Capitalism Revisited

I have written a bit about capitalism in the past. In this post, I'd like to put the idea in the context of how it relates to other elements of our society, past, and present.

Here is a great Wikipedia article on capitalism. I love the way it puts capitalism in a historical context. The relatively modern view of capitalism seems to have emerged with Marx, who viewed it as an inherently evil and doomed system. These days, defenders of capitalism present it as the exact opposite of "socialism", which is seen to be evil in all its variations.

It helps to avoid all the moral outrage and take a look at what capitalism is and why some like it but others don't.

The issue is about ownership of the means of production, along with ownership of "profits" arising from that ownership. We are bothered by the fact that the "owners" are a tiny minority of society and the rest of us slave to make the rich even richer.

To me, this system seems to be built into virtually any historical society we can call "civilized". Civil societies are (literally) based in cities and have economies based (at least) on agriculture. The oldest civilizations we know of emerge fully formed complete with kings and armies defending the territory (which is necessary for agriculture - they are based on the ownership of land). So, along with civilization, we get the concept of land ownership. The land is the means of production - mainly food. Civilization produces enough food with labor capacity left over to make temples, trade with other nations, manufacture, etc. Thus, at the very beginning of history, we have all the elements in place for a "capitalist" structure. "Ownership" of land is always concentrated in a noble class or even the single person of the king. These societies also emerge into the light of history at war with each other. Accordingly, the "ruling class" has an additional responsibility: to organize citizens to defend the land. It's obvious that there is a high premium on "organized" defense (or offense), along with terrible consequences if you are defeated in this situation. On the "upside", the rewards of success are significant and we see little empires being built with the spoils of war right at the beginning of history. The rich are getting richer and the poor are being enslaved (if they are lucky).

My point is that this "top-down" way of organizing society is ancient and a natural - almost mathematical - consequence of the need to "own" territory to support agriculture. In the Americas, we see civilization following a similar path. As the crops go in, temples go up, so do the armies and so does the power of the elite.

To be sure, this "natural" system sucks for all but the "nobility". In all these civilizations we see slavery and human sacrifice alongside the benefits arising from a stable food source.

Forgive me if I take so long to arrive at my point, which is this: Those who chafe under "capitalism" are challenging the concentration of ownership and power in the hands of the elite. They are also complaining that their work and their very lives are sacrificed to make the rich richer. Welcome to the human race.

With this background, I'd like to ask if the modern version of this system represents progress for the average member of society. In its modern form, the system can be called "capitalism", which is defined as:

"an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state."

I must register a minor refinement of this definition, since, in the actual modern capitalist systems, the state is indirectly controlled by the rich. They are, in effect, "one dollar one vote" societies. However, the definition lends built-in support for the "Libertarian" point of view that wants to explicitly subtract the "state" from the definition.

In practice, we find that "trade and industry" cannot be controlled entirely by private owners or the "state". To understand this, we need to introduce another concept, almost as old as history itself: the marketplace. This entity is implied by our definition, which mentions "trade". "Trade" is an advance on the old ideas of conquest and slavery. You can obtain what you want by mutual exchange rather than enslaving people to force them to work or killing them to take their land.

The problem with total "state" control of "trade" is that the "state" sits on both sides of the bargaining table, effectively destroying the concept of price and the marketplace itself. It is amusing to see Gorbachev, in his autobiography, waking up to the fact that the USSR had no concept of "cost". They just decided what was wanted, then micro-managed the entire society to produce it (this is called a "command economy"). The result was not pretty. We see this mistake being repeated over and over - most recently in Venezuela.

The problem with total control by "private owners" is that the majority of citizens don't like it and they have guns. Just as in the former case (state control), the system needs to be shoved down the throats of the citizens at the point of a gun. Pinochet's Chile is a good example, created explicitly by the "Chicago school" of "market fundamentalists".

