Capitalism is a Dirty Word
Capitalism
cap·i·tal·ism /ˈkæpɪtlˌɪzəm/ [kap-i-tl-iz-uhm]
–noun
An economic system based on a free market, open competition, profit motive and private ownership of the means of production. Capitalism encourages private investment and business, compared to a government-controlled economy. Investors in these private companies (i.e. shareholders) also own the firms and are known as capitalists.
Investopedia Commentary
In such a system, individuals and firms have the right to own and use wealth to earn income and to sell and purchase labor for wages with little or no government control. The function of regulating the economy is then achieved mainly through the operation of market forces where prices and profit dictate where and how resources are used and allocated. The U.S. is a capitalistic system.
Socialism
so·cial·ism /ˈsoʊʃəˌlɪzəm/ [soh-shuh-liz-uhm]
–noun
A theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.
Cultural Dictionary
An economic system in which the production and distribution of goods are controlled substantially by the government rather than by private enterprise, and in which cooperation rather than competition guides economic activity. There are many varieties of socialism. Some socialists tolerate capitalism, as long as the government maintains the dominant influence over the economy; others insist on an abolition of private enterprise. All communists are socialists, but not all socialists are communists.
—From Dictionary.com—
Bob and Bill were brothers. They lived in a quaint village in a mountain valley bisected by a small river amongst 50 other families. It was a beautiful place; the fields were the most brilliant shade of green, the river was abundant with fish, and the air smelled of honeysuckle. Bob and Bill, both being handsome young men, were happily married to two of the prettiest women in the village, and they each had two healthy children. Although they lived on opposite sides of the river, Bob and Bill were close, as brothers tend to be. Their wives helped each other with chores and gossiped, while the four children frolicked in the golden sunshine. Life was good.
Bob and Bill were the sons of the local baker. Originally, there was only one bakery—on the west side of the river. Everyone in town needed bread, of course, but the trek across the river was a long way for the people on the east side to travel, so they often went without. Bob’s and Bill’s father did not like that some of the townsfolk, his friends, had to go without his delicious bread, not to mention the fact that he was missing out on revenue, so when he had the means, he built another bakery on the east side of the river for the people over there. After a long, fulfilling life, Bob’s and Bill’s father passed away from a severe yeast infection, leaving the bakeries to his sons. Bill took over the bakery on the west side, Bob on the east. The boys were taught well by their father; they worked hard, rising early every morning to bake delicious bread for the townsfolk. And whatever bread was left over at the end of each day was given to the less fortunate townsfolk who couldn’t afford delicious bread every day. Business thrived, everyone had enough, and all were happy.
This is socialism.
* * * * *
One day, Bob had an idea, so he crossed the river to the Westside to visit his brother at his bakery.
“How’s business, Bill?” Bob inquired.
“Thriving, “ Bill answered, “How’s business on the Eastside, Brother?”
“Excellent, thank you for asking.”
“Can I offer you a complementary slice of my delicious bread, Bob, seeing as you’ve come all this way to see me?”
“I appreciate the offer, Bill, but I must decline your slice of delicious bread. Between you and me, Brother, as delicious as our bread is, I can only eat so much of the stuff!”
Bill, knowing exactly how his brother felt, had a hearty laugh at that one, “Ha! I know exactly how you feel, Brother.”
“No, I’m not here for your delicious bread, Bill,” Bob said, “I’m here for a favor.”
“But of course, Bob, anything, you are my brother. Ask me the favor, and I will do it.”
“Bill,” Bob said, “I have come to ask you for a loan.”
“A loan?” Bill said, “But of course, my brother, name the amount and I will retrieve it from beneath my mattress.”
Bob paused for a long second, and when he worked up the courage, he said, “Bill, I would like to borrow one hundred dollars from you.”
“Jesus Christ, Bob! What the fuck do you need a hundred bucks for?! You startin’ a whorehouse on the Eastside??”
“No, no, Bill, nothing like that. It is a very special project, and I promise I will pay you back soon.”
