The prior post stimulates my thinking about capitalism.
In much of the west, communism is seen as a failure. Consider what has happened to Russia. Look at the changes driving the Chinese economy. These two factors alone convince people that communism is a bankrupt concept.
I cannot defend communism - but to consider its short-comings really requires that we consider it apart from the totalitarian regimes which claimed it as their philosophic core. By divorcing communism from the emotion around its implementation in Russia and China, we can better understand its weakness and thereby be smarter in evaluating other alternative forms of social/economic organization.
Communism seems likely to fail due purely to human nature. People seem to be hard-wired to collect and hoard stores of value. No doubt this is a basic survival instinct. Remember, we can't graze off the land, can't live in most climates without warm clothes, can't survive against any number of animals without tools, and so forth. We are a physically weak species - which depends on advanced adaptations (that is characteristics that are not part of one's physical being) to survive. And survive we do.
One of these adaptations is to grow more food than we need, and store the excess for times when food is scarce. In a different vein, the tools that we have developed don't "grow on trees". Not only do we make our tools, but they have become more complex, requiring time, specialized materials, and acquired knowledge to create. So, just as we need to hoard food, we need to protect and preserve our tools (including clothing and homes) in order to maintain our lives. Trusting a society as a whole to take care of these needs seems fundamentally at odds with our hard-wired learning to hoard.
With out advanced adaptations, one of our greatest threats is our fellow man. So, our hoarding behavior is rarely implemented beyond the boundaries of tight small groups, a family unit, a tribe, but not farther.
Moreover, for a society to provide for the needs of its members, the members need to give up some level of freedom in order for the society to organize and run those activities which create, hoard, and share resources back to the membership. The human being is a complex animal, but it seems clear that the core personality includes both pack-affiliated (or teaming) and independent-behavior characteristics. So strong are these opposing forces, that no matter the rewards that are made available, many individuals will strongly resist the socialization of anything like communism unless they see a means of exploiting the system to their advantage.
So, we must accept that communism is not a likely course for the preservation of our species baring a significant evolution of our core personalities.
But, it is not the case that the alternative is capitalism. First of all, capitalism and communism are recent concepts. It's not clear that all society over the course of human life has distributed resources according to one or the other of these models. In fact, even defining capitalism loosely, only part of any society has distributed assets according to the capitalist model.
We should also clarify that capitalism and free-markets are different and not inherently connected concepts. This distinction is often lost. Capitalism is fundamentally about raising and preserving capital to fund profitable enterprise. By profitable enterprise, we mean endeavors that return more money (in the form of profits) than was invested into them. Capitalism, at its core, is anti-free market.
How can this be? The goal of the capitalist is to maximize the return on capital (now days the model is broadened to include capital, borrowings, and other sources of economic value). To maximize this return, one needs markets. That is, someone has to pay for the outputs of the investment, in order for there to be a profit. But, a free market implies full access to information on the part of the buyer, and that the market is freely open to competing sellers, such that the return on capital is marginalized. As such, a true free market works against the capitalist and the rich.
This is why the modern capitalist talks so much about free markets. He/she is trying to convince consumers that capitalism is providing them with more goods for less money. The reality is that he/she is trying to extract more money for fewer goods.
And who has been at the forefront of confusing capitalism and free-markets? Why our leading economists, which is why I accuse them of VooDoo economics.
That some amount of money leaves the purses of the rich is no surprise. Someone has to pick up the garbage, and it won't be the rich themselves, so yes they spend money. But, fundamentally capitalists are driven by their need to acquire and hoard resources; which means that they are constantly plotting how to further grow their net worth. Implied in this is that their capital grows faster than they spend money. Some will say that they rich need a middle class to purchase good from which the capitalist can make a profit. This assumes that the most efficient means to improve the assets of the rich is by an indirect path whereby other participants in society work to acquire more than marginal resources - and that the capitalist gains a profit by providing these "luxury" resources. The true capitalist believes, and most of history confirms this, that this approach is wrong. A truer capitalist model would have the rest of society toil industriously, but consume minimal resources so that the capitalist obtains all the rest of the created value. This would be an example of maximizing the return on capital.
In what way is this trickle down? How is this benefiting the masses? The course of history shows that trickle down is another way of saying that the rich get richer and the poor get poorer. And, this is true regardless of whether the fundamental social-economic system is capitalism, monarchy, or a military dictatorship. More makes it way to the masses only when they threaten to overwhelm the elite.