So most modern national economies represent a compromise (I won't say "balance") between the two extremes. The fly in the ointment is that the essential component of the economy (the marketplace) is inherently unstable. There is no way to control wild swings in prices especially if the marketplace is dominated by speculation. A speculator buys not for any direct purpose but on the belief that what he buys will rise in cost and he will be able to sell at a profit. This belief actually causes the price to rise and the psychology works just as well in the opposite direction (crashing prices). With a lot of cash sloshing around in the economy and the rich having "savings" that they expect to "work for them", this instability is magnified and can cause regular booms and crashes. On a more subtle level, total state control is also "speculation" since prices are a figment of the imagination in some five-year plan, resulting in "trade" that ends in disaster.

You can't take human psychology out of the marketplace, but the market is real. Inserting a computer into the trading mechanism just makes things go wrong faster. It is not the computer who "decides" on a trade. It is the owner of the computer program who speculates that a certain mechanism will work out.

All this is rather "macro" from the point of view of the average citizen. To see how these systems could every survive beyond a few weeks, we need to dive down into the details.

For one thing the "state" steps in to keep the whole thing from running off the rails:

• It guarantees property rights, something that is more important than voting rights, which only pretend to grant the citizen some measure of control.
• Citizens whose protected ownership of capital can pool capital to create entities whose capital is also protected. Such enterprises are responsible for almost all of what we call "material progress". But such pools of capital are also responsible for the instability mentioned above. Any "investment" is "speculation".
• In spite of appearances, almost all of what the "State" spends is spent in the marketplace. Except for work done directly by employees of the State, all assets and services are purchased from the marketplace. Even employees must be hired from the competitive pool of labor created by the marketplace. In a modern economy, the "State" is the biggest single buyer in the marketplace, often accounting for as much as 50% of the GDP. We see that the alternative assumed in the definition of "capitalism" makes little sense, since, while the State may not "control" trade and industry, it is the gorilla in the marketplace that directly or indirectly controls what goods and services are created by the society. 
• Combining the above insights, the modern "capitalist" state is a combination of "one dollar one vote" representation and "one dollar one vote" economic control. 
• The participation of the "ordinary citizen" is restricted to ceremonial participation in elections and finding a job. 
• The citizen is also free to participate in marches and wave placards to express moral outrage at the injustice of the "system" as a whole. This can be seen as an ancient "emergent" phenomenon - a consequence of the "way things are". If you need to shoot or imprison too many people to keep things going, you are opting for the "Pinochet system". With modern technology, there is virtually no limit to how citizens' protest can be suppressed, as demonstrated by what might be called the "Chinese" system. The "Canadian" system is far preferable to either of these ways of suppressing the protest. My theory is that the "Canadian" system (liberal democracy) is preferable to the others. Canadian "anti-capitalists" need to concentrate on making the system work rather than futile "outrage".

Given this insight, it is difficult to see a clear alternative to "capitalism", but we can see ways to improve it. In my view, anything we do needs to take care to preserve the stability of the economic system, which has a tendency to blow up. Against the insight of the anti-capitalist school, the #1 task is to preserve the marketplace. To do this we need to preserve price stability, namely, protect the currency. This is unwelcome news to anti-capitalists who tend to assume that money is somehow imaginary and the "root of all evil". We also need to keep a close eye on "speculation", which is the root cause of market instability. Ug. Regulations!!

To preserve political stability we need the system to be perceived as "fair" - at least to the point where thousands are not picking up guns. The milder form of such mass displeasure is the support of ill-advised regulation (along with equally ill-advised opposition to all regulation). An example of a regulation that aims squarely at instability is a tax on financial transactions along with capital gains taxes, adding "friction" and pushing against outright speculation. An example of stupid regulation is income tax, which pisses off almost everyone (fueling political instability) and doing nothing to create economic stability. Income tax introduces "friction" in exactly the wrong place. We need currency to flow freely through the economy, like water through the tissues of a plant. But currency should flow freely in the marketplace for "real stuff" and "real services". Free-flow of currency in the financial industry (Finance, Insurance, and Real Estate) is pure speculation with no "upside" for the economy as a whole.

There are a lot of specific ideas that flow from this line of reasoning. I'd love to take them up, especially if my reader(s) have questions or comments.

Perverse Incentives

Koestler was a master of analogies. He talked about magnetic storms, where everyone's "moral compass" swerves from "True North" without us realizing it.