“But Bob, one hundred dollars is all the money I have in this world. It is my life’s savings. If I give you the money and I do not get it back, I will not be able to run my business or support my wife and children.”
“Listen, dude, if you’re gonna be an asshole about it and put me on a guilt trip, then forget it. Thanks a lot, Brother.”
“You are right, Bob, I am being an asshole, and I apologize. You are my brother and you have promised to pay me back. I love you, and I trust you, and I would do anything for you. Please enjoy a complimentary slice of my delicious bread while I retrieve the money from beneath my mattress.”
“I told you already I don’t want the goddamn bread, Bill. I’ve got the exact same shit across the river, and I stuff it into my fat face day and night. I’ve had it up to my nipples with bread. Just give me the money so I can get the hell out of here and go nail the wife.”
Bob walked out of his brother’s shop with a crisp, new one hundred dollar bill in his hip pocket, but instead of returning home to nail the wife, he went directly to the flour maker.
“Yo, Flour Maker, you home, dude?”
“I’m in the back, Baker Bob, I’ll be right out.”
The flour maker emerged from the back, and Bob told him he was willing to purchase one hundred dollars worth of flour, but that he wanted a steep discount due to the fact that he was buying in bulk. The flour maker, licking his chops at the one hundred dollars, quickly agreed to Baker Bob’s terms, and the transaction was completed.
What Bob was then able to do, since he got so much flour at such a steep discount, was offer his bread at a much lower price than brother Bill could match. It was so cheap, in fact, that the townsfolk on the Westside of the river could justify the trek to the Eastside to buy their bread from Bob. Bill hung in there for a while, selling his bread at a loss in a desperate attempt to earn back his customers, but since he had leant his life’s savings to his brother, within a few short months he was out of business. And since he had no income and couldn’t pay his mortgage, Bill and his wife and two small children were evicted from their cottage. Bob did eventually pay his brother back, without interest, but with no job or roof over their heads, the money didn’t go far. All Bill had left was the original bakery his father built, but it wasn’t worth much, since no one had any interest in buying a failed bakery. So Bob bought the Westside bakery from his brother for pennies on the dollar, reopened it as the Eastside-Westside Bakery, and paid his brother a paltry sum to run it for him. And since he was now the only game in town, Bob raised the price of bread to twice what it was before he borrowed the money from his brother. The townsfolk complained at first, but what could they do? Everyone needed bread. And soon they forgot about it, as life was busy, and they had other things to worry about.
“Bob, you’re a dick,” Bill one day said.
“Don’t be mad at me, Bill. I saw an opportunity and I took it. It’s business, nothing personal.”
“You’re wrong, Bob, when you succeed at someone else’s expense, it’s very personal.”
“Hey man, life’s a bitch.”
And that, my friends, is capitalism.
Granted, my account of socialism is simplified to the extreme, and I left out the whole government entity, which plays a bit of a role in any socialistic society. And it is also true that my example of capitalism is capitalism at its worst. But my loose definitions will serve our purposes here. I believe my depiction of capitalism, in many cases, to be a fairly accurate reflection of what’s going on in our country right now. Socialism is not a dirty word, and capitalism has become a dirty word. Socialism is not communism, and capitalism is not democracy. There is nothing evil about distributing the excess to the state, and there is nothing democratic about stealing from your fellow man. The “state” is not the government. It does not mean that Congress lines their pockets with our money—in case you haven’t noticed, that’s capitalism—the STATE is you and I, the state is the people.
“No man ought to own more property than needed for his livelihood; the rest, by right belonged to the state.”
