Market Capitalism

Yves here. The post below is ambitious, which is difficult to execute well in a short space. Even though it makes quite a few good observations about the nature of market economies and capitalism, it ignores some elephants in the room. The big one is corruption. Author Ken Melvin has a touching faith in “independent experts” as a remedy for the wealthy increasingly ordering society to suit them, which includes extracting more from most of the rest of us. Here, they serve a role much like the “magic board” in debate contests of Lambert and my youth, where a newly constituted board would be devised and depicted as able to set up and manage a new bureaucracy flawlessly.

When you have America’s epitome of independent experts, McKinsey, going from scandal to scandal, and not even ashamed of its rap sheet, it’s hard to see experts as anything other than intellectual mercenaries, ready to serve the highest bidder.

Another lapse is not acknowledging that the early industrial era was accompanied by the enclosure movement, which stripped formerly independent yeomen of their ability to support themselves by the seizure of common pasturelands and denying them the right to hunt on private estates. We have a new enclosure movement underway with software serving to limit property rights, such as the ownership of tractors and cars.

Nevertheless, this is a meaty piece and should provide grist for discussion.

By Ken Melvin. Originally published at Angry Bear

Once the birthright of lords and kings, the association of wealth with power, is, of late, more often than not, the prerogative of the very wealthy; theirs as a right derived under the aegis of capitalism, and, one defended, it seems — under the aegis of the Constitution.

For a long time now, capitalism has provided both the rationale and method for continuing the status quo; it granted the wealthy the right to employ the power of their wealth to control a nation’s wealth, and more. Of late, the US Supreme Court has ruled that this right to power extends to politics and beyond.

Surely, the wealth of a nation is a consequence of production by its many, or, even if stolen from another land, that other land’s many; not the efforts of a handful of men. Just as assuredly, the wealth of a nation, the world, belongs to all its citizens; not to a handful of them. And, again, just as assuredly, the right to decide what to do with a nation’s wealth, belongs to all its citizens. So, surely, too, the political power of the Nation belongs to its citizens.

Today, in these, our United States of America, to an extent unseen at least since the Gilded Age, the struggle is about who gets to decide everything. That’s everything as in: What is legal and what is not. How the laws are enforced, …. The distribution of wealth, of healthcare, …. Whether or not to go to war, …. Even what to think. Today, we are seeing the extremely wealthy spend $millions and $millions on think tanks and lobbyists, political campaigns, getting justices appointed to the US Supreme Court, …, in order to ensure that they, not we the people, continue to get to decide what to do with the Nation’s wealth, …, to decide everything. These are they, the very same, who took our wealth, invested it in Asia, then told us, we the people, to go fish.

Why would anyone think that the wealthy really are those most qualified to manage the Nation’s wealth? Perhaps this was so a long time ago; in the days of lords and kings. But that was then and this is now; the 21stcentury. If the wealth of a nation belongs in the main to its citizens, shouldn’t they have a say in the management thereof? In theory, we the people, through our elected representatives, get to decide how our government spends a portion of our wealth in our collective interest. In theory, this works pretty well. In practice, the wealthy have a far greater say about who gets elected, and thus how this portion of our money is spent, than we the people do. In practice, at present, we the people have little or nothing to say about how the rest of our nation’s wealth is spent.

Once, back in the days, the wealthy were more likely to be the more learned, the poor were more likely to be illiterate. This is no longer the case. No doubt, some of the wealthy have expertise, but for most of them, the wealth is inherited. In many cases, we the people are better educated. Today, most of the wealthy hire experts from amongst we the people to manage their wealth. Our legislators, our Government, routinely calls on such experts as these for advice on how best to spend the Nation’s wealth. Should our economy be run by the very wealthy, or by groups of independent experts?

Can we the people be resolved enough to withstand the certain and powerful storm, and take charge of our wealth? Can we fashion an economic constitution under which our representatives choose unconflicted experts to better manage the wealth of our Nation? In law, we trust independent judges and juries to decide such grave and weighty matters as criminal guilt or innocence, civil right or wrong. Could committees of independent experts make better decisions about how to employ, how to distribute, the Nation’s wealth? Seems possible that John Kenneth Galbraith was a man ahead of his time.

Better manage? Capitalism worked well enough as long as waste wasn’t too big a problem, as long as natural resources seemed unlimited, as long as there was always room for growth — for ever more consumption, as long as its lust for power was restrained. That time has passed. Capitalism bears a major portion of the responsibility for global warming, and for the untenable inequities and disparities we are facing. Simply put, the earth can no longer afford capitalism.

We read and hear that, today, nearly half the families in America could not raise $400. We also read and hear that we are host to four of the world’s five centibillionaires. America is experiencing inequality and disparity at levels unknown since, at least, the 1920s & 30s. In re this mal-distribution, as labor becomes ever less in demand, would it not be better to devise a way to provide every citizen a sufficient basic income, and more to those who contribute in proportion to their contribution?

It may be that aspects of capitalism can be used as an economic tool going forward, that it can be kept in the bottle. None come to mind. It seems certain that we can not go forth with capitalism as she is being practiced.

Let the market decide,” said the not so very good, not too very smart, Senator.

