Capitalism Today in America is Broken: An Examination

[jzodda]

I was inspired to write this after reading the poll about whether people support capitalism or not in this country. I was pleasantly surprised that the no votes were quite high. That at least means that the wool is not being pulled over everybodys eyes.

First off has there ever been a time in this country's history where capitalism was fair? The answer to that is no, but there were times when we were heading in the right direction. There are three periods in our history where real attempts were made to change things.

The first was Teddy Roosevelt. His interest in busting the trusts and especially going after Standard Oil set the standard for trying to break up companies that get too powerful for their own good. Since then the results have been quite mixed, but it was a good start.
The New Deal was the next great movement. So many of what we take for granted today was formulated in that period. Social Security, FDIC protections, Banking Reform. The beginning of the modern welfare state. The 1960s Great Society was the last great attempt to move our capitalism toward a more European model, but it utterly failed. In no small part due to Lyndon Johnson's problems with the Vietnam war. The rich and powerful, using their friends in the media then began an attack on the wellfare state. They managed to make even the word "welfare" a dirty word.

Since 1968 there has been a steady erosion of everything that was gained since Teddy Roosevelt decided to start shaking things up. Now in 2005 I feel we have a lot more in common with 1880 or 1895 rather then 1968. The new deal and great society is being wiped off the map one program at a time.

The labor movement was the first casualty. Today only 10% of workers are even in a union of some kind and their power in Washington is on the wane. They can not even protect their members these days from all the rules that allow companies to file for bankruptcy and screw the workers wholesale. Wallmart workers are being forced to work off the clock, and generally are treated like dirt. Who in labor is there to represent them? For the people who want to try the deck is stacked against them. They would not have gotten away with this even 30 years ago, but today its accepted as the cost of doing business.

Next is the gap between the top of the income ladder and the bottom. I was reading in the NY Times a while back that Manhattan now had the worlds largest gap between the top and the bottom, moving ahead of the poorest nations and even a leper colony. Thats a total disgrace and makes me ashamed to be a New Yorker. In this catagory we are so much like the late 19th century its not even funny. Look at all the rules that have come about just in this year alone. Bankruptcy filings are harder for individuals starting next month, Property rights took a huge hit with the Supreme Court ruling on eminent domain. Now if the rich develper wants your property, he can get it a lot easier and then build his big hotel. The protections of the Rich and what is important to them is becoming a huge wave sweeping over the entire legal and economic system.

The past 20 years have seen a revolution in this country in medical care but how much do the people at the bottom really benefit? Tens of millions of people with no coverage, and millions more with limited coverage. Seniors having to sacrifice other things just to get medications? Its a total disgrace. Watch TV for any amount of time and get deluged by advertisements from drug companies pushing the "latest pill". The Drug companies get outrageous deals on Patents which limit the use of generics. Prilosec worked fine for acid reflex, but as the patent ran out what did they do? Make Nexium so they can get another patent for essentially the same drug and rack up more billions. Its disgusting. Have assets? Then you can go into a nice and expensive private nursing home when you get elderly, while the folks at the bottom are lucky to get into a state home where we all have heard of the horror tales. Even at the very end of our lives the divide between rich and poor is evident and becoming worse year after year.

Our justice system is totally and 100% broken. If you are rich its far easier to get away with murder-and thats in the literal sense. O.J. Simpson is the tip of the iceburg but its a wonderful example. You can buy your way out of trouble in criminal court, and in civil court the costs of litigation means the little guy gets stomped on, or forced into settlements that run contrary to their interests. I have seen that one up close and personal as an Attorney and it sickens me.

Then there is the Greed Factor. The media and madison ave have convinced the people of this country that you are defined by how much you have relative to your neighbors. Promoting this attitude makes it far easier for the Rich to get away with the stuff I have been mentioning above. Everybody is supposed to get as much as they can in the short time they spend alive. Even the idea of giving something back when you pass on to the country that gave the rich so much opportunity is on the verge of being eliminated. The estate tax elimination will further promote the greed and hoarding of the almighty dollar.

