The downside of capitalism

by Allen Marshall of Defiant Living

I’ve been a small business owner for most of my adult life. I’ve lived by the rules of capitalism and have always thought of it as the best possible economic system available, and the one most compatible with the idea of personal freedom. But as I get older, its flaws have become more glaring, to the point that I’m starting to wonder if there are other ways for us to work.

Let’s start by acknowledging its formidable benefits:

  • It offers the best alignment with our nature as people. As humans, we are wired to do, to achieve, to grow, and to accumulate resources, and capitalism allows all of this. It rewards positive traits like hard work and creativity, and punishes negative traits like sloth.
  • It offers the best alignment with the ideal of personal freedom. It does not impose on our rights to do as we wish, and it does not require government interference. It does not involve some government agency confiscating the fruits of our work because others “need” them. It benefits from smaller, less invasive government.
  • Historically, there’s been nothing more effective in improving the quality of people’s lives. We have more “stuff,” more spending power, and more purchasing options; our living conditions are better; and poverty is much lower, and much less severe, in capitalist countries. Capitalism is also the best solution for racial problems: Capitalists see green, not black, brown, or white.
  • In terms of our working lives, we work less and we work safer, thanks in part to technological innovation and in part to the freedom of workers to pursue better jobs.
  • Capitalism even helps international relations: Countries that trade are far less likely to fight.
  • Perhaps most importantly, there don’t seem to be any better alternatives. Options like the various forms of socialism or mixed economies fall short when it comes to aligning with our values and in terms of their historical results.

That’s an extremely strong list of benefits, and maybe they override any flaws; after all, no system is perfect, and maybe you just have to choose the best of your imperfect alternatives. But the flaws gnaw at me more and more, and I have to wonder if there’s some way that they can be accounted for.

What flaws? How about:

Cost Shifting: Pollution

Profit comes by maximize your sales and minimizing your expenses. And many of the industries that actually produce things, like manufacturing, power, and agriculture, have minimized costs by dumping hazardous waste products that then become the public’s problem. In the US, up through the 1970s and 80s, we saw rivers catch on fire from dumped industrial toxins and debris for example, and we still have close to 2,000 “Superfund” sites where the government is cleaning up land that was contaminated by industry. And even today we see coal plants dumping thousands of gallons of toxins into the drinking water supplies of cities like Pittsburgh.

And what happened when the government enacted stronger environmental laws in the 70s and 80s? Manufacturing found its way to other countries, unencumbered by environmental rules, so they could continue polluting without picking up the tab. As a result, we see countries like China where polluted air leads to 1.6 million deaths per year, more than a quarter of the key rivers are unfit for human contact, and 20 percent of the soil is contaminated.

Cost Shifting: People

I’m not going to argue over “unfair” wages; I recognize their role in supply/demand here, and in developing economies elsewhere. What I do have a problem with is the fact that there’s no room for nationalism in capitalism, as evidenced by industries’ mad dash to send American jobs overseas solely to take advantage of lower pay rates.  According to the Wall Street Journal, “U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers … cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the US Commerce Department show.” IBM, for example, now employs more people in India than in the US, mostly because the average pay for a high-tech worker there is around $17,000 versus $100,000 here in the states. Then there’s the value of bringing lower-paid people to the US to compete with citizens for jobs, both through illegal immigration (which corporate America is wholly in favor of) and the H1b work visa program.

Resource Depletion

We live on a finite planet, yet the growth model inherent in capitalism requires that we use more and more resources to produce and sell more and more products. The resources we get from nature, like ocean-harvested seafood or precious metals, are being depleted at an alarming rate, and as Chris Martenson notes, it requires more and more energy to not only obtain those resources, but it takes more and more energy just to get the energy to do that work in the first place! And in those cases where we farm resources, like food or animals, our processes have been so Frankenstein-ed with hormones, antibiotics, and genetic modification, or so inhumane, that they hardly seem appropriate for a healthy society.

Human Values

Capitalism grows as people consume more, and consumerism has become a defining characteristic of our society. As a society, we measure success and happiness in dollars, and it seems that we would rather self-medicate to mask our barren souls than question the system that produced them. One can argue that capitalism works best when paired with a moral code like Christianity, but I think that in the battle between God and money, God has lost.

Corruption

In a capitalist model, money is the central measure of value – and when people hold up the dollar as their highest value, the means become secondary to that end. That’s why you see so politicians so easily bought by the wealthy; it’s why you see corporatists using the government, and the military in particular, to strong-arm their way into exploiting smaller foreign countries.

Maybe this is just first-world whining over a system that is necessarily imperfect. Again, I see all the good that capitalism brings, both on an individual and societal basis; this is not, by any means, a call for socialism, government interference, or anything of the sort. But I can’t escape my growing awareness of the downside of this system either, and it bothers me more and more.