—Benjamin Franklin
In other words, once you’ve earned enough to be comfortable, you contribute to the pot. It doesn’t mean that the government steals your hard-earned money and leaves you with nothing, it means that instead of living in a 5,000 sq. ft. house, you live in a 2,500 sq. ft. house. It means that instead of driving a $50,000 car, you drive a $25,000 car. And you get something for your money. In fact, you get a lot for your money. On January 11, 1944 during his State of the Union Address, President Franklin Delano Roosevelt proposed a Second Bill of Rights suggesting every American has:
1. The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;
2. The right to earn enough to provide adequate food and clothing and recreation;
3. The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
4. The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
5. The right of every family to a decent home;
6. The right to adequate medical care and the opportunity to achieve and enjoy good health;
7. The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
8. The right to a good education.
A job; an adequate wage and decent living; a decent home; medical care; economic protection during sickness, accident, old age, or unemployment; a good education. Security. And the knowledge that your neighbor has the same. Not a bad investment. Perhaps it would allow us to be more human? Maybe, instead of stepping on the throats of our friends to get ahead, instead of fighting for every last scrap for fear that we will be the one dying alone in a state-run hospice where the nurse cares more about Dancing with the Stars than comforting a terminal patient, we’d be able to take a step back and not only enjoy life more, but treat our fellow human with dignity, and respect, and affection.
Fear does nasty things to people. We shouldn’t have to live our lives in fear of losing everything if we get sick; by doing so we give the power to the insurance companies. Or in fear of losing our jobs for no good reason; by doing so we give the power to the corporations. We treat each other horribly because we are afraid someone is going to get a leg up on us. But the fear itself is the reason we don’t get our piece of the pie. If we weren’t afraid that we would lose everything if we got sick or lost our job—food on the table, our home, our children’s future, the things we all should have as a citizen of the United States—we wouldn’t be afraid to push back. The banks and the corporations instigate that fear, and then they prey on the fear. They lie and manipulate and steal. They tell us everything is fine when it isn’t. They use intentionally confusing language, deceptive advertising, and contracts that you need a law degree to decipher. They take no interest government loans of taxpayer money and give themselves million dollar bonuses. And then, like a dog begging at a table, they feed us just enough scraps so that we allow them to continue this charade. We get that taste, and we wag our tails and lick our master’s hand. They rob us dry, give us pennies, and we say, “Thank you very much,” and are grateful for the insult.
Our current capitalist system enriches the few at the sacrifice of the many. They squeeze us for every dime they can in order to increase their income from millions to tens of millions, and from tens of millions to hundreds of millions. It’s a game to them; it’s life and death to us. How much excess does one person need? It is greed. It is gluttony. It is literally like sitting down with a fresh baked peach pie between you and “Baker Bob” or “Banker Bob,” and him cutting you the smallest of slivers and taking the rest for himself, and then you respond with, “Thank you very much.” Why does “Bob” get so much and the rest of us so little? Is he better than we are? Is he more deserving than us? Is he more human than we? “Bob” was born in this country just like you and I. He does not work harder that we do. He is no more human than we are. And we are supposed to have the exact same rights that he does. Think about the word “rights” for a second. What does it mean, exactly? Like FDR proposed: The RIGHT to a job. The RIGHT to an adequate wage, and a decent home, and medical care. The RIGHT to an education. It is a right, because it is the right thing to do, it is the correct and proper way to treat a person. It is what every human being living in the richest country in the world deserves. There is no reason we shouldn’t all have these things. We have the means. But corporate greed prevents it.
Workers used to have value, they used to be respected and appreciated. They were the life’s blood of the corporation. Without them, the assembly lines wouldn’t run. Without them, the companies couldn’t function. Now they’ve got us killing each other for table scraps. We fight each other for lower and lower wages. All we are now is slabs of meat. We are so desperate for a job—any job—that we will shit on our neighbor to get it. They’ve destroyed the middle class. They’ve got us right where they want us, and we just take it. But we have the power. One man, one vote. The banks and the corporations make the laws. They pay off the politicians, and because there are no repercussions from us, the politicians do what the corporations demand. Why wouldn’t they? Politicians want their piece of the pie, too. They’re being manipulated by the corporations just like we are. They’re playing the game. That’s how the system works. But the system is broken. Isn’t government supposed to represent the people? It’s OUR government, after all. All of ours. There is the law, and there is what is right. There is what is legal, and there is what is moral.
