August 30, 2011

Any attempt to impose a dogmatic set of ideas on how to run an economy and a government is going to fail, and capitalism is no exception. We need a variety of practical approaches, and to stop arguing about labels.

When you begin to see discussions about what is or isn't true capitalism, you know what is at issue is capitalism the ideology. The same is true of socialism, or any theory that one tries to impose in pure form on the very messy combination of people and money that we call an economic system. Arguing about ideology almost always gets in the way of making the system work. The system does not exist as an experiment for theories, nor does it exist for those who strive to profit by it. It is there to serve the entire population it affects in the fairest and most beneficial way possible.

True, there is nothing inherently wrong with labeling and defining things or ideas. The problem arises when the labels are approached with an emotional bias due to a dogmatic ideology, which gets in the way of rational problem-solving.

I see running an economy much like designing an engine. To begin with you have a machine that puts out raw power, but if you let it run wide open, it will soon fly apart and destroy itself, so you add a throttle control, and then devices to make it quieter, more dependable, less polluting, and safer. This may slow it down a little, but make it usable, longer-lasting, and more pleasant to be around. And a good engineer doesn't have preconceived prejudices- they try new ideas, use them if they work, and not if they don't. It's an analogy, but a useful one, I think.

Certainly an economy will regulate itself. But no one should be anywhere near it when it does.

I'm familiar with conservative economic theories, just as I am with the intelligent ones. The reason self-regulating theories don't work, no matter how many times they are tried, is because they are based on an ideal capitalism that has never existed and never will, not on the way it works in the real world with real people. True capitalism may be organic, but it is not to the benefit of the consumer. It uses the consumers, and needs the consumers (although it will irrationally destroy its own consumer base for short-term gain), but its purpose, motivation, is to benefit the capitalist. And remember that the capitalists are not content to be sitting on growing piles of wealth. They invest it in politicians to corrupt democracy, so that they can count on keeping more wealth, and the government will protect their interests in far-away places, going to war for them if necessary.

Capitalists will try to maximize profits by minimizing wages. Without strong unions, workers, who are also consumers, make less and less. Add offshore outsourcing, and there are fewer employed workers and even less money to spend. That's what has been happening since the 1980's, gradually weakening the economy even before recession. Free is a word that always sounds good. but when applied to markets just means uncontrolled, not necessarily a good thing. True capitalism is whatever capitalism actually does, not the theory of ideal capitalism on paper.

Acquiring large amounts of wealth, then using it to influence others, especially officials of government, is the usual path to excessive power. How to limit that?
(1) Limit the wealth. The proposal to place an upper limit of a $ billion would be reasonable.
(2) Devise a system in which large amounts of money are not needed for political campaigns.
Neither of those will be easy, especially since the creation of Corporate Personhood by the Supreme Court.

Land ownership is a philosophically dubious concept; the first owner paid nothing, so why should the next have to buy it? Still, it's probably too late to change the system now.

Henry George had one good idea, no ownership of land. His belief was that people should own what they create, but land belongs to everyone in common. He saw private land ownership as the reason for poverty even when there was general prosperity. That one idea gained him a lot of popularity, and it would have been beneficial if implemented.

He realized that making such a radical change was probably impossible; his approach was to tax land value and nothing else. How that was supposed to solve the problem is a mystery. It would seem that taxing land would increase the cost to anyone using it. He favored free trade, as many others have; it is perhaps only recently that we have realized how bad an idea that was, and is. Many people have thought free trade was a good idea, not realizing the damage it can do between unequal economies in the hands of multinational corporations, of which we are now feeling the full effects.

I don't think land, by itself, is a form of wealth. At one time it was the main SOURCE of wealth, and ownership of it provided a potential to become wealthy. That is true today, but it is no longer the main one. I think this definition of wealth says it well:
Wealth is ownership of labor, and of anything upon which labor has been expended, whether material or immaterial, which can directly satisfy human wants, needs or tastes. Wealth is goods and services (property) owned.
Realizing that labor is the crucial element gives a slightly different perspective.

It is true that land must always be a factor in that everything that is done must be done somewhere. Nothing happens nowhere. So, the location where labor is expended can be defined as land, even if it is on a moving vehicle or a space station.

For those who believe the concept intellectual property has validity, the land would be the human brain. However, this may be one of the worst constructs of capitalism, which tries to put a monetary price on everything. Ideas, even more than land, should belong to humankind as a whole, and all knowledge should be shared as widely as possible.

It seems to me that the more importance one places on land as a source of wealth, the less justifiable it is to allow private ownership of land. Of course it is much too late to change that. Land ownership evolved out of European feudalism. A feudal domain was more like a local government than a modern landowner, with serfs laboring on land they didn't own for a share of the profits, and for protection by the nobility. As kingdoms as an alliance of feudal lords became nations, and industrialism became more important, serfs evolved into small landowners.

It's important to note that the industrial age began long before petroleum was used. Technology was already advancing, and economies becoming more complex even before petroleum accelerated the process.

Libertarianism appears to be an attempt to superimpose the simpler eat-or-be-eaten logic of earlier times on the much more complex systems we have since developed out of necessity and/or a desire for social progress. And, while the law of the jungle is valid in inter-species competition, it has never been the driving force of human society. Mankind suceeded because we cooperated, not because we compete.

I have noticed a tendency to confuse the terms free market and freedom in the sense of human liberty. They are 2 different things entirely, sometimes able to co-exist, and sometimes conflicting. They both contain the word free, so the confusion is understandable, but misleading. Those involved in commerce have always pursued their interests, by any means necessary, whether their particular market was unregulated (free) or not. When they require government help, such as a war or military threat, they have always found a way to get it. They are only interested in a free market if their competitor, or, even worse, the consumer/worker, has an advantage. Before the advent of democracy, this was business as usual, and few paid attention to the exchange of favors among the holders of power. However, if we, the people are to be the basis of democratic government, our relations with the commercial interests must be transparent and subject to the will of the majority. Business interests, conflicting with the people's interests, are motivated to corrupt democracy in order to win against greater numbers. If we fail to regulate this adequately, we will continue to have corruption.

The constant battle of ideologies gets us nowhere. Most progressives, myself included, long ago abandoned the goal of pure utopian socialism. It isn't practical to ban all free enterprise. But the biggest task of government on behalf of the people is the protection from the effects of the practice of capitalism, which will always corrupt democracy and attempt to take economic advantage of workers and consumers if not prevented from doing so.

--cosmic rat September 4, 2011