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anarchyst
anarchyst

Henry Ford CREATED a market which had not existed when he paid his employees $5.00 per day. The average wage of the day was around $1.25 per day. Of course, the wall street types and the banksters howled that Ford’s wage rates would destroy capitalism. Guess what?? The OPPOSITE happened. Henry Ford knew one of the basic tenets of a truly free, capitalistic society, that a well-paid work force would be able to participate and contribute to a strong economy, unlike what is taught in business schools today–that wages must be kept to a bare minimum and that the stockholder is king. Our “free trade” politicians have assisted the greedy wall street types and banksters in depressing wages on the promise of cheap foreign labor and products. A good example of this is the negative criticism that Costco receives for paying its employees well above market wages. These same wall street types praise Wal-Mart for paying its employees barely subsistence wages while assisting them in filling out their “public assistance” (welfare) forms. Any sane person KNOWS that in order for capitalism to work, employees need to make an adequate wage. Unfortunately, this premise does not exist in today’s business climate.
Henry Ford openly criticized those of the “tribe” for manipulating wall street and banksters to their own advantage, and was roundly (and unjustly) criticized for pointing out the TRUTH. Catholic priest, Father Coughlin did the same thing and was punished by the Catholic church, despite his popularity and exposing the TRUTH of the American economy and the outsider internationalists that ran it . . . and STILL run it.
Our “race to the bottom” will not be without consequences. A great “realignment is necessary (and is coming) . .

Iska Waran
Iska Waran

“Henry Ford CREATED a market which had not existed when he paid his employees $5.00 per day.”

If that’s true, it could only be because his paying them so well created such good PR that it caused people who would otherwise not have bought his cars to do so. I find that implausible, since people these days wouldn’t buy a product just because they’re impressed with the manufacturer’s beneficence. You can’t make money selling a product only to your employees. That’d be like a perpetual motion machine. I think this is an urban myth that wouldn’t withstand detailed analysis.

anarchyst
anarchyst

Henry Ford had a two-fold purpose for increasing wages. One was intentional and the other was a by-product of high wages.
Assembly line work was repetitive and relatively boring. Ford had trouble attracting employees at the wage “standards” of the day. His $5.00 per day rate attracted many people who, given the right incentive, would do such work.
The $5.00 per day wage rate also had the consequence of creating a middle class of people who could afford many products previously unaffordable to them.
I stand by my statement that Henry Ford was partially responsible for creating the modern-day middle class.

Iska Waran
Iska Waran

If you’re saying that Ford’s $5/day pay rate shamed other employers into paying markedly more for labor (thereby creating the middle class), I suppose that’s theoretically possible (though improbable) and almost certainly not provable. His assembly line increased productivity to the point where he could afford to pay $5 – so in that sense he helped create a middle class. When people talk about Ford’s famous $5/day pay scale, most people seem to think he sold a meaningful percentage of his cars to his employees. In 1915, Ford had about 14,000 employees and sold 300,000 Model T’s. In years 1915-1918, Ford sold about 2.2 million model T’s. Ford’s sales to employees could not have exceeded 1% of total sales. So the legend that he thrived because his well-paid employees were buying the cars is an urban myth.

credit
credit

I don’t like my car because it doesn’t fly too. So I’m going to buy a model T and try to make that fly. I see the benefits of modern cars but, like evolving capitalism, I expected perfection by now, and without it I’m rejecting modern automobiles.

MrLiberty
MrLiberty

As if any of the crap that is on cars today has anything to do with what the MARKET wants versus what the criminals in the federal government want. The automobile market has NOTHING to do with capitalism (free market) either.

Annie
Annie

The problem is not the type of society – capitalistic, communistic, etc. It is the psychopaths and sociopaths. Psychopaths and sociopaths will take advantage of any society and corrupt it.

pyrrhus
pyrrhus

Not true. In traditional manorial societies, the aristocracy had an interest in maintaining the land and the people because the aristocracy owned the land, and derived most of its income from land. In financialized capitalism, capital is rootless and wanders from place to place strip mining resources and people….Edmund Burke predicted this result more than 200 years ago when he observed Jewish bankers acquiring great influence in England.

pyrrhus
pyrrhus

The author has correctly pointed out that modern capitalism has turned into a strip mining operation, in which the wrecking of nations is perfectly ok as long as it brings vast personal wealth to capitalists like Mitt Romney and George Soros…Of course, governments might not allow some of these destructive activities if they cared about the voters, but Billionaires have a lot of money for lobbyists and campaign contributions….

MadMike
MadMike

The government powered warfare/welfare state, combined with crony capitalists run the world. The less well off are played against the wealthy and not so wealthy, while the crony capitalists conspire to regulate and legislate competition out of existence. Distracted by the latest sound byte, twitter feed, football on the weekend, and beer in the fridge, the herd stampedes from one Kool-Aid watering hole to the next, then dutifully votes for the D or R. “Independent” is just another word D or R voter.
This country hasn’t had real free market in 200 years.

MrLiberty
MrLiberty

The Federalists were fundamentally pushing for the revolution as a means to establish their own “mercantilist” (aka crony-capitalist) system here in America that was free of the crown (but most certainly not free of government control for the benefit of the elite). 228 years is more like it.

MrLiberty
MrLiberty

Where does one begin to address the GROSS IGNORANCE of this post?

For the purposes of my criticism, I am going to assume that the author is bashing “free market” capitalism.
Well, let’s start at the beginning. The pros are all fine and it is acknowledged that there are far more to list.

Let me begin with an apology for the length of my response. There is just so much wrong, it takes a while to cover.