The visual image of this led me to think of humanity as a bunch of iron filings around a magnet.  One of the striking things in this image is the fibers of filings - the way they bunch up and line up head to toe under the influence of the magnetic field. Looking closely, you see that each fiber has its own little magnetic field, resulting in the textured pattern.

I've given a lot of thought to the way humans "click" together, usually in "pseudo-persons" like corporations. This image invited me to consider another kind of alignment, the 'head to toe" relationship being the way people are connected, especially "transactional". A special case is a network of "perverse incentives" created by the social environment itself.
Here's an example:

1. We don't like bugs around for various reasons, creating a market for some kind of "solution". Sadly, this "market" may be for improved weapons for wars not yet fought.
2. Chemical companies jump in to take advantage of the "opportunity". This attracts the best and brightest scientists and lots of good middle-class jobs*. A big bump in GNP.
3. Corporations, in general, minimize costs. One way is to externalize these costs - make them somebody else's problem. Such things as pollution and "downstream" health effects on the users of their products. These costs don't show up on the corporate balance sheet. All this attracts shareholders. It looks good on the stock market.
4. "Downstream", people get sick and die, creating more jobs for lawyers and doctors. These unfortunate Joes create more GNP than Joe could ever contribute. In other words, John's death is good for GNP and jobs.
5. Cleanup of downstream pollution creates jobs, which also add to GNP.
6. Fear of polluted water makes people buy bottled water (another huge business). This is another industry that loves to externalize its costs. For example, plastic bottles are somebody else's problem.

The lesson to learn from this example is that we should be skeptical about politicians who claim that they will:

1. Create jobs
2. "Grow" the economy (GNP)

As the example shows, more "jobs" are not necessarily good for society in general, nor is GNP a good way to measure increasing "wealth".

This is just one example of the way we are linked by perverse incentives. Politics is full of them, as are banking. Perhaps these chains of incentives are the fabric of society.
--------------------------
* New York Times "Daily" Podcast sheds some light on the connection between "demand" for weapons and the ability of corporations to recruit or retain people to work on a new technology. Napalm and Artificial intelligence come up.

Dimensions of Value: Socialism and Capitalism

Socialism and Capitalism are both ways of combining theories of value with practices "on the ground" which purportedly reflect these perceived values.

SOCIALISM

It seems that Socialism pays special attention to three value-related concepts:

• "Fairness" in the system of allocating things of value. This needs to be unpacked a bit since there is a different concept, also called "fairness" in capitalism. The two concepts are so different that we can see part of the dispute as encouraged by a problem of language. The same word used in opposite senses, as in "newspeak".
• Equal influence on public policy. The "government" should act on behalf of all citizens and not be dominated by a certain segment. Being "rich" should not equate to being politically powerful. One person, one vote, not one dollar one vote.
• Since "Socialism" is fundamentally a political world view, "socialists" are, of course, willing to stretch the truth, sweep details under the rug and ally themselves with the devil to "win power for the people". This process often seems to throw the baby out with the bathwater, as with the Canadian NDP, who seems to totally accept the capitalist lexicon in an attempt to grab power. The ultimate value with any political party is political power itself.
• "Socialist" countries are willing to sacrifice the lives of their citizens for the sake of "society". I regard the willingness to do so on a spectrum. At one end are the "democratic socialists" who will fight to preserve general welfare. At the other end are "communists" who regard "society" as an abstract entity that has little do do with the actual welfare of actual citizens. Actual citizens are expendable. Dissent is to be suppressed to preserve the illusion of "society" as a "thing" worth defending. I regard "society" to be an illusion - a fiction - quite like the "Invisible hand" of the market so popular on the right.

