September 11, 2012

"Under True Capitalism, Goldman Sachs Would Not Exist"

The words in the title of this blog come from H. "Woody" Brock, Ph.D, President, Strategic Economic Decisions, Inc., who has other interesting and insightful things to say about capitalism and how it is being played out in America. He contrasts "true" capitalism with crony capitalism.

"Capitalism is an economic system that is based on private ownership of the means of production and the creation of goods or services for profit.[1] Other elements central to capitalism include competitive markets, wage labor and capital accumulation.[2] There are multiple variants of capitalism, including laissez-faire, welfare capitalism and state capitalism. Capitalism is considered to have been applied in a variety of historical cases, varying in time, geography, politics, and culture." (from Wikipedia)

"Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of dirigisme[1] Crony capitalism is believed to arise when political cronyism spills over into the business world; self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals." (from Wikipedia)

Elsewhere, Ralph Nader describes some of the aspects of capitalism by stating what defines it and at the same time hints at what capitalism should not look like:

--In capitalist society, when business fails, it is not bailed out;
--Business cannot lobby for the benefit of its own position;
--Capitalism works for the good of all, not just the rich;
--Speculation with derivatives, polluting and gambling should not be part of capitalism;
--Capitalism is not solely about profit either for shareholders and top executives.

With the financialization of the economy and the deminuation of manufacturing, capitalism has focused more and more on ways to create huge profits for corporations which comes at the expense of ordinary citizens whose pensions and savings have been diminished and whose employment opportunities have suffered. Wealth has been, and still is being, transferred from the many below to the few at the top. With the fixation on attaining money, new financial innovations (like derivatives and outsourcing labor) have contributed to the rising inequality of wealth.

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