Then we have the main obstacle to any meaningful change. The rich have access to just about the entire political system. Big corporate money flows into campaigns at a shocking rate. People are assumed to be "corruption free" if they are wealthy and do not have to take the dirty money when they run for office. Does anybody else see how moronic that seems? The filthy rich guy is going to win and then turn the other cheek? Sure tell me another one. The public is so deluded to allow all this to happen. What do you think the bigwigs are getting for all that money? Well for one thing, everything I have mentioned above and other wonderful things like Enrons, and the moving from high level gov jobs to high paying lobbying work. As long as so much money is allowed to flow freely into the system of gov, we will never get any changes at all.

I did some PHD work studying the late 19th century and today in 2005 we are closer to that period then ever before. Its worrying, disturbing and needs fixing pronto.

[RagingInMiami]

1. Good post

I'm hoping that we have swung so hard to the right, that we're going to have to swing equally as hard back to the left.

And maybe, hopefully, American people will realize that a Canadian/European model is not communism but common sense.

[Peter Frank]

6. As Long as the Liberal Conservatives Control...

...all three branches of our government (particularly the executive) -- what happens on abroad stays abroad ...regardless of proven merit.

[area51]

18. Ah, but republinazis love communism...

... when it benefits them.

[ConsAreLiars]

2. Thank you, and recommended.

That is the most succinct and accurate description of "how things work" that I have seen in a long time.

[jzodda]

22. Thank you

I was really both bothered and inspired yesterday for whatever reason. Must be something in the water

[burrowowl]

3. Good essay

I am going to recommend.
By the way: Kevin Philips: Weath and Democracy is a good read, as well as Howard Zinn's The People's History of the United States.
The USSR's overspending on arms to match the U$ brought them down. Will U$ overspending on Empire and non-substainable growth bring the U$ down in a decade or less?

[KharmaTrain]

4. Human Nature Prevents Equality

We're the products of centuries of power and privilidge...wealth and class...and to eliminate those and "level the playing field" is the hardest struggle man has ever had to attempt and even harder to maintain.

While Jefferson professed his belief in the rights of the common man, he still considered a black man 3/5th of a man and woman was no better than property. This was the conventional wisdom of that time, and we are products of that "wisdom" in ours.

In it's simple form...capitalism...or a "for profit" system is the best man has ever designed. It provides the rewards equal to the work provided...meaning the harder you work the more you earn the more you should profit from your work and so on. Again, this is in a simple, rare form.

Where things fall apart is that our capitalistic system isn't. It's actually very socialistic if you examine the strong ties between the corporate elite and the government. The corporate welfare system far outspends the social one and creates a different kind of "welfare baby". It produces corporations that get flush with capital and power and use both to squash the very profit and capitalistic system they originated, evolved and propsered in. This is the sad change of the past 50 years. Look at how many companies have been bought out, folded or just vanished. Compare the capitalism of 10 years ago with the one we live under today.

There's a lot of imbalance that many misconstrue with open markets and a "for profit" system that can benfit all. Yes, there must be assistance and support for those who don't have the opportunities...but in a more equitable system, there would be jobs, careers and opportunities and many could try their hand at making a profit in an open marketplace.

[Gnostic]

15. Agreed

Human nature is what will always prevent any form of "communism" from ever becoming a viable and permanent political option.

[Qibing Zero]

23. You had me until the third paragraph

The rewards were never equal to the work provided. There are thousands of reasons for that, many of them listed in the OP. The sysem is inherantly unfair and stacked against you unless you're born rich and white, and it's been that way for ages. The only thing provided is a chance, and that chance is very, very small for the people on the bottom.

A simple capitalistic system works only in a small area where farmers come together from all around and barter their goods. Even with that in place, it still doesn't benefit off of simply hard work because the farmers can't control the weather and other variables. You can never have a system that is 'fair', unless you believe in social darwinism and think it is somehow fair (or even works, both of which are easy to argue against).

Both the Industrial Revolution and the corporation shot down that system in it's tracks, anyhow. Aside from a few brief instances, we've been moving toward the corporate oligarchy we now live in today since.

[KharmaTrain]

25. Equality And The Corporate Oligarchy

There's the discrepency. I think we are of the same view here, just looking from different perspectives.

