First Contestant: Capitalism
A Four-Part Series on Choosing a Socio-Economic System for America
Ah, Yes. This One is Familiar
We start this little review and exploration of systems with capitalism in large part because it is the incumbent in America, and the one most of us know best. Well, at least we know a version of it. More on that later.
We begin or review of these systems on Friday the 13th. What could possibly go wrong?!
Remember our analogy we set up to evaluate these systems? This is a bit like buying an automobile. Socio-economic systems carry a lot of the same characteristics we look for in automobiles. Capitalism is a fine example – it is, above all, a bodacious engine.
What Does Capitalism Do Well?
Nothing comes close to capitalism in its strengths. Capitalism leaves every other system known so far in the dust in its ability to do a number of things. One, it generates economic power and growth like nothing else. Two, it fosters innovation, mostly through competition. Again, no other system comes close.
Three, it can reward the right people for the right reasons and weed out competitors and organizations that are not up to the match. Sounds harsh, but it works on many levels. Perhaps most importantly, it is correctable when it runs off course. Its flaws are less organic and more a function of misuse.
So, What’s the Problem?
Going back to our vehicle analogy, capitalism is indeed a bodacious engine, which takes care of much of the economic part of the equation, but it inherently lacks the steering, overspeed governor, and navigation system that feeds the social side of the equation. It is powerful, but if not structured and at least moderately regulated, it goes badly out of balance and off the road.
We see much of that imbalance in America now. The middle class is increasingly squeezed out. The economic (and political) power of the 1% is distorting the entire national operations. The 1% of the 1%, even more so. The last time we had an imbalance this bad, we wound up with the Great Depression in the early part of the 20th century. The system had lost its checks and balances and thus fell into disrepair. That was not the first time this has happened in our history.
The market, that mysterious set of factors that is “The Force” (a tip of the hat to you Star Wars fans) of capitalism lacks the necessary tools for long term effectiveness in serving the nation. Capitalism needs rules, oversight, and direction set by more than the market. Treating the market as some sort of religious icon is the first step to having a nonfunctioning cult.
Balance is Required
Conservative economics fans would say that if we take care of the economics, by running unfettered capitalism, the social part will get taken care of almost automatically. Rising tides raise all boats, etc. Clearly that is nonsense. And dangerous.
In fact, as powerful and effective as the market can be, it clearly is a mismatch for some essential functions. We don’t entrust national defense to the mercenary army that offered the best bid. We generally seem to agree that police and fire protection are core social functions that are not primarily market driven.
Slowly, painfully, we are beginning to figure out the same is true for health care. The US has a largely market based health care and pharmaceutical system. The result? We pay orders of magnitude more than anyone else and have consistently worse outcomes. This is one of those areas in which the market is part of the problem, not the solution. And there are others, of course.
So, Is Capitalism the Right Answer?
Yes and no. As we will discuss going through our review of systems, each one has strengths and weaknesses. Capitalism’s strengths, in my view, are profound enough and so rooted in our nation, that simply tossing it out is a frivolous thought. Not everyone agrees with that for sure – more discussion on that in our next installment.
I think the case can be made that this is an engine we want to keep. But let’s be clear that just being an engine is not enough, and the folks who really, really like that engine need to know that the rest of us are going to add on breaks, a GPS that works for most of us, and steering to keep us on the road. Yep, that means oversight, laws, taxes – all that stuff the Grover Norquists of the world hate. Without those elements, we have an uncontrolled thing sure to overheat, run amok, and eventually blow up.
Are such accoutrements going to take some of the power out of capitalism? Sure. Might we overregulate and wind up out of power? Definitely a risk, but not a matter of fate. A certain amount of market efficiency is a fair tradeoff for a country that enables people to feel they have a stake in all this and that their kids can expect to do better than they did. How many families feel that way today? Time for a tune up, folks.
It’s the 21st Century. We know how to do better than this. Otherwise, capitalism will consume itself – and take us with it. There are serious people out there outlining a better, more stable, more humane capitalist model. I think they may be on to something.
We said in the introductory post to this series that terminology matters, as do generational perspectives. Our next entry brings that out like gang busters. Next up: Socialism. No controversy there, right?
Which reminds me. This is a range of topics, how we run this country, including the economy, that is important to all of us. I know most of the readers of this blog care deeply about this and have valuable opinions. I hope many of you will share and speak out on this one.
If there ever was a discussion in which disagreements and perspectives are appropriate, this is it. What say you, America?
Bill Clontz (with his buddy Ben Franklin)
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