The People's Corporation- The Forced Evolution Of Capitalism

On October 3rd of 2008 a Bill was passed entitled the “Emergency Economic Stabilization Act of 2008.” The Bill,created out of need after disaster struck the banking industry was one of many steps in the United States’ past of nationalizing pieces of the market when necessary. It provided money to bailout the banking industry, rather than taking the purely capitalistic approach of allowing the corrupted and failing banks to collapse (the results of which would have inevitably put millions out of work). To pure capitalists, the Bill goes against their core economic values. “The only viable solution to this financial crisis is to keep the government from intervening any further.” — Said by Ron Paul when speaking before Congress. A typical capitalist in the purest sense, would say that virtually any governmental intervention in the market place would cause serious issues. While capitalist approaches do, in many cases, work to do things like spur innovation and create wealth, capitalism can no longer be seen as the purest of economic systems because of its variable: people. The economic system of capitalism requires people to go about their daily lives regardless of the state of the market. The pure theory of capitalism does not account for the fear, doubt, and so on that will drive consumer spendingbehavior. Nor does it account for human impatience while waiting for the markets to stabilize again after failing. It also fails to take into account human greed,

and the types of mistakes made when there is an inevitable accumulation of wealth upward creating a “ruling class” that mostly controlswealth. This exact “ruling class” can be seen as reason that the economic bailoutmust occur in the first place. The alternative to this system is known as socialism. Although the name of the concept has been propagandized by governments that would use it to promote a good feeling about their politics (The Nazi party of Germany rings the bell here), it is thereforeimportant to clarify exactly what socialism is. Socialism is “a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.” (citationhere) This means that the government, usually, controls the means of production (as a representative of the community) and that government control is typically a failure of the system because, again, human greed and ignorance are not clearly factored into the equation. Socialism is also thought of as the step before communism, under Marxist theory. Obviously, both of these theories are ideal in and of themselves, but when placed into action in the real world the variable of people will inevitably cause these systems to break down because human behavior cannot be reliably predicted. So, then, what’s left? America, and much of Europe, is a good example of what’s left. An update of this system is

happening in America where a new economic model may be occurring through a process of economic evolution. Historically, America is a capitalist country, but what can be found when looking back through its economic history are numerous examples of human variables causing complete disasters in the economy (the Great Depression, stock market crashes, and even the economic disaster of 2008). In each of these cases, an interesting thing occurred that should not have occurred in any capitalist system: government intervention. Government intervention in the market will take many forms, be it the mandate of a minimum wage, the partial nationalizing of our banking system, or a public school system. What’s interesting about this is that it is new ground economically speaking. The government becoming a player in a capitalist market place, and allowing organizations to compete with it, is completely unprecedented in any major economic theory. It’s also important to outline the exact concept of the theory which is: At any point where the capitalist, profit driven, system of the United States fails to meet the needs of the people as a whole, the people will move government into the area to meet the need. In short: where it’s needed, the government of the United States will become The People’s Corporation. In order to examine why this may be occurring it’s important to look at important (but otherwise unprofitable) industries

where the profit motivation of a capitalist system seems to wane, and where an overly ambitious profit motive created just as much of a problem. These two extremes of the spectrum represent the areas where the government has traditionally become involved. A major concern of many Americans today is healthcare, many believe that the system is just “plain broken” (citation needed). If you could put the current medical system of the U.S. as a proposal before congress, it would probably not garner a single vote: no one would support it (paraphrased citation here). It’s been said that America has one of the most expensive, and inefficient health care systems on the planet. Much of this could be attributed to human greed such as CEOs and other important members of these organizations giving themselves more than just compensation, it could also be attributed to the corporations need to return an a profit to it’s investors. This system, in the state it’s in today (as of 2008, that is) is ripe for the kind of government intervention that is becoming more common practice in America. In fact, health care reform is a major issue in the presidential election of 2008, where the most popular candidate, Barack Obama, suggested that the government should offer the same health insurance to the people that it offers to it’s workers, among other things. This makes health care a perfect forward looking example of the policy of America’s democracy: either the market will meet the need

appropriately or the government will, but the needs of the people will be met in some form, eventually. Another firm example of past government intervention is USPS: The United States Postal Service. The USPS is the earliest possible example of this kind of government intervention, but is most notable for the fact that the government has not outlawed competing with it. Today many package delivery services exist: UPS, and Fedexare the most notable examples. Although they don’t traditionally deliver letters back and forth, they do compete with the USPS on delivering packages. This is important because it means that the government, while intervening in the market place in order to meet a need, is not necessarily discouraging competition. In fact it’s entirely possible that the government’s intervention spurred competition in this event by allowing companies to detect the USPS’s weaknesses and build businesses out of beating it on those points. Perhaps the easiest to miss, but not the least important by any means, is the nationalized education system of the United States. It’s very easy to look over this system as a ‘basic need’ but that’s why the government became involved in the first place. It’s not at all difficult to find data that at one point in American history (mostly during the age of agriculture) getting an education was a luxury afforded to only those with the money to pay for private schools. This is an area where it was obvious there was a need of the

people, and the private, market driven, system was incapable of delivering thanks in no small part to it’s profit motive. This particular instance should also show that all government intervention isn’t necessarily positive as the public school system in America is subjected to worldwide criticism. Looking back (and forward) at these examples of government intervention in the markets would probably give both capitalist and socialist idealists a small heart attack. While the socialists would praise government intervention, they might criticize the constant sway of the markets that the government allows; however, while capitalists might praise allowing competition, they’ll readily denounce any and all government intervention in the markets as something bordering on blasphemy. Clearly though, one thing can be seen by giving a hard look at reality: while it is good to have ideals, and it is good to move towards them, not every possible variable can be accounted for in creating them, and virtually every extreme vision is utopian in nature. When capitalist systems first arose, they were wealth building. But now, ascapitalism is ‘coming of age’ a number of faults (many of which were, indeed, pointed out by Karl Marx in his criticisms of capitalism) are coming to light. However, rather than a revolution replacing the whole thing, as Marx may have suggested, we’re patching the capitalist framework with socialist ideas. It’s important to note that much of Marx’s theories have

been discredited in practice, that some of it still describes conditions that work today:

Although Marx's economic analysis is based on the discredited labour theory of value, there are elements of his theory that remain of worth. The Cambridge economist Joan Robinson, in An Essay on Marxian Economics, picked out two aspects of particular note. First, Marx's refusal to accept that capitalism involves a harmony of interests between worker and capitalist, replacing this with a class based analysis of the worker's struggle for better wages and conditions of work, versus the capitalist's drive for ever greater profits. Second, Marx's denial that there is any long-run tendency to equilibrium in the market, and his descriptions of mechanisms which underlie the trade-cycle of boom and bust. Both provide a salutary corrective to aspects of orthodox economic theory.

It is entirely plausible that, for so long as America exists, it will be inherently a capitalist nation; however, as faults in the capitalist system

continue to show themselves it is increasingly likely that the government in America will have to take on the roll of The People’s Corporation.