CAPITALISM

• "Fairness" in capitalism boils down to holding property rights sacred - baked into the constitution. Any re-distribution of property, especially by the Government in (for example) taxes is "unfair". Morally wrong.
• In Marxist terms, those who own the "means of production" are entitled to all profits that arise from the use of those means of production. Profits, as well as the means themselves (industry), are private property. Re-distrubtion of these is morally wrong.
• Modern capitalist thinking makes room for "middlemen" - merchants and "platforms" such as Amazon, to have a moral right to their profits. It's a simple matter of arithmetic to see that the allocation of such profits is a zero-sum game between labor and capital. Therefore, the capitalist (valuing property rights) sees the suppression of wages (and therefore the value of life itself) as an "externality".  "Culture" or "society" is meant to deal with these "externalities" but not by means of expropriating of capital, especially through taxation.
• Capitalistic rhetoric often features "jobs" as a substitute for the value of human life. "Jobs" are the rabbit pulled out of the hat that, mysteriously, leads us to think of people as raw material for capitalistic production and therefore profits. The purpose of society, in general, is to provide "inputs" to industry and consumers for its outputs.
• Capitalists tend to treat "money" as the measure of all things. The entire discipline of "economics" is an effort to reduce all human value to money. If there is anything such as "socialist economics" I have failed to find it.
• To the capitalist, political power, like everything else, is to be purchased and owned. The capitalist loves to risk other people's money and other people's lives. You often see this attitude emerging in claims that the rich "own" the country because "they" built it. "They" own the real estate, the factories, the banks. They, therefore, have the moral right to "run the country". This is a claim that is rarely challenged in open debate. We tend to forget that their claim to ownership extends beyond the borders of our country (including Canada), resulting in "shooting wars" and the deaths of hundreds of thousands of politically misguided peasants in "other" countries. "Ownership" is everywhere achieved, maintained and defended at the point of a gun.

BETWEEN THE CRACKS

Both of these worldviews tend to systematically ignore whole categories of value. At bottom, they represent different worldviews along with different ideas about the way political power should be allocated in a "fair" way. Mostly economic power. Money power. Jobs. Taxes. GDP. 

We all seem to agree that political power is a value worth fighting for. In personalities likeMitch McDonnell, we see people who are willing to sacrifice anything to gain power, even allowing the country to be ruled by Russia rather than the Democrats. In every "political" struggle, it is power itself, rather than "values" of any type that are being fought over.

Stalin was the ultimate capitalist, clothed in Socialist rhetoric. Stalin owned the country. Its wealth was his to distribute. Every citizen lived and died at his whim. He starved millions to death to build up a modern industrial economy (capital). Individual citizens had zero political power and zero value in themselves. They lived in fear of their lives. Allowing millions to starve and millions of others to be imprisoned or exiled represents the logical end of a system of thought that attaches no significance to any human value. Yet, "right wing" rhetoric paints Stalin as the "ultimate socialist".

I tend to see the "Nordic" countries as examples of socialism at work. Everyone is guaranteed access to the necessities of life. Such values as a good education are taken for granted and "fairly" distributed. Major resources (such as fossil fuels) and the revenue from them are owned by the state. There are instructive differences between these countries. Iceland is not Sweden. Denmark is not Finland. But you see a commonality of assumptions - how people think of value. I call this system of values "democratic socialism". It is not even a close relative to "communism" - a totally different animal which I may come back to at some point. 

America is a country without a coherent system of values. "Capitalist" assumptions fill the vacuum, resulting in an atmosphere of false alternatives and alienation. Ignorance of the population (itself a consequence of education being a "commodity" to be bought and sold) leaves America open to almost any rhetoric. There are no accepted values worth defending. The American voter is effectively for sale, resulting in de facto rule by the rich. 

Even in this brief introduction, we see that our left wing/right wing assumptions place us with a false alternative. Socialism seems to cast a wider net than traditional capitalism and it seems to attract those who want to make the net bigger, such as "environmentalists". Even so, Socialists seem

to find it hard to admit to any concern that is not fundamentally economic. Who pays for health care? Why do the rich not pay their fair share of taxes? Why do a small number of people own the lion's share of wealth? The "left" cedes the floor to the capitalist "right wing" by treating these sorts of issues and this dimension as fundamental.

Climate change is an example of an issue "falling between the cracks". Both sides struggle to find an economic reason to avoid destroying the planet. Both sides manage to find the logic that supports massive investment in weapons that will if used, destroy us all. Both sides have trouble seeing over their borders to the suffering created for the masses who "fall between the cracks" as they arm wrestle for power within their borders and struggle to expand their domination at the expense of actual people.