Pollution: Pollution is a property crime – a trespass if you will. It is a violation of the rights of EVERY OTHER PROPERTY OWNER impacted. In a free market, these crimes would be addressed with lawsuits and judgements that would send a very clear message to future polluters that waste, etc. MUST be kept and dealt with on one’s own property (or properly disposed of elsewhere also in accordance with the respect of private property rights). The introduction of government into the mix creates a “crony-capitalist” system and undermines the free market mechanisms for addressing the issue. Governments steal land and allow dumping to enable low-cost disposal of hazardous waste (Yucca Mountain for nuclear waste comes to mind). They also pass laws that establish “permissible levels” of pollution completely in violation of the rights of the property owners impacted. They also run the court system and use that system to throw out lawsuits that THEY deem inappropriate. In short, government/business collusion regarding pollution is the reason we have ALL the issues the author FALSELY attributes to Capitalism. These is nothing more than the negative, but inevitable effects of crony-capitalism.

People: Labor cost is only one component of the cost of producing a product or service. Taxes (government – not free market capitalism), regulations (not free market capitalism), inflation (Federal Reserve-created, not free market capitalism), manipulation of currency/interest rates/asset values by government/central bankers (not free market capitalism), property taxes (not free market capitalism), ,and countless other GOVERNMENT interventions into the economy that have NOTHING to do with free market capitalism, play as important if not MORE important role in the overall costs to an employer. And that leaves out labor laws, EEOC mandates, forced minimum wage requirements, insurance market manipulation, and so much more (all the product of government/crony-capitalism, NOT free market capitalism). Without all of this, what would employers REALLY do? One thing is for sure, the INCENTIVE for the hiring of foreign labor, the movement offshore, etc. is CREATED by government involvement, NOT inherently by free market capitalism. Oh, and let’s also not forget that huge multi-national corporations themselves are the product of GOVERNMENT, NOT the free market. The entire regulatory apparatus has been put in place to destroy the growth potential of the little guys and to protect the market position of the big guys. It has been that way since the big railroads pushed through the Interstate Commerce Commission in the 1800s to destroy their smaller competitors. Would huge multinational corporations really truly still exist in a truly free market that exposed them to REAL competition? It is quite doubtful. One thing is for sure, they would ONLY get huge in a free market by pleasing their customers, NOT by purchasing future wealth via government power and influence over competitors/consumers, etc.

Resource depletion: Natural resources have a REAL cost to produce. Government theft of land, government leases far below market value to crony capitalists, etc. ENCOURAGE the exploitation of the land, the depletion of natural resources, and destroy the very market pricing signals that generate reduced consumption, searches for alternatives, and the restoration of new materials (where possible, like trees). Government-owned forests are harvested through clear-cutting, on roads paid for by the taxpayers, with NO replanting of trees. Privately-owned forests are selectively cut, roads are created as needed, and trees are replanted and managed properly. Once again, CRONY CAPITALISM, not free market capitalism, is to blame. The examples of strip mining, and other natural resource depletion and pollution on government-owned lands are even more widespread and atrocious. Energy throughout the nation is controlled by government-protected/created “public” utilities (not the free market), is subsidized in many areas via government theft of lands, government damning of rivers, and expenditures of stolen taxpayer dollars used to create hydro-electric plants. Most definitely NOT free market energy. Oil in the middle east receives “FREE” security courtesy of taxpayer dollars and US military forces (or the threat of military force). I could go on and on. Even mentioning energy and natural resources in the context of capitalism is shameful.

Human Values: “Capitalism grows as people consume more, and consumerism has become a defining characteristic of our society. As a society, we measure success and happiness in dollars, and it seems that we would rather self-medicate to mask our barren souls than question the system that produced them. One can argue that capitalism works best when paired with a moral code like Christianity, but I think that in the battle between God and money, God has lost.”
Capitalism is simply a mechanism for distribution of resources, capital, labor, etc. It is inherently AMORAL (not immoral). Trying to beat it down using a “moral” argument that fails to even talk about how the destruction of savings through Federal Reserve interest rate manipulation encourages consumption over savings (at LEAST) shows the hollow fallacy of even this premise. The author may measure success and happiness in dollars, but that is not true of everyone, but it seems to help make his point so he paints with a wide brush. When you actively destroy the value of the dollar, destroy the inherent drive to save, invest, etc. through what can ONLY be described as crony-capitalist central bank money-manipulation, you are going to get exactly the society we now have that lives for today (because government and the Fed are actively destroying tomorrow).

Corruption: Where to begin? Given that the government and its puppetmasters at the Federal Reserve, control the entire money supply, control the value/purchasing power of ALL the money, can create as much of that money as their hearts desire, and get to spend it before inflation has destroyed its purchasing power, the current situation is inevitable. Additionally, a government which possesses all of the powers listed above (and so, so many more), is one that everyone would wish to purchase and control. Would the FREE MARKET allow a central authority to control the money supply, interest rates, the production of money, etc.?? Don’t be ridiculous. Money is just another commodity/means of exchange. It can easily be regulated as every other commodity is in the free market – by consumers, producers, supply, and demand. It is ONLY because the government controls all this that we have corruption in the first place. Is anyone coming by to hand YOU envelopes of cash (or deposit large sums into Cayman Island bank accounts) to purchase YOUR influence over others?? Of course not.

Sadly the author falls for the delusion and deception so commonly put forth by the proponents of our current Crony Capitalist system – that what we have is a free market, and all the evils you see are attributable to the free market and that the Crony Capitalist “wizard” hiding behind the curtain need not be a distraction or anything worth considering or discussing.

starfcker

MrLiberty, we don’t always see eye to eye, but that’s a great post. And your intro is dead to rights. “Where does one begin to address the GROSS IGNORANCE of this post?” I can answer that for you. Liberalism is a mental disorder. The little liberal weenie that wrote this is just hoping somebody will come on and redistribute something his way, evidently. I don’t know what kind of business this knucklehead could run. Doggie daycare, maybe. Edit: I’m being overly tough on this guy, the most of the things he whines about could be fixed with a little border enforcement. We are not as helpless as he thinks

kokoda the Deplorable Raccoon and I-LUV-CO2
kokoda the Deplorable Raccoon and I-LUV-CO2

Liberty……….didn’t read it all and I am sure that some of your comment can be shot with an arrow, but a couple major items were not only spot-on, they were expressed beautifully.