The system works to the benefit of the rich and white and male (don't forget this important qualification) as this has come from centuries of this group being so dominant. It's a condition that has changed in recent times, but still firmly engrained in what is best known as a patriarchial society that is the underpinning of so many religions and politicial ideologies. Thus, social equality is and will be a long-term, hard fought struggle as the concept of equality changes from which group you belong to or associate with.

Free markets and capitalism are based not just on the concept of profit but also investment. In essence, the more you invest or wisely, the greater your return will be in the long-term. Thus keeping a market stable and improving competition rises all ships. Again, in theory. This is far from reality and something I doubt will ever occur in my lifetime. Look at the concepts of the Progressive movements of the late 19th and early 20th centuries and you'll see this concept put forward over a purely socialistic system.

In the past 25 years, this country has turned into the military-industrial complex Eisenhower warned us about. Yes, truly an oligarchy as this system is based on a very controlled marketplace and limited competition...and a degree of collusion among the prinicpals to ensure their power and position. The problem is their tentacles or so deep into our lives it's hard to see how pervasive their controls are and to make others see it in that same light.

Thank you for your thoughts...

[KharmaTrain]

26. Equality And The Corporate Oligarchy

There's the discrepency. I think we are of the same view here, just looking from different perspectives.

The system works to the benefit of the rich and white and male (don't forget this important qualification) as this has come from centuries of this group being so dominant. It's a condition that has changed in recent times, but still firmly engrained in what is best known as a patriarchial society that is the underpinning of so many religions and politicial ideologies. Thus, social equality is and will be a long-term, hard fought struggle as the concept of equality changes from which group you belong to or associate with.

Free markets and capitalism are based not just on the concept of profit but also investment. In essence, the more you invest or wisely, the greater your return will be in the long-term. Thus keeping a market stable and improving competition rises all ships. Again, in theory. This is far from reality and something I doubt will ever occur in my lifetime. Look at the concepts of the Progressive movements of the late 19th and early 20th centuries and you'll see this concept put forward over a purely socialistic system.

In the past 25 years, this country has turned into the military-industrial complex Eisenhower warned us about. Yes, truly an oligarchy as this system is based on a very controlled marketplace and limited competition...and a degree of collusion among the prinicpals to ensure their power and position. The problem is their tentacles or so deep into our lives it's hard to see how pervasive their controls are and to make others see it in that same light.

Thank you for your thoughts...

[Mr_Jefferson_24]

5. FDR is, I'm afraid, a "Fading Legacy."

[ladylibertee]

7. IS THERE ANY HOPE? ....VOTE DEMOCRATIC.......

[high_and_mighty]

8. Briefly

I call it the paradime (sic) shift of the white male system. (spelling check can't even fix my spelling)

[cire4]

9. Fantastic post .......recommended n/t

[sandnsea]

10. Great Society did not fail

Even as bad as the poverty is in New Orleans today, it is not the kind of poverty that LBJ's poverty programs sought to alleviate. Food Stamps has all but wiped out persistent hunger. The people at the very bottom have Medicaid. Before, 20-40% of people never ever ever saw a doctor. There weren't even laws that people had to be seen in emergency rooms. Housing and energy assistance keep most people out of tar paper shacks, or at least families. Maternity care has improved dramatically and 40% of all babies are born on Medicaid. What would those women have done 50 years ago?

The right likes to say the Great Society programs didn't work because there are still poor people. That's true, but it's more because of Republicans refusing to raise the minimum wage than anything to do with LBJ's programs. If they keep taking away these programs, they're going to see revolts the like of which this country has never seen. Low income workers can't make it without these programs.

[Hawkowl]

11. Bravo!!!

Exactly right. I've been thinking along these same lines this past year, but you have summed it up much more succinctly and elegantly than I've been thinking.

[philly_bob]

12. Free Market Logic

Thought provoking post, jzodda.

I've been following the regulatory side of this story -- how the FTC and DOJ have justified higher and higher levels of corporate concentration.

Their justification, believe it or not is 'Consumer Welfare.' In a clever rhetorical move by Robert Bork and Richard Posner about 25 years ago, the Chicago School of academics and economists changed the definition of Consumer Welfare so it now means overall economic efficiency. Their argument is that when the economy is working at maximum efficiency, there are more goods and services for consumers to buy and prices are lower.