I would like to know that I am secure. I would like to know that my loved ones will be taken care of in an emergency. I would like the middle class to be reestablished. I would like to know that every citizen of this country has the same rights as every other citizen. And if I have to give up any chance of ever being “rich” for that security, that’s okay with me. This article is not promoting socialism over capitalism. Both systems are inherently flawed because people are inherently flawed. This article is about doing the right thing. It’s about acting morally when it is not necessarily in our own best interest. We need to get the corporations out of the pockets of our political leaders. We need to pass fair business practice laws that do not favor the corporation. We need to prosecute the CEOs who have committed morally reprehensible atrocities. We need to establish a health care system that will actually help the sick, where doctors determine what their patients need, not the insurance companies. We need to love thy neighbor and do what is right, instead of making money off people’s misery. We need the government to work for the people again. How do we make these changes? Beats the hell outta me. But I imagine a good place to start is to vote, and to make your voice heard by writing your Congressman.
If you haven’t seen Michael Moore’s Capitalism: A Love Story, then I recommend you do. A lot of what is in this article I stole from him. Check out www.michaelmoore.com for more information.
Like this:
~ by tylermsmith on April 30, 2010.
Posted in politics
Tags: banks, Capitalism, corporations, dirty, FDR, Michael Moore, Moral, Opinion, Politics, Socialism
Tyler;
In the simplest terms, the Golden Rule seems to work pretty well. You make me proud. Your #1 fan
Loved the post, and you make a lot of good points. People get too hung up on labels rather than focusing on what is good. There needs to be balance and right now there is none and you have all of these Tea Party people, and “Birthers” etc etc our there spouting stuff that’s not only untrue, it’s ridiculous. They place the blame for our society’s woes in entirely the wrong place in the name of “freedom”. It’s frightening, because if people will believe such nonsense they’re capable of much much worse. That’s how Nazi Germany got started: a few nutjobs and then the thing just snowballed.
Also, libertarians are just as deluded as people who believe in communism, don’t you think? Either one on paper looks plausible, but neither one will ever happen, unless people evolve en masse to some higher form of consciousness where the majority of people–capitalist or communist–behave ethically.
I agree that it all comes down to ethics and morals. I used to think that acting morally was contradictory to human nature, and therefore we were screwed. But that’s bullshit, if you and I can do it, and if most of the people I allow in my life are morally conscious, then why can’t everyone be? It’s not human nature that makes one unethical, it’s being an asshole that makes one unethical.
Is European socialism bleeding like a stuck PIG? The conservatives are yelling from the rooftops that we are witnessing the slow death of European Socialism due to massive spending on social programs. They say the countries bleeding the most red ink are Portugal, Ireland, Greece and Spain or the P.I.G.S. of Europe as they are known in financial circles. Greece has run out of money and is now using German money to prevent total collapse. Portugal may be next followed very closely by Spain. Yet the European countries with some of the most socialist – that is, strong social safety networks – are Germany and Denmark, two countries where things are going just fine. In Germany, for example, every corporation in the country is required to have half of the members of their board of directors appointed by the union representing the workers of the company – the most corporate-intrusive system in all of Europe. In Denmark, not only are healthcare and education free, but they even pay students a monthly stipend to cover food, housing, and books – all the time they’re in school all the way up to PhD or MD degrees. So what differentiates Germany and Denmark from Portugal, Ireland, Greece and Spain? Germany and Denmark never fully drank the so-called “free trade” kool-aid, and thus both have strong manufacturing sectors. Across America you’ll find German cars and Danish wind turbines, as well as across those nations themselves. But walk into any store in Spain, Greece, Ireland, or Portugal and you’ll find row after row of Chinese-made goods. Twenty years of insane flat-earth free-trade policies have disemboweled the economies of the United States and numerous European countries. The US, for example, has gone from 20% GDP in manufacturing before the election of Reagan to just 11% now. Countries that don’t make things don’t create real wealth, and thus must turn to Goldman Sachs to help them borrow money. And Goldman hasn’t treated Greece – or the US – all that well. The reason why China is not having this problem – and neither are South Korea or Taiwan or Singapore, all countries with strong social safety nets – is because they’re strongly protecting their own manufacturing sectors. The way we used to do before Reagan’s presidency and then Bill Clinton’s throwing us to the tender mercies of transnational corporations by turning US trade policy over to NAFTA and the WTO. Time to reconsider protectionism.
