To fight the economic downturn we need a national discussion on the two forms of capitalism. Unlike other nations, the US has adopted a bad, immoral, greed-driven form that benefits the rich and powerful. by Joel S. Hirschhorn
(libertarian)
Friday, June 17, 2011
With a kind of religious fervor, American conservatives love to talk about their love of capitalism, as if it has a singular definition and can always be counted on to serve public and national interests. The intelligent way to think about capitalism is that it can be of two kinds. The good kind is patriotic and stakeholder oriented, the bad kind is selfish and shareholder obsessed. The global economic downturn is strong evidence of the dominant second form of capitalism that has caused so much human suffering while it has served the rich and powerful.
When those with power take actions purely to serve corporate financial interests even though it greatly harms employees, the middle class and the national economy then the bad kind of capitalism is being pursued. Think of the mass export of good jobs, especially in manufacturing, the preference for imported goods, and the investment of capital to build new manufacturing and research facilities in other countries. Maximizing financial returns to reward corporate bigwigs and stockholders even though the actions greatly harm the US economy and society results from US companies practicing bad, immoral capitalism. Think of this development as the conquest of Wall Street over Main Street, of those who make money over those who create and make products, of those who promote economic inequality over those who value the middle class.
The power elites that have succeeded in perverting capitalism have also succeeded in making much of the American public so dumb and distracted that they no longer function as informed and effective citizens, which has allowed the government to be hijacked by the rich and powerful through a two-party plutocracy.
Selfish capitalism was exemplified by the role of Fannie Mae in creating the economic disaster by perverting the housing market, as conservative David Brooks correctly concluded; he noted "the leadership class is fundamentally self-dealing;" it practiced "shameless self-enrichment" which produced disastrous results.
To be clear, the conflict is not between capitalism and socialism, the way right wing ideologues talk, but between the good and bad kinds of capitalism, which those on the left need to learn how to talk about. Bad, greed-driven, too-big-to-fail capitalism has ruined the US for all but the rich which have sucked off much of the nations wealth.
A fine analysis by Harold Meyerson on the difference between the highly successful German economy and the dismal US one drives home the crucial differences between the two forms of capitalism. The need is for the US to learn from the more successful German, good form of capitalism and develop policy reforms that could rejuvenate the US economy by curbing the bad form of capitalism. The ideas that Republicans keep advocating are all wrong because all they want to do is promote bad capitalism, which only serves the interests of the rich and powerful, not ordinary Americans, not the middle class, and not workers. Peter Coy has also assembled great information on what can be learned from other nations.
The German economy makes the US one look like it is on its deathbed. The German tripartite system has business, labor and government working together. Faced with the same competition from low wage developing countries and the entire globalization condition, Germany has a booming manufacturing sector that constitutes almost twice the share of the economy than that in the US. And even in the current global economic recession German unemployment is 7 percent. The tripartite system has kept German labor unions strong and, therefore, protects the middle class whose pay has risen at roughly the same rate as top incomes. This is in stark contrast to the rich-getting-richer and unionbusting situation in the US. Indeed, the top 1 percent in the US are seeing their proportion of total income rise dramatically, even as their German counterparts are seeing their share of total income shrink. German corporate boards are required by law to have an equal number of management and employee representatives. By law! Germany's stakeholder capitalism benefits the many unlike the US where selfish capitalism benefits the upper class and brutalizes everyone else. Corporate power has not captured the German government the way it has hijacked the US government.
One powerful and highly successful public policy used by several democracies with strong capitalistic systems in the current economic downturn is providing companies with funds to keep workers on the payroll until demand improves. This directly fights unemployment and puts government dollars directly in the pockets of workers, in stark contrast to the many billions of dollars the US has spent which have not helped fight unemployment nor helped ordinary Americans, because the billions have flowed to corporate and financial interests. This more sensible approach that boosts consumer demand and spending has been used by Singapore, Germany and Japan, for example.
