Thursday, February 25, 2021
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More Hidden Truths About Modern “Capitalism”

This is the promised follow-up to the earlier article Hidden Truths About Modern Capitalism, based on Cambridge economist Ha-Joon Chang's easy-read book 23 Things They Don't Tell You About Capitalism.

To refresh your memory, these two hidden truths, or "things," were explained previously:

Thing 1:  There is no such thing as a free market. The truth is, so-called free markets, the foundation of Freidman economics, simply do not and cannot exist in the real world. They are a fantasy, and pretending you can create such markets by formal de-regulation only screws it up for everybody.

Thing 5: Assume the worst about people and you get the worst.The truth is, no society, much less any economic activity, can survive and work efficiently if everyone really operates on the rational basis of grabbing their own short-term personal profit by any means possible, because the system would completely collapse under the weight of cheating, catching cheaters, and punishing them. No trust, no market.

Following the Golden Rule under Capitalism


The darkest gray of extreme free market capitalism in the U.S. is the idea that subsists under this economic system that the profit-motive is the overriding consideration in human affairs, trumping all other social concerns. Under such a system of economic beliefs, one who takes this or that action is only condemned if the "return" has not been maximized relative to all other possibilities that the individual has to choose from. Yes, extreme free market capitalism discourages discrimination on all grounds except from that which no profit can be made. But extreme free market capitalism also dissuades individuals from taking objects that have not traditionally been subjected to the economic gaze (e.g. wetlands, endangered species, human well-being, etc) and placing these objects at the top of their economic calculations, if they are placed at all. An inevitable consequence of this line of economic thinking is preventable oil spills, non-fuel efficient cars, a continued reliance on fossil fuels, and so on.

I use the term "extreme" because the form of active-state capitalism that has developed in the U.S. through trial and error is not, of course, free market capitalism at its most radical. Through trial and error, our country has democratically concluded that free markets, left to their own, will reap irreparable and/or catastrophic economic and social turmoil. Adam Smith, the father of modern capitalism, understood that left to its own, wealth and power would accumulate among a minority in the marketplace and individual freedom would find itself in a strait-jacket of tyranny. Hence the rise of Marxism as the consequence of "unfettered" capitalism led directly to the toiling masses of Europe's major cities (as well as its rise in academia following the global financial crisis beginning in late 2008).  

Who Is The Enemy?

We watch the desperate citizens of Tunisia and Egypt demonstrate successfully against their resident dictators, and hope their joy is fulfilled, even as oppressed people under neighboring tyrants try to emulate them, and are slaughtered by the firepower of their own Establishments.  We have seen Greek workers and pensioners take to the streets, and even staid Englishmen and women in the UK rally against tax-cheating corporations, and against austerity programs which would be unnecessary had the corporations paid their taxes. We hear about food riots and the rising cost of food, and the threat of hyper-inflation.

Meanwhile, right here at home, we see the betrayed workers in Wisconsin fighting their ruthless Governor.  We worry about intractable unemployment and irrational anti-immigrant laws, and the steady increase in political violence, of which the Tucson shootings are only the latest example. We hear Representative Jackie Speier (D,CA) on the floor of Congress speaking eloquently against the Republican war on women.  We sign petitions against attacks on Social Security, the environment, the thievery of Wall Street, and the opening of the floodgates of corporate political spending due to the Citizens United decision. Does it not strike you that all of these battles have something in common?  That they are not isolated, local incidents, each with its own, individual backstory and provenance?

UPDATE: See above for video from Al Jazeera on revolution suppression in Libya tonight. The tyrant appears to be following the classic doctrine of using overwhelming force against the opposition.  

Corporate Values, Ethics, and Consequences

The overly optimistic oil spill recovery projections made by BP are part of a routine charade corporations use to shift real production costs from the books and immediate consumers to a vague future debtor. It ignores risk, assigning low cost to potential consequences on a wager with others' futures.

The failure to capture the costs of this particular unassigned risk are dramatic and, in this case, quantifiable. Further, the casual dismissal of potential responsibility and the attempt to fix it on others is transparent. Both Marine Spill Response Corporation and National Response Corporation were set up to be the fall guys in the event of a less tragic event where BP would be positioned to claim it had been misled about the capabilities, dust itself off, and carry on.

It is much more difficult to fix costs when, for instance, mountaintop removal is used to mine coal that will produce poisonous pollutants as an end product. With this oil spill, the damage is impossible to disguise and easier to assess. Other industries that create waste that will either one day have to be cleaned up or will create permanent wastelands while reaping exorbitant margins by shifting real cost are harder to indict. Consumers who enjoy the benefit of such arrangements through lower prices at the counter are just as irresponsible as the corporations. But theirs are often acts of omission while the corporations' are acts of commission.

The BP obfuscation continues in the stories of skimming efforts. While it reports that more than 671,428 barrels of oil-water mixture have been captured, they are remiss in failing to mention that 90% of the mixture is water. In the end, $20 billion may not cover making the Gulf region whole. And equally as dangerous is the prospect that BP may be the victim of a corporate raid by our close ally, Libya. Imagine if the long term cost of this spill had been included in the price of a gallon of gasoline in anticipation of risk.

Bottom line: if the true cost of oil production or coal production, or battery production, or whatever, were captured by the producers and passed to the consumers, the free market could function more closely to the ideal manner described by the Chicago acolytes. The actual cost of energy would make the green alternative dynamic and profitable in a world where truth has value.