The most glaring example of this is the USA, which makes laws for the entire planet, assumes the right to invade any country, kill anyone, destroy any economy but claims no responsibility whatsoever for the catastrophe it leaves behind for "others". There is a large aspect of "entropy" in this project. The USA doesn't leave "order" behind (such as tame capitalist economies). It leaves chaos behind. Ruined economies. Impoverished political debate. Kleptocracies. We need to step back and see the entropy in this situation. We can see it also in pictures of Europe in the aftermath of World War II. We can see it in failed nuclear reactors and the unrecoverable environmental mess that military activities leave behind in their wake.

MORALITY

Both "sides" of the political debate regard the "other side" as morally corrupt. Yet, in private, the individual is rudderless when it comes to defining what is or is not "moral". It seems arbitrary. It's in the "eye of the beholder". Yet, our "eye" is being steered in definite directions and away from the horrible truth.

Pope Paul's encyclical (on Human Life) points the way to a moral issue that both sides skip over. Are we morally obligated to leave an inhabitable planet for our descendants? Is it morally right to steal that planet for the benefit of people now living? Pope Paul attempts to expand orthodox Catholic theology to include a few "new sins". He also makes a brave attempt to convince non-Catholics that they need to re-assess their view of morality even if they reject "religion". There is a troubling connection between the Catholic concern for the "unborn" fetus and the welfare of the people who do actually get born. Most non-Catholics don't want to go anywhere near this way of seeing things.

I maintain that "morality" reflects the way we see (or fail to see) "dimensions of value". It boils down to how we see (or fail to see) the world with the full range of dimensions of value. Similarly, we see (or are made to see) certain aspects of value (such as money and the "good life") as the only values worth attention.

To a certain extent, we are free to challenge the way we see things. To exactly the same extent, morality is a matter of choice. But all of these frameworks of value are sold to us like Corn Flakes. They are woven into the very language we use. We can't address the question without figuring in the way that humans are "programmed" to see things a certain way, just as our biology programs us to see light in certain wavelengths and hear certain sounds but not others.

We arrive at the conclusion (not so surprising) that morality and values are intimately linked. The link is not something "out there" like the laws of physics. Or laid down by some supernatural being. It is the link between the individual and society. The individual sees morality (and therefore value) only through the filter held up by society and the environment. Under the spell of the capitalist, we can be made to "see" the "Invisible Hand" and the "Market" at work.  Under the socialist spell, we are tricked into feeling like we are supporting the "common good" without really knowing what this means.

Break the spell and a whole different world comes into view.

More on "Dimensions" here.

Corruption, Assimilation and Debt

Thieves of State

"Thieves of State" is about a particular form of society - sadly perhaps the most common form of society - a kleptocracy. "Thieves" goes into a lot of detail about how individuals are drawn into (assimilated into) this form of society ("dragon"). The examples allow us to drill down to get a close-up view of how assimilation takes place, how it is almost inevitable and why it is so difficult to resist.

It's hard to find an example of a social form that doesn't feature a "strongman" (usually but not always male) with built-in mechanisms that draw group resources to the strongman and his immediate family. This is as true of a Canadian "first nation" as it is of the Trump administration in the USA.

Chayes describes how this phenomenon permeates the whole society in a kind of fractal structure, with layer upon layer of mini-strongmen paying up to the strongmen above them while extracting resources from humans below them in the pyramid. We may think of this structure as the skeleton of the dragon. Its joints are made strong by the bonds of mutual protection and flow of resources up and down the structure.

Mid-level strongmen (who may be humble officials such as border guards or policemen) are bound to the system by being laughably underpaid (making bribes necessary for daily survival) and the debt incurred by buying the position in the first place (There is an echo here: the theme of "debt strangulation", where 99% of the population is in debt to the top 1%). The exchange involved is not just for money. It involves the tacit assumption that anyone in the structure will be protected by all the others. For example, the corrupt border guard can be assured that nobody in the police force will prosecute him for his involvement in smuggling drugs. In mature kleptocracies, protection of corruption is burned into law, especially protecting individuals from prosecution, stripping debtors of rights, making corrupt courts accessible only to the corrupt. "Freelance corruption" can be framed as "crime", allowing the kleptocracy to attack its rivals with the full force of law.