This is a farce. If Teddy Roosevelt and Louis Brandeis and the folks who wrote the antitrust laws wanted economic efficiency to be the standard for government regulation of trade and commerce, they would have said so.

And when it comes to consumer protection, the first priority of the folks who do consumer protection is to encourage industry self-regulation. Like that's going to work!

The capitalism we are living through now is a capitalism with its restraints removed.

[OneGrassRoot]

13. I'm saving this.....great essay. Thanks! n/t

[Gnostic]

14. One thing as exception

Excellent post.

I have however just one thing to take exception with.

You say the "rich and powerful and media" managed to make the welfare state and even the word welfare a dirty word. Reason is, at least in my family, it always HAS been. My grandmother would tell us about how my grandfather outright refused any welfare or "hand-outs" even during the height of the Depression....and though it could have been alot out of foolish pride or some kind of indoctrination, it was how many of those people from that generation were and believed. It was considered shameful.....which I disagree with, because I think "welfare" has a place in a compasionate and civilized society as a safety net for those who temporarily need it. But the work ethic was so strong, the pride of self determination so inherent in them, that they shunned it until it became a matter of life and death, and some even then not, and far be it from their minds to ever accept the notion of America becoming a "welfare state".

Then, growing up in the Midwest, particularly Chicago and Milwaukee, I saw in my generation "welfare families", who made welfare a profession and passed it on to their offspring, people who never sought work at all and preferred to simply collect a check and food stamps once a month and have several more babies. And I would think to myself, what happened?

[zippy890]

16. The American Dream feeds off greed

Thank you, excellent essay

[drduffy]

17. I always felt capitalism was suspect

Now I have discarded it entirely in its current form. And when the economy begins to drastically contract with the end of cheap energy - that event coupled with rampant corporatism will turn many off to capitalism as it has been for the last decades.

[dcfirefighter]

19. self interest, especially enlightened self interest, works.

The real problem is lack of fluidity in markets and lack of competition.

We tend to give away things that we should hold in common.

We've tried to make a square peg fit into a round hole by treating land and natural wealth as a commodity. It can't be created, so no rise in price will spur further production. This is where the 'capitalist' model falls apart.

Free & open markets doesn't mean Capitalism. Capitalism, by definition, favors financial returns to capital v. labor.

If the 'correct' economic rules are applied to land & natural resources, their use would be efficiently allocated by the market. Since the incorrect rules are applied, 40% of our labor goes to pay private landlords, we get sprawl, excessive transportation costs (in time and energy), polluted waters, polluted air, and climate change. Because we have inefficient allocation of land, we must use less than optimal land for production & commerce, reducing wages and returns to productive investment.

Having our tax laws treat capital favorably is a good thing. The failure is in treating land like capital. If we consider capital to only include 'man-made' things, we can see why favoring it is beneficial to all. Favoring man-made things tends to employ more people in making things. Likewise, capital, when efficiently applied without market distortions, increases the productivity, and therefore, wages, of labor.

If the correct economic rules are applied to land; if the exclusive right of access to land and natural resources is paid for with user fees for their market values, there will be sufficient public revenue to pay for the activities of government while untaxing labor & productive investment. Consider that between the payroll tax and the income tax, labor in the US is taxed at around 30%. Removing those taxes would reduce the price of labor to employers, and employers would then employ more people. As more people are employed, employers must improve wages and working conditions in order to attract more labor.

The other prime economic failing of our modern society is in the failure to recognize the nature of money, as well as allowing private entities to create it. Money is a marker, a tool, a measure. When we used barter, we had to have a simultaneous coincidence of wants in order to effect a trade. Each side of a trade must have something the other wants. We quickly discovered that precious metals were generally considered valuable by many people, however, trading in gold & silver is just a slightly more efficient form of barter. We then figured out that, if we had gold on deposit in a vault, a vault receipt was pretty much as good as gold, and not as heavy. The vaultkeepers then realized that they could write receipts for more gold than they had in the vaults. Fractional reserve banking was born. This wasn't terrible, because it allowed for more commerce with a given amount of gold. However, we let the vaultkeepers earn interest on the receipts they created. As commerce expanded, the amount of gold available to the world became insufficient to back the world's money, and fiat money was created. The government creates the fiat money, but still allows the banks to create their own money through fractional reserve banking. 1/10th of your checking account (from which you can withdraw at will) is backed by 'base money' in the (private) Federal Reserve System. Of course, the base money has no intrinsic value either. We, as a country, could cut out the middle man (fractional reserve banks) and simply issue money at the Federal level. The US Treasury would have to determine how much new money could be issued each year without causing inflation ($200-300 billion), and simply allow the federal government to spend it into existence. It's worth would be ensured by requiring the Federal government to accept it as payment for taxes. In addition to the ~$250B we'd make, we'd save ~$250 in interest payments.