Damn, dude. Get your own blog.
Governments are not inherently good nor evil, and the same holds for corporations, companies, partnerships, etc. Morality, ethics, are tied to individuals, not organizations, and the individuals who run the organizations are the responsible parties.
Your first example of Bill and Bob may as well be labeled capitalism as socialism. Capitalism is not inherently evil as an economic system. It can be operated in an evil way and it can be operated in a massively productive, positive, and creative way. In fact, capitalism — which enables individuals to own their means of production and maximizes freedom to operate in the way they see fit — has raised vastly more people out of poverty than any economic system ever devised.
Nazi Germany was called socialism, in which the state did not own the means of production but just told everyone running companies what to do. It was an example of socialism in an evil incarnation — again, the ethics, or lack thereof, came back to the individuals running the system.
Much of what is wrong with American capitalism can be traced to the overbearing interference of the government, unintended consequences of well-intentioned regulation, the failure of the government to act as the referee it should be, and the ever-present inability of the government to accomplish much of anything in an efficient manner — government budgets and unnecessary programs almost never really get cut. The best of American capitalism is largely responsible for the prosperity of the world (see Milton Friedman) and an astonishing proliferation of innovations and inventions that benefit mankind immeasurably.
Finally, I think you are fortunate to know George Bush and report back that contrary to politically correct general wisdom he is not after all equipped with horns and a forked tail. I always thought he was an honorable and decent man who had to face the most massive disasters of any president since FDR and acquitted himself pretty well.
Good blog, Maestro, keep it up!
Agreed.
wow another ‘blogger’ who doesn’t understand economics. Nice try, but your illustrative models are too simplistic, and you didn’t even try to apply math to it.
The illustration fails because of several reasons:
In the first month, Evil baker Bob also has to double his variable costs, and his fixed costs remain the same. As a result, his profit drops because he has lowered his prices dramatically. While he may barely make a profit the first month, he has made so little money to purchase supplies for the next month. Because he has doubled his capacity, he runs through the flour twice as quickly, so he has to return to the flour seller in the middle of the second month and purchase flour at the previous rate. At this point, he does not have enough money to buy flour to finish the month at the demand he has created, so he’ll have to raise his prices again or be unable to purchase raw goods to make bread. The townspeople will arrive at an empty shop, and then have to go back to Bill.
Conversely, good guy Bill has made more profit than Bob selling at a greatly reduced capacity, (his fixed costs went down) also because he realizes he must make less bread since the demand has gone down, and has more flour left over for the next month.
So after only 2 months, what really happens in this situation, is Bob, the evil baker, has put himself in a situation where he cannot sustain his own business, and the moor likely result is that market equalization forces, or Adam Smith’s Invisible Hand will force him to raise his prices to cover his losses and stay in businesses. This will drive the customers back to Bill.
So now either Bakers have reduced capacity or there is only one baker baking, as a result there is a shortage of bread. This could cause the cost to temporality go up, as people will offer more for bread than the next chump as there is a shortage. This will go on for a while until another baker comes in and fills in the excess capacity which drives the prices down.
That’s how a free market and capitalism works.
your socialism model fails also.
The baker pays for all the supplies and fixed cost of making all the bread. When he gives away free bread to the poor, he has lost money on that bread, so he has to raise the price of bread to cover the loss. As bread gets more expensive, less people can afford it, so more bread must be given away to feed the increasing numbers of poor. In addition, it makes the cost of sandwitches and toast go up. and since people have to spend more money on bread, toast and sandwitches, the buy less apples and chicken. Since people who grow apples and raise chickens eat bread, toast, and sandwitches, their expenses have gone up, so they will have to raise their prices too. Now all of a sudden, the price of everything is going up, and less people can afford bread, chickens and apples.
That’s socialism.
