I do NOT track my own rants. Sometimes I will go back and read something dated and think, “That was drivel!” Or sometimes, albeit much more rarely, “That was good.” I just went back and read an old 2015 post: Reflexivity – the study of Hungarian feet?
I liked that one. Still do.
But I mention this ‘mirror-gaze’ because for some time I have been ranting about Capitalism and how it is broken. It is all wrong. Bad, bad, bad. Oooohhhhh, so bad!
But, like many, I could not really imagine another system. Capitalism has so much inherent that is also inherent to the human being that it is a close-to-natural economic construct/system. Which means: it should work. It doesn’t work for the same reason it should – so much is inherently human and the basic human is also very flawed. Our Capitalistic system reflects our own flaws! We are greedy. We are selfish. We are mean, cruel and sociopathic.
So, we’re talking the yin and yang of things again.
But the currently obvious problem with modern capitalism is that it overly rewards our flaws and NOT our better side. Capitalism, as it is practiced today, has no morals, no empathy, no sympathy, no higher aims. Nor does it reward goodness. It is cold math for personally materialistic and psychotic gains. Ugly stuff.
Seems some of the geniuses at DAVOS, the world economic and civil think-tank conference have finally clued in to that. God bless their atheistic little hearts. These are the guys who did really well in the dysfunctional, greed-based system and are the so-called winners now doing the good work of reflecting on the state of it.
And NOW they are worried….not SSSOOOOOOooooooo much about you (the great unwashed) or the lack of goodness but, rather because they are worried about THEMSELVES staying at the top of the heap. Still, they seem to recognize that the heap is suffering. And they realize that the system is broken. It’s a start.
IRONY: Ya gotta be a winner at what is wrong to be invited to DAVOS to talk about what should be right.
Anyway, I am copying an article by Steve Levine (AXIOS) with a tiny bit of added editing…..and a follow up comment after ‘Me:‘ below. The following is Levine:
DAVOS, Switzerland — If a single theme ran through (it) this week, it was acceptance that the capitalist system, of which the attending elites are the masters, is broken. And if they (the elites) don’t take charge, changes may come that they won’t like. What brought them to this point is a growing threat of trust-busting, regulation and public opprobrium in both the U.S. and Europe, on top of the residual shock of Brexit and the election of President Trump. (NOT guilt or shame…but still….)
In interviews and speeches, many of them described what is fueling the push for dramatic action:
- Three-quarters of people living in developed countries feel they are not getting a fair shake, according to the Edelman Trust Barometer.
- Real pay for all but the richest people has been almost flat for at least three decades. And when Americans have lost a job, almost half have moved to a lower-paying one, jeopardizing their place in the middle class.
- Home prices in U.S. and European cities are often unaffordable, again for almost anyone but the wealthiest.
“Only 1 in 5 people say the system is working for them. One in 3 say their children will be worse off. That is really scary,” Richard Edelman, CEO of the eponymous public relations firm, told Axios on Thursday in Davos.
In reporting this story, I came to know that this is not an easy discussion (for them) to have — executives, economists and others here were often angered at the mere juxtaposition of the words “capitalism” and “challenge,” as though change meant (the imposition of) a Soviet-style economy. But in public and private sessions, the CEOs came to acknowledge that few are talking about overturning capitalism itself, and determined that they must do something.
- As a hedge fund CEO described the zeitgeist: “We need to get in front of this problem or it’s going to get in front of us.”
- “Whether they’re concerned about their business and profitability and shareholder value and so forth, or they’re concerned about society overall, they understand that they may have to slow down the integration of the global economy in order to let the rest of society catch up,” said Brian Gallagher, chairman of United Way Worldwide, who has attended Davos 10 other times. “That’s the first time I’ve heard it here.”
The main flaw with capitalism, critics here and elsewhere argue, is that nowhere is it practiced as it is meant to be: capitalism is supposed to be hellishly competitive; and, in addition to featuring an invisible hand, it’s supposed to have a heart.
- Instead, say increasing numbers of critics, market power is concentrated across industries. In the U.S., four airlines control more than 65% of the market; in cellphone service, the top four have 80%; and in drug stores it’s about 70%, according to “The Myth of Capitalism,” a new book by Jonathan Tepper. This is not to mention the market power exerted by Big Tech.
