Tuesday, August 09, 2011

Are Capitalism and Democracy Compatible?

Image courtesy of SFWeekly
This is part one of a series on local sustainability.

Capitalism is an economic system that is, by definition, run and controlled by the few.

Not too long ago, businessmen (such as Henry Ford) and most economic theorists (Keynes and his followers) understood that this system could become bloated, unworkable, and cannibalistic if it wasn't controlled to some extent by other factors, such as living wages and governmental oversight. Over the last thirty years, though, there's been a systematic undermining of those protections (or, limitations, according to the dismantlers). Wealth disparity is at an odds, and the US - through recession and bull and bear markets and this Great Recession - no longer has a fair economy.

When few people hold most of resources - most of the jobs, most of the money, most of the land in the land - those few people run the country. They control the use of resources. They control the options for well-paying, living-wage jobs. The opportunities to eat well and with comfort. The ability to be housed. To be insured against calamity or disease. The ease and access to transport.

When those few people run the country, the fate of the rest of the country rests not on the strength of the country as a whole, but on those few people. It is no longer a democracy. It is an plutarchy - control by the few wealthy for the purpose and benefit of the few wealthy.

And the hope of salvaging the country is lost when the elected and governing powers are also given to the elites. Thanks in part to rulings such as Citizens United and loopholes such as Super PACs (both were corporations and individuals are allowed to put as much money to use for whatever political purpose they choose with close to no oversight), those with the most money are now given unrestricted power to publicize the very politicians that they handpick, and therefore have unprecedented access to those politicians. When the electoral process is largely a popularity contest, the one with the most publicity wins - not the best or the most effective official, but the one with name recognition.

Even prior to CU, the big firms (whether they be agriculture or financial or oil-based) were already writing their own rules within Washington. But now, the American people have been locked out of not just the Republican base (despite the claims of the Tea Party-led pols), but the so-called Party of the People, the Democrats.

Why? Because a few people (and corporations) have access to nearly uncountable funds. Funds that we are told are used for job creation and research and development and are, therefore, untouchable. The more money they make, we are told again and again by (vocally by one party, but the message is reinforced through mainstream media and the "other" party's actions and legislation), the better chance we have to end this recession and enter into another period of unparalleled prosperity.

But that will not happen. The previous period of unparalleled prosperity neglected about a third of the US population - who couldn't even afford basic medical insurance, who lacked food security, who spent over half their income on simple rent alone, who wouldn't be able to afford their children without the basic governmental aid that is right now - yet again - being threatened.

And there is very little room for new job creation - but plenty of job loss. The old jobs of manufacturing are gone - to other countries whose infrastructures are purposefully being wrecked in order to provide cheaper workers. And the jobs of the service economy are also quickly leaving.

Capitalism needs for a few people - a fraction of a fraction of the population - to amass enough wealth and therefore make the important decisions of what should be funded - capitalism thrives on the fact that a few people are good with oddly abstract concepts like "wealth creation" and "economic growth." In order to continue in their positions of economic power, those same individuals need to make decisions to keep the growth going and the accumulated capital back to themselves. And they have full power within the legislative, executive, and judicial branches to continue this for as long as they would like.

It all sounds like a scam to me. And perhaps it is. The most complex, perpetual pyramid scheme ever.

And maybe that's why citizens are disengaged from politics and from business success. Maybe that's why we're all checking Facebook and playing Mafia Wars all day long. What else is left for us? No job is secure. And despite the protests of a good friend last night, no industry is safe.

The one-third working poor minority is growing, and more and more Americans are becoming either unemployed or underemployed - as well as those who are not even counted anymore and those who are feeding their families on minimum wages.

The ideal situation is to share the wealth, for all to have a say in how the businesses of running the country and smaller businesses are run - but in a way that is protective of all. If the ownership of a business, for instance, were equally shared (instead of the disproportion that we see in the case of stockholders), the owners of that business would all have equal say in how the business was run. Likewise, they would all want that business to run well, for they all have equal stake in the success of that business.

