U.S. Version Of Capitalism Is Obsolete & Must Change

This cartoon (by Mike Stanfill at farleftside.com) shows one of the disadvantages of the kind of largely unregulated capitalism in the United States. The rich (who own the corporations) make the rules and get all the benefits, while workers struggle to make a living.

There is a better way. Capitalism must be regulated so that it is beneficial to all members of society. Many other developed nations do this, and their citizens are better off than most Americans.

Consider this excellent article from Umair Haque:

Imagine the most comically absurd capitalist thing you can think of. Go ahead. Double it. OK — ready? How about this one: a nation of people who are mostly broke, living paycheck-to-paycheck, who’ll never retire, barely able to afford decent healthcare…subsidizing, by billions, the world’s — scratch that, history’s — richest man. Absurd enough for you?

And yet that’s American reality. It’s essentially what massive “incentives” for Amazon’s new HQ means. So why are Americans — who live at the edge of ruin — subsidizing the world’s richest man, who’s also probably history’s richest man, to the tune of billions — instead of him investing in them, their healthcare, educations, retirements, and so forth? Let me put that another way.

Could there be a better example of the abject failure of capitalism — and what it really is — than the world’s richest man asking for yet more money from broke Americans (LOL)? I mean, he’s already…the world’s richest man!  . . . 

But it’s not just funny. It’s a failure. Not just one of ethics or morals — capitalism doesn’t have any. It’s the result of the stunning, catastrophic failure of an outdated set of ideas about how societies grow and prosper. . . .

The American idea of how societies grow and prosper goes like this. In order to fund social investment, you need capitalism. You tax the capitalists, and hey presto — then and only then do you have money to invest in schools, roads, hospitals, and so on. (Now, it’s obvious to see that there are many flaws with this theory. In order for capitalism to earn more, it will have to exploit more people, or exploit people more — and so in the end, will it just be a wash? And who will decide what the adequate level of such public goods is? In America, it’s capitalists — not people: they essentially dictate terms to the polity. Now, note the assumption here: the only way a society grows is through capitalism, and that means that capitalists, too, have the power to withhold prosperity from a society — and that way, to hold it ransom. What if they decide to do that?)

The biggest flaw with this theory is one of power. If capitalists know that a society depends on them to “fund” it, then they’ll probably demand some kind of payment in order to operate in a society in the first place — hence, incentives. And the payment they demand — since capitalism is only concerned with how much money it makes, period, full stop — will be precisely equivalent to the taxes that are raised. (If all this sounds suspiciously like a shakedown to you, you’re not wrong — the real question is why decades of American thinking has glorified it as some kind of grand intellectual breakthrough.) What’s the effect of that ? That means that in a capitalist society, the level of public investment will never really rise — translation: people will never really have more or better healthcare, incomes, savings, retirements, choices, chances, and so on.

And that is precisely, exactly, eerily what happened in America, isn’t it? The capitalists won, by stripping society of investment, and everyone else lost. . . .

So does society-need-capitalism, or does capitalism-need-society? You see, if the theory that society-needs-capitalism is true, then we’d see a very specific pattern at work in the world. Societies with higher levels of all those nice and wonderful things would have more and bigger capitalism, not less — because capitalism is the thing which would be funding all those gleaming hospitals, universities, schools, roads, not to mention retirement and childcare systems and so forth. So is that pattern — more public goods require more capitalism — what we do see, in the real world? Of course not. We see precisely the opposite, in fact.

Europeans live vastly better lives — longer, happier, richer, wealthier in every regard than Americans — because they spend twice as much on public investment as a share of GDP — 50% versus 25%. Translation — they spend twice as much on healthcare, education, retirement, childcare systems, safety nets, and so on — which also means they spend less on capitalism. Europeans have far better healthcare and retirement and education and everything systems — but there are no Apples and Amazons in Europe — there’s not a single trillion dollar company, in fact. So the American theory that society-needs-capitalism in a kind of linear relationship to grow and prosper is obviously false — we can disprove it merely by glancing at the world. . . .

The European theory goes like this: social investment can be self-sustaining. Imagine that you work at a national healthcare system somewhere in Europe, as a doctor, or a nurse. It’s not that you don’t pay taxes — of course you do. Your taxes then go right back to fund all those other various social services. But the people who work in those sectors are funding you, too. Everyone is simply investing in everyone else. There’s no magic behind it — you can simply think of it like a shared insurance pool, which is exactly what it mostly is. Together, all that adds up to about half the economy — a much more balanced model than America.

Now, all those people who are investing in one another can go out and spend some of their money on capitalism. But note the effect — now a society has a stable, large, and readily available pool of secure, well-paid, middle class jobs with benefits. So there is always an alternative to capitalism — unlike in America, where the choice is between different flavors of exploitation, in Europe, it’s often between being exploited by some capitalist, and working for the common good. And because people are free to make that choice, which also means they are investing in their own growth and development, capitalism can never really hold such a society hostage like it can in the States. . . .

In European thinking, a society doesn’t have to depend solely on capitalism for its growth and prosperity. In fact, it mustn’t — because capitalism will hold it to ransom, and demand that people subsidize capitalists, not matter how rich they grow — which is how you get to the world’s richest man demanding even more money (LOL) from Americans. How to escape that dilemma? A society can simply invest in itself — and kickstart a virtuous circle that lifts everyone upwards, because here, no one is exploiting anyone else. . . .

It’s through bizarre, strange, upside-down examples like this one — the world’s richest man asking for more money from a nation whose middle class has collapsed, where people choose between healthcare and food — that we see the hard, grim, and dismal truths of capitalism. What it is, without the myths and fables and fairy tales. It’s contradictions, it’s limitations, at what scale it is useful and helpful — and how it becomes abusive and self-destructive to a society.