Beliathon cant objectively explain or define capitalism without regressing into meaningless pejoratives and circular reasoning. At least I havent seen it. So without clear defintions, you cant discuss intelligently. Sorry but its true.
One reason that radical capitalism, what some of you may erroneously refer to as "anarcho"-capitalism, has won the hearts of so many is that it is highly plausible; it sounds great. A world of abstract morality where the anonymous ‘market’ expertly and without pity, favoritism or error decides the ultimate value of goods and services and delivers those goods and services with maximum efficiency, the highest good. A world where shared ownership shifts corporate responsibility to a plebiscite to which the corporation answers; the interests of the shareholders will echo the interests of humanity. A world where capital flows continuously from the corporate class back to the entrepreneurial class, endlessly cycling value into new innovations that serve humanity.
Hell, I’ve almost convinced myself!
Each of those assertions is not just false, but diametrically opposed to reality. And reality is all we have left.
The Truth Within the Lie
While each of these assertions is false, each has some kernel of truth or potential for truth that tethers radical capitalism to reality enough for many people to overlook the obvious flaws and falsehoods in this religion, er, approach to economics.
So with the market’s ability to assess values, it’s true that a broad, robust, well-managed market can do this thing. But our current leveraged, opaque, unmanaged markets do just the opposite, as evidenced by the series of economic bubbles that have ruined our economy.
A hardcore radical capitalist intellectual would point out that, despite the bubble a true value was eventually determined. I would counter that a bubble can only exist when significant market players facilitate transactions that they KNOW to be badly valued. And I don’t mean once, I mean tens of thousands of times.
If a market can be manipulated, no price can be trusted. Nothing has any value.
Again, it is true that markets seek efficiency – stone cold truth. The mythical part is that efficiency is the highest good. In reality, efficiency is a dangerous, brittle approach prone to catastrophic failure. The opposite of efficiency is not inefficiency; the opposite is resilience.
Surely though, the broad base of shareholders can anchor corporate behavior within the framework of human betterment. Surely enough humans have the strength of character to say “no” to those practices that endanger employees or put our environment at risk.
I have no doubt that most humans have the broader human interest in their hearts. It’s just that “the shareholders” aren’t humans. The shareholders are other corporations. The idea that Johnny Puterbox’s 184 shares of GE somehow give him decision-making authority is laughable. Those votes count for nothing compared with the millions of votes the institutional investors get. And besides, it’s not like the board of directors has to do what the shareholders say. The directors do what they think is in the best interest of the shareholders, regardless of what the shareholders say.
If you did not know this, the current state of corporate boards of directors can best be described as the most expensive circle-jerk in the history of the species.
That leaves us with the capital itself. All that money soaked up by the institutions through all those bubbles, on top of all of those cynical transactions, after all that “value” has been wrung out of companies through the magic of profits…doesn’t that go to fuel the next wave of innovation, the new jobs?
For me, this is the piece de resistance of radical capitalism. A preposterous lie, transparent on the face of it and never once challenged on the basis of data. If this were true, no state, local and even now federal government would ever risk a dollar of taxpayer money on seed funds, loan guarantees or tax abatements. NEVAH! And yet any government that can find the money is putting into the venture space.
Here’s how we know that radical capitalist are cynical liars – every one of them knows that as wealth increase, the appetite for risk decreases proportionally. When money gets big, it gets notoriously skittish, fearing everything and seeking the safe haven. Big money is why bonds are selling like risk-avoidance crack. 0.25%…? SOLD! Only a microscopic portion of amassed wealth gets reinvested in the economy.
Occupy Reality
Right now, corporations are sitting on trillions of dollars of cash. Oh, they’d help you out with your economy and all, but they’re a-scared. They’re worried that if they gave some of that money to the government in taxes they wouldn’t have it anymore.
And if they loaned some to you for your company, there’s a slight chance that they wouldn’t get 100% of the value they anticipated based on the amortized payment scheme in which you end up paying them far more than they actually lent you and they can’t not get 100% of anticipated revenue because they would already have leveraged 100% of the anticipated revenue 40:1 against corn futures.
But your landscaping business represents a serious risk. So they’ll just wait it out while you die. They have to look out for the shareholders.
This country needs to learn, once and for all, that capitalism is not perfect and that radical capitalism is destructive. Markets, trade, money, all the normal stuff is generally fine, but the special status afforded the Too Big to Fail club puts them beyond the law yet dependent on government to save them when they’ve gone too far. They get all the speech rights of an individual, only their speech is money and they have pretty much all of that.
This, my friends, is called “tyranny”. And it has got to go.
