Capitalism Mythology

Yesterday after our Thanksgiving feast, I enjoyed a nice talk with my father-in-law about capitalism.

He was offended when I said that capitalism is unsustainable. He felt I was attacking free enterprise, and assumed I was advocating socialism instead. He said that there is nothing wrong with someone becoming wealthy through hard work. He said there is not a single country where socialism has succeeded, and that the incentive of profit is needed to motivate people.

I pointed out to him that with unfettered capitalism, the money simply rises to the top. I said that when 5% of the world's population control 40% of the world's wealth, there is a problem. And when you are rich, it's easier to accumulate more wealth. I also pointed out that the middle class are becoming the lower class, and can't afford to buy all the crap that made the rich people rich in the first place. Thus, we have the sinkhole in which capitalism collapses.

I finished the conversation by saying the solution is not socialism, but socially responsible capitalism. On the way home, I realized that this is a fallacy as well. Only government can control capitalism, and that means a larger and more intrusive government. Since the government seems to screw up nearly everything it does, I doubt that they could properly reign in capitalism, which tends to treat humans as a commodity rather than people.

So, I guess the only solution is that capitalists should self-regulate. They must adopt the attitude of not just focusing on the bottom line, but also being environmentally and socially responsible, and, most importantly, remembering that they should also try to provide some decent paying jobs for American citizens. Hey, there is an advantage to that. If you outsource ALL the jobs, there won't be anyone to buy your product.

I don't think most people are intentionally greedy, but the system we operate in IS inherently greedy. There is pressure at all levels of a corporation to turn a good quarterly profit, which increases stock value, and, in turn, means more bonuses and dividends.

I am not sure that sustainable capitalism will EVER work. But, anyway, I digress. Here is a quote from columnist and blogger Chris Hedges:

It is not accidental that the economic crisis will converge with the environmental crisis. In his book The Great Transformation (1944), Karl Polanyi laid out the devastating consequences the depressions, wars and totalitarianism that grow out of a so-called self-regulated free market. He grasped that "fascism, like socialism, was rooted in a market society that refused to function." He warned that a financial system always devolves, without heavy government control, into a Mafia capitalism and a Mafia political system which is a good description of our financial and political structure. "A self-regulating market", Polanyi wrote, "turns human beings and the natural environment into commodities, a situation that ensures the destruction of both society and the natural environment". The free market's assumption that nature and human beings are objects whose worth is determined by the market allows each to be exploited for profit until exhaustion or collapse. A society that no longer recognizes that nature and human life have a sacred dimension, an intrinsic value beyond monetary value, commits collective suicide. Such societies cannibalize themselves until they die. This is what we are undergoing.

Polanyi is insistent that "laissez-faire was planned; planning was not." He explicitly attacks market liberals who blamed a "collectivist conspiracy" for erecting protective barriers against the working of global markets. He argues, instead, that this creation of barriers was a spontaneous and unplanned response by all groups in society against the impossible pressures of a self-regulating market system. The protective countermovement had to happen to prevent the disaster of a disembedded economy. Polanyi suggests that movement toward a laissez-faire economy needs the countermovement to create stability. When, for example, the movement for laissez-faire is too powerful, as in the 1920s (or the 1990s) in the United States, speculative excesses and growing inequality destroy the foundations for continuing prosperity. And although Polanyi's sympathies are generally with the protective countermovement, he also recognizes that it can sometimes create a dangerous political-economic stalemate. His analysis of the rise of fascism in Europe acknowledges that when neither movement was able to impose its solution to the crisis, tensions increased until fascism gained the strength to seize power and break with both laissez-faire and democracy.