I wonder if these structures arise out of almost physical or mathematical necessity out of the way that basic human needs are met more efficiently by larger and larger groups of humans. Within these groups networks of control, obligation, power and wealth quickly lead to kleptocracy. Another interesting question is whether the same conditions work in a "free" society to produce dramatic inequality. "Capitalism" tends to give free reign to these forces. Debt is the lifeblood of capitalism, creating "legal" bonds that may be structurally identical to those in more "primitive" kleptocracies.

"Socialism" can be seen as a counter-force against the natural tendency for power and wealth to concentrate whether or not the society can be described as an overt kleptocracy. On the other hand, there is a distressing tendency of even "socialist" governments to be captured by networks of obligation, mutual assistance, and general desperation. From this point of view, we may see all of politics as corruption versus socialism. We see that socialism requires extensive state intervention and strict rule of law since the natural order of society (unregulated) is to slip into kleptocracy. In the US, the key difference between Republicans and Democrats is the Republican insistence that all regulation be dismantled (most recently the EPA and consumer protection), while the Democrats see more and more programs and regulations as needed to create a just society.

This question would seem to be something that could be addressed empirically and historically - perhaps in the form that "Thieves of State" takes. Are there countries that successfully counteract the natural tendency to become "kleptocratic"? In "Thieves", Chayes points out a range of policies (all ignored) the US can employ to avoid support of corruption in states it is trying to "stand up", like Afghanistan. Is there a set of similar policies that could be adopted as part of a political platform of a socialist party, such as the Canadian NDP? Such policies would focus on issues such as undermining the power of the banks and freeing people from the chains of "rents" that flow up the pyramid to the rich and powerful.

I provide a related rant on money and debt in another post.

What, if Anything, is "Capitalism"

... capitalism is not simply an economic system – it creates an entire culture that invades almost every aspect of life. It is a top-down culture where those on the bottom are virtually powerless and those on the top issue orders. It atomizes people by forcing them to compete against one another rather than join together in the pursuit of the common good. This is the culture that one confronts at work, whether in the private or public sector, in schools where students must compete against one another for grades, and it even infuses the union movement. Union members are rarely encouraged to engage in significant decision-making within their union (with the exception of unions like the Chicago Teachers Union) and hence for the most part do not bother to vote in union elections. Similarly, when unions call for mass demonstrations, few of their members bother to show up.

... Counterpunch 

As you move "leftward" in the political spectrum, capitalism is portrayed more and more like this. There is broad agreement that our current political system is "capitalism" and that is inherently evil. There are many problems with this idea ...

For starts, I think Chomsky makes a lot of sense by describing our current system as "Corporate Welfare". He also points out that the really big corporations utterly depend on government handouts. The point is that there is not enough connection between "capitalism" and our current system to call the system "capitalist". In particular, it makes no sense to talk about "capitalism" as an entire culture as we see above. To my mind, it makes more sense to describe the "philosophy" of our current culture as "consumerism". This shift of perspective puts the whole discussion beyond the reach of Marx who could not have imagined the lifestyle of even "poor" people in the 21st century developed world.

So, apart from an incorrect label for our current social model, what can "capitalism" possibly mean? I hope I don't betray my ignorance of Marx by saying it has a lot to do with the ownership of the means of production, which (in Marx's view, probably correct in the 19th century) creates the situation described in the quote above, including jobs going to the lowest bidder etc.

In Marx's day, this "system" was not very old. Formerly, giant corporations were created by royal fiat (such as the grant of the entire territory of what is now Canada to the Hudson's Bay Company or Virgina to Walter Ralley). There is an interesting parallel to those days when warfare was also a commercial enterprise, funded by some of the earliest joint stock companies, but don't let me get started on that.

