Capitalism ‘Good’ & ‘Bad’: A Reply to Stiglitz and Macron By Jack Rasmus

17 October 2019 — Jack Rasmus

I was recently asked by a media source to answer the followning questions for an interview about the future of capitalism in general, and about recent comments on that theme by economist, Joseph Stiglitz, and France’s president, Macron. Here are my responses to the questions asked by the reporter:

    TOPIC:

It is broadly understood that capitalism as a social, political, and economic system is dead. Or is it? What marks the end of capitalism? Capitalism’s failures arise from purchasing on credit, perpetual growth on a finite planet leading inexorably to environmental calamity

QUESTIONS:

1. Capitalism is defined as an economic system in which a country’s trade, industry, and profits are controlled by private companies. Is that an accurate definition of capitalism, and is it going strong or is it dead?

2. Anti-capitalists view capitalism as an inhuman, anti-democratic, unsustainable, deeply exploitative system that must be dismantled. Do you agree?

3. In a capitalist country, the focus is on profits over anything. The Nobel economist Joseph Stiglitz sought to distinguish between good capitalism, which he called “wealth creation”, and bad capitalism, which he called “wealth grabbing”. Hasn’t this wealth grabbing led to inequality and poverty?

4. In the most recent G7 meeting held in France, G7 leaders especially France’s Emanuelle Macron concluded that there needs to be a rethink of capitalism as risk of recession looms. Emanuelle Macron said We are experiencing a “deep crisis of democracy,” urging his fellow leaders to reinvent multilateralism and rethink capitalism: can u break this down for us?

Sincerely,

Hamid Reza
Admin, Newsroom

    My Reply to Hamid

“I would describe capitalism as an economic system in which the production and distribution of goods and services is for the market, with the purpose of realizing a profit in excess of the costs of producing and distributing those goods and services, and where the owners of capital secure as much of the excess for themselves and as little as possible for others who are those who make the goods and services–i.e. workers and everyone else involved in the process.

Capitalism in the modern era is also about more than just exploitation of workers in the act of producing and distributing goods and services. That’s the limited classic Marxist notion. Increasingly Capitalism is about making ‘money from money’, i.e. from creating financial securities and financial assets and speculating on the price instability of those financial assets. It needs no worker exploitation for that. Capitalism is also in the modern period about intensification of extraction of natural resources with the purpose of excess wealth creation. We often forget the role of nature itself in the process. Yes, no goods get made without workers. But all the materials used in making goods and delivering services ultimately come from nature itself. Nothing gets produced or distributed without workers and without nature.

So Capitalism is about creating wealth for the few who control the means of production, extraction, and financial asset creation–at the expense of all others who participate in these processes as well as at the expense of the destruction of nature itself.

Capitalism is immoral, as your second statement notes but not simply because it is exploitative and inhuman. It is immoral because it will, if left unchecked, destroy all human society itself as we know it. All morality is of human origin. And if human society as we k now it is destroyed, so is the essence of all morality.

I don’t agree Capitalism should be simply ‘dismantled’. It must be replaced with something better (which is getting easier to offer since capitalism is becoming more destructive with its wars, climate chaos, global poverty, etc.). A better alternative must be described and shown as possible before people will give up what they know, even if what they know is killing them.

Stiglitz’s differentiation between ‘wealth creation’ and ‘wealth grabbing’ is a hoax. Why doesn’t he simply say it’s about wealth production and wealth distribution? They are one and the same, not counterposed. There is no wealth (goods and services) distribution without its production and creation; and there’s no incentive to produce anything unless it can be distributed and consumed.

Economists recognized centuries ago that Wealth is created with the goods and services that are produced.

Wealth ‘grabbing’ is when the value of those goods and services are increasingly distributed to only the few (capitalists). Counterposing the terms ‘creation’ and ‘grabbing’ obfuscates the fact that the distribution of wealth is increasingly being skewed to the few, even as wealth production is growing under capitalism.

It’s thus a false dichotomy to counterpose ‘wealth creation’ to ‘wealth grabbing’. It’s all about the maldistribution of the wealth between classes, capitalists on the one hand and workers and everyone else on the other. Stiglitz likes to talk about income and wealth inequality, but he refuses to go further and describe how the maldistribution of income and wealth under Capitalism today is occurring (and accelerating) and what measures need to be taken, economic and political, to reverse the trend. he likes to identify the fact and the problem, then avoids proposing measures and ways to rectify the problem. If he did the latter, he would have to identify the role of the capitalist state today in the acceleration of that inequality, and identify his friends in the Democrat Party as being responsible in part for the increasing inequality. Nearly everyone knows that inequality of wealth creation and income distribution is a problem today. What’s missing is a serious discussion about what are the solutions, what needs to change and how, in the economy and in the political-state structure that increasingly serves that inequality.

Macron says there’s a need ‘to rethink capitalism’. What he really means is that the capitalists better figure out quick what to do about the increasing inequality and rising discontent–right wing and left–with that inequality, if he and his capitalist friends want to continue to rule in the decades to come.

And along with the trend of inequality and its political reaction underway, he’s worried that Capitalist forms of (limited) Democracy might give way to more radical forms as people organize and rise up against it–as capitalism fails to deliver, destroys the environment, and provokes more wars. And those more radical forms may be neo- or proto-fascist in character next decade.

Macron realizes that Democracy cannot continue ‘as is’ in the face of contemporary capitalist economic fiscal-monetary-trade policies which are failing both to stabilize capitalism more and more and are failing to ensure a necessdary level of economic growth. Capitalist inequality is worsening because the capitalist class, with the help of their state, are being driven to more aggressively ensure their own wealth grows, as the ability of the system to create wealth enough to share with other classes is weakening. (In my forthcoming book, ‘The Scourge of Neoliberalism: US Policy from Reagan to Trump’ (clarity press, October 2019), I explain how current capitalist economic policies continued existence require the destruction of capitalist Democracy in the US, which has been going on since Reagan, and now is accelerating under Trump).”

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