[jzodda]

24. Fantastic Post

Land Use and the way people view capital in general is another problem and you summed it up nicely. Since so much of a % of money goes to private landlords, they have little incentive to change, and those are some of the same people pouring money into politics.

[corkhead]

20. excellent job of identifying the problem

what can we do about it? There seems to be a perfect balance between apathy and powerlessness in the minds of the average Joe, thanks to the corporate media, IMHO. I feel that '06 is our last best hope to save this country, but the deck is stacked against us.

[Czolgosz]

21. One of the things that worries me most about John Roberts is that the New

Deal and Great Society (as well as most of our civil rights and voting rights and gender equality legislation as well as our environmental regulations) are based on a broad reading of the commerce clause in the constitution which empowered congress to pass these reforms. This was a huge issue in the '30s, but the broad view of congress's authority has been unquestionably established for well over half a century now. There is much evidence that Roberts adheres to a 1930s vintage interpretation of the commerce clause, which is extremely radical, extremely activist, extremely disrespectful of stare decisis, and extremely dangerous for all we Americans hold dear.

[sweetheart]

27. There was as well the critical start at the civil war

The constitutional amendments that were made at the end of the civil
war have been mostly used to create and defend corporate personhood,
a stealth takeover by the confederacy at the end of the war, to create
a virtual culture of plantations.

And in each subsequent generation, capitalism has its slaves, as does
democracy, something that has always had slaves somewhere in order to
fuel its appearance of progression, what is really just a wealth transfer
of the value stolen from the slaves and the lower classes by the
system of disenfranchisement.

And now, beyond ricardo's theory of comparative advantage, money moves
around the world without boundaries enabling labour to be discounted to
the lowest common social denominator across all world nations.

Services trade then dumps all the overheads of national sovereignty and
loyalty, and the republican dream of a world erased of sovereignty
arises, a historical ripple of the rise of the neo-confederacy in its
objective to take back the world of plantations for the slave masters.

Its no wonder tonly blair is in to it all, the english right supported
the confederacy in the american civil war.

[Beam Me Up]

28. As a society we don't understand how money works.

Worse, we don't understand the difference between HAVING A LOT OF MONEY on one hand and REAL WEALTH on the other.

These are two very different things. The first is quantitative, the second is qualitative. If we do not understand the VALUE of a safe neighborhood, a good school, adequate health care, clean drinking water, access to nutritious food free from dangerous pesticides, the value of a sustainable energy infrastructure, etc., then we live in POVERTY despite how much money we have or how much stock we own.

The United States has in the past thought of itself as "The Wealthiest Nation on Earth." That is gone. Our dollars are gone. Our gold is gone. Worse, the infrastructure of our society has been deteriorating at an alarming rate. What we're seeing as the consequences of the hurricanes in the south are a good example. PEOPLE TO PEOPLE are working against great odds to solve the problem, but the government infrastructure which should be aiding that regional healing process is in many instances actually working AGAINST it. Why? Because there are big profits to be made in any disaster, natural or intended (eg war).

Upon what was our wealth based when we WERE the "Wealthiest Nation on Earth"? Unfortunately it was mostly based upon the economic hegemony of the dollar and 'petrodolars'. We see now where this has taken us -- and where it is taking us. Barring significant changes our society will increasingly look like that of a third world country. Is that what American's want?

[CrispyQ]

31. Corporations, which have personhood rights just like real persons,

do not need clean air & water, safe food supplies, health care, education, safe neighborhoods. Because they do not need these things, they do not put value on these things. Because they hold most of the wealth in our country, & because they can participate in our political process, thanks to their personhood rights, they have unequal protection & unequal rights by law.

