Why “free market” capitalism cannot last long.

Here are a series of illustrations I have made to demonstrate why capitalist economies that are supposed to be free markets inevitably degenerate into fascist-corporatist tyrannies that deprive the people of freedom of choice in the end.

Stage one: Here is a free market economy represented by dozens of small circles, each circle representing a small business. Of course, some of them are more successful than others, but no single business dominates the industry and there is plenty of competition. Note that three such businesses have been singled out and designated “A”, “B”, and “C”.

Stage two: After a period of time, many of the small businesses have collapsed and the remaining ones have tended to grow larger and more powerful. Companies “A” and “B” have merged and this soon enables the new company “AB” to becomes more powerful still, and it begins to crush its competitors.

Stage three: Another generation or so has passed. Now companies “AB” and “C” have merged together, forming an even more powerful union. Meanwhile, the forces of competition have served to eliminate most of the smaller companies we saw earlier. However, a new company, named “D” has been established, showing that at this time there is still room for innovation and diversity, which is the essence of freedom.

Stage four:  Sadly, company “D” isn’t able to last long, and it is soon bought out and taken over, resulting in company “ABCD”, so powerful that it eventually forms a virtual monopoly, and other companies are at a total disadvantage and will never have a chance to rival what ABCD has gained.

There are four lies that “free market” advocates tell that need to be slammed down.

First, they claim that in a free market it would be a simple matter for people dissatisfied with a company to start and run one of their own. But in the present American system, the vast majority of new businesses that are established fail within a few years. The reason is simple: the already established and larger companies are always able to take advantage of their larger capital and the fact that people are already familiar with them to crush their new and smaller competition.

Second, it is not government action that creates corporatism out of free market economies. Rather, it is the already formed corporatism that prompts government to prop up failing giant corporations due to a recession. Why? Because if those corporations go out of business, millions of people would be thrown out of work, reducing economic activity further. That’s exactly why both Presidents Bush Jr and Obama chose to endorse corporate bailouts; if they had not, we would most likely be in a Second Great Depression now with even less competition than before as bankrupt companies are bought and taken over by bigger ones.  A better policy would have been for government to prevent those corporations from growing so big in the first place……but then we wouldn’t have a free market.

Third, socialism or communism as envisioned by Karl Marx was not supposed to be a one-man dictatorship. Stalin and many of those who came after him were responsible for that perversion, not Marx himself. In reality, Marx wanted a collective rule that would actually be more like a democracy, with the workers (which he assumed would be the vast majority in any industrial economy) ruling through elections in both the government and the corporations. This was what would later make possible the gradual dissolving of the state leaving only the worker run companies. The reason “Communism” failed was because after the death of Lenin in 1924, real Communism was never tried. No one-man totalitarian state can be rightfully called Communist or Socialist. It’s Fascism instead!

Fourth, the whole point of democratic socialist, liberal, or progressive politics in industrialized countries is to prevent a disruptive revolution by the workers against the capitalists by gradually making reforms to keep the workers happy. By opposing them, Conservatives like Presidents Reagan and both Bushes, along with their Republican allies in Congress, were setting the stage for the actual long-term downfall of America through their idiotic short sighted policies to disempower labor unions and deregulate Big Business.  This in turn, will actually INCREASE the likelihood of a real Communist revolution later! The repeated cycles of economic surges (which enrich those who are already wealthy) followed by recessions (which hurt the middle and working classes the most) can only weaken capitalism until it falls. The outsourcing of manufacturing by American companies to other countries like China for their cheap labor only delays this gradual breakdown, while threatening the independence of America. China’s lax labor, safety and trade policies have resulted in a great many inferior products being shipped over here. Meanwhile, millions of Americans can no longer get manufacturing jobs and end up with lower paying ones, locking them into dependence on Chinese goods. Thus American consumers are forced to keep buying the Chinese made products when they wear out.

Wake up, Americans! We need liberalism, socialism, and progressivism NOW. Free markets in a  strict sense are a dream, never a reality that we can have forever.

Economic growth vs. economic justice

One of my biggest concerns is the blatant inequality of wealth in many societies and how that often translates into total injustice. Those who are raised in wealthy families tend to remain wealthy. And where there is wealth, there is also power. Meanwhile, those who come from poor families tend to remain poor. Because there are a finite range of resources in any society, those who already have wealth also have access to the highest technologies sooner than others, thus enabling them to maintain and even increase their wealth still further at the expense of the impoverished. And I’m not just talking about individuals, but about nations as well. The United States is far, far richer than Afghanistan  and will probably always remain so. Thus, while America is on the cutting edge of technology, the people of Afghanistan still live largely like they did a century ago, because they simply cannot afford the latest computers, cars, or private jets.In a capitalist economic system without any restraints, the rich will get richer and the poor remain poor until finally you have a few ultra rich and masses of the poor that will never have a chance to get better. And because cash flow then drops to minimal levels due to the tendency of the rich to hoard their fiances while the poor cannot even spend much money, the capitalist system collapses under its own weight.Karl Marx forsaw this. His mistake was to assume there was no way to prevent this and it was actually a good thing. Wrong! A restrained capitalism in which the government taxes the rich highly to prevent them accumulating too much wealth for themselves and does not tax the poor at all is both just and more productive in the long run. That is why I cringe whenever I heard about President Bush taking credit for his tax cuts for the wealthy helping the economy grow. Such growth will not last forever, of course. I’d rather have economic JUSTICE and STABILITY rather than merely GROWTH.

Why did Communism fail?

When I look at Communism, I see a system that had entirely good intentions in the beginning but also had flaws that became more and more obvious as it was put into practice. It is ironic to me that the proposed solution to the abuses of capitalism, resulting as they did from the concentration of wealth and power into the hands of a few, was to take that wealth and power and transfer it all to the GOVERNMENT! That’s a bit like treating a burn by putting the burn victim into boiling water. So the whole point of Communism was a farce from the start, but those who followed it acted like religious fanatics, never allowing its contradictions to really impact their minds until it was too late. Yet they claimed to be atheists? What HYPOCRITES!!!

Communism failed because it had the same results as extreme capitalism, concentrating power in the hands of a few elitists. If the cure is as bad as the disease, why bother?