Ben, in your haste to prove wrong my economics, you missed the forest for the trees. Of course my examples are simplified, which I freely admit within the post. But it ain’t about that, Ben, it’s about morals, it’s about right and wrong, it’s about not accepting the corporate takeover of our country, it’s about treating your ‘brother’ with respect and dignity. An economics lesson would have detracted from the point. But you’re right, Ben, my knowledge of economics and politics is elementary, at best. But your need to impress, your need to flaunt your expertise, your need, being so great as to actually take time out of your day to comment on something that is irrelevant to the point of the post, shows a great deal of insecurity on your part, don’t you think, Ben? You’re the guy at the party who butts into conversations uninvited to correct any ‘misinformation’ and wonders why he can’t get laid, aren’t you? Nobody likes that guy, Ben. Thank you for your comments. Best of luck with the therapy. And I’m sorry you’re so lonely.
haha, Tyler, that’s funny. it must have really hurt your feelings that your little scenario broke down under empirical evaluation. If it’s about right and wrong, you should not use scenarios that fall apart under mathematic scrutiny. Your moral lesson falls apart because it’s based on a story you made up to prove a point without really thinking it through.
You made up a silly story to prove a dumb point, tried to promote it on other sites, and you got busted. Now you resort to childish insults because you have no intellectual ground to stand on. What’s next, are you going to threaten to beat me up? Why is it that socialists are such sniveling whiners with such a shallow intellect?
I have to laugh at all you ‘bloggers’ and social media douches who think you are little experts because you can type tripe into a website.
Yay, Ben! I like you, dude, you amuse me. I think I’ll bat you around for a while like a cat with a mouse until I get bored with you. We’re gonna play a little game, it’s called “Wind-Up Ben.” The object of the game is to see how many times I can manipulate you into leaving a comment on my blog. I figure if I can squeeze 10 comments out of you, that would pretty much make me Grand Champion of The World! Sound fun? Let’s play:
The test that proves my story does hold water is that YOU, Ben, are the only one who doesn’t get it. Everyone else understands that the story is a morality play and not meant to be analyzed “mathematically.” It is not, nor was it ever intended to be, an economic model. And quite frankly, you would have to be pretty obtuse to ever think it was. In fact, I ACTUALLY TELL YOU AS MUCH WITHIN THE ARTICLE!! But because you are trapped within the confines of your own “shallow intellect,” your superiority (read, insecurity) complex does not allow you to see the big picture. You see only what you want to see, you hear only what you want to hear, and that fact renders your opinion null and void. If, because of your inability to see the point someone else is making due to the fact that you are so caught up in your own ego, the point you yourself are attempting to make is invalidated. At that juncture, you, and whatever poor soul you have trapped against a wall who doesn’t give a shit about what you have to say anyway and who would agree with anything you might be saying just to get out of the conversation and away from you, are discussing two completely different things. I’m sorry you don’t have any friends, Ben, but there is a reason for that. Keep up with the therapy, and one day, years from now, you may actually figure out what that reason is and be a happier person for it.
You are also misinformed about what constitutes a “childish insult.” A childish insult would be more like calling someone a “douche,” don’t you think, Ben? It is a childish insult because there are no factual grounds to it. It is an insult thrown out willy-nilly because the insulter does not possess an intellect mature enough to base said insult on firm reasoning. What I did was a psychological evaluation of your personality based on your comments. Like this:
THE EMPIRICAL EVALUATION OF BEN (as determined by his own definition of “empirical evaluation”)…
Ben is a lonely individual–Due to the fact that Ben spends most of his free time on the internet searching for blogs to comment on in a desperate hope that someone, ANYONE, will care about what he has to say, and that he has absolutely no idea how to relate to a real human being, we have determined that Ben is a sad, lonely man, and perhaps even harbors latent homosexual tendencies.
Ben is extremely insecure–Due to the fact that Ben feels an insatiable need to prove his point to anyone and everyone who will listen, even when no one gives a shit (which is most of the time), it is obvious to us that he maintains a severe inferiority complex. We believe this also demonstrates latent homosexual tendencies.
Ben is in therapy–Well, if he ain’t, he sure does need to be. Oh yeah, he’s gay, too.
We have run the numbers ad nauseam, and find these determinations to be mathematically sound.