If we the people take control of our wealth, we will also be, directly or indirectly, taking control of what gets produced, what gets brought to market, what is offered for sale. How to decide these things? How do we go about finding out what people want? We could ask them, or, we could have them let us know. The demand part of markets seems to work fairly well, excepting those instances where we get stuck with stuff like plastic waste. But, that demand for plastics didn’t swell up out of the ground; it took $millions worth of ‘Marketing’ to create. Likewise, with the demand for cars, electronics, …. Consumption was always the oxygen for capitalism; as were the waste of Edsels and human burn-outs that wind up in junkyards its ash. Throwing stuff at the wall was never a good strategy. It is something we can no longer afford. A wiser economic model would never have allowed for the marketing of non-recyclable plastics. Products should be created for a purpose, in response to a need. Markets shouldn’t be created just for the purpose of selling something.

These days, market surveys can accurately measure demand. What about markets for new, innovative, products? Here again, market surveys have been shown to work well. How do we encourage the introduction of new, innovative products; something that to this point has depended on investors; private or public. Rather the hazard of the die, let’s let the inventors and innovators compete for the investment of our wealth by submitting their proposals to a team of unconflicted experts. Going forward, let’s go with our best thinking.

Humans have centuries of experience with markets. We well know how effective and powerful, an economic tool they can be. They are a way of imposing competition on suppliers that leads to improved efficiencies in production methods, processes, transportation, … They are fairly simple to affect; bids can be let, rules can be imposed, performance verified, …. An independent, unconflicted, group of experts could solicit bids for producing an existing or a new product. Imposing the competitive bid process would ensure that the cost of the product was kept as low as economically feasible.

The not so very good Senator’s remark was in response to America’s healthcare crisis, a most abject failure of the ‘market’s’ ability to provide a solution. Perhaps, if our elected representatives had put a well specified contract for healthcare out to bid? If only, but they didn’t. They did market their good offices to lobbyists from the healthcare industry. Other abject failures of the ‘market’ include housing, income distribution, education, pandemic response, ….

Capitalism had at least two Achilles Heels: One, its demand for copious, wasteful, consumption. Two, it requires perpetual growth. Though the second employs the first, they work hand in hand. Either one alone would have eventually been fatal. In the name of capitalism, we have depleted our orb and corrupted its environment. With our failure to restrain its inherent lust for power, we have lost control of the beast; of our nation. Perhaps the world. It wasn’t capitalism that propelled China’s recent growth. It was their best thinking in combination with our blind fealty to capitalism. While it is more and more obvious that capitalism is not suited to this 21stcentury. Greater efficiency, better decision making, is required. For the environment, for all of nature, the price of capitalism has become too much.

Slaves brought from Africa to Charleston, in what would become South Carolina, brought with them the knowledge of how to grow rice and, it seems, somehow, the seeds themselves. On the rice plantations, it was they who did the arduous labor of planting and the growing of rice in the lowland heat, rice that made antebellum Charleston’s planters and merchants, and Charleston, very wealthy. To whom should the wealth have gone?

Well regulated markets work well; can be, are, a most useful economic tool. In well regulated markets there are no monopolies unless they are of benefit to all; no monopsonies, if avoidable. Maybe market capitalism with well regulated markets and without the capitalism?

Print Friendly, PDF & Email


  1. Thuto

    Today’s unconflicted expert is tomorrow’s conflicted expert, the lure of consulting gigs and the fees to be had from the after dinner speaking circuit almost guarantee this. The author has a lot of faith, perhaps more than is warranted, in experts and the panacea of reform via better regulation as a fix to market capitalism. Both of those, regulators and experts, are putty in the hands of the rich and powerful (dissenters are publicly smeared and their reputations muddied by the same laundry service that exfoliates the reputations of the elite I.e. the press), so thinking that we’re going to mount a successful retake of capitalism by placing them at the centre of any reformist agenda strikes me as somewhat naive.

  2. PlutoniumKun

    The achilles heel of socialism as a ‘system’ has always been the efficient allocation of resources. Planned economies work very well – probably better than ‘free markets’ in the medium term, as shown by various war economies and the initial success in the Soviet Union and even North Korea. But it is quite clear that primarily command economies fall victim to a similar type of rot we are now seeing in advanced capitalist economies – a fixation on outputs and arbitrary (or ‘gamed’) targets, rather than real productivity. By the end, the Soviet Union was not just an economic basket case, it was also an environmental mess – instead of plastic waste everywhere, it had numerous highly inefficient factories using lots of coal and inputs to produce substandard products.

    Put another way, the trick in managing any type of sustained economic success (by success I mean more than just endless production, I mean ‘real’ outputs that improve peoples lives without destroying the fabric of the planet), is to match your ‘system’ to your circumstance and stage of development. Those countries which have sustained high productivity growth along with reasonable social protection over time, are those with the capacity to manage change. The success, for example, of South Korea or Taiwan or Singapore in the past half century has been down to their ability to switch from high growth authoritarian capitalist systems (which provided for relative high initial growth), into more mixed, social-democracy-with-asian-characterisitic systems. For all their apparent hyper capitalism, all three (along with Japan) have far more internal planning than is immediately apparent from the outside. In South Korea, for example, despite what sometimes appears to be a free for all in property development, the government maintains a very strong grip on land use ownership and planning (in complete contrast to Japan). Many screen very ‘socialistic’ policies under the guise of social insurance (Singapore).

    In Europe, even apparently sleep mixed economy, social democratic-ish countries from Sweden to Austria have varied the way they structured their economies surprisingly often over the past century, usually with significant success. A lot of this of course comes down to a collectivist cultural tradition which has made what appears from the outside like capitalism, to being in reality something far more planned (this particularly applies to Germany and Switzerland). In many of those countries, social protection is seem less a matter of equality, and more a matter of maintaining an internal balance of power between capitalism and workers – hence the Christian Democrat tradition of being relatively supportive of universal benefits.

