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Captitalism vs Corporatism ! ?

March 8, 2012

Okay, so you are out there protesting with your fellow 99 Percenters and this three-piece-buttoned down chap comes up to you and calmly screams, a la Breitbart, “You people are just a bunch of Socialists; all you want is a free handout; you’re just out to destroy  Capitalism!”  What do you say?  How can you answer this, lamely espousing, “Well sir, I am really a democratic capitalist and really favor sort of a free market that does nevertheless consider some limits on the concentration of wealth here in the good ol’ US of A.”

Forewarned is forearmed; memorize this retort: “Sir I certainly do believe in capitalism but the free market system envisioned by the our founders has been thoroughly corrupted by corporatism that threatens the existance of our democratic republic!”

Then thoroughly study this excellent treatise to prepare yourself to back up this powerful argument.  It should be relatively easy to see how corporatism is used to further the aims of the Military/Industrial complex.

Johnnie “U”

Blaming Capitalism for Corporatism   by Edmund S. Phillips and Saifedean Ammous                                                                                  published February 1, 2012 in   Project Syndicate

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The fu­ture of cap­i­tal­ism is again a ques­tion. Will it sur­vive the on­go­ing cri­sis in its cur­rent form? If not, will it trans­form it­self or will gov­ern­ment take the lead?

The term “cap­i­tal­ism” used to mean an eco­nomic sys­tem in which cap­i­tal was pri­vately owned and traded; own­ers of cap­i­tal got to judge how best to use it, and could draw on the fore­sight and cre­ative ideas of en­tre­pre­neurs and in­no­v­a­tive thinkers. This sys­tem of in­di­vid­ual free­dom and in­di­vid­ual re­spon­si­bil­ity gave lit­tle scope for gov­ern­ment to in­flu­ence eco­nomic de­ci­sion-mak­ing: suc­cess meant prof­its; fail­ure meant losses. Cor­po­ra­tions could exist only as long as free in­di­vid­u­als will­ingly pur­chased their goods – and would go out of busi­ness quickly oth­er­wise.

Cap­i­tal­ism be­came a world-beater in the 1800’s, when it de­vel­oped ca­pa­bil­i­ties for en­demic in­no­va­tion. So­ci­eties that adopted the cap­i­tal­ist sys­tem gained un­ri­valed pros­per­ity, en­joyed wide­spread job sat­is­fac­tion, ob­tained pro­duc­tiv­ity growth that was the mar­vel of the world and ended mass pri­va­tion.

Now the cap­i­tal­ist sys­tem has been cor­rupted. The man­age­r­ial state has as­sumed re­spon­si­bil­ity for look­ing after every­thing from the in­comes of the mid­dle class to the prof­itabil­ity of large cor­po­ra­tions to in­dus­trial ad­vance­ment. This sys­tem, how­ever, is not cap­i­tal­ism, but rather an eco­nomic order that harks back to Bis­marck in the late nine­teenth cen­tury and Mus­solini in the twen­ti­eth: cor­po­ratism.

In var­i­ous ways, cor­po­ratism chokes off the dy­namism that makes for en­gag­ing work, faster eco­nomic growth, and greater op­por­tu­nity and in­clu­sive­ness. It main­tains lethar­gic, waste­ful, un­pro­duc­tive, and well-con­nected firms at the ex­pense of dy­namic new­com­ers and out­siders, and fa­vors de­clared goals such as in­dus­tri­al­iza­tion, eco­nomic de­vel­op­ment, and na­tional great­ness over in­di­vid­u­als’ eco­nomic free­dom and re­spon­si­bil­ity. Today, air­lines, auto man­u­fac­tur­ers, agri­cul­tural com­pa­nies, media, in­vest­ment banks, hedge funds, and much more has at some point been deemed too im­por­tant to weather the free mar­ket on its own, re­ceiv­ing a help­ing hand from gov­ern­ment in the name of the “pub­lic good.”

The costs of cor­po­ratism are vis­i­ble all around us: dys­func­tional cor­po­ra­tions that sur­vive de­spite their gross in­abil­ity to serve their cus­tomers; scle­rotic economies with slow out­put growth, a dearth of en­gag­ing work, scant op­por­tu­ni­ties for young peo­ple; gov­ern­ments bank­rupted by their ef­forts to pal­li­ate these prob­lems; and in­creas­ing con­cen­tra­tion of wealth in the hands of those con­nected enough to be on the right side of the cor­po­ratist deal.

This shift of power from own­ers and in­no­va­tors to state of­fi­cials is the an­tithe­sis of cap­i­tal­ism. Yet this sys­tem’s apol­o­gists and ben­e­fi­cia­ries have the temer­ity to blame all these fail­ures on “reck­less cap­i­tal­ism” and “lack of reg­u­la­tion,” which they argue ne­ces­si­tates more over­sight and reg­u­la­tion, which in re­al­ity means more cor­po­ratism and state fa­voritism.

It seems un­likely that so dis­as­trous a sys­tem is sus­tain­able. The cor­po­ratist model makes no sense to younger gen­er­a­tions who grew up using the In­ter­net, the world’s freest mar­ket for goods and ideas. The suc­cess and fail­ure of firms on the In­ter­net is the best ad­ver­tise­ment for the free mar­ket: so­cial net­work­ing Web sites, for ex­am­ple, rise and fall al­most in­stan­ta­neously, de­pend­ing on how well they serve their cus­tomers.

Sites such as Friend­ster and My­Space sought extra profit by com­pro­mis­ing the pri­vacy of their users, and were in­stantly pun­ished as users de­serted them to rel­a­tively safer com­peti­tors like Face­book and Twit­ter. There was no need for gov­ern­ment reg­u­la­tion to bring about this tran­si­tion; in fact, had mod­ern cor­po­ratist states at­tempted to do so, today they would be prop­ping up My­Space with tax­payer dol­lars and cam­paign­ing on a promise to “re­form” its pri­vacy fea­tures.

The In­ter­net, as a largely free mar­ket­place for ideas, has not been kind to cor­po­ratism. Peo­ple who grew up with its de­cen­tral­iza­tion and free com­pe­ti­tion of ideas must find alien the idea of state sup­port for large firms and in­dus­tries. Many in the tra­di­tional media re­peat the old line “What’s good for Firm X is good for Amer­ica,” but it is not likely to be seen trend­ing on Twit­ter.

The le­git­i­macy of cor­po­ratism is erod­ing along with the fis­cal health of gov­ern­ments that have re­lied on it. If politi­cians can­not re­peal cor­po­ratism, it will bury it­self in debt and de­fault, and a cap­i­tal­ist sys­tem could re-emerge from the dis­cred­ited cor­po­ratist rub­ble. Then “cap­i­tal­ism” would again carry its true mean­ing, rather than the one at­trib­uted to it by cor­po­ratists seek­ing to hide be­hind it and so­cial­ists want­ing to vil­ify it.

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