Capitalism has been a vehicle for vastly improving and advancing the human condition. But no system is perfect, and Capitalism's flaws are becoming progressively more apparent. While it is unlikely to collapse as dramatically as Soviet styled Communism, neither is it likely to survive in its current mode.
However, before I delve deeper into this subject, perhaps it would be useful to separate Capitalism from some of its philosophical underpinnings that are as vital to a democracy as to a Capitalist paradigm of economic enterprise.
Capitalism rests on a foundation of private enterprise, private property rights and competition. These three elements are as fundamental to a democracy as freedom of speech, of religion, of association. They are not inherently capitalistic in nature, but Capitalism could not exist without them. The amalgam of these there elements is manifest in the entrepreneurial spirit, the exercise of freedom to take risks and reap rewards in a venture to provide unique goods or services, and hopefully advance the human condition.
Capitalism took these raw elements of economic freedom, and injected them with the corporate form of business and its two defining features: distributed ownership through stock, and professional management who would theoretically direct the enterprise for the benefit of passive owners. This second aspect of professional management is known as 'agency': professional managers serving as 'agents' for the stock-holding owners.
Corporate Capitalism, as distinguished from Entrepreneurial Capitalism of individuals as sole proprietors and partnerships, had the unique attribute of infinite life, the corporation being a 'legal' person transcending the nuisance of human mortality. Its embodiment in stock made wide distribution practical and beneficial in amassing great resource for great endeavors. This was the genius of early industrial corporate Capitalism.
Capitalists like to fashion themselves as entrepreneurs. But for every true entrepreneur like Fred Smith of FedEx or Ted Turner who founded CNN, there are probably twenty or more buccaneers who know how to milk a system, but not how build a product. The inflation of executive salaries, the contagion of back-dating stock options suggest a corporate culture more concerned about insulating itself from risk and leveraging its self-interest than managing its entrusted enterprise to successful long term outcomes. The concentration of wealth in the US over recent decades is further testimony to the success of this insular corpocracy in manipulating the system to its benefit, not only to the detriment of the public at large, but the very stockholders whose interests they are supposedly engaged to promote.
The argument that the Corpocracy puts forth to justify its bloated salaries is that they are merited by the returns they earn for their stockholders. But the only constant over the past three decades has been a succession of meteoric rises and falls of corporations and their rapidly revolving C-class executives. When you protect yourself going in the revolving door with a large sign-on bonus, reward yourself irrespective of performance while you in the C-suite, and assure your soft landing on the way out of the revolving door with an equally generous severance package, what fear of consequence keeps you tethered to reality, to a sense of responsibility to others.
We have witnessed an auto industry that we built supplanted by foreign competition; an airline industry reduced to a subway system with wings, with quality and safety of service steadily declining in recent years as a result of a predatory and byzantine fare structure designed to confuse the public as a strategy to build dominance through market share that could not be sustained in the face of progressively less reliable service. We have a food industry seeking to sustain profits with low cost labor, and all too often skirting regulations that they cannot dilute through manipulation of the legislative process in pursuit of profit. In all such cases the titans of these industries continue to richly rewarded themselves without regard for their performance or impact on public well-being.
Perhaps there is no greater evidence of the failure of the corpocracy than health care. As both providers and nominal 'customers' of health care, corpocracies have failed miserably to apply their presumed wisdom and managerial discipline to provide service that is at least the equal of other developed societies. Yet they have the undiminished audacity to trash Medicare and 'socialistic' medicine while insurers continue to cherry-pick risks (known in the vernacular as 'people') and employers outsource or off-shore employees to avoid health care costs that they could not find the way to control responsibly through exercise of their presumed management wisdom and combined purchasing power.
The demise of Enron and Worldcom and other notable corporate catastrophes brought on Sarbanes-Oxley as a knee jerk response to the ethical lapses of the business community, but it apparently did not cause a self-assessment of business ethics from a public perspective. Rather, it generated a wave of private equity migrations: taking formerly public corporations private, behind the green curtain of accumulated executive wealth to shield the inner workings from the public scrutiny enabled by SEC regulation. This myopic belief of safe haven from public accountability is a mirror image of the current Administration's belief that housing detainees in Guantanamo shields the government from accountability to the federal laws it is empowered and obliged to uphold--a further manifestation of the close relationship between the Corpocracy and the government it currently leases.
Capitalism has lost sight of the fact that its continued existence, as with any institution in a democracy, is contingent on its ability to meet the needs of the public it serves. When it fails to serve the society and in fact subjugates and subverts the society to its self-serving purposes, whether overtly or covertly, it becomes yet another form of tyranny awaiting redress. If the capitalist community does not begin to reform itself in its enlightened self interest, it will inevitably slit its own wrists with the instruments of its selfishness.
Onward.
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