Why Our Current Brand of “Capitalism” is Inconsistent with Freedom
November 25, 2008 by Mike Wilson · Leave a Comment
“The system of corporate life is a new power for which our language contains no name. We have no word to express government by moneyed corporations.” -Charles Francis Adams
Equal opportunity is the bedrock of freedom. This nation was established to preserve, protect, and ensure that opportunity. The United States (and the world) will need to make a very important decision over the next 30 years: whether to choose democracy or capitalism. Democracy protects equal opportunity while capitalism (as practiced today) stifles it.
Let’s ask some questions to help us see in what ways capitalism and democracy are incongruent. Our first task will be to precisely describe our terms.
What is capitalism and how does it differ from free enterprise?
Capitalism suffers from misused and loose definitions. Capitalism is commonly defined as “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.”
Unfortunately, in our current state of capitalism, this free market doesn’t exist. What we experience is more closely associated with Karl Marx’s definition of a “capitalist.” It was Marx who first used the term to describe the oppressive and face-grinding economic environment of aristocratic Europe that was buoyed up by legal protection of the few at the expense of the many.
In place of a free market exists a complicated web of laws and regulations that, as one critic suggests, allows the corporate class to “use free-market rhetoric to justify imposing greater economic risk upon the lower classes, while being insulated from the rigors of the market by the political and economic and legal advantages that such wealth affords.”
Capitalism today is an economic system where the government favors those with capital over those with little or none. It’s a marriage between government and big business. You don’t see small businesses being “bailed out” right now, do you? There’s a reason for that.
Although capitalism suffers from these weaknesses, we should recognized that it is a much freer system, both economically and politically, than either communism or socialism.
Nevertheless, capitalism is the systems in which those with the capital make the rules. The rules are made to benefit themselves at the expense of new competition. This is accomplished through financially-privileged and unequal access to political influence and power.
For example, a small business owner would have a difficult road competing against a large “box” store, not only because of volume and pricing (which is part of market forces and free enterprise), but because of fewer obstacles (paperwork, fees, etc) the large “box store” would face because of laws and favors granted due to financial influence (which is what makes it capitalism).
This environment results in exclusionary practices and limits opportunity; and this is where our current state of capitalism breaks with democracy.
Free enterprise is the legal framework that allows all with the desire and the idea and the creativity to compete on a level playing field; free enterprise is therefore more democratic because it is based on equal opportunity before the law. In contrast, capitalism is the legal framework that leads to aristocratic structures by providing advantage to those who have capital via protection and perpetuation of wealth.
What is democracy and why is it currently tightly associated with capitalism?
Democracy is another term with many loose definitions. Historically it denotes that the common people (demos) rule (kratia) in that the population of the society controls the government, and that the government is for, of and by the people. There are many brands of democracy but they are all distinguished from other forms of government by general population-based input into the political process.
Aristocracy, the rule by “the best” (generally determined by birth or status that almost always rule for life) and plutocracy, rule by the wealthy, are enemies of democracy. Our current brand of capitalism tends to create and then maintain these other social forms.
Historically, free enterprise was tied to democracy by the American Revolution, as much of the reasoning for war was a push-back against British mercantilistic policies imposed upon colonists accustomed to operating within an essentially free market.
With the advent of communism and socialism in the mid 19th century and their rise at the turn of that century, capitalism stood out as the “more free” of the economic systems and the alliance with democracy was forged. This bond was fortified during WWI and WWII and the Cold War as the world battled between democracy and totalitarianism.
Why is “a government of the people, by the people, and for the people” inconsistent with mercantilistic capitalism?
1. The increasingly manipulated legal system of capitalism, set up in order to preserve and protect privileged access to the market (try to get a franchise license without incredible personal assets), causes the political process to concurrently become less and less democratic.
Although we are given the impression that the process is becoming more democratic (that we can vote about more things), reality is that those who we choose to represent us are increasingly influenced, and to that degree, controlled by those who fund their political ascendancy. This tends to aristocracy or oligarchy (rule by the few).
2. Thus, only those with legal and political influence are able to manipulate the system to their advantage. At some point (I think we’re getting close) the common man disengages from the political and civil conversation and the wealthy and powerful (whether conservative or liberal) are the only ones involved in the functioning of government, making decisions based on protecting their wealth and power.
3. Even if the political structures don’t change form, the economic and legal systems create a de facto wealth-based aristocracy. The ability of the common people (demos) to influence the political situation diminishes into insignificance and thus capitalism changes the political structure.
