Capitalism is so broken it can’t be fixed

[Live and Learn]

By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) — Clayton Christensen, one of the world’s brilliant minds on business innovation, believes capitalism is broken. Needs a fix.

But look closely at his three innovations for saving capitalism. He’s really talking about saving America from a broken political system that was broken by capitalists. What if it’s the other way around? If capitalism is America’s biggest problem, why save it?

This story begins with Andy Grove. He once held up Christensen’s 1997 book, “The Innovator’s Dilemma,” at a Las Vegas Comdex trade show and said it was “the most important book I’ve read in 10 years.” Why? Solving the “innovator’s dilemma” helped Grove build Intel into what’s now a $100 billion semiconductor giant.

But when the new “A Capitalist’s Dilemma” is published next year is there a new Andy Grove in Washington to endorse it? more>

http://www.marketwatch.com/story/capitalism-is-so-broken-it-cant-be-fixed-2013-02-23?pagenumber=1

[xchrom]

1. Du rec. Nt

[krhines]

2. I've seen the

saying "The system isn't broken, it was created this way" and i personally believe that is 100% true.

[limpyhobbler]

3. yup. Succeeding wonderfully at impoverishing the many while enriching the few.

[TheKentuckian]

4. Wisdom

[alcibiades_mystery]

5. Exploitation, environmental destruction, gargantuan inequality, poverty, war, corruption

Cyclical economic catastrophe.

These are features of the capitalist world system, not bugs. Fix it? That's how it works. It has one principle and one only: accumulation. Any system driven exclusively by accumulation is doomed and destructive.

[Silent3]

6. Our capitalist culture is a different thing from capitalism itself

"Too big to fail" isn't capitalism itself.
Big tax breaks for hugely profitable oil companies isn't capitalism itself.
Union busting isn't capitalism itself.
A broken health care system isn't capitalism itself.

A lot of the above, of course, stems from the concentration of wealth that capitalism often produces, with that wealth being used to buy political power that rigs the game. But even if that corruption often follows from capitalism, it doesn't make the corruption capitalism itself. All human systems of governance and trade can and do fall to corruption without constant vigilance.

I see the idea of capitalism as descriptive, not proscriptive. One doesn't institute capitalism, one doesn't sit down and decide, "Hey, let's set up some capitalism!" and then execute The Plan for Capitalism.

All you have to do is let people own private property, let people have the freedom to choose what they want to do for a living (among what will, of course, often be a range of great choices for some people and a lousy range of choices for others), and let people choose what they will or won't buy.

Capitalism follows. Capitalism describes what people will do with these options, what happens unless you specifically step in and outlaw capitalistic outcomes.

When people rail against capitalism, however, I often get the impression that they're talking about capitalism as if it were something the we (our or not-so-representative leaders) instituted, as if capitalism were an artificial, imposed construct that simply wouldn't exist unless it were explicitly instituted, enabled and supported.

You can (and should, much better than we do!) regulate capitalism, but you can't end all behavior that would be described as capitalistic without explicitly forbidding attitudes and behaviors which are hardly, in and of themselves, evil or disruptive or unnatural to people. Ending capitalism in all forms would take a dictatorial degree of oppressive, intrusive regulation.

[HiPointDem]

9. capitalism inevitably ends in concentrated wealth & concentrated power.

and that power regulates the non-powerful oppressively and intrusively.

[Silent3]

11. Being born inevitably leads to death, but we don't ban birth.

Name me one governing institution or economic system that hasn't inevitably been corrupted, that isn't inherently corruptible.

Inevitable corruption is only a damning disqualifier is you've got an incorruptible substitute in mind, and one that does at least half as good a job while it's busy being pure.

[leftstreet]

12. Being born to Bab$ and Poppy Bu$h would be nice n/t

[HiPointDem]

21. nothing to do with corruption; capitalism operating normally concentrates wealth and power.

it's inherent in the design.

[Silent3]

22. Which "design" is that?

Please do tell me about how capitalism is "designed".

[HiPointDem]

23. the design that says capitalism exists to increase & accumulate one's capital investment. if

you don't, you eventually lose.

it's a feature. *the* feature, actually.


Capitalism is an economic system based on the private ownership of capital goods and the means of production, with the creation of goods and services for profit.[1][2] Elements central to capitalism include capital accumulation, competitive markets, and a price system.[3]

http://en.wikipedia.org/wiki/Capitalism

PS: a design doesn't necessarily imply a 'designer'.

your snotty tone is unnecessary.

[Silent3]

26. But businesses come and go all of the time

Many just linger on at low profit for many years. Whole economies boom and crash, capitalism goes on.

Capitalism doesn't exist for any purpose or goal whatsoever. Capitalism describes what happens when you have private ownership of productive capacity and (relatively) free markets. There is no "design" other than letting people own things, buy things, sell things and sitting back and watching what happens. What happens isn't, of course, always pretty.