    Put another way – I don’t think you can separate a fair economic system from a countries existing state of economic development and underlying cultural issues. You can’t replicate the Swiss style of direct democracy in a country without that long tradition. You have to start from where you are. Protect those systems that work. Improve those systems which can be improved. Smash the systems that are setting us back. The trick is working out which is which.

    1. Adam1

      I have often said to friends that Marx and Adam Smith would have had wonderful conversations together if they had lived in the same time period. While Marx was very detailed in how capitalists exploited workers and created rents (unearned income); Smith’s chief argument in the Wealth of Nations is that a select few acquire outsized wealth not because they’ve earned it, but because they were given monopolies for no other reason than having better connections to the crown.

      As you mentioned, the biggest failing of the Soviet Socialists were their inability to prevent power and corruption from taking over the system – which is probably the ultimate and largest source of rentier incomes in any economy.

    2. Tom Pfotzer

      I’d like to extend some of the points PlutoniumKun set out, as well as the ideas Ken Melvin presented.

      Here’s a few context-setters:

      a. Capitalism, representative democracy, dictatorships…are tools. A carpenter needs a lot of different tools to get the job done: saw, hammer, level, measuring tape, drill. Each tool is specialized, and in order to get good results you need the full complement of tools, and – this is even more important – you have to know how to operate the tool well, and which tool to use as dictated by the situation.

      b. Policy-making needs a good situational analysis (where we are now) and a good goal-set (where we’re going)

      c. Policy implementation needs competent implementors and … broad agreement among implementors that the policy is valid, desirable, etc. and … the proper resources must be available to do the implementation

      Mr. Melvin advocates for a policy-making unit comprised of best-and-brightest. Let’s do a thought experiment. Suppose we actually had this Great Policy-maker Unit, and it produced Great Policies. Would we be able to implement them? We have plenty of resources, and lots of tools. Plenty. What’s missing? Agreement among the implementors (the People).

      What would it take to get agreement among the people? It would require the People to have substantially-similar “shared image” of the situation, the policy options, and values (is it worth it to implement the policy).

      The U.S. doesn’t have that, and that’s why we’re so divided. If you did a random survey, and asked each respondent to take out a sheet of paper, and write down the top 5 problems we face and what to do about them….you’d get a very diffused picture.

      A society, with “government” as proxy for that society, is a “roll-up” or summation of the individual parts. If the parts aren’t coherent-as-functional-unit, you get … the diffusion and bickering we’re getting. Of course.

      Task one for me, Mr. Average Nobody, is to get an accurate situational analysis of where we are. Task two is to set goals, and task three is to generate solutions, and task 4 is to pick the best one(s) and get busy with implementation.

      I’m doing this because I realize:
      a. I can’t expect top-down policy-making to work if I don’t know what to ask for
      b. Most people cannot or will not do the work involved in tasks 1-4 set out above, so we’re very likely to get “more of the same” for years to come. And I hate waiting around for stuff that’s not gonna happen.

      And that’s why my operations concentrate on the other end of the telescope. I’ve not much faith in top-down solutions. I have little faith in bottom-up ones either, but bottom-up is where the “freedom” is. And I believe that successful bottom-dweller (me) operations will ultimately “roll up”

      Sum up:

      a. We have the tools. We need to learn to operate them, and that means reading and debate, like we’re doing here @ NC. But a few NCs frequented by a few Very Smart People (you, not me) is digging a mountain with a teaspoon. Gonna take a while.

      b. We need some national “define the situation” programs. Congress ain’t it. We have a complexity problem, and poor tools to manage that complexity. Fix that.

      c. We need a Users Manual. A natural extension of the “situation analysis” would be some basic Operations instructions on how to operate the rest of the policy-implementation tools (e.g. government) in order to minimize sub-optimalization by “interests”. Those Ops Manuals would define the tools (representative gov’t, capitalism, socialism, etc.) and explain what those tools are for, what they can/can’t do, and where the steering wheel, brake, and accelerator is and how to work them.

    3. Carolinian

      Perhaps the Achilles heel of both socialism and capitalism is that thing called human nature and both systems have had a hard time coming to terms with it. Which is to say our problems are not so much ideological as psychological and any ideology is going to be distorted to serve the selfish drives that are baked into the cake. Capitalism celebrates selfishness and uses it to make society go regardless of the long term price. Socialism often pretends those drives don’t exist and that if only people can be persuaded to see reason (by a committee of experts?) they will act differently.

      I believe it is a cultural change that is needed here in the United States and as a country of individualists that will be a tall order. The political war that is going on right now is a manifestation of our tendency to divide and be conquered with those at the top being the only beneficiaries. We are also a country that in the main is still comfortably well off which makes it easy to ignore what is coming.,

    4. tegnost

      “You can’t replicate the Swiss style of direct democracy in a country without that long tradition”

      Unfortunately for us americans, our “long tradition” is to start wars/disrupt primarily in latin america in order to herd cheap labor into the us to provide (capitalism loves this word when it applies to someone else, i.e. lamberts stipulation to the rules of neoliberalism don’t apply to neoliberals)…competition. Sadly, I don’t see those with power, the wall st wing of either party, as being interested in anything changing….

    5. Pelham

      PlutoniumKun is my favorite commenter here. I search for that name daily. So the following are just mild, timid observations:

      Re Soviet factories: Granted, the energy wastage was awful. But are shoddy products really such a bad tradeoff if everyone is employed (I’m making the big and possibly unjustified assumption that everyone was)?

