That's my rallying cry for the protestors on Wall Street, for the millions of citizens who are unemployed, for the anti-government Tea Partiers and for the nation's small business owners and entrepreneurs. It is time to expose the imposters and reclaim capitalism for the American people.
Today, Adam Smith's Wealth of Nations is considered a Bible for capitalism, but when published in 1776, it was a blasphemous challenge to the big business, big government mercantilism in Europe. Smith's free market theories expanded economic opportunity, promoted competition and encouraged innovation, in large part, by attacking the "concentrated wealth and power" of Britain's commercial elite.
More than taxation without representation, it was the corrupt British economic system that ignited the American Revolution -- just read the entire Declaration of Independence. This insidious corruption was a major focus of Smith's economic treatise. Smith's theories dovetailed beautifully with Thomas Jefferson's political manifesto, and his writings became the framework for our capitalist philosophy. But as both men learned in their lifetime, theory and practice are rarely in sync.
In a Faustian bargain, our leaders pay homage to Smith's ideals, but from the outset, they have ignored his model in favor of rapid national expansion and global economic power. What we call capitalism is, in fact, the American version of mercantilism. Ludwig von Mises, a libertarian economist, summed up its benefits rather nicely: "Capitalism gave the world what it needed, a higher standard of living for a growing population." Measured thusly, the results have been breathtakingly successful, but if the goal is the long-term viability of our economic and political democracy, we are in serious trouble.
Just as Jeffersonian democracy operates best on a small scale, Adam Smith believed his self-correcting free markets were ideal for small businesses in a domestic economy. Integrated in their communities, these businesses would be influenced directly by the needs and demands of consumers, and any dangerous or abusive conduct would rarely affect the broader economy. But Smith treated large, powerful companies very differently. He said big business was led by "an order of men...that generally have an interest to deceive and even to oppress the public", and he referred to powerful corporations (then known as joint stock companies) as "unaccountable sovereigns" that were as dangerous to free markets as tyrannical governments. Unrestrained, they had the power to shape society and governments for their own purposes, and consumers would pay for "all the extraordinary profits" while suffering from "all the extraordinary waste", the inherent fraud and abuse, that accompanies such immense economic power.
Smith stated emphatically that a strong government, acting through democratic and legal institutions, was the only entity capable of challenging such corporate power. Smith supported necessary government regulations, labor and human rights, public education, and progressive taxation to ease the economic and social inequities he knew would occur in a capitalist system. Without these "liberal" measures, social and political unrest would threaten a nation's stability and his free market economy could not survive.
While Thomas Jefferson applauded Smith's theories, the 'father of American conservatism', Alexander Hamilton, denounced this philosophy as nonsense. Hamilton intended to establish America as a global powerhouse in short order. He was thinking big and didn't have time for Smith's small-scale, go-slow approach. Britain's mercantile system was elitist and abusive, but Hamilton knew it was the engine that drove England's powerful economy. As Secretary of the Treasury, he planned to use that very system to propel America onto the world stage.
Both his plan and its execution were brilliant. Hamilton set out to consolidate power in the new federal government by controlling the money supply, tariffs and trade and by managing the nation's industrial development. Farmers and shopkeepers couldn't provide the revenue he needed, nor could they finance the commercial development and infrastructure necessary for America to play in the big leagues. Hamilton needed big money and powerful partners in the private sector.
To accomplish this, he used the courts and Federalist Congress to institutionalize a powerful federal government and corporatist economy, a practice continued by his successors. The myth that corporations are somehow "persons" and equivalent to the human beings Adam Smith was liberating in his free market utopia is possibly the most successful coup in the history of the world, achieved with the stroke of a judicial pen in 1886.
Despite warnings by prescient Republican presidents like Abraham Lincoln, Teddy Roosevelt and Dwight Eisenhower, the American system has morphed quite predictably into a dog-eat-dog economic Darwinism, and the big canines have rigged the game in their favor.
Flying the capitalist flag, the really big guys have completely corrupted Smith's free market philosophy. They use their concentrated wealth and power to buy off politicians, skate around regulations, abuse their privileges and sometimes, break the laws to win. When their politicians and corporate-sponsored "citizen" groups insist that small government and the market itself are sufficient checks, that further controls are a socialist plot to destroy capitalism, they are counting on our collective naiveté to win the game. They are destroying free enterprise by abusing the very freedoms intrinsic to a market economy.