Capitalism can be regulated, however, with fairly good results -- when compared to all of the alternatives that have been tried, not to some never-before-seen theoretical ideal. Do bad things eventually happen? Certainly. Corruption, excessive concentrations of power -- things which happen in all human societies, under all systems of governance and economics, in a way that is not at all unique to capitalism.

[HiPointDem]

30. businesses come and go, but capital concentrates. it moves from business to business -- into

the up-&-coming, out of the passe. and monopolizes all basic commodities.

in many cases it deliberately destroys businesses for its own profit.

[Silent3]

33. And you can attempt to use regulation to minimize those failures

If you then say the concentration of wealth and power "inevitably" buys its way past those regulations, then I'll ask you how that's any different than corruption in communist societies or feudal societies or theocratic societies or anything else humans have ever tried.

[HiPointDem]

34. my original statement was: capitalism is 'designed' to concentrate capital. just like a game

of monopoly.

there's no corruption in monopoly, just people with initially equal resources making their 'choices'.

but it ends in monopoly. monopoly or oligopoly is the endpoint of capitalism when left to its own devices.

your comments about regulation are quite beside the point. i didn't say anything about regulation, I said the function of concentrating wealth is INHERENT in the design, inherent in the goals and rules of the game.

you can't 'regulate' it away without regulating capitalism away, unless the regulation was that everyone lost their accumulated wealth at death and it went into a common pot to be redistributed for another round, with everyone getting a stake at birth.

[chervilant]

38. Ironically,

I had a dream last night that the feds (en masse, not just Obama) gave each adult US citizen (over 18) $500,000. They just printed the money and distributed it via electronic deposits. They were working on getting equal resources to homeless people and people without accounts, but that's when I woke up--just before two am.

I had to laugh.

And now, this thread...oh, the irony!

You might be interested in Marshall Sahlins or any other anthropologist's work on the origins of our economic behaviors.

[HiPointDem]

40. i've read plenty of anthropologists, and they don't all agree on 'the origins of our economic

behaviors,' so if you want to point out something specific, you're going to have to point it out specifically.

[chervilant]

42. Nope,

nothing specific. No hidden agenda; no snark or sarcasm intended. Just thought you might be interested.

[chervilant]

44. P.S.

Also, Beyond Power by Marilyn French.

Most interesting...

[HiPointDem]

45. thanks for the recommendation. i haven't read that.

[HiPointDem]

32. 'people buying things' is not a feature specific to capitalism. people have 'bought things,' or

traded things, under every economic system in existence.

[Silent3]

35. It's not *unique* to capitalism (never said it was), but it's necessary...

...along with private ownership of the means of production and free markets. It's important to mention only in that alternative systems have been proposed where money wouldn't exist, where buying and selling wouldn't happen. (I suppose you could try to build a moneyless form of capitalism on top of pure barter, but I can't see that functioning very well even in the short term.)

[HiPointDem]

37. look, you seem to think i'm comparing capitalism to some other better economic arrangement &

finding it wanting, and you seem to want to prove capitalism is "best".

that's not my interest.

the fact is that capitalism, as a system, is based on the investment and accumulation of capital as profit. that's its integral feature, the feature which distinguishes it from other historic economic systems, and that's the feature that by necessity = increasing concentration of wealth, not as a manifestation of human corruption -- but just as a technical feature inherent in the mechanics.

it's not about you buying bread and me buying sausage. people have bought bread and sausage, or traded it, for millenia. people have had private property for millenia. markets have existed for millenia.

but capitalism has *not*.

as an example: there is nothing *inherent* in the economic mechanics of a feudal system which mandates expansion. assuming population was stable and there was a 'good' sovereign who was content with his little fiefdom, and the fiefdom had the resources to support the population, the system could chug along in a stable state economically.

Similarly, there's nothing *inherent* in a socialist economy that mandates economic expansion.

But there *is* something in the mechanics of a capitalist economy that mandates expansion, and that's the profit mandate. You invest *capital* in order to get more *capital*. You get it either by widening the field of operations or taking it from others.

[gulliver]

10. Nice post.

I also see capitalism as emerging from basic free choices we all like to be able to make. Capitalism needs to be regulated and nourished, not just at the individual decision level but at all levels. Higher order actors like companies and government all have roles and choices to make.

The idea that capitalism is designed is just as dangerous and simplistic as the idea that capitalism is natural and therefore somehow perfect. One side tries to cut up the body of the economy and stitch it back together, because that worked so well for Dr. Frankenstein and Pol Pot. The other side worships cancer (take oil companies whose unrestrained interests ruin the environment).

I think the truth is that government needs to keep the cancers at bay and needs to make sure all of the people have all of their basic needs met and the opportunity to realize their full potential. To the extent that capitalism already does that, great. To the extent capitalism doesn't do that, it needs to be steered until it does.

[RoccoR5955]

7. Capitalism is broken by design.

Capitalism implies infinite resources, so that infinite profits can be made. In a universe where resources are finite, this is unrealistic. Therefore, by design, capitalism is a flawed system.

We could end capitalism if we instituted a cooperative system, whereby all workers were also owners and had a say in every action taken by the cooperative.

