How Capitalist is America? - ProjectSydicate

[WillyT]

How Capitalist is America?
Mark Roe - ProjectSyndicate
2011-06-20

<snip>

CAMBRIDGE – If capitalism’s border is with socialism, we know why the world properly sees the United States as strongly capitalist. State ownership is low, and is viewed as aberrational when it occurs (such as the government takeovers of General Motors and Chrysler in recent years, from which officials are rushing to exit). The government intervenes in the economy less than in most advanced nations, and major social programs like universal health care are not as deeply embedded in the US as elsewhere.

But these are not the only dimensions to consider in judging how capitalist the US really is. Consider the extent to which capital – that is, shareholders – rules in large businesses: if a conflict arises between capital’s goals and those of managers, who wins?

Looked at in this way, America’s capitalism becomes more ambiguous. American law gives more authority to managers and corporate directors than to shareholders. If shareholders want to tell directors what to do – say, borrow more money and expand the business, or close off the money-losing factory – well, they just can’t. The law is clear: the corporation’s board of directors, not its shareholders, runs the business.

Someone naïve in the ways of US corporations might say that these rules are paper-thin, because shareholders can just elect new directors if the incumbents are recalcitrant. As long as they can elect the directors, one might think, shareholders rule the firm. That would be plausible if American corporate ownership were concentrated and powerful, with major shareholders owning, say, 25% of a company’s stock – a structure common in most other advanced countries, where families, foundations, or financial institutions more often have that kind of authority inside large firms.

But that is neither how US firms are owned, nor how US corporate elections work. Ownership in large American firms is diffuse, with block-holding shareholders scarce, even today. Hedge funds with big blocks of stock are news, not the norm.

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More: http://www.project-syndicate.org/commentary/roe4/English

:kick:

[DonCoquixote]

1. Not very much at all

when you consider that many people rely on an old boy network to move ahead and get loans. Does anyone believe that, barring the name, half these rich clowns could run a soda fountain?

[WillyT]

2. Yep... Privatize The Profits, Socialize The Losses...

:shrug:

:hi:

[The Big Vetolski]

3. Extremely so.

Given the fact that the CEOs, the Boards of Directors, and the shareholders ALL want one thing--more capital generated by increasing profits at whatever the cost to anyone else--America is about as capitalist as they come. Workers have zero input at the decisionmaking level. The unions have been emasculated and are almost powerless. The politicians bow to capital, even if they call it such things as "productivity" and "growth." The founding American ideal of the common wealth is mocked and ridiculed by most of the media and the PTB.

The few socialist programs that remain, such as food stamps, Medicaid, Medicare, public schools, Social Security, and even public works and police forces, are under relentless attack in the name of deficit cutting and privatization.

How can anyone even pretend that America is not extremely capitalist unless they either have money to be made by screaming "Socialist!" or are already certifiably insane?