This blog is based on a paper entitled: Critiques of Capitalism. It is fourth of five parts in a series that takes a long, hard look at the economic system we have in modern America. [Part 1 is available HERE]. The purpose of the bold-face type is that it represents my main arguments.
Business is very powerful in modern America, notes Joseph Stiglitz. Wall Street, insurance companies, pharmaceutical companies, military contractors and others donate hundreds of millions of dollars in an election cycle to what amounts to legal bribery, as Robert Reich notes. There are 50 or more lobbyists for every elected representative, making the voice of the people drowned in a sea of money. The Supreme Court has sanctioned this hostile takeover of the democratic republic. Thomas Piketty writes: “In the United States, the Supreme Court blocked several attempts to levy a federal income tax in the late nineteenth and early twentieth centuries and then blocked minimum wage legislation in the 1930s, while finding that slavery and, later, racial discrimination was perfectly compatible with basic constitutional rights for nearly two centuries.” Professor of sociology at UC Santa Cruz, G. William Domhoff sums it up neatly:
Who has predominant power in the United States? The short answer, from 1776 to the present, is: Those who have the money – or more specifically, who own income-producing land and businesses – have the power. George Washington was one of the biggest landowners of his day; presidents in the late 19th century were close to the railroad interests; for the Bush family, it was oil and other natural resources, agribusiness, and finance. In this day and age, this means that banks, corporations, agribusinesses, and big real estate developers, working separately on most policy issues, but in combination on important general issues – such as taxes, opposition to labor unions, and trade agreements with other countries – set the rules within which policy battles are waged.
It could hardly be put more plainly than what consumer advocate and tireless progressive Ralph Nader says here in a Green Party presidential candidacy speech in 2000: “Up against the corporate government, voters find themselves asked to choose between look-alike candidates from two parties vying to see who takes the marching orders from their campaign paymasters and their future employers. Money of vested interests nullifies genuine voter choice and trust.”
Government has been pared down and weakened and altered quite a bit since the late 1970s, and especially under Ronald Reagan, as shown by Stiglitz in his book The Price of Inequality. Decades of growth and prosperity have been traded in for gross levels of income and wealth inequality and other negative results. “The level of inequality and the absence of opportunity that we see in the United States today is not inevitable, nor is its recent rise simply the product of inexorable market forces,” claims Joseph Stiglitz. Uber-journalist Bill Moyers bluntly puts it this way: “America’s vast inequality didn’t just happen…. It’s been politically engineered.” Stiglitz adds: “Markets, by themselves, even when they are stable, often lead to high levels of inequality, outcomes that are widely viewed as unfair.” It seems to be the Achilles heel of even a legitimate, clean “free market economy:” some people will be lucky, some will be unscrupulous, and some will have inherited wealth. It leads to a kind of entitlement that is, in many cases, bereft of any moral desert or deep sense of social and economic justice. Laws, after all, are written by human beings, and human beings are obviously fallible. Some would say, corruptible.
Indeed, the results we are witnessing do appear to be causally-related to deregulation and the pernicious effect of big money on politics. “At their best, markets have played a central role in the stunning increases in productivity and standards of living in the past two hundred years,” Stiglitz notes. “…But government has also played a major role in these advances, a fact that free-market advocates typically fail to acknowledge. On the other hand, markets can also concentrate wealth, pass environmental costs onto society, and abuse workers and consumers.”
Much is on the line. Real lives are affected in important (even drastic) ways every day, as shown in Robert Reich’s winning documentary Inequality for All, and Charles Ferguson’s powerful Inside Job. Stiglitz describes it thusly:
Countries around the world provide frightening examples of what happens to societies when they reach the level of inequality toward which we are moving. Is not a pretty picture: countries where the rich live in gated communities, waited upon by hordes of low-income workers; unstable political systems where populists promise the masses a better life, only to disappoint. Perhaps most importantly, there is an absence of hope. In these countries, the poor know that their prospects of emerging from poverty – let alone making it to the top – are minuscule. This is not something we should be striving for.
At least until we usher in a new era reminiscent of what Gar Alperovitz calls “A Pluralist Commonwealth,” until progressive social movements force our leaders to actually consider the people its constituency, government is the only current institution or force currently capable of preventing instability, reducing harmful disparities in income and wealth, and steering the economy rightly. Government is supposed to, in fact, be represented by, and comprised of, the people. Other countries show that a relatively functional and uncorrupted government is possible, and appreciated (Reich). Stiglitz contributes: “Competitive forces should limit outsize profits, but if governments do not ensure that markets are competitive, there can be large monopoly profits. Competitive forces should also limit disproportionate executive compensation, but in modern corporations, the CEO has enormous power— including the power to set his own compensation….”