4. The laws currently in place give capitalism a decided advantage in the choice between capitalism and democracy. Money purchases political influence and will continue to bring into play laws that perpetuate the capitalist system at the expense of free enterprise and democracy.
5. Remember that we are not talking about overnight change. This is a trend that has progressed for decades. Only now are we able to distinguish the two, and we need to choose before we reach a point of no return.
How are democracy and capitalism perceived internationally?
The United States is currently the self-proclaimed “bastion” of both capitalism and democracy. However, in international opinion the U.S. government is associated (through sad experience) with rapacious capitalistic policies and oft-times hypocritical democratic interventions that have been claimed have the intention of “spreading democracy and prosperity,” only to have had the opposite effects in multiple countries throughout the world.
Much of U.S. foreign policy has supposedly been to “spread democracy”; however the means chosen seem to indicate that the purpose has been to make the world safe for mercantilistic capitalism at the expense of popular sovereignty and paced and sequenced movements, determined by each country, to improve the freedom in their markets and the prosperity of the people of these lands.
It’s not yet clear whether the incoming executive administration will continue to force on other countries the concepts of free government and free markets through the use of the military and international financial organizations. Regardless, we must choose, as soon as possible, whether as a people we will continue to align ourselves with mercantilistic capitalism, or if we will trust free government, free markets, and popular sovereignty.
Conclusion
Our rampant commercialism, consumerism, and materialism indicate which way we are leaning. Our ethics and our legal system to which we sacrifice our morals demonstrate that we value capital and wealth (and especially protecting it) more than we value liberty. We demonstrate that we would rather have an aristocratic plutocracy govern us than to govern ourselves (if it means we can maintain our current level of luxury).
Mercantilistic capitalism is winning in the U.S. and will continue to do so until appropriate corporate and tax reforms are undertaken and until financial influence of the political system is eliminated.
Will we wait until our own government implements “Intolerable Acts” that protect its mercantilistic desires at the expense of the free market, or until our foreign economic and political policies become so unfair that our security is even more seriously compromised? Or will we pro-actively choose democracy, free enterprise, and liberty at home and abroad?
We must call our current economic system what it is — mercantilistic capitalism — recognize how distant we are from liberty in our government and our economics, and move forward the overhaul that needs to occur.
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Copyright © 2008 by The Cause of Liberty. All rights reserved.
Palmer Says Bush Feeding Market Instability
October 10, 2008 by Stephen Palmer · 2 Comments
I just read an article on Yahoo! News entitled “Bush Says Anxiety Feeding Market Instability.” It prompted me to write my own version of the article. My version will make more sense after you’ve read the original.
(Note: Apparently Yahoo! News updates their stories, so the article I link to above is not the exact article that this was based on. But you’ll still get the point.)
Palmer Says Bush Feeding Market Instability
By STEPHEN PALMER, COL Correspondent
October 10, 2008
ROUND ROCK, TX — Stephen Palmer said Friday that the government’s financial rescue plan was aggressive enough and big enough to plunge America into a depression and rob citizens of their hard-earned savings, but it may take time to fully kick in as the government props up unstable policies and institutions. “We can solve this crisis and we will — by getting rid of the Federal Reserve,” he said in brief remarks from his home.
Palmer spoke as leaders of the world’s top economies gathered in Washington to figure out how they could leverage the panic to confiscate more illegitimate power.
Mr. Palmer noted that major Western countries were working together in an attempt to undermine every positive step we’ve taken toward creating just and equitable society since 1776, including ignoring their respective Constitutions.
“Through these efforts, the world is sending an unmistakable signal. We’re in this together and we’ll be oppressed by our governments together,” Palmer said.
Palmer said how he understood how Americans could be concerned about their economic future. “That anxiety can feed anxiety and that can make it hard to see all that’s being done to worsen the problem and strip us of more freedom,” he said.
But despite a relentless sell-off that has seen the Dow Jones industrials plunge 20 percent in the past seven trading days, Palmer said, “We are a prosperous nation with immense resources and a wide range of tools at our disposal — all of which can be employed when we get President Bush, Henry Paulson, Ben Bernanke and the Federal Reserve out of the way.”
Mr. Palmer said the new $700 billion tyranny plan that President Bush signed into law a week ago authorizes the Treasury Department to socialize financial institutions at the whims of one man.
It wasn’t the first time Mr. Palmer has declared that the government stop distorting the market by controlling interest rates and the money supply, although it has also been mentioned by several other prominent economists and experts.