      I’ve read that in a typical Soviet factory, workers would arrive and spend the first half of the day schmoozing and reading the papers. Then in the afternoon they’d get to work and manage to meet their quotas anyway. Also drawing on my hazy memory, I read years ago that Western economists who rushed in to study Soviet factories shortly after the fall concluded by several basic measures that the factories were on average slightly more efficient than their counterparts in the West.

      But I wholly buy into the notion that cultural issues underlie any nation’s ability to build a fair economic system. I think it was James Madison who made a similar case for this country when he said Christian virtues would be indispensable to the functioning of government — and by extension he could have included the economy as well. I would only add that the now decades-old and largely justified rush to deep-six the patriarchy may also be dispensing with any virtues that this arrangement may have had. This would include a fatherly function and obligation reserved for men and a humble acknowledgment of the Father.

  3. Amfortas the hippie

    bad blank verse providing a shot of hopium: “let them(the Rich) listen to Reason!”
    as in “Audeamus!”(Kant)
    but Reason…since at least Limits to Growth…has been and is inimical…anathema…to what we think of as “Capitalism”.
    the more or less Marxist Diagnosis has been right all along…but the solution?
    our gilded lords are NOT gonna turn loose of their power…and they’ll continue to pay all and sundry to insists that monopoly and monopsony is the pinnacle of what the Market wants.
    it doesn’t matter if it makes no sense…because they enjoy Power…which is what gets left out of most of our rumination(which is what cows do, btw)
    every important system i can think of…from education to media to finance to the gathering of information, itself…to the “legitimate” use of violence(!!)…and especially to the machinery of erstwhile “democracy”…is colonised.
    our global civilisation is a corpse…and we are sewn up inside it.
    that corpse is our proverbial Cave….and everyone i know in real life thinks the inside of that corpse is made of gold.

    (i don’t have a credit card….never have. and i get my shoes…moccasins, with no arch support(flat feet)…at wally whirled. i have never looked for them online. how is it that i get pop ups and other ads that try to sell me the very moccasins i prefer? even right up there^^^?….the Enclosures never stopped…we are encircled.)

    “Our desires and possessions are the strongest fetters of despotism”-Ed Gibbon

    we willingly sign it all over….we consented to the chains we wear…are even proud of those chains…show them off to our friends, and derive a bit of oneupmanship when our chains are more shiny than theirs.
    “my chains are better than yours”

    all that’s left to us is the withdrawal of our consent, and of our participation in the masters’ games.
    but to have any effect, it would require withdrawal en masse….not a general strike…but a universal strike.
    how are we to get there, from here?
    one mind at a time?
    it’s far too late for that, I’m afraid.

    expect a regime of depopulation…already underway…
    if humanity can endure that…make it through with some remnant of independent thought…then maybe we could do differently…wrest Power back from those who have so abused it.
    i am not at all sanguine about our prospects.

    kindergarten teacher learned that i could already read…so first week of school, she put me in front of the class and caused me to read a story(i am not a xtian, but this was a lutheran school)…a story about papa rabbit who led his family down into a hole to ride out some great cataclysm.
    this was a kid’s version of Revelation(in itself horrible)…and the same story that Manson told his flock that they were doing out in Death Valley.
    it has stuck with me all these years….all my works have been with the almost subconscious purpose of being a backup drive for civilisation.
    it ain’t gonna be enough.
    see: Canticle for Liebowitz

    Principiis obsta; caveat ruinam.

    1. Tom Pfotzer

      @Amfortas the hippie:

      You may well be right, assuming we stay on-trend.

      If somebody wanted to advocate the systematic and wide-spread development of a lot of “backup drives”, could you design a project that would deliver that outcome, assuming motivated participants?

      And one key component of the “project” would be a “culture”. (e.g. the “canticle” component). Would you care to comment on the design of that culture?

      1. Amfortas the hippie

        i’ve always been rather terrible at networking,lol…although i consider myself a Humanist, i prefer humans at some remove.
        so i don’t know…i tacitly lead by example….and asnwer questions willingly…but have no idea how to make a movement out of all this.
        likely should have been begun some 50 years ago to have any measurable effect.
        evangelism is likely the best model(look what the american Right were able to accomplish with that model…ginning up an army of plebes who will defend oligarchy to the bitter end)

        1. Tom Pfotzer

          Yeah, me too (people at remove). And so I’d probably aim toward a “generative model” that self-adapts & replicates. And, given the paucity of resources (like time) the design really has to get a lot of attention.

          You seem to have all the cpy necessary; pls expound if it’s interesting.

          Core elements of the culture I’d design are:

          Bias toward action. Nevermind that I post too much here @NC, I’m basically talked-out. Things need to happen

          Creativity. Gotta be able to have dreams, and then convert them to reality. Both.

          Failure-tolerant. Fail early and well, see failure as max learn opptys. E. Musk is national-master at this.

          Negotiator. Good at making deals. Never going to get full agreement, get good at working the Venn diagram

          Read. Need to know a lot of stuff to work this planet. Nobody’s got time to “learn ya”. Got to be big-time reader.

          Builder. Most of the stuff we’re going to need doesn’t exist yet. Got to know tools, design, materials. Got to have materials and a place to work. Artisans fit that bill, sorta.

          Recruiter. Find like-mindeds and tell the story.

          Just to name a few. Then gen up a system of rewards/sanctions to elicit the desired behaviors. All religions have such systems. They all have “recruiter” ethos.

          Unfortunately, they generally have a social-order and a dogma, and that’s where the boat-anchors show up.

