Why has no country or culture practiced Capitalism? What then IS the system of economic practices that you always thought was Capitalism? What can an Individual do to promote Capitalist economics?
My Webster's defines Capitalism as: "a system under which the production and distribution of goods are privately managed" and also as "free enterprise". The latter is defined as "a doctrine or type of economy under which private business is allowed to operate with minimal government control."
Still think the U.S.A. is a Capitalist free enterprise?
Yeah, right!: No FCC or SEC or FDA or EPA or IRS or DEA. No Department of Labor, no Workers Comp, no 401K or ESOP regulations. And more recently we have the NAFTA tariffs and the EEU and don't forget the WMF and the New World Order (whoever they are). And very importantly, the threats to Individual Liberty written into the Patriot Acts, both I
"Free enterprise"? Hah!
Capitalism is incompatible with greed. Capitalism is incompatible with economic slavery. Capitalism is incompatible with massively lowered Quality of Life.
I re-read "Capitalism: The Unknown Ideal" for this essay, and the odd thing about that book is that Ayn Rand never defines Capitalism per se. Mostly the collection of essays by her and a few others are about the bad, bad things done in the name of Capitalism to the American businessman under the then-as-now extant "mixed economy" (with some reference to economies elsewhere).
This omission provides an opening for me to write down what I see Capitalism is by definition and design, and also to spell out the Working Minds viewpoint. [Readers who have the Objectivism CD or other searchable Rand files are invited to locate & report any such definition to me by email.]
In Ayn Rand's Objectivist philosophy, she repeatedly states that Reason gives man the right to exist, and that the pursuit of one's own survival and happiness as an Individual is a corollary right. Without the existence and practice of that right, we are simply slaves.
That then gives every Individual the right for free [uncoerced] trade for his/her labors whether physical labor or service work or office work, or management of employees, or the creation of intellectual property (art, literature, gadgets, entertainment). In a Capitalist economy, market controls by government are reduced to the barest minimum, and the open and unregulated marketplace determines the dollar value of each career field or product or idea.
In a free marketplace, efficient producers and workers will see increased value and demand, while inefficient or shoddy producers and workers will find less and less demand.
THE LIVING WAGE
Capitalism operates quite differently for workers and for management and for entrepreneurs.
In Objectivism (philosophy) and in Capitalism (economics), the worker has the natural right to his/her Life (survival); he/she has a right to free trade for his/her labor (the means to survival); and those two rights lead to a third right: a right to a Living Wage. For how can a worker have the Objectivist right to a Life UNLESS he/she can work the legislated 40-hour work week and actually make a living, with the hope of making a better living thru hard work, training, thrift, and persistance.
(This is absolutely NOT the Collectivist's anti-Reason false right to a living, which concept transfers wealth generated by the workers to non-producing looters.)
The right to a Living Wage does not exist in America today, and is not likely to be instituted short of revolution. Almost 30% of households in America today struggle along on two jobs to make ends (barely) meet, which is very Dickensian. Either both parents work or one parent works multiple full or part-time jobs, or a single parent works multiple jobs, and all have next to no benefits. In all such cases, the children are without supervision, except by the deluge of mind-numbing input that they get from the Oligarchy-owned media.
What happened to the free-time evenings and weekends of the past? The Oligarchy took it away by force.
As an arbitrary interim figure, I say that any job paying less than $10 per hour is not a Living Wage. In fact, such payment is indentured servitude, economic slavery, the only escape from which is death or madness or political upheaval the 'R' word, revolution.
I likewise previously defined the arbitrary interim Benchmark figure for executives if the U.S. President, the 'Leader of the Free World', is paid only half a million dollars (including estimated perks) per year, then how can any executive, any other person on the planet claim to be worth hundreds, even thousands of times the present 'worth' of their able and hard-working employees?
These executives' only justification is greed.
The entrepreneur [Webster: one who undertakes to organize and manage a business or enterprise] is one who sets up a one-person shop or organizes a company to deliver a product or service, especially something of his/her own invention. Within limits (see below), the entrepreneur is entitled to the wealth produced by his/her efforts as entrepreneur. But the executives in any such company deserve no more than the Benchmark figure. Same for artists and entertainers as for entrepreneurs let the marketplace prevail.
