Sunday, May 16, 2010

In case I wasn't clear...

in my post on financial bubbles, let me eliminate all ambiguity.  

"Capitalism", as practiced in the United States, and most of the developed world is fundamentally corrupt at its core.  Its successful practitioners almost invariably lie, deceive, mislead, misrepresent, bully, threaten (both tacitly and explicitly), bribe and steal.

The above behaviors are carried out, over and over again, in the course of daily business.  It is done as part of routine business operations, and it takes place as part of dominance behaviors having nothing to do with business operations.  This behavior is carried out by a particular subculture to whom we may refer as "Commercial Elites".  The behavior itself is a form of coercion, in that it leverages asymmetries in power between parties in a transaction in such a way as to cause the weaker party to act in ways it would not otherwise have acted.  Such coercion may take the form of a bribe rather than a threat.

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Commercial Elites are no more innately evil than any other identifiable subgroup of our species.  But they have "power", in the sense that they can impel behavior in others that would not otherwise be present.  And, like any other group of human beings with power, they use that power to influence what we are told are purely "market" transactions.  

Every elite will promulgate an ideology (often a religion) that legitimates both their greater power and the use of that power to further their own interests.  Commercial Elites promote a particular type of Capitalism that is excessively deferential to those elites, that exalts its practitioners to the status of heroes, and that defends the privileged position of Commercial Elites by predicting catastrophic economic consequences should their behavior be moderated.

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It would be a mistake to conflate coercive business behavior with crime.  Lots of utterly sleazy business transactions  are perfectly legal.  They are legal because Commercial Elites invest trivial sums of money (by their standards) in the campaigns of politicians.  The fact of their legality is itself a product of the power of Commercial Elites.  But of course, there's plenty of criminal behavior, too.

It would also be a mistake to conflate every single business person with the coercive subset of that group.  I have very little experience interacting with this group, so you should ignore my estimate that no more than 40% of them are actively corrupt (in the moral rather than legal sense).  But many, many more members know about coercive business practices and stay silent. 

And of course, any subset of humanity is as corrupt as Commercial Elites.  But lacking power, their corruption lacks specific, obvious national consequence.

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"Capitalism", (by  which I mean the practice of Commerce as it is carried out in the United States today) has been successfully legitimized in the minds of the American mass populace by  associating it with such potent nationalist symbols as "liberty", the "founding fathers", and "rugged individualism" despite having no relationship to any of those things.  This makes attempts to moderate the behavior of Commercial Elites through public policy processes inherently difficult.

"Capitalism" (much like Marxism) has also been legitimized by claims that its outcomes are somehow rational, or scientific, or objective.  And in fact, one can imagine a world where demand and supply are always moderated by price and price only.

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It has been said so often that it is a clich√©; the "market" is a purely intellectual construct, an abstraction employed because of its utility both descriptively and predictively...

and then, having covered their intellectual asses, the Capitalism Apologists promptly reify the market, citing the "efficiency" of an admitted intellectual abstraction in defending existing supply and pricing arrangements.  But those existing arrangements are not typically arrived at through the beautifully meshed operations of supply and demand mediated by price.  So-called market outcomes are primarily the result of power differences between the parties in an transaction. 

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Capitalism is also cited as the primary causal variable in contemporary American prosperity.  This assertion calls for two responses...

the extent of American prosperity is massively overstated.  And Americans cannot internalize that fact beyond a vague anxiety about their personal circumstances..  We are not the 
richest country in the world.  We don't have the best healthcare in the world (if by "we" you mean most Americans).  We don't have the most leisure time in the world.  We don't have the best education system in the world.  We are a top 10 country, not number 1.  But if you can convince people that we are number 1 because of an almost religiously fundamentalist devotion to practicing economic activity in a way that defers to your personal interests....

that turns out to be an effective tactic.

American prosperity is not due to "Capitalism". (Again, as it's practiced here.)  American prosperity, such as it is, is a complex phenomenon.  Like all complex phenomena, it is multi-causal and changes over time.  But here's a striking relationship...  the public policies advocated by Capitalism apologists don't seem to have resulted in greater prosperity for the American people, despite their promises.  

It is claimed that Capitalism takes advantage of the particular expertise of private industry, but in fact, our so-called "Captains of Industry" are no more competent (just as they are no less moral) than any other subset of humanity.  There are smart business people, and there are business people that are astonishingly dumb, in about the same proportion you'd find among teachers, or cops, or government bureaucrats.  Furthermore, the relationship between competence and ultimate success is tenuous at best.

(image from  Really.)

Ideologies are programmatic.  They advocate behaviors which, it is promised, will result in certain outcomes.  But, the public policies advocated by apologists for the American practice of Capitalism don't give us the outcomes the apologists predict.  Their supply-side tax cuts don't result in economic growth beyond the anemic Keynesian effect one would expect.  Their massive deficits don't magically vanish under a "rising tide" of economic growth that always comes in weaker than they promise.  And their fanatical deregulation inevitably empowers Commercial Elites to employ ever more coercion against those with whom they transact business.

The benefits which derive from American Capitalism have been grossly exaggerated.  The economic and social costs of regulating the behavior of Commercial Elites has been exaggerated even more.

Commercial Elites will ruthlessly exploit those with whom they do business to the extent that the existing regulatory environment allows them to do so.  As it is presently constituted, the regulatory environment of the United States fails to deter coercive business practices, including practices blatantly illegal under current law.  

Increasing regulatory restraint on Corporate Management will not make us poor.  It's not anathema to the principles of the Founding Fathers.  And it's the only defense we have against our rapacious exploitation by a privileged, hypocritical elite.

It occurs to me that I still haven't watched "Capitalism, a Love Story" by Michael Moore.  I think it's on pay-per-view...

certainly, the Penguins don't have any games scheduled.