CAPITALISM: A LOVE HATE RELATIONSHIP
In the beginning God created America, but did not proclaim the gospel of Capitalism. Historians have discovered that though the Puritans were not averse to making a buck, the Capitalist mentality took time to take root within the thirteen colonies. After the Revolution, however, the pursuit of business and profits accelerated. But it hit a snag, or at least considerable resistance from the southerners in the decades before the Civil War. Apologists there argued that capitalist development in the North and West was creating a dismal society characterized by insecurity, fragmentation and sordid materialism. The southern system of slavery, on the other hand, they claimed, brought about a much more livable, more stable and compassionate society.
This was the first time in the United States that Capitalism had been seriously questioned. It would not be the last. Challenges came again in the late 19th and early 20th centuries by Populists, Labor Unions and Socialists. Later on in the 1930s, when the system seemed to have broken down, certain New Dealers decided it could not heal itself, that it required major overhaul. Later, communists insisted they had no use for it; neither did the 60s radicals. But, in truth, none of these assaults sent capitalism to the canvas. Some changes resulted. Still, it forged ahead confident, albeit a bit complacent.
But look what’s going on now! Capitalism is being challenged, asked to defend itself as never before. Why it’s become vulnerable is no mystery. There was Enron, Bernie Madoff, Lehman Bros., bank bailouts, a bloated financial sector, a nationwide housing collapse, accelerating inequality, all contributing to the coming of the Great Recession. And there was “Occupy Wall Street” raising questions as to why this had all come to pass and why extreme income disparities, hunger, homelessness and poverty had become all too common. The system’s Achilles Heel had been exposed.
But there was more. It had become too much a “winner-take-all” system. Strikingly outsized CEO rewards confirmed that point, as did a tax code that allowed them to keep the lion’s share of their gains. People saw the free market had no remedy for the emergence of giant corporate entities whose size dwarfed whatever competitors remained. Witness the emergence of banks “too big to fail”, and multi-national companies that spanned the globe. There was no controlling these mammoth entities. If pressured they were likely to shift operations abroad; if taxed they chose to leave profits overseas, and if threatened with regulation they dispatched legions of lobbyists to dissuade legislators or direct campaign payments toward representatives more compliant.
Capitalism had never shown much sympathy toward labor. It employed workers, but the pursuit of profits always took precedence over returns to labor. Labor’s efforts to organize met with fierce and often violent resistance from business. Today, labor is again on the defensive as wages lag behind inflation, benefits are being stripped away, firings are frequent and insecurity widespread. The pressure against government workers in particular has of late become especially intense. But, as services are reduced or disappear, public anger is likely to build.
Above all, Capitalism allocates power and places it squarely in the private sector. The public has learned how that power is exercised. It has automated the workplace and eliminated or outsourced jobs. It has used its authority to fire people, placed them on reduced work schedules, forced down the wages of new hires and insisted that large numbers become private contractors (not entitled to benefits). It has reduced benefits of long standing and insisted that workers themselves bear more of the costs. It has chosen to retain billions of dollars in reserve (or to use to increase stockholder dividends or for stock purchases) instead of investing in R&D or in new facilities. Capitalism celebrated for its dynamism and creativity has in recent years failed to deliver.
The longer this continues, the larger the number of critics emboldened to question and challenge the system as never before. A majority of Americans now believe that high earners (heavily represented in the corporate sector) should be required to pay more in taxes and that companies must stop exporting jobs. More and more college grads are heading for the non-profit sectors of our economy. The rising tide of Capitalism once expected to lift all boats is instead scuttling them, witness the sizable contraction of the middle class. The “free market” has become too much of a free-for-all with inadequate safeguards or oversight. People have started referring to Europe, whatever economic system it has (actually it is a mixed economy), and noticed that in many of those countries, despite the current problems, citizens there ejoy greater security and a higher quality of life. Capitalism, therefore, may no longer be the sacred cow it has long been here. Some recent polls even indicate that Americans currently view Socialism more favorably than Capitalism? Imagine that!
Capitalism will not in the short term disappear, but it will have to defend itself, address its shortcomings and provide answers to the problems now laid at its doorstep. Will it be up to the task?