André Comte-Sponville is a popular French philosopher. When I say "popular" I mean that his writing sells books. One of his bestsellers is entitled Is Capitalism Moral?
In a nutshell, he says that capitalism cannot be an activity constrained by anything other than the laws of the market, which are not moral but technical. Not your stereotypical French leftie spouting warmed-over Marxism, certainly, but much too glib nevertheless.
Michael Moore, in his film Capitalism: A Love Story, posits that Americans have been sold a bill of goods -- so to speak -- concerning capitalism, uncritically accepting that market forces dictate life and if you play along, sooner or later you'll get rich. Too bad that Mr. Moore makes his point with heavy-handed theatrics, in effect creating propaganda.
As we contemplate the inability of the American economy to lift itself out of the depression that has devastated our common life, there is a temptation to say that capitalism is all wrong, immoral. However, alternatives were tried in the twentieth century, and they failed. The bloodbaths that drowned communist and national-socialist economies ended them (hard to remember that the Nazis were economically at least socialistic...) Or else to insist that the market will make all things right again, if only we lower taxes, get rid of government regulations, red tape, blah-blah-blah. Reaganomics ending up requiring the largest peacetime tax increases in history in order to avoid bankrupting the country. Now we're almost there again...
Complex economies are, well, complex, with all kinds of actors, including government, finance, manufacturers, service providers, and of course, millions of consumers. And it seems to be a tried-and-true fact that across all sorts of human differences, the best way to distribute goods and services is market capitalism.
So is capitalism going to come to the rescue? No. Because what we are living under is not market capitalism, but something else. Market capitalism does work according to the laws of supply and demand, and markets need to be regulated to the extent that they remain open to all. The stock markets should be sources of capital, investors willing to place their surplus money (capital) into ventures that will have a reasonable chance of returning a profit. Those markets need regulation as well, since boom-bust cycles result from unbridled speculation. Of course, anyone investing in a business, whether directly or through stock ownership, is taking a risk -- speculating. But there is a second level in which the instruments of speculation -- stocks and bonds -- become themselves marketed commodities. Mutual funds, which hedge risks by owning a spread of different financial instruments, are perhaps the simplest example of these.
Those companies that go to the capital markets for investments become responsible to their shareholders. Being publicly traded means that corporate managers need to keep the stock value and dividends in mind as they make decisions in their particular markets. Now it used to be that if you wanted to get into the stock market, you would go to an investment counselor, a broker who had trading rights in the stock market, and after selecting what you wanted, you became part of a partnership of brokers all of whom had their own money invested as well.
Things changed in the 80s, as brokerages became more and more aggressive and finally became publicly-traded themselves. For more, read Michael Lewis' Liar's Poker and his much more recent The Big Short.
The minute a company is publicly traded, it loses some control, because it becomes responsible not only to its clients -- who are the true source of corporate profits -- but also to its shareholders, who deserve a return on their investments that underwrite the company's expansions.
Nothing wrong with that, or is there? Not if you are Alcoa or Pepsico. However, if a brokerage firm, whose clients are investors, is itself owned by investors, which investors should the firm favor?
In the normal course of things, traders want to limit risk and maximize profits for their clients. I have mentioned the mutual fund, for example. The markets become themselves sources of profits. Commissions aren't enough for your shareholders, however, because the richer you can make them the more likely they are going to keep you and pay you well. Options and futures aren't profitable enough, we need other instruments to trade, other markets to create. The firm becomes not a partner with its clients but something else entirely.
There is a straight line from this development to Goldman Sachs and other investment banks selling financial instruments to their clients while themselves betting that these instruments would lose money. They sold their own clients short, figuratively and literally. And don't get me started on the credit rating agencies...
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Myself included. It is one of the traditional deadly sins, as you point out. There is a joke that if you preach on lust, everyone will feel convicted, but if you attack greed, "now you're meddling..."
Why aren't religious leaders preaching against greed from their pulpits ?
The last I knew it was one of the Deadly Sins:
http://www.deadlysins.com/sins/index.htm
The Seven Deadly Sins revealed
"...Greed
is the desire for material wealth or gain, ignoring the realm
of the spiritual. It is also called Avarice or Covetousness...."