The most precious element of our Commons is our government -- government granted power by the consent of the governed. Yet the neocons see our democratic government as the enemy. They believe corporations are more suited to governance than WE THE PEOPLE.

We are entering what Thom Hartmann calls corporate feudalism. He states: "When the wealthiest in a society take over government & then weaken it so it no longer can represent the interests of the people, the transition has begun into a new era of feudalism."

Feudalism doesn't mean the end of government, but the subordination of government to the interests of the feudal lords, the 21st century version being CEOs, corporate officers, & shareholders. Once the rich & powerful gain control of the government, they turn it upon itself, usually first eliminating its taxation process as it applies to themselves.

Sounds eerily familiar, doesn't it?

Corporate personhood needs to be revoked if we are to ever turn this country (world) around. Sadly, many democracies around the globe are granting these same personhood rights to their corporations, too.

Corporations are creations of man & should serve mankind, not the other way around.

[toymachines]

29. ok, so I know it would be nice if it just got fixed

but according to history, what is a good estimation of what is coming for this society? or is this something that hasnt really happened before? History is crazy.

[Armstead]

34. We've got two choices

History does tend to repeat itself. But we have two choicres.

1)We can follow the path of arrogent empires of the past that degenerated into tyranny, rebellion and/or a state of collapse.

OR

2)We can instead repeat the first half of 20th Century history and follow the path of progressive/liberal reform to deal with the core of the problem and broaden prosperity.

[The Revolution]

30. Well said

Sadly, things are looking more like the 19th century these days. And the people behind this won't stop until they've rolled back all the progress we made in the 20th. And it isn't just confined to workers rights either. There are simultaneous attacks going on that threaten our right to privacy, choice, religious freedom, etc.

This should be the message of the Democratic Party.

[Armstead]

32. I believe capitalism can work -- but agree with your analysis 100 percent

You summarized up the problem today perfectly, and succinctly. What we need are more leaders weho are not afraid to acknowledge that truth.

Personally I am basically a capitalist, but there aremany flavors of capitalism. My view of progress is the notion of capitalism moving in a fairer direction. But what we have today is moving farther and farther from that goal instead of closer to it.

Neither pure capitalism or pure social is possible in a world of human beings. Socialism is great in theory, but unworkable in a democratic society,and oppressive in an authoritarian one.

Capitalism in its pure form cannot work in its pure form either.We're seeing that today.

We need a balance, but as you correctly point out, that balance has long been shifting in the wrong direction for too many years

[jzodda]

40. I call it capitalism with a human face

Seems there is far less hostility in Europe to trying various ways of merging socialism and capitalism while not going one way or the other too far to the other side.

I can not understand why in this country there is so much opposition to trying to make things better for all the people who live here. So many people invest so much time, money and energy trying to make sure nothing changes. I guess that all fits in nicely with my ideas of greed. Greed is really a sickness but is promoted today as a virtue. All one has to do is watch the movie wall street and listen to Gordon Gecko espousing the virtues of greed. "Greed is good" I believe he said.

[Armstead]

33. Kick

This post encapsulates what the Democratic Party should be hammering home as a core of its message.

Regardless of whether one is "pro-business" or not, the form of capitalism we have today is way off course.

[nomatrix]

35. You can carry a lunchbox and vote republican

but you can't carry a lunchbox and be a republican.

As soon as that reality hits the rest of the country, maybe something will change. The middle class pays the taxes, and I fear we are out of cash.

Free trade has killed our economy. Period.

(Anyone who challenges this statement, please research what other nations are doing in their industrial revolution and not what goods are shipped to Walmart.)

I wonder if there are any numbers on how much of the campaign $$$$ went to financing their votes.

[Seansky]

36. fair capitalism??????

[Armstead]

37. Nothing in life is fair

Capitalism can be abused, as can socialism or anarchism.

But since capitalism is the system we've got, and is not likely to change, we must make it as fair as possible.

[AuntiBush]

38. All in the name of "Jesus!"

That's what really grabs ya. Faux Christian promoting & those red, white & blue pins on their lapels.

Good post! Kick!

[PowerToThePeople]

39. Bah, so late. Bookmarked for tomorrow.. n/t