Their work would be more meaningful to their own success.

Next, if none of the industries are safe, what is there left to share?


  1. The most serious charge against the situation of "sharing" the wealth is that people are not rewarded for harder more productive work. I can't be paid more for being a brilliant doctor than anyone else can for being a regular doctor because i have to share my wealth with people who are not as good (like the regular doctor). I can't be paid more for having extremely good business sense than a blithering dolt who pisses a business's funds to the wind because i have to share my wealth with people who are not as good (like the blithering dolt who pisses a business's funds to the wind). I can't be paid more as a genius computer programmer who's creative and insightful, programming since i was 10, than a guy who learned to program in college and got C's.

    This is not, of course the things that MOST matter in the ridiculous distribution of wealth (though it does play some). But it IS the charge that people THINK OF when they hear your solution, and is fair enough. Relevant is the Cuban joke where a woman's father wouldn't let her marry a man when he found out he was a doctor, when she had the opportunity to marry a perfectly nice janitor.

  2. Leo,

    Thanks for responding, first off.

    Let me clarify, though. First, I think a socialistic view allows for really good and valuable workers to be paid more than lazy workers, per se. But not unsustainably more. What that precisely looks like, I'm not sure yet.

    Janitors and maids are being paid bootleg wages for hard, back-breaking work - and barely surviving off those earnings. Should they barely eek out a living b/c they weren't given the chance to study medicine in the US?

    But I think you're presenting the view of socialism in the sense that it's been misunderstood - as largely a top-down, even autocratic approach. That's something that I should declare here: that's not the type of solution that will work. That's the type of "socialism" or "communism" we're most used to, but it's not genuine socialism or communism...

  3. Small organizations can usually work better as syndicates than large ones. For example, an asphalt paving company that surfaces parking lots and driveways. It employees 50 people from unskilled laborers to bookkeepers and engineers. It may have two executives, a superintendent and a CEO. If all employees had a stake in the company based on how long they had worked there and at what value their work brought the company all the employees would in essence be the CEO's employer. If he brought prosperity it would be in their self interest to see that he was rewarded enough to stay and not go run a competing company. On the other hand it is doubtful any executive could convince his.her workers they should be paid 100's of times more than the laborers. A wage plus bonus system would motivate all to work hard and would give all workers a motive and desire to weed out the unproductive.
    This is in fact "Free Enterprise" but it is not Capitalism which is economic rule by those with money. Nor is it Socialism which is economic equality by rule of law. Syndication begins to break down the larger an organization becomes because the workers cannot all know each other. This does not mean large enterprise cannot exist. I means that for large enterprise to exist many small syndicates would have to cooperate.
    Within such a system government could indeed be smaller and less intrusive. Even those intrusions necessary would be less resented since they would insure that each competing syndicate is playing by the same rules.
    When it comes to competition if reduction in salary is indicated in order to remain competitive the executives would not be in the position of cutting the workers salary in order to give themselves a raise while charging less for their product or service. All employees would have a weighted vote based on seniority and job value. It would be economic suicide for an executive to savagely cut labor's wage but it would equally be labor's economic suicide to refuse to pay a good executive, lose him/her and lose market share.
    Some executives would commit economic suicide as would some labor. those companies would fail. Wiser companies would absorb the quality workers from the failed company. The lackluster executives and labor would wind up with mediocre syndicates. Some would mend their ways and advance. Some would be content to be mediocre. Excellence would be rewarded from labor through CEO. Each would realize their need for the other and each would realize that earning must be based upon value produced. This realization would allow some to receive more in compensation than others without either having to feel better than or less than.
    Syndication is neither Socialism nor Capitalism and certainly not Communism. It did not originate with me and has been much better explained by others.
    Syndication is to me vastly preferable to the Totalitarian Capitalism of China and the Authoritarian Capitalism we are rapidly descending into here in the United States.


Be kind. Rewind.