Gene Bales
Capitalism is not one thing; it has been taken many different forms over time. I do not like talking about “capitalism” as though what Adam Smith talked about in the 18th century (England as the nation of shopkeepers) is the same thing we have today. There are historical connections and continuities, but not identity.
Capitalism has produced much good, both in mass consumer products, technology, and the rising standard of labor. None of that I would deny.
But it has also simultaneously increased inequality and that in the following respects:
1. First and most fundamentally the sheer growth of capital beyond labor income has been astronomical in recent decades. The distance between the 1% who live off the income derived from capital and the rest of humanity has grown to be very great, and has shown no sign of decline. Piketty’s statistical studies lend strong support to this.
2. Secondly, capitalism in its current international structure utilizes tax avoidance processes which robs nations of needed tax revenue and thus thrusts needs further on those less well-off to pay for them.
3. Third, capitalism demands that production aim at the lowest cost per item. This implies lowest quality of production, and it also implies the lowest possible wage. This has meant increasingly shipping jobs out of first world countries to countries where wages are lower and labor can be better exploited because of weaker government regulations. Those who make Nike tennis shoes in Asia are not just paid abominable wages; they also work under conditions that are often a threat to health.
4. Fourth, capitalism has no inner motive to limit the drive to profit so as to realize other ethical demands. It resists government intervention for this very reason, and it resists improving anything unless workers get fed up and either strike or quit. As long as labor is plentiful this is not too problematic. Capitalism has always sought to eliminate unions and the power of laborers because of the threat to profit. Thanks to labor, and not capitalism, we have a 40-hour work week and various other improvements.
5. Capitalism has intensively increased the inequality between poorer countries and wealthier ones by refusing to internalize the cost of pollution and degradation of water and natural resources. The lowest possible price leads inevitably to environmental disasters which disproportionately affect the poorer citizens of countries in South America, Africa, and Asia, among other continents. And in the U.S. as well: think Exxon-Valdez, and the BP disaster in the Gulf.
6. Capitalism today is largely a non-competitive environment, in which no one can enter the market place to compete and consumers have no serious choice in buying many products. Early capitalism was all about competition, but the entities competing were relatively small. As corporations and businesses grew exponentially in the 19thh and 20th century, anti-trust laws were instituted, but capitalists have been good at avoiding the consequences. Today, a given corporation may own sub-units manufacturing everything from plant food to autos to computers. This is far beyond traditional capitalism and its limits of size and scope. And all this means that the consumer and the laborer is at the worst possible disadvantage both in terms of working conditions, wages, benefits and the like.
7. Capitalism in the US. today has large eliminated the middle class. As more and more jobs are eliminated, the world economy may be getting better, but the gap between the rich and the poor in this country and in other developed countries is getting worse.
8. In short, capitalism has no moral conscience. Making the highest possible profits is what it’s all about. Some inequality is both inevitable and good in societies. But the kind of gargantuan inequality in wealth that capitalism has created today blocks serious environmental improvements, labor improvements around the world, and new products or services that might otherwise compete in a better market place.
9. One final issue has emerged: the need for some capitalists to begin to actively address attempts by government to regulate them. Thus some capitalists are now in the political business full-time, writing “ideal” laws for legislators—thereby eliminating the need to listen to ordinary citizens–, funneling money to candidates who espouse their concerns, and attempting to stop drives to increase voting in the U.S., since marginal voters are often more likely to be liberal than conservative. Modern capitalism is a thoroughly political phenomenon. It champions quiet government intervention—i.e., intervention to weaken government.
10. One consequence of modern capitalism in the U.S. is the redefinition of conservatism from moderate pragmatism to something close to libertarian anti-government philosophy. This is true across the political spectrum. Along with this has come a desire to abolish as many taxes as possible (this never reaches the point of disbanding the military, of course), and to insist that taxation is the greatest evil of all. But the abandonment of progressive taxation either increases the powerlessness of ordinary citizens, or it is compensated for other kind of regressive taxes that especially impact those at the bottom of the social class hierarchy. Those at the top ceased paying taxes a long time ago. Getting rid of capital gains tax is high on their list of noble imperatives.
Reflections 