In Focus: Return to workable socioeconomic philosophy

March 28, 2014 

Most political debates today boil down to economics. Beliefs concerning “job creators,” the optimal size of government and the virtues of capitalism are central. For competent evaluation of these ideas, we need to understand the strengths and weaknesses of capitalism. Evolving out of an economic system called mercantilism, the main institutions of capitalism first materialized in England just prior to the year 1700. Most people at that time actually viewed capitalism with suspicion and resistance given its violation of certain mores going back to antiquity, such as “just price” and not committing “usury.” It was evident that capitalism is a socioeconomic system of human creation (biased toward the upper class) that is no more natural nor God blessed than any other human product. But that is not to say the system doesn’t have its virtues. In addition to encouraging creativity and productivity, the beauty of capitalism is that many needs of society are addressed through the forces of supply and demand, reducing the necessity of central planning. However, in our enthusiasm for the system, we often overlook how many important human and societal needs are not met through market forces: — care for the sick and unemployment, national defense, mass education, environmental stewardship, infrastructural investments, first responders, secured retirement income, justice and more. Nor does capitalism naturally plan for the future, which is of critical importance to long-term societal success. Another name for the “free market” could be the “mindless market.” Capitalism does not, on its own, produce some of the most essential goods and services required for a successful, healthy society. In addition to needs unmet, capitalism has many undesirable consequences — horribly fattening/unhealthy foods are sold for profit, damaging inequalities arise, corporations subordinate democracy, sacred elements of society are commercialized, Christmas, for example, and people are commoditized, spied on and downsized, precious resources are squandered, journalism is perverted and more. In general, many things that are better left undone are produced by unfettered capitalism. Finally, another important characteristic of capitalism to understand is that markets are not self-regulating. As the Great Depression and recent recession clearly revealed, without proper and strong oversight, capitalists can run amuck, markets can be consumed by greed, and the entire socioeconomic system can crash. Modern capitalism is all about maximizing profits and shareholder value, which are frequently very destructive forces. Moreover, a highly ironic characteristic of capitalism always exists: While requiring competitive markets to operate effectively, lassie-faire capitalism naturally gravitates toward monopoly. There is an inherent contradiction to the system. Capitalism should be of services to society, not vise-versa, and in order to serve the needs of society, capitalism must be managed by a strong overseeing body, ideally a democratic republic. To summarize, capitalism has many virtues. But that shouldn’t make us dogmatic about it. Capitalism doesn’t provide all the things required to have a fair and prosperous society. Capitalism, often does, however, produce many products and conditions that are undesirable and unhealthy to people. And finally, to function properly, capitalism requires the oversight of a strong governing body. Although sometimes well meaning, citizens making antigovernment, libertarian arguments are simply unaware of the nature of capitalism, the functioning and needs of a healthy society, and the important role of government in making it all work. American socioeconomic history since World War II can roughly be divided into two eras: those of Franklin Delano Roosevelt and Ronald Reagan. The rise of the great American middle class, advancements in education, growth of real income and the tremendous gains in rights and freedoms that Americans experienced between 1950 and the mid-1970s constituted one of the most impressive periods of societal development in world history, and it occurred during the maturation of FDR’s policies. Compare to that our steady decline, indebtedness, and creeping plutocracy since the rise of Reaganomics. There really isn’t even a serious debate as to which philosophical approach is better. Advocating the superiority of Reagan’s supply-side economics is analogous to arguing that the Denver Broncos were the better Super Bowl team. America doesn’t have too little reliance on capitalism. We have, in reality, far too much. People of the middle class (the true “job producers”) have been hoodwinked. Instead of continuing to plod toward a cliff wearing ideological blinders, let’s heal capitalism by returning to Keynesian economics and the FDR humanitarian policies that clearly worked to produce a better society. w Mark Mansperger is an assistant professor of anthropology and world civilizations at Washington State University Tri-Cities. His research includes cultural ecology, development and international economics.

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