by investing in the type of just and civilized society that the American Dream is supposed to mean for everyone.

The selfishness and shortsightedness of the ultra-rich and the politicians who do their bidding are not new phenomena, of course. They were evident a hundred years ago when the country had its initial encounter with unrestrained corporate power, immense wealth accumulation, and attendant political corruption. During this so-called Gilded Age, the Rockefellers, Carnegies, Vanderbilts, Mellons, Astors, Morgans and the like wallowed in the unprecedented wealth that the newly-industrialized economy had generated for them and capitalized on the political power that their money had bought for them, while millions of their fellow Americans lived in the direst poverty.

Some wealthy people of conscience, along with those who realized that this state of affairs was not sustainable, took steps to put the country back on the right track. Andrew Carnegie, for example, after working his employees mercilessly in the pursuit of unprecedented riches, late in life took to heart the biblical admonition that it is easier for a camel to pass through the eye of a needle than for a rich man to enter heaven. He set about giving away a large portion of his personal fortune, the bulk of which was devoted to building and endowing hundreds of free libraries around the country and overseas. The charitable foundations set up by Carnegie and others were admirable and may even have enabled Carnegie to make it into heaven. However, they could not save the country from the excesses of the unfettered capitalism that they had promoted and that had rewarded them so generously. These efforts did not alter the way the system worked and, therefore, could not prevent the impending disaster.

That required a new way of thinking about the free market economy and people who had the vision and courage to change it, most notably Theodore Roosevelt and his Progressive allies and, later, Franklin Roosevelt and the New Deal. Just as we are seeing today, the wealthy and powerful in those days relentlessly pursued policies that earned them a larger and larger piece of the economic pie rather than increasing the size of the pie. As Joseph Stiglitz points out, this is just as unsustainable and potentially disastrous today as it was back then. He believes that today's ultra-wealthy need to look back and learn from those enlightened predecessors who realized what was in their own best interests.

They knew that there would be no top of the pyramid if there wasn't a solid base -- that their own position was precarious if society itself was unsound. Henry Ford, not remembered as one of history's softies, understood that the best thing he could do for himself and his company was to pay his workers a decent wage, because he wanted them to work hard and he wanted them to be able to buy his cars. Franklin D. Roosevelt, a purebred patrician, understood that the only way to save an essentially capitalist America was not only to spread the wealth through taxation and social programs, but to put restraints on capitalism itself, through regulation. Roosevelt and the economist John Maynard Keynes, while reviled by the capitalists, succeeded in saving capitalism from the capitalists.

Therefore, we need people like Warren Buffett, George Soros, Bill Gates and others -- I am not counting on the Koch brothers here -- to call on their fellow billionaires to stop what they are doing because it is ruining the country for everyone, including themselves.