- As to empathy, the problem goes back to Adam Smith, the father of capitalism.Mainstream economists tend to ignore Smith’s appeal to the better nature of the human race — for “following our conscience [and] … promoting the happiness of mankind,” according to the Adam Smith Institute.
- The neglect of this dimension is a culprit in the grievances of the world’s down-on-their-luck rust belts, coal towns, and factory centers.
“The way [capitalism] has been practiced has been corrosive to some of the conditions that made it an attractive system,” Christopher Eisgruber, president of Princeton University, tells Axios. “The practice has undermined some of the cultural supports that made it successful.”
The bottom line: “Large segments of society are excluded from the fruits of economic growth,” said Adam Tooze, an economic historian at Columbia University. “And the corporate world is deeply worried about (their) legitimacy.”
Me: The still-bad part is that they still do not ‘get’ that the system has foundational issues that they are not seeing. I will not try to explain all that because I cannot – not very well, anyway – but, as an example; Capitalism postulates that money is worth money. Money has to make money. Money has to reproduce. We call it interest. Money is expected to ‘grow itself’. But it cannot. Money is inanimate and dead, soulless and unrelated to life in it’s own-self. But still, we expect it to grow even if it just sits there. That is a fundamental error in the system. When money is working? Maybe. Sitting? No. Put bluntly: the capital side of the labour/capital balance is too strong.
Secondly, we do not attribute value to the planet. We use it and abuse it as an unlimited resource. It is not. And yet, it IS the ultimate capital. We are foolishly spending the principal of it in anything and everything that is NOT 100% sustainable.
And thirdly, we expect unrealistic (read unsustainable) growth.
There is so much more wrong but you know all that……
….I just hope those guys at Davos smarten up and fix it but I am NOT holding my breath.
The basic foundations of Capitalism are sound. They are the laws of nature (other creatures operate under NATURAL laws…they work and are sustainable, although not always immune from cruelty. It has to seem CRUEL if YOU are a gazelle in the jaws of a lion, but gazelles are faster for it.). The problems arise from the natural rules being tampered with.
The PROBLEMS stem from and are CAUSED by: Corporations, Governments, Foundations, Religions, Monarchies and Dictatorships and “Non-Governmental Organizations”. Any and all of those entities will conspire to interfere with you and I exchanging things of value with each other.
The worse offenders, as I see it, are the BANKERS (the big ones who have given themselves the privilege of creating wealth out of thin air!) The other offenders simply steal from us: “Give me 1/3 of the fruits of your labor or I will steal from, harm or imprison you”. (pure theft, but we are brainwashed to feel that it is something “good”!!) What could be more of a violation of nature??
THEY have fraudulently put themselves in a position that none of the rest of us can legally be in:
They create money from nothing, or just steal it from us with nothing to exchange, and benefit from that.
If we could eliminate those violators of nature, and keep the other aspects of capitalism, we would all be a lot better off. Some say the only way to keep the bankers honest would be for the “money”
to be something that they cannot “counterfeit” (such as precious metals coins). America’s founders had that included in their rules because they knew their bankers, even back then.
The basic foundations are sound if you read Adam Smith and grasp the basic concepts. But they are not sound if people cheat and cheating is so inherent in us that our games-of-play even have referees and penalties built in. “Two minutes in the penalty box for smashing in the face of the more talented hockey player. Fifteen yards for causing a concussion.” We KNOW we cheat.
But worse than that ‘paltry penalty’ syndrome, today’s capitalism has been ‘de-regulated’ and the cheats are the referees, coaches and commissioners. Even the audience cheats. And the biggest bad guys never pay. They are ‘too big to fail’ and get a bonus instead. They are REWARDED for cheating. Today’s Capitalism is corrupt and the dorks at Davos are at least saying it out loud.
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Oooooopppps…..the basic foundation is NOT sound in one respect: we do not treat the planet as a finite resource. IT IS THE REAL CAPITAL. What ‘we’ call capital is a construct, an imaginary token. REAL ESTATE is called ‘real’ for a reason and the planet is the ultimate in REAL ESTATE.
Many think that the invisible hand in some case is penance. Do not end suffering it will ruin someone’s punishment. Adam Smith is totally discredited
Nice to see you, Kev.