If President Obama was as smart as he and so many others think he is, and if he was a genuine leader and seeker of deep reforms, he would learn, respect and work like a dog to apply the best practices other nations are using to get better and fairer economic results. But as the Center for Public Integrity found, Obama has showered benefits on big time funders of his presidential campaign. Will he be a forceful advocate for capitalism with a human face?
Don't hold your breath.
If Republican presidential hopefuls and crony capitalists cared as much about serving the public interest as serving corporate desires, than they would stop their nonsensical free market claptrap embracing selfish capitalism and seek a more patriotic form that puts the nation first. Time to stop talking about cutting taxes. Pursue new and better ideas. Face reality, a free market that provides freedom for corporate and financial interests to victimize the public must be changed. Admit that!
Don't hold your breath.
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Posted By: Joel S. Hirschhorn
Date: June 18, 2011 08:04:19 AM
Dear Ahov: The only way to change reality is to deal explicitly with it. Pure forms of anything hardly exist. Have the courage to recognize and choose between two realities.
Posted By: Roy Ellis
Date: June 18, 2011 11:37:17 AM
I’m not for laying all of our problems on the corporations and capitalism. You make the point that there are good and bad corporate and capitalistic models. I agree, but this doesn’t encompass the breadth of the issue, IMO.
To make my point let’s return to the early days of the Republic. From this article“The first Corporate Charters that were granted in America were usually granted for things that specifically served the public good. For example a University or a Railroad. They had specific disollusion dates, and were created with a specific goal in mind. States had the right to revoke the charter if it felt the corporation was not acting in the public's best interest. States also had the right to tax corporations in whatever manner they pleased, and they often did in order to favor local business interests over the interests of large out of state corporations. Since then the States and the people have lost many of these rights, while the corporations have made huge gains in their ability to dominate society.”
It’s clear that early corporations were set up to support ‘the public good’, and that should be the intent today. But, we know that corporations teamed with the courts and legislators to give corporations many of the same rights as humans, spelled out under Corporate Personhood law. Read how this was done using the 14th amendment.
From that point, 1876, corporations have pressed on and slowly replaced our democracy with corpocracy rule. Corporations have supplanted the public in their relationship with gov’t.
Therein lies the problem.
Corporations are no longer operated for the public good. Corporations are operated for the ‘bottom line’. For example, suppose you were a corporate executive and you made the point that you didn’t want the company to move to China where corporate profits were assured to be far greater. How long do you think you would have remained in your position?
It is the govt’s job to regulate corporations. We know the history of the breakup of Standard Oil owned by John D. Rockefeller. Today, big oil has reconstituted the monopoly in oil production. Anti-trust law was abandoned with Ronald Regan and the era of ‘greed is good’. Today, Corpocracy rule is more powerful than ever.
The Corpocracy has been working to implement globalisation for some 30 years and part of that plan is to ‘harmonize’ laws and wages around the world in creating a more level playing field. While the NAU concept failed, most all of the plan to globalise has been put in place. One piece remaining is that US wages have not fallen to a point where we can compete in a globalised economy. The big squeeze is on and it appears that over the next few years the Corpocracy will have solved the wage issue as well. And, Germany is in the crosshairs too. By the time they bail out the PIIGS and deal with the recession, or perhaps multi-dip recessions if it takes that, German wages will fall in line with developing countries, IMO.
To extricate the nation from Corpocracy rule and remove the money influence from politics and gov’t we must establish a 3rd party designed to abolish corporate personhood and to implement REAL campaign finance reform. Otherwise, the country will continue to be drug down the road at the hands of the Corpocracy.
Posted By: Joel S. Hirschhorn
Date: June 19, 2011 07:41:24 AM
Steven Pearlstein recently examined the history of IBM and noted its “outmoded ethos – namely that the company exists not simply to maximize profit for shareholders but to maximize the benefits it can offer to customers, employees and the society as a whole.” Exactly right.
Posted By: rwilymz
Date: June 21, 2011 08:08:46 AM
The intelligent way to think about capitalism is that it can be of two kinds. The good kind is patriotic and stakeholder oriented, the bad kind is selfish and shareholder obsessed.