The implementation of reasoned limits on greed are long overdue, but unless the Oligarchy is deposed, we can expect another Great Depression or even a return to the anarchic Dark Ages. Indeed, George Dubya has already screwed up seriously (perhaps intentionally) in that he is now the first U.S. President since Herbert Hoover who will leave office having created a JOB DEFICIT. Irreparable damage has been done to the economy, and it is so enormous that only extreme progressive economic programs which Dubya will prevent can reverse the economic statistics, and thus Dubya cannot produce an effected solution any time before the November election.
"It's the job deficit, stupid!"
The only reason that George W. Bush may not be replaced for his misfeasance in office is that the U.S. public is at best ill-informed and ignorant, and the bulk of them are suckers for the lies and manipulation beamed 24/7 at their unfocused eyeballs by the Culture-Structure.
(George Dubya took your job away, do not trade that insult for your vote!)
The key problem in any realignment of the economic system is that the extant economy is based on the False (dis-empowering) Values of the Oligarchy. The entire present economy is based on Profit At All Cost the Holy Bottom Line. (Any economic Value other than Profit or Greed is automatically revolutionary it violates the status quo.)
Jobs are moved to Asia not because the workers are more efficient or better trained but because the economic slavery in those countries allocates only pennies per day per worker.
Executives here and overseas earn unconscionable multiples of what their non-salaried employees receive, merely so the execs can brag about their abuse of power and strut around showing off their skills at conspicuous consumption. The Oligarchy operates no differently than any medieval fiefdom, using force of ownership of the serfs, of the factories and farms and the force of their wealth the Oligarchy controls the media, which deliver disinformation sprinkled with Pavlovian admonitions to buy! buy! buy! and the Oligarchy controls the government in every jurisdiction from the lowly bureaucrat to George Dubya and Congress and the Supremes.
True Capitalism is based on ownership of the Self, and the trade of one's labor for wealth money, services, goods and on entrepreneurship, the non-salaried world of the marketplace.
I searched the internet for a useful name to encompass the 'real' practice of Capitalism, and one of the terms that showed up was 'neo-capitalism', but those results included some quite-loony websites that have co-opted the term (i.e. advocating the elimination of money, f'godsakes!). So that term is useless.
I suggest that the term 'Paleo-Capitalism' will work for the present. [Paleo is Greek for 'ancient, early, primitive, archaic', used here to denote 'old', in the sense of original, as in Capitalism as originally intended.]
Before the Industrial Revolution, virtually everyone was an entrepreneur. The farmer grew his crops, the freighter hauled them to market, the wholesaler sold to the retailer, who in turn sold to the end consumer, the innkeeper or housewife. The herdsman raised his sheep or cattle or poultry, sold the meat and hides to the wholesalers, who sold them to tradesmen, who transformed the raw materials into finished product cuts of meat or shoes or harness who again sold to the end consumer. The woodcutter, the weaver, the tailor, the horse trader, the lumberman, the cabinetmaker each took raw materials and plied their trade and produced saleable goods.
Society also maintained a government, the church provided for its clergy, and colleges taught academics to teach others. Bankers, soldiers, artists, entertainers, and thieves all worked their chosen trade directly.
The development of factories, however, required only unskilled, brute labor to run the machines built to produce goods on a massive scale, at great efficiency, and thus at reduced cost. The result was very soon exploitation: as machines replaced tradesmen, the displaced masses had to compete for jobs in the factories.
Greed took hold of the factory owners, and Charles Dickens and others documented the terrible conditions of the powerless working classes: child labor, dangerous and unhealthy working environments total disregard for the humanity of the actual producers of wealth, the workers.
The original intention and design of Capitalism (aside from labor), however, is that when an entrepreneur (inventor, artist, manufacturer) gets an idea for a new product or service, he sets up a business plan for others to invest in. Venture capitalists and I.P.O.s [initial public offerings] and basic bank loans amount to the same thing: investment of capital in an enterprise.
The new business is built up, markets developed, and products or services enter the marketplace.
If the new company fails, the investors lose capital and the entrepreneur suffers loss of his capital (if any) plus the loss of his/her reputation. Risk is always an option in a free economy.
But if the new company makes a profit, then the profits are used to repay the investors NOT to extract dividends in perpetuity to the investor class, the Oligarchy. The profitable company in Paleo-Capitalism buys treasury shares from the investors, with further profits directed to the original owners/entrepreneurs, and preferably to employees as both wage increases and participation in an ESOP [employee stock ownership program] as an incentive beneficial to both employees and management.