          1. Amfortas the hippie

            even with all the hook up like minded folks tech out there, “Finding the Others” is the most difficult part.
            it’s easy to find a potential partner for a homesteading village endeavor…but finding one you can get along with…and that can get along with you…through good and bad…is hard, indeed.
            like community, relationships take time and attention and forbearance.
            i’m not sure all that translates into a platform.
            so, we’re left with conglomerating(in the geological sense) in the old fashioned way: bumping into people and seeing what happens.
            i’ve got maybe 10 or 15 people who have the option of coming out here to my hermit kingdom after it goes tits up.
            from my brother and cousin, to wife’s brothers, to the boys’ buddies who have worked out here for us(and have nowhere else to go—we’ve practically adopted them)
            instant village, no?
            because it needs to be done Before it goes pear shaped….because a working farm—let alone a working village—is a machine, with inputs and outputs and infrastructure,that cannot sit idle until you need it.

            a brief overview of various hippie communes, intentional communities and the shakers and owenites of yore should dispel any naivity,lol.

          2. Ernie

            I like and agree with both you, Tom, and Amfortas. It IS difficult to find people and get them into a cooperating mode. I think the problem is that too many people are comfortable with stasis even when they, themselves, want to see change, have the ideas, the will, and all the ingredients necessary, except one: No one wants either to go searching for the others needed to make things happen, or to accept or deal with others needed to make changes.

            My own personal example is that, as an attorney litigating on behalf of borrowers facing foreclosure against the “systemically important” financial institutions and services, I did an investigation of bias in a local federal court. Attorneys in the anti-foreclosure bar simply accepted as a given that if a foreclosure case went to federal court, the borrower would lose the case. I studied all the foreclosure cases over an 8 year period in which the case was decided by the court, and not settled by the parties. All 135 cases in that federal district court were decided in favor of the lended. 100%. This is a statistical impossibility – out of that many different cases at least one had to be for the borrower. The senior editor of a well-know news outlet said the study was significant and should be published, but he took a pass, as did the person to whom he referred me. The offices of both senators also requested copies, but nothing has come of that. I’m not built for quitting, but it is frustrating, and makes me wonder if anyone really wants change.

  4. Steve Ruis

    I think capitalism’s fatal flaw is not stated above, namely that that it has no control of greed. We were told that “market forces” would mitigate the system’s ills and in my youth it was “Competition,” with a capital C, that would regulate the system. Just as economists never predict recessions or depressions except at levels below that of sheer chance, those extolling “Competition” and “market forces” had at hand examples in which corporations effectively eliminated any significant competition for quite long periods, most recently Microsoft and Facebook. (We used to call them monopolies, but that term, like “unearrned income” has been banished from most discussions.)

    Money is power and the piles of it as large as the Gates and Bezos of the world cannot spend it without adopting bizarre hobbies, such as launching a space program. By allowing such accumulations, we are undermining our own grand American experiment in democracy.

    We “the people” once had a substantial control on greed. It was a marginal federal income tax rate of immense proportions: 90-100%. Instead of salary increases, CEO’s wrangled for more perks of office to demonstrate their prowess. But that control got eroded, majorly by Ronald Reagan and then ever since. (Of course, those changes didn’t happen by accident as the gears of government were liberally lubricated by money to get the job done.) And today, the ranks of the very wealthy are swelled by what class of people? Corporation executives, of course.

    This, now rather large, group of very wealthy people decided a class war was in order and so waged it and have won. They now control the federal government, the state governments, the judiciary, and anything else they want. School board elections, formerly a launching pad for people who wanted to see if they had a taste for politics … because seats were so cheap to win … are now being contested with million dollar donations flying back and forth.

    Since they have won, they are now defenders of the status quo, their status quo, and we are on the outside trying to get a seat at the table at which decisions are made, but we are ignored because we are not rich enough to get the attention of politicians.

    If you think this is all hogwash, look at what happened when the “very wealthy” power brokers of this country saw that Bernie Sanders had a legitimate chance of getting the 2020 Democratic nomination for president. Sanders has not been vetted or bought off, so he just wouldn’t do. So, Joe Biden, whose campaign was disorganized, underfunded, and uninspired is selected, and voila! All of a sudden, all of the other candidates drop out, as if by magic, Mr. Biden has a substantial war chest, and it is now down to two candidates. One who had been vetted by the filthy rich and one who had not been. And you saw who won. From that point onward, the rich didn’t care who won the contest, their interests would continue to be at the head of the line no matter who won.

  5. William Hunter Duncan

    Are not those Big 5 corporations, Amazon, Microsoft, Google, Facebook, Apple unto like public utilities at this point, insofar as their importance to the market?

    The income tax is like a hammer, or a boot on the head of the people, when rentier monies are taxed less and pollution, outsourcing, automation and AI not taxed really at all.

    If the people are in need of a sense of ownership over their own country, then make every corporation a profit-sharing collective, empower the workforce and disempower the managers/executives/shareholders.

    Reconstitute banking to be about investing in the people and community, for the training necessary for a sense of autonomy, pride and dignity, and commitment to the local.

    Put America’s youth to work restoring ecosystems large and small, to greatly expand biodiversity and resilience, as a means to revive a sense of living wisely on this beautiful earth, that they might transition into transforming America’s food production systems into something wholistic and healthier for people, the land, waters and pollinators.

    Remove any rentier(unearned) profits from Health Care.

    Make defense about defense, make private profiteering in war unto like the enemy, and cultivate in any and every way always, love and peace.