MrLiberty
MrLiberty

I would appreciate the shots from arrows if you have the time. One learns from criticism. And thanks for the praise. My point is not specifically to detail why free market capitalism is somehow perfect (it is far from that – but so is life, free will, free choice, etc.) but merely to undermine the claims regarding free market capitalism’s supposed failures in these areas by clearing up the point that NONE of the problems mentioned is the result of a free market, but rather the DIRECT result of the crony-capitalist marketplace that is ACTUALLY operating and appears to be unseen or unknown by the author.

Anonymous
Anonymous

There is no perfect economic system, because there are no societies of perfect people.

If there were, they would end up being taken over by societies of imperfect ones.

Oilman2
Oilman2

When the means of production are owned by people with no skin in the game, capitalism begins to fail. Who owns the means of production (business owner) will eventually sell out to take their gain. This allows others to concentrate additional means of production, and thus we build, by default, an oligarchy, plutocracy or bastardized versions thereof. The worker becomes an employee and has zero ownership, and thus disconnected from the means of production. Employees thus become a ‘resource’, to be used and traded.

If everyone OWNS a stake, OWNS a piece of the means of production, then everyone has skin in the game. Even if the original owner takes his gain, the company moves forward as everyone would need to be bought out. Management is controlled, because the owner/employee will not tolerate stupid management – it hits their pocketbooks directly. Everyone is working in the same direction, not at cross purposes.

This is where we have to go in order for capitalism to work effectively. It isn’t new; it’s just been long suppressed by those hating the idea of employees owning anything…

Anonymous
Anonymous

It’s called the stock market.

Stocks represent ownership, and ownership is skin in the game.

starfcker

Bullshit Anna. Like Plato said in 895 AD, ” if you let some people borrow hundreds of billions of dollars from the fed’s discount window at 0%, they will use it to buy up all the productive assets in the world.” Free money trumps earned money any day of the week.

NickelthroweR
NickelthroweR

Greetings,

That is what I keep telling my friends that are selling real assets in order to purchase crypto. What good is crypto if the banks can buy all of it up with their pocket change?

credit
credit

So let’s say I have a very profitable business, and I am forced to slowly sell/give it to my employees over time. That will limit the value of my business and that process itself will inhibit future business formation. Unintended consequence of economic manipulation.

kokoda the Deplorable Raccoon and I-LUV-CO2
kokoda the Deplorable Raccoon and I-LUV-CO2

I am 100% for combating REAL pollution (this excludes CO2 which is necessary for all life on planet earth).

Good governments should monitor all potential sites for pollution. And fine or stop production or both until corrected. The sites should not be found after the company has gone out of business.

The author cites coal plants dumping thousands of gallons of toxins into the drinking water supplies – I don’t disagree, but the real problem is corruption in gov’t.
The gold mine where a gov’t agent caused a massive leak of toxins in riverways.
How about the gov’t agents which hid lead poisoning in municipal water supplies due to changing the water feed.

I’m sure you all know about all the rare earth and toxic elements contained in the solar units; you also should know that the state of CA gave a 30 year abeyance for disposal of the solar panels (political agenda tops pollution control).

bigfoot loves Populous
bigfoot loves Populous

Mr. Marshal is dead on in his account of the results of capitalism. Nice work, sir!

There seem to be three main negative issues: resource depletion; environmental destruction; world-wide competition. Much of the advantage given to capitalistic countries over socialistic ones is that capitalism allows corrections in the market without any oversight, which if it exists leads to corruption.

What is lacking in a capitalistic society has to do with consequences that are not easily attributable to individual businesses, as for instance the entrance of a new competitor in a depleting resource commonality such as a fishing ground, or a competitor that cheats using secrecy, violence, and/or by utilizing other methods that are advantageous to it in the short-term but devastating to the resource in the long-term. If the fishery has an overseer agreed upon by the competitors or instituted by a government entity, there will still be cheaters and those who would garner favor from the overseer through corruption.

One major factor that is missing that leads to the problems described that are not self-correcting in the current capitalistic system is simply the question of the ownership of a resource. “The tragedy of the commons” is a well-known feature of human endeavors where individual competitors in a shared-resource system by acting in their own self-interest in the short-term destroy the resource in the long-term.

Humans have altruistic behaviors. We see them all around in our own behavior and in society at large, yet things still go awry as people are more influenced much of the time by unalloyed self-interest either by necessity or by simple greed than by concern for the common good. So then comes the blizzard of laws and regulations and bureaucracy and corruption and elitism that then stifles what altruism exists as well as innovation and competition while at the same encouraging sloth and the gaming of the system.

What then is the real tragedy? Aristotle said, “Virtue is for the few.” Why “the few?” He said virtue must be taught by parents who model it for their children who then act virtuously by habit. A person of integrity does not have to choose between behaviors, that person does what is right without choosing. In that there is nothing of the conflict of choice: should I do this or do that. To live with “choiceless awareness” is a benefit to oneself. In other words it is in one’s own self-interest to act virtuously, which then is the same as acting in the common good, within reason. Hierarchies exist alongside virtuous action so that exigencies within one’s sphere of influence take precedent over activity directed elsewhere, though to be sure these activities are not to be seen as mutually exclusive.