How then do we explain he emergence of the broad middle class of western democracies? Before examining this, we should consider for a moment the health of the middle class. It is interesting to listen to American capitalists comment on Europe. They are dismissive of these democratic/capitalist societies. Their position is that European democracy has lead to excessive socialism. This has, in turn, weakened these societies and reduced the income and assets of their residents.
When I travel to Europe, the Europeans seem behind us in pure materialism. They do not seem like an impoverished race. They do not lack for access to the arts. They seem to have plenty of food, and often very good food. Their educational institutions are strong and capable. And, like us, and virtually every society in the history of mankind, they have a somewhat hidden underclass that is some part helps to fuel the success of everyone else.
My friend the investment banker has pointed out to me how we have a larger gross domestic product per capita than France. Moreover, that we have a better unemployment rate. What he forgets to point out is that the French actually deliver higher labor efficiency. Moreover, that much of our high per capita GDP is based on two earner families, which most people seem to think is a sub-optimal arrangement. And finally, that the unemployed in France are better treated financially than the unemployed in the US (who often aren't even counted as unemployed). I doubt that the average French man or women envies the average American, even if the wealthiest French envy the wealthiest Americans.
Our American capitalists meanwhile insist that the US is doing fine. That GDP continues to rise, and all ships rise with the tide. They ignore the fact that the distribution of rewards is not only uneven, but shrinking the middle class and creating greater gaps between the upper class and both the middle and lower class.So how did the Western middle class come to be? I'm not sure anyone has a full answer to this question. But, I would submit that the following are contributing factors.
1) Part of the American Revolution was a rebellion against the idea that the rights of corporations could trump the rights of man. Strict limits were put into play to protect the rights of individuals in the United States such that free-markets were better empowered relative to capitalism than had traditionally been the case within the British Empire. Consciously or not, some of this was picked up in the evolution of democracy in Europe.
2) Our country started at a time when a free market was easier to achieve. For much of what one might purchase, it was relatively easy to eyeball quality or establish the reputation of the seller. Certainly there was fraud and trickery, but what equivalent was there to what we now call Marketing (with a capital M).
3) In America, we had the benefit of nearly limitless resources. Yes there was a cost, but one could always move West. At the least one could homestead arable land. At he best, one might stumble across silver, gold, or other precious resources. For Europe, there was a world to colonize and provide a number of the benefits of limitless resources.
Notice that while there were parallels for Europe, much of the evolutionary roots for a broad middle clase were found first and strongest in North America. And indeed, the middle class grew here best and fastest. In fact, we became in many instances the home of the middle class for other countries such as Ireland.
We cannot for a minute sugar coat the American experience. There were any number of bad things that happened here that were not about facilitating the growth of the middle class. We had slavery, indentured servants, Indian massacres, Hells Kitchen, political corruption, violence against unions, and more. But consider that the people who came to America didn't come schooled in how to create a middle class or in how to become members of a middle class. Consider that we never had a stated national policy of creating a middle class, nor a state policy as far as I know. And, once you've done this, you'll realize what an amazing thing that our fore-fathers accomplished.
Today, resources are not infinite. In fact, people are rapidly overpopulating the world. We are running out of energy resources quickly, usable water is getting harder and harder to find, our air is no longer clean, and we are upsetting our global climates. This is far from the early American history where the West served as a pressure valve of excess resources.
Nowadays, it can be hard to know what's what about anything, not merely commerce. So many people have been scared into believing that Iraq has something to do with 9/11. So many people have been scared into believing that the theory of evolution is evil and wrong. So many people don't have a clue as to how to sift through and evaluate all the media blasting at them daily. Is it any wonder that these same people are at a disadvantage when evaluating goods in the market place? Meanwhile, the market is not really freely open to all sellers. So many segments have been taken over by giants, creating a situation where a certain critical mass is necessary to gain access to the market. A ma & pa operation can't begin to get the traction necessary to succeed.
Finally, we have (well someone has) shifted the rules in our country. The corporation has more rights and fewer responsibilities than the individual. We have fallen into the trap that gripped Great Britain at the time of our Revolution.
In short, we've lost the advantages that made a middle class easy. From here on out it will take hard work to maintain a middle class. This might not matter, but no nation that has ever been considered a true democracy became such without a substantial middle class.