Forbes reports that currently in the entire world there are about 2200 billionaires with a combined wealth of about nine trillion dollars. Have you been with a group of entitled rich people signalling we got our money though merit? So tedious and so boring. Who imagines that their life would be much better if their residence had a car elevator? So shallow and so pathetic. Of note more than a plurality of them live in countries with weak or nonexistent democratic traditions. Canada is among the five percent of all countries with true democracies. Most with true democracies are socialist to some extent.The USA with a democracy rating of twenty-second place in the world has over 700 billionaires. Let’s say kleptocracy and voter suppression. The French Philosophes answer this question, How has one group of people gained dominion over others?” By trickery, coercion and lies.
I do not see a conflict with socialism and capitalism. Social Capitalism is simply Capitalism with rules and rewards for goodness thrown in. Right now we reward people who use leverage over others – as if that was a good thing. Extortion is a good thing? We do NOT reward those who act unselfishly and that truism is best captured in the old joke, “no good deed goes unpunished.” If a person spends a few hours helping another through supportive counselling or accompaniment, we say, “What a nice guy! But he must be rich to be able to afford all that time.” So helping is NOT cost effective? That is sick.
Neither do I see a conflict with Environmentalism. Read Natural Capitalism. Lovins and the Rocky Mountain Institute. Best example: Ray Anderson of Interface Corporation.
An invocation of Adam Smith’s “Weath of Nations” and an “invisible hand.” The unintended consequence of greed unleashed by unconstrained capitalism is that some crumbs fall to the poor. Currently called the ‘‘trickledown economics.’’ Wage stagnation for decades since Regan and Thatcher. ‘’And their tears ran down their legs.”
I see it differently. Reaganomics was not ‘pure Capitalism’. It was DEREGULATED corruption unleashed. There is an invisible hand but it can’t be fully trusted. The invisible hand is human nature and human nature needs constraints.
the topic is way too deep, if all these erudite elites cant figure it out, we sure cant solve the problems either. people get rewarded for their effort and talent. if you are lazy and dumb, you don’t get rewarded, its as simple as that. I agree there should be a basic safety net for the truly needed, but beyond that, you take what your ability can afford you. the billionaires can have their jets and islands and mistresses, its all fine by me, though it would be nice if they can provide some toilets for those who still have to dig a hole for their business, just saying.
Yup that is the justification wealth is the fruits of a meritocracy otherwise known as Social Darwinism. I’m more skilled at wealth accumulation so my share is the biggest.
That’s good to hear.😀
I disagree. Totally. Do you think we have the best doctors? Or do you think we get the children of wealthy parents who can afford to put their kids through med school? Do you think we have the best athletes playing the hardest games? Or do you think many couldn’t even afford to play at all? Do you think our politicians are the best they can be for the people or do you think maybe they are the ones who just sold out the fastest? Meritocracy doesn’t even work in a union shop. The senior person is deemed to be of MORE merit by dint of their ‘membership’ in a silly-rule hierarchy. There are arguments but meritocracy holds no water.
Do I think that a smart person who can do well at many things will find a way to survive…? Yes. For many, all the lyin’, cheatin’ and corruption cannot stop them from living their life well. Will they ever become president? Of anything? Not a hope in hell…see previous, ‘lyin’, cheatin, corruption.
I’m happy that you do not support meritocracy but it is a mind set of many. Sadly it is used by many to justify for example inequalities in pay. Turns out equal work does not always get equal pay. As for the union floor what do you call a “Red Seal?’’ Pay by merit?
AND…..the topic ain’t deep! What the hell……? Economic is simply the study of human behaviour….we’re all human. We’re all engaged in it. It AIN’T DEEP!
Revisionist theory about Adam Smith says capitalism is not based on greed. Capitalism according Smith has an ethical ethos and that over the years Capitalism has been misinterpreted and misunderstood. Tell that to organizers of cartels.
Methinks you are too shrill. It’s like blaming God for religion. Capitalism (radically revised) is as good as it gets because it reflects human nature. I would add that we need to NOW consider the planet (it was too big to consider in Smith’s day).
Sadly, human nature can run amok, go nuts and self-destruct. That doesn’t mean all humans are bad or their natures are all bad. It just means we need to have some rules to live by. Same for Capitalism, Natural Capitalism or a rose by any other name.