    1. John Anthony La Pietra

      Well, now that you’ve brought it up. . . .

      If corporations are people, how can they be owned from “birth” — before they’ve had any chance to be duly convicted of a crime and punished with slavery or involuntary servitude?

      They’re obviously allowed to enter a certain level of contractual and business relationship without direct control by their stockholders, so apparently they aren’t legally incompetent.

      Arguably, at least, the comparative “personal” status which seems to describe them best is . . . juveniles. In which case, if there is no law to the contrary, they should reach maturity like other new adult persons do — around age 18, or 21, or . . . well, for now let’s round it off at 20.

      And what happens then? They separate from their stockholder/owner “parents”, I’d think. In which case who’s left to constitute the corporation’s corpus? The employees. Voilà! — instant co-op!

      How does this sound to everybody?

  6. tegnost

    “None come to mind. It seems certain that we can not go forth with capitalism as she is being practiced.”
    I can see referring to a boat or maybe a nation as “she”, but capitalism? No… It’s a thing. Gender shouldn’t enter into it, esp. since all the centibillionaies are….. Male.
    Over all, the gist of this post is basic income and technocrats, but as yves points out above the technocrats turn out to be gatekeepers. My feeling is that BI is a bribe to let the chaos continue…

  7. lyman alpha blob

    Another elephant missed by the author –

    [Markets] are a way of imposing competition on suppliers that leads to improved efficiencies in production methods, processes, transportation…

    About that competition thing. Is trying to one up the other guy with the implicit threat of ruin always in the background really the only way that human beings can be spurred to efficiency and innovation? What about cooperation rather than competition?

    Also, why are efficiency and innovation always touted as net benefits? There is a reason commercial jets have four engines when they don’t actually need that many to get off the ground. As to innovation, how many millions that could have housed thousands of homeless people were spent developing the Juicero?

    Some decent ideas here, but still couched within that neoliberal framework. As I mentioned yesterday, much like a fish who doesn’t understand water because they’re swimming in it, it’s really hard to shake off neoliberalism when you’ve grown up hearing there is no alternative at every turn.

    1. Bruno

      “like a fish who doesn’t understand water because they’re [sic] swimming in it”
      I’m so, so, tired of that cliché. Every fish has at every moment to be totally aware, entirely conscious, of the water it swims in–its currents, its temperature gradients, above all the subtle disturbances caused by the movements of every other inhabitant of its acquatic environment, plus all indicia of predators and nutritional sources around it. Most of the time we humans are, in the *mental* part of our consciousness, far less aware of the air surrounding us.

      1. lyman alpha blob

        Are you using the [sic] because of the plural pronoun not agreeing with the singular subject? I did consider ‘its’ but felt the neuter possessive a bit degrading to a sentient creature so I took a flyer on the ambiguous plural instead ;)

        Maybe humans describing air as odorless and colorless air due to being constantly enveloped by it would have been the more apt analogy, but I was already using humans with neoliberalism so I went with the fish.

  8. Lex

    Someone here indirectly persuaded me to read a Robert Kaplan book. I chose ‘Earning the Rockies’. It’s been on my nightstand a while; I finally picked it up yesterday and began reading.

    There was a quote from Wallace Stegner, I’ve been rolling around in my brain since I read it:

    ‘The industrial culture was certain to eat away at the tribal culture like lye… What destroyed the Indian was not primarily political greed, land hunger, or military power, not the white man’s germs or the white man’s rum. What destroyed him was the manufactured products of a culture, iron and steel, guns, needles, woolen cloth, things that once possessed could not be done without.’

    Well, none of those things helped. Let’s add alcohol and Christianity. I recall watching a news broadcast decades ago where it was projected that the products from capitalistic countries (specifically the U.S.) would have the same effect on communist countries like China. When Russia imploded, the MSM immediately crowed that it was because the Russian people had been spoiled by the few products that had gotten through, creating a black market. That communism had been undermined by better, cheaper products from abroad… or ‘eaten away… like lye’.

    Well, there might have been something to that. But it was actually bidets I’ve been thinking about. We had already taken out the toilets the builder had installed and swapped them for Toto Drake’s. We thought that quite decadent, but then we bought out first bidet last Christmas, then another this Christmas.

    The first bidet was plumbed in the master bath, that’s effectively my bathroom. Hubby listened to me wax poetic about the experience once I got past the startling spray feature. The second went into the upstairs bath next to his office. We meet in the middle (the kitchen) mid-morning and exchange graphic details as only old married couples can.

    Yesterday at mid-morning I got up from this desk and mindlessly walked into the half-bath just out of habit. I was musing, off in another world when I sat down, when I was interrupted by another voice in my brain yelling, ‘WHAT ARE YOU DOING?’ ‘What?! Um, pooping?’ WHY WOULD YOU DO THAT HERE? THE SEAT IS COLD! PULL UP YOUR PANTS WHILE THERE’S STILL TIME AND GO ACROSS THE HALL.’ ‘There’s still time?’ I obeyed, arguing with myself all the way. ‘But I was already seated!’ When did I decide that shitting in a cold toilet was (and I’m quoting my quoting here) “a waste of time”. If you’ve read this far, you’ll know what I mean. It’s like once you go bidet, there’s no going back.

    We have to make a continuous consciousness effort when we’re around our families (what’s left of them) to avoid bringing up the details of our lifestyle. We came from poor folks, and they are ‘weight and measure’ people. Anything that went into the ears of one member via the phone was almost immediately sent down the line to every other member. The actual cost of a bidet is always considered along with the social cost to us later on. The market corrodes and corrupts human relationships.

