Capitalism & the Capitalists

It now seems abundantly clear: capitalism run only by capitalists equals catastrophe. Virtually all of the world's religions abhor this "purist" ideological stance and have preached against it for centuries.

A strong strain of "laissez-faire"capitalism has always run through the veins of the
American body politic: sometimes nearly dormant, sometimes raging wildly. As the 70's drew to a close, however, word went out that the best government is less government. This became the bedrock of the Reagan philosophy, reaching full-flower by the end of the 80s. Its most ardently admired spokesguy for the last two decades was Alan Greenspan, purist descendant of Milton Friedman, guru of the gentlemen and women of the Chicago school of economics, who jump-started this new Age of Economic Conservatism. For the hardest of these hard-right radicals, of course, the best government is virtually no government. (People of this persuasion used to be called anarchists in those heady days when adherents stormed through the streets of Europe and America, demanding an end to government..) One of their central issues here was and is "TAXES!" Those on the right don't like them. In fact, the more radical among them don't like them to the extent that they would rather there be none - or virtually none. Perhaps some sales tax would be okay. Some. Privatize, privatize, privatize is their mantra. (Ooops, better make that "slogan" instead. We don't want to get too "Eastern" in our choice of words.). Go and sell the highways to private operators! Same with the sewers. Let them be maintained and operated for a "fair market price." Likewise, with water, minerals, wilderness. And then, let this newly unfettered market police itself with the "invisible hand"--that appendage that now seems not only invisible but non-existent. And, here's the best - back off the banks and the other financial institutions - WORLD-WIDE, for crying out loud! Oh, and one more thing - the Executive Branch, is beyond the law, immune to checks or balances (or common sense). So, the President and his crew can start baseless, pre-emptive wars. They can torture innocent foreigners and citizens alike. They can round up and incarcerate undocumented workers whose only crime is a willingness to do menial work that no one else will take on. (This anti- immigrant attitude, by the way, disables [irony of ironies] the only privately operated, low-overhead, foreign aid program ever devised: undocumented workers sending funds back to their poverty-stricken families without benefit of real bureaucratic nonsense.)

This is the world these pure capitalist, laissez-faire folks, have created - the one that's now lying in ashes at President-elect Barrack Obama's feet. And, because we are a moral people living in democracy, it is also lying at our feet - to fix.

So let's start with a re-thinking our fundamental economic philosophy: capitalism. In order to run effectively over time, democracies need robust economic systems. Such systems rest on a kind of economic social contract ratified (usually informally, even instinctively) between those governed and those governing. Viewed in broadest terms, this economic engine's purpose is to produce outcomes in terms of wealth (and the quality of life that wealth provides) that those governed perceive to be both fair, dynamic, growth-oriented, and open to participation by all.

Such a viable system can thrive only in a social/political environment that can actually yield a compromise agreement, forged by functioning political forces. And so, accordingly, it would seem that any system that is skewed too much in favor of one set of ideological principles (or one or a few interest groups) will and should fail or, at least, have only very limited success.

So, against this vision, where do we stand nationally (and globally) right now? Do we have a system based on a truly democratic "ideology"? We don't. But the recent election has given us, a vision of one. According to this vision, participation and benefit-sharing are as much a right of the poor and the middle-class as they are of the top ten percent of the economic "goose pile".

As already implied, free market capitalists (so called "pure capitalists" - though many would say there is nothing pure about them) are the authors of the present national and global economy. And while some may think that "their names are legion," the prime movers are really a rather small group of individuals (right wing "intellectual elites"), third and fourth generation descendants of earlier day laissez-faire true believers. What is "legion" are the millions who have followed them into the present dark night behind banners emblazoned with "fair trade," "free trade," "unfettered marketplace," de-regulation and other standards promising the common man that all God's children can become as rich as Boone Pickens if they simply "let the market work."

This blighted vision maintains that economic parity among all peoples is not possible. Equity is not attainable. "The poor you will always have with you," is their favorite biblical injunction. So, what we've got right now (unless you belong to a Third World nation doomed to be held in economic hostage by the mega economic powers) is not an unforeseen glitch or anomaly. It is predictable and, while perhaps regrettable, it is to be expected in this utterly "free market" environment. WE have this current economic, financial, fiscal , social debacle staring us in the face because it was designed and built exclusively by capitalists for purely capitalist purposes and these guys are essentially not democrats as our forefathers and mothers were. They are oligarchs. They have replaced an economic system "of, for and by" the people with a greed-driven, jungle environment that offers only voluntary charity from the winners as a palliative for the losers.

But, of course, these folks had a lot of help from many of us complacent, often willingly ignorant, "maybe-I-can-get-me-a-little-of-this-bonanza" docile citizens of democratic nations.