If individuals in a society conflated self-interest to virtue to capitalism to a well-run state (or State), we’d all be fat and happy. But this won’t occur until virtue is taught to children, who then teach it to their children. Meanwhile we go to war with one another and we will never find a solution in that milieu however many wise leaders we might dig up. Even Jesus hasn’t gotten it done.

starfcker

“But this won’t occur until virtue is taught to children, who then teach it to their children.” Hence, the first thing the Marxists set out to corrupt and demonize simultaneously is the church, the place where virtue is taught.

MrLiberty
MrLiberty

Fishing is a problem because of LACK OF PROPERTY RIGHTS. When the “government” owns the ocean and “licenses” folks to fish it, there is an inherent incentive to take as much as possible. No different from the forests, the minerals, etc. In a free market, with enforced private property rights, areas of the ocean would be owned just like property. There is a LONG, well-established history of riparian law (water) that can be applied. You are criticizing the failure of the commons, not free market capitalism. And as for any resource, honest ownership of private property is critical to price structure. Scarcity generates higher costs which limit consumption, etc. New competitors are NOT an issue in a privately owned fishing area any more than they are with regards to broccoli or copper. Price and supply will regulate ALL that is needed.

bigfoot loves Populous
bigfoot loves Populous

I’m not criticizing the failure of the commons. That’s be like criticizing grass for growing or you for getting growing older. Some things are just facts. And yes indeed, I think ownership of resources is paramount, just as I said if you care to read what I said more carefully. But even owners are often exploitative. Take the farmers in the Midwest who own the land and have depleted the soils to the point of asbestos and are using up the water in the Ogallala Aquifer, which no one owns. Are these folks managing their property with any visible virtue? Nope.

“One major factor that is missing that leads to the problems described that are not self-correcting in the current capitalistic system is simply the question of the ownership of a resource.”

Unintended
Unintended

I enjoyed the article, Crimson.

As you say, there is no perfect system. This means there are benefits and consequences. It makes sense that, as the population grows, so do the solutions and problems.

For me, it comes down to the difference between Main Street and Wall Street. Or, to an extent, Norman Rockwell versus Andy Warhol.

I am betting the future on “local”. Simple is better anyway. We’ll see.

starfcker

I reread the article. My first reaction to the author was that he was a liberal in somewhat conservative clothing, shilling for redistribution. I would say that is incorrect. I think much more than that he is someone who does not fully understand, or is in the process of trying to understand that without a moral code, capitalism becomes a race to the bottom. I retract my earlier comments. I think this guy is searching, and I think that’s a healthy thing.

BL
BL

Communism- Political and ECONOMIC DOCTRINE that aims to replace private property and a profit-based economy with public ownership and communal control of at least the major means of production (e.g. mines, mills, factories) and the natural resources of a society.

Capitalism- An economic system characterized by PRIVATE or corporate ownership of capital goods/property, by investment.

You will labor for $$ either way….do you want to work for the good of the state or yourself? No system is perfect. Which system would you REALLY choose for yourself, this gets old.

He speaks of corruption in a capitalist state but fails to speak of MASSIVE corruption in communist/socialist states…..really?

And last, I take offense at the flag painted red/yellow, just because.

James M Dakin

Too many people look at capitalism as a religion. It is just a means of controlling a new resource that emerged, carbon fuels and the unprecedented surplus those brought. It has also always been ruled by central banks and colonialism. Everyone views it through a micro rather than macro lens. ( and PS, I am an anarchist and have studied economics quite a bit. I just don’t like pulling the wool over my own eyes. No need to prove you hate what I just said. I assume it )

Thunderbird
Thunderbird

Good comment MrLiberty. It is in line with my observations.

I would like to add some of my observations being a small business owner at one time and also working for several manufacturing companies before they were bought up by the big corporations and becoming their brands. The CEOs of these large corporations are the slaves of the investors and could care less about the companies they are in charge of.

Many if not all the companies owned by these large financed corporations were at one time small corporations run by family that built them up by sweat and reinvesting profits into the company to make it grow. The theme was to build quality products that served the needs of the customers. Customer service was priority along with a close relationship with their suppliers which contributed to customer service and satisfaction. I would like to stress that quality products were built to withstand stress and abuse due to the nature they were used for. In other words their products were built to last. Today these same products are produced under these large multinational corporations with far less durability. It is called by them efficiency. What efficiency means is lower quality. Durable goods like automobiles, appliances, electric motors, circuit breakers, motor starters, pumps, etc are made without the quality materials that used to go into their manufacture.

These multinational corporations buy out well established companies with no debt with financed money and run them with an extra layer of corporate government. This adds to the cost of doing business. In addition to this they disrespect the lower management and workers by striping them of their input and say. As a result much of the old management and workers are either fired or quit. Then new local managers and workers with less or no experience in the product are hired at lower salary. What happens then is customer service goes down and the old supplier relations suffer leading to delayed shipment of needed supplies to keep the production lines going. Bottom line is a loss of quality and efficiency in customer service leading to a loss in sales that transforms into no money to upgrade aging equipment because the investors want their promised return. These large corporations (I could name them but I won’t) are going down but hiding it through accounting manipulations. The CEO’s of these corporations are failures that are good at politics and snow jobs on their investors. They take money out of the brands that are still doing well due to their brand name reputation to pay off their investors while these same brands are suffering from lack of money to replace aging equipment. And what is upper management doing? They are sitting on government regulating boards making regulations favorable to themselves and dis-favorable to small competitors and the public.