Not saying that at all. Revisionist history exists. Selective facts are massaged to fit new realities.But why the shrill epithet?
I do NOT think Smith has been totally discredited. A lot of ‘his’ capitalism is right. Some is NO LONGER right (such as ignoring the planet) and the myth of market wisdom but self-interest, motivation, etc. are straight out of the behaviouralist handbook, Smith understood his generation’s
So now the “elite” at Davos are getting worried?
Because the mob has bought what they were selling us for the last 70 years?
We NEED a new CAR.
We NEED a two car garage.
We NEED a cruise every year.
And when everyone is drowning in needless debt.
The jobs arent for “life” anymore,….
The “allegiance” to your employer isnt reciprocated…..
The politicians listen to the money men giving them political donations…..
The media play along by self censoring lest they lost advertisement $$$…..
Along came the internet where people can have discussions with complete strangers from all walks of life and they realize how screwed up everything is…. without the censorship that has been foisted upon traditional information sources………..
Trust in leadership today is at an all time low for good reason.
They only care about themselves and what they can get while in power…..
Yeah, the Davos participants should be worried.
Markets are always imperfect. Knowledge is always imperfect. I just want to curl up in the foetal position whenever I hear these circular arguments. PTSD from too many arguments with my economics lecturers and 30 years of working life where people actually believed this crap. Human psychology was never taken into account in old-fashioned economists. Economics is finally getting a little more sophisticated apparently. Too bloody late. Australia did put a price on s negative externality, a carbon price. Vested interests were successful in their lobbying and over-turned it. The marketing department has always known better. That’s why people queue up for days for the latest IPhone! Sickening.
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There is a long line of necessary illusions to justify disparities in wealth distribution. According to these illusions the poor are not worthy.
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Or perhaps the Davos crew know whats coming?
China’s economy is slowing down.
The US economy has been lifted by Trumpian tax cuts for how much longer?
Brexit and the EU .
Russia’s byzantine meddling everywhere to keep its population’s mind off….Putin’s endless leadership.
Govt’s everywhere paralysed under minority govt’s or protests.
As Japan ages and their economy struggles under its 2nd decade of stagflation…is that what the future holds for us ageing countries?
“Retirement” on cat food and pension plans that are essentially broke?
Apple iphone sales tanking because…lets face it…how many times do you really NEED a $1100 phone replaced.
Car sales tanking,
Housing sales tanking.
Interest rates slowly ramping back up…..
And the Davos “elite” realize the ” Dalit untouchables” may be pissed?
I guess Economists forgot to factor “humanity” in the equation for perfection.
Perhaps another World War to get everyone’s minds off their troubles?
I wouldnt put it past them.
Not only would I NOT put it past them, I think it is likelihood. Not a strong one but it appears to be a real alternative.
Welcome to the abyss of the “reverse supply chain,” where hope springs eternal.
Welcome to the abyss of the “reverse supply chain,” where hope springs eternal.
One might consider Mercantilism, which floods the markets with exports and has by design a balance of trade deficit with its major markets. Generally mercantile countries such as the People’s Republic of China face charges of dumping goods but smart business men jump on these bargains
Capitalism rewards those who generate ‘profit’ – the invisible (but real) end number being greater than the sum of it’s parts. Add five parts labour to one part ‘resources (which includes capital)’ and you get 25 parts of ‘value’ a large portion of which is profit. Thus, the invisible ‘growth’. But is it real? Why cannot five parts labour plus one part resource plus (and let’s be generous) two parts capital equal just eight? Why does it have to equal 25? Well, there are plenty of reasons for that – too boring to elaborate – but clearly there is NO reason for 5+1+1 to equal 25. NOT really. The rest is eaten by corruption. The Chinese call it ‘rent’.
Buy low and sell high. The secret sauce of profit. Why are goods from (China or PR of C) flooding into the west? Chinese Mercantilism feeding the maws of profiteering. China needs American greenbacks and China has a flood goods to move to maintain an annual GPD growth of around 6%. The impact in the West has been destructive but on the consciences of marketeers, little impact because, ‘Life is full of winners and losers.’ If you feel like a loser put on a ‘yellow vest’ and tear the mess down. Without our functional institutions society would be in as Thomas Hobbes predicted a life that is “…poor, nasty, brutish and short.”