Capitalism
Revisited
It’s that time again for new year’s resolutions, presidential
“state of the union” speeches, or simply taking stock of capitalism as we know
it.
When we hear that the price of a barrel of oil is declining
to below $30, should we panic, rejoice, or ignore this data point? Do you
recall when it was over $100 and we didn’t know if to panic, rejoice, or ignore
it? Is this simply the result of, as economic textbooks have taught us, supply
and demand? Or, is something else going on here?
What are the political ramifications of the decline in oil
prices? Adversaries, from Russia and Venezuela to Iran and Libya are bound to
feel the pain because their domestic budgets depend on high oil prices; even
so-called friendly nations, like Saudi-Arabia and Brazil feel the squeeze. Are
they all our competitors now?
At home, mixed-messages abound: the stock market tumbles
because oil giants are suffering and their losses are reflected in their stock
prices which make up the index. Job losses are mentioned everywhere, as if the
nation’s latest December upsurge in employment wasn’t real or lasting.
But wouldn’t lower oil prices, as translated into lower gas
prices at the pump, not translate into greater discretionary spending
elsewhere? And wouldn’t this create a domestic economic boom?
If you have a nagging suspicion that the argument about the
natural wisdom of supply and demand and prices isn’t consistently applied to
the market, you are not alone.
Robert Reich, the former Secretary of Labor under President
Clinton, attempts to help us understand what’s wrong with American capitalism in
his latest Saving Capitalism: For the
Many, Not the Few (2015).
If anyone suspects Reich to be on the left of the political
spectrum, he begins his analysis with the assurance that unlike Karl Marx’s
prediction, capitalism isn’t inherently a bad system that will bring its own collapse.
Reich’s focus is on the rules that set up the marketplace,
the political system that establishes the laws that support capitalism as an
economic system. For him, it’s not the “free market” vs. “the “government,” but
rather how the free market is supported by government regulations that are
supposed to ensure its fairness and trustworthiness.
Democratic governments set the rules by which market
mechanisms work efficiently and for all, or inefficiently and just for the few.
In recalling the warnings of politicians and justices from the past century, it
becomes clear that the issue for them wasn’t how to protect the free market,
but how to protect democracy from the wealthy elite.
Among the ones he quotes, the most blatant was supreme
court justice, Louis Brandeis, who said in 1941 that “We can have democracy or
we can have great wealth in the hands of a few, but we cannot have both.”
Was his warning prescient?
As far as Reich is concerned, when about half of all the
senators and representatives who leave office (regardless of party affiliation)
join lobbying firms and then pressure their previous colleagues to pass
legislation that protects or promotes the interests of few corporate giants,
then, yes, we have a political and economic collusion. to fruition!
Likewise, the concentration of wealth in the hands of the
few, as Reich reports, is quite extreme: “the six Walmart heirs together had
more wealth (in 2014) than the bottom 42 percent of Americans combined (up from
30.5 percent in 2007).”
Reich calls this a “redistribution upward” or a “pre-distribution”
because it’s about the rules of the game of capitalism and how “invisible” they
remain from public scrutiny. These rules, from intellectual property rights and
monopoly power to contractual relations between corporations and their workers
to the laws of bankruptcy and the lack of regulatory enforcement, ensure that
the game is rigged in favor of large corporations, Wall Street, and wealthy
individuals.
The days of “stakeholder capitalism”—where what was good
for General Motors was good for America—have become after the 1980s the days of
“shareholder capitalism”—where CEOs make decisions that favor themselves and a few
large shareholders.
Reich reminds us of “interest-group populism” that
prevailed after WWII when people joined local groups and professional associations
to represent their interests, and what resulted was “neither rule by majority
nor by minority but by a ‘majority of minorities’.” This way of thinking was
inspired by John Kenneth Galbraith who argued for a “countervailing power” to
limit the power of the wealthy.
So, instead of listening to pundits that lament the loss of
jobs in the oil and gas industry, let’s remember that we can become the largest
oil exporting power in the world, and that we can create millions of jobs in
alternative energy industries!
Raphael
Sassower is professor and chair of philosophy at UCCS. He can be reached at rsassower@gmail.com See previous
articles at sassower.blogspot.com