Corporate "ownership" has gone through radical changes since the time of Queen Elizabeth and these changes continue to take place. Among many fundamental changes is the advent of "fiat currency", which makes money a kind of information. Such currency can be created and destroyed without references to physical laws like conservation of matter (applicable to, say, gold). Especially since World War II, the economy has shifted to being "information based". For example, most of the value in an iPad is the cost of licensing the technology, not the labor or materials. This would be "Science Fiction" to Marx. The money we pay for the iPad is also "information".

Divorcing "money" from the real physical world has lead to some bizarre situations. There is really no limit to how much "money" anyone can have (or print), especially if that person's wealth is based on production of valuable information (like a rock band) or the ability to print money (like all sovereign governments of the world). This creates a class structure that echoes the one that Marx complained about, but is so utterly different Marx can't really tell us much about it. The current class difference is between those who trade in information (including money) and those who must sell the the old fashioned "sweat of their brow" to the highest bidder. A third class is those who have nothing at all to sell.

I'm no economist, but my suspicion is that this has a lot to do with the lamented gap between the "1%" and the rest of us. In the face of such pessimism, I can only point out that information (which I hold is the new "money") is getting exponentially cheaper by the day, which is not surprising since information can be copied, cloned and combined without limit. Perhaps we need to define a fourth class - those who intensely value information. In the new economy, these people grow richer through their ability to access, interpret and apply information that is for all intents and purposes free.

But I digress ...

Old fashioned "money" still exists and we all need to eat. Most of us need "jobs". Just as we still have a Queen of Canada, the bones of the old economy underlie the new.

A new "capitalist" can create a "means of production" in the Marxist sense by:

• Existing in a framework of laws that protect "good will", the information value of the company - such things as patents and trademarks
• Conforming to the laws of the host State, including keeping records and paying taxes -- an expense that can easily exceed such things as rent. Directors of companies expose themselves personally to lawsuits. Shifting regulations can make the difference between survival and ruin.
• Finding, training and keeping skilled employees who, unlike the mill workers in the days of Marx, are free to pick up stakes at short notice and take their new skills with them to sell to the highest bidder.
• Finding capital. There are a dizzying number of ways to do this, all with "strings attached" that Marx could not have imagined. The existence of such a wide variety of sources of capital is, I suppose, what gives our system the legitimate name of "capitalism", but the vast majority of small businesses are funded the old fashioned way: out of the pocket of the founder.
• Finding customers. Of course, without customers, the enterprise will quickly die. It's astonishing how many people who have never started a business don't understand this.
• Successfully weighing risk. The vast majority of enterprises eventually fail, taking the fortunes of their founders with them. Employees are barely inconvenienced -- there are more jobs out there. Depending on how capital is raised, owners face ruin.
• In the case of success (much more rare and difficult than people think), owners and/or investors can become incredibly wealthy. But lets not forget that bond holders (such as all those boomers) get paid on time, taxes get paid and the corporation is usually (but not always) produces something of exceptional value for the consumer.

In a nutshell, this is the current "capitalist" system. The "capitalist" part of it has mainly to do with how easy it is to scrape up capital for a good idea with a promising market. The rest of it would seem to apply to any "means of production" in any political system. So what do the "anti-capitalists" propose to do? In Russia and China, we have the answer: hand over massive corporations to private individuals, skipping the need for them to raise more money than a few bribes to the "ex" communist leaders. In these cases, the risk is assumed by the public, the customers are handed over without the need to win them and usually without alternatives.

It is not surprising that the catastrophe also works in the opposite direction, when successful businesses are "privatized". Risk is assumed by the public. The new "business" has no need to justify its need for additional resources since it now has the ability to tax the general public to keep itself afloat. There is no more need for innovation. Such moves are usually made with the specific intent to remove all competition.

I'm not "pro" or "anti" "capitalism". I just think it's important to understand how the system actually works and what the alternatives really are. Dogma and all the -isms seldom point to rational policies.

Finally, I need to point out that many corporations succeed in producing value for the owners but produce no value (or negative value) for the consumer. This magic is usually pulled off by outright corruption of the political process (such as with the tobacco companies or "Obamacare") or by creating the false impression of a need (such as with weapons manufactures). Other companies succeed by leveraging massive public investment to patent discoveries made at public expense (drug companies), by "ownership" of resources that should be held in common (telecommunications companies) or by providing "services" that should really be provided to citizens by right (medical insurance companies).

