Chrystia Freedland, the prominent Reuters editor just recruited by the Liberals to contest the nomination in the Toronto Centre riding vacated by Bob Rae, remarks how capitalism deserves credit as “the best prosperity-creating system humanity has come up with so far.” True enough, it has done better than feudalism, slavery, hunting, fishing and food gathering. The issue is whether it is time to move past profit seeking as the answer, and on to a better economic system, or whether capitalism just needs to evolve.
Freeland wants to enter politics as a champion of the middle class. She has reported on how recourse to flexible labour markets helps explain the deep recessionary conditions forced on families in the U.K. In The Price of Inequality, Joseph Stiglitz pointed out how institutional forces conspired to weaken unions and lower wages, leaving more for the rich.
Freeland has written a bestseller documenting the rise of the rich: Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. Recently she has identified a hopeful initiative in the State of Delaware — the benefit corporation — a legal entity incorporated to meet socially responsible goals, not just maximize profits.
Trying to save capitalism from itself has emerged as an American intellectual industry. At least one adviser at the Institute for New Economic Thinking posits that economists, not capitalism, are responsible for the economic slump. He and his colleagues have inaugurated a research program on Imperfect Economic Knowledge to show how to do it right.
More promisingly, the Modern Monetary Theorists based in Kansas City, Missouri have a solution to the crisis: make the government employer of last resort, providing minimum-wage jobs with minimum legal benefits to anyone willing to work.
New York Times columnist and Princeton economist Paul Krugman argues government austerity makes most people worse off. Presumably, governments turn things around for capitalism, but not necessarily for workers.
In the 25 good years after World War II, economic policy experts had minor differences. Would it be left to the central bank to control the money supply and make the economy behave, or did governments have to compensate for economic weakness by direct spending?
In recent years, those who thought governments only looked out for their own interests and were incapable of minding the economy, somehow convinced people that corporations could be trusted to exert greater and greater influence and privilege.
Believing that handing over power and authority to investors determined to make a profit, or fail in the process, somehow gives citizens of our one world the answers to the multiple environmental, economic, social and cultural woes that beset us requires rigorous training in forgetting everything we have learned in past decades, and widespread ignorance of the scientific evidence warning of perils ahead for the planet.
Promoting the interests of corporations currently heating up the planet is bad enough. Worse are the plans afoot to increase climate change exponentially through the mere pursuit of profit by the fossil fuel industry. The very establishment International Energy Agency reports, “the world is drifting further and further from the track it needs to follow.”
In Canada, instead of providing new capital for brave new ventures, the Toronto Stock Exchange (TSX) provides comfortable surroundings for big oil, the big banks, telecom operators, real estate and mining giants. The monopoly capitalists are so big, they make constructing a balanced Canadian stock portfolio impossible. No wonder Canadian savings escape abroad in search of some diversity, led by the now privately run Canada Pension Plan.
In 1995, the late Hyman Minsky referred to “money manager” capitalism. Huge pools of money managed by mutual and pension funds are interested in profits and rates of return on their investments, end of story. If investing in arms, nuclear energy, tobacco, junk food, sugary or alcoholic beverages produces a good rate of return, so be it. This capitalism has little to do with the mythical entrepreneur with a line of credit and a bright idea of how to benefit from making people better off.
Minsky explained that corporate executives could be paid excessive salaries, because they benefited from “conveyance,” remuneration through a transfer of corporate assets to themselves. In other words, the people running the corporate world are looting it for their own benefit.
Lots of people understand that just because investing in global warming (fossil fuel producers) makes money does not mean we should be doing it. Disinvestment campaigns have been successful in some sectors, and remain an important tool for limiting capital’s freedom to fry the planet.
What needs to be more properly understood, tamed and transformed is private monopoly economic power. Governments can limit this by direct regulatory action. For instance, corporations can be made to stop producing electricity through burning coal. The problem remains that in the U.S. the corporate sector is one step ahead: it works with local allies to rig the political process in favour of King Coal.
The antidote to corporate power is the “other superpower” — world public opinion. Until a clear understanding of how capitalism fails the people of the world works its way into political consciousness, monopolists looks safe, even from those trying to save an idealized form of capitalism from itself.
Duncan Cameron is the president of rabble.ca and writes a weekly column on politics and current affairs.
Photo: Andrés Nieto Porras/flickr