We supposedly live in a democracy, why then do we so love an economic system that is run as a dictatorship, as is capitalism?

[truebluegreen]

8. Yup. It's not a bug, it's a feature.

And, to me, it explains why our government has spent so much time and energy ridding the world of social democrats and replacing them with dictators. Dictators, who belong to us, are far better for our capitalist system and those pesky "developing world" nations we like to exploit for their resources are much less trouble.

[Silent3]

13. Capitalism isn't designed.

And where the hell does this babble about "infinite resources" and "infinite profits" come from? In idealized, theoretical capitalism, profits aren't infinite, they're incredibly slim. Real world capitalism is only more profitable to the extent that everything from innocent, less-than-ideal market responsiveness to less innocent issues of imbalance of power and corruption skew the game.

[RoccoR5955]

15. Talk about babble

I really don't know where you got your information from, let alone understand it.
Capitalism is about more, more, more, profits, and thus implies infinite profits. In order to achieve these infinite profits, one must use resources to create goods. Since there is a finite amount of resources on Planet Earth, the basic presumption of capitalism, and more, more, more profits is a major fault.

[Silent3]

20. People engaged in capitalistic behavior may indeed want...

...more and more profits, but capitalism itself is not a system that depends on getting such profits. When capitalism is working well, profits are in fact minimized -- that's an equilibrium state of supply and demand.

Here's one definition of capitalism:

An economic and political system in which a country's trade and industry are controlled by private owners for profit.

Here's another:

Capitalism is an economic system based on the private ownership of capital goods and the means of production, with the creation of goods and services for profit. Elements central to capitalism include capital accumulation, competitive markets, and a price system.

Now you tell me where anything in those above definitions require, imply, or even somehow inevitably lead to the absurdity of INFINITE!!! profit, INFINITE!!! use of resources.

[RoccoR5955]

41. for profit.

That's what implies infinite profit. When people get greedy, which many do, that it the inevitable result.
Also, competitive markets, and capital accumulation.

[Silent3]

43. Profit implies infinite profit no more than eating implies infinite weight gain.

You have a curious notion of "implies".

[HiPointDem]

25. a design doesn't necessarily imply a single designer, or any designer. "idealized, theoretical"

capitalism doesn't exist except in the minds of theoreticians -- 'designers'.

[Silent3]

27. There is no "idealized, theoretical" capitalism then that...

...is any more or less particularly susceptible to spinning out of control than anything else humans do.

[HiPointDem]

28. you're the one who brought up 'idealized theoretical capitalism.' It's a mental concept that

doesn't exist in real life, like 'god'.

real life capitalism 'spins out of control' every 10 years or so in a small way, and every 50 years or so in a major way. It always has. A feature, not a bug.

It also concentrates wealth and power inexorably. again, a feature, not a bug.

[Silent3]

31. When you use a phrase like "feature, not a bug"...

...that strongly implies deliberate design, like writing software, like someone building that feature into the designed system.

As human societies go, 10-50 years cycles of excess then correction seems about par for the course, no matter what humans attempt to do. That's not at all specific to capitalism, by "design" or not.

[HiPointDem]

36. no, it doesn't. no more than 'death is a feature, not a bug, of human life' implies deliberate

design.

[Nye Bevan]

14. Sweden, Norway and Switzerland are capitalist countries (nt)

[brooklynite]

16. Since we won't be switching to socialism (and definitely not anarchism), we better find a way...

[white_wolf]

17. Maybe we won't be and maybe those aren't the best solutions....

I don't know, but we need to look at all possibilities to find the best one and that includes considering whether or not or current economic system is sustainable in the long run. I think it's naive to simply assume capitalism is the best system or that it will last forever. I'm sure people once thought feudalism was a permanent system, but it's gone now.

[brooklynite]

19. Assuming we're not returning to feudalism or slavery...

...either property and assets are held by individuals (capitalism) or by the Government ("socialism&quot or by "nobody" ("anarchism&quot . I can't think of an alternative.

[Starry Messenger]

18. It isn't broken, this is the way it functions.

When you have a never-ending drive for an expanding bottom line, eventually several things are going to give way. Reality can't support never-ending exploitation and consumption by 1% of the population. The earth is hating life too.

[reformist2]

24. Our capitalist system doesn't recognize the right of citizens to own land - not buy it, own it.

It's a huge flaw in the basic conception of our society, recognizing the right to life and liberty to each person, but not the right to a piece of land necessary to sustain life. If our society recognized this essential right, it would recognize that every citizen has a right to receive regular, basic income in lieu of owning that land. Far from being viewed as charity or the much-maligned "welfare", it would be viewed as everyone's birthright. And it would end poverty.

[ananda]

29. Capitalism where?

America hasn't been capitalist for a while.

It's corporate fascist now.

[Coyotl]

39. Don't make me laugh while drinking coffee

It takes a hook to sell a bad book

[Orsino]

46. There's nothing wrong with American capitalism that can't be fixed...

...by more American democracy. If enough of us cared enough to demand worthwhile changes, we would already have them.

Voter apathy got us into this mess.