In a democracy, alas, it is "we" who must own both success and failure (allowing, of course, for either some grace or good luck along the way). It is, therefore, "we" who will ultimately direct ourselves out of this terrible mire that threatens to suck the world l deeper and deeper into the muck of its grasp. President-elect Obama, without addressing the situation head on yet, seems to understand all this and, without pointing fingers and condemning anyone, is calling back a more humane level of social, economic, political consciousness from which to re-build the nation.

Citizens need to keep some basics in mind.
1. Economic systems are built, not on arcane economic formulae or esoteric hypotheses or to fulfill some immutable laws of the universe. Economic systems are built to serve people: individuals, families, communities, towns, cities, states, countries, the world. "Business" is only one factor in economics. Government is only one factor. The individual is only one factor. Society, the same. The marks of a sound economy are: equilibrium, fairness, steady growth, progress, reasonable (though not full) equity in the distribution of goods and wealth, etc.
2. Fairness cannot be left to the "good will" of those with philanthropic instincts. An economic system must have "fairness" as one of its principal goals. So a real political leader must be able to respect business' needs and support an environment that allows for the "business instinct" to function. But he or she cannot, for instance, perceive "good times" simply to be the condition defined by rising stock markets, "booming business", robust sales of durable goods, and sky-rocketing capital gains - for the few. You can have all of those things and NOT have a healthy economy in human terms. This is what, sadly, has been happening for years.
3. To have any economy subject wholly to or principally in the hands of business people and/or even economists themselves is disastrous. A business person, to be successful, must be single-mindedly "minding his/her business." We can't expect General Motors to provide social services to its people without pressure. It is NOT always the case that "what's good for GM is good for the nation."
4. Presidents have everything to do with developing an environment of genuine economic health. It is the leader of a nation who does the juggling, the persuading, the cajoling, the threatening sometimes, the critiquing all the time that ultimately keeps things in balance. If we want economic good health, we want a president who does not confuse sound economics with "good business." A good economy doesn't want a purist (in financial/business terms) at the helm. That only leads to the kind of disaster we have in front of us. We don't need a "socialist" either - one who perceives business and finance as "enemies of the people."

The last 30 years. have seen the U.S. move toward the development of an economic system made by, with, and for the good of business only. It's obvious; after all that's what TRICKLE DOWN means in the now-well-worn phrase, "trickle down economics." Trickle down economics cannot by definition be good economics. Its purview is too narrow and its premises are undemocratic. A good test of this can be given by asking ourselves: are our "dollar votes" more significant than our "ballot box votes." When that becomes the case there is trouble. These two should at least be in balance.

So what can the "average citizen" do? It's really quite simple and on November 4th we seemed to have made the first step by voting for the presidential candidate who has a wide horizon and who can inspire and motivate "we, the people" to see that wider horizon. At the same time, we are also a wounded nation right now. Many, many people feel (and with good reason) that they, along with their entire country have been wronged. They want things made right. So, we will also need, as citizens, to be willing to support an administration that corrects the wrongs and names the wrong-doers.

The recent election indicates above everything else that most American voters no longer trust the supply-siders and deregulators; we will not seek our salvation based only on the calculus of the marketplace. We do not trust, on the basis of sad experience, the singular perspective of the "business community" or Wall Street, or ideologically narrow politicians who have only their own, donation-driven special interests in mind. This election is only a first step, one that has created the potential for a better future. We have, by strong mandate, chosen differently. So now we can face a more definite future, one filled with promise - but only if citizens will answer the call and re-engage in their government and their communities. Each of us must, see to it that those who govern us act demonstrably in our best interests. By doing so, we can show the world how to build a genuine economy not of, for, and by "capitalists" but one which is more all-embracing, one that is of, by, and for all the people - as our founders intended.

Comments

[Socrates Thinks]

"If you examine the failures of the socialist experiments of the past 150 years, it's not collective ownership of production or social investment in infrastructure -- the central tenets of socialism -- that led to their demise. It's always inefficient, bureaucratic central planning and delusional, utopian autocracy that does them in."

Another way to look at this is to realize is that this is a pretty good description of our current corporate socialist system. Privatization of profits, socializing of loss. Loss of the real "free market" to domination of the markets by a few "too big to fail" corporations that become one with the federal government.

The result: central planning and the utopian autocracy. How bout dat!

[SeriousBlack]

Well said, Mr. Murray.

[jsarets]

Yes, but we have to be clear about what aspects of capitalism work and which don't. To this effect, it is useful to divide the economy into four different types of transactions: commercial (goods and services), financial (loans and investments), natural (land and materials), and labor (effort and sacrifice).