    Conclusion for now? Human behavior and human psychology drive markets, even without Madison Avenue’s influence. A good needle is priceless for stitch-work. I’ve done decades of it and have a wide ranging collection. Who throws out a perfectly good needle? Heated bidets for your post-tea morning constitutional? Better, almost anywhere in the world where you are pooping!!! Communist countries? Socialist? Predatory capitalist? Still better, and better drives markets. Humans aren’t good at settling, when better is right across the hall, just a dozen goosesteps away. I’m not convinced we’re capable of accepting wide-spread quality.

  9. farmboy

    Planetary consciousness is recent, as pollution, global warming, exploitation all fester, we look to escape to space exploration. Humans have despoiled wherever we have lived in increasing magnitude. Daytraders on 1 minute charts dictate culture. Social media mavens echo images of elegiac dreams and dystopian nightmares. The financial world is built to absorb incoming, unaccounted for energies, it’s racing to catch up, just like plants absorbing sunlight, witness Robinhood and Credit Default Swaps and MMT. As we contemplate our survival, the horizon shifts from threats to daily existence to my tribe and genetics replicating to species survival then planetary cataclysm and it’s all good but how do we take the next breath. Can the feedback loops we have right now save us? These are our institutions, culture, sense of history. Entropy always wins, that’s what we are up against and can harness, let the harmful die off.
    “If you simulate this economy, a variant of the yard sale model, you will get a remarkable result: after a large number of transactions, one agent ends up as an “oligarch” holding practically all the wealth of the economy, and the other 999 end up with virtually nothing. It does not matter how much wealth people started with. It does not matter that all the coin flips were absolutely fair. It does not matter that the poorer agent’s expected outcome was positive in each transaction, whereas that of the richer agent was negative. Any single agent in this economy could have become the oligarch—in fact, all had equal odds if they began with equal wealth. In that sense, there was equality of opportunity. But only one of them did become the oligarch, and all the others saw their average wealth decrease toward zero as they conducted more and more transactions. To add insult to injury, the lower someone’s wealth ranking, the faster the decrease.” From Scientific American
    Collective choices are never overt, never obvious, always seen in hindsight, always lamented. Religion and technology in rotation hold promise, but always allow for the next failure. Balance of terror observed and relied on for nuclear weapons applies to peoples and systems. The question of survival is always unanswered until it’s negative, it’s like dividing by zero, even 0/0 is ambiguous.

  10. JEHR

    When I was in junior/senior high school, the principals and teachers made sure that there were elections held for the leader and members of the School Council. Candidates offered to run, or were asked to run, for various offices (secretary, treasurer, etc.) in the school council. Advertisements were posted all around the school extolling the virtues of the students running for various offices. We had elections with anonymous voting and the results of those who were chosen by the student population were posted. At the time, I didn’t understand that the school was actually showing us how a democratic system could be successfully carried out. One member, or more than one member, of the Student Council would attend School Board meetings and bring up ideas regarding what students needed or wanted. I have no idea if schools still do this kind of “learning-by-doing” but it seems to me a wonderful way to begin teaching students how democracy can work. It could even be used in more advanced ways (by introducing how students could allocate or use money for the needs of the students, etc.)

    This is an example of Democracy in Action that could be used in many other ways to show how unions are important, how monopolies screw up the system, how money can be mismanaged, etc. Perhaps such a course should be obligatory early in children’s education.

    1. ook

      My takeaway from these student elections was that it quickly became clear who was really in charge, and that the sham elections were a kind of theater to refocus the discontent away from the power center.
      Come to think of it, that describes our situation quite well.

  11. JimTan

    What we need to come to terms with is that capitalism and markets can either function to align a corporations interests with those of society, or it can reward corporate interests which are in conflict with those of society.

    When competitive markets perform a ‘Darwinian selection’ that rewards ( makes profitable ) innovative products, and eliminates ( makes unprofitable ) ones which are not, then they are functioning to align corporate interests with the interests of society. When competitive markets allow firms to charge higher prices by blocking product substitutes ( monopoly or oligopoly ), or by coordinating between suppliers to restrict sales so there is artificial scarcity ( collusion or cartels ), then they are functioning to create corporate interests which are not aligned with society. When competitive markets allow firms to ignore existing laws that protect against fraud, exploitation, and economic disruption, or to profit from illegal businesses where profits exceed fines, or to profit from subsidies not available to competitors, then they are functioning to create corporate interests which are in conflict with those of society.

    If capitalism and markets are to survive then they must find a way to deter the corporate behaviors which are in conflict with society, and to incentivize corporations to pursue mainly socially productive profit strategies.

  12. LarryB

    Centibillionaire? No, a centibillionaire is just a garden variety multimillionaire. The word you’re looking for is “hectobillionaire”. Centi means 1/100th, hecto is the prefix for 100.

  13. Gulag

    If only it were just the actions of the “extremely wealthy” that are at the origins of our contemporary problems.

    Such an assumption leaves out of the equation key institutional entities like an already highly centralized and bureaucratized national state closely linked to the Pentagon, already highly centralized and bureaucratized national intelligence entities like the NSA, and an already highly centralized and bureaucratized Central Bank that often merges together, through the law, private financial commercial practices like the creation of financial derivatives into protected assets which are then increasingly bailed out through the use of state money by that same Central Bank.

    Together these entities in combination with the usual suspects ( the extremely wealth in all their guises) begins to get at what ails us. And these comments don’t even take into consideration many of the profound cultural issues discussed above.