Companies manage to break out of the ideal "capitalist" paradigm for by various means, but the core motivation is always the same: survival. Of course, massive profits don't hurt. In principal, such abuses of the "capitalist" system can be rolled back. Rolling them back is a perfectly legitimate goal of progressive politics. Rollback is resisted not (as generally imagined) to protect the fortunes of the rich, but to protect the survival of cancers masquerading as businesses. The "rich" are just as assimilated by the cancer as anybody else, but it is a comfortable assimilation. They just need to check their humanity and moral sense at the board room door.

ANTI-CAPITALISTS

If capitalism is meaningless, "anti-capitalism" borders on comic absurdity. Those who claim this attribute seem to be saying "I hate my job, can't get a better one and it's not my fault". It's a personal admission of failure to "fit in" to a society that they think is "capitalist". One suspects that the failure to understand how the society works may contribute to their lack of success fitting in. But it's easier to imagine that there is a conspiracy against morally pure folks. Such people have a tendency to identify in slightly insulting ways with people who are genuinely disadvantaged (but don't have time for philosophy), such as Hispanics, Aboriginals, African Americans ...

If they have an meaningful political program, Anti-capitalists seem to be outraged at the inequality in society (which, to them, is somehow new and a result of "Capitalism"). It's quite true that economic principals like the "law" of supply and demand tend to put little money in the hands of people whose labor is not in demand. But this is not a capitalist "law". It's an economic law. There are poor people all over the world in all kinds of political systems, even those without "money" or any kind of "system" apart from centuries-old tradition.

ECONOMIC THEOLOGY

For the true capitalist, there is no society, only the economy. While it is impossible to banish the role of capital from the economy, it should be possible to consider the welfare of society as something quite different from the health of the economy. At present, virtually all political parties, including the "socialists" see the way to improving the lot of the citizen is only through improving economic security (narrowing the income "gap", providing jobs etc).

Even the "Greens" tend to concede this point - for example, by touting the economic benefits of a clean environment. Few politicians will concede the necessity to pay a significant price (in GDP, for example) for a sustainable future. Support for education, health, safety and culture is grudging at best and always treated as a "line item" cost in the budget, which must be (for religious regions) be "balanced".  The true "balance sheet" of a society must recognize the value of a healthy, safe, well educated public.

Even in purely economic terms, resource depletion should be treated as a reduction in assets, not solely tax revenue for the government and GDP contribution from the extractive industries. "Externalities" such as pollution and climate change need to be accounted for.

So, you might say that the problem with "Capitalism" is that its proponents "cook the books" to show an illusionary "profit" for society, hiding the costs to society and the disappearance of common assets. This is *before* you consider the fact that the entire approach only considers things that can be priced by the market. If it can't be bought and sold, it's not worth considering.

"FINANCE CAPITALISM": PRIVATIZATION OF PROFIT, SOCIALIZATION OF DEBT

It is crucially important to distinguish between "industrial" capitalism and "finance" capitalism. At the very least, one must recognize that Marxist theory was born in the era of "industrial" capitalism. One may defend the benefits of "industrial" capitalism against the logic of Marxist socialism, but "finance" capitalism is an entirely different thing -- a system that directly benefits the owners of "capital" while socializing risk. The "capitalist" (imagined to be the mythical creative entrepreneur) disappears from this picture.

The conflict between "finance capitalism" and "socialism" became clear in the crash of 2008, where banks, "too big to fail", were saved at enormous public expense. A very informative documentary of the way this works is provided here in the case of Europe. "Bailing out" a bank involves paying off the bank's creditors. Following the money trail, you find that the creditors are other banks and bond holders. When these loans *don't* fail, such creditors make money. When the loans were made irresponsibly and eventually can't be paid back, the creditors still get paid, but out of the public pocket.

The official logic is that allowing one bank to fail will cause its creditor banks to fail and so on, bringing down the entire "system" in a collapse of a house of cards.