Shouldn't religious leaders be telling their congregations about sweatshop-produced goods, growing inequality, etc. ?
And, no we have not tried all other forms of economic governance. We have only experimented with a few, mostly cobbled together by a few idealists, yet never, fully implimented. The world is governed by very little intelligence, so it is not accurate to say, we have tried everything, and capitalism reigns supreme above all others. Capitalism is simply the antiquated default that everyone falls back on when they can't get other systems to function properly.
When people are accustomed to living under Capitalism all their lives, it is hard for them to have an appreciation for anything better. So, they continue down the same old rut. It is just like having any appreciation for the environment, if you have already cut down all the forests, and polluted all the water. No one knows what it was like before. Then the struggle for life becomes survival in an environment you already have made for yourself.
Furthermore, markets need regulation, and economic actors (consumers included) need educating. When I say "bring capitalism back!" I am trying to be provocative.
Is it moral for the government to transfer the risk from the clients to the taxpayers? What term is used to describe government stepping in and taking the risk away from investors?
Those who espouse self-regulation are ignoring human nature. All of us have the ability to become evil, as was demonstrated by the Stanford Research Experiment:
http://www.prisonexp.org/
The Stanford Prison Experiment: A Simulation Study of the Psychology of Imprisonment
"A Simulation Study of the Psychology of Imprisonment Conducted at Stanford University
Welcome to the Stanford Prison Experiment web site, which features an extensive slide show and information about this classic psychology experiment, including parallels with the abuse of prisoners at Abu Ghraib. What happens when you put good people in an evil place? Does humanity win over evil, or does evil triumph? These are some of the questions we posed in this dramatic simulation of prison life conducted in the summer of 1971 at Stanford University.
How we went about testing these questions and what we found may astound you. Our planned two-week investigation into the psychology of prison life had to be ended prematurely after only six days because of what the situation was doing to the college students who participated. In only a few days, our guards became sadistic and our prisoners became depressed and showed signs of extreme stress. Please join me on a slide tour describing this experiment and uncovering what it tells us about the nature of human nature.
--Philip G. Zimbardo"
The battle against oligarchs is a never-ending fight.
"Power always thinks... that it is doing God's service when it is violating all his laws." — John Adams
===
We need to start looking critically at the above article of faith. Democracy originated in Ancient Greece, but it wasn't until two thousand years later that stable democracies appeared. In the case of socialism, it was tried for less than a century by fewer than two dozen nations, half of which were not really independent nations anyway. You could equally point to Latin America to prove that democracy doesn't work. Whenever it's tried, a military junta is sure to follow.
As for socialism's economic failure, well, no kidding. The US and other countries in the developed world did everything they could to economically damage socialist countries. So we drove the Soviets to bankruptcy. We could have done the same to France, and what would that have proven?
And as for the human rights nightmare that socialism turned out to be in the practice, was that really socialism's fault? Consider that Russia was a human rights nightmare before socialism, and continues to be a human rights nightmare after socialism. The same goes for China. When in 5,000 years has it been a non-authoritarian culture?
Socialism isn't what you've been told, folks.
But the proffering of the cliched advantages/disadvantages of mischaracterized economic systems is probably not going to get you a ticket to Oslo.
Capitalism has been around two centuries plus, more or less, and yet, in all that time, there have been no examples of a literally free market, as capitalists always seek to influence the politics of the nation in which they practice their arts so as to fend off regulation, tax and competition, and wherever possible, to secure advantage.
The seeking of influence is not an aberration of capitalism, it is an intrinsic and inseparable component.
A hankering for a return to free market capitalism is an exercise in nostalgia, not a revisiting of historical circumstance.
Now, I could be reading this wrong...but haven't we been at war for the last 10 years?...with (at least) two different countries?
I know it's easy to forget that we're actually in two (or three) wars, seeing that the Independent Press hasn't had much access to photograph, report or publish from the front lines.
End the wars, cut the military budget, use that money to re-invest in the United States, and we're on track, back to prosperity.