Since the bailout package was signed into law, the conversation about how it will be used has shifted from how taxpayers are lining the pockets of corporate executives to how they are supporting an overblown government.
Nationalization of the U.S. banking industry was once unthinkable, but in a stagnant pond of public apathy, anything is possible.
The government is authorized under the law to “screw taxpayers.”
These include the couple in South Dakota making $45,000 a year and trying desperately to put their two sons through college, but not Wall Street executives making $5 million per year and struggling with the overwhelming decision of how they should spend their money.
It is Mr. Palmer’s position that the Bush administration’s authority extends to whatever it feel like doing, since Congress doesn’t have the guts, nor the knowledge, to check it on any front.
“The plan they are executing is aggressive. It is the wrong plan. It will take time to have its full impact. It is flexible enough to get even more tyrannical as the executive branch amasses more power. And it is big enough to work, the definition of ‘work’ being to collapse the economy,” Palmer said.
He also noted that the Federal Reserve has injected hundreds of billions of green pieces of paper into the system — with little to no oversight and with nothing backing it. Other central banks have cooperated to help speed up the rate of inflation and erode the savings of every American.
“The federal government has a comprehensive strategy to lull the people into temporary security at the cost of freedom,” Palmer said.
While he sought to reassure Americans that the situation is not hopeless and that we should continue doing all we can, Palmer also acknowledged that this was one of the most egregious acts of tyranny in our nation’s history.
Palmer said his online community, The Cause of Liberty, has launched initiatives that are “helping common Americans to reclaim their responsibilities as citizens and to restore the American Republic.”
He also noted “rigorous discipline” must be enacted by the People to make sure that the government doesn’t “take advantage of the crisis to illegitimately erode our freedoms.”
“Over the past few days,” Palmer continued, “we have witnessed a totally predictable drop in the stock market, much of it driven by the stupidity and power-mongering of the government and the Federal Reserve. This has been a deeply unsettling period for the American people.”
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The Bitter Ironies of September
September 24, 2008 by Rob Benson · 1 Comment
(Guest Contributor)
These days have produced some great ironies. Not the least of which is the current scene on Wall Street: The “free market capitalists” are the ones at the helm when we have the biggest fiasco of the financial system to date, and they are proposing a bail-out? The free marketists created the very system which will result in the biggest regulatory intervention ever: so far $1 trillion proposed to bail out the Wall Street financials.
Ironic that under Bush, the conservatives allow the governmental bail-out in the first place. Furthermore, the RTC (governmental commission to oversee and take in conservatorship of the assets that are upside down) and other heavy-handed governmental regulatory agencies that will come from this are far more heavy-handed than the regulation repealed by the GOP in the 80’s!
Ironic that while the Chinese have worked to “privatize” their biggest banks over the last decade, the US of A has just “nationalized” it’s biggest banks!
Ironic that the American taxpayer will bail out the CEO’s of Wall Street, whose taxes the American taxpayer, through the representatives, voted to decrease!
Ironic that the American taxpayer will bail out the biggest financial giants whose shares are widely held by foreigners!
Ironic that Morgan Stanley, an age-old American financial, is being looked at for purchase by a Chinese bank.
It’s ironic that John McCain who has defended the SEC and the “down-regulate” culture of wall street now calls for Chairman Cox to be “fired!” Further ironic that he was considering Cox for his VP.
Ironic that Bush spent us into uncharted deficit territory, while Obama is vowing to cut spending and cut taxes on the middle class.
Ironic that during the Clinton years, we saw more economic growth, less governmental spending and saw an expansion of global trade activity, while during the Bush years we’ve seen more spending, less growth and a decrease in our ability to expand trade.
It’s ironic that the mean income of the majority of the conservative voting block is “middle class” while the two groups of voters for Obama are “wealthy/upper class” and “lower class/poor” — yet, Obama is proposing a sizable “middle-class tax-cut.”
Furthermore, irony strikes broadly in politics these days: The “family-values” party nominates a man known for NOT being a family man and a woman who chooses to run for the highest office in the land right after having a baby!, while the other party’s two nominees are well known family men.
The party who claims to defend fighting for the rights of women misses the opportunity to nominate the first woman to the highest office. While the other party chooses a woman to run as VP.
The minority nominee is the most educated in the running. The minority nominee has the most statesman-like temperament.
While John McCain accuses Obama of being inexperienced, he chooses a green governor of a small state who’s only other experience is mayor of a town of 7,000 people.