I have rarely observed that the intelligent way of doing anything is to create a false dichotomy out of a situation. Binary solution sets usually involve the obliteration of dozens to hundreds of possible solutions.
It is often a good way to illustrate, but it is usually facile to read too much into it.
...as it is here.
Who are the "stakeholders", Joel? Who are the "shareholders"? You bandy these terms about and I don't believe you have a real solid grasp of them. The reason I believe that is because you also say:
The power elites that have succeeded in perverting capitalism have also succeeded in making much of the American public so dumb and distracted that they no longer function as informed and effective citizens
"The People" have always been dumb. The People were dumb in 1784, they were dumb in 1884, 1984 and they were dumb yesterday. The People don't have time to be knowledgeable on everything that will and might affect their lives; they have lives. They need to work, they need to sleep, they need to cook and clean and take out the trash. You're blaming the wrong target for the wrong sin. It's not even a sin, and there's no blame for it, but you're creating it anyway.
And even though people have to cook in order to live their lives, I find it fascinating how many people know bupkus about their food. People are dumb about food. Stupid. Raving idiots, most of them. Absolute retards.
How can I say this? Because I raise food as a second business, and the things I'm told by these idiots is phenomenal. If I were to do what they believe I should, if large farms were to, no one would eat. It would be impossible to grow food, distribute it, sell it, store it, do anything with it.
Here's a little lesson for you, Joel, on your sainted "stakeholders". The only "stakeholders" that matter a damn are the ones that can leverage their way into the discussion. Some years ago, a few people decided they were all irritated by corporate farming ... never mind that most of the "bad things" about corporate farming were cause by the same people mad at them for being "bad" when those people insisted on zoning changes that yanked farmland from the farmers and left it open for subdivision developers ... which then property-taxed the rest of the farms out of existence. These people wanted food grown the way it used to be.
They wanted "organic" food.
Great, so people like me who turned the back yard into a pasture and got sheep so he wouldn't have to mow could sell a lamb to one of these pinheads for $150 instead of $100 by calling it "organic". Marvelous.
But that's a good game: add a word and raise the price. Soon everybody was doing that, including corporate farms who chem up their fields and hormone up their livestock. And so the pinheads who wanted "organic" food then demanded regulation of the process over who can call themselves "organic" and who can't. Regulation = government, if it is to be mandatory.
So Congress gave USDA the regulatory authority to define "organic". And USDA put out a call to "stakeholders" to help them come up with the definition and the means for certifying it. And who are those "stakeholders"? Give me a guess Joel. Take a breather for a while and just guess who the "stakeholders" are. If you say anything like "
the pinheads who want to eat organic food
" or "
the farmers who grow organic food
" take two steps backwards.
We don't have loyyers or advocacy groups. We have jobs.
The rules and regulations for "organic" food were written by Cargill, Monsanto, and American Farm Bureau. ...the folks who advocate on behalf of those who do NOT grow organic food. And because it's the government here, the rules are complex, cumbersome, are paperwork-heavy and financials-heavy. I cannot simply show my county agent the pasture my sheep graze and the lack of hormone injections and say voila! Organic! Doesn't work that way. It would cost $3-5,000 to certify my farm [my revenue is maybe $1,000 a year] and several days off work to hand hold the regulators; I'd have to hire an accountant and a loyyer to hand-hold ME, and all for the privilege of being able to use a single word in my craigslist ads for lamb.
If you skipped my story to get to the part with the boldface type because it was near the end, then there's one thing and one thing only I want you to take away from this:
"Stakeholders" are those the big boys with power say they are, and no one else. In almost every case, they are other big boys. Your pretentious "fight for the little guy" is shinola.
Make it two things:
Regulations are written by the big boys for the big boys, as only the big boys have the loyyers and accountants on staff to navigate their way through the maze of regulation in order to come out on the other side safe from government sanction.
If you want more little guys to fight for, then you need to scrap most of the regulations which prevents them from starting or, if started, growing and flourishing. Until then, about the only way to keep your head above water is to be a shareholder of industries that can call themselves stakeholders.