That so many conservatives, adamant that they are defending true capitalism, would fail to make this distinction, gives credence to the power of the "big lie." They have so internalized this nonsense, that again and again, they are willing to defend transnational behemoths over the well-being of the American economy.
As one (somewhat mysterious) financial trader said in a BBC TV interview last week, a crashing economy is a brilliant opportunity for savvy insiders to make a killing. The economic well-being of a nation or its citizens is not a major factor in the world of transnational commerce. Predicting that the economic crisis will deepen, he summed up his message with a smile -- governments don't rule the world, Goldman Sachs rules the world.
For true American patriots who believe in a vibrant free market economy, it is time to recognize we've been sold a bill of goods. The real enemy in the battle for American capitalism is not socialism; it is global corporatism. For true patriots, conservatives and liberals alike, the stakes could not be higher.
My new book, Patriot Acts -- What Americans Must Do to Save the Republic, examines the true nature of our constitutional system, how it has been interpreted and manipulated by conservatives and liberals since 1789, the effect of partisan ideology on this democratic system, including the economy, national security, health care, education and immigration, and how modern politicians betray the founding principles, constitutional system and economic capitalism that all Americans, left and right, profess to defend. Patriot Acts can be preordered on-line and will be released on November 1, 2011.
Patriotacts.com, catherine@patriotacts.com
People are not that creative on a whole to always invent new products and services.
Human ingenuity for the majority of CEO's consists of:
Reducing wages,benefits & production costs (why? global competition with slave labor).
Ultimately raising product service prices over the longer course.
To sell stuff we end up overhyping the 'benefits' of the product/services via advertising (lying).
That formula will always end badly for the workers.
Think of Cantor, Ryan, Boehner, McConnell and the right-wing ideologues on the SCOTUS who gave us Citizens United and corporate personhood. She belongs to a GOP not seen since the 60s, before the Moral Majority, the Neocons and the hi-jacked Tea Partiers came on the scene. She really knows who the middle-class is, how they're being betrayed, seems to really care, and isn't afraid to argue the case against the wrongheaded callousness of those controlling her own party or any who think unbridled capitalism is a panacea rather than an enslaving poison.
Every form of government operates best on a small scale.
Larger scale and complexity brings in all manner of problems ... WFA (waste, fraud, abuse)
There is an appropriate size that is just right; and it's not on either end of the spectrum. What we have to determine is what do we want the government to do, and then size it accordingly. Some agencies are too small/weak, while others are way too large. The key is, we, as the electorate, must do our job to research and elect the paragon (erudite and altruistic leaders) of our society to represent their constituents in the discussions; and we should support them as long as they continue to represent the constituents interests.
But, having said all of that, we shouldn't let our quest for perfection be the enemy of the good (yet adequate). Along with that, we (society as a hole) have to agree that not everyone will get everything they want; but the net effect should be that our representatives (and in turn, the governments) actions are always in the interest of the majority of the constituency/citizenry.
That's how this syncretic republic/democracy was supposed to work, but almost never has...
.If I want a raise in the government I can do a bad job and say I need more money to do it right as well as more employees.If I am a supervisor with more employees I can get gs8 to gs 9 etc.We certainly need laws etc.but government has a history of being corrupt and,inefficient,I t seem that a government powerful enough to help people usually hurts them.I do believe we have the best system for getting rid of the ones we dont like.A republic will fail when citizens vote their own entitlements and corporations bribe the politicians
Words have changed. 'Competition' no longer means ... 'lots of choices from many'. Now it means ... 'reduce wages/benefits'. In fact there is no competition with the mergers/acquisitions in all Industries. Now only a handful of Big Mega-Corps control so much. All shopping centers are the same. We purchase through subsidiaries.
'Mercantilism' or 'Corporatarchy' ... that has replaced our simpler forms of capitalism. In reality the word 'socialism' has been thrown around without any understanding of that word either. Obamacare is corporatarchy ... everyone must purchase 'insurance' from private businesses. It's not a government run health system. BTW I lived for 20+ years in a country that had 'direct health services'. I didn't need insurance to access health care. I much prefer that system.