  14. Sound of the Suburbs

    How did we get here?

    Economics the timeline.
    Classical economics – observations and deductions from the world of small state, unregulated capitalism around them
    Neoclassical economics – Where did that come from?
    Keynesian economics – observations, deductions and fixes for the problems of neoclassical economics
    Neoclassical economics – Why is that back again?
    We thought small state, unregulated capitalism was something that it wasn’t as our ideas came from neoclassical economics, which has little connection with classical economics.
    On bringing it back again, we had lost everything that had been learned in the 1930s and 1940s, by which time it had already demonstrated its flaws.
    The Mont Pelerin society developed the parallel universe of neoliberalism from neoclassical economics.

    What did they learn in the 1930s?
    In the 1930s, the University of Chicago realised it was the bank’s ability to create money that had upset their free market theories.
    The Chicago Plan was named after its strongest proponent, Henry Simons, from the University of Chicago.
    He wanted free markets in every other area, but Government created money.
    To get meaningful price signals from the markets they had to take away the bank’s ability to create money.

    Henry Simons was a founder member of the Chicago School of Economics and he had worked out what was wrong with his beliefs in free markets in the 1930s.
    Banks can inflate asset prices with the money they create from bank loans.
    Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability to create money.
    “Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of “bank-financed inflation of securities and real estate” through the leveraged creation of secondary forms of money.”
    Real estate lending was actually the biggest problem lending category leading to 1929.
    Richard Vague had noticed real estate lending balloon from 5 trillion to 10 trillion from 2001 – 2007 and went back to look at the data before 1929.
    Margin lending had inflated the US stock market to ridiculous levels.

    The IMF re-visited the Chicago plan after 2008.

    What did they learn in WW2?
    In the paper from 1943 you can see …..
    They knew Government debt and deficits weren’t a problem as they had seen the massive Government debt and deficits of WW2.
    They knew full employment was feasible as they had seen it in WW2.
    After WW2, Governments aimed to create full employment as policymakers knew it could be done and actually maximised wealth creation in the economy.
    Balancing the budget was just something they used to do before WW2, but it wasn’t actually necessary.
    Government debt and deficits weren’t a problem.
    They could now solve all those problems they had seen in the 1930s, which caused politics to swing to the extremes and populist leaders to rise.
    They could eliminate unemployment and create a full employment economy.
    They could put welfare states in place to ensure the economic hardship of the 1930s would never be seen again.
    They didn’t have to use austerity; they could fight recessions with fiscal stimulus.

    Neoclassical economics – Why is that back again?
    Well, there was a reason.
    After a few decades of Keynesian, demand side economics the economy had become supply side constrained.
    Too much demand and not enough supply causes inflation.

    Neoclassical, supply side economics should be just the ticket to get things moving again.
    It does, but it’s got the same old problems it’s always had.

    1. Sound of the Suburbs

      How different is classical economics?
      Ricardo was part of the new capitalist class, and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.
      “The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist
      What does our man on free trade, Ricardo, mean?
      Disposable income = wages – (taxes + the cost of living)
      Employees get their money from wages and the employers pay the cost of living through wages, reducing profit.
      Employees get less disposable income after the landlords rent has gone.
      Employers have to cover the landlord’s rents in wages reducing profit.
      Ricardo is just talking about housing costs, employees all rented in those days.
      Low housing costs work best for employers and employees.

      Adam Smith on Profit:
      “But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin.”
      Exactly the opposite of today’s thinking, what does he mean?
      When rates of profit are high, capitalism is cannibalising itself by:
      1) Not engaging in long term investment for the future
      2) Paying insufficient wages to maintain demand for its products and services
      Today’s problems with growth and demand.
      Amazon didn’t suck its profits out as dividends and look how big it’s grown (not so good on the wages).

      The benefits of the system can be passed upwards in dividends or downwards in wages.
      Both actually detract from the money available for re-investment as Jeff Bezos knows only too well.
      He didn’t pay dividends and paid really low wages, to maximise the amount that he could re-invest in Amazon and look how big it’s grown.
      The shareholders gains are made through the value of the shares.
      Jeff Bezos hopes other people are paying high enough wages to buy lots of stuff from Amazon; his own workers don’t have much purchasing power.

      William White (BIS, OECD) talks about how economics really changed over one hundred years ago as classical economics was replaced by neoclassical economics.
      He thinks we have been on the wrong path for one hundred years.
      Small state, unregulated capitalism was where it all started and it’s rather different to today’s expectations.

  15. Richard

    This article to me reads like a Buzzfeed solution. And I would always defer to Michael Pettis on this issue.

    The US is largely not in control of its deficit if it wants to maintain certain levels of employment. And it has to maintain employment to be politically stable. This is a product of two primary things, first the reserve currency status the US dollar has, and second, the rather frictionless inflow of capital into the US. These qualities make thinking about the US as some stand alone entity that can be controlled easily with policy nothing more than though exercise for journalists. It’s economy is largely at the whims of the global economy.

    Why is that the case? I think one should refer to the work Pettis has done. The US can make all kinds of advanced products, but it needs a buyer. Who is going to make that happen? That’s not to say it still shouldn’t be done. The US is still the best place in the world to foster advanced ideas.

    The biggest focus for US leadership should be world wide income inequality. That’s basically the only way to fix trade issues. If the middle class in China had higher wages, their goods would not be as cheap and they’d be more inclined to buy imported products they could now afford. I don’t see it happening with this leadership, but we’ll see.

Comments are closed.