William Pfaff has a great article today, with the explicit title of “Why Europe should reject U.S. market capitalism” which I recommend that you read in full.
He reminds us that the current market ideology is just that, an ideology, and that it is thus a political choice, that has nothing inevitable about it and can be reversed. He traces its origins to the combined influence of Milton Friedman (monetarism), Van Hayek (rejection of totalitarism, associated with socialism and too powerful States) and Ayn Rand (the selfishness of superior people against the mob and the weak is a good thing).
This is what underlay the transformation of American corporate culture, and of the American business corporation from an institution with national identity, constrained to reconcile interests of owners, employees and community, into the modern global corporation, effectively controlled by its managers and mandated to the single objective of producing “value” for stockholders, while handsomely rewarded its executives.
This change transformed labor into an anonymous commodity and put both blue-collar and white-collar staff into competition with an effectively unlimited global labor supply, resulting in employment insecurity, reduced or static wages, diminished or eliminated benefits and pensions, and the destructive social pressures of falling living standards.
In the United States, the new model of corporate business has evolved toward a form of crony capitalism, in which business and government interests are often corruptly intermingled, the system resistant to reform because of the financial dependence of both major political parties on contributed money.
As I said, read it all. My only quibble is with the title of the article. I have used my proposal for an amended title as the title for this post…
This entire idea of unregulated or minimally regulated capitalism beiing equated with mom and apple pie is the defense that the corporate global capitalist are using in America to fight against any social intervention in the process. Most Americans should see the negatives to the unreg capitalistic theory, as proven by the job flight and job dumbdown here, and this should be/could be the most powerful political issue there is. However, both parties in America suffer from being controlled by these same global corporate interests so no meaningful alternative social choice/message is given/offered to the American electorate (can you say healthcare???). How to break that stranglehold by corporate power on the electoral menu is the big challenge to me!
Thanks for posting this here. It is an insightful analysis, but I don’t hold out much hope for defeating unrestrained greed and unregulated capitalism anytime soon. Most of the people I talk to think I’m some sort of communist for suggesting that anti-trust laws should be enforced and they are too ignorant to know who Rand, Van Hayek, and Friedman are, much less understand their bogus theories.
The one and only thing I ever really agreed with Poppy on: “Voodoo economics.”
His was born “von Hayek” (not “Van”), but he later dropped the “von”. Before dismissing all he had to say as bogus, please consider my remarks in a comment below.
One reason why Americans won’t ever reject market Capitalism is because they are brainwashed. I would say “we are brainwashed,” except that I was raised by a socialist, so I learned early on that Capitalism is an economic rather than a political system. The vast majority of Americans are brainwashed into believing that Capitalism is synonymous with Democracy.
When I was growing up, education was an American value, but that value system has slowly been eroded by two things 1) the systematic degradation of public education so that now it is little more than a brainwashing machine, and 2) the re-appropriation of education as an asset of wealth and privilege.
None of this has happened by accident. It became clear to the big corporate interests in this country during the rise of the Labor Movement, that true “democracy” was a threat. Since the underlying principle of a democracy, as I see it, is supporting a government for the sake of the good of all of the members of that democracy, socialism is the only logical economic system. Not that there is anything wrong with Capitalism in and of itself. It’s just a system, and only becomes a bad system when it is puts the interests of very tiny minority over the interests of the vast majority of the country, the planet, and the world.
The so-called Cold War was all about brainwashing Americans into a knee-jerk reaction that anything having to do with communism or socialism was evil. The infrastructure that supports this brainwashing is now built into the very foundations of the American Way of Life.
One of the underpinnings of the brainwashing process, and something which Pfaff does not touch on, is the linking of Capitalism to Darwin’s theory of the Survival of the Fitness. He does mention Ayn Rand, and the selfishness of superior people against the mob, but the symbolism behind this is the symbolism of Darwin’s theory, in other words, “naturalism.” Capitalism, you see, reflects nature, and therefore, it is human nature to be relentlessly selfish in promoting your own interests above those of everyone else.
It must be clear to most thinking people that the whole construction of Social Darwinism is totally bogus, and while ironically the Religious Right totally rejects Darwin’s theory of evolution, they still buy into the concept of Social Darwinism, and the survival of the Fittest to acquire massive wealth at any expense.
So Capitalism has become a kind of American religion, with the same kind of brainwashing techniques in place to ensure that children will grow up as Defenders of the Faith. This is guaranteed, since the big corporate interests that run this country, have made sure that the vast majority of American children do not learn to think.
The Orwellian “No Child Left Behind Act” is the culmination of years of planning by big corporate interests to deliver the final death blow to the American system of public education. Now teachers are forced to “teach to the test,” public schools are stripped of any arts or creative education, and children spend their time doing rote memorization under stress. Only those who are blessed with enough native intelligence to start asking questions, and who come into random contact with some wholesome influences, will be able to transcend a system that is put in place basically to generate cheap labor that is resigned to an inhuman workplace and divided against itself.
I must have been thinking of my upcoming workout at the gym!
I count Hayek as a far deeper and more flexible thinker than Friedman, and as utterly unlike Rand. In saying this, I recognize that there are many people whose thinking has been influenced by all three. I do think, however, that negative influences from Hayek are largely based on simplistic and debased derivatives of his ideas.
Hayek’s thinking is characterized by a profound respect for law and decentralized human social orders regulated by law. He was neither an anarchist, a conservative, nor a rigid ideologue. His profound skepticism regarding strong, lawless state power was shaped by his witness of the mass murder that grew from this during his lifetime. His aims, I believe, were entirely directed toward the common good.
There is no point in expending intellectual effort to understand why one’s policy preferences differ from Rand’s. It is worth considering why they differ from Hayek’s — what we have learned that he didn’t know, and what misperceptions may have set his views askew.
A major fact to remember in evaluating his work: When he refers to “socialism”, he means the term in the early- to mid-20th century sense, that is, the economics and (he argued) associated governance of states like the Soviet Union. Detailed central planning failed, and for reasons he articulated. This “socialism” is quite unlike the variety of socialism that has widespread support today.
There is a curious perversity in the standard interpretation of the “objective of producing ‘value’ for a corporation’s stockholders”, a perversity which I have never seen mentioned. It stems from two widely neglected facts:
First, that the more widespread the holdings of a corporation’s stock, the more its effects on the general populace are, in fact, effects on its stockholders, and
Second, that the practice of holding diversified portfolios of stocks can make the success of one corporation at the expense of another a net detriment to its own stockholders, through their holdings of the other corporation’s stock.
To illustrate this, suppose that everyone in a population held a completely diversified portfolio of stocks. In this simple, limiting case, maximizing value delivered to a corporation’s stockholders would coincide with maximizing social utility — a transaction that lost two units of value for a corporation yet added three units of value to another (whether to a supplier, customer, or competitor) would in fact increase value delivered to that corporation’s shareholders. Likewise for suitably efficient tradeoffs of profit in exchange for general environmental and social benefit.
To the extent that the real world has something in common with this idealization, the standard concept of maximizing value for shareholders is actually misconceived: it mandates actions that do not, in fact, maximize the value that the stockholders receive. Indeed, this holds true to some substantial extent in the world as it is today.