I much appreciate this article. It's complex but I know this country is unique because We The People, For The People, Of The People, By The People is definitely not the same as 'I The Person' (personal freedoms without any responsibility ... much like chaos or anarchy) nor 'We The Corporation' (but we've headed down this path since The Great Restructuring of the mid1980s.
Time for a Great Renewal and rethinking how to enliven our 'freedom' and 'equality' balanced by 'justice'. http://oldtimeislands.org/pledge/pledge.htm
The average entrepreneur in Jefferson's time was a small farmer, but reasonably large corporations can be highly beneficial so long as they are governed by the rules of a democratic society, Regulations are rules, like a 20 MPH speed limit in a school zone. Of course rules are necessary, even if some prove to be counterproductive and worthy of modification or repeal.
I sometimes hear Jefferson quoted as a conservative hero, which is rubbish. Even the word "conservative" in the modern political context is a misnomer. The Tea Party is no more the embodiment of the values of the American Revolution than the values driving Crusades or the Spanish Inquisition were those of of Jesus. The revolution fought against the influence of a royalty that lived by a different set of rules than ordinary folk.
I agree, with qualifiers, that "Government is never good, at best necessary" insofar as power of any sort "tends to corrupt". But inasmuch as it is necessary, it is the responsibility of "We the People" to attempt to make government as good as it can be.
So indeed, be careful with labels, and remember that you can't map 21st century politics smoothly onto the 18th century political landscape.
So, a very conservative position on that even in his own day.
Indeed, labels are misleading.
The founding fathers clearly favored large wealth inequalities and a ruling upper class
No voting rights unless you are a white wealthy land owning male
They clearly supported a "democracy" of the rich white ruling class.
The rights laid out in the constuition are explicitly not for everyone, only them.
One protester = the entirer protest movement.
We learned that from the media's and the left's observation of the tea party protests.
People also act in the interest of the group, even when it's at personal sacrifice. Capitalism fails to take this into account. Humans care about others, not just themselves. Probably the best system we have, in terms suitability to human nature, is a mixed economy. That's certainly what Americans prefer.
There is nothing in Capitalism which precludes these very human responses.
Understand this, all wealth is derived from exploiting workers, customers, investors, government(s), and/or the environment. In fact, capitalism, which I support, requires a modicum of exploitation - it's the motivator/incentive. It's when this exploitation gets excessive (or usurious) that it becomes a problem.
Right (or left) wing propagandists try to frame everything as absolutes; either this choice or that one. Absolutely, we follow self interest, but part of that self interest (if we think about it) is societal. Aside from the supposedly Holy realm of business, how could everyone being as selfish as possible automatically produce a civil society? Is that what we teach our kids? The trick for a free society -not a lawless or tyrannical one- is to make rules that maximize opportunities to pursue self-interest while actively promoting and protecting the common good.
A very subjective term. In fact, regulation itself can be (and often is) used by unscrupulous people to further their own self interests ... both in its adoption and it's enforcement (or lack thereof)
Who is regulating the regulators?
Smith would be despised as a pinko socialist today by the right-wingers who claim to love the system he created.
Excellent article. Can't wait to read the book.
Overall, Adam Smith favored progressive taxation schemes..... thinking that those who benefit most, should pay the most.
"The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.[15]"
http://en.wikipedia.org/wiki/Progressive_tax
This means a flat tax rate - not a progressive tax rate.
Oh yeah and he would say "protection" means law enforcement and defense - they didn't have much else in those days. Dirt roads did not need many "shovel-ready" jobs.
"The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.[15]"
http://en.wikipedia.org/wiki/Progressive_tax
The recent awakening, including this article, the Wall Street occupation, and a good number of other articles challenging the status quo, has been very welcome to my abysmal forecast. Not too long ago I heard about a company called Lincoln Electric and a book about its structure called Spark. It occurred to me that capitalism didn't need to be such a bad thing, if only humans tamed it and made it work for them, rather than the other way around. Now the momentum is gaining traction, more and more people are becoming aware of their exploitation and, even those who rigorously vote against their own interests are seeing the light. In short, I am beginning to feel hope creep back into the picture.
More importantly, why do we let them...