Saturday, February 1, 2014

Gary Engler — Why Capitalism Can’t Fix Our Most Urgent Problems

Real capitalism, not the theoretical version taught in school, is a system of minority rule in which a few people profit at the expense of others.

Real capitalists are always trying to cut their costs and increase their profits, which leads to unemployment, falling wages, rising economic disparity and not paying for the environmental damage they cause.

Private ownership of what are social means of livelihood produces incentives for capitalists to pass along the real costs of industry to communities, workers, future generations and other species.

Private ownership makes growing inequality inevitable. A system can proclaim itself democratic, but if a minority holds most of the economic, and therefore social and political power, that minority will inevitably reward itself, its power will grow and ever-expanding inequality will be the result.

Capitalism is sociopathic. Its ideologues, like the late Margaret Thatcher, reject the social, claiming only individuals exist. Yet capitalism has driven individual producers to the fringes of economies. Most people, ninety per cent in the U.K., depend on wages or salary, working with others in cooperative, coordinated labour — social labour, but directed by wealthy minorities for their own profit.

Capitalism promotes greed. It boasts of this.
Counterpunch
Why Capitalism Can’t Fix Our Most Urgent Problems
Gary Engler

6 comments:

Ralph Musgrave said...

“Real capitalists are always trying to cut their costs and increase their profits, which leads to unemployment, falling wages…” So how come wages have steadily risen, not fallen, over the last 200 years? And how come unemployment has not steadily risen over the same period?

Matt Franko said...

Good point Ralph... this is perhaps an overly simplistic view by Engler here...

We are obviously not operating under a system best described by Marx's "Capitalism"...

Leading govt spending flows have been steadily increasing (though not yet reached high enough levels for acceptable economic outcomes for all...) over the time period you cite... this imo leads to the outcomes you describe ie the increasing wages and the inadequate levels of spending result in the UE...

Marx never saw this nor do most of his current adherents imo...

rsp,

Anonymous said...

The fact that firms are always trying to cut their costs should be celebrated. That's why we are able to have more things over time, produced more efficiently. That's why a simple electronic calculator, something for which I had to pay 30 or 40 1975 dollars in high school, is now so cheap to make that people give them away for free. That's why we are able to devote resources and human labor that were once locked up in one industry to whole new enterprises, private and public, to produce new goods and services that we previously couldn't afford to produce. While the movement of labor from old enterprises to new one can be disruptive and sometimes lead to large (and avoidable) crises, as Ralph note, the historical record over time does not show an aggregate fall in worker income or in employment.

The issue of profit is more important and more complex. The question here is how the value that is generated and added to the world by productive activity is distributed. We have a system that relies very, very heavily on the private organization of productive enterprise, and the private ownership of those enterprises and their assets. The apparent result has been a concentration of capital in a relatively few hands, and also great inequality in the quantity and quality of consumption.

We need to rethink the balance between the private and public role, and also the rules and legal constraints that govern the use and distribution of added value. We need a more prominent role for political communities, an increase in public enterprise, and somewhat less discretion for private enterprises, and more constraints on their ability to accumulate and concentrate wealth and social power.

Ryan Harris said...

He is really getting at two separate points here, the first is the legal idea of the right of capture, and second is the assumption of knowledgeable participants. The first, the right of caputure is the basis of most capitalism, you know, the animal comes on to your property, the government and society needs food for the population so they reward the industrious person that captures the animal and turn it into food. In most of western law, this is how most of capitalism works, from Oil, to Fish, to Agriculture, to High Tech patenting tweaks on government research, this is the legal precept that is plaguing trade, domestic and foreign. We need to make sure that economists, when the engage in their favored abstractions don't avoid or distort the basis of the patterns to come up with "all trade is beneficial" statements, or just "trade is what makes us rich" idiocy. We get that. We all do. It doesn't mean there isn't problems. The right of capture has limits and when well enforced they make a more harmonious relationship between neighbors. After all we don't shoot fido the dog when he strays. If a cow has a brand it isn't yours. You can't pump the entire river into your reservoir. And so on.

The second idea that is basically false in most trade is that the trade is fair and done for reasons of profit in a competitive environment. People that specialize in capture resources, and corner markets become very good at it and specialize. Governments protect eternal monopolies on some goods and oligopolies on most goods. Individuals can't and don't understand who they are trading with, what their motives are and which products have the most/least negative externalities. They assume that government has set rules and applied them evenly to all firms. That assumption is regularly violated in domestic and foreign trade because of corruption, distance and strategic interests. It is more of a game where people in economics create models that, every one sees and talks about, as if all firms were pawns, while in reality there are chess pieces filling the board playing by more powerful rules. The people playing checkers are surprised when a bishop or Rook comes flying out of no-where. Best to model reality and not to simplify out those moves that are neither complex or difficult to identify over and over again.

Tom Hickey said...

"So how come wages have steadily risen, not fallen, over the last 200 years? And how come unemployment has not steadily risen over the same period?"

Govts generally run deficits and when they occasionally run surpluses, economic contraction is the consequence, with high UE.

Ryan Harris said...

Employment as a % of the population has fallen for nearly a half century. We are back to the late 60s or early 70s aren't we? Back to the way it was before women entered the workforce, en masse.

An uneducated but skilled worker probably has a more difficult life now than the 1940s after labor unions and the war raised the fortunes of the non-elites. An educated office workers has probably about the same relative quality of life as the 1940s except for technology improvements. A state sanctioned professional such as doctor or attorney might be better off. Government employees are much, much better off as are many professions.

In the late 1930s my grandfather was a US Steel Worker and made about $5/day. He is dead, but now the employees that work for the company he started make about $350/day but the same house in San Francisco he owned now costs $1,700,000 that used to cost $6500. That is almost four times as much relative. Food is LESS expensive relative to those wages. I looked up the cost of a loaf of bread compared to today: 7 cents vs $3.49 in San Fran. (100 versus 71 loaves/hr) Medical care now uses 3 times as much GDP as then but is also of higher quality. I don't envy the folks who have to calculate price levels. Inflation occurs incredibly unevenly over different products and the types and volumes and relative importance of products to consumers over time. Not an easy task. I just don't see how you can raise a family on 350/day now. But I don't really see how they made ends meet on $5/day then either.