The trick to selling the ideology of free market fundamentalism is to get people to only consider market dynamics in the context of commercial transactions, where it is relatively easy to grasp how the mechanics of supply and demand tend toward an equilibrium of between production and consumption.

After all, the demand for a commercial product is only meaningful relative to that for other products in the marketplace, and the relative pricing signals create trade-offs that inform pricing in a feedback loop that pursues an equilibrium.

But this is not true for financial, natural, and labor markets. The demand side in both of these markets always wants more capital, more resources, and lower wages. There is no relativity, feedback loop, or equilibrium. These markets are inherently unstable.

If you examine the failures of the socialist experiments of the past 150 years, it's not collective ownership of production or social investment in infrastructure -- the central tenets of socialism -- that led to their demise. It's always inefficient, bureaucratic central planning and delusional, utopian autocracy that does them in.

We have the institutions to make socialism work: commercial markets and participatory democracy. Call it market socialism. Call it economic democracy. Google it.

[shamanbart]

You make some excellent points, but unfortunately socialism is a brand as tarnished as Republicanism or supply side economics.

The problem with modern economics is hinted at from your point about natural and labor markets which is one of sustainability. We should be seeking an economic model that above all is sustainable for all elements -- natural resources, consumers, lenders, owners, workers, etc.

We need to shift from a primary focus of profit above all to a goal of reasonable profit, health of the labor force, availability of resources, sustainable growth.

The greatest sins of the corporate world are due to the primary goal of maximizing shareholder returns, through greed, tax evasion, plundering of natural resources, pollution, regulation avoidance, etc.

The first step to realizing the goal of sustainability is to undo the notion that a corporation is a legal person. I know of no person that can be sold outright, dismembered, merged with another, or made publicly owned. If a corporation were treated as it is, which is an association of people and property that produce goods and/or services, it should have fewer rights and more responsibility -- especially in terms of consumption of natural resources and maintaining employment.

Another concept that needs fixing is employment. Currently, we have to make up bizarre jobs and worthless products in order to employ people so that they can eat and have shelter. At what point is it simply better to shorten the work week and move up retirement? I'm out of

[DiogenesOfAlaska]

We probably roughly agree, but I would like to make a few points.

I think the task is less to shift from 'profit' to 'reasonable profit' than to remember that 'profit' always stands in a trade-off with risk, including long-term risk, and hence automatically comes with 'reasonable' writ large on its forehead. I even think it would provide ideologues with a dangerous amount of room for pseudo-argument if we would even distinguish between the growth that a sane capitalist can desire and sustainable growth. This is probably a political or strategic point: why would a sane person solve the problem that the capitalist has and has not yet managed to solve just to justify a new name tag?

Let me be clear: 'the greatest sins of the corporate world' are not sins but cases of utter dumbness. The problems about the legal treatment of corporate entities that you mention are indeed tough ones: for the shareholders as well as the workers (and increasingly, many workers are themselves shareholders). The conflicts of interest and misalignment of incentives in executive pay are hard problems: for the capitalist to solve.

What I am trying to get at is: if you remove the plutocratic or feudalist image and take capitalism for what it is, then you already have found your first and foremost ally in your struggle: it is the capitalist himself. (Who is often also a worker or a democrat or a critic.)

[DiogenesOfAlaska]

Just in case you are serious in your attempt to form the synthesis of free markets and democracy and find that it is not what is realized in the US or anywhere else - to advertise this synthesis under the name of socialism is certainly the worst idea ever, already in terms of marketing.

The problem with your analysis of the failure of socialist experiments is - as in many other attempts to do this analysis - that you give far too much credibility and respect both to the 'scientific' foundations of socialism (creating the impression that there is some hypothesis to be tested by experiment - this is not so) and to the people who were in the business of carrying out the 'experiments' (who thought of themselves as revolutionaries by profession, a kind of intellectual class or elite).

Certainly social investments in infrastructure or a heightened understanding of the inherent instability of financial or natural or labor markets have never contributed to the ruin of anything, including socialist utopia. But that doesn't work in favor of utopia.

By the way, there is no valid or comprehensive or non-contradictory account known of how democracy can co-exist with collective ownership of production. This problem was known even before Marx. It was discovered during the French Revolution. I happen to believe that there is, in fact, no such reconciliation, and that for this reason, socialism in the sense of collectivism is doomed to failure in all its variants.

[DiogenesOfAlaska]

Let me be a bit more concrete:

Is it possible to abolish property rights in a democracy? In principle/actually? Neither.
Would a collectivist state introduce democracy? In principle/actually? Neither.

That's what I meant by the reconciliation that does not exist in my opinion. I admit that I also do not have a preference for collectivism, but I like to think of myself as first considering argument before I wonder what my preferences are.