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The Limits Of Free-Market Capitalism

Until a few years ago, my spiritual devotions were  limited to the free market and the music of Patsy Cline. I’m sorry to say it’s  just me and Patsy now.

Karl Marx may have been wrong where it really mattered—communism, to paraphrase Churchill, is government “of the duds, by the duds,  and for the duds”—but he was spot on about the pitfalls of capitalism,  particularly when it came to the entrenchment of social classes, the fetish of  consumption, the frequency of recession, and the concentration of industry. Yet,  like trained seals, we continue to leap through the flaming rings of a system  that is contemptuous of the public good while rewarding those who feed off  “free” markets and the politicians who rig them. Nearly three years after the  global economy almost collapsed under the weight of a corrupt and inbred  financial order, Washington is still mired between the false choice of the  state or private enterprise as the proper steward of the general welfare.

It should be clear to anyone who has lost a cell phone  signal in our nation’s capital or been denied health coverage because of a  pre-existing ailment that capitalism’s endgame is not freedom of choice and  efficiency, but oligarchy. Many of America’s top industries—agriculture,  airlines, media, medical care, banking, defense, auto production,  telecommunications—are controlled by a handful of corporations who fix prices  like cartels. As Marx predicted, the natural inclination of players in a  market-driven economy is not to compete but to collude.

Reporting in Asia and the Middle East for many years, I  prayed to the same kitchen gods of untrammeled commerce that now bewitch the  Republican Party faithful and the neoliberals who inhabit the Obama White House. In Asia more than a decade ago, I covered the liquidation of state  assets as prescribed by the International Monetary Fund, perhaps the  largest-ever transfer of wealth from public to private hands, as if it were a  new religion that would transform economies from the Korean peninsula to the  Indian subcontinent. Laissez-faireism, I wrote, would liberate consumers and  domesticate once overweening state-owned enterprises.

In fact, privatization merely shifted economic control  from corrupt apparatchiks to their allies in business, a transaction lubricated  with kick-backs and sweetheart deals. That’s what happened in the Middle East,  and it became the spore that engendered the Arab uprising.

The corruption of capitalism in America is all the more  appalling for its legality. With the economy still struggling to recover from a  housing crisis fomented largely by Wall Street’s craving for mortgage-backed  securities, prosecution of those responsible has been confined to a single lawsuit filed by the Securities Exchange Commission against a  lone financier. The system is still lousy with loopholes, and the Republican  Party, which demographically as well as ideologically is becoming a gated  community for white, southern males, is calling for more deregulation, not  less.

Which brings us to the central failure of American  capitalism: the excoriation of the state.

So deep is the mythology of the free market that we  ignore the consequences of starving our schools, libraries, public media, and  roads and railways. We expect our teachers to assume the burdens of parenthood  and then blame them for failing education. We lament our dependence on foreign  oil and the aviation cartels, but we refuse to underwrite a passenger-rail  equivalent of the interstate highway system. We disparage the coarse  reductionism of corporate-owned news outlets while neglecting public  broadcasting, an isolated archipelago of smart, responsible journalism.

Our hostility to the public sector—fountainhead of  the Hoover Dam, Mount Rushmore, the Golden Gate Bridge, the Los Angeles  Coliseum, our national parks, and countless other public utilities and services  in addition to the federal highway system—is inversely proportional to our  reverence for private consumption. As the economist John Kenneth Galbraith wrote in his 1958 book The Affluent Society, “Vacuum cleaners to ensure clean houses are  praiseworthy and essential in our standard of living. Street cleaners to ensure  clean streets are an unfortunate expense. Partly as a result, our houses are  generally clean and our streets are generally filthy.” Galbraith also noted the  uniquely American conceit of sanctioning debt when households and private  investors hold it but condemning it when  governments do.

Should the feds nationalize banks and appropriate soy  fields? Certainly not. At its essence, there is probably no more efficient way  of establishing the price of a particular good or service than market  economics. Not all transactions are so simple, however, and there are some  services—healthcare, for example, or transportation—that often fare better  more as public goods than as private commodities. In order to save American capitalism,  we must appreciate its limits even as we struggle to harness its power.

By: Stephen Glain, U. S. News and World Report, June 2, 2011

June 3, 2011 - Posted by | Businesses, Capitalism, Conservatives, Consumers, Corporations, Democracy, Democrats, Economic Recovery, Economy, Financial Institutions, GOP, Government, Health Care, Ideologues, Ideology, Politics, Republicans, Wall Street | , , , , , , , , , , , ,

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