These large multinational corporations are too big for their own good. Because of their financed accumulation of so many brands and their power in creating government regulations they have become large monopolies. They need to be broken up using the monopoly laws still in place but not used by our corrupt congress.

But all in all these large monopolies are going down and will go bankrupt because of their amoral and incompetent corporate leadership. Let’s just hope that the government does not bail them out like they did with GM.

I think I will live to see their demise. Name brand durable goods are not the quality they used to be. It is time to see new start-ups in manufacturing but that can’t happen until the present trash is removed. Let’s hope President Trump in rebuilding America does not forget the small guy in this rebuilding.

MrLiberty
MrLiberty

Busy day so just getting back to replying to comments.

Appreciate the positives. Some thoughts….

Can we truly say that free choice is ALL that is involved in the decision by a business owner to sell stock or whatever in his company? Is EVERY financial alternative available to him, or MUST he stay within the bounds SET UP BY GOVERNMENT, the SEC, etc.? Does government TAX LAW dictate what path he decides to take? Does he have the legal ability to simply trade an ownership position to a friend for cash, or are their tax implications for both that are not as positive as another approach? We see what we see, but what is unseen is the influence government rules, regulations, tax policies, etc. have on these decisions, the alternatives available, etc.? And what about inflationary pressures? If we had HONEST banking in this country (versus crony capitalist central banking and fraudulent fractional reserve banking), banks would be FORCED to pay higher interest rates to attract the savings required to support their profitable lending. Pressure from other banks would impact both interest rates paid by borrowers and to savers. How does the destruction of honest savings impact the pressure on a company to sell stock to others to fund growth? How does the planned inflation of the Federal Reserve (which actively destroys the purchasing power of the dollar) impact the organic growth of a company? Are businessmen constantly chasing higher returns JUST to stay ahead of a crony-capitalist Federal Reserve System’s destruction of purchasing power? And when NOBODY in the US saves a penny (relatively speaking), where would the money come from for all this leveraged acquisition you speak of?? Without the Federal Reserve (the lynchpin of ALL Crony Capitalism in this country), there wouldn’t be a penny available for anyone to purchase SHIT!!! From close up the problems seem to naturally occur, but in reality, they are ALL the product of a fiat money system that is specifically designed to enhance the wealth, power, and control of the 99.9% by the 0.1% through the financial system. As I point out in my first post – NOT a FREE MARKET feature AT ALL!!!!

Anonymous
Anonymous

Hope and Change, T-Bird? Let’s keep hopium alive.

PaulTheCabDriver

The author has a lot to learn about freedom and capitalism especially in the area of property rights. People were allowed to pollute the rivers in this country for the longest time because property rights were not properly assigned to the rivers of the Eastern part of the country. Down-stream users had no right to seek redress over upstream polluters because of the (bad) way the laws were set up, and because no one had property rights in the rivers. Currently, the State has assumed ownership of the waters of the Cuyahoga and other rivers and the State seeks redress on behalf of the public for pollution violations. Although it is a partial solution, it is a bad one. A much better solution to waterway pollution is for the river to be “owned” by various private parties, and their rights respected by the courts. Butler Shaffer has much to say on free market ownership of rivers, and things like air pollution.
The author says “What I do have a problem with is the fact that there’s no room for nationalism in capitalism, as evidenced by industries’ mad dash to send American jobs overseas solely to take advantage of lower pay rates.” This is akin to saying “What I do have a problem with is that there is no room for poison in this banana bread recipe…” Nationalism is a poison that has killed literally hundreds of millions of people since the dawn of time. It is this “nationalism” that the author wants capitalism to embrace that has led to the worst and most damaging wars; and the expenditure of trillions of dollars on weapons (by governments,who, by the way, have no problem polluting anything they want to whenever they want to.) In this paragraph, the author decries “American” tech jobs being sent to India because an Indian tech worker is cheaper. Questions: Does the author have a problem with Toyota opening plants in the United States, where the labor is cheaper? Is the author aware that labor costs are not the only costs involved in the “outsourcing” of jobs? There are taxes and regulatory fees as well as other costs. Is the author aware that as jobs are created anywhere (including India) wages in that area go up, and that eventually the wage competition makes outsourcing jobs to cheaper countries no longer effective? I cite for example Japan and Hong Kong. After World War 2, their economies were devastated, and their cities charred ruins. They began by embracing (relatively) free trade. At first, the labor there was cheap. And the manufacturing they did was cheap, too. Made in Hong Kong or Made in Japan were synonyms for chintzy, cheap stuff. But now, after relatively free markets have been allowed to grow, Japan & Hong Kong both produce some of the top quality manufactured goods on the planet. And it is no longer “cheap”, either. And the cheap manufacturing has moved to China, which only recently embraced relatively free markets.
I could go on, and on.
But the author’s biggest mistake is confusing “capitalism” with both a political system and a moral code. Capitalism is neither. Capitalism is simply an economic methodology whereby men are allowed to keep the products of their own labor, and negotiate to trade their property without governmental interference. Capitalism has nothing to do with politics. As we can see by looking at China, capitalism can flourish on an oligarchy. It can also flourish in a monarchy, or a republic. Capitalism also has nothing to do with personal morality, other than the respect of private property & wealth. Capitalism can flourish in a mostly Catholic country (Ireland), a mostly Buddhist country (Japan) or a relatively atheistic society (China) or a mixed belief country (UK, or USA).
Lastly, the author believes that capitalism is at fault when most of the abuses of capitalism take place. Wrong. It was government that allowed the Cuyahoga River to catch fire by its failure to protect the property rights of those downstream.
Capitalism is simply an economic system. It is not a political system. It is not a religion. That stated, capitalism is the best, most productive, economic system we have. And you should never feel guilty for being a capitalist.