All the while, profits up to 15% of net revenue are not taxed thru the corporation, period. But any excess profits are supposed to be used (at first) to purchase treasury shares. Once the company is a stand-alone corporate entity, profits are kept below the 15% limit either by reducing wholesale/retail prices or by investment in expansion or new products even investment in other new ventures.
The original investors and the privately-held company now each have funds available for investing in further new business ventures.
The other element of Paleo-Capitalism is that of the free market for labor. Employees, whether unionized or not, are able to earn a Living Wage, are encouraged to be efficient (increase profits), and their payoff for a good or excellent job is not cash stripped from the economy (as is currently handed to the Oligarchy), but by an increase in equity thru the ESOP and-or retirement funds and-or participation in a solid (non-Casino) stock market.
Management salary compensation is addressed from two different directions in Paleo-Capitalism. The Working Minds Benchmark figure of $500,000 per year is plenty for any family. And the reduction in pressure from elimination of daily worship of the Holy Bottom Line lets the executives' families participate together as family. During the economic adjustment period (implementation of Paleo-Capitalism), all income above the Benchmark figure will be taxed big-time, with NO loopholes. The middle and lower classes all citizens below $100,000 per year income will pay much lower tax rates than the 20% of the population who now own 83% of everything in America. Consumer debt and indentured servitude will thus disappear.
The new design of the economic and tax systems will be such that the upper tiers will pay a 'fair share' of the operating expenses of government equal to their ownership of property [see WMail ezine April 2001 Issue #9]. The Oligarchy in the U.S. of A. who own 50% or more of everything will pay a minimum of 50% of the Federal budget; they will not like it, but too damn bad. The upper class who own 83% of everything will be charged for 83% of the Federal budget.
The taxation on excess net profits (above 15%) and on excess management compensation (exceeding the Benchmark) will be used to pay off the staggering National Debt [see News Section below].
The incentive of Paleo-Capitalism will be to reduce extraction of unearned wealth and to reduce management compensation, to build an economy based on efficient production and equitable reward to participants. Such a redefinition of the economic system as Paleo-Capitalism eventually will calm down the overheated stock market, thus stabilizing day-to-day economics and eliminating inflation, by converting the stock market from a casino-style greed-based design to the original purpose of Capitalism, which is the rotation of capital from one profitable investment to new investment ventures.
The Oligarchy will be unhappy at having their rule by divine right challenged. Cutting off their extortion money means that they will have to give up their yachts and their 100-acre residences in multiple states and their vain adornments that each cost the equivalent of many city or county budgets.
We do not need the approval of the Oligarchy or the aristocratic upper classes, nor was any such permission sought by the Forefathers who took on the might of the British Empire, at great personal and public risk. A new revolution might perhaps result in armed conflict, even civil war in the U.S., but the First U.S. Revolution occurred before Gandhi and others proved the effectiveness of passive resistance and civil disobedience. Revolution is inevitable, the only other option is our present economic slavery.
The people of the U.S.A. have the unalienable right to take back responsibility for control and management of the American economic system.
The start is to regain control of your own economic system: Sell your stocks and pay off all your debts. Make double payments on your mortgage and automobile. Purchase toys only if you have cash in hand. If you are struggling to make the rent with very little expenditure, then you are underpaid (below a Living Wage) and should connect with a labor union or start one. Get a degree and change careers. Demand a raise or promotion, and if your employer does not reward your efficiency and productivity, find a job somewhere else.
As long as the Oligarchy controls the economy and the government, and you and others blindly obey the injunction to buy! buy! buy! to keep the economy going thru increase of your personal and public debt well, that makes you an indentured servant.
The only thing, I say, that Marx and Engels got right is that "You have nothing to lose but your chains".
See Issue #9: "Reason-Based Taxation"
See Issue #14: "The Best Investment - Labor"
See Issue #18: "The Stock Market Casino"
See Issue #42: "The Oligarchy"
See Issue #46: "A Living Wage"
Capitalism & Wall Street Page at Maison d'Κtre Philosophy Bookstore
For the full contents of this issue of the free 'WMail' exine, click here.
NOTE: This essay garnered an invitation to speak on the subject
at U.C.L.A. Anderson School of Management in October 2004.