It’s ironic that the man who fought for campaign-finance reform is now being out fund-raised by his counterpart because of his own rules.
Ironic that the party in favor of a “free press” cloisters their VP nominee, Palin, from any exposure to the press.
Ironic that Palin, a staunch opponent of sex education in schools — even if it’s limited to teaching abstinence — has a teenage daughter who is pregnant.
Ironic that McCain calls Obama “elite” while the combined net worth of Obama and Biden is a fraction of the networth of Palin, and Palin’s net worth is a fraction of McCain’s!!
Ironies that may shift the entire political and economic field.
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Conquering the World; Losing Our Soul
September 17, 2008 by Stephen Palmer · 8 Comments
“For what shall it profit a man, if he shall gain the whole world, and lose his own soul?” -Mark 8:36
Let me get this straight — we’re spending $12 billion a month to tame Iraq, while our own financial infrastructure is crumbling and we’re adding AIG’s blunders to our credit card to the tune of $85 billion?!
Our military is deployed in over 150 countries (out of 195 total countries), with more than 369,000 of our nearly 1.4 million active-duty troops serving outside the United States.
Meanwhile, the standard of living for those in the bottom 10% of our population was lower here than other developed nations except the United Kingdom, which has the lowest standard of living for impoverished children in the developed world. According to the U.S. Census Bureau, in 2001 the bottom quarter of families in the United States had zero net worth. The bottom 90% of families had less than 20% of the net wealth, and the top 10% owned 80.7% of all the net wealth.
The wealthiest man in America, Bill Gates, has more wealth than the bottom 45% of American households combined.
In 2001 our annual military expenditures were $333 billion. The requested figure for 2009 currently stands at $706 billion. We’ve increased our military expenditures an average of 8.775% per year since 2001. Add that to the facts that America’s military expenses represent 48% of the entire military spending around the world. All of Europe combined represents 20%, with a 2008 bill of $289 billion. China comes in third with $122 billion, representing 8% of the world’s military funding.
One country, representing 4.56% of the world’s population and 7% of the globe’s land mass, accounts for almost half of all military spending.
“Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes … known instruments for bringing the many under the domination of the few.… No nation could preserve its freedom in the midst of continual warfare.” -James Madison
Meanwhile, the total federal debt burden is $52.7 trillion, with your share of that being $175,000. The sum of America’s unfunded liabilities and unfunded, off-the-balance sheet entitlement promises currently exceeds three times the size of the entire U.S. economy. Health care costs are more than twice as high per capita in the United States as in the rest of the developed world. Half of America’s youth in urban areas and 30% of all young Americans do not graduate from high school.
And on top of all of that, our culture is rotting like a corpse. There are more outlets for hard-core pornography in the United States than McDonald’s restaurants. The Wall Street Journal estimated that total revenues from pornography during 2001 was likely between $10-20 billion, which means that it exceeds revenues for any professional sport. We’re kissing sewage and we like it, to borrow from a degenerate hit song by Katy Perry.
And need I mention anything about our failed education system?
Can somebody PLEASE tell me why we think we’re morally superior enough to spread our brand of “democracy” across the globe? Can somebody please tell me that I’m dreaming? Can somebody please tell me how to stop the madness?
Are we consoling ourselves by saying that although we have our problems, we’re still better than the rest of the world? Is that really how we measure our success — by freedom and prosperity relative to countries who don’t even have a fighting chance at what we have? Shouldn’t we measure ourselves against a better scale — what we could and should be relative to the legacy we’ve been given?
What will America be profited if we gain the whole world and lose our own soul?
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Copyright © 2008 by The Cause of Liberty. All rights reserved.
The Law — Tool of Acquisition, Redistribution, or Justice?
September 1, 2008 by Mike Wilson · 1 Comment
How To Keep The Law In Its Rightful Place
The only legitimate purpose of legislation is to establish some level of justice in society. However, it doesn’t take long for that proposed intent to be abused. Human beings have a tendency to self-interest and legislators are no different.
The French physiocrat Frederic Bastiat, popularized the phrase “legal plunder” in his essay The Law. Legal plunder means to use legislation to accomplish exchanges of money, capital, labor, resources, etc. that one could not do without the law. This legalization does the following: “And, as law cannot exist without the sanction and the support of a preponderating force, it must finally place this force in the hands of those who legislate.”
Historically, how has this been manifested? How do we understand it today? What can we do about this problem in order to increase our liberty and prosperity?
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