Llpoh
Llpoh

The flaws listed have nothing to do with capitalism. Capitalism searches out lowest cost. It is what it does. Those that have lowest cost benefit. Calling “cost shifting” in capitalism a flaw is akin to calling meat eating in carnivores a flaw. Suggesting that captalism should be nationalistic is absurd. It is not a philosophy. Nor should it be. Blaming capitalism for pollution is equally absurd. You think communist countries do not pollute? It is up to govts to legislate that stuff.

Cost shifting of labor? Again, that is what capitalism does. It singles out the lowest cost, most profitable locations and flows there. Who benefits? Why, everyone who consumes the good provided, at the lower cost, and of course the shareholder. Capitalism is not meant to benefit employees. To assign such responsibilty to a business is to damage it. Business is in business for profit, not to keep employees working. If labor is flowing to other locales, it is because labor is overpriced in the current location. Any attempt to artificially prevent the flow will result in increasingly uncompetitive business. Instead, the cost of labor needs to fall, or productivity needs to increase. Which is slowly happening.

Resource depletion? That decision is up to consumers. Business provides a service, a product, relative to consumer demand. Consuming too many resources? The consumer can stop buying at any time.

Human values? Not the role of business. It has an obligation to be honest, obey laws, etc. But values are the realm of the people. If they do not like a business’s values, they can vote with their pocketbook.

Corruption is not limited to business. It is everywhere, and is particularly prevalent in non-capitalist nations. I have very rarely seen corruption in business, and I have never seen it at the enterprise level. Rather I have seen some corrupt individuals, but never have I personally seen a company that was corrupt at the enterprise level. I am sure it happens. But socialism and communism is far more corrupt, as their systems do not award achievement but rather are truly crony driven.

Capitalism is what it is – a system that drives competition, and advancement, by rewarding excellence in the pusuit of profit. That is what it does – nothing more, nothing less. It is the place of govt to make regulations, and the place of the people to determine values.

David
David

Yes, we see the corruption in a relatively free society like those capitalistic, i.e. free, western style economies, and do not see or comprehend the far worse corruption in non free socialistic or communist societies. They hide it better and our press has no interest in uncovering it.

Econman
Econman

Any country that has a central bank IS NOT capitalist.

All we have left is fake capitalism, so most countries are going broke. It becomes harder and harder to accumulate legit capital with a central bank creating it out of thin air.

MrLiberty
MrLiberty

The cornerstone of crony capitalism is central banking.

Mike Moore
Mike Moore

Just thought regarding the questioning of the morality (or lack of same) in the capitalistic system(s) of our present world. As the owner/operator of a (very) small repair/fabrication shop, I’d have to say that I regard the so-called Golden Rule as the only legitimate morality for any business. Given the need for an enforceable code of conduct in commercial activities, is it possible that doing away with incorporated enterprises of all types might tend to make corrupt actions by known or knowable individuals more easily dealt with? It seems to me that the creation in law of eternal “persons”, as corporations legally are, opens the door for the worst aspects of human nature to assert themselves in activities which are shielded behind–and defended through–the anonymity afforded by “incorporated” status. If anyone would care to correct/clarify this point, I’d be grateful.

Llpoh
Llpoh

Mike – Corporations exist in order to isolate risk from those that own the shares or the entity. Without that, individual shareholders become liable for corporate debt and liabilities. The risk would be too high for anyone to invest in any entity if they inherited the corporate liabilities by so doing.

Without the isolation of risk, there would be no large corporation, and there would be no latge scale r and d, no car companies, no aircraft manufacturers, no private medical research, etc., as it would be impossible to have entities that of appropriate size without the pooling of resources, and that pooling would not happen if those providing the funding were unable to limit their risk to just the funding they provide. No one would want to risk their family home to decisions made by persons over whom they have no influence or control.

By isolating risk, large projects, developments, etc., become possible. Otherwise, individual businesses would be on the whole tiny.

Econman
Econman
Thunderbird
Thunderbird

Yes Mike Moore it was through the amoral Administrative Law that was introduced into this country in the Late 20th century that corporations were able to be called persons. Yes and this protects the real live criminals from being prosecuted for their dirty deeds.

You raise a great question about doing away with incorporated and pass through corporations. Unfortunately Administrative Law in place is hard to challenge let alone change. The mechanism is not there. Certainly not the administrative courts. These courts are in place to enforce administrative laws, rules and regulations; not challenge them. Only when a new law or regulation is made can it be challenged. This gives the judges a chance to create case law avenues. It is in it’s present form a sick form of law that can be misused by unscrupulous individuals. This law needs to be placed under a foundation rooted in natural and ethical values. Right now it has none.