The least corrupt countries, according to Berlin-based Transparency International, are (in ascending order): Norway, Switzerland, Australia, Holland, Canada, Sweden, Finland, New Zealand, and Singapore. France and Germany didn’t make that cut, nor England or Denmark. However, the United States is also conspicuously absent. Iceland, in fact, was duped by its bankers and deregulated its markets much like the U.S. in the run-up to the Great Recession. It soon realized its grave error, saw how inconsistent it was with the generally subservient government it enjoyed for quite a long time prior to its greed, and promptly prosecuted and punished 26 individuals (whom Thom Hartmann refers to here in the States as “banksters”). Alan Pyke writes of this in a ThinkProgress article entitled “Iceland, Where Bankers Actually Go to Jail for Committing White-Collar Crimes”:
Nearly all the financiers who headed powerful American firms in the run-up to the 2008 economic crisis remain wealthy, powerful, and free. Not so in Iceland, where jail sentences handed out last week bring the number of bankers imprisoned over the meltdown to 26. Combined, the bankers will spend 74 years behind bars. While critics of such stringent treatment of the business community often warn that cracking down on finance hurts the economy, Iceland’s experience has shown it’s possible to pursue corporate accountability and broad growth at the same time. The American form of justice for banking titans has been rather less robust. Prosecutions for all white-collar crime are at a 20-year low. Criminal prosecutions of corporations dropped 29 percent from 2004 to 2014.
This blog is entitled Critiques of Capitalism (Part 4)
Why did Barack Obama, upon being sworn in in 2008, not seek justice – a reckoning, if you will? Could shysters who run investment firms and Wall Street hedge funds not be called on the carpet for wrecking the economy and hurting real people in real ways? Were not cigarette manufacturers’ CEOs not tarred and feathered for making products that were dangerous and only benefitted themselves? Incidentally, Stiglitz writes this: “The head of Goldman Sachs, Lloyd Blankfein, made it perfectly clear: sophisticated investors don’t, or at least shouldn’t, rely on trust.” Oh, okay. So, it’s caveat emptor when it comes to derivatives. Hell, even Warren Buffett can’t understand derivatives. Well, the answer to the question from the beginning of this paragraph has something to do with the fact that Obama took in more campaign contributions than any other president ever. And no, they were not an average of $33 each. A chorus of forehead-slapping was heard when Lawrence Summers, Timothy Geithner, and Paul Volcker were appointed as his main advisors and executives.
Therefore, to combat multinational corporations and extremely wealthy individuals intent on influencing the political system, we need a responsive, clean, and reformed government to be a bulwark against corporate power, and a champion of the people and the environment (Stiglitz). This will necessarily result in a truer and greater justice for the greatest number.
Utilitarian calculations can be somewhat unwieldy, but isn’t our system totally lacking any homage to the idea that the greatest good for the greatest number is something we should be striving for? Is amount of money possessed really going to be the #1 factor influencing who gets what in this society? How do other countries arrive at conclusions about natural rights and human rights and the hallmarks of good government in a totally different way than we do? Indeed, health care, social security, “just and favourable conditions of work and protection against unemployment” are values enumerated in the United Nations’ Universal Declaration of Human Rights. It also specifically declares “the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice, and peace in the world.” We currently have no such thing in the United States. We should be ashamed of that.
Joseph Stiglitz gets aspirational and inspirational with this language: “Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest ‘properly understood’ is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, to the common welfare— is in fact a precondition for one’s own ultimate well-being.” He notes that Tocqueville referred to this spirit of thought as “a mark of American pragmatism.” He hits it out of the park with this communistic viewpoint: “The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this has been something that the top 1 percent eventually do learn. Often, however, they learn it too late.”
Stiglitz, one of America’s greatest treasures, also points out that there are two visions of society, and he believes that “this second vision is the only one that is consistent with our heritage and our values.” The first vision is about “the haves” and “the have-nots,” one of gated communities of nervious rich and the rest of society: the envious poor. He refers to the alternative with the following: “The other vision of a society where the gap between the haves and the have-nots has been narrowed, where there is a sense of shared destiny, a common commitment to opportunity and fairness, where the words ‘liberty and justice for all’ actually mean what they seem to mean….” Amen to that!
This blog was entitled Critiques of Capitalism (Part 4).
FOR THE NEXT INSTALLMENT IN CRITIQUES OF CAPITALISM – the conclusion – CLICK HERE