Capitalism in itself is not bad. If you read the comments posted by MrLiberty, bigfoot, and PaulTheCabDriver they explain capitalism for what it is.

What is ironic is that 95% of the population is basically good and 5% of the population is bad. It seems like these 5% have taken over all the leadership positions all over the world. The herd is just the herd. The herd has always needed a good shepherd throughout all of modern history. But for some reason the bad ones have the drive to be at the top. But hope of consciousness is strength and someday there will be enough conscious members of the herd to drive these bad ones out. Then capitalism can be practiced in a purposeful way that will benefit humanity and the earth.

V.I. Vernadsky who wrote a book “The Biosphere” says that the purpose of all life is to produce the chemical substances that will change the surface of the earth. This is the universal plan. When we take time to ponder what vegetation does in converting the radiations of the sun, what bacteria and the insects do, and what the animals & humans biosystems do in creating thousands of internal chemical substances not to mention all the substances humans create consciously from the materials of the earth, this man is totally correct. This is not a theory. It is empirical fact. The biosphere is the thin layer of life; a total organism, that covers the surface of the earth and is changing the crust by it’s action. And the most interesting part it that we are part of that organism. And capitalism plays into that function of changing the earth. The more we know about the workings of our universe the more we know GOD.

Just my two cents in this conversation.

Thunderbird
Thunderbird

@ Llpoh “Corporations exist in order to isolate risk from those that own the shares or the entity”.

This is where I have to part agreement with you. It is not that you are not right… you are, but there comes a time when faults have to be corrected so civilization can progress. Remember the East India Corporation? This corporation had an army and a navy. The modern multinational corporations have the U.S. Military to protect them in their plundering Look at how the east was plundered by the East India Company and the workers were abused for the greedy amoral shareholders profits. Who is kidding who here? The same game is going on today because of the amoral Administrative laws that we live under.

Corporations do not have to be as big as they are today. When a corporation gets big it gets like big government. It wants to control everything and everyone. If you want to see how multiple entities can work together on big projects look how metropolitan areas work together with large populations. Humans can work together in large companies with one owner (take Hughes Helicopter) when it was privately owned.

The problem is greedy shareholders that want to make money and have no desire to put their earnings into growing the company and making it financially sound. At one time people bought stocks as an investment in the company for their retirement years. Now big investors go in to manipulate the stock market for profit. This has to change. And it will change when we fix administrative law or go back to common law.

You are absolutely right in what is going on today but this system is not ethical. This has to change before we lose it all.

c1ue
c1ue

Sadly, the author misses the most glaring example of a failure in capitalism in America today: Health Care.
Only in America is health care so expensive as to cause literally millions of people financial hardship.
And only America has this problem. Every other 1st world, every 2nd world, and even most 3rd world countries have the problem under control. People in those countries do die due to financial limitations preventing medical care, but far, far, far fewer.
That this occurs in the 2nd largest economy in the world is purely inexcusable.
And the proximate cause is abundantly clear: The profits and interests of the entire health care sector, but principally the hospitals, pharma and health insurance companies, are being put ahead of the welfare of almost the entire American population. The wealthy aren’t impacted because they have more than enough money to not worry about it – and in fact the situation helps them because it permits ever greater concentration of medical sector focus on their selfish interests.

anarchyst
anarchyst

You are correct about there being problems in the American health care system, BUT, your comparison to other countries is slightly off-base. If you need a CT scan or other high-tech procedure here in the USA, you will get one, almost immediately.
Our neighbor to the north, which has excellent medical staff, routinely rations CT scans and other high-tech procedures, as these machines and procedures are far less available due to cost considerations. You might have to wait 3 months for the same CT scan in Canada. A number of years ago, Canadian hospitals were “caught” providing CT scans for veterinarians’ animals, while humans were on “waiting lists” for use of the machines. You see, veterinarians paid “cash up front” for use of the machines.
A “dirty little secret” of Canadian health care, is that some patients are referred to American border-city hospitals for treatment if they squawk loud enough. In addition, Canadian politicians and “movers and shakers” routinely come to the United States for medical treatment.
Look at Great Britain’s’ “National Health Service” which routinely rations health care as well as exacting “death sentences” on humans because of cost. Recently, a British “subject” (baby) was refused potentially life-saving treatment not only in Great Britain, but also in the United States. The parents had the money to pay for the treatment here in the United States, but Britain’s “National Health Service” would not allow the baby to leave. What kind of “health-care” is that?
Socialized health care is fine for cuts, scrapes, and bruises, but when it comes to high-tech procedures, there are always cost considerations. Anyone can see that government-imposed “solutions” almost never work.
It is interesting to note, that in Canada, Great Britain, and other “socialized medicine” countries, private supplemental health insurance is necessary in order to receive decent medical treatment.
The problem is not “health care”, but health INSURANCE which artificially masks the true costs of “health care”.
Going back to a “fee for services” like in the pre-HMO days of medicine would be an improvement as there would be competition for health care services.
Two good examples of successful “fee for services” medicine are plastic surgery and laser refractive surgery (eyes). Both plastic surgeons and ophthalmologists offer discounts for their procedures. In fact, prices for these procedures are constantly dropping.
A good distinction can be made between HMOs and automobile insurance.
Automobile insurance pays for accidents and damage to vehicles, nothing more. If automobile insurance were run like HMOs, they would pay for vehicle maintenance,oil-changes and the like.
Yes, the American health-care system needs improvement, but socialized medicine is not the right approach.

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